U.S. stocks in freefall

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Uncle Pennybags
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Re: U.S. stocks in freefall

Post by Uncle Pennybags » Mon Mar 27, 2017 8:31 am

I knew it; I felt it in my bones........sell,sell,sell....NOW. :oops:

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Re: U.S. stocks in freefall

Post by fantasytensai » Mon Mar 27, 2017 8:51 am

Uncle Pennybags wrote:I knew it; I felt it in my bones........sell,sell,sell....NOW. :oops:
Can't tell if serious.

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dwickenh
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Re: U.S. stocks in freefall

Post by dwickenh » Mon Mar 27, 2017 8:54 am

You can't harvest without losses............

Dan
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Uncle Pennybags
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Re: U.S. stocks in freefall

Post by Uncle Pennybags » Mon Mar 27, 2017 8:59 am

fantasytensai wrote:
Uncle Pennybags wrote:I knew it; I felt it in my bones........sell,sell,sell....NOW. :oops:
Can't tell if serious.
I rode the 10% up and will ride the 8% down; good thing I never look. :D

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Re: U.S. stocks in freefall

Post by WentzWagon » Mon Mar 27, 2017 9:16 am

Uncle Pennybags wrote:
fantasytensai wrote:
Uncle Pennybags wrote:I knew it; I felt it in my bones........sell,sell,sell....NOW. :oops:
Can't tell if serious.
I rode the 10% up and will ride the 8% down; good thing I never look. :D

Good thing you never look because its down over 5% this morning....














....Made you look!

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nedsaid
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Re: U.S. stocks in freefall

Post by nedsaid » Mon Mar 27, 2017 10:19 am

Oh goody! The thread has popped up again. A market rally is just around the corner!
A fool and his money are good for business.

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Re: U.S. stocks in freefall

Post by willthrill81 » Mon Mar 27, 2017 11:16 am

nedsaid wrote:Oh goody! The thread has popped up again. A market rally is just around the corner!
I'm actually hoping for a 20% correction. I still have a long ways yet to go and want to buy some cheaper equities!
“It's a dangerous business, Frodo, going out your door. You step onto the road, and if you don't keep your feet, there's no knowing where you might be swept off to.” J.R.R. Tolkien,The Lord of the Rings

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walletless
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Re: U.S. stocks in freefall

Post by walletless » Mon Mar 27, 2017 2:14 pm

Hardly what if call a "free fall"!

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Re: U.S. stocks in freefall

Post by harvestbook » Mon Mar 27, 2017 2:55 pm

Were people this nutty before the Internet? What did they do when they only got to see yesterday's stock prices in the newspaper once a day?
I'm not smart enough to know, and I can't afford to guess.

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Uncle Pennybags
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Re: U.S. stocks in freefall

Post by Uncle Pennybags » Mon Mar 27, 2017 3:02 pm

nedsaid wrote:Oh goody! The thread has popped up again. A market rally is just around the corner!
Quicker than I thought. US can't seem to get a good "freefall" going.

How you day traders do'n? Some fun, huh?
harvestbook wrote:Were people this nutty before the Internet? What did they do when they only got to see yesterday's stock prices in the newspaper once a day?
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Re: U.S. stocks in freefall

Post by Doom&Gloom » Mon Mar 27, 2017 3:07 pm

harvestbook wrote:Were people this nutty before the Internet? What did they do when they only got to see yesterday's stock prices in the newspaper once a day?
They worried just as much; they just couldn't bug the crap out of a bunch of strangers :D

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Re: U.S. stocks in freefall

Post by Theoretical » Mon Mar 27, 2017 3:20 pm

Today seems like a very chicken little day, but on the other hand, it does seem like some people finally got out of all cash and plunked into the market when it's high.

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cfs
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Re: U.S. stocks in freefall

Post by cfs » Mon Mar 27, 2017 4:23 pm

Actually, there is a LOT of cash on the sidelines. This is from the Investment Company Institute -- "Total money market fund assets decreased by $23.26 billion to $2.65 trillion for the week ended Wednesday, March 22" -- Thanks for reading ~cfs~
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Re: U.S. stocks in freefall

Post by littlebird » Mon Mar 27, 2017 4:24 pm

dwickenh wrote:You can't harvest without losses............Dan
I prefer to harvest gains.

