U.S. stocks in freefall

Discuss all general (i.e. non-personal) investing questions and issues, investing news, and theory.
subham
Posts: 168
Joined: Wed Oct 01, 2014 1:01 pm

Re: U.S. stocks in freefall

Post by subham » Tue Jan 06, 2015 4:10 pm

Clearly_Irrational wrote:
GingerU wrote:I'm curious also about this freefall today. I had planned to buy some ETFs today (ITOT and AGG) but seeing the declines I'm wondering if I should wait to see if things go lower. I'm not a fan of timing the market as I have learned thru this forum but would it be reckless for me to invest now?


You're wasting your time for the most part. The results from picking one day over the other are fairly small for any sort of regular contribution. I know how and I still don't bother, pick a regular schedule and stick with it, the statistics will work in your favor over the long run. That said, if you insist on trying then here is my forecast:

1) Signals are weak, forecasting accuracy will be mediocre
2) RSI is low but not oversold
3) Bollinger bands are widening and the price move is not yet touching the bottom boundary
4) No 50/200 SMA cross
5) Japanese candlesticks suggest a weakening trend
6) Volume is rising
7) MACD Divergence is widening
8) Chaikin Money Flow is negative and still trending downwards
9) No new P&F pattern, target is still bullish
10) Resistance level at 1972 on the S&P 500

The highest probability is to wait a bit, we're probably not done with the current pullback. Later this week is likely the optimum time, perhaps Friday or thereabouts.


Like someone here said before, "I like it when you talk dirty" :mrgreen:

But seriously 9th is my DCA date.

Scotttheking
Posts: 175
Joined: Wed Apr 09, 2008 7:58 pm

Re: U.S. stocks in freefall

Post by Scotttheking » Tue Jan 06, 2015 6:53 pm

That's it, I give up, I sold everything at Vanguard in taxable today.

Disclaimer: This may have been done due to needing the money for another use.

User avatar
papito23
Posts: 372
Joined: Fri Jan 06, 2012 6:54 am
Location: midwest

Re: U.S. stocks in freefall

Post by papito23 » Tue Jan 06, 2015 11:42 pm

When I go to Google finance, click the "S&P 500" link, and select any time period of 3 months or greater (6 months... 1 year... 5 year...), all I see are percentages in green.

That is to say, everyone who bought any amount of the broad U.S. stock market before Halloween 2014 has made money.

What's the problem, again?



(If you bought Total International... you're down more than 6%, time to catch the falling knife :twisted:)
A thing is right when it tends to preserve the integrity, stability, and beauty of the biotic community. It is wrong when it tends otherwise. -Aldo Leopold's Golden Rule of Ecology

subham
Posts: 168
Joined: Wed Oct 01, 2014 1:01 pm

Re: U.S. stocks in freefall

Post by subham » Fri Jan 09, 2015 3:43 pm

Clearly_Irrational wrote:
GingerU wrote:I'm curious also about this freefall today. I had planned to buy some ETFs today (ITOT and AGG) but seeing the declines I'm wondering if I should wait to see if things go lower. I'm not a fan of timing the market as I have learned thru this forum but would it be reckless for me to invest now?


You're wasting your time for the most part. The results from picking one day over the other are fairly small for any sort of regular contribution. I know how and I still don't bother, pick a regular schedule and stick with it, the statistics will work in your favor over the long run. That said, if you insist on trying then here is my forecast:

1) Signals are weak, forecasting accuracy will be mediocre
2) RSI is low but not oversold
3) Bollinger bands are widening and the price move is not yet touching the bottom boundary
4) No 50/200 SMA cross
5) Japanese candlesticks suggest a weakening trend
6) Volume is rising
7) MACD Divergence is widening
8) Chaikin Money Flow is negative and still trending downwards
9) No new P&F pattern, target is still bullish
10) Resistance level at 1972 on the S&P 500

The highest probability is to wait a bit, we're probably not done with the current pullback. Later this week is likely the optimum time, perhaps Friday or thereabouts.


Clearly_Irrational, I put in my last but one DCA orders in today. How did your prediction do today?

User avatar
VictoriaF
Posts: 17584
Joined: Tue Feb 27, 2007 7:27 am
Location: Black Swan Lake

Re: U.S. stocks in freefall

Post by VictoriaF » Fri Jan 09, 2015 3:57 pm

The stocks are in a free sine wave-like pattern: they freely sin but do not fall.
(A new spin on a financial porn.)

