U.S. stocks in free fall

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Youngblood
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Re: U.S. stocks in free fall

Post by Youngblood » Sat Dec 22, 2018 11:21 am

J G Bankerton wrote:
Sat Dec 22, 2018 11:08 am
harmoniousmonk wrote:
Sat Dec 22, 2018 10:39 am
Has anyone been kicked out of Flagship or Flagship select yet?
Do they rip off your buttons and break your sword when they kick you out?
I had a fund fall below admiral requirement for over a year and I was not demoted to a common "investor".
Yes, and your epaulets.
"I made my money by selling too soon." | Bernard M. Baruch

peppers
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Re: U.S. stocks in free fall

Post by peppers » Sat Dec 22, 2018 11:28 am

Youngblood wrote:
Sat Dec 22, 2018 11:21 am
J G Bankerton wrote:
Sat Dec 22, 2018 11:08 am
harmoniousmonk wrote:
Sat Dec 22, 2018 10:39 am
Has anyone been kicked out of Flagship or Flagship select yet?
Do they rip off your buttons and break your sword when they kick you out?
I had a fund fall below admiral requirement for over a year and I was not demoted to a common "investor".
Yes, and your epaulets.
Chuck Connors in Branded.

https://www.youtube.com/watch?v=DKmJPnAGUJk
"..the cavalry ain't comin' kid, you're on your own..."

Incendiary
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Stayed the course during a downturn?

Post by Incendiary » Sat Dec 22, 2018 11:32 am

[Thread merged into here, see below. --admin LadyGeek]

People who talk about asset allocation and blood in the streets and staying the course during a downturn are often asked if they themselves have been invested through a downturn without panicking.

At what point in this market can we all now answer in the affirmative? Now? If it drops another 10%? 20%?

PhilosophyAndrew
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Re: Stayed the course during a downturn?

Post by PhilosophyAndrew » Sat Dec 22, 2018 11:37 am

I would think you can accurately say that you stayed the course throughout the downturn only once the downturn is over.

Andy.

Incendiary
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Re: Stayed the course during a downturn?

Post by Incendiary » Sat Dec 22, 2018 11:38 am

Good point! But what if it starts going up now? Was the drop so far enough to qualify?

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LadyGeek
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Re: U.S. stocks in free fall

Post by LadyGeek » Sat Dec 22, 2018 11:48 am

I merged Incendiary's thread into a similar discussion.
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A-Commoner
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Re: U.S. stocks in free fall

Post by A-Commoner » Sat Dec 22, 2018 11:51 am

What's the current PE ratio of Vanguard total stock market? Vanguard website shows 18.7 but does this reflect the recent drop?

bradshaw1965
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Re: Stayed the course during a downturn?

Post by bradshaw1965 » Sat Dec 22, 2018 11:55 am

PhilosophyAndrew wrote:
Sat Dec 22, 2018 11:37 am
I would think you can accurately say that you stayed the course throughout the downturn only once the downturn is over.

Andy.
Agree. That capitulation phase of a nasty bear market is where the risk profile is really assessed. Things seem much too orderly at the moment even as we approach a bear market.

anoop
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Re: U.S. stocks in free fall

Post by anoop » Sat Dec 22, 2018 11:57 am

A-Commoner wrote:
Sat Dec 22, 2018 11:51 am
What's the current PE ratio of Vanguard total stock market? Vanguard website shows 18.7 but does this reflect the recent drop?
How is the PE of companies showing a loss reflected in this?

Unfortunately, PE doesn't reflect that companies have goosed their earnings by taking on record amounts of long-term debt to buy back stock.

Bastiat
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Re: U.S. stocks in free fall

Post by Bastiat » Sat Dec 22, 2018 11:58 am

RollTide31457 wrote:
Sat Dec 22, 2018 10:47 am
Cash is king. We’ve been working on accumulating 10+ years of living expenses in cash reserves since 2009.
It's easy to say that now that we've seen a good sized correction, but that would have cost you 17+ years of living expenses since 2009.

The total return of the S&P 500 from January 2009 to yesterday is 179%, more than 10%/year.
willthrill81 wrote:
Fri Dec 21, 2018 3:56 pm
It's very interesting to see stocks fall almost into bear territory despite nearly all of the economic fundamentals being very solid. Market participants are no more prescient than individuals, so I expect that this is mostly Bogle's animal spirits.
Keynes' animal spirits*
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%.
That's interesting. I find all the whinging far more annoying.

Sure, it sucks to lose money. But that's part of the deal. You knew that going in. Everyone but those who have just started investing in the past year or so are still in the green. The more people reiterate how normal and unimportant this is to one's overall investing life the better I think. It keeps people from taking their money and going home, for which they will almost certainly be worse off in the long run.

I invested my life savings in September 2007. I was pretty young and it wasn't an incredible amount of money but it was everything I had. I couldn't have picked a worse time. But instead of panicking and moaning about all the money I lost I just kept buying. And here we are 11 years on and I'm way better off than I was when I started. I'm confident 11 years from now will be no different.

Who cares. Keep buying. And set your AA appropriately as you approach the time for you to start selling.

