U.S. stocks in freefall

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miles monroe
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Re: U.S. stocks in freefall

Post by miles monroe » Wed Aug 26, 2015 2:08 pm

seems to me if ya wait til stocks get above their 200 day moving average to invest you're gonna miss out on the 10% gain from here to there.

Browser
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Re: U.S. stocks in freefall

Post by Browser » Wed Aug 26, 2015 2:18 pm

Just to clarify, my comment about "being brave" is not directed to folks of the buy-and-hold faith but mainly to the dip buyers who seem to believe that now is a good time to buy more stock or "rebalance." That sort of market timing will probably get you into a whole bunch of hot water in this kind of market, at least that's what I think.
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Re: U.S. stocks in freefall

Post by Johno » Wed Aug 26, 2015 2:20 pm

miles monroe wrote:technical anyalysis is people trying to create order out of chaos.

The assumption there is that there are no patterns to be derived, which is assuming your own conclusion, generally not a convincing form of argument. Market participants aren't fully rational, that's beyond dispute IMO. Technical analysis basically posits that such irrationality leaves traces so to speak in price patterns. Some actual research indicates it does, though subject to both the usual caveats: strictly statistical issues assuming a stationary distribution, and the fact that the distribution of returns isn't actually stationary (ie. when all the arguing about t-stats of findings in historical data is over, or stalemated, it's still quite possible an anomaly indeed existed in the past returns machine, but is no longer a feature of the current/future returns machine).

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Re: U.S. stocks in freefall

Post by lack_ey » Wed Aug 26, 2015 2:25 pm

miles monroe wrote:seems to me if ya wait til stocks get above their 200 day moving average to invest you're gonna miss out on the 10% gain from here to there.

If the rebound is slow, then you may not miss out on as much because the average will be lower by that point, so the crossover point at a lower price. Also, remember that the moving average technique would have gotten out far below the bottom (so far), so it doesn't need to get back in perfectly on time to keep pace. It has less losses to recover.

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InvestorNewb
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Re: U.S. stocks in freefall

Post by InvestorNewb » Wed Aug 26, 2015 2:52 pm

InvestorNewb wrote:And down we go.

And up we go.

Total Stock Market is + 3.7% today so far :D
Last edited by InvestorNewb on Wed Aug 26, 2015 2:53 pm, edited 1 time in total.
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autonomy
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Re: U.S. stocks in freefall

Post by autonomy » Wed Aug 26, 2015 2:53 pm

InvestorNewb wrote:And up we go.

Total Stock Market is + 3.7% today so far :D


Go home, market, you're drunk.

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JonnyDVM
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Re: U.S. stocks in freefall

Post by JonnyDVM » Wed Aug 26, 2015 2:55 pm

And back up we go. At least we had some dry powder to catch some of the dip action this time. :)
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Re: U.S. stocks in freefall

Post by BahamaMan » Wed Aug 26, 2015 2:55 pm

InvestorNewb wrote:Total Stock Market is + 3.7% today so far :D


Boy, am I glad that Bear is Over. :mrgreen: :mrgreen: :mrgreen: :mrgreen:

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Re: U.S. stocks in freefall

Post by Scott Teresi » Wed Aug 26, 2015 3:02 pm

From a few pages back...

Browser wrote:There must be some sort of rule pertaining to buying while the market is going down the tank. I ran across one just recently that might work: at the first trigger point (say down 10% for purpose of argument), deploy 25% of your wad and then begin DCAing in the rest over whatever period seems right to you, such as 12 months, 24, 36 -- or until the market is down 50%, whichever comes first. Have any other formulas to share?

I personally recommend against keeping cash on the sidelines, since markets generally go up longer than people think they will/should, but here's a similar "timing" idea for people who are already fully invested. (My background: I have an asset allocation I'm comfortable with for taxable savings, around 60%/40% stocks/bonds, and am always fully invested. My tax-deferred savings are 100% stocks following Dan Wiener. I'm in accumulation mode but would prefer the market to have lower valuations.)

I have this plan in place for my taxable savings:

* If the S&P 500 drops a total of 30%, move 10% from bonds to stocks (I have a specific fund targeted ahead of time if I'm busy when it happens)

* If the S&P 500 drops a total of 50%, move another 10% from bonds to stocks

I remember the 2008 market crash, and I was in a mental position to do this but really just needed to have a clear plan ahead of time, to know when to act.

If the market drops 30%, my allocation will actually drop to 55/45 stocks/bonds, so the 10% shift would only bring me to 65/35. Similarly for the 50% drop. (These are from market highs.)

I'm not sure when I would shift my allocation back to 60/40, maybe after 3-4 years, or I may let it drift that direction on its own by directing a larger portion of accumulation money into bonds.