Victoria
Last edited by VictoriaF on Fri Jan 09, 2015 4:28 pm, edited 2 times in total.
WINNER of the 2015 Boglehead Contest. | Every joke has a bit of a joke. ... The rest is the truth. (Marat F)

User avatar
Clearly_Irrational
Posts: 3087
Joined: Thu Oct 13, 2011 3:43 pm

Re: U.S. stocks in freefall

Post by Clearly_Irrational » Fri Jan 09, 2015 4:12 pm

subham wrote:Clearly_Irrational, I put in my last but one DCA orders in today. How did your prediction do today?


The recommendation was made that Jan 6th was probably not optimum and that a date somewhere around Friday the 9th or so would be slightly higher odds but prediction accuracy was said to be mediocre.

A purchase on the 6th would have been cheaper than a purchase on the 9th, even if you give it some wiggle room Monday will probably still be higher than the 6th. So from that perspective the prediction didn't work out so well. (negative relative return due to waiting)

So there are three main possibilities:

1) The original prediction was correct but the highest probability event didn't occur (odds were maybe 55%-60% in favor of that outcome, odds in favor are not a guarantee of desired outcome)
2) The original prediction was wrong due to mixed signals (declared at prediction time) that reduced accuracy (also declared)
3) The original prediction was wrong because those kinds of predictions never work

I'm leaning in favor of 2, though it could have been 1, say 2:1 odds for 2. In my experience 3 is incorrect, predictions of that sort are generally better than random chance however since they're generated by humans and involve large amounts of interpretation the chance for rare but serious analysis failure is pretty high. That risk was the main reason I moved from active trading to passive once I learned how to apply statistics to stock trading.

Personally I would never of traded on such a weak signal (the gain to risk ratio was poor as well), but if I had I would have immediately closed out on the 7th when things started going the wrong way since that invalidated the thesis. With this move we now have a pretty clear rising wedge:

Image

A rising wedge is a bearish signal that suggests a breakdown in prices is likely coming soon.

For me, active trading restrictions remain in effect so I'm busy doing a whole lot of nothing. We have heavy Fed Intervention and Moderately high PE10 but the composite crash indicator is too low, 7.14/100 (over 30 is usually bad)

User avatar
k66
Posts: 415
Joined: Sat Oct 27, 2012 1:36 pm

Re: U.S. stocks in freefall

Post by k66 » Fri Jan 09, 2015 4:54 pm

VictoriaF wrote:The stocks are in a free sine wave-like pattern: they freely sin but do not fall.
(A new spin on a financial porn.)

Victoria


Can someone please "cosine" Victoria's hypothesis? I need validation before making any new lines in a market this "tricker-numeratry"...
LOSER of the Boglehead Contest 2015 | lang may yer lum reek

User avatar
VictoriaF
Posts: 17584
Joined: Tue Feb 27, 2007 7:27 am
Location: Black Swan Lake

Re: U.S. stocks in freefall

Post by VictoriaF » Fri Jan 09, 2015 5:05 pm

k66 wrote:
VictoriaF wrote:The stocks are in a free sine wave-like pattern: they freely sin but do not fall.
(A new spin on a financial porn.)

Victoria


Can someone please "cosine" Victoria's hypothesis? I need validation before making any new lines in a market this "tricker-numeratry"...


If you differentiate sin (from fall) you'll get your cosine.

Victoria
WINNER of the 2015 Boglehead Contest. | Every joke has a bit of a joke. ... The rest is the truth. (Marat F)

User avatar
roymeo
Posts: 1176
Joined: Sat Apr 28, 2007 7:19 pm
Location: SF, CA
Contact:

Re: U.S. stocks in freefall

Post by roymeo » Fri Jan 09, 2015 5:57 pm

k66 wrote:
VictoriaF wrote:The stocks are in a free sine wave-like pattern: they freely sin but do not fall.
(A new spin on a financial porn.)

Victoria


Can someone please "cosine" Victoria's hypothesis? I need validation before making any new lines in a market this "tricker-numeratry"...


I really wish you people wouldn't keep going on tangents. This is surely a new local minimum for this board.
The sewer system is a form of welfare state. | -- "Libra", Don DeLillo

chaz
Posts: 13601
Joined: Tue Feb 27, 2007 2:44 pm

Re: U.S. stocks in freefall

Post by chaz » Fri Jan 09, 2015 5:58 pm

VictoriaF wrote:
k66 wrote:
VictoriaF wrote:The stocks are in a free sine wave-like pattern: they freely sin but do not fall.
(A new spin on a financial porn.)

