U.S. stocks in free fall

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ruralavalon
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Re: U.S. stocks in freefall

Post by ruralavalon »

fantasytensai wrote: Wed Feb 21, 2018 3:37 pm What do I do with my bond funds that have been dropping like a rock? I'm already at 80/20 but I still feel absolutely screwed by my bond fund allocations. I have the risk tolerance for 90/10 but it just sickens me to sell VBTLX at such a huge loss.
Please develop some perspective. Vanguard Total Bond Market Index Fund Admiral Shares (VBTLX) is down 2.42% year to date. Stock funds can drop that much in a day.

Bond funds are not "dropping like a rock".
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Re: U.S. stocks in freefall

Post by InvestInPasta »

RetireBy55 wrote: Wed Feb 21, 2018 4:31 pmI've never liked VBTLX as a bond fund. Returns are dismal. There are a lot better choices (PONDX comes to mind) out there.
Don't you think PONDX (mainly HY bond) should be compared to VWEHX (Vanguard High-Yield Corporate Fund) rather than VBTLX (that it's all investment grade bonds)?
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Re: U.S. stocks in freefall

Post by tj »

No reason to use PONDX when you can use PIMIX. It had a low minimum at Scottrade. As I recall, PONDX/PIMIX full of emerging market bonds, always was leveraged. Not really comparable to Vanguard High Yield.
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Re: U.S. stocks in freefall

Post by mega317 »

Incredible. Stocks down over 1% and the only posts are about bonds.
https://www.bogleheads.org/forum/viewtopic.php?t=6212
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Re: U.S. stocks in freefall

Post by Leif »

I just popped a positive YTD yesterday, but now it is gone.
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Re: U.S. stocks in freefall

Post by gas_balloon »

mega317 wrote: Tue Feb 27, 2018 10:30 pm Incredible. Stocks down over 1% and the only posts are about bonds.
The market dropped because Powell talked about how good the economy is, indicating acceleration in interest rate rise... Indicating that potentially bonds may "free-fall", indicating I'll be buying more of them to rebalance to my AA.
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Re: U.S. stocks in freefall

Post by Doom&Gloom »

mega317 wrote: Tue Feb 27, 2018 10:30 pm Incredible. Stocks down over 1% and the only posts are about bonds.
Everybody knows that it will be back up tomorrow.
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Re: U.S. stocks in freefall

Post by cfs »

Closing the month tomorrow. . . Negative gains in February? Fasten seat belts for March! Gracias por leer / cfs
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Re: U.S. stocks in freefall

Post by H-Town »

cfs wrote: Wed Feb 28, 2018 12:06 am Closing the month tomorrow. . . Negative gains in February? Fasten seat belts for March! Gracias por leer / cfs
maybe.. maybe not.. I hope that everyone ended up with a lot more shares than they did end of last month.
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Re: U.S. stocks in freefall

Post by radiowave »

cfs wrote: Wed Feb 28, 2018 12:06 am Closing the month tomorrow. . . Negative gains in February? Fasten seat belts for March! Gracias por leer / cfs
I'm getting sea sick watching the ups and downs. I need to get back to following my IPS, only look at my funds when the market is up :)
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Re: U.S. stocks in freefall

Post by VAslim16 »

cfs wrote: Wed Feb 28, 2018 12:06 am Closing the month tomorrow. . . Negative gains in February? Fasten seat belts for March! Gracias por leer / cfs
Yes for negative gains for the month. I think we will be fastening seatbelts for the whole year. Time will tell :)
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Re: U.S. stocks in freefall

Post by ruralavalon »

walletless wrote: Tue Feb 27, 2018 10:33 pm
mega317 wrote: Tue Feb 27, 2018 10:30 pm Incredible. Stocks down over 1% and the only posts are about bonds.
The market dropped because Powell talked about how good the economy is, indicating acceleration in interest rate rise... Indicating that potentially bonds may "free-fall", indicating I'll be buying more of them to rebalance to my AA.
VAslim16 wrote: Wed Feb 28, 2018 12:26 am
cfs wrote: Wed Feb 28, 2018 12:06 am Closing the month tomorrow. . . Negative gains in February? Fasten seat belts for March! Gracias por leer / cfs
Yes for negative gains for the month. I think we will be fastening seatbelts for the whole year. Time will tell :)
What will happen to stocks, and to bonds???

