U.S. stocks in free fall

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jpelder
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Re: U.S. stocks in free fall

Post by jpelder »

Doom&Gloom wrote: Thu Jun 11, 2020 8:49 pm
TheTimeLord wrote: Thu Jun 11, 2020 7:55 pm
willthrill81 wrote: Thu Jun 11, 2020 6:14 pm
firebirdparts wrote: Thu Jun 11, 2020 4:55 pm Well, payday is tomorrow.
Buy the dip automatically! :beer
I don't recall seeing one buy the dip post today. The world has changed.
"Buy the abyss" is the new "buy the dip."
Just remember that when you buy the abyss, the abyss buys you back! Isn't that how it goes?
Silk McCue
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Re: U.S. stocks in free fall

Post by Silk McCue »

newyorker wrote: Fri Jun 12, 2020 10:00 am Its dropping like crazy. Im panicing. Telling myself to stay the course.
Continue to tell yourself to do just that.

Hopefully you didn't buy the million dollar condo in NYC for weekend use that you recently posted about.

Cheers
newyorker
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Re: U.S. stocks in free fall

Post by newyorker »

Silk McCue wrote: Fri Jun 12, 2020 10:11 am
newyorker wrote: Fri Jun 12, 2020 10:00 am Its dropping like crazy. Im panicing. Telling myself to stay the course.
Continue to tell yourself to do just that.

Hopefully you didn't buy the million dollar condo in NYC for weekend use that you recently posted about.

Cheers
[OT comment removed by admin LadyGeek] I didn't :) :) :)


I invested around 65k for now. Still break even point. Contributing 1500 every day into VFIAX. Crossing my fingers I won't regret my choice now in the future.
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Leif
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Re: U.S. stocks in free fall

Post by Leif »

TheTimeLord wrote: Fri Jun 12, 2020 8:05 am
Leif wrote: Fri Jun 12, 2020 7:59 am Before yesterday the market had gone up a lot. So it seems unlikely that -1,800 on the Dow would trigger a rebalance action. Everything else, like moving trucks, is just day trading.
I prefer the term Opportunistic Reallocation of Resources, or OROR. Personally, I do not rebalance since my AA is not based on static percentages.
Sounds like active management. Could that term be used as well? Active managers often tout their ability to move in and out of the market as they see opportunities.
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TheTimeLord
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Re: U.S. stocks in free fall

Post by TheTimeLord »

Leif wrote: Fri Jun 12, 2020 10:26 am
TheTimeLord wrote: Fri Jun 12, 2020 8:05 am
Leif wrote: Fri Jun 12, 2020 7:59 am Before yesterday the market had gone up a lot. So it seems unlikely that -1,800 on the Dow would trigger a rebalance action. Everything else, like moving trucks, is just day trading.
I prefer the term Opportunistic Reallocation of Resources, or OROR. Personally, I do not rebalance since my AA is not based on static percentages.
Sounds like active management. Could that term be used as well? Active managers often tout their ability to move in and out of the market as they see opportunities.
Sure, why not. I am fine with whatever label people want to apply.
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Mrmetalpole
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Re: U.S. stocks in free fall

Post by Mrmetalpole »

There may be a big selloff at at the close, stay ready to post :wink:
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TheTimeLord
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Re: U.S. stocks in free fall

Post by TheTimeLord »

Mrmetalpole wrote: Fri Jun 12, 2020 11:03 am There may be a big selloff at at the close, stay ready to post :wink:
There might be. I would expect an interesting close today.
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atdharris
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Re: U.S. stocks in free fall

