U.S. stocks in free fall

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anoop
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Re: U.S. stocks in free fall

Post by anoop » Mon Dec 24, 2018 4:34 pm

passiveTiger wrote:
Mon Dec 24, 2018 4:28 pm
Japan is still waiting to return to December 1989 stock prices. Japan was so wrecked by overinflated real estate and other assets that it is now going extinct. Literally.

https://www.npr.org/2018/12/21/67910354 ... id-decline

People talk long-term, staying the course, etc., but can you stomach the risk of being 33% down after almost 30 years?
I don't know if it makes sense to compare the US to Japan. Unlike Japan's central bank, the fed has demonstrated it can support asset prices at will. Japan had tried QE in the past and it didn't work. Yet in the US, it worked beautifully (again for asset prices, not for main street). I wouldn't worry too much about stocks recovering. My guess is that is part of the reason the fed is stepping in now so that the US doesn't end up like Japan with a runaway stock market and real-estate prices.

The next time the fed says we should load up on assets, I will strongly consider doing so. For now they are saying assets are overvalued (and have been saying so since mid 2015) and all is well with the economy. This means they won't support asset prices unless they fall below whatever they think is a fair value, provided that doesn't cause some other crisis (hence Mnuchin calling the banks). But once they step in, they will blow another bubble and we will take out the current tops in no time (i.e. no more than a few years).
Last edited by anoop on Mon Dec 24, 2018 4:44 pm, edited 4 times in total.

Glockenspiel
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Re: U.S. stocks in free fall

Post by Glockenspiel » Mon Dec 24, 2018 4:37 pm

I rebalanced into bonds when the market was down about 3% off its high. Now my IPS is close to breaking the threshold for me to rebalance back into international and small cap stocks.

Turbo29
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Re: U.S. stocks in free fall

Post by Turbo29 » Mon Dec 24, 2018 4:43 pm

Nicolas wrote:
Mon Dec 24, 2018 4:31 pm

I read that at one point the emperor’s palace grounds in Tokyo were worth more than the State of California.
I remember reading that the value of real estate in Tokyo exceeded the total value of all the real estate in the United States. Something was definitely out of whack at the time. And they are still paying for it.

Japan ten year bond is at 0.032%. It does seem that since 1990 they have had a lot less inflation than the US.
Last edited by Turbo29 on Mon Dec 24, 2018 4:53 pm, edited 2 times in total.

Bacchus01
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Re: U.S. stocks in free fall

Post by Bacchus01 » Mon Dec 24, 2018 4:50 pm

passiveTiger wrote:
Mon Dec 24, 2018 4:28 pm
imareal1 wrote:
Mon Dec 24, 2018 3:17 pm
Doom&Gloom wrote:
Mon Dec 24, 2018 2:50 pm
Accrual wrote:
Mon Dec 24, 2018 2:06 pm
In an effort to console newish members, many posters have noted that "Prices will go back up. This is typical and part of investing in equities."

I would like to remind those posters that an increase in future prices is not guaranteed. This is the risk we all assume through equity investments.
+1

History certainly implies that prices will go back up, but the market does not issue guaranteed refunds like Costco. I am afraid that many newer investors have gotten used to to quick recoveries to former levels from all the dips they have experienced. This one has been deeper and more prolonged, and it is evident from posts on BH that some have been a bit unnerved already.

Good luck to all!
As a new investor who believes the market will recover but cannot dispute this point, I don't see why we need to be reminded of this. Like yeah, the market may never recover from this point on, but do you really think that is a realistic possibility worth mentioning?

And to say this one has been deeper and more prolonged, I think that's simply unnecessary fear mongering.
Japan is still waiting to return to December 1989 stock prices. Japan was so wrecked by overinflated real estate and other assets that it is now going extinct. Literally.

https://www.npr.org/2018/12/21/67910354 ... id-decline

People talk long-term, staying the course, etc., but can you stomach the risk of being 33% down after almost 30 years?
Japan is some bigger macro issues. No population growth. No immigration. No natural resources. No natural trade advantage.

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willthrill81
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Re: U.S. stocks in free fall

Post by willthrill81 » Mon Dec 24, 2018 4:53 pm

Bacchus01 wrote:
Mon Dec 24, 2018 4:50 pm
passiveTiger wrote:
Mon Dec 24, 2018 4:28 pm
imareal1 wrote:
Mon Dec 24, 2018 3:17 pm
Doom&Gloom wrote:
Mon Dec 24, 2018 2:50 pm
Accrual wrote:
Mon Dec 24, 2018 2:06 pm
In an effort to console newish members, many posters have noted that "Prices will go back up. This is typical and part of investing in equities."

I would like to remind those posters that an increase in future prices is not guaranteed. This is the risk we all assume through equity investments.
+1

History certainly implies that prices will go back up, but the market does not issue guaranteed refunds like Costco. I am afraid that many newer investors have gotten used to to quick recoveries to former levels from all the dips they have experienced. This one has been deeper and more prolonged, and it is evident from posts on BH that some have been a bit unnerved already.

