U.S. stocks in freefall

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prettybogle
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Re: U.S. stocks in freefall

Post by prettybogle » Mon Sep 25, 2017 8:27 pm

I always chuckle when this thread pops up very promptly on a down day. It is amusing to see some folks commenting here comes bear market and some other folks just laughing it off saying this is a great buying opportunity. I think one day the bear market will truly arrive. I will then look forward to how these 2 camps react and I bet it will be very interesting :D

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FIREchief
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Re: U.S. stocks in freefall

Post by FIREchief » Tue Sep 26, 2017 2:21 am

prettybogle wrote:
Mon Sep 25, 2017 8:27 pm
I always chuckle when this thread pops up very promptly on a down day. It is amusing to see some folks commenting here comes bear market and some other folks just laughing it off saying this is a great buying opportunity. I think one day the bear market will truly arrive. I will then look forward to how these 2 camps react and I bet it will be very interesting :D
Really? Won't they just react the same as always?

Nervous nilly neophites: The sky is falling. Sell. Sell. Sell!!!!

Seasoned Bogleheads: So what? Just stick to your plans..... I'm going to go take a nap. 8-)
I am not a lawyer, accountant or financial advisor. Any advice or suggestions that I may provide shall be considered for entertainment purposes only.

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oldcomputerguy
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Re: U.S. stocks in freefall

Post by oldcomputerguy » Tue Sep 26, 2017 5:43 am

prettybogle wrote:
Mon Sep 25, 2017 8:27 pm
I always chuckle when this thread pops up very promptly on a down day.
Wait... did we have a down day?
It’s taken me a lot of years, but I’ve come around to this: If you’re dumb, surround yourself with smart people. And if you’re smart, surround yourself with smart people who disagree with you.

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JoMoney
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Re: U.S. stocks in freefall

Post by JoMoney » Wed Sep 27, 2017 2:19 pm

These bull runs can be bitter sweet. How many new highs can we hit before a something drags us down? :greedy :shock:
"To achieve satisfactory investment results is easier than most people realize; to achieve superior results is harder than it looks." - Benjamin Graham

MotoTrojan
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Re: U.S. stocks in freefall

Post by MotoTrojan » Wed Sep 27, 2017 2:43 pm

JoMoney wrote:
Wed Sep 27, 2017 2:19 pm
These bull runs can be bitter sweet. How many new highs can we hit before a something drags us down? :greedy :shock:
Windfall hits tomorrow darnit!!

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triceratop
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Re: U.S. stocks in freefall

Post by triceratop » Wed Sep 27, 2017 2:53 pm

oldcomputerguy wrote:
Tue Sep 26, 2017 5:43 am
prettybogle wrote:
Mon Sep 25, 2017 8:27 pm
I always chuckle when this thread pops up very promptly on a down day.
Wait... did we have a down day?
No. In fact today was a big up day for small caps, and small cap growth especially.
"To play the stock market is to play musical chairs under the chord progression of a bid-ask spread."

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Re: U.S. stocks in freefall

Post by czeckers » Wed Sep 27, 2017 8:18 pm

JoMoney wrote:
Wed Sep 27, 2017 2:19 pm
These bull runs can be bitter sweet. How many new highs can we hit before a something drags us down? :greedy :shock:
Since the markets go up most of the time, new highs shouldn't be all that uncommon.
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wrongfunds
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Re: U.S. stocks in freefall

Post by wrongfunds » Thu Sep 28, 2017 12:24 pm

Number of replies to this topic should make it very clear that few people get what you just wrote!
Since the markets go up most of the time, new highs shouldn't be all that uncommon.

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Uncle Pennybags
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Re: U.S. stocks in freefall

Post by Uncle Pennybags » Thu Sep 28, 2017 2:44 pm

wrongfunds wrote:
Thu Sep 28, 2017 12:24 pm
Number of replies to this topic should make it very clear that few people get what you just wrote!
Since the markets go up most of the time, new highs shouldn't be all that uncommon.
From July 2007 it took VTI over five years to hit a new high. That's a lifetime to younger investors.

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triceratop
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Re: U.S. stocks in freefall

Post by triceratop » Thu Sep 28, 2017 2:57 pm

Uncle Pennybags wrote:
Thu Sep 28, 2017 2:44 pm
wrongfunds wrote:
Thu Sep 28, 2017 12:24 pm
Number of replies to this topic should make it very clear that few people get what you just wrote!
Since the markets go up most of the time, new highs shouldn't be all that uncommon.
From July 2007 it took VTI over five years to hit a new high. That's a lifetime to younger investors.
1) You really mean October 2007.