Scott

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Re: U.S. stocks in freefall

Post by sharpjm » Wed Aug 26, 2015 3:09 pm

Johno wrote:Trading success is some combination of being right slightly more often than you're wrong and/or running with winners slightly more than you do with losers, in the context of overall risk management, ie not betting in sizes which the odds tell you will wipe almost anyone out eventually.

I disagree. If someone makes 1000 trades in a given time period and 51% are net gain, 49% are net loss, and they beat the market by 5, 10, 20% ... they are not successful, they are lucky. You can get the same kind of luck in roulette, especially if you use a small sample size. In addition, they are taking on higher risk due to exposure to price spread, increased transaction costs, and risk of black swan events.

"Successful" is difficult to define, but I think one needs a pretty high success rate for me, personally, to classify them as successful.

In this case, there are a couple of posters saying, "oh yea of course I went cash, whoever didn't is silly and didn't see the indicators." Ok, they have 100% success rate on 1 transaction (sample size = 1) that they posted about (we'll just ignore the lack of verification since they all always refuse to post screenshots of the trades they actually made). The "indicators" that they use were the same ones from last October, why weren't they posting then? The indicators they post about were largely similar to the ones that existed in 2011, why weren't they posting then? What is their success rate prior to them posting in this thread? One of the cash-braggers mentioned US debt as one of the reasons for going cash. Are you kidding me? Did you just come out from a 20+ year hibernation to learn that the US has tremendous debt? [edit] That's not to say that US debt is something to ignore, but the situation didn't change overnight. Someone who wakes up one day and says, "OK today the debt is real bad now, time to go 100% cash," is just gambling.
Last edited by sharpjm on Wed Aug 26, 2015 3:19 pm, edited 1 time in total.

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Re: U.S. stocks in freefall

Post by sharpjm » Wed Aug 26, 2015 3:15 pm

lack_ey wrote:
miles monroe wrote:seems to me if ya wait til stocks get above their 200 day moving average to invest you're gonna miss out on the 10% gain from here to there.

If the rebound is slow, then you may not miss out on as much because the average will be lower by that point, so the crossover point at a lower price. Also, remember that the moving average technique would have gotten out far below the bottom (so far), so it doesn't need to get back in perfectly on time to keep pace. It has less losses to recover.

What about October 2014 type of movements? Fast drop, followed by fast rebound... wouldn't the moving average technique result in a sell low, buy high result?

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HomerJ
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Re: U.S. stocks in freefall

Post by HomerJ » Wed Aug 26, 2015 3:16 pm

Johno wrote:
miles monroe wrote:technical anyalysis is people trying to create order out of chaos.

The assumption there is that there are no patterns to be derived, which is assuming your own conclusion, generally not a convincing form of argument. Market participants aren't fully rational, that's beyond dispute IMO. Technical analysis basically posits that such irrationality leaves traces so to speak in price patterns. Some actual research indicates it does, though subject to both the usual caveats: strictly statistical issues assuming a stationary distribution, and the fact that the distribution of returns isn't actually stationary (ie. when all the arguing about t-stats of findings in historical data is over, or stalemated, it's still quite possible an anomaly indeed existed in the past returns machine, but is no longer a feature of the current/future returns machine).


Those are pretty powerful caveats. Enough to make a reasonable person doubt the value of technical analysis. I'm certainly disinclined to invest my life savings using a method with caveats like that.

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Re: U.S. stocks in freefall

Post by lack_ey » Wed Aug 26, 2015 3:35 pm

sharpjm wrote:
Johno wrote:Trading success is some combination of being right slightly more often than you're wrong and/or running with winners slightly more than you do with losers, in the context of overall risk management, ie not betting in sizes which the odds tell you will wipe almost anyone out eventually.

I disagree. If someone makes 1000 trades in a given time period and 51% are net gain, 49% are net loss, and they beat the market by 5, 10, 20% ... they are not successful, they are lucky. You can get the same kind of luck in roulette, especially if you use a small sample size. In addition, they are taking on higher risk due to exposure to price spread, increased transaction costs, and risk of black swan events.

"Successful" is difficult to define, but I think one needs a pretty high success rate for me, personally, to classify them as successful.

In this case, there are a couple of posters saying, "oh yea of course I went cash, whoever didn't is silly and didn't see the indicators." Ok, they have 100% success rate on 1 transaction (sample size = 1) that they posted about (we'll just ignore the lack of verification since they all always refuse to post screenshots of the trades they actually made). The "indicators" that they use were the same ones from last October, why weren't they posting then? The indicators they post about were largely similar to the ones that existed in 2011, why weren't they posting then? What is their success rate prior to them posting in this thread? One of the cash-braggers mentioned US debt as one of the reasons for going cash. Are you kidding me? Did you just come out from a 20+ year hibernation to learn that the US has tremendous debt? [edit] That's not to say that US debt is something to ignore, but the situation didn't change overnight. Someone who wakes up one day and says, "OK today the debt is real bad now, time to go 100% cash," is just gambling.

If you're talking about outcomes, if you're 5% ahead, 10%... that's successful to me, whether by luck or skill.