Victoria


Can someone please "cosine" Victoria's hypothesis? I need validation before making any new lines in a market this "tricker-numeratry"...


If you differentiate sin (from fall) you'll get your cosine.

Victoria

I think he meant "cosine alone".
Chaz | | “Money is better than poverty, if only for financial reasons." Woody Allen | | http://www.bogleheads.org/wiki/index.php/Main_Page

User avatar
oldzey
Posts: 742
Joined: Sun Apr 13, 2014 8:38 pm
Location: Land of Lincoln

Re: U.S. stocks in freefall

Post by oldzey » Wed Jan 14, 2015 1:54 pm

I guess 300 point up or down swings are the norm these days. :D
"The broker said the stock was 'poised to move.' Silly me, I thought he meant up." ― Randy Thurman

User avatar
Clearly_Irrational
Posts: 3087
Joined: Thu Oct 13, 2011 3:43 pm

Re: U.S. stocks in freefall

Post by Clearly_Irrational » Wed Jan 14, 2015 1:58 pm

We won't know for sure till end of day, but at the moment it looks like the breakdown in prices has now occurred. Intra-day prices suggest a double bottom breakdown with a downside target of 1910. First resistance level at 1973 or so, blowing through that would be a strong confirmation of the new trend.

zotty
Posts: 841
Joined: Tue Sep 15, 2009 5:18 pm
Location: DFW, Texas

Re: U.S. stocks in freefall

Post by zotty » Wed Jan 14, 2015 3:40 pm

Clearly_Irrational wrote:We won't know for sure till end of day, but at the moment it looks like the breakdown in prices has now occurred. Intra-day prices suggest a double bottom breakdown with a downside target of 1910. First resistance level at 1973 or so, blowing through that would be a strong confirmation of the new trend.

do you believe that stuff or are you joking? we all know the pattern of the past few years, bounce off the 200 day, bounce to new highs, rinse, repeat. buy and hold has outperformed peaks and dips. It's the "big story" issues that matter (positive or negative shocks). Shocks blast through those points so fast it makes my head spin. Since the charts have no predictive value with regards to the important stuff, the shocks, they are basically noise to keep us entertained and perhaps generate additional churn revenue for the financial service industry.
Nadie Sabe Nada

User avatar
riptide
Posts: 695
Joined: Thu Jul 17, 2014 2:38 pm
Location: Coastal, South Carolina

Re: U.S. stocks in freefall

Post by riptide » Wed Jan 14, 2015 4:14 pm

Should I go from 70stocks/30 bonds to 0 stocks/100 bonds right now. I am tired of the market going down every day in 2015? :greedy 8-)
Brokerage account 70/30 | VG total Market 40% | VG total Intl 12% | VG small cap value 12% | VG Reit index 6% | VG Total Bond 30% | TSP Account 75/25 | C Fund 45%, S 15%, I 15%, G 25% | EE Bonds=Emergency Fund

User avatar
Clearly_Irrational
Posts: 3087
Joined: Thu Oct 13, 2011 3:43 pm

Re: U.S. stocks in freefall

Post by Clearly_Irrational » Wed Jan 14, 2015 5:43 pm

zotty wrote:do you believe that stuff or are you joking?


Back when I was actively trading I found it to be quite reliable within the predicted accuracy levels. (which while greater than random chance are no where near certainty) The problem is that it's not fully mechanical and thus open to bias and errors in judgement. This creates a significant negative skew to your investment probability set which essentially means you're picking up pennies in front of a steam roller. Although normal returns are lower on an passive indexing portfolio they're much more consistent and less prone to lapses in judgement and that leads to higher compound returns over the long run.

flyingaway
Posts: 1532
Joined: Fri Jan 17, 2014 10:19 am

Re: U.S. stocks in freefall

Post by flyingaway » Wed Jan 14, 2015 6:41 pm

riptide wrote:Should I go from 70stocks/30 bonds to 0 stocks/100 bonds right now. I am tired of the market going down every day in 2015? :greedy 8-)


"Stay the course" is the advice of this forum, I believe.

User avatar
VictoriaF
Posts: 17584
Joined: Tue Feb 27, 2007 7:27 am
Location: Black Swan Lake

Re: U.S. stocks in freefall

Post by VictoriaF » Wed Jan 14, 2015 6:44 pm

flyingaway wrote:
riptide wrote:Should I go from 70stocks/30 bonds to 0 stocks/100 bonds right now. I am tired of the market going down every day in 2015? :greedy 8-)


"Stay the course" is the advice of this forum, I believe.