2) It only took about 3.5 years, to February 2011.
"To play the stock market is to play musical chairs under the chord progression of a bid-ask spread."

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DaftInvestor
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Re: U.S. stocks in freefall

Post by DaftInvestor » Thu Oct 19, 2017 9:03 am

S&P and Dow down only 0.5% at the moment (with NASDAQ down 1%) - let's see if this is the day some have been waiting for.

fantasytensai
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Re: U.S. stocks in freefall

Post by fantasytensai » Thu Oct 19, 2017 9:12 am

DaftInvestor wrote:
Thu Oct 19, 2017 9:03 am
S&P and Dow down only 0.5% at the moment (with NASDAQ down 1%) - let's see if this is the day some have been waiting for.
It should be. I just bought 30k of VTSAX yesterday :P

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Psyayeayeduck
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Re: U.S. stocks in freefall

Post by Psyayeayeduck » Thu Oct 19, 2017 9:15 am

DaftInvestor wrote:
Thu Oct 19, 2017 9:03 am
S&P and Dow down only 0.5% at the moment (with NASDAQ down 1%) - let's see if this is the day some have been waiting for.
It's also the 30th Anniversary of Black Monday!

https://www.axios.com/the-30th-annivers ... ce=sidebar

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DaftInvestor
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Re: U.S. stocks in freefall

Post by DaftInvestor » Thu Oct 19, 2017 9:22 am

Psyayeayeduck wrote:
Thu Oct 19, 2017 9:15 am
DaftInvestor wrote:
Thu Oct 19, 2017 9:03 am
S&P and Dow down only 0.5% at the moment (with NASDAQ down 1%) - let's see if this is the day some have been waiting for.
It's also the 30th Anniversary of Black Monday!

https://www.axios.com/the-30th-annivers ... ce=sidebar

Ah - That could be a factor of why some nervous nellies are selling. Of course Apple is causing some drag as well. Any movement in the FAANG stocks tends to drag the market with it a bit. Doesn't look catastrophic in any case (during 1st hour after bell).

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oldcomputerguy
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Re: U.S. stocks in freefall

Post by oldcomputerguy » Thu Oct 19, 2017 9:26 am

Somehow I knew this thread would come back to life today.
:twisted:
It’s taken me a lot of years, but I’ve come around to this: If you’re dumb, surround yourself with smart people. And if you’re smart, surround yourself with smart people who disagree with you.

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Psyayeayeduck
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Re: U.S. stocks in freefall

Post by Psyayeayeduck » Thu Oct 19, 2017 9:39 am

oldcomputerguy wrote:
Thu Oct 19, 2017 9:26 am
Somehow I knew this thread would come back to life today.
:twisted:
I'm so guilty of this as of late. It's becoming my new favorite pastime -- checking this thread when there's a large drop in the markets. Never disappoints. Whether the cause is from politics, anniversaries, or some other voodoo methodology, I take days like this as a reminder to invest when others run the away from the excitement.

Slothmeister
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Re: U.S. stocks in freefall

Post by Slothmeister » Thu Oct 19, 2017 9:53 am

It's leveling off. Whew! I was hoping the drop would hold out until at least the middle of next week.

fantasytensai
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Re: U.S. stocks in freefall

Post by fantasytensai » Thu Oct 19, 2017 3:25 pm

After all that, VTSAX finished in the green.

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Portfolio7
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Re: U.S. stocks in freefall

Post by Portfolio7 » Thu Oct 19, 2017 8:13 pm

fantasytensai wrote:
Thu Oct 19, 2017 3:25 pm
After all that, VTSAX finished in the green.
Well, that's it. You're off my 'contrary indicator' list. :wink:
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CULater
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Re: U.S. stocks in freefall

Post by CULater » Thu Oct 19, 2017 8:28 pm

With CAPE at 31+, I've decided to reduce my stock allocation by 10% for each point above 30. Trimmed 10% and will trim another 10% at 32, and so on. If it hits 40, I'm completely out. The bear is coming!
May you have the hindsight to know where you've been, The foresight to know where you're going, And the insight to know when you've gone too far. ~ Irish Blessing

msterrr
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Re: U.S. stocks in freefall

Post by msterrr » Fri Oct 20, 2017 1:32 am

CULater wrote:
Thu Oct 19, 2017 8:28 pm
With CAPE at 31+, I've decided to reduce my stock allocation by 10% for each point above 30. Trimmed 10% and will trim another 10% at 32, and so on. If it hits 40, I'm completely out. The bear is coming!
What's was your stock allocation before the 10% reduction?