If someone has a true winning percentage of 51% (net of fees), that counts as a win for me as well. This is more likely to make more money over time as long as bets are reasonably sized. This is what we're talking about.

If you observe someone to win 51% of the time, we can't say if it's skill or luck (unless with massive sample size, and the result is probably still mostly meaningless in finance as we're dealing with nonstationary distributions anyway, where 51% in the past does not reliably indicate 51% in the future). This seems to be what you're talking about.

It depends on the types of trades and what you're comparing it to as to the occurrence and exposure to black swan events, so I don't see that as directly applicable. And I think implicitly (though I was explicit above) the assumption is getting ahead net of fees.

With respect to the arguments about US debt and current conditions that some have brought up, I don't see it either, as all of those things were pretty much true months ago.


sharpjm wrote:
lack_ey wrote:
miles monroe wrote:seems to me if ya wait til stocks get above their 200 day moving average to invest you're gonna miss out on the 10% gain from here to there.

If the rebound is slow, then you may not miss out on as much because the average will be lower by that point, so the crossover point at a lower price. Also, remember that the moving average technique would have gotten out far below the bottom (so far), so it doesn't need to get back in perfectly on time to keep pace. It has less losses to recover.

What about October 2014 type of movements? Fast drop, followed by fast rebound... wouldn't the moving average technique result in a sell low, buy high result?

In this particular case, you'd be out of the market for about a week and then buying in again at substantially the same price as was exited. Think about it. In such a brief period of time and with a mild dip, a 200-day moving average won't have shifted much. So the crossover point on the way down will be about the same as the crossover point on the way up.


HomerJ wrote:
Johno wrote:
miles monroe wrote:technical anyalysis is people trying to create order out of chaos.

The assumption there is that there are no patterns to be derived, which is assuming your own conclusion, generally not a convincing form of argument. Market participants aren't fully rational, that's beyond dispute IMO. Technical analysis basically posits that such irrationality leaves traces so to speak in price patterns. Some actual research indicates it does, though subject to both the usual caveats: strictly statistical issues assuming a stationary distribution, and the fact that the distribution of returns isn't actually stationary (ie. when all the arguing about t-stats of findings in historical data is over, or stalemated, it's still quite possible an anomaly indeed existed in the past returns machine, but is no longer a feature of the current/future returns machine).


Those are pretty powerful caveats. Enough to make a reasonable person doubt the value of technical analysis. I'm certainly disinclined to invest my life savings using a method with caveats like that.

True but that goes for most everything in finance. If you for example invest part of your money in stocks with the idea that they have greater returns than bonds, pointing to the historical record, the same caveats apply. We can run a test on the likelihood that stock returns being greater than bond returns was a fluke over a certain period and get a certain result, but there is no guarantee that statistical characterization of the past applies to potential future outcomes.

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Re: U.S. stocks in freefall

Post by Johno » Wed Aug 26, 2015 3:59 pm

sharpjm wrote:
Johno wrote:Trading success is some combination of being right slightly more often than you're wrong and/or running with winners slightly more than you do with losers, in the context of overall risk management, ie not betting in sizes which the odds tell you will wipe almost anyone out eventually.

1. I disagree. If someone makes 1000 trades in a given time period and 51% are net gain, 49% are net loss, and they beat the market by 5, 10, 20% ... they are not successful, they are lucky. You can get the same kind of luck in roulette, especially if you use a small sample size. In addition, they are taking on higher risk due to exposure to price spread, increased transaction costs, and risk of black swan events.

"Successful" is difficult to define, but I think one needs a pretty high success rate for me, personally, to classify them as successful.

2. In this case, there are a couple of posters saying, "oh yea of course I went cash, whoever didn't is silly and didn't see the indicators." Ok, they have 100% success rate on 1 transaction (sample size = 1)

1. I'm defining success as results. The reason for success (luck or skill) is IMO a different issue.

2. But obviously not success in just one case, and with due respect to those posters no actual proof of any success. As I think I made clear, I find those posts useless at best. I don't think though it's useful either to speculate on the motives and actual situations of people making such posts. And one reason such posts are useless is that they tend to draw such responses, as well as leading to straw man bashing, eg. 'one right decision doesn't prove anything', well obviously, why do we even need to say that?

My point is that realistically successful trading still involves lots of wrong decisions. You said 51/49 right/wrong I didn't, but in fact a successful trader doesn't necessarily even have to be right more than 50% of the time in initial choice of asset or long v short, if good enough at riding winners and quickly abandoning losers. Anyway even if I had specified 51/49, it's not clear that such a narrow margin must be the result of luck. A very slightly bent coin in a enough flips might tend to stabilize at 51/49, though still with some variance around that ratio due to chance.