Good luck to all!
As a new investor who believes the market will recover but cannot dispute this point, I don't see why we need to be reminded of this. Like yeah, the market may never recover from this point on, but do you really think that is a realistic possibility worth mentioning?

And to say this one has been deeper and more prolonged, I think that's simply unnecessary fear mongering.
Japan is still waiting to return to December 1989 stock prices. Japan was so wrecked by overinflated real estate and other assets that it is now going extinct. Literally.

https://www.npr.org/2018/12/21/67910354 ... id-decline

People talk long-term, staying the course, etc., but can you stomach the risk of being 33% down after almost 30 years?
Japan is some bigger macro issues. No population growth. No immigration. No natural resources. No natural trade advantage.
And Japan's economy going nowhere didn't have a noticeable 'rippling' effect to other major nations' economies, unlike the financial crisis, which originated in the U.S. but hit international markets very hard.
“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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ofcmetz
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Re: U.S. stocks in free fall

Post by ofcmetz » Mon Dec 24, 2018 4:53 pm

Glockenspiel wrote:
Mon Dec 24, 2018 4:37 pm
I rebalanced into bonds when the market was down about 3% off its high. Now my IPS is close to breaking the threshold for me to rebalance back into international and small cap stocks.
:D Oh the joys of following one's investment policy statement (IPS). I got really close to the same thing, but was able to just put new money into fixed income for awhile and avoided the rebalance. And today I actually did rebalance into International and US total funds. It's a seesaw year.
Never underestimate the power of the force of low cost index funds.

passiveTiger
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Re: U.S. stocks in free fall

Post by passiveTiger » Mon Dec 24, 2018 4:54 pm

anoop wrote:
Mon Dec 24, 2018 4:34 pm
passiveTiger wrote:
Mon Dec 24, 2018 4:28 pm
Japan is still waiting to return to December 1989 stock prices. Japan was so wrecked by overinflated real estate and other assets that it is now going extinct. Literally.

https://www.npr.org/2018/12/21/67910354 ... id-decline

People talk long-term, staying the course, etc., but can you stomach the risk of being 33% down after almost 30 years?
I don't know if it makes sense to compare the US to Japan. Unlike Japan's central bank, the fed has demonstrated it can support asset prices at will. Japan had tried QE in the past and it didn't work. Yet in the US, it worked beautifully (again for asset prices, not for main street). I wouldn't worry too much about stocks recovering. My guess is that part of the reason the fed is stepping in now is so that the US doesn't end up like Japan with a runaway stock market and real-estate prices.

The next time the fed says we should load up on assets, I will strongly consider doing so. For now they are saying assets are overvalued (and have been saying so since mid 2015) and all is well with the economy. This means they won't support asset prices unless they fall below whatever they think is a fair value, provided that doesn't cause some other crisis (hence Mnuchin calling the banks). But once they step in, they will blow another bubble and we will take out the current tops in no time (i.e. no more than a few years).
First of all, I’m not gloom and doom. I too believe that this drop will eventually pass, the markets will not collapse, the banks will not be nationalized, and the people with underground bunkers will not be vindicated.

On the other hand, markets do go down and can stay down. Sometimes, down a lot for a long time.

So, Japan’s Nikkei drop of almost 30 years doesn’t convince you of possible risk?

How about the NASDAQ’s 15-year drop?

https://www.forbes.com/sites/investor/2 ... overy/amp/

What if that started this month for the S&P 500? I don’t think it did, but who knows?

The problem with the economy and all economies is that they are fragile things at all times. They are as strong as you believe they are until you don’t believe.

We have record low unemployment. That’s great for people working, but not so great if you think that is indefinitely sustainable.

passiveTiger
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Re: U.S. stocks in free fall

Post by passiveTiger » Mon Dec 24, 2018 5:07 pm

Bacchus01 wrote:
Mon Dec 24, 2018 4:50 pm
passiveTiger wrote:
Mon Dec 24, 2018 4:28 pm
imareal1 wrote:
Mon Dec 24, 2018 3:17 pm
Doom&Gloom wrote:
Mon Dec 24, 2018 2:50 pm
Accrual wrote:
Mon Dec 24, 2018 2:06 pm
In an effort to console newish members, many posters have noted that "Prices will go back up. This is typical and part of investing in equities."

I would like to remind those posters that an increase in future prices is not guaranteed. This is the risk we all assume through equity investments.
+1

History certainly implies that prices will go back up, but the market does not issue guaranteed refunds like Costco. I am afraid that many newer investors have gotten used to to quick recoveries to former levels from all the dips they have experienced. This one has been deeper and more prolonged, and it is evident from posts on BH that some have been a bit unnerved already.

Good luck to all!
As a new investor who believes the market will recover but cannot dispute this point, I don't see why we need to be reminded of this. Like yeah, the market may never recover from this point on, but do you really think that is a realistic possibility worth mentioning?