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Re: U.S. stocks in freefall

Post by littlebird » Mon Mar 27, 2017 4:27 pm

harvestbook wrote:Were people this nutty before the Internet? What did they do when they only got to see yesterday's stock prices in the newspaper once a day?
I sure you've read what some unhappy people did in the Depression, long before the internet.

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Re: U.S. stocks in freefall

Post by oldcomputerguy » Mon Mar 27, 2017 4:32 pm

harvestbook wrote:Were people this nutty before the Internet? What did they do when they only got to see yesterday's stock prices in the newspaper once a day?
They developed ulcers while trying to get their broker on the phone. Of course the broker couldn't answer because he was busy on the phone to all the other panicking sellers. :twisted:
Anybody know why there's a 20-pound frozen turkey up in the light grid?

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Re: U.S. stocks in freefall

Post by oldcomputerguy » Mon Mar 27, 2017 4:33 pm

Uncle Pennybags wrote: How you day traders do'n? Some fun, huh?
I can't help but wonder what happened to the guys who shorted S&P500 right before the election. Ouch!
Anybody know why there's a 20-pound frozen turkey up in the light grid?

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Re: U.S. stocks in freefall

Post by oldcomputerguy » Mon Mar 27, 2017 4:34 pm

willthrill81 wrote:
nedsaid wrote:Oh goody! The thread has popped up again. A market rally is just around the corner!
I'm actually hoping for a 20% correction.
Um, isn't that a bear market? :shock:
Anybody know why there's a 20-pound frozen turkey up in the light grid?

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Uncle Pennybags
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Re: U.S. stocks in freefall

Post by Uncle Pennybags » Mon Mar 27, 2017 5:42 pm

littlebird wrote:I prefer to harvest gains.
Have you tried harvesting grains?
Image

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Tycoon
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Re: U.S. stocks in freefall

Post by Tycoon » Mon Mar 27, 2017 6:26 pm

Is there a definition of what freefall means anywhere in this thread? Would it be measured in percentage drop per minute, hour, or day? Is it a sustained drop for a certain amount of time? I need a quantitative measure to properly worry. Qualitative doesn't do it for me.
...I might be just beginning | I might be near the end. Enya | | C'est la vie

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Re: U.S. stocks in freefall

Post by radiowave » Mon Mar 27, 2017 6:36 pm

Uncle Pennybags wrote:
littlebird wrote:I prefer to harvest gains.
Have you tried harvesting grains?
'Thanks Uncle Pennybags, you made my whole day!
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Re: U.S. stocks in freefall

Post by cfs » Mon Mar 27, 2017 6:42 pm

"Is there a definition of what freefall means anywhere in this thread . . ."

The original post is about the Dow dropping 550 points in just a couple of hours of trading. Thanks for reading ~cfs~
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cfs
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Re: U.S. stocks in freefall

Post by cfs » Mon Mar 27, 2017 6:43 pm

"I prefer to harvest gains."

Me 2.

Thanks for reading ~cfs~
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Tycoon
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Re: U.S. stocks in freefall

Post by Tycoon » Mon Mar 27, 2017 6:48 pm

cfs wrote:"Is there a definition of what freefall means anywhere in this thread . . ."

The original post is about the Dow dropping 550 points in just a couple of hours of trading. Thanks for reading ~cfs~
NOW I can properly worry! Thanks!
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Re: U.S. stocks in freefall

Post by jhfenton » Mon Mar 27, 2017 7:00 pm

After all that foofaraw this morning, my 88% equity (50/50 US/Intl) heavily-tilted portfolio ended up down 3 bp for the day.

It just goes to show that you never know. I looked at the global markets this morning and the futures and expected another 1% drop. (I knew the drop in the dollar would offset much of the decline in overseas markets, but I didn't expect the big bounce-back.

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Re: U.S. stocks in freefall

Post by ray333 » Mon Mar 27, 2017 7:03 pm

yeah I was planning on DCA'ing another 2500 today ... oh well.

Dead Man Walking
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Re: U.S. stocks in freefall

Post by Dead Man Walking » Mon Mar 27, 2017 10:35 pm

Why is this noise still active! It's 100% bull!

DMW

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Re: U.S. stocks in freefall

Post by linenfort » Tue Mar 28, 2017 12:20 pm

jhfenton wrote:After all that foofaraw this morning,
I learned a new word! :D
The problem is not that bitcoin is a sham. The problem is that people are nuts.