Post by atdharris »

mroe800 wrote: Fri Jun 12, 2020 10:05 am
stocknoob4111 wrote: Thu Jun 11, 2020 7:14 pm Futures up... if tomorrow the SPX breaks 3000 then it's pretty bad, so tomorrow is going to be important.
Getting there...
Tim_in_GA wrote: Fri Jun 12, 2020 9:22 am
atdharris wrote: Fri Jun 12, 2020 9:04 am Payday today. Automatically bought the dip ;)
Payday for me too but my Vanguard 401k always contributes on the following Tuesday or Wednesday.
Similar experience at Fidelity with my employer. I get my taxable contributions same day, but my 401K/HSA deductions don't post until ~2 business days later.
Mine usually does as well, but it looks like the buy order went through last night
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Stef
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Re: U.S. stocks in free fall

Post by Stef »

Just a terrible week.
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NearlyRetired
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Re: U.S. stocks in free fall

Post by NearlyRetired »

Stef wrote: Fri Jun 12, 2020 12:51 pm Just a terrible week.
yep
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Sesamebean123
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Re: U.S. stocks in free fall

Post by Sesamebean123 »

I currently have 420k around that I'm trying to get into the market. Previously I was considering lump summing or DCAing it in, but what are peoples thoughts about trying to time the market during this all-time volatility? It seems the market has demonstrated peak volatility during this time where we may be able to capture large daily drops. I'm consider putting in 100k at a time during times the markets drop.
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TheTimeLord
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Re: U.S. stocks in free fall

Post by TheTimeLord »

Stef wrote: Fri Jun 12, 2020 12:51 pm Just a terrible week.
Or an opportunity laden week. I have no reason to raise cash any time soon so for the most part this week is a non-event to slight positive in my eyes. Now string several of these back to back and it will be a different story. But right now it is only one week, don't let it get to you.
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dukeblue219
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Re: U.S. stocks in free fall

Post by dukeblue219 »

Sesamebean123 wrote: Fri Jun 12, 2020 1:02 pm I currently have 420k around that I'm trying to get into the market. Previously I was considering lump summing or DCAing it in, but what are peoples thoughts about trying to time the market during this all-time volatility? It seems the market has demonstrated peak volatility during this time where we may be able to capture large daily drops. I'm consider putting in 100k at a time during times the markets drop.
The advice is going to be exactly what you expect. Just buy in. Otherwise you're sitting out what over the long, long term should be a drift to the upside.
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TheTimeLord
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Re: U.S. stocks in free fall

Post by TheTimeLord »

willthrill81 wrote: Thu Jun 11, 2020 8:58 pm
TheTimeLord wrote: Thu Jun 11, 2020 8:52 pm
Doom&Gloom wrote: Thu Jun 11, 2020 8:49 pm
TheTimeLord wrote: Thu Jun 11, 2020 7:55 pm
willthrill81 wrote: Thu Jun 11, 2020 6:14 pm

Buy the dip automatically! :beer
I don't recall seeing one buy the dip post today. The world has changed.
"Buy the abyss" is the new "buy the dip."
It is interesting, I am about as peacefully as I have ever been about my portfolio but reading the forum I have never seen so many people on edge.
I think that a lot more people were on edge in mid-March.
Maybe I am going to get my sideways market after all.
IMHO, Investing should be about living the life you want, not avoiding the life you fear. | Run, You Clever Boy! [9085]
Hyperchicken
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Re: U.S. stocks in free fall

Post by Hyperchicken »

Stef wrote: Fri Jun 12, 2020 12:51 pm Just a terrible week.
My paycheck posts today. I consider this a small bonus. 8-)
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Stinky
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Re: U.S. stocks in free fall

Post by Stinky »

Mrmetalpole wrote: Fri Jun 12, 2020 11:03 am There may be a big selloff at at the close, stay ready to post :wink:
Well, we’re back to positive now.