I don't know, and don't care.

OK, I admit that I do care, but I still don't know.
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Taylor Larimore
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"I don't know. I don't care."

Post by Taylor Larimore »

ruralavalon wrote: What will happen to stocks, and to bonds???

I don't know, and don't care.

OK, I admit that I do care, but I still don't know.
ruralavalon:

You remind me of this great article written by Jason Zweig for Money Magazine in 2001:

I Don’t Know, and I Don’t Care
I didn’t always believe in indexing. As a fledgling business reporter at Time Magazine in the mid-1980s, I got interested in sector funds, and the first fund I ever bought was Fidelity Select American Gold on my hunch that gold stocks were cheap. I sold a few months later, feeling quite proud of myself for turning a quick 10 percent profit (before tax). The fund promptly went up 40.5 percent in 1987. Oops — guess I sold too soon.

Next I bought Twentieth Century Select Investors (now American Century Select). Attracted by its great record — it had beaten the S&P 500 in nine out of the 10 years from 1978 through 1987 — I pumped 50 bucks a month into it for years. I kept contributing after I became Forbes‘ mutual funds editor in 1992. By the time I got out a year or two later, I had barely broken even after taxes. Hmm. Where had I gone wrong? Time to do more homework.

Some academic research I read showed “conclusively” that, over time, small stocks would outperform big ones, value stocks would beat growth stocks, and companies that paid dividends would have better returns than non-dividend payers.

So Royce Equity-Income Fund seemed like the Holy Grail: It bought small stocks with low valuations and high dividend yields, and it was run by the redoubtable Chuck Royce. I bought in. But the fund went nowhere and its assets dwindled until Royce had to shut it down in 1997.

A few things were beginning to sink through my thick skull: I wasn’t very good at fund-picking, and beating the market is amazingly hard.

Most depressing of all, the “superstar” fund managers I encountered in the early 1990s had a disconcerting habit of fading from supernova to black hole: Rod Linafelter, Roger Engemann, Richard Fontaine, John Hartwell, John Kaweske, Heiko Thieme. I soon realized that if you thought they were great, you had only to wait a year and look again: Now they were terrible.

Meanwhile, I had been doing more research. The evidence was overpowering: After the expenses of researching and trading stocks, the odds that a fund will beat the S&P over time seemed to be no better than one in four. After tax, the odds went pretty close to zero. Scariest of all, as Nobel Laureate Bill Sharpe showed, these odds are virtually a mathematical certainty.

So, in 1994 — a year before I arrived at MONEY — I threw in the towel and opened my Vanguard 500 Index account. Every month since, I’ve added more money, and I’ve never looked back. (If I had it to do all over again, I would have chosen Vanguard Total Stock Market Index, which tracks the broad Wilshire 5000, but that fund was new then, and I would face a huge capital gains tax if I were to switch now.)

I do own some actively managed international funds (bought before Vanguard launched its total international stock index offering), some bond funds and in my 401(k), a bunch of AOL stock.* But I no longer own any non-index U.S. stock funds, and I haven’t traded a stock in years. And it feels great.

The ultimate beauty of index funds is that they get you utterly out of the business of guessing what will happen next. They enable you to say seven magic words: “I don’t know, and I don’t care.”

Will value stocks do better than growth stocks? I don’t know, and I don’t care — my index fund owns both. Will health care stocks be the best bet for the next 20 years? I don’t know, and I don’t care — my index fund owns them. What’s the next Microsoft? I don’t know, and I don’t care — as soon as it’s big enough to own, my index fund will have it, and I’ll go along for the ride.

With an index fund, you’re on permanent auto-pilot: you will always get what the market is willing to give, no more and no less. By enabling me to say “I don’t know, and I don’t care,” my index fund has liberated me from the feeling that I need to forecast what the market is about to do. That gives me more time and mental energy for the important things in life, like playing with my kids and working in my garden.
Best wishes.
Taylor
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Re: U.S. stocks in freefall

Post by DrGoogle2017 »

I’m positive for the year, in fact close to an all time high on my husband’s account. Mine has higher stock allocation and I didn’t have cash to buy at the dip, so I’m not at an all time high.
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Re: U.S. stocks in freefall

Post by cfs »

This is good.