And to say this one has been deeper and more prolonged, I think that's simply unnecessary fear mongering.
Japan is still waiting to return to December 1989 stock prices. Japan was so wrecked by overinflated real estate and other assets that it is now going extinct. Literally.

https://www.npr.org/2018/12/21/67910354 ... id-decline

People talk long-term, staying the course, etc., but can you stomach the risk of being 33% down after almost 30 years?
Japan is some bigger macro issues. No population growth. No immigration. No natural resources. No natural trade advantage.
Every country has its issues. You left out that their debt situation is now even worse than ours, although we do our best to make it worse each day.

But we do have similarities. For example, replace absent population with absent qualified workers.

We have immigration, but it’s not sufficient to provide what we need, despite trying to be selectively targeted about it.

We are truly blessed with natural resources.

I don’t know about the “trade advantage” thing. If we have one, it doesn’t make itself known.

https://www.marketwatch.com/amp/story/g ... B25E1938B1

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CULater
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Re: U.S. stocks in free fall

Post by CULater » Mon Dec 24, 2018 5:11 pm

nisiprius wrote:
Mon Dec 24, 2018 4:30 pm
  • No Wall Street analysts believe stocks will suffer next year, despite a fear addled market
  • Widespread market jitters include Federal Reserve policy, a prolonged trade fight with China, and political polarization in Washington that's partly shut down the U.S. government.
Ergo,
  • Wall Street analysts believe that next year Federal Reserve policy will prove to be sound, the trade fight with China will end, Washington will cease to be politically polarized, and the government will resume normal operation.
Best news since the Hindenburg Omen of 2010.
TIME TO SELL! The dreaded Wall Street Analyst Prediction Omen!
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CULater
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Re: U.S. stocks in free fall

Post by CULater » Mon Dec 24, 2018 5:18 pm

John Hussman recently was predicting market losses in the neighborhood of 65%. Only about 45% more to go...
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anoop
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Re: U.S. stocks in free fall

Post by anoop » Mon Dec 24, 2018 5:23 pm

passiveTiger wrote:
Mon Dec 24, 2018 4:54 pm
First of all, I’m not gloom and doom. I too believe that this drop will eventually pass, the markets will not collapse, the banks will not be nationalized, and the people with underground bunkers will not be vindicated.

On the other hand, markets do go down and can stay down. Sometimes, down a lot for a long time.

So, Japan’s Nikkei drop of almost 30 years doesn’t convince you of possible risk?

How about the NASDAQ’s 15-year drop?

https://www.forbes.com/sites/investor/2 ... overy/amp/

What if that started this month for the S&P 500? I don’t think it did, but who knows?

The problem with the economy and all economies is that they are fragile things at all times. They are as strong as you believe they are until you don’t believe.

We have record low unemployment. That’s great for people working, but not so great if you think that is indefinitely sustainable.
I agree with your points. In the NASDAQ case as well, the fed stepped in to correct it, or it could easily have turned into another Nikkei. So yes, I agree it is possible it may take 15 years to recover (unlikely, IMO, but possible), but it is also very different from Japan where 30 years later, the market is still at ~50% of the peak.

The record low unemployment has actually not been that great even for people working. Many of those jobs are in waiting tables, bartending, ride shares, and other gig economy areas that have little in terms of job stability or benefits. They will last only as long as the boom lasts.

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CULater
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Re: U.S. stocks in free fall

Post by CULater » Mon Dec 24, 2018 5:31 pm

Just took a look at Stockcharts, and it appears that at today's close we've wiped out all the gains in the total U.S. market since the end of May, 2017 - about 19 months ago. And 2017 was a very good year. Well, that was fun, eh?
On the internet, nobody knows you're a dog.

passiveTiger
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Re: U.S. stocks in free fall

Post by passiveTiger » Mon Dec 24, 2018 5:42 pm

anoop wrote:
Mon Dec 24, 2018 5:23 pm
passiveTiger wrote:
Mon Dec 24, 2018 4:54 pm
First of all, I’m not gloom and doom. I too believe that this drop will eventually pass, the markets will not collapse, the banks will not be nationalized, and the people with underground bunkers will not be vindicated.

On the other hand, markets do go down and can stay down. Sometimes, down a lot for a long time.

So, Japan’s Nikkei drop of almost 30 years doesn’t convince you of possible risk?

How about the NASDAQ’s 15-year drop?

https://www.forbes.com/sites/investor/2 ... overy/amp/

What if that started this month for the S&P 500? I don’t think it did, but who knows?

The problem with the economy and all economies is that they are fragile things at all times. They are as strong as you believe they are until you don’t believe.

We have record low unemployment. That’s great for people working, but not so great if you think that is indefinitely sustainable.
I agree with your points. In the NASDAQ case as well, the fed stepped in to correct it, or it could easily have turned into another Nikkei. So yes, I agree it is possible it may take 15 years to recover (unlikely, IMO, but possible), but it is also very different from Japan where 30 years later, the market is still at ~50% of the peak.