Hope that holds for the next 80 minutes until Mr Market closes.
Last edited by Stinky on Fri Jun 12, 2020 1:42 pm, edited 1 time in total.
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Re: U.S. stocks in free fall

Post by abuss368 »

The market is up! I am pulling the truck away!
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newyorker
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Re: U.S. stocks in free fall

Post by newyorker »

It is really hard to stay the course in falling market. I am tempted to pull out everytime I log in to Vanguard.com

BH philosophy of stay the course is the simplest strategy yet hard to follow through.
minimalistmarc
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Re: U.S. stocks in free fall

Post by minimalistmarc »

newyorker wrote: Sat Jun 13, 2020 2:32 am It is really hard to stay the course in falling market. I am tempted to pull out everytime I log in to Vanguard.com

BH philosophy of stay the course is the simplest strategy yet hard to follow through.
Falling markets are wonderful. Even as a late stage accumulator i welcome any opportunity to buy at cheaper prices.

My advice to you is to stop logging onto your account, or maybe hire VAnguard PAS to look after things for you.
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calvin+hobbes
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Re: U.S. stocks in free fall

Post by calvin+hobbes »

newyorker wrote: Sat Jun 13, 2020 2:32 am It is really hard to stay the course in falling market. I am tempted to pull out everytime I log in to Vanguard.com

BH philosophy of stay the course is the simplest strategy yet hard to follow through.
Did you stay the course through February and March?
newyorker
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Re: U.S. stocks in free fall

Post by newyorker »

calvin+hobbes wrote: Sat Jun 13, 2020 4:14 am
newyorker wrote: Sat Jun 13, 2020 2:32 am It is really hard to stay the course in falling market. I am tempted to pull out everytime I log in to Vanguard.com

BH philosophy of stay the course is the simplest strategy yet hard to follow through.
Did you stay the course through February and March?

Yes I did. Thank god.




minimalistmarc wrote: Sat Jun 13, 2020 2:57 am
newyorker wrote: Sat Jun 13, 2020 2:32 am It is really hard to stay the course in falling market. I am tempted to pull out everytime I log in to Vanguard.com

BH philosophy of stay the course is the simplest strategy yet hard to follow through.
Falling markets are wonderful. Even as a late stage accumulator i welcome any opportunity to buy at cheaper prices.

My advice to you is to stop logging onto your account, or maybe hire VAnguard PAS to look after things for you.

Thank you. I always panic thinking what if this downturn lasts 10 years and blah blah blah. But you are right. Stay the course. Contribute set amount every week and etc. Just do that.
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calvin+hobbes
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Re: U.S. stocks in free fall

Post by calvin+hobbes »

newyorker wrote: Sat Jun 13, 2020 7:21 am
calvin+hobbes wrote: Sat Jun 13, 2020 4:14 am
newyorker wrote: Sat Jun 13, 2020 2:32 am It is really hard to stay the course in falling market. I am tempted to pull out everytime I log in to Vanguard.com

BH philosophy of stay the course is the simplest strategy yet hard to follow through.
Did you stay the course through February and March?

Yes I did. Thank god.
Glad to hear it. If you didn't then, they I would think you'd have less trouble holding firm now. If you still feel tempted, may I suggest you log in to Vanguard less and turn off the financial news?

Cheers
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zaboomafoozarg
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Re:

Post by zaboomafoozarg »

Lbill wrote: Tue Aug 09, 2011 5:08 pm
There's seriously something wrong with Little Bill. He really is taking PLEASURE in this down-turn.
I'm still seeking revenge against the stockbugs who were getting rich during the dotcom craze. I hope they've all lost their money by now. But, even more important, I want to see stocks get killed so I can buy. The last time I bought was the very day the S&P hit bottom at 666 back in March 2009. Going for a 2-fer.
This thread is so big, I had forgotten why Lbill started it in the first place :D
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Stef
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Re: U.S. stocks in free fall

Post by Stef »

Futures down -2.3%.

Last week ended ugly, this week is starting ugly.
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Re: U.S. stocks in free fall

Post by Kookaburra »

Stef wrote: Mon Jun 15, 2020 12:46 am Futures down -2.3%.

Last week ended ugly, this week is starting ugly.
Beauty is in the eye of the beholder. I like what I see.
newyorker
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Re: U.S. stocks in free fall

Post by newyorker »

Stef wrote: Mon Jun 15, 2020 12:46 am Futures down -2.3%.

