U.S. stocks in free fall

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ge1
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Re: U.S. stocks in free fall

Post by ge1 » Thu Dec 20, 2018 5:34 pm

WanderingDoc wrote:
Thu Dec 20, 2018 4:54 pm
willthrill81 wrote:
Thu Dec 20, 2018 4:49 pm
Accrual wrote:
Thu Dec 20, 2018 1:58 pm
You are also assuming a lot with an 18 month recovery time (if a recovery actually occurs).
If a recovery doesn't occur eventually, then we're all hosed. :D

Historically, most market recoveries have taken fewer than 18 months. But I don't really care.
No, not all of us are hosed. If we are diversified into real assets and internationally into multiple investments than we are not hosed at all.

The "all of us are hosed" is a common rationalization that I read on this board, touted by investors heavily into US paper, telling themselves this so they could sleep better at night.

The fact of the matter is, there are other ivestments and diversification strategies which protect against "being hosed" in the precise situation that is being described here.
Let my guess WanderingDoc..... maybe Real Estate?

Don't take this the wrong way, but I think every single post I read from you is touting one way or the other Real Estate.

Just curious why you hang out here and not on BiggerPockets?

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J G Bankerton
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Re: U.S. stocks in free fall

Post by J G Bankerton » Thu Dec 20, 2018 5:38 pm

What percent of the people don't watch the ups and downs of the market? Not because they are Bogleheads but because they don't have any money to watch. :confused

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Doom&Gloom
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Re: U.S. stocks in free fall

Post by Doom&Gloom » Thu Dec 20, 2018 5:40 pm

Can't be a free fall. I haven't even hit a rebalancing point yet. But I guess it could happen in the next day or two.

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J G Bankerton
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Re: U.S. stocks in free fall

Post by J G Bankerton » Thu Dec 20, 2018 5:41 pm

ge1 wrote:
Thu Dec 20, 2018 5:34 pm
Just curious why you hang out here and not on BiggerPockets?
EZ pickings, the same reason insurance types hang around. Jackals circling in the night. :shock:

dspencer
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Re: U.S. stocks in free fall

Post by dspencer » Thu Dec 20, 2018 5:43 pm

willthrill81 wrote:
Thu Dec 20, 2018 4:51 pm
WhiteMaxima wrote:
Thu Dec 20, 2018 4:49 pm
When everyone hates the stock, then is the time to buy. 2008,9 is one example.
DING DING DING!! :sharebeer
I truly don't know if these are meant to be serious or not.

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mrspock
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Re: U.S. stocks in free fall

Post by mrspock » Thu Dec 20, 2018 5:47 pm

Looking forward to hearing all of Jim Cramer’s sound effects tonight (e.g. “the house of paaaaain”), days like today make for the most entertaining shows (less the CEO fluff pieces) and maybe a solid rant about the fed chairman.

You can also tell we are far from any bottom due to the lack of “despair” posts which were more common in the older 2008 threads. That said, maybe the lack of “FIRE” posts is a sign we are half way down? :D

amitb00
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Re: U.S. stocks in free fall

Post by amitb00 » Thu Dec 20, 2018 5:48 pm

Market will come back, They will come back roaring. Problem is if you lose job or need money for college/retirement etc and have to do distress selling before they come back.
If you have a good job and don’t need to sell, and can buy, go for it.

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gilgamesh
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Re: U.S. stocks in free fall

Post by gilgamesh » Thu Dec 20, 2018 5:49 pm

actx wrote:
Thu Dec 20, 2018 4:36 pm
So. . serious question. . .

When do these 500 its (2%+) daily drops become an issue and something to really worry about?

I am happy with my asset allocation but man, it is getting hard to stomach these drops with no real end in sight.
“Something to really worry about” is such a personal reaction - that’s why AA (risk tolerance) is personalized.

I will start to worry if total USA stock market drops below 50% or does not recover for over 5 years.

What’s happening now is still such a yawner for me...I don’t think the sale will be substantial enough or last long enough to make a difference - I wish it does.

P.S: My taxable account which only has total USA stock market, where I did not re-invest dividends (or make new purchases) is only down 5.99% this year ...why would this even be an event?
Last edited by gilgamesh on Thu Dec 20, 2018 5:52 pm, edited 2 times in total.

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J G Bankerton
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Re: U.S. stocks in free fall

Post by J G Bankerton » Thu Dec 20, 2018 5:51 pm

I know where all the stock money is gong. Bitcoin is going through the roof again. I'm all in as soon as I can dump this VTI. I'm not missing this Bitcoin bounce.

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willthrill81
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Re: U.S. stocks in free fall

Post by willthrill81 » Thu Dec 20, 2018 5:57 pm

dspencer wrote:
Thu Dec 20, 2018 5:43 pm
willthrill81 wrote:
Thu Dec 20, 2018 4:51 pm
WhiteMaxima wrote:
Thu Dec 20, 2018 4:49 pm
When everyone hates the stock, then is the time to buy. 2008,9 is one example.
DING DING DING!! :sharebeer
I truly don't know if these are meant to be serious or not.
Assuming that the market eventually recovers, would you rather have bought VTSAX at $73.65 (price on 9/20/18) or today's $62.40?
“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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willthrill81
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Re: U.S. stocks in free fall

Post by willthrill81 » Thu Dec 20, 2018 5:58 pm

lostdog wrote:
Thu Dec 20, 2018 5:05 pm
WanderingDoc wrote:
Thu Dec 20, 2018 4:54 pm
willthrill81 wrote:
Thu Dec 20, 2018 4:49 pm
Accrual wrote:
Thu Dec 20, 2018 1:58 pm
You are also assuming a lot with an 18 month recovery time (if a recovery actually occurs).
If a recovery doesn't occur eventually, then we're all hosed. :D

Historically, most market recoveries have taken fewer than 18 months. But I don't really care.
No, not all of us are hosed. If we are diversified into real assets and internationally into multiple investments than we are not hosed at all.

The "all of us are hosed" is a common rationalization that I read on this board, touted by investors heavily into US paper, telling themselves this so they could sleep better at night.