And I don't think the definition of 'success' strictly in terms of results. vs. your apparent definition as 'results not due to chance', is just semantic. Mine's more practical I think. In the real world there's no way to prove or any real reason actually to have to prove what % of a given person's trading success is luck. At some academic level we can impose statistical tests to only accept a hypotheses at a very high level of confidence (according to the statistics of past results, with all the vagaries): 'this is 95% (theoretically) unlikely to be the result of chance'. But why should the money making trader really care if it's 95% likely their success is 'real' or only 80% or 50%, or how about 50% was 'real' and 50% was 'luck'? In any case they still get to keep the money. :D Seriously, 'luck v real' is actually fuzzy depending the POV.

OTOH for average people on the sidelines wondering if they should be traders, IMO the much bigger issue than 'efficiency of the market' is whether those people have the background, training, temperament, etc. for trading. Some people on this forum tend IMO to take the question too personally based on some egalitarian fantasy. When it's said 'some people are skilled traders' (this IME is irrefutable), they take it to mean 'maybe you're one of them and you should try it'. I'm certainly not implying that. I'm satisfied the great majority of people can't consistently make money trading. I'm just describing what I believe, having seen it personally, constitutes successful, in results ie. people getting rich, trading. You're going to be wrong a lot of the time, and how you deal with being wrong is a big part of being good at it.
Last edited by Johno on Wed Aug 26, 2015 4:11 pm, edited 1 time in total.

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greg24
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Re: U.S. stocks in freefall

Post by greg24 » Wed Aug 26, 2015 4:11 pm

Does today's market movements result in a cup and handle? Head and shoulders? Some other rock-solid scientifically discovered technical analysis formation?

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Re: U.S. stocks in freefall

Post by sawhorse » Wed Aug 26, 2015 4:18 pm

greg24 wrote:Does today's market movements result in a cup and handle? Head and shoulders?

Actually, I see more of a Pantene pattern with some hints of Dove in there.

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Re: U.S. stocks in freefall

Post by sharpjm » Wed Aug 26, 2015 4:38 pm

Johno wrote:And I don't think the definition of 'success' strictly in terms of results. vs. your apparent definition as 'results not due to chance', is just semantic.

If your definition of success includes those who have succeeded by luck, that's your prerogative, but I highly disagree with that notion. In my book, that is called gambling, not investing. Why would anyone gamble with their entire life's savings? There's a place called "Las Vegas" for people with gambling problems. :happy

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Uncle Pennybags
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Re: U.S. stocks in freefall

Post by Uncle Pennybags » Wed Aug 26, 2015 5:04 pm

Day traders got screwed by the big boys with private lines to the exchange. As the market tanked yesterday they got locked out until it was too late. You may be the greatest market timer that ever lived but if you don't have a prayer against the insiders. Insiders love hot shot traders.

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k66
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Re: U.S. stocks in freefall

Post by k66 » Wed Aug 26, 2015 5:16 pm

autonomy wrote:
InvestorNewb wrote:And up we go.

Total Stock Market is + 3.7% today so far :D


Go home, market, you're drunk.


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Re: U.S. stocks in freefall

Post by Johno » Wed Aug 26, 2015 5:39 pm

sharpjm wrote:
Johno wrote:And I don't think the definition of 'success' strictly in terms of results. vs. your apparent definition as 'results not due to chance', is just semantic.

If your definition of success includes those who have succeeded by luck, that's your prerogative, but I highly disagree with that notion. In my book, that is called gambling, not investing. Why would anyone gamble with their entire life's savings? There's a place called "Las Vegas" for people with gambling problems. :happy

The point is that there is no real way to determine with absolute certainty whether success is partly or wholly or more than wholly due to luck, so your definition, 'to be success if must not be due to luck' can just lead to trivial conclusion that there is no such thing as trading success since it can't be absolutely proven not to be due to luck. Again yes at one end of the spectrum somebody *saying* they *took* all their money out of the market last month is wholly unconvincing of anything: I take that as a given. However back at what I believe is the relevant end of the spectrum, the imposition of the condition 'must not be due to luck' to call trading profit 'success' is actually quite problematic in the real world. It's a certain fact in the physical setting of machines in Las Vegas* that the expected value is negative: we know that expected value even though there is a distribution of returns around it. Your construction tends to assume that situation. But in the real situation of trading we don't know the expected value of a given person's efforts and the time it takes to 'prove' or indicate to a very high level of confidence more realistically, that the person's success is 'not due to luck' might span an impractically long time. And again why should it make any difference to a successful (makes money pretty consistently) trader if we find it 98% or 81% or only 64% likely their success is 'not due to luck'? Or let me just ask, how exactly would you determine what's 'due to luck'?

I say short circuit that and say success means making money, with a common sense proviso that we don't mean on one or a few trades. It by no means forecloses a discussion of whether even more consistent success was due to luck or partly so.

And nobody is saying, not I certainly, that trading is necessarily investing though they might overlap.

*let's set aside card games in casino's where a player might make money against other customers or even the house, more often than not, due to skill.