Last week ended ugly, this week is starting ugly.


Did u lumpsum before the fall? I did... its hard to stay the course for sure
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Stef
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Re: U.S. stocks in free fall

Post by Stef »

newyorker wrote: Mon Jun 15, 2020 4:56 am
Stef wrote: Mon Jun 15, 2020 12:46 am Futures down -2.3%.

Last week ended ugly, this week is starting ugly.
Did u lumpsum before the fall? I did... its hard to stay the course for sure
Yes, made a lump sum with my 2019 bonus in February 2020 when the SP500 was at 3386 (ATH) and got a windfall a couple of days ago which I lump sum invested on Monday last week at 3232. So already down -9% on that within a week. What's the chance of investing 2 times at the absolute peak? I mean the timing was perfect to lose money short-term, I couldn't have done it better.

I guess the market tried its best to test my risk tolerance being 100% into stocks. I learned that it's the right AA for me, eventhough I feel like the worst "market timer" of the whole internet.
minimalistmarc
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Re: U.S. stocks in free fall

Post by minimalistmarc »

newyorker wrote: Mon Jun 15, 2020 4:56 am
Stef wrote: Mon Jun 15, 2020 12:46 am Futures down -2.3%.

Last week ended ugly, this week is starting ugly.


Did u lumpsum before the fall? I did... its hard to stay the course for sure
Yep, I did.

My portfolio hit an all time high of 1.05 million and I chucked another 16k in right at the recent top.

The ups and downs of the market are just a distraction/sideshow. Think long term only.
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Stinky
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Re: U.S. stocks in free fall

Post by Stinky »

Stef wrote: Mon Jun 15, 2020 5:13 am
Yes, made a lump sum with my 2019 bonus in February 2020 when the SP500 was at 3386 (ATH) and got a windfall a couple of days ago which I lump sum invested on Monday last week at 3232. So already down -9% on that within a week. What's the chance of investing 2 times at the absolute peak? I mean the timing was perfect to lose money short-term, I couldn't have done it better.

I guess the market tried its best to test my risk tolerance being 100% into stocks. I learned that it's the right AA for me, eventhough I feel like the worst "market timer" of the whole internet.
You've already "bought high" (inadvertently, as a part of your plan).

Now, just don't "sell low". Stay the course.
It's a GREAT day to be alive - Travis Tritt
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Stef
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Re: U.S. stocks in free fall

Post by Stef »

Stinky wrote: Mon Jun 15, 2020 5:22 amYou've already "bought high" (inadvertently, as a part of your plan).

Now, just don't "sell low". Stay the course.
Don't worry. My IPS is rather simple.

1) Invest globally.
2) Invest as soon as it's available.
3) Sell what you need when retired.
nigel_ht
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Re: U.S. stocks in free fall

Post by nigel_ht »

Stef wrote: Mon Jun 15, 2020 5:13 am
newyorker wrote: Mon Jun 15, 2020 4:56 am
Stef wrote: Mon Jun 15, 2020 12:46 am Futures down -2.3%.

Last week ended ugly, this week is starting ugly.
Did u lumpsum before the fall? I did... its hard to stay the course for sure
Yes, made a lump sum with my 2019 bonus in February 2020 when the SP500 was at 3386 (ATH) and got a windfall a couple of days ago which I lump sum invested on Monday last week at 3232. So already down -9% on that within a week. What's the chance of investing 2 times at the absolute peak? I mean the timing was perfect to lose money short-term, I couldn't have done it better.

I guess the market tried its best to test my risk tolerance being 100% into stocks. I learned that it's the right AA for me, eventhough I feel like the worst "market timer" of the whole internet.
This is why some folks (like me) suggest folks with a very large windfall to DCA into a market like this. There’s both volatility AND a higher than normal chance of a near term downward trend when the economy is tanking.

You feel like a terrible market timer now...what if it was a larger windfall as big as your existing portfolio and you lump summed all of it in Feb?