The fact of the matter is, there are other ivestments and diversification strategies which protect against "being hosed" in the precise situation that is being described here.
When is the steak dinner?
Yeah, no investors lost any money in real estate in 2008-2009. And international stocks were a great diversifier then too, especially emerging markets. :D
Last edited by willthrill81 on Thu Dec 20, 2018 5:59 pm, edited 1 time in total.
“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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JoMoney
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Re: U.S. stocks in free fall

Post by JoMoney » Thu Dec 20, 2018 5:58 pm

J G Bankerton wrote:
Thu Dec 20, 2018 5:51 pm
I know where all the stock money is gong ...
Image
"To achieve satisfactory investment results is easier than most people realize; to achieve superior results is harder than it looks." - Benjamin Graham

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oldcomputerguy
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Re: U.S. stocks in free fall

Post by oldcomputerguy » Thu Dec 20, 2018 6:10 pm

MisterMister wrote:
Thu Dec 20, 2018 2:55 pm
In support of the Boglehead view, two advisors I allowed to speak with me recently both conceded I could do better with a long-term SP500 index fund (than with them) as long as I can resist the temptation to sell. At least I'll give marks for admitting that. But 1% or better is an expensive way to get a backbone transplant. I did not move further with them.
Sounds like what I experienced recently. DW's workplace offered a "retirement workshop", she wanted to go, so we did. Of course they offered "a free one-on-one session" afterward, which (at her request) we did as well. Long story short, the presenter proposed that we put my Fidelity tIRA in their loving hands and into thirteen different SEI investment funds with ERs ranging from 0.2% (for a government money-market fund) to 2.0% (for an alternative-investment fund); over half of the suggested funds had ERs over 1%. I did the math, and found out that, with the ERs on those funds plus the advisor's 1% AUM fee, I would wind up spending over $7300 in expenses per year, versus the $226 that I'm paying now for my Fidelity index fund tIRA.

We have a return appointment scheduled with the presenter. I'm telling him "thanks, but no thanks".
"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." (Aaron Sorkin)

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Doom&Gloom
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Re: U.S. stocks in free fall

Post by Doom&Gloom » Thu Dec 20, 2018 6:14 pm

mrspock wrote:
Thu Dec 20, 2018 5:47 pm
Looking forward to hearing all of Jim Cramer’s sound effects tonight (e.g. “the house of paaaaain”), days like today make for the most entertaining shows (less the CEO fluff pieces) and maybe a solid rant about the fed chairman.

You can also tell we are far from any bottom due to the lack of “despair” posts which were more common in the older 2008 threads. That said, maybe the lack of “FIRE” posts is a sign we are half way down? :D
Is the lack of FIRE posts offset by the flurry of TLH posts?

I think a difference between the 2008 posts and these is that there was pain coming from many directions in 2008. People today are still clinging to the belief that the bounce is always swift and substantial.

kaeltor
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Re: U.S. stocks in free fall

Post by kaeltor » Thu Dec 20, 2018 6:44 pm

We officially in a bear market?

dspencer
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Re: U.S. stocks in free fall

Post by dspencer » Thu Dec 20, 2018 6:48 pm

willthrill81 wrote:
Thu Dec 20, 2018 5:57 pm
dspencer wrote:
Thu Dec 20, 2018 5:43 pm
willthrill81 wrote:
Thu Dec 20, 2018 4:51 pm
WhiteMaxima wrote:
Thu Dec 20, 2018 4:49 pm
When everyone hates the stock, then is the time to buy. 2008,9 is one example.
DING DING DING!! :sharebeer
I truly don't know if these are meant to be serious or not.
Assuming that the market eventually recovers, would you rather have bought VTSAX at $73.65 (price on 9/20/18) or today's $62.40?
I would rather make all my investment decisions with the benefit of hindsight. The real question is should I buy at today's price or the price in 3 months?

I'm pretty sure "everyone" hated the stock market after it declined 30% from the peak during the last bear market, but it was far from the bottom. And as always, knowing when to buy implies that one is not already invested so you have to know when to sell also.

I just don't understand how this amounts to anything other than "buy low, sell high".

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willthrill81
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Re: U.S. stocks in free fall

Post by willthrill81 » Thu Dec 20, 2018 6:49 pm

kaeltor wrote:
Thu Dec 20, 2018 6:44 pm
We officially in a bear market?
If you mean whether the total U.S. stock market has dropped 20% from its highs (i.e. the traditional definition), no, we aren't. And the S&P 500 isn't yet either. Technically, we are still in "correction" territory.
“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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willthrill81
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Re: U.S. stocks in free fall

Post by willthrill81 » Thu Dec 20, 2018 6:51 pm

dspencer wrote:
Thu Dec 20, 2018 6:48 pm
willthrill81 wrote:
Thu Dec 20, 2018 5:57 pm
dspencer wrote:
Thu Dec 20, 2018 5:43 pm
willthrill81 wrote:
Thu Dec 20, 2018 4:51 pm
WhiteMaxima wrote:
Thu Dec 20, 2018 4:49 pm
When everyone hates the stock, then is the time to buy. 2008,9 is one example.
DING DING DING!! :sharebeer
I truly don't know if these are meant to be serious or not.
Assuming that the market eventually recovers, would you rather have bought VTSAX at $73.65 (price on 9/20/18) or today's $62.40?
I would rather make all my investment decisions with the benefit of hindsight. The real question is should I buy at today's price or the price in 3 months?

I'm pretty sure "everyone" hated the stock market after it declined 30% from the peak during the last bear market, but it was far from the bottom. And as always, knowing when to buy implies that one is not already invested so you have to know when to sell also.

