U.S. stocks in freefall

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Da5id
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Re: U.S. stocks in freefall

Post by Da5id » Mon Feb 05, 2018 6:29 pm

bligh wrote:
Mon Feb 05, 2018 6:25 pm
njuser wrote:
Mon Feb 05, 2018 6:23 pm
Vanguard is updated for today. ow.
Ow is right. :shock:

I suspect we wont be seeing many new "2 comma club" posts for a bit.
Or quite as many 100% stocks is all you need at any age!

robertmcd
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Re: U.S. stocks in freefall

Post by robertmcd » Mon Feb 05, 2018 6:34 pm

Looks like XIV is busted and will have to liquidate. There is also a large imbalance between the long vol and short vol products. I hate to mention Cramer but he is talking about this. We could be in store for a historic flash crash at the open quickly capitalized on by the algos.

thangngo
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Re: U.S. stocks in freefall

Post by thangngo » Mon Feb 05, 2018 6:47 pm

Anyone plans to short tomorrow? :mrgreen: Make up what was lost today :moneybag

chicagoan23
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Re: U.S. stocks in freefall

Post by chicagoan23 » Mon Feb 05, 2018 6:51 pm

It is comforting that Vanguard Total Bond Market Index was up 47 bps today and TIPs were up about 40 bps.....at least that is a positive sign for me. A flight to safety during a Really Bad Day--even when interest rates are still expected to rise--is exactly why you hold "safe" assets.

Let the short VIX speculators have their fun (or misery) but that activity doesn't mean anything with respect to underlying intrinsic value or market fundamentals.

MotoTrojan
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Re: U.S. stocks in freefall

Post by MotoTrojan » Mon Feb 05, 2018 6:56 pm

robertmcd wrote:
Mon Feb 05, 2018 6:34 pm
Looks like XIV is busted and will have to liquidate. There is also a large imbalance between the long vol and short vol products. I hate to mention Cramer but he is talking about this. We could be in store for a historic flash crash at the open quickly capitalized on by the algos.
Tempted to put in limit orders at a discount :)

RRAAYY3
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Re: U.S. stocks in freefall

Post by RRAAYY3 » Mon Feb 05, 2018 7:01 pm

AnalogKid22 wrote:
Mon Feb 05, 2018 6:29 pm
njuser wrote:
Mon Feb 05, 2018 6:23 pm
Vanguard is updated for today. ow.
T'is but a scratch. And people ask why they should hold bonds.
cash is currently outperforming bonds by almost 2% (total bond market) YTD and has barely given CD-level returns over the last 5 years.

madbrain
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Re: U.S. stocks in freefall

Post by madbrain » Mon Feb 05, 2018 7:09 pm

thangngo wrote:
Mon Feb 05, 2018 6:47 pm
Anyone plans to short tomorrow? :mrgreen: Make up what was lost today :moneybag
Nope, don't have a margin account, and don't want one. However, I'm doing an in-plan roth conversion of after-tax 401k contributions to Roth 401k today, as there will be little to no taxes to pay on this conversion (may have a small loss as of today, don't know yet).

MnD
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Re: U.S. stocks in freefall

Post by MnD » Mon Feb 05, 2018 7:10 pm

Annoyed with myself.
At Jan 26 close my portfolio exceeded my rebalancing bands by like 0.02% on my primary asset allocation (AA) tracking tool. I now have two systems that track AA and I noted the other one was just under the rebalancing band threshold. My IPS says check AA only on weekends and _only_ rebalance when bands are exceeded. Incredibly busy weekend Jan 27-28 with social and home improvement work so I justified not rebalancing various accounts by the fact that both AA trackers were not over the bands. By this weekend it was a moot point and now I'm drifting comfortably into the middle of my AA zone. :annoyed

UPDATE
I made an error - I never did get outside rebalancing bands on Jan 26 close. I was at 27.1% fixed income with bands of 27.0%-33.0%.
I feel much better now! :mrgreen:

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knpstr
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Re: U.S. stocks in freefall