What if we are entering another ten years like 2000 and end up at 3386 in Feb of 2030?
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Re: U.S. stocks in free fall

Post by nigel_ht »

minimalistmarc wrote: Mon Jun 15, 2020 5:15 am
newyorker wrote: Mon Jun 15, 2020 4:56 am
Stef wrote: Mon Jun 15, 2020 12:46 am Futures down -2.3%.

Last week ended ugly, this week is starting ugly.


Did u lumpsum before the fall? I did... its hard to stay the course for sure
Yep, I did.

My portfolio hit an all time high of 1.05 million and I chucked another 16k in right at the recent top.

The ups and downs of the market are just a distraction/sideshow. Think long term only.
$16K is very little in comparison to your portfolio.

What if it was the inverse? You lump summed in $1.05M into your $16K portfolio at peak?
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Stef
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Re: U.S. stocks in free fall

Post by Stef »

nigel_ht wrote: Mon Jun 15, 2020 7:15 amThis is why some folks (like me) suggest folks with a very large windfall to DCA into a market like this. There’s both volatility AND a higher than normal chance of a near term downward trend when the economy is tanking.

You feel like a terrible market timer now...what if it was a larger windfall as big as your existing portfolio and you lump summed all of it in Feb?

What if we are entering another ten years like 2000 and end up at 3386 in Feb of 2030?
But the academical research is clear: there are no circumstances where DCA has better odds for outperforming lump sum. So if you keep lump sum investing (basically investing everything what's available the moment you got it), you'll win more often longterm than lose. Btw, it was a larger amount. I just started investing in December 2019, so my avg. price is currently at 3280 despite the big chunk I got 1.5 weeks ago (40% of my total assets today). Despite the bad outcome, it was still the right decision. DCA might trick you into thinking that you have a hisher risk tolerance than it's actually the case. If you aren't comfortable being fully invested in stocks today, you should never be in the 1st place.

If we enter another 10 years like 2001-2010, then I won't be able to change anything about that. I might still make some gains because of my monthly contributions in that time. I'll focus on the things I have control over: career, studying and savings rate.
dukeblue219
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Re: U.S. stocks in free fall

Post by dukeblue219 »

Stef wrote: Mon Jun 15, 2020 8:15 am
nigel_ht wrote: Mon Jun 15, 2020 7:15 amThis is why some folks (like me) suggest folks with a very large windfall to DCA into a market like this. There’s both volatility AND a higher than normal chance of a near term downward trend when the economy is tanking.

You feel like a terrible market timer now...what if it was a larger windfall as big as your existing portfolio and you lump summed all of it in Feb?

What if we are entering another ten years like 2000 and end up at 3386 in Feb of 2030?
But the academical research is clear: there are no circumstances where DCA has better odds for outperforming lump sum. So if you keep lump sum investing (basically investing everything what's available the moment you got it), you'll win more often longterm than lose.
Sure, but maximizing expected return isn't always the best solution for everyone. Accepting lower return in exchange for eliminating some extreme cases (on both ends) is appealing for the windfall case. To some.
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Re: U.S. stocks in free fall

Post by nigel_ht »

Stef wrote: Mon Jun 15, 2020 8:15 am
nigel_ht wrote: Mon Jun 15, 2020 7:15 amThis is why some folks (like me) suggest folks with a very large windfall to DCA into a market like this. There’s both volatility AND a higher than normal chance of a near term downward trend when the economy is tanking.

You feel like a terrible market timer now...what if it was a larger windfall as big as your existing portfolio and you lump summed all of it in Feb?