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Re: U.S. stocks in freefall

Post by Toons » Tue Mar 28, 2017 12:27 pm

Lest We Forget :happy

"The Dow Jones industrial average (INDU) lost 80 points, or 1.2%, to end at 6,547.05, its lowest point since April 15, 1997."

"The Nasdaq composite (COMP) lost 25 points or 2%, to end at 1,268.64, its lowest point since Oct. 9, 2002
."

Was everyone eagerly investing in equities then?
If Not ,,

Then Why Not,
Steak Was On Sale :mrgreen:

http://money.cnn.com/2009/03/09/markets ... s_newyork/
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Re: U.S. stocks in freefall

Post by willthrill81 » Tue Mar 28, 2017 8:38 pm

oldcomputerguy wrote:
willthrill81 wrote:
nedsaid wrote:Oh goody! The thread has popped up again. A market rally is just around the corner!
I'm actually hoping for a 20% correction.
Um, isn't that a bear market? :shock:
Yes. Isn't that the best time to invest in equities?
“It's a dangerous business, Frodo, going out your door. You step onto the road, and if you don't keep your feet, there's no knowing where you might be swept off to.” J.R.R. Tolkien,The Lord of the Rings

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Re: U.S. stocks in freefall

Post by Theoretical » Wed Mar 29, 2017 12:08 am

willthrill81 wrote:
oldcomputerguy wrote:
willthrill81 wrote:
nedsaid wrote:Oh goody! The thread has popped up again. A market rally is just around the corner!
I'm actually hoping for a 20% correction.
Um, isn't that a bear market? :shock:
Yes. Isn't that the best time to invest in equities?
It is, but you have to have the dry powder to rebalance into stocks on sale. And you have to have a job stable enough that you won't need the cash if they fall more.

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randomizer
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Re: U.S. stocks in freefall

Post by randomizer » Wed Mar 29, 2017 12:20 am

They need to freefall a bit more before I can harvest any losses. None of my purchased lots, even the most recent, is showing a loss yet.

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Re: U.S. stocks in freefall

Post by kellykline » Wed Mar 29, 2017 12:42 am

What bear market? What freefall? CNBC was going on and on about how today was a record up day! Record close or something.

Stocks seem to be going up and up, they're never coming down. I'm hoping it would correct but now I feel like I missed the boat.

Image :moneybag :moneybag :moneybag

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Re: U.S. stocks in freefall

Post by Ari » Wed Mar 29, 2017 3:34 am

kellykline wrote:Stocks seem to be going up and up, they're never coming down. I'm hoping it would correct but now I feel like I missed the boat.
The best day to invest is yesterday. The second best day to invest is today.
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Re: U.S. stocks in freefall

Post by grettman » Wed Mar 29, 2017 3:58 am

What happened? What is going on?

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Re: U.S. stocks in freefall

Post by digarei » Wed Mar 29, 2017 4:12 am

Theoretical wrote:
willthrill81 wrote:
oldcomputerguy wrote:
willthrill81 wrote:
nedsaid wrote:Oh goody! The thread has popped up again. A market rally is just around the corner!
I'm actually hoping for a 20% correction.
Um, isn't that a bear market? :shock:
Yes. Isn't that the best time to invest in equities?
It is, but you have to have the dry powder to rebalance into stocks on sale. And you have to have a job stable enough that you won't need the cash if they fall more.
Dry powder can be in the form of bonds, not just cash. To rebalance, sell bond shares to buy into deflated stocks.

That's better than depleting your emergency cash reserves, which might be needed to pay expenses absent a regular job or other revenue stream.

One more reason that accumulators should include an allocation to bonds in their investment plan.
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Re: U.S. stocks in freefall

Post by Ari » Wed Mar 29, 2017 6:16 am

digarei wrote:One more reason that accumulators should include an allocation to bonds in their investment plan.
Nope. Keeping bonds as "dry powder" will decrease your returns, unless you're an exceptionally skilled market timer. Bonds are good for lowering volatility, but thinking they're good to keep around as dry powder is a mistake. You'll lose more money keeping them out of the market than you'll gain by buying low.

Or, if you manage to actually get better returns by keeping dry powder, you're better off keeping 100% bonds until a crash, then going 100% stocks, and so on. That would give even better returns.