Post by knpstr » Mon Feb 05, 2018 7:27 pm

bligh wrote:
Mon Feb 05, 2018 6:25 pm
njuser wrote:
Mon Feb 05, 2018 6:23 pm
Vanguard is updated for today. ow.
Ow is right. :shock:

I suspect we wont be seeing many new "2 comma club" posts for a bit.
Down 4% across the board. But weekly contributions being posted tomorrow, so things are looking up!
Very little is needed to make a happy life; it is all within yourself, in your way of thinking. -Marcus Aurelius

rgs92
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Re: U.S. stocks in freefall

Post by rgs92 » Mon Feb 05, 2018 7:31 pm

I think from reading this thread today it's true that it's not easy to be a Boglehead. It's simple to be one, but not easy.

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packet
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Re: U.S. stocks in freefall

Post by packet » Mon Feb 05, 2018 7:43 pm

MnD wrote:
Mon Feb 05, 2018 7:10 pm
Annoyed with myself... I was at 27.1% fixed income with bands of 27.0%-33.0%.
:mrgreen:
Wow!

At first I'm like, holy cow, this is terrible (Boglehead perspective)... then I'm like, wait, their 0.1 may be waaaayy bigger than my 0.1, then I'm like, WOW!
Then I'm like, MnD... drat, got me... :)

Seriously tho folks, 4%, of equities... really?
Beer me.

:beerCheers,
packet
First round’s on me.

RRAAYY3
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Re: U.S. stocks in freefall

Post by RRAAYY3 » Mon Feb 05, 2018 7:50 pm

are we expecting another dumpster fire mañana as well ?

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willthrill81
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Re: U.S. stocks in freefall

Post by willthrill81 » Mon Feb 05, 2018 7:53 pm

RRAAYY3 wrote:
Mon Feb 05, 2018 7:50 pm
are we expecting another dumpster fire mañana as well ?
International didn't save the day in 2000-2002 nor in 2008-2009 either. Many argue that international markets are becoming increasingly interdependent, leading to returns being more strongly correlated now than in the past.
“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

harvestbook
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Re: U.S. stocks in freefall

Post by harvestbook » Mon Feb 05, 2018 7:54 pm

I'm selling stocks and fleeing for the stability and safety of bitcoin myself.
I'm not smart enough to know, and I can't afford to guess.

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willthrill81
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Re: U.S. stocks in freefall

Post by willthrill81 » Mon Feb 05, 2018 7:58 pm

harvestbook wrote:
Mon Feb 05, 2018 7:54 pm
I'm selling stocks and fleeing for the stability and safety of bitcoin myself.
Image
“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

RRAAYY3
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Re: U.S. stocks in freefall

Post by RRAAYY3 » Mon Feb 05, 2018 7:59 pm

willthrill81 wrote:
Mon Feb 05, 2018 7:53 pm
RRAAYY3 wrote:
Mon Feb 05, 2018 7:50 pm
are we expecting another dumpster fire mañana as well ?
International didn't save the day in 2000-2002 nor in 2008-2009 either. Many argue that international markets are becoming increasingly interdependent, leading to returns being more strongly correlated now than in the past.
i'm quite disappointed in my INT'L fund myself ... not really seeing that "diversification" perk at the moment !

https://www.cnbc.com/2017/04/17/a-stubb ... ffett.html

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willthrill81
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Re: U.S. stocks in freefall

Post by willthrill81 » Mon Feb 05, 2018 8:04 pm

RRAAYY3 wrote:
Mon Feb 05, 2018 7:59 pm
willthrill81 wrote:
Mon Feb 05, 2018 7:53 pm
RRAAYY3 wrote:
Mon Feb 05, 2018 7:50 pm
are we expecting another dumpster fire mañana as well ?
International didn't save the day in 2000-2002 nor in 2008-2009 either. Many argue that international markets are becoming increasingly interdependent, leading to returns being more strongly correlated now than in the past.
i'm quite disappointed in my INT'L fund myself ... not really seeing that "diversification" perk at the moment !
Overall, international has underperformed the U.S. for the last several decades. Who knows whether that will continue going forward.
“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

kappy
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Re: U.S. stocks in freefall