The record low unemployment has actually not been that great even for people working. Many of those jobs are in waiting tables, bartending, ride shares, and other gig economy areas that have little in terms of job stability or benefits. They will last only as long as the boom lasts.
I wasn’t really thinking about the quality of jobs. For example, if you pee on a thousand dollar bill and then hand it to me, I will shake it off a little, try to hold it in whatever dry spot is available, etc., but I’m still depositing it or otherwise using it. I don’t like how I got it, but I like having it.

Once upon a time, there was the “natural rate of unemployment” that was generally pegged around 5-6% that kind of told you how fully employed we are.

I don’t use that anymore. I use the U.S. felony conviction rate that is around 8%. When the unemployment rate is around half of that, I personally think that we are way unsustainable in employment. It theoretically means that half the felons are employed which seems unrealistically high to me. I’m not trying to bait anyone into felony conviction political discussion. I’m only arguing that when half the convicted felons are employed, employment is not particularly selective.

Mrmetalpole
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Re: U.S. stocks in free fall

Post by Mrmetalpole » Mon Dec 24, 2018 5:45 pm

Don’t Fight the Fed! And end of year tax selling.....Merry Christmas!

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grabiner
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Re: U.S. stocks in free fall

Post by grabiner » Mon Dec 24, 2018 5:50 pm

tmcc wrote:
Mon Dec 24, 2018 1:12 pm
I just realized I botched my TLH :(

There was a reinvested cap gains distribution in one of my mutual funds on 12/21. I just sold my entire position to get the ETF instead. I wonder if this will be disallowed.
If you sold a mutual fund to buy the same ETF, that creates a wash sale, because the mutual fund and ETF are substantially identical. Your brokerage is not required to identify this, as brokerages are only required to report wash sales on identical securities in the same account. However, you are required to report the correct numbers on your tax form.

You can deal with the issue by selling the ETF you just bought; there are four trading days left this year. This will not undo the wash sale, but it will allow you to realize the disallowed loss, which was added to the basis of the replacement shares. (If you purchased the replacement shares in an IRA, the disallowed loss cannot be recovered.
Wiki David Grabiner

uberme
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Re: U.S. stocks in free fall

Post by uberme » Mon Dec 24, 2018 5:50 pm

I could see this causing a recession... when people feel less wealthy they cut spending back. I wonder how many people are seeing their company stock shares nose diving (tech companies)

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willthrill81
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Re: U.S. stocks in free fall

Post by willthrill81 » Mon Dec 24, 2018 5:54 pm

uberme wrote:
Mon Dec 24, 2018 5:50 pm
I could see this causing a recession... when people feel less wealthy they cut spending back. I wonder how many people are seeing their company stock shares nose diving (tech companies)
It would be unusual indeed for a stock market decline to cause a recession. It's usually the other way around.
“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 » Mon Dec 24, 2018 6:01 pm

ResearchMed wrote:
Mon Dec 24, 2018 4:11 pm
willthrill81 wrote:
Mon Dec 24, 2018 4:09 pm
cashboy wrote:
Mon Dec 24, 2018 4:03 pm
But, If a person cannot wait (ex: RMDs, medical costs), then having to sell now makes things more difficult.
That is why 100% stock portfolios are not appropriate for most of those who are regularly needing to make portfolio withdrawals. Being forced to sell stocks at a loss is neither optimal nor necessary in many instances.
And to cashboy,

RMD's are not really "forced sales at losses".
One has to take the RMD. One does *not* need to spend it.
One can re-purchase the same or similar holding in the taxable account, and be "even".

RM
yes, very true for people fortunate enough to be able to take an RMD and not need the money!

if only everyone (including me) were fortunate enough to be in that situation.

thanks
Three-Fund Portfolio: FSPSX - FXAIX - FXNAX (with slight tilt of CD - CASH - Canned Beans - Rice - Bottled Water)

anoop
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Re: U.S. stocks in free fall

Post by anoop » Mon Dec 24, 2018 6:12 pm

willthrill81 wrote:
Mon Dec 24, 2018 5:54 pm
uberme wrote:
Mon Dec 24, 2018 5:50 pm
I could see this causing a recession... when people feel less wealthy they cut spending back. I wonder how many people are seeing their company stock shares nose diving (tech companies)
It would be unusual indeed for a stock market decline to cause a recession. It's usually the other way around.
Stocks are not a good indicator.

CR is the only one I know that predicted the last recession correctly, but has also correctly said no recession since then (despite all of the stock declines along the way). He continues to say no recession for now, at least for 12 months, following Oct 2018.
https://www.calculatedriskblog.com/2018 ... ssion.html

For normal recessions, he writes:
"I think the most likely cause of the next recession will be Fed tightening to combat inflation sometime in the future - and residential investment (housing starts, new home sales) will probably turn down well in advance of the recession."