Don't tell us to stay the course. Tell the market to stay on its course up!

Victoria
WINNER of the 2015 Boglehead Contest. | Every joke has a bit of a joke. ... The rest is the truth. (Marat F)

peppers
Posts: 1278
Joined: Tue Oct 25, 2011 7:05 pm

Re: U.S. stocks in freefall

Post by peppers » Wed Jan 14, 2015 6:52 pm

VictoriaF wrote:
flyingaway wrote:
riptide wrote:Should I go from 70stocks/30 bonds to 0 stocks/100 bonds right now. I am tired of the market going down every day in 2015? :greedy 8-)


"Stay the course" is the advice of this forum, I believe.


Don't tell us to stay the course. Tell the market to stay on its course up!

Victoria


Lady Victoria, of all people, you should know that Ms. Market, does what she wants, whenever she wants and for as long as she wants. :)
"..the cavalry ain't comin' kid, you're on your own..."

chaz
Posts: 13601
Joined: Tue Feb 27, 2007 2:44 pm

Re: U.S. stocks in freefall

Post by chaz » Wed Jan 14, 2015 6:54 pm

peppers wrote:
VictoriaF wrote:
flyingaway wrote:
riptide wrote:Should I go from 70stocks/30 bonds to 0 stocks/100 bonds right now. I am tired of the market going down every day in 2015? :greedy 8-)


"Stay the course" is the advice of this forum, I believe.


Don't tell us to stay the course. Tell the market to stay on its course up!

Victoria


Lady Victoria, of all people, you should know that Ms. Market, does what she wants, whenever she wants and for as long as she wants. :)

You got that right. :D
Chaz | | “Money is better than poverty, if only for financial reasons." Woody Allen | | http://www.bogleheads.org/wiki/index.php/Main_Page

User avatar
VictoriaF
Posts: 17584
Joined: Tue Feb 27, 2007 7:27 am
Location: Black Swan Lake

Re: U.S. stocks in freefall

Post by VictoriaF » Wed Jan 14, 2015 7:12 pm

peppers wrote:
VictoriaF wrote:
flyingaway wrote:
riptide wrote:Should I go from 70stocks/30 bonds to 0 stocks/100 bonds right now. I am tired of the market going down every day in 2015? :greedy 8-)


"Stay the course" is the advice of this forum, I believe.


Don't tell us to stay the course. Tell the market to stay on its course up!

Victoria


Lady Victoria, of all people, you should know that Ms. Market, does what she wants, whenever she wants and for as long as she wants. :)


Somebody has to read and learn from The Taming of the Shrew.

Victoria
WINNER of the 2015 Boglehead Contest. | Every joke has a bit of a joke. ... The rest is the truth. (Marat F)

User avatar
Toons
Posts: 12104
Joined: Fri Nov 21, 2008 10:20 am
Location: Hills of Tennessee

Re: U.S. stocks in freefall

Post by Toons » Wed Jan 14, 2015 7:29 pm

No,no you have it all wrong,,,You want to continually buy as the markets head South,so you can get more shares for your money,,,,don't fret,,,it will return to its former high and beyond.It just takes time,sometimes years.
Remember when the S&P was @666 March 9,2009.The market had been steadily declining for 2 years,that was the time to be steadily buying not in rising markets,,,It has more than tripled since then.The investors who panicked and bailed missed the rally of maybe a lifetime.
Don't fret ,Stay the course :happy
"One does not accumulate but eliminate. It is not daily increase but daily decrease. The height of cultivation always runs to simplicity" –Bruce Lee

peppers
Posts: 1278
Joined: Tue Oct 25, 2011 7:05 pm

Re: U.S. stocks in freefall

Post by peppers » Wed Jan 14, 2015 7:45 pm

Methinks Kate wore Prada :twisted:
"..the cavalry ain't comin' kid, you're on your own..."

Browser
Posts: 4857
Joined: Wed Sep 05, 2012 4:54 pm

Re: U.S. stocks in freefall

Post by Browser » Wed Jan 14, 2015 8:36 pm

At least one guy (former CIA agent or something) is forecasting that the market could drop 70% in one day. That would be a doozy wouldn't it? I think the biggest one-day drop in history was about 25% back in 1987. I guess anything is possible. I wonder what most of us would do if that actually happened -- rebalance???? :x
We don't know where we are, or where we're going -- but we're making good time.