Post by kappy » Mon Feb 05, 2018 8:05 pm

I put a buy order in for VTSAX before the close. Couldn't help myself :beer . If it continues to drop, I'll buy more :sharebeer

RRAAYY3
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Re: U.S. stocks in freefall

Post by RRAAYY3 » Mon Feb 05, 2018 8:07 pm

kappy wrote:
Mon Feb 05, 2018 8:05 pm
I put a buy order in for VTSAX before the close. Couldn't help myself :beer . If it continues to drop, I'll buy more :sharebeer
all my dip buying last week put me over my transaction cycle for the statement period ...

which conveniently starts back up tomorrow, as does my paycheck. :twisted: .

DavidRoseMountain
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Re: U.S. stocks in freefall

Post by DavidRoseMountain » Mon Feb 05, 2018 8:11 pm

This is a good time to chill out and watch Netflix or Hulu

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Noobvestor
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Re: U.S. stocks in freefall

Post by Noobvestor » Mon Feb 05, 2018 8:13 pm

RRAAYY3 wrote:
Mon Feb 05, 2018 7:59 pm
willthrill81 wrote:
Mon Feb 05, 2018 7:53 pm
RRAAYY3 wrote:
Mon Feb 05, 2018 7:50 pm
are we expecting another dumpster fire mañana as well ?
International didn't save the day in 2000-2002 nor in 2008-2009 either. Many argue that international markets are becoming increasingly interdependent, leading to returns being more strongly correlated now than in the past.
i'm quite disappointed in my INT'L fund myself ... not really seeing that "diversification" perk at the moment !

https://www.cnbc.com/2017/04/17/a-stubb ... ffett.html
In a stock crash, I expect all of my stocks to go down - bonds are the diversifier. In a 'lost decade' like 2000-2010, international can help.
"In the absence of clarity, diversification is the only logical strategy" -= Larry Swedroe

zeugmite
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Re: U.S. stocks in freefall

Post by zeugmite » Mon Feb 05, 2018 8:17 pm

chicagoan23 wrote:
Mon Feb 05, 2018 6:51 pm
Let the short VIX speculators have their fun (or misery) but that activity doesn't mean anything with respect to underlying intrinsic value or market fundamentals.
Actually it might. The VIX contracts were probably hedged with underlying, and leaking into prior returns elsewhere (and thus causing certain over/under valuations). As they unwind, those prior returns on other assets might be wound back as well. Doesn't affect "intrinsic" value, but you didn't get to shop intrinsic value, you bought/sold market price.

Also let's not blame VIX speculators too much as low volatility was what the Fed explicitly guaranteed. This is the kind of market distortion that will really screw with people accumulating over the past decade, earning them low real returns going forward on those acquisitions. This is how the financial crisis got "paid" for, credit risk converted into embedded interest rate risk everywhere.

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ofcmetz
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Re: U.S. stocks in freefall

Post by ofcmetz » Mon Feb 05, 2018 8:26 pm

I remember when this thread kicked off in 2011. I had a lot less invested then, but was moved a lot more emotionally with the ups and downs of the markets. Now I appreciate even more the value of following a plan. At the end of last year we were basically putting new savings into fixed income and even rebalanced towards the end of January towards fixed income. Now two bad weeks have erased 2018's gains plus a little more.

Look at where we are now from when this thread started in 2011. Where this goes is anyone's best guess. My advice is to follow a well thought out plan and not to panic. Markets don't always go up contrary to what last year taught us. I don't think it's ever good to make any drastic changes in the midst of either a raging bull market or sudden crash. Your plan should already say what to do when each happens.
Never underestimate the power of the force of low cost index funds.

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nedsaid
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Re: U.S. stocks in freefall

Post by nedsaid » Mon Feb 05, 2018 8:51 pm

Today is a reminder of several things.

First, markets do awfully weird things for no apparent reason. I see absolutely no logic in the market dropping over 600 points on Friday and over 1,100 points the next Monday. Really, what has changed in the last couple of weeks? Not much.