Also, if you're just looking at CAPE why not shift 10% of your stock allocation at a time to international instead since the valuations there are so much lower?

Over the last month I've gone from 70/30 to 60/40 and taken stocks from 30/25 DOM/INT to just 50 INT (VGTSX).

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Portfolio7
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Re: U.S. stocks in freefall

Post by Portfolio7 » Fri Oct 20, 2017 3:09 am

msterrr wrote:
Fri Oct 20, 2017 1:32 am
CULater wrote:
Thu Oct 19, 2017 8:28 pm
With CAPE at 31+, I've decided to reduce my stock allocation by 10% for each point above 30. Trimmed 10% and will trim another 10% at 32, and so on. If it hits 40, I'm completely out. The bear is coming!
Also, if you're just looking at CAPE why not shift 10% of your stock allocation at a time to international instead since the valuations there are so much lower?
I have less domestic equity than I had one year ago. I have more international equity, EM and Developed. I don't consider buy and hold to be a straight-jacket. I can still move a little money around now and then if I think conditions warrant it. I also have a 10% rule, the most I can move in any one month. I see what I did as taking advantage of a likely mispricing... selling US high and buying Int'l low so to speak. There is virtually always a valuation gap between US and Int'l for valid reasons, but that GAP has been bigger than usual for many years now, so I bet on mean reversion. I don't expect to change my current AA for years.

So I don't think it hypocritical to say that if I were adjusting more than 10% to be defensive reasons, it would be a clue that I likely had the wrong AA, and need to dial back the portfolio risk. Cape is a terrible forecasting tool, it could stay high for many more years, and there are plausible reasons for it to be as high as it is and still not be considered significantly over-valued. Also, I'm not certain, but won't Cape adjust down significantly when 2008 rolls off the books (10 year calc.) ?
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Re: U.S. stocks in freefall

Post by CULater » Fri Oct 20, 2017 2:05 pm

I did the same thing by adding more foreign, up to 50% of my equities. But lately I've remembered that when the U.S. market tanks, foreign stocks really tank so that's no protection. Best thing it might do is help long-term returns if you have the nerve to hang on for the long term.
May you have the hindsight to know where you've been, The foresight to know where you're going, And the insight to know when you've gone too far. ~ Irish Blessing

EnjoyIt
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Re: U.S. stocks in freefall

Post by EnjoyIt » Mon Oct 23, 2017 12:38 pm

Portfolio7 wrote:
Fri Oct 20, 2017 3:09 am
Also, I'm not certain, but won't Cape adjust down significantly when 2008 rolls off the books (10 year calc.) ?
This is an interesting comment. Is that true? Please correct me if I am wrong but CAPE 10 is the current price divided by the earning over 10 years. When the market dropped the price to earnings ratios dropped as well during those years and therefor the average over 10 years is probably lower than the average over the last 5 years which did not include the Great Recession. Would't the CAPE 10 therefor increase over the next 3 years by eliminating 2008-2010 PE ratios?

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ray.james
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Re: U.S. stocks in freefall

Post by ray.james » Mon Oct 23, 2017 12:44 pm

EnjoyIt wrote:
Mon Oct 23, 2017 12:38 pm
Portfolio7 wrote:
Fri Oct 20, 2017 3:09 am
Also, I'm not certain, but won't Cape adjust down significantly when 2008 rolls off the books (10 year calc.) ?
This is an interesting comment. Is that true? Please correct me if I am wrong but CAPE 10 is the current price divided by the earning over 10 years. When the market dropped the price to earnings ratios dropped as well during those years and therefor the average over 10 years is probably lower than the average over the last 5 years which did not include the Great Recession. Would't the CAPE 10 therefor increase over the next 3 years by eliminating 2008-2010 PE ratios?
That is indeed correct. I expect it is around 28-29 if low years are removed. Current p/E is around 26. However all the historical comparison of cape 15 and cape 20 do include recessions. So it is a moot point.
You can have some fun here:

https://dqydj.com/shiller-pe-cape-ratio-calculator/
When in doubt, http://www.bogleheads.org/forum/viewtopic.php?f=1&t=79939

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triceratop
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Re: U.S. stocks in freefall