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Re: U.S. stocks in freefall

Post by backpacker » Wed Aug 26, 2015 5:43 pm

autonomy wrote:
InvestorNewb wrote:And up we go.

Total Stock Market is + 3.7% today so far :D


Go home, market, you're drunk.


This. :D

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Uncle Pennybags
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Re: U.S. stocks in freefall

Post by Uncle Pennybags » Wed Aug 26, 2015 6:03 pm

It was a blood bath for "retail" traders yesterday, they lost billions to the insiders. OK all of you who got taken to the cleaners please post and share.

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Re: U.S. stocks in freefall

Post by sharpjm » Wed Aug 26, 2015 6:12 pm

Johno wrote:
sharpjm wrote:
Johno wrote:And I don't think the definition of 'success' strictly in terms of results. vs. your apparent definition as 'results not due to chance', is just semantic.

If your definition of success includes those who have succeeded by luck, that's your prerogative, but I highly disagree with that notion. In my book, that is called gambling, not investing. Why would anyone gamble with their entire life's savings? There's a place called "Las Vegas" for people with gambling problems. :happy

The point is that there is no real way to determine with absolute certainty whether success is partly or wholly or more than wholly due to luck, so your definition, 'to be success if must not be due to luck' can just lead to trivial conclusion that there is no such thing as trading success since it can't be absolutely proven not to be due to luck. Again yes at one end of the spectrum somebody *saying* they *took* all their money out of the market last month is wholly unconvincing of anything: I take that as a given. However back at what I believe is the relevant end of the spectrum, the imposition of the condition 'must not be due to luck' to call trading profit 'success' is actually quite problematic in the real world. It's a certain fact in the physical setting of machines in Las Vegas* that the expected value is negative: we know that expected value even though there is a distribution of returns around it. Your construction tends to assume that situation. But in the real situation of trading we don't know the expected value of a given person's efforts and the time it takes to 'prove' or indicate to a very high level of confidence more realistically, that the person's success is 'not due to luck' might span an impractically long time. And again why should it make any difference to a successful (makes money pretty consistently) trader if we find it 98% or 81% or only 64% likely their success is 'not due to luck'? Or let me just ask, how exactly would you determine what's 'due to luck'?

The first thing that comes to mind would be the percentage of trades that resulted in a net gain. Aside from hedging and making options spreads, no trader will ever make a trade with the intent to invoke a loss. For this statistic, one would obviously exclude all the trades associated with a complex options spread and instead count the entire spread as one trade. Likewise, a hedged trade will take the net of the hedged trade and asset that the hedge was created for. Once you have excluded all the net losses (in this case, net refers to how the trade performed relative to the market as well, so you'd need to determine how the market performed over the same time period that each position was held), normalize the trades based on how big they were. A trade that ties of 25% of one's portfolio is a big bet compared to a smaller, riskier bet. So you could weight all of the net gain trades based on their size of ones portfolio.

I'm kind of tired of typing, but you get the idea. Find the trades that beat the market over the same time period, weight them based on how big of a bet the trader made, and come up with a normalized statistic. You'd also include time spent in cash as trades. Lucky people get small numbers, skilled traders get big numbers. If someone wants to pay me some money I'll write up a formal algorithm so we can all save some time typing long posts in threads like these. :happy

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Re: U.S. stocks in freefall

Post by thatwhichisgood » Wed Aug 26, 2015 6:38 pm

I usually think of the market like [weather in the early spring*].

Always trending up but a blizzards along the way. Always glad when the sun comes back out!

[* substituted for off-topic metaphor - admin alex]

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Uncle Pennybags
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Re: U.S. stocks in freefall

Post by Uncle Pennybags » Wed Aug 26, 2015 7:43 pm

OK, two more days like today and I'm even for the year. Let the good times roll. :sharebeer

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Re: U.S. stocks in freefall

Post by jjface » Wed Aug 26, 2015 7:58 pm

Quick change the title - stocks are now going to soar

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Re: U.S. stocks in freefall

Post by lack_ey » Wed Aug 26, 2015 8:58 pm

You guys remember how there were some big bouncebacks like 3-4% in some days on the way down in 08-09, right (and most crashes)?

I'm not expecting a crash, but just sayin'.

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Re: U.S. stocks in freefall

Post by broadstone » Wed Aug 26, 2015 9:12 pm

Wednesdays gain will provide false security. It's the calm before the storm (downward).

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Re: U.S. stocks in freefall

Post by bayview » Wed Aug 26, 2015 9:34 pm

autonomy wrote:
InvestorNewb wrote:And up we go.

Total Stock Market is + 3.7% today so far :D


Go home, market, you're drunk.

Thank you; finally some well-researched and data-driven explanation of the lat five days. :beer:

I just sat there and watched the craziness. I don't think that I have all the insights I'd like to have, but my 50/50 AA trudged through OK in a not very glamorous manner. And that's just fine with me.