I just don't understand how this amounts to anything other than "buy low, sell high".
You dodged my question. Money invested in the stock market today has a higher expected return going forward than money invested three months ago today due to the drop in price.
“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

kaeltor
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Re: U.S. stocks in free fall

Post by kaeltor » Thu Dec 20, 2018 6:56 pm

WanderingDoc wrote:
Thu Dec 20, 2018 4:54 pm

The fact of the matter is, there are other ivestments and diversification strategies which protect against "being hosed" in the precise situation that is being described here.
yes but you also get less growth during the bull markets too

veggivet
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Re: U.S. stocks in free fall

Post by veggivet » Thu Dec 20, 2018 7:01 pm

kaeltor wrote:
Thu Dec 20, 2018 6:44 pm
We officially in a bear market?
NASDAQ entered bear market today, according to CNBC.
If you watch your pennies, your dollars will take care of themselves.

hoops777
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Re: U.S. stocks in free fall

Post by hoops777 » Thu Dec 20, 2018 7:18 pm

willthrill81 wrote:
Thu Dec 20, 2018 6:51 pm
dspencer wrote:
Thu Dec 20, 2018 6:48 pm
willthrill81 wrote:
Thu Dec 20, 2018 5:57 pm
dspencer wrote:
Thu Dec 20, 2018 5:43 pm
willthrill81 wrote:
Thu Dec 20, 2018 4:51 pm


DING DING DING!! :sharebeer
I truly don't know if these are meant to be serious or not.
Assuming that the market eventually recovers, would you rather have bought VTSAX at $73.65 (price on 9/20/18) or today's $62.40?
I would rather make all my investment decisions with the benefit of hindsight. The real question is should I buy at today's price or the price in 3 months?

I'm pretty sure "everyone" hated the stock market after it declined 30% from the peak during the last bear market, but it was far from the bottom. And as always, knowing when to buy implies that one is not already invested so you have to know when to sell also.

I just don't understand how this amounts to anything other than "buy low, sell high".
You dodged my question. Money invested in the stock market today has a higher expected return going forward than money invested three months ago today due to the drop in price.
A lot of bogleheads seem to think it doesn’t matter when you buy.If I understand basic math I would much rather invest 100,000 today than 3 or 4 months ago.
K.I.S.S........so easy to say so difficult to do.

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Rowan Oak
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Re: U.S. stocks in free fall

Post by Rowan Oak » Thu Dec 20, 2018 7:31 pm

willthrill81 wrote:
Thu Dec 20, 2018 6:49 pm
kaeltor wrote:
Thu Dec 20, 2018 6:44 pm
We officially in a bear market?
If you mean whether the total U.S. stock market has dropped 20% from its highs (i.e. the traditional definition), no, we aren't. And the S&P 500 isn't yet either. Technically, we are still in "correction" territory.
I found this interesting, because we're right on the edge...

At 2462.12, the S&P 500 will be down -16.28% from the all time high.

In the history of the index, which began in 1923, it has never been 16.28% below the most recent all time high and NOT then become a Bear Market (-20% from all time highs) before setting a new all time high.


Source:
OddStats (@OddStats)
https://twitter.com/OddStats?s=03
"Retired finance professional. I can't see the future and neither can you; anyone who says different has something to sell. Nothing I say is investment advice."
“If you can get good at destroying your own wrong ideas, that is a great gift.” – Charlie Munger

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gilgamesh
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Re: U.S. stocks in free fall

Post by gilgamesh » Thu Dec 20, 2018 7:39 pm

hoops777 wrote:
Thu Dec 20, 2018 7:18 pm
willthrill81 wrote:
Thu Dec 20, 2018 6:51 pm
dspencer wrote:
Thu Dec 20, 2018 6:48 pm
willthrill81 wrote:
Thu Dec 20, 2018 5:57 pm
dspencer wrote:
Thu Dec 20, 2018 5:43 pm


I truly don't know if these are meant to be serious or not.
Assuming that the market eventually recovers, would you rather have bought VTSAX at $73.65 (price on 9/20/18) or today's $62.40?
I would rather make all my investment decisions with the benefit of hindsight. The real question is should I buy at today's price or the price in 3 months?

I'm pretty sure "everyone" hated the stock market after it declined 30% from the peak during the last bear market, but it was far from the bottom. And as always, knowing when to buy implies that one is not already invested so you have to know when to sell also.

I just don't understand how this amounts to anything other than "buy low, sell high".
You dodged my question. Money invested in the stock market today has a higher expected return going forward than money invested three months ago today due to the drop in price.
A lot of bogleheads seem to think it doesn’t matter when you buy.If I understand basic math I would much rather invest 100,000 today than 3 or 4 months ago.
I think most boglehead do think it matters when you buy...you buy as soon as possible.

Your example doesn’t make much sense...if I am investing $100k every 4 months ($300k/yr), then in 10 years with 7% return, I will have excess of $4M, so having waited 3 months now for a $100k, at time of retirement makes almost no difference. (I don’t think this is what you had in mind, but this is precisely what it says...)

If you were sitting on $100k for longer than 4 months, but comparing it to have been invested 3-4 months ago vs now, then your example is totally faulty in the context...(I think this is what you were thinking). It’s faulty because the choices wasn’t just investing 3-4 months ago, as you had a choice to invest even earlier.

But at the most basic, 3 months ago you didn’t know the stocks will be lower today. This however doesn’t matter.

justsomeguy2018
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Re: U.S. stocks in free fall

Post by justsomeguy2018 » Thu Dec 20, 2018 7:46 pm

hoops777 wrote:
Thu Dec 20, 2018 7:18 pm
willthrill81 wrote:
Thu Dec 20, 2018 6:51 pm
dspencer wrote:
Thu Dec 20, 2018 6:48 pm
willthrill81 wrote:
Thu Dec 20, 2018 5:57 pm
dspencer wrote:
Thu Dec 20, 2018 5:43 pm


I truly don't know if these are meant to be serious or not.
Assuming that the market eventually recovers, would you rather have bought VTSAX at $73.65 (price on 9/20/18) or today's $62.40?
I would rather make all my investment decisions with the benefit of hindsight. The real question is should I buy at today's price or the price in 3 months?

I'm pretty sure "everyone" hated the stock market after it declined 30% from the peak during the last bear market, but it was far from the bottom. And as always, knowing when to buy implies that one is not already invested so you have to know when to sell also.