Post by triceratop » Mon Oct 23, 2017 12:46 pm

EnjoyIt wrote:
Mon Oct 23, 2017 12:38 pm
Portfolio7 wrote:
Fri Oct 20, 2017 3:09 am
Also, I'm not certain, but won't Cape adjust down significantly when 2008 rolls off the books (10 year calc.) ?
This is an interesting comment. Is that true? Please correct me if I am wrong but CAPE 10 is the current price divided by the earning over 10 years. When the market dropped the price to earnings ratios dropped as well during those years and therefor the average over 10 years is probably lower than the average over the last 5 years which did not include the Great Recession. Would't the CAPE 10 therefor increase over the next 3 years by eliminating 2008-2010 PE ratios?
"When the market dropped the price to earnings ratios dropped as well during those years"

Did you check this? Are you sure this is what happened?

Anyway, it's not relevant because only historical earnings matter in computing CAPE10, not historical P/E ratios. This is the source of your confusion. You would in fact expect CAPE10 to decrease slightly as the lower earnings from 2008-2010 fall outside of the averaging window. But there have been looks at this and the CAPE10 would not change very much; I can't find the link immediately but you can google for it.
"To play the stock market is to play musical chairs under the chord progression of a bid-ask spread."

marcopolo
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Re: U.S. stocks in freefall

Post by marcopolo » Mon Oct 23, 2017 12:55 pm

EnjoyIt wrote:
Mon Oct 23, 2017 12:38 pm
Portfolio7 wrote:
Fri Oct 20, 2017 3:09 am
Also, I'm not certain, but won't Cape adjust down significantly when 2008 rolls off the books (10 year calc.) ?
This is an interesting comment. Is that true? Please correct me if I am wrong but CAPE 10 is the current price divided by the earning over 10 years. When the market dropped the price to earnings ratios dropped as well during those years and therefor the average over 10 years is probably lower than the average over the last 5 years which did not include the Great Recession. Would't the CAPE 10 therefor increase over the next 3 years by eliminating 2008-2010 PE ratios?
Will not be eliminating old PE ratios, just old "E"s. It is the current price divided by averaged (adjusted) earnings. I believe the argument is that earnings were low(er) during the great recession. So, when those earning are replaced by more recent earning numbers, the average earnings will be higher. The numerator P, is always the current price, so is unaffected by roll off of old data. So, for the same (current) P level, increasing the average E, should make the PE lower. How big of an impact this has is debatable.
Once in a while you get shown the light, in the strangest of places if you look at it right.

EnjoyIt
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Re: U.S. stocks in freefall

Post by EnjoyIt » Mon Oct 23, 2017 4:05 pm

marcopolo wrote:
Mon Oct 23, 2017 12:55 pm
EnjoyIt wrote:
Mon Oct 23, 2017 12:38 pm
Portfolio7 wrote:
Fri Oct 20, 2017 3:09 am
Also, I'm not certain, but won't Cape adjust down significantly when 2008 rolls off the books (10 year calc.) ?
This is an interesting comment. Is that true? Please correct me if I am wrong but CAPE 10 is the current price divided by the earning over 10 years. When the market dropped the price to earnings ratios dropped as well during those years and therefor the average over 10 years is probably lower than the average over the last 5 years which did not include the Great Recession. Would't the CAPE 10 therefor increase over the next 3 years by eliminating 2008-2010 PE ratios?
Will not be eliminating old PE ratios, just old "E"s. It is the current price divided by averaged (adjusted) earnings. I believe the argument is that earnings were low(er) during the great recession. So, when those earning are replaced by more recent earning numbers, the average earnings will be higher. The numerator P, is always the current price, so is unaffected by roll off of old data. So, for the same (current) P level, increasing the average E, should make the PE lower. How big of an impact this has is debatable.
Makes sense. Thanks

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Portfolio7
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Re: U.S. stocks in freefall