User avatar
VictoriaF
Posts: 17584
Joined: Tue Feb 27, 2007 7:27 am
Location: Black Swan Lake

Re: U.S. stocks in freefall

Post by VictoriaF » Wed Jan 14, 2015 8:41 pm

Browser wrote:At least one guy (former CIA agent or something) is forecasting that the market could drop 70% in one day.


Are you sure he was from the CIA, and not the FSB? Did he wear Prada or Pravda?

Victoria
WINNER of the 2015 Boglehead Contest. | Every joke has a bit of a joke. ... The rest is the truth. (Marat F)

User avatar
Toons
Posts: 12104
Joined: Fri Nov 21, 2008 10:20 am
Location: Hills of Tennessee

Re: U.S. stocks in freefall

Post by Toons » Wed Jan 14, 2015 8:47 pm

Browser wrote:At least one guy (former CIA agent or something) is forecasting that the market could drop 70% in one day. That would be a doozy wouldn't it? I think the biggest one-day drop in history was about 25% back in 1987. I guess anything is possible. I wonder what most of us would do if that actually happened -- rebalance???? :x



Yes it would be good,,,,I would scrape together every available penny I Had,,sell every bond fund ,and use it all to purchase equities :happy
"One does not accumulate but eliminate. It is not daily increase but daily decrease. The height of cultivation always runs to simplicity" –Bruce Lee

tigermilk
Posts: 484
Joined: Thu Aug 15, 2013 9:32 am

Re: U.S. stocks in freefall

Post by tigermilk » Wed Jan 14, 2015 8:56 pm

Browser wrote:At least one guy (former CIA agent or something) is forecasting that the market could drop 70% in one day. That would be a doozy wouldn't it? I think the biggest one-day drop in history was about 25% back in 1987. I guess anything is possible. I wonder what most of us would do if that actually happened -- rebalance???? :x

Isn't this impossible? After Black Monday "circuit breakers" were put in place to stop trading to avoid speculative sell-offs and massive drops. I think the max drop can only be like 20% in the domestic exchanges.

Browser
Posts: 4857
Joined: Wed Sep 05, 2012 4:54 pm

Re: U.S. stocks in freefall

Post by Browser » Wed Jan 14, 2015 10:02 pm

Jim Rickards is the guy's name. You can google it on your own - lot's of political stuff so won't post any links here. Guess what he recommends investors do -- buy energy and other commodity stocks! Hey, the market is down by 70% but this sector will make you rich (unless you become poor in the meantime).
We don't know where we are, or where we're going -- but we're making good time.

Wayson
Posts: 75
Joined: Thu Jul 10, 2014 11:33 am

Re: U.S. stocks in freefall

Post by Wayson » Wed Jan 14, 2015 10:40 pm

VictoriaF wrote:
Browser wrote:At least one guy (former CIA agent or something) is forecasting that the market could drop 70% in one day.


Are you sure he was from the CIA, and not the FSB? Did he wear Prada or Pravda?

Victoria


Now I have visions of a crazy homeless guy wearing Russian newspapers. Bearded with birds-nest hair, wild-eyed, and smelling strongly of vodka and sewage.

User avatar
ofcmetz
Posts: 2259
Joined: Tue Feb 08, 2011 8:09 pm
Location: Louisiana

Re: U.S. stocks in freefall

Post by ofcmetz » Thu Jan 15, 2015 1:02 am

Browser wrote:At least one guy (former CIA agent or something) is forecasting that the market could drop 70% in one day. That would be a doozy wouldn't it? I think the biggest one-day drop in history was about 25% back in 1987. I guess anything is possible. I wonder what most of us would do if that actually happened -- rebalance???? :x


I'd open my bottle of 120 proof Knob Creek Single Barrel. After a few shots, I'd buy some stocks using my fixed income funds.
Never underestimate the power of the force of low cost index funds.

User avatar
dbCooperAir
Posts: 1107
Joined: Tue Jan 07, 2014 10:13 pm

Re: U.S. stocks in freefall

Post by dbCooperAir » Thu Jan 15, 2015 9:59 am

ofcmetz wrote:I'd open my bottle of 120 proof Knob Creek Single Barrel. After a few shots, I'd buy some stocks using my fixed income funds.


Hmmm, one of my top picks! I'm becoming more of a TT guy the more I age for some reason though.