Good to see that forum members are doing fine, did not sell during the dark days, and are maintaining proper course and speed.

My signature applies.

Gracias por leer ~cfs~
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Re: U.S. stocks in freefall

Post by oldcomputerguy »

RetireBy55 wrote: Wed Feb 21, 2018 5:35 pm Wish I knew how to do a screen cap on BG forum but do a M* compare of PONDX v. VBTLX.
Here it is on Portfolio Research; blue is PONDX, red is VBTLX, and orange is VTSAX (which I threw in to allow comparison to the stock market). It's pretty apparent that PONDX has more correlation to the stock market than one might want in a diversifier.
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Re: U.S. stocks in freefall

Post by scone »

cfs wrote: Wed Feb 28, 2018 12:28 pm This is good.

Good to see that forum members are doing fine, did not sell during the dark days, and are maintaining proper course and speed.

My signature applies.

Gracias por leer ~cfs~
Yep. I had a big wad of cash come in to the 401k (long story) so I've been buying. And since I'm a retiree, buying bonds at a lower price and higher yield is all to the good. I've even been able to reduce my average duration a little, so that's cool too. :D
"My bond allocation is the amount of money that I cannot afford to lose." -- Taylor Larimore
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Re: U.S. stocks in freefall

Post by WentzWagon »

I love how the market has just dropped off the ledge in the last few minutes of trading. Goes up huge one day and then down the same the next. What gives?
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Re: U.S. stocks in freefall

Post by nolesrule »

WentzWagon wrote: Wed Feb 28, 2018 4:36 pm I love how the market has just dropped off the ledge in the last few minutes of trading. Goes up huge one day and then down the same the next. What gives?
I bought 2 shares of VT in each of my kids' accounts around 3:30.
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Re: U.S. stocks in freefall

Post by WentzWagon »

These daily swings a + 30 - 40 + 45 - 40 make zero sense to me.
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Re: U.S. stocks in freefall

Post by SimplicityNow »

WentzWagon wrote: Wed Feb 28, 2018 4:51 pm These daily swings a + 30 - 40 + 45 - 40 make zero sense to me.

Then stop trying to make sense of them. They don't. Short term increases and decreases can be based on anything. And the "experts" will of course postulate why they went up or down but they don't know either. More people wanted to buy then sell. More people wanted to sell then buy.

Ignore it. If you can't ignore it then perhaps your stock percentage is too high for your comfort level.
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Re: U.S. stocks in freefall

Post by GoldenFinch »

WentzWagon wrote: Wed Feb 28, 2018 4:51 pm These daily swings a + 30 - 40 + 45 - 40 make zero sense to me.
It’s just volatility. It’s nothing new. The long term trend is up.
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Re: U.S. stocks in freefall

Post by gas_balloon »

WentzWagon wrote: Wed Feb 28, 2018 4:51 pm These daily swings a + 30 - 40 + 45 - 40 make zero sense to me.
Yes, Mr. Market is senseless. Nothing new 😊
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Re: U.S. stocks in freefall

Post by willthrill81 »

walletless wrote: Wed Feb 28, 2018 7:37 pm
WentzWagon wrote: Wed Feb 28, 2018 4:51 pm These daily swings a + 30 - 40 + 45 - 40 make zero sense to me.
Yes, Mr. Market is senseless. Nothing new 😊
Senseless yet supposedly extremely efficient. A conundrum wrapped in a paradox. :?
“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 triceratop »

willthrill81 wrote: Wed Feb 28, 2018 8:05 pm
walletless wrote: Wed Feb 28, 2018 7:37 pm
WentzWagon wrote: Wed Feb 28, 2018 4:51 pm These daily swings a + 30 - 40 + 45 - 40 make zero sense to me.
Yes, Mr. Market is senseless. Nothing new 😊
Senseless yet supposedly extremely efficient. A conundrum wrapped in a paradox. :?
I think it was Thaler who pointed out EMH shares more with religion than it does with science due to its infalsifiability apart from small discrepancies which Fama dismisses as "anomalies".
"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 willthrill81 »