This "dry powder" myth keeps popping up again and again on BH, and it needs to die.
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Re: U.S. stocks in freefall

Post by livesoft » Wed Mar 29, 2017 6:21 am

OK, then you have to start the wet powder myth. Bonds can be wet powder since they are not explosive.
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Re: U.S. stocks in freefall

Post by lgs88 » Wed Mar 29, 2017 6:30 am

Ari wrote:
digarei wrote:One more reason that accumulators should include an allocation to bonds in their investment plan.
Nope. Keeping bonds as "dry powder" will decrease your returns, unless you're an exceptionally skilled market timer. Bonds are good for lowering volatility, but thinking they're good to keep around as dry powder is a mistake. You'll lose more money keeping them out of the market than you'll gain by buying low.

Or, if you manage to actually get better returns by keeping dry powder, you're better off keeping 100% bonds until a crash, then going 100% stocks, and so on. That would give even better returns.

This "dry powder" myth keeps popping up again and again on BH, and it needs to die.
Not strictly true.

Image

Portfolio 1 is 100% US Stock, Portfolio 2 is 75% US Stock, 25% Long-Term Treasury with annual rebalancing. Period is 1972-2017. As you can see, as recently as 2012 the portfolio with bonds was outstripping the all-stock portfolio. So there is value in combining negatively/zero correlated assets, so long as they both have positive expected returns. Maybe "dry powder" is an imprecise way to think about it, but the more pernicious fallacy is that any amount of bonds will be a major drag on your portfolio's performance. That's what gets people hocked into portfolios with volatility they can't handle.
merely an interested amateur

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Re: U.S. stocks in freefall

Post by GoldenFinch » Wed Mar 29, 2017 6:38 am

^^Regarding the wet and dry powder:

My biggest regret in 2008-2009 was that we were 100% equities and had never heard of rebalancing. At least I didn't sell everytime the market crashed further and my husband said, "Sell, sell!" Now we are better prepared with some bonds. :beer

NiceUnparticularMan
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Re: U.S. stocks in freefall

Post by NiceUnparticularMan » Wed Mar 29, 2017 6:42 am

Reserving some "dry gunpowder" is indeed not expected to increase long-term returns.

However, if your reason for not going 100% risky assets is at least in part psychological, then I think the "dry gunpowder" effect can be a big part of the psychological advantage, for at least some people. Basically, it means you are making significant use of any "buying opportunity" in the form of a major price reduction.

But of course that depends on whether you can comfortably stick to your rebalancing plans, or if instead watching a portion of your safe assets be converted to risky assets which are plunging (and may plunge some more before they are done) will freak you out even more.

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Re: U.S. stocks in freefall

Post by nedsaid » Wed Mar 29, 2017 6:44 am

randomizer wrote:They need to freefall a bit more before I can harvest any losses. None of my purchased lots, even the most recent, is showing a loss yet.
Wow. Excuse me for my naïvete, but I always invested to MAKE money. By all means take advantage of tax loss harvesting when it makes sense but this seems like letting the tax tail wag the investing dog.
A fool and his money are good for business.

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Re: U.S. stocks in freefall

Post by NiceUnparticularMan » Wed Mar 29, 2017 6:53 am

lgs88 wrote:Portfolio 1 is 100% US Stock, Portfolio 2 is 75% US Stock, 25% Long-Term Treasury with annual rebalancing. Period is 1972-2017. As you can see, as recently as 2012 the portfolio with bonds was outstripping the all-stock portfolio. So there is value in combining negatively/zero correlated assets, so long as they both have positive expected returns. Maybe "dry powder" is an imprecise way to think about it, but the more pernicious fallacy is that any amount of bonds will be a major drag on your portfolio's performance. That's what gets people hocked into portfolios with volatility they can't handle.
So what happened is a severe drop followed by a rapid recovery, which naturally favors the "dry gunpowder" approach. And if you happened to want to entirely liquidate your portfolio in the few years after that severe drop, you'd be SLIGHTLY better off with Portfolio 2. But if you look at any other point of the series, which is the vast majority of it, you'd be better off with Portfolio 1.

What is true is that the cost in terms of total return to holding a modest amounts of safer assets has tended not to be too high relative to the amount of reduced volatility you got. So not a free lunch, but a modestly-priced one.

But outside of very specific and limited circumstances, there has in fact been some sort of cost in terms of lower returns, so your expected returns (applying future probability estimates over the possible return scenarios) should be lower, because odds are you will be withdrawing most of those funds in periods where the all-risky portfolio would have generated higher returns.