I just don't understand how this amounts to anything other than "buy low, sell high".
You dodged my question. Money invested in the stock market today has a higher expected return going forward than money invested three months ago today due to the drop in price.
A lot of bogleheads seem to think it doesn’t matter when you buy.If I understand basic math I would much rather invest 100,000 today than 3 or 4 months ago.
But "time in the market beats market timing"! :wink: (as my investments are down 12% since I entered the market 3 months ago) :oops:

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willthrill81
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Re: U.S. stocks in free fall

Post by willthrill81 » Thu Dec 20, 2018 7:51 pm

gilgamesh wrote:
Thu Dec 20, 2018 7:39 pm
hoops777 wrote:
Thu Dec 20, 2018 7:18 pm
willthrill81 wrote:
Thu Dec 20, 2018 6:51 pm
dspencer wrote:
Thu Dec 20, 2018 6:48 pm
willthrill81 wrote:
Thu Dec 20, 2018 5:57 pm


Assuming that the market eventually recovers, would you rather have bought VTSAX at $73.65 (price on 9/20/18) or today's $62.40?
I would rather make all my investment decisions with the benefit of hindsight. The real question is should I buy at today's price or the price in 3 months?

I'm pretty sure "everyone" hated the stock market after it declined 30% from the peak during the last bear market, but it was far from the bottom. And as always, knowing when to buy implies that one is not already invested so you have to know when to sell also.

I just don't understand how this amounts to anything other than "buy low, sell high".
You dodged my question. Money invested in the stock market today has a higher expected return going forward than money invested three months ago today due to the drop in price.
A lot of bogleheads seem to think it doesn’t matter when you buy.If I understand basic math I would much rather invest 100,000 today than 3 or 4 months ago.
I think most boglehead do think it matters when you buy...you buy as soon as possible.

Your example doesn’t make much sense...if I am investing $100k every 4 months ($300k/yr), then in 10 years with 7% return, I will have excess of $4M, so having waited 3 months now for a $100k, at time of retirement makes almost no difference. (I don’t think this is what you had in mind, but this is precisely what it says...)

If you were sitting on $100k for longer than 4 months, but comparing it to have been invested 3-4 months ago vs now, then your example is totally faulty in the context...(I think this is what you were thinking). It’s faulty because the choices wasn’t just investing 3-4 months ago, as you had a choice to invest even earlier.

But at the most basic, 3 months ago you didn’t know the stocks will be lower today. This however doesn’t matter.
We weren't talking about trying to time the market. We were simply commenting that the expected returns of U.S. stocks are higher today than they were three months ago due to the drop in price.
“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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gilgamesh
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Re: U.S. stocks in free fall

Post by gilgamesh » Thu Dec 20, 2018 7:54 pm

willthrill81 wrote:
Thu Dec 20, 2018 7:51 pm
gilgamesh wrote:
Thu Dec 20, 2018 7:39 pm
hoops777 wrote:
Thu Dec 20, 2018 7:18 pm
willthrill81 wrote:
Thu Dec 20, 2018 6:51 pm
dspencer wrote:
Thu Dec 20, 2018 6:48 pm


I would rather make all my investment decisions with the benefit of hindsight. The real question is should I buy at today's price or the price in 3 months?

I'm pretty sure "everyone" hated the stock market after it declined 30% from the peak during the last bear market, but it was far from the bottom. And as always, knowing when to buy implies that one is not already invested so you have to know when to sell also.

I just don't understand how this amounts to anything other than "buy low, sell high".
You dodged my question. Money invested in the stock market today has a higher expected return going forward than money invested three months ago today due to the drop in price.
A lot of bogleheads seem to think it doesn’t matter when you buy.If I understand basic math I would much rather invest 100,000 today than 3 or 4 months ago.
I think most boglehead do think it matters when you buy...you buy as soon as possible.

Your example doesn’t make much sense...if I am investing $100k every 4 months ($300k/yr), then in 10 years with 7% return, I will have excess of $4M, so having waited 3 months now for a $100k, at time of retirement makes almost no difference. (I don’t think this is what you had in mind, but this is precisely what it says...)

If you were sitting on $100k for longer than 4 months, but comparing it to have been invested 3-4 months ago vs now, then your example is totally faulty in the context...(I think this is what you were thinking). It’s faulty because the choices wasn’t just investing 3-4 months ago, as you had a choice to invest even earlier.

But at the most basic, 3 months ago you didn’t know the stocks will be lower today. This however doesn’t matter.
We weren't talking about trying to time the market. We were simply commenting that the expected returns of U.S. stocks are higher today than they were three months ago due to the drop in price.
I know...

Of course it is...I agree

My argument still stands. Let’s take that $100k example...first step. How did you end up with that $100k 3 months ago? (were you given a $100k bonus or did you save $100k over the last 3 years by saving it under the mattress?)
P.s: in the context of an argument starting “A lot of bogleheads seem to think it doesn’t matter when you buy.”

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grabiner
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Re: U.S. stocks in free fall

Post by grabiner » Thu Dec 20, 2018 8:27 pm

Rowan Oak wrote:
Thu Dec 20, 2018 7:31 pm
willthrill81 wrote:
Thu Dec 20, 2018 6:49 pm
kaeltor wrote:
Thu Dec 20, 2018 6:44 pm
We officially in a bear market?
If you mean whether the total U.S. stock market has dropped 20% from its highs (i.e. the traditional definition), no, we aren't. And the S&P 500 isn't yet either. Technically, we are still in "correction" territory.
I found this interesting, because we're right on the edge...

At 2462.12, the S&P 500 will be down -16.28% from the all time high.

In the history of the index, which began in 1923, it has never been 16.28% below the most recent all time high and NOT then become a Bear Market (-20% from all time highs) before setting a new all time high.


Source:
OddStats (@OddStats)
https://twitter.com/OddStats?s=03
My first impression is that this wasn't surprising. Given any random day, there is a reasonably high chance that the market will drop 4% from that day's value before rising 20%; this is about what would have to happen for an index which has fallen through 16.28% (and is thus down slightly more than that amount) to decline by 20% before hitting a new high. (It is even more likely when you consider that dividends are not counted in the index return.)

My second impression is that it wasn't right, as I confirmed by checking a chart for 1998.