triceratop wrote: Wed Feb 28, 2018 8:06 pm
willthrill81 wrote: Wed Feb 28, 2018 8:05 pm
walletless wrote: Wed Feb 28, 2018 7:37 pm
WentzWagon wrote: Wed Feb 28, 2018 4:51 pm These daily swings a + 30 - 40 + 45 - 40 make zero sense to me.
Yes, Mr. Market is senseless. Nothing new 😊
Senseless yet supposedly extremely efficient. A conundrum wrapped in a paradox. :?
I think it was Thaler who pointed out EMH shares more with religion than it does with science due to its infalsifiability apart from small discrepancies which Fama dismisses as "anomalies".
Since I study human behavior extensively in my line of work, I'm afraid that I know too much about humans' endemic tendency to behave irrationally en masse to believe in the EMH; I personally know some with Ph.D.s in finance who feel the same way. We think that the market is 'mostly' efficient during 'normal' times, but that this efficiency begins to break down during periods of turbulence.
“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 nisiprius »

SimplicityNow wrote: Wed Feb 28, 2018 5:23 pm
WentzWagon wrote: Wed Feb 28, 2018 4:51 pm These daily swings a + 30 - 40 + 45 - 40 make zero sense to me.
Then stop trying to make sense of them. They don't...
Nassim Nicholas Taleb and Jeremy Siegel each have cited examples that show what nonsense "explanations" of daily movements are.
In 'The Black Swan,' Nassim Nicholas Taleb wrote:One day in December 2003, when Saddam Hussein was captured, Bloomberg News flashed the following headline at 13:01: U.S. Treasuries Rise; Hussein Capture May Not Curb Terrorism. ... Half an hour later, they had to issue a new headline. As these U.S. Treasury bonds fell in price (they fluctuate all day long, so there was nothing special about that), Bloomberg News had a new reason for the fall: Saddam's capture (the same Saddam). At 13:31 they issued the next bulletin: U.S. Treasuries Fall; Hussein Capture Boosts Allure of Risky Assets. So it was the same capture (the cause) explaining one event and its exact opposite.
Less dramatically, but equally significantly:
In 'Stocks for the Long Run,' Jeremy Siegel wrote:Even when the day is filled with news events, there can be sharp disagreement over what news caused the market change. On November 15, 1991, when the Dow fell more than 120 points, or nearly 4 percent, Investor's Business Daily ran an article about the market entitled "Dow Plunges 120 In a Scary Stock Sell-Off: Biotechs, Programs, Expiration and Congress Get the Blame." In contrast, the London-based Financial Times published a front-page article written by a New York Times writer entitled "Wall Street Drops 120 Points on Concern at Russian Moves." What is interesting is that such news, specifically that the Russian government had suspended oil licenses and taken over the gold supplies, was not mentioned even once in the Investor's Business Daily article!
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Re: U.S. stocks in freefall

Post by EyeYield »