If we did have big a$$ decline I would be tempted to over balance the other way a tad.
Neither a wise man nor a brave man lies down on the tracks of history to wait for the train of the future to run over him. | -Dwight D. Eisenhower-

User avatar
greg24
Posts: 2908
Joined: Tue Feb 20, 2007 10:34 am

Re: U.S. stocks in freefall

Post by greg24 » Thu Jan 15, 2015 10:28 am

Browser wrote:Jim Rickards is the guy's name.


He appears to be well versed in investing disasters.

As general counsel for the hedge fund Long-Term Capital Management (LTCM),[4][5] he was the principal negotiator in the 1998 bailout of LTCM[6] by the Federal Reserve Bank of New York.

User avatar
VictoriaF
Posts: 17584
Joined: Tue Feb 27, 2007 7:27 am
Location: Black Swan Lake

Re: U.S. stocks in freefall

Post by VictoriaF » Thu Jan 15, 2015 2:36 pm

Wayson wrote:
VictoriaF wrote:
Browser wrote:At least one guy (former CIA agent or something) is forecasting that the market could drop 70% in one day.


Are you sure he was from the CIA, and not the FSB? Did he wear Prada or Pravda?

Victoria


Now I have visions of a crazy homeless guy wearing Russian newspapers. Bearded with birds-nest hair, wild-eyed, and smelling strongly of vodka and sewage.


The guy is RasPutin reincarnated to apply his healing powers to the modern age ills. The smell is of moonshine; he can't afford vodka.

Victoria
WINNER of the 2015 Boglehead Contest. | Every joke has a bit of a joke. ... The rest is the truth. (Marat F)

gks
Posts: 198
Joined: Sat Dec 01, 2012 7:17 pm
Location: Michiana

Re: U.S. stocks in freefall

Post by gks » Thu Jan 15, 2015 3:08 pm

Clearly_Irrational wrote:
GingerU wrote:I'm curious also about this freefall today. I had planned to buy some ETFs today (ITOT and AGG) but seeing the declines I'm wondering if I should wait to see if things go lower. I'm not a fan of timing the market as I have learned thru this forum but would it be reckless for me to invest now?


You're wasting your time for the most part. The results from picking one day over the other are fairly small for any sort of regular contribution. I know how and I still don't bother, pick a regular schedule and stick with it, the statistics will work in your favor over the long run. That said, if you insist on trying then here is my forecast:

1) Signals are weak, forecasting accuracy will be mediocre
2) RSI is low but not oversold
3) Bollinger bands are widening and the price move is not yet touching the bottom boundary
4) No 50/200 SMA cross
5) Japanese candlesticks suggest a weakening trend
6) Volume is rising
7) MACD Divergence is widening
8) Chaikin Money Flow is negative and still trending downwards
9) No new P&F pattern, target is still bullish
10) Resistance level at 1972 on the S&P 500

The highest probability is to wait a bit, we're probably not done with the current pullback. Later this week is likely the optimum time, perhaps Friday or thereabouts.


11) Vanguard Rainfall Correlation: According to this morning's WeatherChannel report, extreme drought in California increased from 13% last year to 39% this year, so it is time to sell California stocks.

Greg

letsgobobby
Posts: 10698
Joined: Fri Sep 18, 2009 1:10 am

Re: U.S. stocks in freefall

Post by letsgobobby » Thu Jan 15, 2015 4:20 pm

bonds are at new historic lows, notably including the 30 year.

oil is down 60%.

commodities are down, some at multi-year lows.

Does this stuff happen without a deflationary recession soon to follow?

User avatar
Clearly_Irrational
Posts: 3087
Joined: Thu Oct 13, 2011 3:43 pm

Re: U.S. stocks in freefall

Post by Clearly_Irrational » Thu Jan 15, 2015 4:35 pm

gks wrote:11) Vanguard Rainfall Correlation: According to this morning's WeatherChannel report, extreme drought in California increased from 13% last year to 39% this year, so it is time to sell California stocks.


I pulled drought data from http://droughtmonitor.unl.edu/Home/StateDroughtMonitor.aspx?CA and S&P 500 Adjusted Close Data from Yahoo Finance. While there is a 0.49 Pearson Correlation between the two data sets that doesn't prove causation. If your thesis was correct there should be a negative correlation rather than a positive one anyways, so I'm going to say that the rainfall indicator has no predictive value. To be fair, I used all stocks listed rather than California only stocks, you're welcome to pull the more specific info if you think it will make your case.