Whakamole
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Re: U.S. stocks in free fall

Post by Whakamole » Sat Dec 22, 2018 12:03 pm

A-Commoner wrote:
Sat Dec 22, 2018 11:51 am
What's the current PE ratio of Vanguard total stock market? Vanguard website shows 18.7 but does this reflect the recent drop?
It will say at the top of the table - currently says 11/30. So no.

http://www.multpl.com, at least, calculates the PE ratio and CAPE daily, for the S&P 500 at least. Currently 18.53. CAPE is still on the high side if you follow that sort of thing.

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

Post by J G Bankerton » Sat Dec 22, 2018 12:09 pm

A-Commoner wrote:
Sat Dec 22, 2018 11:51 am
What's the current PE ratio of Vanguard total stock market? Vanguard website shows 18.7 but does this reflect the recent drop?
They have quarter end and month end. They don't show December in ether. December was OMG.

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JoMoney
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Re: U.S. stocks in free fall

Post by JoMoney » Sat Dec 22, 2018 12:21 pm

J G Bankerton wrote:
Sat Dec 22, 2018 12:09 pm
A-Commoner wrote:
Sat Dec 22, 2018 11:51 am
What's the current PE ratio of Vanguard total stock market? Vanguard website shows 18.7 but does this reflect the recent drop?
They have quarter end and month end. They don't show December in ether. December was OMG.
Forward PE on the S&P 500 is 15.09
"To achieve satisfactory investment results is easier than most people realize; to achieve superior results is harder than it looks." - Benjamin Graham

A-Commoner
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Re: U.S. stocks in free fall

Post by A-Commoner » Sat Dec 22, 2018 12:22 pm

Japan is often cited here as an example of what can happen if your stock market remains flat for 30 or more years. Yet Japan today is still one of the wealthiest and most productive countries in the world. Not only that, it's second to only the US in terms of number of millionaires.
https://www.businessinsider.com/countri ... kingdom-16

I guess Japan would be even far richer today if not for its 3 to 4 decade stock market doldrums. Still, it doesn't look to be a total disaster.

Am I missing something?

desafinado
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Re: U.S. stocks in free fall

Post by desafinado » Sat Dec 22, 2018 12:23 pm

JoMoney wrote:
Sat Dec 22, 2018 12:21 pm
J G Bankerton wrote:
Sat Dec 22, 2018 12:09 pm
A-Commoner wrote:
Sat Dec 22, 2018 11:51 am
What's the current PE ratio of Vanguard total stock market? Vanguard website shows 18.7 but does this reflect the recent drop?
They have quarter end and month end. They don't show December in ether. December was OMG.
Forward PE on the S&P 500 is 15.09
That 123.80 value for the Russell 2000 12 months ago seems out of place.

Jags4186
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Re: U.S. stocks in free fall

Post by Jags4186 » Sat Dec 22, 2018 12:25 pm

A-Commoner wrote:
Sat Dec 22, 2018 12:22 pm
Japan is often cited here as an example of what can happen if your stock market remains flat for 30 or more years. Yet Japan today is still one of the wealthiest and most productive countries in the world. Not only that, it's second to only the US in terms of number of millionaires.
https://www.businessinsider.com/countri ... kingdom-16

I guess Japan would be even far richer today if not for its 3 to 4 decade stock market doldrums. Still, it doesn't look to be a total disaster.

Am I missing something?
This is why you don’t invest solely in one country. A Japanese investor who is well diversified might have 50% or less of his or her investments in the Japanese stock market. Remember, our domestic is their international. For everyone who writes here “international is a disaster, why invest international” there are people abroad saying “thank god for international returns”!

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ruralavalon
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Re: U.S. stocks in free fall

Post by ruralavalon » Sat Dec 22, 2018 12:26 pm

J G Bankerton wrote:
Sat Dec 22, 2018 10:31 am
Flymore wrote:
Sat Dec 22, 2018 10:25 am
Just statically speaking. :)
Reversion to the mean and all that. :)
. How much time does one have to wait for the mean to not be so mean? :confused
Median is about 18 months :wink:
"Everything should be as simple as it is, but not simpler." - Albert Einstein | Wiki article link:Getting Started

MisterMister
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Re: U.S. stocks in free fall

Post by MisterMister » Sat Dec 22, 2018 12:29 pm

gilgamesh wrote:
Sat Dec 22, 2018 11:06 am
BogleMelon wrote:
Sat Dec 22, 2018 8:53 am
gilgamesh wrote:
Sat Dec 22, 2018 3:13 am
I am starting to realize I may be tempted not to ‘stay the course’ if the markets continue to slide significantly...so far it’s been easy, as it’s not significant, but say if S&P 500 is down 30% from its all-time high I may be tempted to change my AA.

I’m about 9 years from retirement and at around 30% in bonds...if USA stocks decline by 30% I’m thinking of going 25% bonds, and 20% bond at a 35% market decline and go down to 15% bonds if it declines by 40%. There on , I’ll stay there...

I don’t think I could resist the stock market sale, if it declines by 30%...heck! Even 20% will be mighty tempting...