nisiprius wrote: Wed Feb 28, 2018 8:18 pm
SimplicityNow wrote: Wed Feb 28, 2018 5:23 pm
WentzWagon wrote: Wed Feb 28, 2018 4:51 pm These daily swings a + 30 - 40 + 45 - 40 make zero sense to me.
Then stop trying to make sense of them. They don't...
Nassim Nicholas Taleb and Jeremy Siegel each have cited examples that show what nonsense "explanations" of daily movements are.
In 'The Black Swan,' Nassim Nicholas Taleb wrote:One day in December 2003, when Saddam Hussein was captured, Bloomberg News flashed the following headline at 13:01: U.S. Treasuries Rise; Hussein Capture May Not Curb Terrorism. ... Half an hour later, they had to issue a new headline. As these U.S. Treasury bonds fell in price (they fluctuate all day long, so there was nothing special about that), Bloomberg News had a new reason for the fall: Saddam's capture (the same Saddam). At 13:31 they issued the next bulletin: U.S. Treasuries Fall; Hussein Capture Boosts Allure of Risky Assets. So it was the same capture (the cause) explaining one event and its exact opposite.
Less dramatically, but equally significantly:
In 'Stocks for the Long Run,' Jeremy Siegel wrote:Even when the day is filled with news events, there can be sharp disagreement over what news caused the market change. On November 15, 1991, when the Dow fell more than 120 points, or nearly 4 percent, Investor's Business Daily ran an article about the market entitled "Dow Plunges 120 In a Scary Stock Sell-Off: Biotechs, Programs, Expiration and Congress Get the Blame." In contrast, the London-based Financial Times published a front-page article written by a New York Times writer entitled "Wall Street Drops 120 Points on Concern at Russian Moves." What is interesting is that such news, specifically that the Russian government had suspended oil licenses and taken over the gold supplies, was not mentioned even once in the Investor's Business Daily article!
I like the way Lemuel Gulliver, head of research at Nisiprius Investments, explains it.
“And in todays news, stocks soared on expectations that nothing would happen, then plunged on news that nothing happened.
We interviewed Lemuel Gulliver, head of research at Nisiprius Investments for his take on this.
"Our research department was expecting nothing to happen, but we underestimated the actual degree to which nothing happened. I mean, it was really nothing. Nada. Zero. Zip. Zilch. Nil. Expecting nothing to happen, the market was stunned when those expectations were fulfilled, and reacted to nothing with something. The market then surprised itself by its own reaction, and then reacted to its reaction so that overall, the reaction was nothing. Now we will wait to see how Asian markets react to this lack of reaction, so that we can forecast the U.S. market's reaction to the Asian reaction.”
:D
"The stock market is a giant distraction from the business of investing." - Jack Bogle
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Re: U.S. stocks in freefall

Post by pokebowl »

Leif wrote: Tue Feb 27, 2018 10:32 pm I just popped a positive YTD yesterday, but now it is gone.
The market giveth and the market taketh away.
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Re: U.S. stocks in freefall

Post by Dominic »

GoldenFinch wrote: Wed Feb 28, 2018 5:31 pm
WentzWagon wrote: Wed Feb 28, 2018 4:51 pm These daily swings a + 30 - 40 + 45 - 40 make zero sense to me.
It’s just volatility. It’s nothing new. The long term trend is up.
What was new was the total lack of volatility in 2017. No month with a loss, no day with a rise of more than 1.4%, no days with substantial drawdowns. 2018 is just back to the usual pattern.
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Re: U.S. stocks in freefall

Post by Bodhi312 »

oldcomputerguy wrote: Wed Feb 28, 2018 12:49 pm
RetireBy55 wrote: Wed Feb 21, 2018 5:35 pm Wish I knew how to do a screen cap on BG forum but do a M* compare of PONDX v. VBTLX.
Here it is on Portfolio Research; blue is PONDX, red is VBTLX, and orange is VTSAX (which I threw in to allow comparison to the stock market). It's pretty apparent that PONDX has more correlation to the stock market than one might want in a diversifier.
According the metrics tab in your link, PIMIX’s beta comes at a whopping 0.17. Also, PIMIX’s allocation to various sectors changes based on whatever the managers deem prudent based on market conditions. There’s more material on the fund’s website, but this shows the allocation’s evolution through time:
https://www.pimco.com/handlers/displayd ... 9vxDrOgsBS
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Re: "I don't know. I don't care."

Post by Kitty Telltales »

Taylor Larimore wrote: Wed Feb 28, 2018 10:26 am
ruralavalon wrote: What will happen to stocks, and to bonds???

I don't know, and don't care.

OK, I admit that I do care, but I still don't know.
ruralavalon:

You remind me of this great article written by Jason Zweig for Money Magazine in 2001:

I Don’t Know, and I Don’t Care
I didn’t always believe in indexing. As a fledgling business reporter at Time Magazine in the mid-1980s, I got interested in sector funds, and the first fund I ever bought was Fidelity Select American Gold on my hunch that gold stocks were cheap. I sold a few months later, feeling quite proud of myself for turning a quick 10 percent profit (before tax). The fund promptly went up 40.5 percent in 1987. Oops — guess I sold too soon.