Starts are still increasing.
https://www.calculatedriskblog.com/2018 ... tarts.html

When he does write about stocks he says stock market is NOT the economy. The economy can be doing just fine, but stocks can have a big correction. That is why he rarely writes about stocks.
https://www.calculatedriskblog.com/2017 ... ubble.html

letsgobobby
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Re: U.S. stocks in free fall

Post by letsgobobby » Mon Dec 24, 2018 6:19 pm

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Re: U.S. stocks in free fall

Post by willthrill81 » Mon Dec 24, 2018 6:24 pm

letsgobobby wrote:
Mon Dec 24, 2018 6:19 pm
Will, what single (un)employment data point would persuade you that the rate of change had hit some inflection point? I believe you’re still waiting on that as a momentum follower.
Indeed I am. I will not move out of stocks until both stocks are trading below their 7 month moving average (which they currently are) and the unemployment rate is above its 12 month moving average (which it clearly isn't); unless both of these conditions are satisfied, I remain in equities. The latter indicator has historically helped to prevent whipsaws that would result from using price alone. So I'm standing pat in 100% equities.
Last edited by willthrill81 on Mon Dec 24, 2018 6:25 pm, edited 1 time in total.
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Re: U.S. stocks in free fall

Post by letsgobobby » Mon Dec 24, 2018 6:29 pm

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Re: U.S. stocks in free fall

Post by willthrill81 » Mon Dec 24, 2018 6:33 pm

letsgobobby wrote:
Mon Dec 24, 2018 6:29 pm
willthrill81 wrote:
Mon Dec 24, 2018 6:24 pm
letsgobobby wrote:
Mon Dec 24, 2018 6:19 pm
Will, what single (un)employment data point would persuade you that the rate of change had hit some inflection point? I believe you’re still waiting on that as a momentum follower.
Indeed I am. I will not move out of stocks until both stocks are trading below their 7 month moving average (which they currently are) and the unemployment rate is above its 12 month moving average (which it clearly isn't); unless both of these conditions are satisfied, I remain in equities. The latter indicator has historically helped to prevent whipsaws that would result from using price alone. So I'm standing pat in 100% equities.
What is the 12 mo moving avg of unemployment rate currently?
Including the Nov., 2018, data, it is 3.92. November's UER was 3.7. Historically, this has been a strong indicator that we are not currently in a recession.
“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

morsk
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Re: U.S. stocks in free fall

Post by morsk » Mon Dec 24, 2018 7:14 pm

willthrill81 wrote:
Mon Dec 24, 2018 6:33 pm

Including the Nov., 2018, data, it is 3.92. November's UER was 3.7. Historically, this has been a strong indicator that we are not currently in a recession.
Can you please provide the link to where you pull the 12MMA unemployment rate from? Many thanks.

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Re: U.S. stocks in free fall

Post by willthrill81 » Mon Dec 24, 2018 7:21 pm

morsk wrote:
Mon Dec 24, 2018 7:14 pm
willthrill81 wrote:
Mon Dec 24, 2018 6:33 pm

Including the Nov., 2018, data, it is 3.92. November's UER was 3.7. Historically, this has been a strong indicator that we are not currently in a recession.
Can you please provide the link to where you pull the 12MMA unemployment rate from? Many thanks.
I calculate with Excel using the data from the BLS website. You can also download the data in Excel format from their site.
“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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hdas
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Re: U.S. stocks in free fall

Post by hdas » Mon Dec 24, 2018 7:25 pm

willthrill81 wrote:
Mon Dec 24, 2018 7:21 pm
morsk wrote:
Mon Dec 24, 2018 7:14 pm
willthrill81 wrote:
Mon Dec 24, 2018 6:33 pm

Including the Nov., 2018, data, it is 3.92. November's UER was 3.7. Historically, this has been a strong indicator that we are not currently in a recession.
Can you please provide the link to where you pull the 12MMA unemployment rate from? Many thanks.
I calculate with Excel using the data from the BLS website. You can also download the data in Excel format from their site.
Two questions:
- How about the revisions?
- Didn't you say 7 month moving average in another thread.

Cheers :greedy
"whenever there is a randomized way of doing something, then there is a nonrandomized way that delivers better performance but requires more thought" ET Jaynes

Chuffly
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Re: U.S. stocks in free fall

Post by Chuffly » Mon Dec 24, 2018 7:27 pm

hdas wrote:
Mon Dec 24, 2018 7:25 pm
willthrill81 wrote:
Mon Dec 24, 2018 7:21 pm
morsk wrote:
Mon Dec 24, 2018 7:14 pm
willthrill81 wrote:
Mon Dec 24, 2018 6:33 pm

Including the Nov., 2018, data, it is 3.92. November's UER was 3.7. Historically, this has been a strong indicator that we are not currently in a recession.
Can you please provide the link to where you pull the 12MMA unemployment rate from? Many thanks.
I calculate with Excel using the data from the BLS website. You can also download the data in Excel format from their site.
Two questions:
- How about the revisions?
- Didn't you say 7 month moving average in another thread.

Cheers :greedy
I think the 7 month moving average was the time series momentum benchmark for the "Risk On" ETF he'd be investing in. Not the unemployment rate.