Besides my 30% bond allocation was assuming a 50% stock decline...if stocks are already down 30%, it’s unlikely (not impossible) to go another 50%, So why stay at 30%? I should have thought about this before, but it makes a lot of sense now...
If new information becomes available to you now and it wasn't available to you before for whatever reason, then (now) is the correct time to adjust your AA instead of waiting and sell low. You didn't know before your real risk tolerance, and this is absolutely so fine because we are humans after all with emotions that don't usually follow the theory. But since you start to get a clearer idea now how really your tolerance is, then no reason to wait for a crash to happen to start to make the changes.
I don’t agree with you...Now will not be the time.

The whole point was to buy stocks in the cheap. The new information I have now, precisely says not to act now....

Say, the assumption now is that the stock market can decline 50% from its all time high. At that data point, I’m willing to risk 70% of my portfolio to stock risk. After a 30% decline, it’s unlikely to drop another 50% and secondly stocks are on sale - that’s when I want to have more than 70% in stocks as I can take more risk as I’m not fearing another 50% loss and I’m potemtially buying stocks for cheap. It makes absolutely no sense to change my AA now
The problem with this entire class of strategies (tactical asset allocation), is the idea that we can know when the market will take various twists and turns and thus we can take advantage of them; IOW, market timing.

Better to determine AA based on age & risk tolerance, change it rarely and not based on market conditions; I think that's the Boglehead way, and better than kidding ourselves that we know what the market will do.

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Earl Lemongrab
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Re: U.S. stocks in free fall

Post by Earl Lemongrab » Sat Dec 22, 2018 12:30 pm

Bastiat wrote:
Sat Dec 22, 2018 11:58 am
RollTide31457 wrote:
Sat Dec 22, 2018 10:47 am
Cash is king. We’ve been working on accumulating 10+ years of living expenses in cash reserves since 2009.
It's easy to say that now that we've seen a good sized correction, but that would have cost you 17+ years of living expenses since 2009.
Yeah, if you look at a total return chart for VTSAX from 2009 on, the increase has been substantial. That being said, half of my fixed-income is and has been in stable-value. That usually does a bit better than inflation, but not much. However, its function is to be an anchor, not make a lot of money.

In 2010 there was a 16% drop in the broad US market. In 2011 there was an 18% fall. These came fairly close to the end of a brutal bear market, in an economy still largely recovering from that. Many people felt (especially with the first) that the fears of "double-dip recession" were coming true. Now those events are largely forgotten due to the quick recovery and substantial growth from those events.

Is this market another of those? Or something like 2008? I don't know. I never know. I don't need to know. A core principle of my plan is that I don't know and have no talent for market timing.
Play Gloria!

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JoMoney
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Re: U.S. stocks in free fall

Post by JoMoney » Sat Dec 22, 2018 12:30 pm

desafinado wrote:
Sat Dec 22, 2018 12:23 pm
JoMoney wrote:
Sat Dec 22, 2018 12:21 pm
J G Bankerton wrote:
Sat Dec 22, 2018 12:09 pm
A-Commoner wrote:
Sat Dec 22, 2018 11:51 am
What's the current PE ratio of Vanguard total stock market? Vanguard website shows 18.7 but does this reflect the recent drop?
They have quarter end and month end. They don't show December in ether. December was OMG.
Forward PE on the S&P 500 is 15.09
That 123.80 value for the Russell 2000 12 months ago seems out of place.
Small-caps have had extreme valuations for several years now... there have been times where it's been listed as "NIL" due to it being negative.
"To achieve satisfactory investment results is easier than most people realize; to achieve superior results is harder than it looks." - Benjamin Graham

columbia
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Re: U.S. stocks in free fall

Post by columbia » Sat Dec 22, 2018 12:33 pm

JoMoney wrote:
Sat Dec 22, 2018 12:21 pm
J G Bankerton wrote:
Sat Dec 22, 2018 12:09 pm
A-Commoner wrote:
Sat Dec 22, 2018 11:51 am
What's the current PE ratio of Vanguard total stock market? Vanguard website shows 18.7 but does this reflect the recent drop?
They have quarter end and month end. They don't show December in ether. December was OMG.
Forward PE on the S&P 500 is 15.09
I would love to see historical data for that.

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gilgamesh
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Re: U.S. stocks in free fall

Post by gilgamesh » Sat Dec 22, 2018 12:35 pm

MisterMister wrote:
Sat Dec 22, 2018 12:29 pm
gilgamesh wrote:
Sat Dec 22, 2018 11:06 am
BogleMelon wrote:
Sat Dec 22, 2018 8:53 am
gilgamesh wrote:
Sat Dec 22, 2018 3:13 am
I am starting to realize I may be tempted not to ‘stay the course’ if the markets continue to slide significantly...so far it’s been easy, as it’s not significant, but say if S&P 500 is down 30% from its all-time high I may be tempted to change my AA.

I’m about 9 years from retirement and at around 30% in bonds...if USA stocks decline by 30% I’m thinking of going 25% bonds, and 20% bond at a 35% market decline and go down to 15% bonds if it declines by 40%. There on , I’ll stay there...