Next I bought Twentieth Century Select Investors (now American Century Select). Attracted by its great record — it had beaten the S&P 500 in nine out of the 10 years from 1978 through 1987 — I pumped 50 bucks a month into it for years. I kept contributing after I became Forbes‘ mutual funds editor in 1992. By the time I got out a year or two later, I had barely broken even after taxes. Hmm. Where had I gone wrong? Time to do more homework.

Some academic research I read showed “conclusively” that, over time, small stocks would outperform big ones, value stocks would beat growth stocks, and companies that paid dividends would have better returns than non-dividend payers.

So Royce Equity-Income Fund seemed like the Holy Grail: It bought small stocks with low valuations and high dividend yields, and it was run by the redoubtable Chuck Royce. I bought in. But the fund went nowhere and its assets dwindled until Royce had to shut it down in 1997.

A few things were beginning to sink through my thick skull: I wasn’t very good at fund-picking, and beating the market is amazingly hard.

Most depressing of all, the “superstar” fund managers I encountered in the early 1990s had a disconcerting habit of fading from supernova to black hole: Rod Linafelter, Roger Engemann, Richard Fontaine, John Hartwell, John Kaweske, Heiko Thieme. I soon realized that if you thought they were great, you had only to wait a year and look again: Now they were terrible.

Meanwhile, I had been doing more research. The evidence was overpowering: After the expenses of researching and trading stocks, the odds that a fund will beat the S&P over time seemed to be no better than one in four. After tax, the odds went pretty close to zero. Scariest of all, as Nobel Laureate Bill Sharpe showed, these odds are virtually a mathematical certainty.

So, in 1994 — a year before I arrived at MONEY — I threw in the towel and opened my Vanguard 500 Index account. Every month since, I’ve added more money, and I’ve never looked back. (If I had it to do all over again, I would have chosen Vanguard Total Stock Market Index, which tracks the broad Wilshire 5000, but that fund was new then, and I would face a huge capital gains tax if I were to switch now.)

I do own some actively managed international funds (bought before Vanguard launched its total international stock index offering), some bond funds and in my 401(k), a bunch of AOL stock.* But I no longer own any non-index U.S. stock funds, and I haven’t traded a stock in years. And it feels great.

The ultimate beauty of index funds is that they get you utterly out of the business of guessing what will happen next. They enable you to say seven magic words: “I don’t know, and I don’t care.”

Will value stocks do better than growth stocks? I don’t know, and I don’t care — my index fund owns both. Will health care stocks be the best bet for the next 20 years? I don’t know, and I don’t care — my index fund owns them. What’s the next Microsoft? I don’t know, and I don’t care — as soon as it’s big enough to own, my index fund will have it, and I’ll go along for the ride.

With an index fund, you’re on permanent auto-pilot: you will always get what the market is willing to give, no more and no less. By enabling me to say “I don’t know, and I don’t care,” my index fund has liberated me from the feeling that I need to forecast what the market is about to do. That gives me more time and mental energy for the important things in life, like playing with my kids and working in my garden.
Best wishes.
Taylor
Dear Taylor,

Thank you for posting this article from 2001. It’s funny how some may think that as time passes, the truth changes, when actually it doesn’t. Since finding Bogleheads 2 years ago, I went from caring too much about the markets daily moves to training myself to focus on the long picture. Good thing because I bought a chunk of Vanguard 500 Index on Tuesday. What jumps out to me from this article is that the author now wishes he had bought Vanguard Total Stock Market.

I remember on some post in the past, you mentioned that you retired at the age of 57. This is the age I am now and I am considering pulling the retirement trigger too. I’ll cut to the quick. If you were 57 today and had some cash to invest, would it be 500 Index or Total Stock Market?

Best, Kitty Telltales
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Re: U.S. stocks in freefall

Post by Bacchus01 »

cfs wrote: Wed Feb 28, 2018 12:28 pm This is good.

Good to see that forum members are doing fine, did not sell during the dark days, and are maintaining proper course and speed.

My signature applies.

Gracias por leer ~cfs~
I sold a lot during those dark days

To TLH
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Taylor Larimore
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500 Index or Total Stock Market?