He uses both UE rate and ETF price trend, but each have different lookback periods.

long_gamma
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Re: U.S. stocks in free fall

Post by long_gamma » Mon Dec 24, 2018 7:41 pm

willthrill81 wrote:
Mon Dec 24, 2018 7:21 pm
morsk wrote:
Mon Dec 24, 2018 7:14 pm
willthrill81 wrote:
Mon Dec 24, 2018 6:33 pm

Including the Nov., 2018, data, it is 3.92. November's UER was 3.7. Historically, this has been a strong indicator that we are not currently in a recession.
Can you please provide the link to where you pull the 12MMA unemployment rate from? Many thanks.
I calculate with Excel using the data from the BLS website. You can also download the data in Excel format from their site.
So it is basically October data, published in beginning of November. Do you think 12 MMA of data which is basically stale and revised is relevant in today's algo driven market? Atleast it is better to use some moving average of Initial jobless claim data which is released weekly
"Everyone has a plan 'till they get punched in the mouth." --Mike Tyson

limeyx
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Re: U.S. stocks in free fall

Post by limeyx » Mon Dec 24, 2018 7:44 pm

CULater wrote:
Mon Dec 24, 2018 2:29 pm
Worst Christmas Eve drop in history -- ever. Merry Christmas! (I'm giving everybody coal this year).
I thought coal was (the only thing?) up right now ? Better make it something cheaper :)

Steven in NC
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Re: U.S. stocks in free fall

Post by Steven in NC » Mon Dec 24, 2018 7:47 pm

15 years out from retirement I am 70/30 (TSM, TBM) and staying the course. Not even logging into my accounts. Letting my automatic buys still continue and dividends continue to accumulate. I will one day log on and buy with the dividends. We all knew this was going to happen right? But, sure it can still be somewhat unnerving. Just have a plan and stick to it. Last year I took some gains and other cash and paid the mortgage off. Now I look like a smart guy but truthfully at the time I had some doubt it was the right move. Why take $ and pay off an already low debt note and miss out on easy equity gains? My reason was I am not smart enough to continue making the correct choice on entry / exit points. I have tried that before and failed miserably. Not to mention it was very stressful and stressful investing just plain sucks. Point is to have YOUR plan and stick to it. We all love it when we get that 60" TV at a black Friday price...just consider equities to be approaching black Friday prices and keep on buying. Good luck to all.
Last edited by Steven in NC on Mon Dec 24, 2018 7:49 pm, edited 2 times in total.

Turbo29
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Re: U.S. stocks in free fall

Post by Turbo29 » Mon Dec 24, 2018 7:48 pm

limeyx wrote:
Mon Dec 24, 2018 7:44 pm
CULater wrote:
Mon Dec 24, 2018 2:29 pm
Worst Christmas Eve drop in history -- ever. Merry Christmas! (I'm giving everybody coal this year).
I thought coal was (the only thing?) up right now ? Better make it something cheaper :)
Natural gas?

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Re: U.S. stocks in free fall

Post by LadyGeek » Mon Dec 24, 2018 7:51 pm

Regardless of recent events, this is a strictly enforced "no politics" forum. A number of off-topic posts have been removed. See: Politics and Religion
In order to avoid the inevitable frictions that arise from these topics, political or religious posts and comments are prohibited. The only exceptions to this rule are:
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limeyx
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Re: U.S. stocks in free fall

Post by limeyx » Mon Dec 24, 2018 7:54 pm

Turbo29 wrote:
Mon Dec 24, 2018 7:48 pm
limeyx wrote:
Mon Dec 24, 2018 7:44 pm
CULater wrote:
Mon Dec 24, 2018 2:29 pm
Worst Christmas Eve drop in history -- ever. Merry Christmas! (I'm giving everybody coal this year).
I thought coal was (the only thing?) up right now ? Better make it something cheaper :)
Natural gas?
Yeah I could give everyone a bag of "toddler toots" ? Or is that methane ? Probably close enough

limeyx
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Re: U.S. stocks in free fall

Post by limeyx » Mon Dec 24, 2018 7:55 pm

limeyx wrote:
Mon Dec 24, 2018 7:54 pm
Turbo29 wrote:
Mon Dec 24, 2018 7:48 pm
limeyx wrote:
Mon Dec 24, 2018 7:44 pm
CULater wrote:
Mon Dec 24, 2018 2:29 pm
Worst Christmas Eve drop in history -- ever. Merry Christmas! (I'm giving everybody coal this year).
I thought coal was (the only thing?) up right now ? Better make it something cheaper :)
Natural gas?
Yeah I could give everyone a bag of "toddler toots" ? Or is that methane ? Probably close enough
Actually kind of ironic that coal was the misers gift and (for now) at least it's gone the other way a little heh heh

letsgobobby
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Re: U.S. stocks in free fall

Post by letsgobobby » Mon Dec 24, 2018 8:26 pm

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White Coat Investor
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Re: U.S. stocks in freefall

Post by White Coat Investor » Mon Dec 24, 2018 9:24 pm

AnalogKid22 wrote:
Fri Feb 02, 2018 4:22 pm
willthrill81 wrote:
Fri Feb 02, 2018 4:17 pm
AnalogKid22 wrote:
Fri Feb 02, 2018 4:14 pm
The BH philosophy is to not market time, yet the majority of posts are about just that. There will be a lot of unhappy people when things take an ugly turn.