Post by Portfolio7 » Tue Oct 24, 2017 12:52 am

EnjoyIt wrote:
Mon Oct 23, 2017 4:05 pm
marcopolo wrote:
Mon Oct 23, 2017 12:55 pm
EnjoyIt wrote:
Mon Oct 23, 2017 12:38 pm
Portfolio7 wrote:
Fri Oct 20, 2017 3:09 am
Also, I'm not certain, but won't Cape adjust down significantly when 2008 rolls off the books (10 year calc.) ?
This is an interesting comment. Is that true? Please correct me if I am wrong but CAPE 10 is the current price divided by the earning over 10 years. When the market dropped the price to earnings ratios dropped as well during those years and therefor the average over 10 years is probably lower than the average over the last 5 years which did not include the Great Recession. Would't the CAPE 10 therefor increase over the next 3 years by eliminating 2008-2010 PE ratios?
Will not be eliminating old PE ratios, just old "E"s. It is the current price divided by averaged (adjusted) earnings. I believe the argument is that earnings were low(er) during the great recession. So, when those earning are replaced by more recent earning numbers, the average earnings will be higher. The numerator P, is always the current price, so is unaffected by roll off of old data. So, for the same (current) P level, increasing the average E, should make the PE lower. How big of an impact this has is debatable.
Makes sense. Thanks
Missed this comment. As I understand it, the earnings rolloff will reduce Cape by perhaps 2-3 points, so 6-10%.
I like the discussion at the site below. It recasts the Cape ratio interestingly.

http://www.philosophicaleconomics.com/2013/12/shiller/
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Always passive
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Re: U.S. stocks in freefall

Post by Always passive » Tue Oct 24, 2017 12:58 am

Uncle Pennybags wrote:
Thu Sep 28, 2017 2:44 pm
wrongfunds wrote:
Thu Sep 28, 2017 12:24 pm
Number of replies to this topic should make it very clear that few people get what you just wrote!
Since the markets go up most of the time, new highs shouldn't be all that uncommon.
From July 2007 it took VTI over five years to hit a new high. That's a lifetime to younger investors.
And much worse for a retiree

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Re: U.S. stocks in freefall

Post by MotoTrojan » Tue Oct 24, 2017 10:12 am

Always passive wrote:
Tue Oct 24, 2017 12:58 am
Uncle Pennybags wrote:
Thu Sep 28, 2017 2:44 pm
wrongfunds wrote:
Thu Sep 28, 2017 12:24 pm
Number of replies to this topic should make it very clear that few people get what you just wrote!
Since the markets go up most of the time, new highs shouldn't be all that uncommon.
From July 2007 it took VTI over five years to hit a new high. That's a lifetime to younger investors.
And much worse for a retiree

Dividends.

CULater
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Re: U.S. stocks in freefall

Post by CULater » Tue Oct 24, 2017 10:20 am

I know this market is in for a tumble. Not because it keeps going up, but because it doesn't go down. The dip-buyers can't get in because there are no dips. Just what it did the last times just before it crapped out.
May you have the hindsight to know where you've been, The foresight to know where you're going, And the insight to know when you've gone too far. ~ Irish Blessing

carofe
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Re: U.S. stocks in freefall

Post by carofe » Tue Oct 24, 2017 10:24 am

I wonder if the correction we all have been waiting to happen already happened in 2015 but much more smoother than we expected.
US Total Stock Market + Intermediate Term Bond. That's it.

asif408
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Re: U.S. stocks in freefall

Post by asif408 » Tue Oct 24, 2017 11:21 am

carofe wrote:
Tue Oct 24, 2017 10:24 am
I wonder if the correction we all have been waiting to happen already happened in 2015 but much more smoother than we expected.
That was one of them. There was also one in 2010 and one in 2011: https://www.portfoliovisualizer.com/bac ... ion3_3=100.

And in developed ex-US there have been 3 15%+ dips since 2009. Emerging markets dropped over 30% for the 6 years between 2011 and 2017, finally climbing out of the hole in August of this year.

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Re: U.S. stocks in freefall

Post by dspencer » Tue Oct 24, 2017 1:51 pm

CULater wrote:
Tue Oct 24, 2017 10:20 am
I know this market is in for a tumble. Not because it keeps going up, but because it doesn't go down. The dip-buyers can't get in because there are no dips. Just what it did the last times just before it crapped out.
Are you short the market? Do you have a time table for this prediction? How much will it tumble? Otherwise, aren't you just stating the obvious? Sooner or later the market will decline like it has many times in the past?