Post by Taylor Larimore »

KItty:

It is nice to hear from you.
If you were 57 today and had some cash to invest, would it be 500 Index or Total Stock Market?
I would chose Total Stock Market for its better diversification, and it eliminates any need to add more U.S. stock funds.

Both broad market, low-cost index funds are great choices.

There is more than one road to Dublin.

Best wishes
Taylor
Last edited by Taylor Larimore on Thu Mar 01, 2018 9:33 am, edited 1 time in total.
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RRAAYY3
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Re: U.S. stocks in freefall

Post by RRAAYY3 »

why only choose SP500 when the Total Market gives you the SP500 returns + thousands of other companies ?
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nedsaid
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Re: U.S. stocks in freefall

Post by nedsaid »

willthrill81 wrote: Wed Feb 28, 2018 8:12 pm
triceratop wrote: Wed Feb 28, 2018 8:06 pm
willthrill81 wrote: Wed Feb 28, 2018 8:05 pm
walletless wrote: Wed Feb 28, 2018 7:37 pm
WentzWagon wrote: Wed Feb 28, 2018 4:51 pm These daily swings a + 30 - 40 + 45 - 40 make zero sense to me.
Yes, Mr. Market is senseless. Nothing new 😊
Senseless yet supposedly extremely efficient. A conundrum wrapped in a paradox. :?
I think it was Thaler who pointed out EMH shares more with religion than it does with science due to its infalsifiability apart from small discrepancies which Fama dismisses as "anomalies".
Since I study human behavior extensively in my line of work, I'm afraid that I know too much about humans' endemic tendency to behave irrationally en masse to believe in the EMH; I personally know some with Ph.D.s in finance who feel the same way. We think that the market is 'mostly' efficient during 'normal' times, but that this efficiency begins to break down during periods of turbulence.
I have the view that the markets are mostly rational and efficient but suffer bouts of investor irrationality from time to time. If markets are efficient all of the time, why would the market correct by 10% on what turned out to be very little amount of actual news. I think someone's hedge fund bet went really, really bad. I think one day, the Dow fluctuated by something like 1,600 points. Is that efficiency? Is that rational?
A fool and his money are good for business.
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Re: U.S. stocks in freefall

Post by munemaker »

RRAAYY3 wrote: Thu Mar 01, 2018 9:32 am why only choose SP500 when the Total Market gives you the SP500 returns + thousands of other companies ?
While almost all my equity is in Total Market, Morningstar shows it has under performed Vanguard's S&P 500 index fund over all time periods.
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Re: U.S. stocks in freefall

Post by triceratop »

munemaker wrote: Thu Mar 01, 2018 9:48 am
RRAAYY3 wrote: Thu Mar 01, 2018 9:32 am why only choose SP500 when the Total Market gives you the SP500 returns + thousands of other companies ?
While almost all my equity is in Total Market, Morningstar shows it has under performed Vanguard's S&P 500 index fund over all time periods.
Source?
"To play the stock market is to play musical chairs under the chord progression of a bid-ask spread."
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Taylor Larimore
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Re: U.S. stocks in freefall

Post by Taylor Larimore »

munemaker wrote: Thu Mar 01, 2018 9:48 am While almost all my equity is in Total Market, Morningstar shows it has under performed Vanguard's S&P 500 index fund over all time periods.
munemaker:

The S&P 500 has enjoyed good recent performance because of the current overperformance of large-cap stocks. However, according to Morningstar, Vanguard Total Stock Market (VTSAX) has outperformed Vanguard S&P 500 (VFIAX) during 10- and 15-year periods.

Both are excellent broad-market index funds.

Past performance does not forecast future performance.

Best wishes.
Taylor
"Simplicity is the master key to financial success." -- Jack Bogle
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Re: U.S. stocks in freefall

Post by ruralavalon »

RRAAYY3 wrote: Thu Mar 01, 2018 9:32 am why only choose SP500 when the Total Market gives you the SP500 returns + thousands of other companies ?
Because you bought it long ago in a taxable account and now hav big capital gains built up, so switching to a total stock market index fund creates a big income tax liability.