"I know I shouldn't market time, but..."
I'll bet that all but the most die-hard BHs would agree, though, that if the market going down causes you to invest even more, that's a form of market timing they would be completely fine with.
What's the appropriate amount to invest at each drop?
I invest everything I have available to invest at every drop. And every rise.
1) Invest you must 2) Time is your friend 3) Impulse is your enemy | 4) Basic arithmetic works 5) Stick to simplicity 6) Stay the course

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willthrill81
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Re: U.S. stocks in free fall

Post by willthrill81 » Mon Dec 24, 2018 9:40 pm

letsgobobby wrote:
Mon Dec 24, 2018 8:26 pm
willthrill81 wrote:
Mon Dec 24, 2018 6:33 pm
letsgobobby wrote:
Mon Dec 24, 2018 6:29 pm
willthrill81 wrote:
Mon Dec 24, 2018 6:24 pm
letsgobobby wrote:
Mon Dec 24, 2018 6:19 pm
Will, what single (un)employment data point would persuade you that the rate of change had hit some inflection point? I believe you’re still waiting on that as a momentum follower.
Indeed I am. I will not move out of stocks until both stocks are trading below their 7 month moving average (which they currently are) and the unemployment rate is above its 12 month moving average (which it clearly isn't); unless both of these conditions are satisfied, I remain in equities. The latter indicator has historically helped to prevent whipsaws that would result from using price alone. So I'm standing pat in 100% equities.
What is the 12 mo moving avg of unemployment rate currently?
Including the Nov., 2018, data, it is 3.92. November's UER was 3.7. Historically, this has been a strong indicator that we are not currently in a recession.
Say if December’s unemployment rate bumps up to 3.93%, you’ll sell stocks? What will your new asset allocation be?
I will move 100% into bonds. What type of bonds depends on which investment account (e.g. only TBM available in my 401k and HSA).
letsgobobby wrote:
Mon Dec 24, 2018 8:26 pm
If the average lead time is 3.5 mo from the time the 12 mo MA and the unemployment rate cross, and assuming a normal distribution, that implies half the time the lead time will be less. couldn’t it often be 1 month, or 2 months? Yet the stock market typically leads a recession by 6 months. By the time your signal happens, stocks will have been falling for months. How is this a good market timing strategy?
Rather than duplicate it here, I'll refer you to this excellent and very detailed summary of the method I choose.
“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 » Mon Dec 24, 2018 9:42 pm

hdas wrote:
Mon Dec 24, 2018 7:25 pm
willthrill81 wrote:
Mon Dec 24, 2018 7:21 pm
morsk wrote:
Mon Dec 24, 2018 7:14 pm
willthrill81 wrote:
Mon Dec 24, 2018 6:33 pm

Including the Nov., 2018, data, it is 3.92. November's UER was 3.7. Historically, this has been a strong indicator that we are not currently in a recession.
Can you please provide the link to where you pull the 12MMA unemployment rate from? Many thanks.
I calculate with Excel using the data from the BLS website. You can also download the data in Excel format from their site.
Two questions:
- How about the revisions?
- Didn't you say 7 month moving average in another thread.

Cheers :greedy
I remain 100% in equities unless both the U.S. unemployment rate is above its 12 month moving average and stocks are below their 7 month moving average. Here's an excellent and detailed summary of my chosen method.
“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 » Mon Dec 24, 2018 9:42 pm

long_gamma wrote:
Mon Dec 24, 2018 7:41 pm
willthrill81 wrote:
Mon Dec 24, 2018 7:21 pm
morsk wrote:
Mon Dec 24, 2018 7:14 pm
willthrill81 wrote:
Mon Dec 24, 2018 6:33 pm

Including the Nov., 2018, data, it is 3.92. November's UER was 3.7. Historically, this has been a strong indicator that we are not currently in a recession.
Can you please provide the link to where you pull the 12MMA unemployment rate from? Many thanks.
I calculate with Excel using the data from the BLS website. You can also download the data in Excel format from their site.
So it is basically October data, published in beginning of November. Do you think 12 MMA of data which is basically stale and revised is relevant in today's algo driven market? Atleast it is better to use some moving average of Initial jobless claim data which is released weekly
Yes, I do.
“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

letsgobobby
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Re: U.S. stocks in free fall

Post by letsgobobby » Mon Dec 24, 2018 9:49 pm

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willthrill81
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Re: U.S. stocks in free fall

Post by willthrill81 » Mon Dec 24, 2018 9:52 pm

letsgobobby wrote:
Mon Dec 24, 2018 9:49 pm
That’s an awful lot of confidence to put in 23 basis points.
If you're using a rules-based, objective system, then you have to draw the line somewhere. If you start introducing judgment into the mix, a whole host of behavioral problems can and likely will crop up.
letsgobobby wrote:
Mon Dec 24, 2018 9:49 pm
This method literally seems crazy to me.
I would suggest that you read the summary of the method that I linked to above before you pass too much judgment on it. The dual indicator approach I use is very 'long-biased' (i.e. it remains in equities significantly more than most trend following systems).