Second, you never know what the hedge funds and the arbitrageurs are doing. This could be a big reason why the markets do stupid things. My guess, panic selling from investors that are way over leveraged, probably from Hedge Funds. Those guys, who supposedly are professionals, in my opinion do some pretty whacky things.

Third, markets are risky.

Fourth, valuations matter and matter a lot. I was getting a bit uneasy at Forward P/E ratios in the market getting to almost 22. Lots of optimism there. We were getting to where the market was pricing in a perfect investing environment, which almost never exists in the real world. Somebody at a hedge fund realized the market environment wasn't 100% perfect, panicked and hit the sell button with a vengeance. Expectations were just too high.

Fifth, the market has not corrected since the last August 2015-February 2016 market correction. Normally, you see 10% market corrections along the way and we were overdue. We have been in pretty much a straight up market.

Sixth, the level of interest rates have an effect upon P/E ratios. Lower interest rates tend towards higher P/E ratios and higher interest rates tend towards lower P/E ratios. Someone at a hedge fund realized that an economy growing in excess of 3% on its way to 4% could cause the Fed to increase interest rates at a rate faster than what has been predicted. As I recall, the market had three rate increases priced in and now they worry there might be more than that.

Is this a healthy correction? Or are we headed towards a true bear market? Corrections are defined as downturns of 10% or more in an otherwise upward trend. Bear markets are downturns of 20% or more. Markets recover from corrections in a few months, bear markets typically take 18 months to 3 years to recover. Who knows? I surely don't. If I had to guess, I would guess this is a healthy correction and that we will be back to all time highs in a few months. But again, my record as an economic and market forecaster is pretty spotty.
A fool and his money are good for business.

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Re: U.S. stocks in freefall

Post by pokebowl » Mon Feb 05, 2018 8:57 pm

CULater wrote:
Mon Feb 05, 2018 3:21 pm
It's official. You dip-buyers stepping up or are you hiding under the covers??

STOCK ROUT IN FULL FORCE, DOW IN FREE FALL DOWN MORE THAN 1,000 POINTS
Trying to do my part. Bought in on Friday, threw more money in the mix today, and have some left over for tomorrow. I am more excited this dip/sale coincided with my monthly contribution time. I just get to break it up into smaller chunks now for fun.

gilgamesh
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Re: U.S. stocks in freefall

Post by gilgamesh » Mon Feb 05, 2018 8:59 pm

I thought posters were being sarcastic with the doom and gloom...I guess they weren't...stunned, this is all it takes for some to panic...I guess all that talk about visualizing stocks dropping 50% and not recovering for 5 years was taken as a joke by some...this? This is NOTHING!

zeugmite
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Re: U.S. stocks in freefall

Post by zeugmite » Mon Feb 05, 2018 9:01 pm

nedsaid wrote:
Mon Feb 05, 2018 8:51 pm
First, markets do awfully weird things for no apparent reason. I see absolutely no logic in the market dropping over 600 points on Friday and over 1,100 points the next Monday. Really, what has changed in the last couple of weeks? Not much.
What changed was that a long-standing correlation structure between stocks and bonds stopped working on Friday* (ultimately due to rapid interest rate rises), increasing the risk of many hedged portfolios substantially. The correlation came back a little bit today but apparently it was enough to trigger the repricing of many assets.

* This has happened a few times before, but each time in the past the Fed stepped in with QE and suppressed rates.

MoonOrb
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Re: U.S. stocks in freefall

Post by MoonOrb » Mon Feb 05, 2018 9:09 pm

bligh wrote:
Mon Feb 05, 2018 6:25 pm
njuser wrote:
Mon Feb 05, 2018 6:23 pm
Vanguard is updated for today. ow.
Ow is right. :shock:

I suspect we wont be seeing many new "2 comma club" posts for a bit.
Only from those folks who had just made the 3 comma club :)

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nedsaid
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Re: U.S. stocks in freefall

Post by nedsaid » Mon Feb 05, 2018 9:11 pm

zeugmite wrote:
Mon Feb 05, 2018 9:01 pm
nedsaid wrote:
Mon Feb 05, 2018 8:51 pm
First, markets do awfully weird things for no apparent reason. I see absolutely no logic in the market dropping over 600 points on Friday and over 1,100 points the next Monday. Really, what has changed in the last couple of weeks? Not much.
What changed was that a long-standing correlation structure between stocks and bonds stopped working on Friday* (ultimately due to rapid interest rate rises), increasing the risk of many hedged portfolios substantially. The correlation came back a little bit today but apparently it was enough to trigger the repricing of many assets.