I don’t think I could resist the stock market sale, if it declines by 30%...heck! Even 20% will be mighty tempting...

Besides my 30% bond allocation was assuming a 50% stock decline...if stocks are already down 30%, it’s unlikely (not impossible) to go another 50%, So why stay at 30%? I should have thought about this before, but it makes a lot of sense now...
If new information becomes available to you now and it wasn't available to you before for whatever reason, then (now) is the correct time to adjust your AA instead of waiting and sell low. You didn't know before your real risk tolerance, and this is absolutely so fine because we are humans after all with emotions that don't usually follow the theory. But since you start to get a clearer idea now how really your tolerance is, then no reason to wait for a crash to happen to start to make the changes.
I don’t agree with you...Now will not be the time.

The whole point was to buy stocks in the cheap. The new information I have now, precisely says not to act now....

Say, the assumption now is that the stock market can decline 50% from its all time high. At that data point, I’m willing to risk 70% of my portfolio to stock risk. After a 30% decline, it’s unlikely to drop another 50% and secondly stocks are on sale - that’s when I want to have more than 70% in stocks as I can take more risk as I’m not fearing another 50% loss and I’m potemtially buying stocks for cheap. It makes absolutely no sense to change my AA now
The problem with this entire class of strategies (tactical asset allocation), is the idea that we can know when the market will take various twists and turns and thus we can take advantage of them; IOW, market timing.

Better to determine AA based on age & risk tolerance, change it rarely and not based on market conditions; I think that's the Boglehead way, and better than kidding ourselves that we know what the market will do.
We don’t know what the markets will do in the short term, but we sure do in the long term. The whole boglehead philosophy is investing...

Why invest? For long term growth. So we do know what the markets do in the long term.

We don’t know whether the markets could crash 5% or 80%, or whether they will recover in 3 months or 10 years ... This is true. I am aware...

‘Investing” strategies of every sort, Even Safe withdrawal rate etc. all rely on markets not crashing in perpetuity...all it takes is just in believing American companies will continue to make profit and innovate...

Therefore, if one’s retirement date is not fixed, there’s nothing wrong with assuming the same - a market will not be in perpetual decline. That’s all I need to know to make my suggested changes...what every investor already assumes, including bogleheads. If my assumptions are wrong, we are all screwed.

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vitaflo
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Re: U.S. stocks in free fall

Post by vitaflo » Sat Dec 22, 2018 12:49 pm

Jags4186 wrote:
Sat Dec 22, 2018 12:25 pm
A-Commoner wrote:
Sat Dec 22, 2018 12:22 pm
Japan is often cited here as an example of what can happen if your stock market remains flat for 30 or more years. Yet Japan today is still one of the wealthiest and most productive countries in the world. Not only that, it's second to only the US in terms of number of millionaires.
https://www.businessinsider.com/countri ... kingdom-16

I guess Japan would be even far richer today if not for its 3 to 4 decade stock market doldrums. Still, it doesn't look to be a total disaster.

Am I missing something?
This is why you don’t invest solely in one country. A Japanese investor who is well diversified might have 50% or less of his or her investments in the Japanese stock market. Remember, our domestic is their international. For everyone who writes here “international is a disaster, why invest international” there are people abroad saying “thank god for international returns”!
Keep in mind that our domestic returns are not the same as a Japanese investors US returns. Currency fluctuations play a role, so you can't directly compare what your returns are to someone using a different currency. Part of internationals poor performance for US investors recently has been from the strong dollar for example.

MJS
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Re: Stayed the course during a downturn?

Post by MJS » Sat Dec 22, 2018 12:56 pm

Incendiary wrote:
Sat Dec 22, 2018 11:32 am
[Thread merged into here, see below. --admin LadyGeek]

People who talk about asset allocation and blood in the streets and staying the course during a downturn are often asked if they themselves have been invested through a downturn without panicking.

At what point in this market can we all now answer in the affirmative? Now? If it drops another 10%? 20%?
One swallow doth not a Summer make.
One quarter doth not a Stayer make.

My vote is we'll have to hold one to at least February to be truly a member of the Stay the Course club.
Last edited by MJS on Sat Dec 22, 2018 1:00 pm, edited 1 time in total.

letsgobobby
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Re: U.S. stocks in free fall

Post by letsgobobby » Sat Dec 22, 2018 12:58 pm

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Last edited by letsgobobby on Mon Apr 22, 2019 2:40 am, edited 1 time in total.