7/17/98: 1186.75
8/31/98: 957.28, a 19.34% decline
11/23/98: 1188.21

This felt like a bear market because the 19% decline happened in just six weeks (much like what has happened recently, with a 12% drop in three weeks), but it wasn't officially a bear market.
Wiki David Grabiner

WanderingDoc
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Re: U.S. stocks in free fall

Post by WanderingDoc » Thu Dec 20, 2018 8:40 pm

aj76er wrote:
Thu Dec 20, 2018 5:02 pm
WanderingDoc wrote:
Thu Dec 20, 2018 4:54 pm
willthrill81 wrote:
Thu Dec 20, 2018 4:49 pm
Accrual wrote:
Thu Dec 20, 2018 1:58 pm
You are also assuming a lot with an 18 month recovery time (if a recovery actually occurs).
If a recovery doesn't occur eventually, then we're all hosed. :D

Historically, most market recoveries have taken fewer than 18 months. But I don't really care.
No, not all of us are hosed. If we are diversified into real assets and internationally into multiple investments than we are not hosed at all.

The "all of us are hosed" is a common rationalization that I read on this board, touted by investors heavily into US paper, telling themselves this so they could sleep better at night.

The fact of the matter is, there are other ivestments and diversification strategies which protect against "being hosed" in the precise situation that is being described here.
Don't fool yourself - the economy is tightly linked to both real-estate prices (and rents) and stock prices (and dividends). However, the rents and dividends do tend to be more stable (historically) than prices.
Correct. While the the stock market is doing what it's doing (near bear market), I just released 2 rentals with a 4% bump in rents, in less than 10 days of vacancy. I am still paying the lender the same principal and interest payment. How sweet it is :)
I'm not looking to get rich quick (stocks), I'm not looking to get rich slow (indexing), I'm looking to get rich, for sure (real estate) | Don't wait to buy real estate. Buy real estate.. and wait.

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Re: U.S. stocks in free fall

Post by Rowan Oak » Thu Dec 20, 2018 8:42 pm

grabiner wrote:
Thu Dec 20, 2018 8:27 pm
Rowan Oak wrote:
Thu Dec 20, 2018 7:31 pm
willthrill81 wrote:
Thu Dec 20, 2018 6:49 pm
kaeltor wrote:
Thu Dec 20, 2018 6:44 pm
We officially in a bear market?
If you mean whether the total U.S. stock market has dropped 20% from its highs (i.e. the traditional definition), no, we aren't. And the S&P 500 isn't yet either. Technically, we are still in "correction" territory.
I found this interesting, because we're right on the edge...

At 2462.12, the S&P 500 will be down -16.28% from the all time high.

In the history of the index, which began in 1923, it has never been 16.28% below the most recent all time high and NOT then become a Bear Market (-20% from all time highs) before setting a new all time high.


Source:
OddStats (@OddStats)
https://twitter.com/OddStats?s=03
My first impression is that this wasn't surprising. Given any random day, there is a reasonably high chance that the market will drop 4% from that day's value before rising 20%; this is about what would have to happen for an index which has fallen through 16.28% (and is thus down slightly more than that amount) to decline by 20% before hitting a new high. (It is even more likely when you consider that dividends are not counted in the index return.)

My second impression is that it wasn't right, as I confirmed by checking a chart for 1998.

7/17/98: 1186.75
8/31/98: 957.28, a 19.34% decline
11/23/98: 1188.21

This felt like a bear market because the 19% decline happened in just six weeks (much like what has happened recently, with a 12% drop in three weeks), but it wasn't officially a bear market.
Thanks for this.

I went back to his post from today and found where he was asked if this was measured from close or intraday and his reply:

"Intraday, all time high to trough.

Which is why 2011 isn't in there; it was still the 2007 peak."
Last edited by Rowan Oak on Thu Dec 20, 2018 8:44 pm, edited 1 time in total.
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Re: U.S. stocks in free fall

Post by MisterMister » Thu Dec 20, 2018 8:42 pm

dspencer wrote:
Thu Dec 20, 2018 5:43 pm
willthrill81 wrote:
Thu Dec 20, 2018 4:51 pm
WhiteMaxima wrote:
Thu Dec 20, 2018 4:49 pm
When everyone hates the stock, then is the time to buy. 2008,9 is one example.
DING DING DING!! :sharebeer
I truly don't know if these are meant to be serious or not.
I'm not pointing to this particular post, but there are a lot of people who do post sarcastic or tongue-in-cheek comments to bring in a little levity.
That's sometimes unfortunate because a lot of inexperienced people come here trying to learn and they can be confused or even get the wrong message if they can't discern the true intention of the comment.

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Re: U.S. stocks in free fall

Post by WanderingDoc » Thu Dec 20, 2018 8:43 pm

ge1 wrote:
Thu Dec 20, 2018 5:34 pm
WanderingDoc wrote:
Thu Dec 20, 2018 4:54 pm
willthrill81 wrote:
Thu Dec 20, 2018 4:49 pm
Accrual wrote:
Thu Dec 20, 2018 1:58 pm
You are also assuming a lot with an 18 month recovery time (if a recovery actually occurs).
If a recovery doesn't occur eventually, then we're all hosed. :D

Historically, most market recoveries have taken fewer than 18 months. But I don't really care.
No, not all of us are hosed. If we are diversified into real assets and internationally into multiple investments than we are not hosed at all.

The "all of us are hosed" is a common rationalization that I read on this board, touted by investors heavily into US paper, telling themselves this so they could sleep better at night.

The fact of the matter is, there are other ivestments and diversification strategies which protect against "being hosed" in the precise situation that is being described here.
Let my guess WanderingDoc..... maybe Real Estate?

Don't take this the wrong way, but I think every single post I read from you is touting one way or the other Real Estate.

Just curious why you hang out here and not on BiggerPockets?
That website is too big and commercialized for me. It was good in the early days. It's now about 95% fluff. Don't have the time or energy to suss out the few gems. Although, I'm still meeting business partners from there on occasion.
I'm not looking to get rich quick (stocks), I'm not looking to get rich slow (indexing), I'm looking to get rich, for sure (real estate) | Don't wait to buy real estate. Buy real estate.. and wait.