CULater
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Re: U.S. stocks in freefall

Post by CULater » Tue Oct 24, 2017 3:17 pm

dspencer wrote:
Tue Oct 24, 2017 1:51 pm
CULater wrote:
Tue Oct 24, 2017 10:20 am
I know this market is in for a tumble. Not because it keeps going up, but because it doesn't go down. The dip-buyers can't get in because there are no dips. Just what it did the last times just before it crapped out.
Are you short the market? Do you have a time table for this prediction? How much will it tumble? Otherwise, aren't you just stating the obvious? Sooner or later the market will decline like it has many times in the past?
Sooner rather than later. This market is on it's last legs. I never short, but I do take money off the table when the odds of craps is high. As Edward Thorpe has pointed out, there is a lot of similarity between investing in stocks and casino gambling. Right now, there's a whole lot of similarity. Lots of risk for not much expected return. House wins.
May you have the hindsight to know where you've been, The foresight to know where you're going, And the insight to know when you've gone too far. ~ Irish Blessing

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parsi1
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Re: U.S. stocks in freefall

Post by parsi1 » Tue Oct 24, 2017 3:32 pm

This market will never freefall. It will continue going up for ever. :D :twisted:

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Re: U.S. stocks in freefall

Post by Bacchus01 » Tue Oct 24, 2017 3:49 pm

parsi1 wrote:
Tue Oct 24, 2017 3:32 pm
This market will never freefall. It will continue going up for ever. :D :twisted:
I am officially worried.

DanMahowny
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Re: U.S. stocks in freefall

Post by DanMahowny » Tue Oct 24, 2017 5:47 pm

I just returned home from a long weekend in Las Vegas.

The blackjack dealers were giving out investment advice. Cab drivers too. And bartenders also.

I actually heard one say, "It's different this time."

The end is near, I'm sure.

CULater
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Re: U.S. stocks in freefall

Post by CULater » Tue Oct 24, 2017 6:36 pm

DanMahowny wrote:
Tue Oct 24, 2017 5:47 pm
I just returned home from a long weekend in Las Vegas.

The blackjack dealers were giving out investment advice. Cab drivers too. And bartenders also.

I actually heard one say, "It's different this time."

The end is near, I'm sure.
I'm officially worried. :shock:
May you have the hindsight to know where you've been, The foresight to know where you're going, And the insight to know when you've gone too far. ~ Irish Blessing

sketchy9
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Re: U.S. stocks in freefall

Post by sketchy9 » Tue Oct 24, 2017 7:52 pm

CULater wrote:
Tue Oct 24, 2017 3:17 pm
dspencer wrote:
Tue Oct 24, 2017 1:51 pm
CULater wrote:
Tue Oct 24, 2017 10:20 am
I know this market is in for a tumble. Not because it keeps going up, but because it doesn't go down. The dip-buyers can't get in because there are no dips. Just what it did the last times just before it crapped out.
Are you short the market? Do you have a time table for this prediction? How much will it tumble? Otherwise, aren't you just stating the obvious? Sooner or later the market will decline like it has many times in the past?
Sooner rather than later. This market is on it's last legs. I never short, but I do take money off the table when the odds of craps is high. As Edward Thorpe has pointed out, there is a lot of similarity between investing in stocks and casino gambling. Right now, there's a whole lot of similarity. Lots of risk for not much expected return. House wins.
1. The odds of craps are the same on every roll. You of course already knew that each roll is an independent event, and that previous rolls do not influence the current one. Don't fall for the gambler's fallacy.
2. I don't see how boglehead-style investing can be compared to gambling. I don't think anyone here would disagree that there is a degree of chance involved in how the market behaves (e.g. will any number of aspiring international supervillains finally get the nuclear breakthrough they've been after and threaten or attack the world? Can't really control for that). However, to imply that chance is the primary determinant of returns seems a bit off. Moreover, although we assume the market will cycle into the troughs eventually, we also believe that the fundamentals of the US economy and US policy are sound and are what will drive it back to the peaks. There's definitely an element of faith involved in that belief but it's faith in the structure of the economy and its people, not in random chance or hoping that I'll roll a 7 before I crap out.

iasw
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Re: U.S. stocks in freefall

Post by iasw » Tue Oct 24, 2017 7:59 pm

CULater wrote:
Tue Oct 24, 2017 6:36 pm
DanMahowny wrote:
Tue Oct 24, 2017 5:47 pm
I just returned home from a long weekend in Las Vegas.

The blackjack dealers were giving out investment advice. Cab drivers too. And bartenders also.

I actually heard one say, "It's different this time."

The end is near, I'm sure.
I'm officially worried. :shock:
I'm not worried for myself, but I'm worried for others if the advice they're handing out is stock picks or something. Please tell me they were championing low-cost index funds and an appropriate AA for a person's goals, and also making sure to reduce/eliminate consumer debt and have an emergency fund?