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willthrill81
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Re: U.S. stocks in free fall

Post by willthrill81 » Sat Dec 22, 2018 1:00 pm

JoMoney wrote:
Sat Dec 22, 2018 12:21 pm
J G Bankerton wrote:
Sat Dec 22, 2018 12:09 pm
A-Commoner wrote:
Sat Dec 22, 2018 11:51 am
What's the current PE ratio of Vanguard total stock market? Vanguard website shows 18.7 but does this reflect the recent drop?
They have quarter end and month end. They don't show December in ether. December was OMG.
Forward PE on the S&P 500 is 15.09
:thumbsup :D
“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

A-Commoner
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Re: U.S. stocks in free fall

Post by A-Commoner » Sat Dec 22, 2018 1:16 pm

Jags4186 wrote:
Sat Dec 22, 2018 12:25 pm
A-Commoner wrote:
Sat Dec 22, 2018 12:22 pm
Japan is often cited here as an example of what can happen if your stock market remains flat for 30 or more years. Yet Japan today is still one of the wealthiest and most productive countries in the world. Not only that, it's second to only the US in terms of number of millionaires.
https://www.businessinsider.com/countri ... kingdom-16

I guess Japan would be even far richer today if not for its 3 to 4 decade stock market doldrums. Still, it doesn't look to be a total disaster.

Am I missing something?
This is why you don’t invest solely in one country. A Japanese investor who is well diversified might have 50% or less of his or her investments in the Japanese stock market. Remember, our domestic is their international. For everyone who writes here “international is a disaster, why invest international” there are people abroad saying “thank god for international returns”!
I agree but my point really is, if the US experienced Japan style malaise, it’s not necessarily the end of the world. Japan has survived and managed to maintain its position as one of wealthiest nations in the world despite its 3 decade record of poor stock returns.

corpgator
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Re: U.S. stocks in free fall

Post by corpgator » Sat Dec 22, 2018 1:27 pm

How close are weekend futures in regard to Monday opens? SP500 futures off 2.5% thus far, so next week looking like more of the same.

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munemaker
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Re: U.S. stocks in free fall

Post by munemaker » Sat Dec 22, 2018 1:30 pm

RollTide31457 wrote:
Sat Dec 22, 2018 10:47 am
Cash is king. We’ve been working on accumulating 10+ years of living expenses in cash reserves since 2009.
King of what?

That doesn't sound like a good long term strategy. You should at least buy some insured CDs.

long_gamma
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Re: U.S. stocks in free fall

Post by long_gamma » Sat Dec 22, 2018 1:33 pm

corpgator wrote:
Sat Dec 22, 2018 1:27 pm
How close are weekend futures in regard to Monday opens? SP500 futures off 2.5% thus far, so next week looking like more of the same.
Futures doesn't trade on the weekends. What you are seeing is Friday close. Future market opens at 6:00 PM on sunday
"Everyone has a plan 'till they get punched in the mouth." --Mike Tyson

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JoMoney
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Re: U.S. stocks in free fall

Post by JoMoney » Sat Dec 22, 2018 1:36 pm

corpgator wrote:
Sat Dec 22, 2018 1:27 pm
How close are weekend futures in regard to Monday opens? SP500 futures off 2.5% thus far, so next week looking like more of the same.
What do you mean by "weekend futures" Sunday night after 5pm? Probably pretty close to the Monday morning open.
Where are you getting your quote? What is the "last" price relative to the S&P close price?
"To achieve satisfactory investment results is easier than most people realize; to achieve superior results is harder than it looks." - Benjamin Graham

CULater
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Re: U.S. stocks in free fall

Post by CULater » Sat Dec 22, 2018 1:52 pm

ARE YOU PREPARED FOR A 4,000 POINT DROP IN THE DOW?

Well, at least we've had a practice dive. The DOW is off by 4383 points since mid-October. That wasn't so bad was it?
Faced with the choice between changing one’s mind and proving that there is no need to do so, almost everyone gets busy on the proof. ~ John Kenneth Galbraith

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gilgamesh
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Re: U.S. stocks in free fall

Post by gilgamesh » Sat Dec 22, 2018 1:58 pm

willthrill81 wrote:
Sat Dec 22, 2018 1:00 pm
JoMoney wrote:
Sat Dec 22, 2018 12:21 pm
J G Bankerton wrote:
Sat Dec 22, 2018 12:09 pm
A-Commoner wrote:
Sat Dec 22, 2018 11:51 am
What's the current PE ratio of Vanguard total stock market? Vanguard website shows 18.7 but does this reflect the recent drop?
They have quarter end and month end. They don't show December in ether. December was OMG.
Forward PE on the S&P 500 is 15.09
:thumbsup :D
Hey! Any comments on increasing stock exposures after a significant stock decline? I don’t know wether you read my recent posts here...I’m asking as you do some sort of AA finagling.

It’s unlikeky for a market to crash, say 50% after a 30% crash, as compared to a 50% crash from its all time high. Also, after a 30% and worse crash, stocks could be ascribed as being “on sale” in the long term perspective.

Then why not increase risk and buy more stocks after a significant decline like 30%?...yes! It can continue to slide, but in the long term it will recover to some degree - otherwise this whole concept of ‘investing” is doomed.