* This has happened a few times before, but each time in the past the Fed stepped in with QE and suppressed rates.
Yes, that would be point six of my post above. The thing is, even in the light of a bit higher interest rates, this drop seems too much too soon. This is what happens when expectations get too high, you get vulnerable to even a small bit of bad news. High valuations can result in sudden drops like this.
A fool and his money are good for business.

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triceratop
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Re: U.S. stocks in freefall

Post by triceratop » Mon Feb 05, 2018 9:12 pm

DavidRoseMountain wrote:
Mon Feb 05, 2018 8:11 pm
This is a good time to chill out and watch Netflix or Hulu
That won't help, NFLX is down 4.92%.
"To play the stock market is to play musical chairs under the chord progression of a bid-ask spread."

CULater
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Re: U.S. stocks in freefall

Post by CULater » Mon Feb 05, 2018 9:23 pm

Noobvestor wrote:
Mon Feb 05, 2018 8:13 pm
RRAAYY3 wrote:
Mon Feb 05, 2018 7:59 pm
willthrill81 wrote:
Mon Feb 05, 2018 7:53 pm
RRAAYY3 wrote:
Mon Feb 05, 2018 7:50 pm
are we expecting another dumpster fire mañana as well ?
International didn't save the day in 2000-2002 nor in 2008-2009 either. Many argue that international markets are becoming increasingly interdependent, leading to returns being more strongly correlated now than in the past.
i'm quite disappointed in my INT'L fund myself ... not really seeing that "diversification" perk at the moment !

https://www.cnbc.com/2017/04/17/a-stubb ... ffett.html
In a stock crash, I expect all of my stocks to go down - bonds are the diversifier. In a 'lost decade' like 2000-2010, international can help.
Actually, I'd argue that bonds are not a "diversifier". As Cliff Asness states, bonds merely dilute or dampen stock returns. Unless you hold a whole lot of them and/or they have long durations, your portfolio returns are still driven by the stock returns in it. For example, the return of a portfolio that is 60% stocks, 40% intermediate bonds is correlated 0.97 with the returns of stocks. Because the bonds have lower volatility, they reduce the likely range of portfolio returns both the upside and the downside, but they do not reduce the equity risk of the portfolio in the sense that most of the volatility of your portfolio returns is still attributable to stocks.
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

fanmail
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Re: U.S. stocks in freefall

Post by fanmail » Mon Feb 05, 2018 9:26 pm

FYI futures markets are implying another 3% dip right now from Monday’s close.

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walletless
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Re: U.S. stocks in freefall

Post by walletless » Mon Feb 05, 2018 9:30 pm

fanmail wrote:
Mon Feb 05, 2018 9:26 pm
FYI futures markets are implying another 3% dip right now from Monday’s close.
Being it on!
#StayingTheCourse

aaronl
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Re: U.S. stocks in freefall

Post by aaronl » Mon Feb 05, 2018 9:33 pm

nedsaid wrote:
Mon Feb 05, 2018 8:51 pm
Fourth, valuations matter and matter a lot. I was getting a bit uneasy at Forward P/E ratios in the market getting to almost 22. Lots of optimism there. We were getting to where the market was pricing in a perfect investing environment, which almost never exists in the real world. Somebody at a hedge fund realized the market environment wasn't 100% perfect, panicked and hit the sell button with a vengeance. Expectations were just too high.
I'm not so sure that valuations are relevant here. EM has been falling in lock-step with US stocks, and there's a pretty broad consensus that EM stocks are not as expensive. I share your concerns about valuations, and would love to see some of the excess unwind. But I'm not convinced that this is driving the declines.