And I don't think it's over by any means. I'm just sitting back and cautiously watching with an AB or two in hand.
The continuous execution of a sound strategy gives you the benefit of the strategy. That's what it's all about. --Rick Ferri

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Re: U.S. stocks in freefall

Post by ofcmetz » Thu Aug 27, 2015 3:48 am

Uncle Pennybags wrote:It was a blood bath for "retail" traders yesterday, they lost billions to the insiders. OK all of you who got taken to the cleaners please post and share.



If I just held my index funds while putting a little bit of new money into them yesterday did I bathe in blood or lose to insiders? I'm assuming you are referring to the the high frequency traders who were touting their record money making days in the WSJ the other day. I can't even imagine going up agains them on days like Monday or Tuesday this week.
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Re: U.S. stocks in freefall

Post by abuss368 » Thu Aug 27, 2015 7:01 am

We did our regular buying yesterday and will stay the course.
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David Jay
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Re: U.S. stocks in freefall

Post by David Jay » Thu Aug 27, 2015 7:43 am

response to OT comment deleted by admin alex
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Re: U.S. stocks in freefall

Post by TomatoTomahto » Thu Aug 27, 2015 7:51 am

Kids, we've come to a place where talking about the weather is the beginning of a political discussion. Our hosts, for good reason, don't allow that. Let's please be mindful of that, and let the only heat generated here be about the markets.

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Uncle Pennybags
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Re: U.S. stocks in freefall

Post by Uncle Pennybags » Thu Aug 27, 2015 8:38 am

ofcmetz wrote:
Uncle Pennybags wrote:It was a blood bath for "retail" traders yesterday, they lost billions to the insiders. OK all of you who got taken to the cleaners please post and share.
If I just held my index funds while putting a little bit of new money into them yesterday did I bathe in blood or lose to insiders?
I find it interesting you took that question personally.

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Uncle Pennybags
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Re: U.S. stocks in freefall

Post by Uncle Pennybags » Thu Aug 27, 2015 8:43 am

Who sold two days ago. Hold up your hands, I know you are out there. :twisted:

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Re: U.S. stocks in freefall

Post by autonomy » Thu Aug 27, 2015 8:46 am

Given what has happened this week, here's a totally crazy idea - I am starting to question if there is some final manipulation going on before the end-of-the-month contributions go in.

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Re: U.S. stocks in freefall

Post by TomatoTomahto » Thu Aug 27, 2015 9:07 am

autonomy wrote:Given what has happened this week, here's a totally crazy idea - I am starting to question if there is some final manipulation going on before the end-of-the-month contributions go in.

Does everyone contribute at the same time, to make that work?

Uncle Pennybags, not only didn't I sell, but I added $6500 to DW's delayed backdoor Roth (50/50), and converted $75k from "emergency" fund to TSM. Not timing as such, but we have a MM that we keep a declining balance in during the year to cover expenses (tuition, cars, etc.) that are not covered by salary, and which gets replenished with year end bonus.

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Re: U.S. stocks in freefall

Post by Thebigc » Thu Aug 27, 2015 9:14 am

Uncle Pennybags wrote:Who sold two days ago. Hold up your hands, I know you are out there. :twisted:


I bought a little more, and to be clear because I don't want to get mobbed with some market timing nonsense. For the last two weeks, I had been talking about the moves I was making on the board. Which were energy moves, not that I think it's all up, up, up, but the debate was in EM's and I said I would by US energy instead do to the correlation and named the companies when I bought them. Yes they were stock play, but only with my fun money and only small moves. XOM, CHK, and WLL. The first company I already explained why and the other two because they are very, very, very cheap, and as aquisition plays.

450 shares CHK 8/26/15 at $6.09

100 shares of WLL 8/24/15 at $14.74

XOM 150 shares 8/24/15 at $70.10 and 50 shares on 8/12/15 at $77.26

This does not include increases to my funds. I actually believe that they will go down again but they are still good prices, and I am not going to try and spot the bottom. If they drop some more I have about 5k left ear marked for my stocks. Xom is long term, they may all be long term, but two of them are pretty basica aquisition plays. Thought about FANG and HES, and kind of wish I had gotten more WLL and less CHK, but so far so good.

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Re: U.S. stocks in freefall

Post by Doom&Gloom » Thu Aug 27, 2015 9:16 am

Rats! I dropped in here for the next installment of As The World Turns. Nothing. I may have to actually check the news out of curiosity to see what the markets are doing today to cause this silence.