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JoMoney
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Re: U.S. stocks in free fall

Post by JoMoney » Sat Dec 22, 2018 2:02 pm

gilgamesh wrote:
Sat Dec 22, 2018 1:58 pm
willthrill81 wrote:
Sat Dec 22, 2018 1:00 pm
JoMoney wrote:
Sat Dec 22, 2018 12:21 pm
J G Bankerton wrote:
Sat Dec 22, 2018 12:09 pm
A-Commoner wrote:
Sat Dec 22, 2018 11:51 am
What's the current PE ratio of Vanguard total stock market? Vanguard website shows 18.7 but does this reflect the recent drop?
They have quarter end and month end. They don't show December in ether. December was OMG.
Forward PE on the S&P 500 is 15.09
:thumbsup :D
Hey! Any comments on increasing stock exposures after a significant stock decline? I don’t know wether you read my recent posts...

It’s unlikeky for a market to crash, say 50% after a 30% crash, as compared to a 50% crash from its all time high. Also, after a 30% and worse crash, stocks could be ascribed as being “on sale” in the long term perspective.

Then why not increase risk and buy more stocks after a significant decline like 30%?
Maybe so, but "likely" or "unlikely" expresses that there is still a chance of further decline. If you're not willing/able to accept the consequences of further loss, you shouldn't make that bet. If you are willing/able, why wasn't that money already invested?
"To achieve satisfactory investment results is easier than most people realize; to achieve superior results is harder than it looks." - Benjamin Graham

MotoTrojan
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Re: U.S. stocks in free fall

Post by MotoTrojan » Sat Dec 22, 2018 2:21 pm

RollTide31457 wrote:
Sat Dec 22, 2018 10:47 am
Cash is king. We’ve been working on accumulating 10+ years of living expenses in cash reserves since 2009.
You’d have gotten there much faster in equities.

MisterMister
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Re: U.S. stocks in free fall

Post by MisterMister » Sat Dec 22, 2018 2:28 pm

MotoTrojan wrote:
Sat Dec 22, 2018 2:21 pm
RollTide31457 wrote:
Sat Dec 22, 2018 10:47 am
Cash is king. We’ve been working on accumulating 10+ years of living expenses in cash reserves since 2009.
You’d have gotten there much faster in equities.
It might have been king for the past year (and we only know this by looking in the rear view mirror).

But it has definitely not been king since 2009. If you have 10 years of expenses now you'd have 20-30 years if you had been in the stock market in that time.

The next 10 years may be a different story.

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gilgamesh
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Re: U.S. stocks in free fall

Post by gilgamesh » Sat Dec 22, 2018 2:28 pm

JoMoney wrote:
Sat Dec 22, 2018 2:02 pm
gilgamesh wrote:
Sat Dec 22, 2018 1:58 pm
willthrill81 wrote:
Sat Dec 22, 2018 1:00 pm
JoMoney wrote:
Sat Dec 22, 2018 12:21 pm
J G Bankerton wrote:
Sat Dec 22, 2018 12:09 pm
They have quarter end and month end. They don't show December in ether. December was OMG.
Forward PE on the S&P 500 is 15.09
:thumbsup :D
Hey! Any comments on increasing stock exposures after a significant stock decline? I don’t know wether you read my recent posts...

It’s unlikeky for a market to crash, say 50% after a 30% crash, as compared to a 50% crash from its all time high. Also, after a 30% and worse crash, stocks could be ascribed as being “on sale” in the long term perspective.

Then why not increase risk and buy more stocks after a significant decline like 30%?
Maybe so, but "likely" or "unlikely" expresses that there is still a chance of further decline. If you're not willing/able to accept the consequences of further loss, you shouldn't make that bet. If you are willing/able, why wasn't that money already invested?
Further decline is almost certain, only that it won’t be as much as when it was at its all time high and it will recover to a reasonable degree (what all investors rely on)

Why was it not invested in the first place?...one, because a 50% stock decline was more likely then (thus I didn’t want to take that risk), than after a 30% decline (thus I’m willing to take more risk) - what’s wrong with that statement?

Is anybody claiming it’s equally likely for total stock market to decline 50% from the high as it is for it to slide another 50% after a 30% slide?

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

Post by J G Bankerton » Sat Dec 22, 2018 2:33 pm

JoMoney wrote:
Sat Dec 22, 2018 12:21 pm
Forward PE on the S&P 500 is 15.09
Could this be right?

Jan 1, 2009 PE 70.91

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

Post by J G Bankerton » Sat Dec 22, 2018 2:36 pm

gilgamesh wrote:
Sat Dec 22, 2018 2:28 pm
Is anybody claiming it’s equally likely for total stock market to decline 50% from the high as it is for it to slide another 50% after a 30% slide?
No one knows what tomorrow will bring
long_gamma wrote:
Sat Dec 22, 2018 1:33 pm
Futures doesn't trade on the weekends. What you are seeing is Friday close. Future market opens at 6:00 PM on sunday
OIC, that's why Lionel Richie's trading all night long is only 24/5. .

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JoMoney
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Re: U.S. stocks in free fall

Post by JoMoney » Sat Dec 22, 2018 2:47 pm

J G Bankerton wrote:
Sat Dec 22, 2018 2:33 pm
JoMoney wrote:
Sat Dec 22, 2018 12:21 pm
Forward PE on the S&P 500 is 15.09
Could this be right?