:sharebeer

gks
Posts: 198
Joined: Sat Dec 01, 2012 7:17 pm
Location: Michiana

Re: U.S. stocks in freefall

Post by gks » Thu Jan 15, 2015 5:00 pm

Clearly_Irrational wrote:
gks wrote:11) Vanguard Rainfall Correlation: According to this morning's WeatherChannel report, extreme drought in California increased from 13% last year to 39% this year, so it is time to sell California stocks.


I pulled drought data from http://droughtmonitor.unl.edu/Home/StateDroughtMonitor.aspx?CA and S&P 500 Adjusted Close Data from Yahoo Finance. While there is a 0.49 Pearson Correlation between the two data sets that doesn't prove causation. If your thesis was correct there should be a negative correlation rather than a positive one anyways, so I'm going to say that the rainfall indicator has no predictive value. To be fair, I used all stocks listed rather than California only stocks, you're welcome to pull the more specific info if you think it will make your case.

:sharebeer


My data is from a Vanguard study that showed precipitation levels have more correlation than conventional "predictors". Feel free to search, I'm too lazy. (edit: and not that good at it.)

Greg
Last edited by gks on Thu Jan 15, 2015 5:12 pm, edited 1 time in total.

gks
Posts: 198
Joined: Sat Dec 01, 2012 7:17 pm
Location: Michiana

Re: U.S. stocks in freefall

Post by gks » Thu Jan 15, 2015 5:02 pm

p.s.

Vanguard did not indicate causation, but correlation.

Greg

(edit)
p.p.s

Tongue firmly implanted in cheek.

G

zotty
Posts: 841
Joined: Tue Sep 15, 2009 5:18 pm
Location: DFW, Texas

Re: U.S. stocks in freefall

Post by zotty » Thu Jan 15, 2015 8:50 pm

letsgobobby wrote:bonds are at new historic lows, notably including the 30 year.

oil is down 60%.

commodities are down, some at multi-year lows.

Does this stuff happen without a deflationary recession soon to follow?


the oil shock of the 80s didn't cause a deflationary recession. Well, maybe, I think the 91 recession was caused by the S&L crisis, which might not have surfaced without the west texas oil bust. There was a lag of several years.

Recessions are highly correlated with 2 successive quarters of negative gdp growth.

inverted yield curves
Nadie Sabe Nada

letsgobobby
Posts: 10698
Joined: Fri Sep 18, 2009 1:10 am

Re: U.S. stocks in freefall

Post by letsgobobby » Thu Jan 15, 2015 8:53 pm

zotty wrote:
letsgobobby wrote:bonds are at new historic lows, notably including the 30 year.

oil is down 60%.

commodities are down, some at multi-year lows.

Does this stuff happen without a deflationary recession soon to follow?


the oil shock of the 80s didn't cause a deflationary recession. Well, maybe, I think the 91 recession was caused by the S&L crisis, which might not have surfaced without the west texas oil bust. There was a lag of several years.

Recessions are highly correlated with 2 successive quarters of negative gdp growth.

inverted yield curves

I thought a recession was *defined* as a 2 successive quarters of negative gdp growth.

JLJL
Posts: 361
Joined: Wed Jan 08, 2014 11:10 pm

Re: U.S. stocks in freefall

Post by JLJL » Thu Jan 15, 2015 8:59 pm

All of these details are getting confusing. Are stocks going to go way down, or not?

zotty
Posts: 841
Joined: Tue Sep 15, 2009 5:18 pm
Location: DFW, Texas

Re: U.S. stocks in freefall

Post by zotty » Thu Jan 15, 2015 9:16 pm

JLJL wrote:All of these details are getting confusing. Are stocks going to go way down, or not?


"U.S. stocks in freefall"

Maybe.
Nadie Sabe Nada

zotty
Posts: 841
Joined: Tue Sep 15, 2009 5:18 pm
Location: DFW, Texas

Re: U.S. stocks in freefall

Post by zotty » Thu Jan 15, 2015 9:29 pm

letsgobobby wrote:
zotty wrote:...

Recessions are highly correlated with 2 successive quarters of negative gdp growth.

...

I thought a recession was *defined* as a 2 successive quarters of negative gdp growth.


causation is the most dependable form of correlation. :)
Nadie Sabe Nada

User avatar
Random Musings
Posts: 5209
Joined: Thu Feb 22, 2007 4:24 pm
Location: Pennsylvania

Re: U.S. stocks in freefall

Post by Random Musings » Thu Jan 15, 2015 10:48 pm

letsgobobby wrote:bonds are at new historic lows, notably including the 30 year.

oil is down 60%.

commodities are down, some at multi-year lows.

Does this stuff happen without a deflationary recession soon to follow?