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Uncle Pennybags
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Re: U.S. stocks in freefall

Post by Uncle Pennybags » Thu Aug 27, 2015 9:26 am

How nice, "U.S. stocks in freefall" is a regular "Lake Wobegon". :wink:

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TomatoTomahto
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Re: U.S. stocks in freefall

Post by TomatoTomahto » Thu Aug 27, 2015 9:32 am

Uncle Pennybags wrote:How nice, "U.S. stocks in freefall" is a regular "Lake Wobegon". :wink:

I might have to start a new thread about my attempts to have an average return, and failing. I'm roughly 50/50, which means that my gains are lower than average, but I don't find the losses reduced much by my bonds (just by them not being equities). It's a bit like driving with a foot lightly on the brake pedal; not enough to avoid a crash but enough to limit acceleration and fuel economy.

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Re: U.S. stocks in freefall

Post by Thebigc » Thu Aug 27, 2015 9:41 am

Uncle Pennybags wrote:How nice, "U.S. stocks in freefall" is a regular "Lake Wobegon". :wink:


Well starting maybe toninght or friday we could start to test the bottom again, we could get a double bottom bounce or a correction could continue. Thing is, either way they would both be normal and healthy for the market. A double bounce is typical, and we could still use a little bit better correction, and September and October are not great months historically speaking.

Now if we can get a real rally through the year and Jon Snow could return it will be a good year. Yeah that's right I watch it and have read the books and even have theories.

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Re: U.S. stocks in freefall

Post by Thebigc » Thu Aug 27, 2015 9:44 am

TomatoTomahto wrote:
Uncle Pennybags wrote:How nice, "U.S. stocks in freefall" is a regular "Lake Wobegon". :wink:

I might have to start a new thread about my attempts to have an average return, and failing. I'm roughly 50/50, which means that my gains are lower than average, but I don't find the losses reduced much by my bonds (just by them not being equities). It's a bit like driving with a foot lightly on the brake pedal; not enough to avoid a crash but enough to limit acceleration and fuel economy.


60/40 is not a horrible way to go, Jack seems very secure doing it. Maybe convert 5% of your bonds to 5% equities, maybe a dividend based fund to help with income.

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Re: U.S. stocks in freefall

Post by Grt2bOutdoors » Thu Aug 27, 2015 10:34 am

Thebigc wrote:
Uncle Pennybags wrote:Who sold two days ago. Hold up your hands, I know you are out there. :twisted:


I bought a little more, and to be clear because I don't want to get mobbed with some market timing nonsense. For the last two weeks, I had been talking about the moves I was making on the board. Which were energy moves, not that I think it's all up, up, up, but the debate was in EM's and I said I would by US energy instead do to the correlation and named the companies when I bought them. Yes they were stock play, but only with my fun money and only small moves. XOM, CHK, and WLL. The first company I already explained why and the other two because they are very, very, very cheap, and as aquisition plays.

450 shares CHK 8/26/15 at $6.09

100 shares of WLL 8/24/15 at $14.74

XOM 150 shares 8/24/15 at $70.10 and 50 shares on 8/12/15 at $77.26

This does not include increases to my funds. I actually believe that they will go down again but they are still good prices, and I am not going to try and spot the bottom. If they drop some more I have about 5k left ear marked for my stocks. Xom is long term, they may all be long term, but two of them are pretty basica aquisition plays. Thought about FANG and HES, and kind of wish I had gotten more WLL and less CHK, but so far so good.


Bought COP and CVX on Friday, I know a day early and MRO on Monday (expecting them to get taken over eventually).....but hey, I'm planning to be in it for at least the next 25 years........but as you say, if they go down further, I'll be waiting.........
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Re: U.S. stocks in freefall

Post by broadstone » Thu Aug 27, 2015 10:41 am

Grt2bOutdoors wrote:
Bought COP and CVX on Friday, I know a day early and MRO on Monday (expecting them to get taken over eventually).....but hey, I'm planning to be in it for at least the next 25 years........but as you say, if they go down further, I'll be waiting.........


But wait, I thought Bogleheads didn't buy single stocks?

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Re: U.S. stocks in freefall

Post by Grt2bOutdoors » Thu Aug 27, 2015 10:45 am

broadstone wrote:
Grt2bOutdoors wrote:
Bought COP and CVX on Friday, I know a day early and MRO on Monday (expecting them to get taken over eventually).....but hey, I'm planning to be in it for at least the next 25 years........but as you say, if they go down further, I'll be waiting.........


But wait, I thought Bogleheads didn't buy single stocks?


Stick around, about 25% of us, do, we buy value and hold it forever. We aren't traders, for that I recommend watching Cramer's mad money segment. When he says to sell, you BUY, BUY, BUY! When he says Buy, you sell, sell, sell. Contrarian investing works! :)
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Re: U.S. stocks in freefall

Post by Leeraar » Thu Aug 27, 2015 10:54 am

Scott Teresi wrote:HomerJ and Backpacker,

From the studies I've read, following a moving average (or cross between two moving averages) has generally reduced volatility/standard deviation (to about 70% of market risk) but historically provided close to the same return over time, using as much data as is available (e.g. going back 100 years, testing in other countries' markets, testing in other broad asset classes, etc., etc.). ...