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Re: U.S. stocks in free fall

Post by WanderingDoc » Thu Dec 20, 2018 8:47 pm

willthrill81 wrote:
Thu Dec 20, 2018 5:58 pm
lostdog wrote:
Thu Dec 20, 2018 5:05 pm
WanderingDoc wrote:
Thu Dec 20, 2018 4:54 pm
willthrill81 wrote:
Thu Dec 20, 2018 4:49 pm
Accrual wrote:
Thu Dec 20, 2018 1:58 pm
You are also assuming a lot with an 18 month recovery time (if a recovery actually occurs).
If a recovery doesn't occur eventually, then we're all hosed. :D

Historically, most market recoveries have taken fewer than 18 months. But I don't really care.
No, not all of us are hosed. If we are diversified into real assets and internationally into multiple investments than we are not hosed at all.

The "all of us are hosed" is a common rationalization that I read on this board, touted by investors heavily into US paper, telling themselves this so they could sleep better at night.

The fact of the matter is, there are other ivestments and diversification strategies which protect against "being hosed" in the precise situation that is being described here.
When is the steak dinner?
Yeah, no investors lost any money in real estate in 2008-2009. And international stocks were a great diversifier then too, especially emerging markets. :D
My close friends, colleagues, and parents did better during the real estate downturn in '06-'10 then lately. This actually makes intuitive sense. You could buy real estate 30 or 40 cents on the dollar then. Remember, the money is made on the buy - not the sell. Accidental landlords may have lost money during that time because they were stupid enough to sell. That was the time of opportunity and unfortunately I do not think I will see something like that in my lifetime.
I'm not looking to get rich quick (stocks), I'm not looking to get rich slow (indexing), I'm looking to get rich, for sure (real estate) | Don't wait to buy real estate. Buy real estate.. and wait.

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Re: U.S. stocks in free fall

Post by MisterMister » Thu Dec 20, 2018 9:01 pm

oldcomputerguy wrote:
Thu Dec 20, 2018 6:10 pm
MisterMister wrote:
Thu Dec 20, 2018 2:55 pm
In support of the Boglehead view, two advisors I allowed to speak with me recently both conceded I could do better with a long-term SP500 index fund (than with them) as long as I can resist the temptation to sell. At least I'll give marks for admitting that. But 1% or better is an expensive way to get a backbone transplant. I did not move further with them.
Sounds like what I experienced recently. DW's workplace offered a "retirement workshop", she wanted to go, so we did. Of course they offered "a free one-on-one session" afterward, which (at her request) we did as well. Long story short, the presenter proposed that we put my Fidelity tIRA in their loving hands and into thirteen different SEI investment funds with ERs ranging from 0.2% (for a government money-market fund) to 2.0% (for an alternative-investment fund); over half of the suggested funds had ERs over 1%. I did the math, and found out that, with the ERs on those funds plus the advisor's 1% AUM fee, I would wind up spending over $7300 in expenses per year, versus the $226 that I'm paying now for my Fidelity index fund tIRA.

We have a return appointment scheduled with the presenter. I'm telling him "thanks, but no thanks".
Yes, Fidelity is my primary broker and of course they've tried to sell me AUM, and I too have declined. But where does the $226 figure come from? The ER on the index fund?

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Re: U.S. stocks in free fall

Post by gilgamesh » Thu Dec 20, 2018 9:34 pm

grabiner wrote:
Thu Dec 20, 2018 8:27 pm
Rowan Oak wrote:
Thu Dec 20, 2018 7:31 pm
willthrill81 wrote:
Thu Dec 20, 2018 6:49 pm
kaeltor wrote:
Thu Dec 20, 2018 6:44 pm
We officially in a bear market?
If you mean whether the total U.S. stock market has dropped 20% from its highs (i.e. the traditional definition), no, we aren't. And the S&P 500 isn't yet either. Technically, we are still in "correction" territory.
.......

This felt like a bear market because the 19% decline happened in just six weeks (much like what has happened recently, with a 12% drop in three weeks), but it wasn't officially a bear market.
This was fascinating....the rate of change being so palpable (apart from explaining the behavior here)..., so I did a quick google search...and I discovered - Price rate of change (ROC) which is an indicator of “momentum”.
https://www.investopedia.com/terms/p/pr ... change.asp

Kind of a new “measure” for me, although I’m a strong believer of momentum until it doesn’t...lol!

Anyhow another rabbit hole I could explore....ROC
Last edited by gilgamesh on Thu Dec 20, 2018 9:37 pm, edited 1 time in total.

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sergeant
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Re: U.S. stocks in free fall

Post by sergeant » Thu Dec 20, 2018 9:37 pm

oldcomputerguy wrote:
Thu Dec 20, 2018 6:10 pm
MisterMister wrote:
Thu Dec 20, 2018 2:55 pm
In support of the Boglehead view, two advisors I allowed to speak with me recently both conceded I could do better with a long-term SP500 index fund (than with them) as long as I can resist the temptation to sell. At least I'll give marks for admitting that. But 1% or better is an expensive way to get a backbone transplant. I did not move further with them.
Sounds like what I experienced recently. DW's workplace offered a "retirement workshop", she wanted to go, so we did. Of course they offered "a free one-on-one session" afterward, which (at her request) we did as well. Long story short, the presenter proposed that we put my Fidelity tIRA in their loving hands and into thirteen different SEI investment funds with ERs ranging from 0.2% (for a government money-market fund) to 2.0% (for an alternative-investment fund); over half of the suggested funds had ERs over 1%. I did the math, and found out that, with the ERs on those funds plus the advisor's 1% AUM fee, I would wind up spending over $7300 in expenses per year, versus the $226 that I'm paying now for my Fidelity index fund tIRA.

We have a return appointment scheduled with the presenter. I'm telling him "thanks, but no thanks".
Why not just send him an email?
AA- 20+ Years of Expenses Fixed Income/The remainder in Equities.