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Re: U.S. stocks in freefall

Post by zeugmite » Mon Feb 05, 2018 9:35 pm

aaronl wrote:
Mon Feb 05, 2018 9:33 pm
I'm not so sure that valuations are relevant here. EM has been falling in lock-step with US stocks, and there's a pretty broad consensus that EM stocks are not as expensive. I share your concerns about valuations, and would love to see some of the excess unwind. But I'm not convinced that this is driving the declines.
Well, if valuations are "right" there would be plenty of buyers, so in a way it is valuations allowing the declines, at least.

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Re: U.S. stocks in freefall

Post by oldcomputerguy » Mon Feb 05, 2018 9:38 pm

Aaaaand, the beat goes on... as of 9:35 PM Eastern, Australia is down almost 3%, Japan is down over 5%, and U.S. S&P 500 e-mini is down a percent and a half. Looks like tuck and roll tomorrow.
:shock:
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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Re: U.S. stocks in freefall

Post by TallBoy29er » Mon Feb 05, 2018 9:44 pm

oldcomputerguy wrote:
Mon Feb 05, 2018 9:38 pm
Aaaaand, the beat goes on... as of 9:35 PM Eastern, Australia is down almost 3%, Japan is down over 5%, and U.S. S&P 500 e-mini is down a percent and a half. Looks like tuck and roll tomorrow.
:shock:

Tuck and roll. That was funny. :D

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Re: U.S. stocks in freefall

Post by sreynard » Mon Feb 05, 2018 9:45 pm

aqan wrote:
Mon Feb 05, 2018 5:45 pm
RetireBy55 wrote:
Mon Feb 05, 2018 5:21 pm
MrNewEngland wrote:
Mon Feb 05, 2018 4:53 pm
HomerJ wrote:
Mon Feb 05, 2018 4:38 pm


People need to stop wishing for a crash. At least out loud. Even if YOU don't get hurt, many people will.
I've been thinking the exact same thing when I've been reading this thread for the past week.
EXACTLY. Some of us are literally on the verge of retirement. Others are IN retirement. People like us don't have 20+ year horizons and watch what's essentially an entire year's worth of living expenses vaporized in one day's trading.
You know wishes don’t work on stock market (and most other things) otherwise I would be a millionaire long time ago:)
If you’re close to retirement and want to sleep well at night change your AA now. It’s not too late.
When I turned onto my street coming home today there was this REALLY pretty.... Nope, that one didn't work either... My unscientific study finds that wishes have no effect on reality at all. Which is probably a very thing for my net worth....

quantAndHold
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Re: U.S. stocks in freefall

Post by quantAndHold » Mon Feb 05, 2018 9:48 pm

The drop is entirely my fault. I’ve been DCAing a large sum into stocks over the last year. I just moved the last chunk into the stock market last week. :oops:

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Re: U.S. stocks in freefall

Post by fanmail » Mon Feb 05, 2018 9:53 pm

oldcomputerguy wrote:
Mon Feb 05, 2018 9:38 pm
Aaaaand, the beat goes on... as of 9:35 PM Eastern, Australia is down almost 3%, Japan is down over 5%, and U.S. S&P 500 e-mini is down a percent and a half. Looks like tuck and roll tomorrow.
:shock:
SP futures closed this afternoon 1.5 below the index so that 1.5% move down, which is now 2% btw, is implying a larger drop in the index,~3.5% now.

Similarly, Dow futures are 1000 points lower than the index close today.

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Re: U.S. stocks in freefall

Post by willthrill81 » Mon Feb 05, 2018 9:55 pm

fanmail wrote:
Mon Feb 05, 2018 9:53 pm
oldcomputerguy wrote:
Mon Feb 05, 2018 9:38 pm
Aaaaand, the beat goes on... as of 9:35 PM Eastern, Australia is down almost 3%, Japan is down over 5%, and U.S. S&P 500 e-mini is down a percent and a half. Looks like tuck and roll tomorrow.
:shock:
SP futures closed this afternoon 1.5 below the index so that 1.5% move down, which is now 2% btw, is implying a larger drop in the index,~3.5% now.