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Re: U.S. stocks in freefall

Post by Roothy » Wed Mar 29, 2017 7:27 am

That chart has a logarithmic y-axis. So the return advantage from all-stocks is actually quite a bit better than this looks.

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Re: U.S. stocks in freefall

Post by Ari » Wed Mar 29, 2017 7:29 am

lgs88 wrote:Not strictly true.

Portfolio 1 is 100% US Stock, Portfolio 2 is 75% US Stock, 25% Long-Term Treasury with annual rebalancing. Period is 1972-2017. As you can see, as recently as 2012 the portfolio with bonds was outstripping the all-stock portfolio.
Yes, you're right, I worded it carelessly. With long-term bonds the strategy can work. You need an asset which has a comparable return to stocks. This way you might get some dry powder/rebalancing bonus. But I don't think you'd find the same result with short or intermediate-term bonds.
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Re:

Post by bottlecap » Wed Mar 29, 2017 7:53 am

Avo wrote:This is nowhere close to a "freefall". The flash crash was a freefall. Black Monday was pretty close to a freefall.

This is an orderly, completely predictable (and predicted) response to meaningless "news" that's followed a huge run up.
Best post in this thread, back in August of 2011.

Stay the course.

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Re: U.S. stocks in freefall

Post by digarei » Wed Mar 29, 2017 8:29 am

Ari wrote:
digarei wrote:One more reason that accumulators should include an allocation to bonds in their investment plan.
Nope. Keeping bonds as "dry powder" will decrease your returns, unless you're an exceptionally skilled market timer. Bonds are good for lowering volatility, but thinking they're good to keep around as dry powder is a mistake. You'll lose more money keeping them out of the market than you'll gain by buying low.

Or, if you manage to actually get better returns by keeping dry powder, you're better off keeping 100% bonds until a crash, then going 100% stocks, and so on. That would give even better returns.

This "dry powder" myth keeps popping up again and again on BH, and it needs to die.
I was responding to the poster's suggestion that one had to have dry powder in the form of cash to buy into stocks when they fell. If one has a percentage of their portfolio in bonds, they instead of cash can be used to rebalance.

It's not a universal truth that keeping bonds will decrease returns; there are times when having bonds will improve returns.

Why isn't one "better off keeping 100% bonds until a crash?" Because you can't know before hand when there will be a crash.
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Re: U.S. stocks in freefall

Post by just frank » Wed Mar 29, 2017 8:43 am

Roothy wrote:That chart has a logarithmic y-axis. So the return advantage from all-stocks is actually quite a bit better than this looks.
Indeed. By my reading, about 10% over 40 years. Or 0.25%/year.

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Re: U.S. stocks in freefall

Post by Ari » Wed Mar 29, 2017 9:05 am

digarei wrote:I was responding to the poster's suggestion that one had to have dry powder in the form of cash to buy into stocks when they fell. If one has a percentage of their portfolio in bonds, they instead of cash can be used to rebalance.
Sure. You can use bonds or cash, and both will give you less expected returns than stocks.
It's not a universal truth that keeping bonds will decrease returns; there are times when having bonds will improve returns.
Agreed. The expected returns of stocks will always be higher, though. But yes, I was talking on average. You can keep bonds in order to protect yourself from a period of low performance by stocks and high performance of bonds. But it's not by keeping "dry powder". It has nothing to do with buying stocks after a crash. It has to do with bonds outperforming stocks, plain and simple.
Why isn't one "better off keeping 100% bonds until a crash?" Because you can't know before hand when there will be a crash.
Which was my argument exactly. If you can't time the market, you can't gain additional returns by keeping dry powder to invest after a crash. If you can't do it with 100% of your portfolio, you can't do it with 10%.

I have nothing against bonds. I'm not arguing against holding them. I'm arguing against the misguided idea that it's good to keep some dry powder, in cash or bonds, in order to have something to buy stocks with after a crash. It might be a nice psychological crutch, but it's not going to help your returns.
All in, all the time.

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Re: U.S. stocks in freefall

Post by lgs88 » Wed Mar 29, 2017 9:53 am

Ari wrote: I have nothing against bonds. I'm not arguing against holding them. I'm arguing against the misguided idea that it's good to keep some dry powder, in cash or bonds, in order to have something to buy stocks with after a crash. It might be a nice psychological crutch, but it's not going to help your returns.

I'm inclined to believe that a nice psychological crutch, even if it's nothing more than that, CAN improve your returns. So many investing mistakes are psychologically-rooted.
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