Deflation would not be good. But does that not fly in the face of all the stimulus the Fed supplied?

RM
I figure the odds be fifty-fifty I just might have something to say. FZ

zotty
Posts: 841
Joined: Tue Sep 15, 2009 5:18 pm
Location: DFW, Texas

Re: U.S. stocks in freefall

Post by zotty » Fri Jan 16, 2015 11:32 am

Random Musings wrote:
Deflation would not be good.



Deflation in oil is like a tax cut for most americans. Yes, it will cause local busts. If we learned anything, maybe the banks can actually survive a bust, this time.

I honestly think when US economists talk nervously abut deflation, they are talking about housing.

Food deflation, a bad thing?
energy, a bad thing?
TVs, a bad thing? btw; we've experienced deflation in electronics for decades. It hasn't ruined us.
What things do i buy that i wish would not go down? yes, if we have 10% monthly deflation, things would get ugly, but is that realistic?

Stock market deflation, a bad thing along with housing.

So housing and the stock market, those are the "scary" deflators. If that's what everyone is so concerned about, our system is too fragile and too dependent on volatile assets.
Nadie Sabe Nada

Ungoliant
Posts: 61
Joined: Sat May 22, 2010 9:23 pm

Re: U.S. stocks in freefall

Post by Ungoliant » Fri Jan 16, 2015 1:42 pm

zotty wrote:Food deflation, a bad thing?
energy, a bad thing?
TVs, a bad thing?


That depends, are you a business owner who sells food, energy, or tvs? Does your business have sunk costs or long-term expense contracts negotiated with the expectation of recouping them at current price levels? There's no free lunch here for the economy as a whole, and it's those businesses that make up the stock market, so it doesn't really make sense to talk about deflation in those things and the stock market as independent events. If a deflationary environment persists, it'll hit consumers too in the form of falling salaries, unemployment, and slower economic growth as everyone tends to avoid discretionary spending in the belief that their money will be worth more in the future. That's basically the complete opposite of everything you'd like to see in a healthy, growing economy, and it can be self-perpetuating once it gets going, as the Japanese can attest.

flyingaway
Posts: 1532
Joined: Fri Jan 17, 2014 10:19 am

Re: U.S. stocks in freefall

Post by flyingaway » Fri Jan 16, 2015 1:57 pm

OK. I get it. We want to deflate anything that we do not have yet, food, oil, etc., and inflate anything that we already have, stock market, housing, etc.

User avatar
dbCooperAir
Posts: 1107
Joined: Tue Jan 07, 2014 10:13 pm

Re: U.S. stocks in freefall

Post by dbCooperAir » Tue Mar 10, 2015 1:15 pm

Just thinking it was time to stir this pot :twisted:

S&P down about 2.4% in the last 5 days.
Neither a wise man nor a brave man lies down on the tracks of history to wait for the train of the future to run over him. | -Dwight D. Eisenhower-

User avatar
VictoriaF
Posts: 17584
Joined: Tue Feb 27, 2007 7:27 am
Location: Black Swan Lake

Re: U.S. stocks in freefall

Post by VictoriaF » Tue Mar 10, 2015 1:17 pm

dbCooperAir wrote:Just thinking it was time to stir this pot :twisted:


Good catch ... that is, if you can "catch" stocks in freefall.

Victoria
WINNER of the 2015 Boglehead Contest. | Every joke has a bit of a joke. ... The rest is the truth. (Marat F)

User avatar
walletless
Posts: 707
Joined: Fri Aug 15, 2014 4:55 pm

Re: U.S. stocks in freefall

Post by walletless » Tue Mar 10, 2015 1:19 pm

VictoriaF wrote:
dbCooperAir wrote:Just thinking it was time to stir this pot :twisted:


Good catch ... that is, if you can "catch" stocks in freefall.

Victoria

I sort of did... bought Emerging markets, Total International, Small-Cap value on Friday last week when they all shedded... Did nothing this week since I am within my 5/25 rule for rebalancing.

dgdevil
Posts: 938
Joined: Sun Feb 20, 2011 1:42 pm

Re: U.S. stocks in freefall

Post by dgdevil » Tue Mar 10, 2015 1:29 pm

Emerging markets? That's brave.

In a few months, when we're looking for an event to symbolize the end of the bull market, it will be either the launch of the Apple watch, or the Nasdaq (briefly) breaking 5000, or that WSJ article about fund clients angry that they can't get guaranteed 20% annual returns.

Post Reply