That being said, I do not believe that trend following is appropriate for most investors. But I do believe it is appropriate for me. I know the risks very 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

letsgobobby
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Re: U.S. stocks in free fall

Post by letsgobobby » Mon Dec 24, 2018 10:01 pm

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willthrill81
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Re: U.S. stocks in free fall

Post by willthrill81 » Mon Dec 24, 2018 10:08 pm

letsgobobby wrote:
Mon Dec 24, 2018 10:01 pm
willthrill81 wrote:
Mon Dec 24, 2018 9:52 pm
letsgobobby wrote:
Mon Dec 24, 2018 9:49 pm
That’s an awful lot of confidence to put in 23 basis points.
If you're using a rules-based, objective system, then you have to draw the line somewhere. If you start introducing judgment into the mix, a whole host of behavioral problems can and likely will crop up.
letsgobobby wrote:
Mon Dec 24, 2018 9:49 pm
This method literally seems crazy to me.
I would suggest that you read the summary of the method that I linked to above before you pass too much judgment on it. The dual indicator approach I use is very 'long-biased' (i.e. it remains in equities significantly more than most trend following systems).

That being said, I do not believe that trend following is appropriate for most investors. But I do believe it is appropriate for me. I know the risks very well.
I’ve read it when you posted in the past.

Beyond the validity of the signal itself, why did you feel going ‘all or nothing’ was best? Why not 100% equities long, 50% equities short (for example)?
I do not have enough confidence in any method to short an asset that has tended to go up over time. All or nothing just makes sense to me. I see no point in continuing to hold an asset that is in a downward (or at least no longer in an upward) trend.
letsgobobby wrote:
Mon Dec 24, 2018 10:01 pm
It seems to me that markets change. My preferred metric, PE10, has changed over the years, and my IPS has evolved to some extent. Wouldn’t the speed of market trading today (speed of communications, HFT, etc) be expected to shorten the lead time from this indicator to whatever you hope to measure?
Market specifics change (e.g. use of computers is universal now in trading), but I do not believe that the behaviors driving the market's major moves have changed at all (e.g. biases, fear, greed, herding mentality).
“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

letsgobobby
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Re: U.S. stocks in free fall

Post by letsgobobby » Mon Dec 24, 2018 10:10 pm

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willthrill81
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Re: U.S. stocks in free fall

Post by willthrill81 » Mon Dec 24, 2018 10:15 pm

letsgobobby wrote:
Mon Dec 24, 2018 10:10 pm
I clarified my response as it didn’t make sense - take another look..
As I said, I see no benefit in holding an asset that is not in an upward trend.
“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

motorcyclesarecool
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Re: U.S. stocks in free fall

Post by motorcyclesarecool » Mon Dec 24, 2018 10:23 pm

retiringwhen wrote:
Mon Dec 24, 2018 2:13 pm
motorcyclesarecool wrote:
Mon Dec 24, 2018 11:03 am
Wahoo! I just TLH’d again! Thanks for the vast universe of TLH partners, Vanguard!
I am about to add the European and Pacific Index Funds to my set of partners, starting to have to go deep.....
With commission free ETFs, I can go VTI - ITOT - SPTM - SCHB - VOO - SPY - virtually forevermore.
Understand that choosing an HDHP is very much a "red pill" approach. Most would rather pay higher premiums for a $20 copay per visit. They will think you weird for choosing an HSA.

letsgobobby
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Re: U.S. stocks in free fall

Post by letsgobobby » Mon Dec 24, 2018 10:24 pm

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letsgobobby
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Re: U.S. stocks in free fall

Post by letsgobobby » Mon Dec 24, 2018 10:26 pm

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willthrill81
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Re: U.S. stocks in free fall

Post by willthrill81 » Mon Dec 24, 2018 10:33 pm

letsgobobby wrote:
Mon Dec 24, 2018 10:24 pm
willthrill81 wrote:
Mon Dec 24, 2018 10:15 pm
letsgobobby wrote:
Mon Dec 24, 2018 10:10 pm
I clarified my response as it didn’t make sense - take another look..
As I said, I see no benefit in holding an asset that is not in an upward trend.
Upward trends are backward looking, not forward looking. :confused
The data suggests otherwise. Momentum is a real effect.
“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

rgs92
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Re: U.S. stocks in free fall

Post by rgs92 » Mon Dec 24, 2018 11:10 pm

For anyone curious, one of my old accounts that has a 60/40 (stock/fixed-income) AA auto-rebalanced every 3 months (including 10% international) has done this (with no deposits or withdrawals at all):
09/30/2016 $258,988.52
12/31/2016 $262,322.83
03/31/2017 $272,597.56
06/30/2017 $279,050.60
09/30/2017 $287,499.50
12/31/2017 $298,323.65
03/31/2018 $296,698.41
06/30/2018 $301,694.42
09/30/2018 $312,379.13
12/24/2018 $277,045.78

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