Similarly, Dow futures are 1000 points lower than the index close today.
That's not a guarantee of tomorrow's action. Remember when the futures market was deep in the red right after the election, only to see the opposite occur during regular trading?
“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 zeugmite » Mon Feb 05, 2018 9:56 pm

quantAndHold wrote:
Mon Feb 05, 2018 9:48 pm
The drop is entirely my fault. I’ve been DCAing a large sum into stocks over the last year. I just moved the last chunk into the stock market last week. :oops:
In your case, should've lump summed :wink:

fanmail
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Re: U.S. stocks in freefall

Post by fanmail » Mon Feb 05, 2018 10:01 pm

willthrill81 wrote:
Mon Feb 05, 2018 9:55 pm
fanmail wrote:
Mon Feb 05, 2018 9:53 pm
oldcomputerguy wrote:
Mon Feb 05, 2018 9:38 pm
Aaaaand, the beat goes on... as of 9:35 PM Eastern, Australia is down almost 3%, Japan is down over 5%, and U.S. S&P 500 e-mini is down a percent and a half. Looks like tuck and roll tomorrow.
:shock:
SP futures closed this afternoon 1.5 below the index so that 1.5% move down, which is now 2% btw, is implying a larger drop in the index,~3.5% now.

Similarly, Dow futures are 1000 points lower than the index close today.
That's not a guarantee of tomorrow's action. Remember when the futures market was deep in the red right after the election, only to see the opposite occur during regular trading?
Yes, of course it’s not a guarantee to get these prices during trading hours tomorrow. I was just trying to clarify where the market really was trading this evening.

sreynard
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Re: U.S. stocks in freefall

Post by sreynard » Mon Feb 05, 2018 10:03 pm

gilgamesh wrote:
Mon Feb 05, 2018 8:59 pm
I thought posters were being sarcastic with the doom and gloom...I guess they weren't...stunned, this is all it takes for some to panic...I guess all that talk about visualizing stocks dropping 50% and not recovering for 5 years was taken as a joke by some...this? This is NOTHING!
I am! I am! My sarcasm is limited only by my faulty technique... :twisted:

Green Street
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Re: U.S. stocks in freefall

Post by Green Street » Mon Feb 05, 2018 10:13 pm

XIV is getting decimated AH, may be liquidated tomorrow, if so, get ready for a very fun ride.
Searching Through The FiRE

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CaliJim
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Re: U.S. stocks in freefall

Post by CaliJim » Mon Feb 05, 2018 10:36 pm

My gut feelings:

Working folks should continue investing in a disciplined way through thick and thin as before, buying in accordance with their target asset allocation.

And folks should perhaps be patient with regard to rebalancing and TLH opportunities in case the market continues to correct, which I suspect it will. I would not rush in to make any big moves. Don't try to catch a falling knife or time the bottom. Let the market's emotions run their course a bit. Let real news filter back into the market, then rebalance and TLH. In other words, I might delay selling bonds to buy stocks just now.

OTOH...interest rates are not too stable and may rise a bit more than is expected. Unemployment is low. Inflation may rise a bit. The Fed may cool things down a bit.. so when buying bonds, I suggest buying shorter durations, and bring average maturity down from 5-7 yeas to 3-5 years.

I doubt this will be anything like 2008 where the depth of corruption in the CDO markets took a while to be uncovered and the market dove 50%. I suspect this is more of a case of the market having gotten 10% to 20% ahead of itself. With the Fed raising rates, and a new Chairman coming in, many folks are finally really looking at PE's and revising their growth expectations downwards.

In the long run....this will be just a little wiggle that can't be seen very well on the 30 year log chart.

But what do I know.
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Houe
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Re: U.S. stocks in freefall

Post by Houe » Mon Feb 05, 2018 10:58 pm

I logged in to my 401k portfolio to see the damage and saw some good news (maybe). My company posted our profit sharing today which is close to 6% of salary. On the down side I see futures are pointing to another ugly day tomorrow. But I guess posting today is better than a few trading days ago...

chicagoan23
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Re: U.S. stocks in freefall

Post by chicagoan23 » Mon Feb 05, 2018 11:02 pm

zeugmite wrote:
Mon Feb 05, 2018 8:17 pm
chicagoan23 wrote:
Mon Feb 05, 2018 6:51 pm
Let the short VIX speculators have their fun (or misery) but that activity doesn't mean anything with respect to underlying intrinsic value or market fundamentals.
Actually it might. The VIX contracts were probably hedged with underlying, and leaking into prior returns elsewhere (and thus causing certain over/under valuations). As they unwind, those prior returns on other assets might be wound back as well. Doesn't affect "intrinsic" value, but you didn't get to shop intrinsic value, you bought/sold market price.