SillyRabbit
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Re: U.S. stocks in freefall

Post by SillyRabbit » Tue Oct 24, 2017 8:33 pm

iasw wrote:
Tue Oct 24, 2017 7:59 pm
CULater wrote:
Tue Oct 24, 2017 6:36 pm
DanMahowny wrote:
Tue Oct 24, 2017 5:47 pm
I just returned home from a long weekend in Las Vegas.

The blackjack dealers were giving out investment advice. Cab drivers too. And bartenders also.

I actually heard one say, "It's different this time."

The end is near, I'm sure.
I'm officially worried. :shock:
I'm not worried for myself, but I'm worried for others if the advice they're handing out is stock picks or something. Please tell me they were championing low-cost index funds and an appropriate AA for a person's goals, and also making sure to reduce/eliminate consumer debt and have an emergency fund?
Lol, according to what I read on this forum, the day that happens is the day Bogleheads truly need to be scared of.

CULater
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Re: U.S. stocks in freefall

Post by CULater » Tue Oct 24, 2017 9:36 pm

“The overlap of interest between gambling and the stock market is very high. There are so many similarities and so much one can teach you about the other. Actually, gambling can teach you more about the stock market than the other way around.

Gambling and investing are alike – in both you risk money, which you then may win or lose.”
~ Ed Thorpe

People keep forgetting that "risk" = "gamble". The stock market doesn't owe you anything.
May you have the hindsight to know where you've been, The foresight to know where you're going, And the insight to know when you've gone too far. ~ Irish Blessing

PFInterest
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Re: U.S. stocks in freefall

Post by PFInterest » Tue Oct 24, 2017 9:39 pm

has anyone read this thread from start to finish?

carofe
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Re: U.S. stocks in freefall

Post by carofe » Tue Oct 24, 2017 10:57 pm

PFInterest wrote:
Tue Oct 24, 2017 9:39 pm
has anyone read this thread from start to finish?
Lol I hope not
US Total Stock Market + Intermediate Term Bond. That's it.

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HomerJ
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Re: U.S. stocks in freefall

Post by HomerJ » Tue Oct 24, 2017 11:52 pm

CULater wrote:
Tue Oct 24, 2017 3:17 pm
dspencer wrote:
Tue Oct 24, 2017 1:51 pm
CULater wrote:
Tue Oct 24, 2017 10:20 am
I know this market is in for a tumble. Not because it keeps going up, but because it doesn't go down. The dip-buyers can't get in because there are no dips. Just what it did the last times just before it crapped out.
Are you short the market? Do you have a time table for this prediction? How much will it tumble? Otherwise, aren't you just stating the obvious? Sooner or later the market will decline like it has many times in the past?
Sooner rather than later. This market is on it's last legs. I never short, but I do take money off the table when the odds of craps is high. As Edward Thorpe has pointed out, there is a lot of similarity between investing in stocks and casino gambling. Right now, there's a whole lot of similarity. Lots of risk for not much expected return. House wins.
Dude, it is beyond ironic that you just wrote that in THIS thread... Go back and read this entire thread that started in 2011.

And read how many people wrote exactly what you just wrote in 2011, 2012, 2013, 2014, 2015, 2016, and 2017. It's right here... People making predictions that the market is about to crash, that odds are high for a crash, that a crash is sure to happen. Over and over and over and over. And then you come along and post the exact the same thing. People have pointing out low expected returns since 2010. We had PhDs claiming 4.5% real going forward in 2010 and 2011 and 2012, etc. and instead we've gotten like 12% real a year.

Yeah, sooner or later the market will crash, but you have no idea what the "odds" are. No one does. You may end up being right. Someone has to be right someday. Someone will be the last one to predict a crash before the actual crash. But that doesn't mean they are smarter than the average bear.

There is very little similarity between stocks and casino gambling. Imagine playing a game like where blackjack where no one tells you the rules, but you can try to figure out how it works and what the odds are by looking at the last hundred hands (years). People get PhDs and spend years of their lives looking at the those last hundred hands trying to come up with rules that fit that data curve.

Oh, but in stocks, the rules can change, unlike blackjack. So now try to figure out the odds with limited data, no rulebook, and knowing that the rules can change.

The best advice I can give you is that "NOBODY knows enough to make good predictions" (Some people here like to quote "Nobody knows nothing", but I like "Nobody knows enough" instead).

I say one should ALWAYS invest like it's possible the market could crash tomorrow. Because it could. Trying to predict when is a fool's game.
Last edited by HomerJ on Wed Oct 25, 2017 12:04 am, edited 2 times in total.

sketchy9
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Re: U.S. stocks in freefall

Post by sketchy9 » Wed Oct 25, 2017 12:02 am

PFInterest wrote:
Tue Oct 24, 2017 9:39 pm
has anyone read this thread from start to finish?
I've read every post in this thread, but I started in 2011 and have been following along periodically. It occasionally serves up some good pearls, even nowadays.