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J G Bankerton
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Re: U.S. stocks in free fall

Post by J G Bankerton » Fri Dec 21, 2018 1:03 am

oldcomputerguy wrote:
Thu Dec 20, 2018 6:10 pm
We have a return appointment scheduled with the presenter. I'm telling him "thanks, but no thanks".
If one of those clowns approached me I wouldn't be nice; they take nice for weakness.

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Re: U.S. stocks in free fall

Post by oldcomputerguy » Fri Dec 21, 2018 5:40 am

MisterMister wrote:
Thu Dec 20, 2018 9:01 pm
But where does the $226 figure come from? The ER on the index fund?
They way I got that was to do a hypothetical comparison between their recommended portfolio and a portfolio of Vanguard funds that most closely matched in terms of AA. It was premised on that Vanguard portfolio holding the same dollar amount ($355k) as the advisor proposed be put into their recommended portfolio. The funds I used were the classic Three Fund Portfolio plus 10% in Federal Money Market; the combined expense ratio of that Vanguard portfolio is 0.064% versus a combined expense ratio of 2.077% (1.077% combined ER plus 1% AUM) for their plan.

As an aside, to those who ask why I'm going back at all, it's because DW wants to go back and politely terminate the discussion. Happy wife, happy life. (We've discussed it between ourselves, though, and we're in agreement that there is no way we're putting our money in this guy's hands.)
"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." (Aaron Sorkin)

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Re: U.S. stocks in free fall

Post by Crisium » Fri Dec 21, 2018 8:04 am

J G Bankerton wrote:
Thu Dec 20, 2018 5:51 pm
I know where all the stock money is gong. Bitcoin is going through the roof again. I'm all in as soon as I can dump this VTI. I'm not missing this Bitcoin bounce.
This is how you know we are still in good times with lots of money going around. When ____ hits the fan, no one will throw money into a pointless asset like BTC. It's an experimental hedge, but do you think when people are losing their jobs they will sell their stock and buy the world's most volatile asset that also has no tangible value?

This is just animal spirits. Not a real panic.

While my rate of return is quite negative for the year, I'm still easily double digits % up from my Dec 31 2017 portfolio value. The joys of early accumulation. :beer

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Re: U.S. stocks in free fall

Post by Jags4186 » Fri Dec 21, 2018 8:43 am

What I love most about this thread and others of people with jitters is how unprepared some people are for a downswing. My wife asks everyday "why does it keep going down?" I'm glad I've been telling her for the last few years that it can go down 50% at any time and this is why we keep a nice sized emergency fund. She's been prepared for the actuality but is having a hard time understanding the reason. Too bad I don't know either.

I have a friend who loves to tell me about all of his great stock picks and sending me pictures of charts going straight up. I don't know when he bought some of the stuff but it does make me smile a little bit knowing AMD, NVidia, and others have dropped 50% over the past few months. For all I know he's still sitting on lovely 100% gains. But I do know I've gotten no pictures these last few weeks. Very similar to gamblers--you always hear about the big wins, never about the losses.

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J G Bankerton
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Re: U.S. stocks in free fall

Post by J G Bankerton » Fri Dec 21, 2018 9:11 am

oldcomputerguy wrote:
Fri Dec 21, 2018 5:40 am
As an aside, to those who ask why I'm going back at all, it's because DW wants to go back and politely terminate the discussion.
Seriously one can't be nice to those people. Treat them like the thrives they are. Sick the dogs on them. I'm totally serious; I let one of those clowns into my home. He went as far to insult me in my own home. I should have put my fist through his face; that is one regret I will carry to my grave.

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Re: U.S. stocks in free fall

Post by CULater » Fri Dec 21, 2018 9:21 am

I wasn't expecting this...

Image
On the internet, nobody knows you're a dog.

itsgot8
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Re: U.S. stocks in free fall

Post by itsgot8 » Fri Dec 21, 2018 9:42 am

CULater wrote:
Fri Dec 21, 2018 9:21 am
I wasn't expecting this...

Image
Pull out semi-auto shotgun, activate Dead Eye and let that bear have it.

(this only makes sense if you've played RDR2)

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Re: U.S. stocks in free fall

Post by latesaver » Fri Dec 21, 2018 9:53 am

Accrual wrote:
Thu Dec 20, 2018 1:58 pm
willthrill81 wrote:
Thu Dec 20, 2018 12:51 pm
So this is a what a free fall feels like? It doesn't bother me at all, even though we've lost tens of thousands of dollars from the peak a few months ago. Honestly, I'm actually kind of glad for us at all because this will allow us to DCA into the market at lower prices. I would be fine if the market didn't really recover for about 18 months, after which we'll be contributing 50% of our income to it.
Yet you felt inclined to comment on how much it doesn't bother you?

You are also assuming a lot with an 18 month recovery time (if a recovery actually occurs).
+1000

the number of "i'm stoic, this doesn't bother me" posts are annoying.

i am still in my high earning years so i can appreciate what a correction or even bear market can do for me. that doesn't mean i am not bothered by "losing" $50-100K when the market drops 5-10%.

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Re: U.S. stocks in free fall

Post by corn18 » Fri Dec 21, 2018 10:05 am

latesaver wrote:
Fri Dec 21, 2018 9:53 am
Accrual wrote:
Thu Dec 20, 2018 1:58 pm
willthrill81 wrote:
Thu Dec 20, 2018 12:51 pm
So this is a what a free fall feels like? It doesn't bother me at all, even though we've lost tens of thousands of dollars from the peak a few months ago. Honestly, I'm actually kind of glad for us at all because this will allow us to DCA into the market at lower prices. I would be fine if the market didn't really recover for about 18 months, after which we'll be contributing 50% of our income to it.
Yet you felt inclined to comment on how much it doesn't bother you?

You are also assuming a lot with an 18 month recovery time (if a recovery actually occurs).
+1000

the number of "i'm stoic, this doesn't bother me" posts are annoying.

i am still in my high earning years so i can appreciate what a correction or even bear market can do for me. that doesn't mean i am not bothered by "losing" $50-100K when the market drops 5-10%.
I agree. Losing $250k of net worth sucks. My IPS keeps me from doing something stupid, but it still sucks.
Don't do something, just stand there!