Jan 1, 2009 PE 70.91
There were points it was even worse than that. There were massive losses / negative earnings, particularly in the financial sector, and the way an index calculates P/E all of the earnings are aggregated together.
WSJ: The S&P Gets Its Earnings Wrong
By Jeremy J. Siegel Updated Feb. 25, 2009
https://www.wsj.com/articles/SB123552586347065675

... What this dismal news actually reflects is the bizarre way in which S&P (and most other index providers) calculate "aggregate" earnings and P/E ratios for their indexes. Unlike their calculation of returns, S&P adds together, dollar for dollar, the large losses of a few firms to the profits of healthy firms without any regard to the market weight of the firm in the S&P 500. ...

...Yet when S&P calculates earnings, these market weights are ignored. If, for example, Exxon-Mobil earned $10 billion while Jones Apparel lost $10 billion, S&P would simply add these earnings together to compute the aggregate earnings of its index, ignoring the vast discrepancy in the relative weights on these firms....

...As the fourth-quarter earnings season draws to a close, there are an estimated 80 companies in the S&P 500 with 2008 losses totaling about $240 billion. Under S&P's methodology, these firms are subtracting more than $27 per share from index earnings although they represent only 6.4% of weight in the index. S&P's unweighted methodology produces a dismal estimate of $39.73 for aggregate earnings last year....
"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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Re: U.S. stocks in free fall

Post by nisiprius » Sat Dec 22, 2018 2:54 pm

Hatch Batten wrote:
Wed Dec 19, 2018 7:52 pm
nisiprius wrote:
Wed Dec 19, 2018 5:43 pm
I'm not ready to listen to all sixteen minutes of the clip, though... where does she say "Things would be so different, if they were not as they are?" (Or words to that effect).
Song starts about 5 minutes in: https://www.youtube.com/watch?v=aYCXO_FZj5k#t=5m21s
Thank you!
Annual income twenty pounds, annual expenditure nineteen nineteen and six, result happiness; Annual income twenty pounds, annual expenditure twenty pounds ought and six, result misery.

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gilgamesh
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Re: U.S. stocks in free fall

Post by gilgamesh » Sat Dec 22, 2018 3:09 pm

J G Bankerton wrote:
Sat Dec 22, 2018 2:36 pm
gilgamesh wrote:
Sat Dec 22, 2018 2:28 pm
Is anybody claiming it’s equally likely for total stock market to decline 50% from the high as it is for it to slide another 50% after a 30% slide?
No one knows what tomorrow will bring
Then when does one ever retire? If one can’t even make reasonable predictions...4%SWR, 3%, 1%, who knows tomorrow? May be 0.01% SWR

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Re: U.S. stocks in free fall

Post by sassy_penguin » Sat Dec 22, 2018 3:14 pm

I feel I owe you all an apology. I only started investing in Vanguard in January 2017. Every time I get close to $100,000 total, there is a drop, haha.

I, unfortunately, took a large paycut at a new job this year, so my ability to invest in non-tax advantaged accounts has been greatly curtailed. Rather than blow past it with new cash put in, it will mostly need to be from dividends and share price growth.

I am all-stock, and my total returns are now in the red. It was definitely fun to see the green mountain get so big on the website, but all good things must come to an end. After tightening the budget a bit, I am able to put $250 in VTSAX/VTIAX in an 80/20 split every two weeks. It will be interesting to see how long it takes me to cross that 100k now. They say your first 100k is your hardest :sharebeer

side-note, is there any way to change the number of posts per page in these threads? It currently is 50, and I'd like to drop it some, if possible.

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Re: U.S. stocks in free fall

Post by LadyGeek » Sat Dec 22, 2018 3:27 pm

^^^ side-reply, that feature is not supported in the "stock" forum software. There is a modification available which can do it, but there's not enough of a demand to make it worthwhile. It also depends if the site owners will allow it. Also, added features mean added maintenance. Feel free to discuss this further in Forum software upgrade bug reports and change requests.
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Re: Stayed the course during a downturn?

Post by ruralavalon » Sat Dec 22, 2018 3:35 pm

Incendiary wrote:
Sat Dec 22, 2018 11:32 am
[Thread merged into here, see below. --admin LadyGeek]

People who talk about asset allocation and blood in the streets and staying the course during a downturn are often asked if they themselves have been invested through a downturn without panicking.

At what point in this market can we all now answer in the affirmative? Now? If it drops another 10%? 20%?
In the period 11/01/2007 thru 03/02/2009 Vanguard Total Stock Market Index Fund Admiral Shares (VTSAX) dropped 54%, and $10k invested became $4.6k even with dividends reinvested.