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TD2626
Posts: 607
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Re: U.S. stocks in freefall

Post by TD2626 » Wed Oct 25, 2017 12:44 am

sketchy9 wrote:
Tue Oct 24, 2017 7:52 pm
CULater wrote:
Tue Oct 24, 2017 3:17 pm
dspencer wrote:
Tue Oct 24, 2017 1:51 pm
CULater wrote:
Tue Oct 24, 2017 10:20 am
I know this market is in for a tumble. Not because it keeps going up, but because it doesn't go down. The dip-buyers can't get in because there are no dips. Just what it did the last times just before it crapped out.
Are you short the market? Do you have a time table for this prediction? How much will it tumble? Otherwise, aren't you just stating the obvious? Sooner or later the market will decline like it has many times in the past?
Sooner rather than later. This market is on it's last legs. I never short, but I do take money off the table when the odds of craps is high. As Edward Thorpe has pointed out, there is a lot of similarity between investing in stocks and casino gambling. Right now, there's a whole lot of similarity. Lots of risk for not much expected return. House wins.
1. The odds of craps are the same on every roll. You of course already knew that each roll is an independent event, and that previous rolls do not influence the current one. Don't fall for the gambler's fallacy.
2. I don't see how boglehead-style investing can be compared to gambling. I don't think anyone here would disagree that there is a degree of chance involved in how the market behaves (e.g. will any number of aspiring international supervillains finally get the nuclear breakthrough they've been after and threaten or attack the world? Can't really control for that). However, to imply that chance is the primary determinant of returns seems a bit off. Moreover, although we assume the market will cycle into the troughs eventually, we also believe that the fundamentals of the US economy and US policy are sound and are what will drive it back to the peaks. There's definitely an element of faith involved in that belief but it's faith in the structure of the economy and its people, not in random chance or hoping that I'll roll a 7 before I crap out.
I agree that it is hard to compare Boglehead investing to gambling. It's risky, but the "expected returns" of the average investor over long periods is very much positive. Portfolio efficiency is very high - Bogleheads try to take the minimum risk needed to meet their goals. Gambling is where the expected return is negative, because the house gets a cut. Speculative, short term trading (like day trading) is in my opinion gambling (a vice that should be avoided) because expected return is negative - trades are made on random noise, and the brokerage gets its cut through fees. Speculation as practiced by traditional active mutual funds with a ~100% annual turnover isn't gambling, but it is speculative, because it isn't as efficient as more broadly diversified passive approaches. All investment is risky, including via the Boglehead philosophy. However, "never bear too much or too little risk" is an important part of the Boglehead approach.

Also - the irony is that this thread (which started in 2011) hasn't really seen all that much free fall. Instead, the market has had strong growth.

Seeing this thread initially made me want to check it to see if there was any breaking news, and that stocks were actually in free fall. After finding out that no, that wasn't the case, false alarm - time after time - I became desensitized to seeing this thread pop up.

Now, if market freefall does occur, my guess is that Bogleheads will be the last to know, because they will ignore threads saying "market is in freefall" since that thread has historically signified that the market was in the middle of a massive bull.

How about someone create a similar "market skyrockets" thread during the next market crash?

In all seriousness, though - no one can reliably predict market crashes, in my opinion. Therefore, in my belief, staying the course is the best option. Yes, volatility is difficult to put up with - but tune out the noise and let things ride.

CULater
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Re: U.S. stocks in freefall

Post by CULater » Wed Oct 25, 2017 7:52 am

Anyone who doesn't see the similarity between investing in stocks and gambling should re-acquaint themselves with the meaning of "risk". Expected return is not actual return. Everyone who walks into a casino has a positive expected return and a strategy to realize that return. Everyone who invests in stocks has a positive expected return and a strategy to realize that return. The Boglehead strategy is to buy and wait for the inevitable payoff that accrues to the patient believer. That's not a bad strategy - it might even be the best strategy - but don't forget it is just a strategy and nothing is guaranteed. The risk is that you can wait patiently for years and wind up losing to the house, just like every other gambler with a plan.
May you have the hindsight to know where you've been, The foresight to know where you're going, And the insight to know when you've gone too far. ~ Irish Blessing

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