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Re: U.S. stocks in free fall

Post by latesaver » Fri Dec 21, 2018 10:36 am

willthrill81 wrote:
Thu Dec 20, 2018 4:51 pm
WhiteMaxima wrote:
Thu Dec 20, 2018 4:49 pm
When everyone hates the stock, then is the time to buy. 2008,9 is one example.
DING DING DING!! :sharebeer
Not exactly. The financial sector was quite despised in 2008/2009. WAMU, New Century, Bear Stearns, Lehman, etc. The only DING was the sound of the boxing ring's bell to indicate a TKO.

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Re: U.S. stocks in free fall

Post by latesaver » Fri Dec 21, 2018 10:41 am

dspencer wrote:
Thu Dec 20, 2018 5:24 pm
brokenrecord wrote:
Thu Dec 20, 2018 2:58 pm
amitb00 wrote:
Thu Dec 20, 2018 12:38 pm
Wow NASDAQ in bear. S&P is with in 4% of Bear market. Let us hope fall stops soon . I wonder when will the next post happen on the the SOAR thread. Hope happens sooner than later.
I don't understand. Wouldn't a bear market remove all the froth? It seems to me that the market needs a pretty hard reset.
It never ceases to amaze me how many metaphors have been applied to the stock market to make it seem like it's an everyday object with predictable behavior.

"Hey Bob, the market's getting a little frothy, what do you think we should do?
"Probably needs a reset."
"Yeah, I thought so too. Hard or soft?"
"I'm thinking hard."
"Ok, great. We shouldn't have any more trouble after that."
we can just unplug it for 20 seconds, then plug it back in. should be fine.

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Re: U.S. stocks in free fall

Post by lostdog » Fri Dec 21, 2018 11:13 am

WanderingDoc wrote:
Thu Dec 20, 2018 8:40 pm
aj76er wrote:
Thu Dec 20, 2018 5:02 pm
WanderingDoc wrote:
Thu Dec 20, 2018 4:54 pm
willthrill81 wrote:
Thu Dec 20, 2018 4:49 pm
Accrual wrote:
Thu Dec 20, 2018 1:58 pm
You are also assuming a lot with an 18 month recovery time (if a recovery actually occurs).
If a recovery doesn't occur eventually, then we're all hosed. :D

Historically, most market recoveries have taken fewer than 18 months. But I don't really care.
No, not all of us are hosed. If we are diversified into real assets and internationally into multiple investments than we are not hosed at all.

The "all of us are hosed" is a common rationalization that I read on this board, touted by investors heavily into US paper, telling themselves this so they could sleep better at night.

The fact of the matter is, there are other ivestments and diversification strategies which protect against "being hosed" in the precise situation that is being described here.
Don't fool yourself - the economy is tightly linked to both real-estate prices (and rents) and stock prices (and dividends). However, the rents and dividends do tend to be more stable (historically) than prices.
Correct. While the the stock market is doing what it's doing (near bear market), I just released 2 rentals with a 4% bump in rents, in less than 10 days of vacancy. I am still paying the lender the same principal and interest payment. How sweet it is :)
This guy is so full of himself I am actually enjoying his responses with some chuckles.
Global Market Cap Equity/1 Year Cash/Bonds || 25x Expenses

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Re: U.S. stocks in free fall

Post by vwgrrc » Fri Dec 21, 2018 11:16 am

Meanwhile... prepare for a big slide!

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Re: U.S. stocks in free fall

Post by UpperNwGuy » Fri Dec 21, 2018 11:49 am

WanderingDoc wrote:
Thu Dec 20, 2018 8:40 pm
Correct. While the the stock market is doing what it's doing (near bear market), I just released 2 rentals with a 4% bump in rents, in less than 10 days of vacancy. I am still paying the lender the same principal and interest payment. How sweet it is :)
More power to you. As for me, I hate real estate. I mean I really detest it. I hate searching for real estate to buy. I hate putting together and presenting contracts. I hate the closings. I hate the inevitable maintenance, repair, and other ongoing costs. And I hate rental agreements. Oh, and I especially hate real estate market crashes — and they do happen. I think I would buy almost any other asset before I would buy real estate.

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Re: U.S. stocks in free fall

Post by WanderingDoc » Fri Dec 21, 2018 12:02 pm

UpperNwGuy wrote:
Fri Dec 21, 2018 11:49 am
WanderingDoc wrote:
Thu Dec 20, 2018 8:40 pm
Correct. While the the stock market is doing what it's doing (near bear market), I just released 2 rentals with a 4% bump in rents, in less than 10 days of vacancy. I am still paying the lender the same principal and interest payment. How sweet it is :)
More power to you. As for me, I hate real estate. I mean I really detest it. I hate searching for real estate to buy. I hate putting together and presenting contracts. I hate the closings. I hate the inevitable maintenance, repair, and other ongoing costs. And I hate rental agreements. Oh, and I especially hate real estate market crashes — and they do happen. I think I would buy almost any other asset before I would buy real estate.
To each their own. It's the only asset that I found which produces monthly income in my bank account that I legally don't have to pay tax on. To get the same effect from paper investing, I would have to work for 20 to 30 years more. I just met for several video chat sessions with a financial advisor, and he told me I was set to retire anytime I wanted based on my real estate income, and he was very conservative. I only started investing in real estate in 2013 and the results speak for themselves. I have nothing against the stock market but I don't want to limit my options in life for decades. I want an asset which I can control and produces actual income, not 1.8% dividend. By the way, if you have a property manager or invest passively in syndications you never have to worry about repairs or rental contracts. Someone else does that all that for you.

Real estate is local. Speaking nationally, there has been only one real estate crash (30% loss peak to trough) in the last 100 years. How many stock market crashes have there been? In the last six weeks, stocks fell 20%. In the last six weeks, real estate values shifted by probably 1% in most markets. See the difference.
I'm not looking to get rich quick (stocks), I'm not looking to get rich slow (indexing), I'm looking to get rich, for sure (real estate) | Don't wait to buy real estate. Buy real estate.. and wait.

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