Because it's the best domestic stock fund offered in your 401k.
Last edited by ruralavalon on Thu Mar 01, 2018 11:02 am, edited 3 times in total.
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Re: U.S. stocks in freefall

Post by WildCat48 »

Have a colleague in my office (non-bogleheader) who is selling everything going to 100% cash. lol.
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Re: U.S. stocks in freefall

Post by RRAAYY3 »

ruralavalon wrote: Thu Mar 01, 2018 10:58 am
RRAAYY3 wrote: Thu Mar 01, 2018 9:32 am why only choose SP500 when the Total Market gives you the SP500 returns + thousands of other companies ?
Because you bought it long ago in a taxable account and now have enorous capital gains built up, so switching to a total stock market index fund creates a big income tax liability

Because it's the best domestic stock fund offered in your 401k.
i meant if you had the choice between the 2 NOW, but thanks

[I'll be buying SP500 in my 401k for reason you mentioned, but have TSM US/INT'L otherwise]
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Re: U.S. stocks in freefall

Post by wrongfunds »


“And in todays news, stocks soared on expectations that nothing would happen, then plunged on news that nothing happened.
We interviewed Lemuel Gulliver, head of research at Nisiprius Investments for his take on this.
"Our research department was expecting nothing to happen, but we underestimated the actual degree to which nothing happened. I mean, it was really nothing. Nada. Zero. Zip. Zilch. Nil. Expecting nothing to happen, the market was stunned when those expectations were fulfilled, and reacted to nothing with something. The market then surprised itself by its own reaction, and then reacted to its reaction so that overall, the reaction was nothing. Now we will wait to see how Asian markets react to this lack of reaction, so that we can forecast the U.S. market's reaction to the Asian reaction.”
Almost 99% of the financial press is like this. It is funny but sad at the same time.
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Colleague needs help

Post by Taylor Larimore »

WildCat48 wrote: Thu Mar 01, 2018 11:00 am Have a colleague in my office (non-bogleheader) who is selling everything going to 100% cash. lol.
WildCat48:

Print "What Experts Say About Market Timing" and give it to them:

viewtopic.php?f=10&t=156499

Best wishes.
Taylor
"Simplicity is the master key to financial success." -- Jack Bogle
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munemaker
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Re: U.S. stocks in freefall

Post by munemaker »

Taylor Larimore wrote: Thu Mar 01, 2018 10:25 am
munemaker wrote: Thu Mar 01, 2018 9:48 am While almost all my equity is in Total Market, Morningstar shows it has under performed Vanguard's S&P 500 index fund over all time periods.
munemaker:

The S&P 500 has enjoyed good recent performance because of the current overperformance of large-cap stocks. However, according to Morningstar, Vanguard Total Stock Market (VTSAX) has outperformed Vanguard S&P 500 (VFIAX) during 10- and 15-year periods.

Both are excellent broad-market index funds.

Past performance does not forecast future performance.

Best wishes.
Taylor
Taylor, you are right. I stand corrected on the 10 & 15 year periods. I agree they are both good funds.
CantPassAgain
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Re: U.S. stocks in freefall

Post by CantPassAgain »

SimplicityNow wrote: Wed Feb 28, 2018 5:23 pmMore people wanted to buy then sell. More people wanted to sell then buy.
This is one of those times when the distinction between "then" and "than" is important (although I would argue that it is always important).
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Re: U.S. stocks in freefall

Post by Earl Lemongrab »

RRAAYY3 wrote: Thu Mar 01, 2018 9:32 am why only choose SP500 when the Total Market gives you the SP500 returns + thousands of other companies ?
In my case, it's because I have a slice-and-dice tilted portfolio, so I prefer that the suballocations have relatively pure representatives. So S&P 500 funds fill most of the US Large Blend category.
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Re: U.S. stocks in freefall

Post by bligh »

Here we go again...
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Re: U.S. stocks in freefall

Post by RRAAYY3 »

My February dip buying is not paying off ...

Oh well, guess it’ll be March dip buying too ...
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Re: U.S. stocks in freefall

Post by selters »

RRAAYY3 wrote: Thu Mar 01, 2018 2:06 pm My February dip buying is not paying off ...

Oh well, guess it’ll be March dip buying too ...
Where do you find money to buy more stocks? Do you just rebalance? Or do you increase your allocation to stocks as stocks fall?
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