The current correction is nowhere near that.
Last edited by ruralavalon on Sat Dec 22, 2018 3:39 pm, edited 2 times in total.
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Re: U.S. stocks in free fall

Post by hoops777 » Sat Dec 22, 2018 3:36 pm

gilgamesh wrote:
Sat Dec 22, 2018 3:09 pm
J G Bankerton wrote:
Sat Dec 22, 2018 2:36 pm
gilgamesh wrote:
Sat Dec 22, 2018 2:28 pm
Is anybody claiming it’s equally likely for total stock market to decline 50% from the high as it is for it to slide another 50% after a 30% slide?
No one knows what tomorrow will bring
Then when does one ever retire? If one can’t even make reasonable predictions...4%SWR, 3%, 1%, who knows tomorrow? May be 0.01% SWR
You can retire by using common sense.If you have enough in assets to live comfortably on risk free or very low risk then you are golden.If you need the stock market to perform well in order to retire,good luck.I like Bernstein’s philosophy about quit playing when you have won the game,but unfortunately very few people have the means to do that at a high level.
Like everything else in life,if you do not have a lot of money you have to adjust the best you can.As much as you want to believe 100 pct in Santa Claus,there is no guarantee that the market will act the way you want or expect.
K.I.S.S........so easy to say so difficult to do.

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

Post by J G Bankerton » Sat Dec 22, 2018 3:49 pm

gilgamesh wrote:
Sat Dec 22, 2018 3:09 pm
Then when does one ever retire?
Before DJ Nanna I hope.

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willthrill81
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Re: U.S. stocks in free fall

Post by willthrill81 » Sat Dec 22, 2018 4:49 pm

gilgamesh wrote:
Sat Dec 22, 2018 1:58 pm
willthrill81 wrote:
Sat Dec 22, 2018 1:00 pm
JoMoney wrote:
Sat Dec 22, 2018 12:21 pm
J G Bankerton wrote:
Sat Dec 22, 2018 12:09 pm
A-Commoner wrote:
Sat Dec 22, 2018 11:51 am
What's the current PE ratio of Vanguard total stock market? Vanguard website shows 18.7 but does this reflect the recent drop?
They have quarter end and month end. They don't show December in ether. December was OMG.
Forward PE on the S&P 500 is 15.09
:thumbsup :D
Hey! Any comments on increasing stock exposures after a significant stock decline? I don’t know wether you read my recent posts here...I’m asking as you do some sort of AA finagling.

It’s unlikeky for a market to crash, say 50% after a 30% crash, as compared to a 50% crash from its all time high. Also, after a 30% and worse crash, stocks could be ascribed as being “on sale” in the long term perspective.

Then why not increase risk and buy more stocks after a significant decline like 30%?...yes! It can continue to slide, but in the long term it will recover to some degree - otherwise this whole concept of ‘investing” is doomed.
Historically, a 50% market decline after a 30% decline (the latter of which we haven't yet experienced, only about 20%), would be a 65% overall decline, something that's only happened once in the U.S.: the Great Depression. So to the extent that you believe that the future will resemble the past, yes, a 50% decline is less likely to happen after a 30% decline than from the market highs.

Would this have been a good means to do some tactical asset allocation in the past? I don't know as I haven't seen any data on it. More importantly, would it be a good strategy going forward? I really don't know.

AlohaJoe referred to this general issue in a thread earlier in the year, and there was some other discussion about it worth reading as well.
“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

cashboy
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Re: U.S. stocks in free fall

Post by cashboy » Sat Dec 22, 2018 5:03 pm

great thread.

not much one can add, but here are my current thoughts:


When i was younger I gave little thought about drops (or rises) in my Stock Market assets since I had a job and steady income; I was accumulating. :D

This year my job at megacorp was eliminated and I am no longer accumulating - I will soon be withdrawing. :(

(I am 61, got severance of 1 year, 26 weeks of unemployment, and I have a modest non-COLA pension - so I am ok.)

Now, even though I invest (and try to think) like a boglehead, I have to admit that I have some concern (not worry) about what I see going on in the Stock Market right now- as I am closer to the point of needing to make withdrawls. It seems to me that too much is happening for too little reason (but what do I know...).

Some posters say that this is a great time to buy, and that is certainly true for people with available money to invest, but for others without money to invest it is not so great a time... :|

It sucks to lose large chunks of money, almost every day, for several days. But, as others have noted, it is understood that there are ups and down and you have to 'stay the course'.

As far as 'staying the course' goes, I am happy that the 'boglehead way' provides a 'course' to 'stay' on - that has been a comfort these last weeks (now turning into months).

In times of volatility like this I want to point out my personal appreciation for the famous Sheepdog thread that was full of ideas (and support for/from fellow investors). For example, as a result of that thread I now have 3+ years of living expenses (in CDs) to get through long Stock Market downturns (and help limit withdrawls). And, I am ready to go back to work to supplement my other sources of income - if needed to make up for limited withdrawls.

"This too shall pass"
Last edited by cashboy on Sat Dec 22, 2018 5:26 pm, edited 5 times in total.

quantAndHold
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Re: U.S. stocks in free fall

Post by quantAndHold » Sat Dec 22, 2018 5:14 pm

harmoniousmonk wrote:
Sat Dec 22, 2018 10:39 am
Has anyone been kicked out of Flagship or Flagship select yet?
Not likely to happen to me this time around, but it happened to me in 2008. It took several months for it to happen. It wasn't instant the moment my account balance dropped. The only reason I even noticed was that a couple of my smaller holdings changed from Admiral to Investor shares.

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