Also let's not blame VIX speculators too much as low volatility was what the Fed explicitly guaranteed. This is the kind of market distortion that will really screw with people accumulating over the past decade, earning them low real returns going forward on those acquisitions. This is how the financial crisis got "paid" for, credit risk converted into embedded interest rate risk everywhere.
I won’t guess about what kind of leaking into returns occurred but according to this last round of earnings reports, underlying businesses are strong and are expected to continue to be strong. Banks are also much stronger than they were last time and despite high debt levels there does not appear to be much risk of a credit crisis or a wave of defaults. If there is little prospect of a recession and there is little risk of a credit crisis, then the risk of big crash is remote. You would not expect it if we are going through a reset due to increasing rates or inflation expectations. 5% broad market drops in a matter of hours appear to be driven by traders and after such a big run up the buyers have paused.....at least that’s my hope of what’s happening.

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ofcmetz
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Re: U.S. stocks in freefall

Post by ofcmetz » Mon Feb 05, 2018 11:08 pm

nedsaid wrote:
Mon Feb 05, 2018 8:51 pm
Today is a reminder of several things.

First, markets do awfully weird things for no apparent reason. I see absolutely no logic in the market dropping over 600 points on Friday and over 1,100 points the next Monday. Really, what has changed in the last couple of weeks? Not much.

Second, you never know what the hedge funds and the arbitrageurs are doing. This could be a big reason why the markets do stupid things. My guess, panic selling from investors that are way over leveraged, probably from Hedge Funds. Those guys, who supposedly are professionals, in my opinion do some pretty whacky things.

Third, markets are risky.

Fourth, valuations matter and matter a lot. I was getting a bit uneasy at Forward P/E ratios in the market getting to almost 22. Lots of optimism there. We were getting to where the market was pricing in a perfect investing environment, which almost never exists in the real world. Somebody at a hedge fund realized the market environment wasn't 100% perfect, panicked and hit the sell button with a vengeance. Expectations were just too high.

Fifth, the market has not corrected since the last August 2015-February 2016 market correction. Normally, you see 10% market corrections along the way and we were overdue. We have been in pretty much a straight up market.

Sixth, the level of interest rates have an effect upon P/E ratios. Lower interest rates tend towards higher P/E ratios and higher interest rates tend towards lower P/E ratios. Someone at a hedge fund realized that an economy growing in excess of 3% on its way to 4% could cause the Fed to increase interest rates at a rate faster than what has been predicted. As I recall, the market had three rate increases priced in and now they worry there might be more than that.

Is this a healthy correction? Or are we headed towards a true bear market? Corrections are defined as downturns of 10% or more in an otherwise upward trend. Bear markets are downturns of 20% or more. Markets recover from corrections in a few months, bear markets typically take 18 months to 3 years to recover. Who knows? I surely don't. If I had to guess, I would guess this is a healthy correction and that we will be back to all time highs in a few months. But again, my record as an economic and market forecaster is pretty spotty.
Thanks for taking the time to write this excellent post Ned.
Never underestimate the power of the force of low cost index funds.

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Re: U.S. stocks in freefall

Post by CULater » Mon Feb 05, 2018 11:17 pm

Hey, guess what? It's still a little more likely that Mr. Market is UP tomorrow and not DOWN. According to Crestmont, over the last 50 years the market has been up about 54% of the days and down 46%. Even in bear market periods, it has been up 51% of the days and down 49%. It's not the number of UPs and the DOWNs that get you -- it's just how B I G they are.

https://www.crestmontresearch.com/docs/Stock-Yo-Yo.pdf
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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