Scott

This is a fallacy. Sampling a signal does not change the signal. If you own something, you face exactly the same risk as everyone else who owns it. That you used some scheme to dampen the variation in your purchase prices over time is irrelevant.

L.
You can get what you want, or you can just get old. (Billy Joel, "Vienna")

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Re: U.S. stocks in freefall

Post by Thebigc » Thu Aug 27, 2015 11:04 am

Grt2bOutdoors wrote:
Thebigc wrote:
Uncle Pennybags wrote:Who sold two days ago. Hold up your hands, I know you are out there. :twisted:


I bought a little more, and to be clear because I don't want to get mobbed with some market timing nonsense. For the last two weeks, I had been talking about the moves I was making on the board. Which were energy moves, not that I think it's all up, up, up, but the debate was in EM's and I said I would by US energy instead do to the correlation and named the companies when I bought them. Yes they were stock play, but only with my fun money and only small moves. XOM, CHK, and WLL. The first company I already explained why and the other two because they are very, very, very cheap, and as aquisition plays.

450 shares CHK 8/26/15 at $6.09

100 shares of WLL 8/24/15 at $14.74

XOM 150 shares 8/24/15 at $70.10 and 50 shares on 8/12/15 at $77.26

This does not include increases to my funds. I actually believe that they will go down again but they are still good prices, and I am not going to try and spot the bottom. If they drop some more I have about 5k left ear marked for my stocks. Xom is long term, they may all be long term, but two of them are pretty basica aquisition plays. Thought about FANG and HES, and kind of wish I had gotten more WLL and less CHK, but so far so good.


Bought COP and CVX on Friday, I know a day early and MRO on Monday (expecting them to get taken over eventually).....but hey, I'm planning to be in it for at least the next 25 years........but as you say, if they go down further, I'll be waiting.........


Almost grabbed some COP, WLL, CHK and FANG are among the super deals out there, on sale for 60 -75% off. I got to call Vanguard, for some odd reason my WLL order still says nonnegotiable on it. It's the 27th and I am totally confused. XOM and CHK are both good orders, what the hell is going on? Anyway I like COP and CVX but I wanted COP to dip a little more because it trades at such a premium because of that monster dividend. I got to go find out why I have an old order in limbo.

I am not a trader, but I will take a little risk in this case. Even if they are not aquired WLL and CHK, still have very good assets, WLL especially and I mean they are down. Looking ot see if the shorts try to cover crude today, if they don;t that is a good sign.

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Re: U.S. stocks in freefall

Post by Scott Teresi » Thu Aug 27, 2015 11:09 am

Leeraar wrote:
Scott Teresi wrote:HomerJ and Backpacker,

From the studies I've read, following a moving average (or cross between two moving averages) has generally reduced volatility/standard deviation (to about 70% of market risk) but historically provided close to the same return over time, using as much data as is available (e.g. going back 100 years, testing in other countries' markets, testing in other broad asset classes, etc., etc.). ...

This is a fallacy. Sampling a signal does not change the signal. If you own something, you face exactly the same risk as everyone else who owns it. That you used some scheme to dampen the variation in your purchase prices over time is irrelevant.
L.

I'm not clear on what you're getting at. Are you saying that spending about 30% of the time out of the market does not reduce risk at all? Maybe our definitions of risk are different

We know that momentum and trends exist in the markets (generally over periods of several months to several years), and in fact they are one of the stronger "factors" or anomalies. A moving average provides a way to trade on some aspect of that information.

Scott

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Re: U.S. stocks in freefall

Post by lack_ey » Thu Aug 27, 2015 11:10 am

Leeraar wrote:
Scott Teresi wrote:HomerJ and Backpacker,

From the studies I've read, following a moving average (or cross between two moving averages) has generally reduced volatility/standard deviation (to about 70% of market risk) but historically provided close to the same return over time, using as much data as is available (e.g. going back 100 years, testing in other countries' markets, testing in other broad asset classes, etc., etc.). ...

Scott

This is a fallacy. Sampling a signal does not change the signal. If you own something, you face exactly the same risk as everyone else who owns it. That you used some scheme to dampen the variation in your purchase prices over time is irrelevant.

L.

How so? If you are out of the market a percentage of the time, you will see less of the market's risk. You will see the same for the periods in which you're invested, but on the whole less over the long run. Under some relatively reasonable definitions and measures of risk such as volatility and unexpected loss of purchasing power (not to mention other related metrics like a regression on market beta), a mechanical in-and-out market timing strategy will be less risky than being 100% long all the time.

Let's say you're invested in stocks 70% of the time and in cash 30% of the time with all your money. It will have a different profile and characteristics, but it is not vastly different from being invested 100% of the time in 70% stocks and 30% cash. In any case, I think it is difficult to describe either as being as risky as 100% stocks all the time.

The real concern is giving up too much upside, especially in less directional markets, and transaction frictions (especially taxes, if in a taxable account, which would be a real killer).

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