What if we are entering another ten years like 2000 and end up at 3386 in Feb of 2030?
But the academical research is clear: there are no circumstances where DCA has better odds for outperforming lump sum.
Citation needed. There is a non-academic paper from Vanguard that indicates that DCA outperforms lump sum about 1/3 the time.
So if you keep lump sum investing (basically investing everything what's available the moment you got it), you'll win more often longterm than lose. Btw, it was a larger amount. I just started investing in December 2019, so my avg. price is currently at 3280 despite the big chunk I got 1.5 weeks ago (40% of my total assets today). Despite the bad outcome, it was still the right decision. DCA might trick you into thinking that you have a hisher risk tolerance than it's actually the case. If you aren't comfortable being fully invested in stocks today, you should never be in the 1st place.
If it was a bad outcome then DCA outperformed Lump Sum in the circumstances that one would choose to use DCA instead of lump sum: namely a market already declining (2008) or at higher than normal risk of declining (2020).

By lump summing you are also making predictions and choosing an action based on probability.

The prediction is that the market will continue to go up over the course of your investment timeline and the probability that the US market sees a nikkei crash like scenario is low.

This is no different than a prediction that the market will see a downturn in the next year and the probability of a bear market is higher than 33% except in degree and not in the kind of decision process.

The average performance penalty for selecting DCA over Lump Sum is 2.39 percentage points.

https://personal.vanguard.com/pdf/ISGDCA.pdf
If we enter another 10 years like 2001-2010, then I won't be able to change anything about that. I might still make some gains because of my monthly contributions in that time. I'll focus on the things I have control over: career, studying and savings rate.
You also have control over the rate of new cash injection into the market and both near term and long term AA.

Your monthly contributions in the scenario where the new injection is multiple years (or decades) worth of contributions won’t do as much to offset the loss in gains from suddenly taking a large loss at the beginning and spending 10 years to get back to your original starting point. In effect you end up in the same scenario as those nearing retirement where portfolio performance outweighs new contributions and SORR increases.

This isn’t about “comfort in being in stocks” but a mathematical analysis of potential end states based on portfolio size, contributions and time horizon. The risk of a negative outcome that projected future contributions can’t fix is simply higher.

This is why considering a DCA during a period when the “US Stocks in Free Fall” thread has a lot of activity...because it’s a pretty boring thread during bull markets where lump sums win.

In December there’s no real reason to pick DCA. After Jan 22 there are reasons to consider DCA. And on June 15th there are reasons to consider DCA...
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Stef
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Re: U.S. stocks in free fall

Post by Stef »

What I meant is that under no circumstances DCA has better odds than lump sum. Not after 5 years of bull market, after a -20% decline etc. Odds for lump sum are always >50%. They talk about it here for example: https://rationalreminder.ca/podcast/101 Otherwise you could successfully time the market.

I fail to see what actions I could take from the things you said. The only thing I can really do is save as much as possible and invest it in low-cost indexfunds.
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Re: U.S. stocks in free fall

Post by nigel_ht »

Stef wrote: Mon Jun 15, 2020 10:46 am What I meant is that under no circumstances DCA has better odds than lump sum. Not after 5 years of bull market, after a -20% decline etc. Odds for lump sum are always >50%. They talk about it here for example: https://rationalreminder.ca/podcast/101 Otherwise you could successfully time the market.

I fail to see what actions I could take from the things you said. The only thing I can really do is save as much as possible and invest it in low-cost indexfunds.
I hate podcasts because the information density vs time is very low. His results were the same as Vanguard. 2/3rds of the time lump sum beats DCA historically. So what? It is 38 basis points performance cost for tail insurance. Far left outcomes are worse than the far right outcomes are good. He goes into the which was the worst delta was 1931. I wonder if anything bad happened prior to 1931 would indicate that things might be bad? June 2008 was another. What might have happened before 2008 that might make you DCA?

It's hard to tell without seeing his data but the issue isn't when DCA beats LS but whether the performance premium for avoiding left tail scenarios is worthwhile. The answer to that lies in his data and looking at similar studies and analysis in the past you can see that the average performance costs for doing DCA vs LS decreases at higher CAPE values. These are values for a 24 month DCA vs 12 so the 38 basis points don't match up but when CAPE is above 25 the DCA underperformance drops to 2% vs 45%. And then these are also when DCA wins.

"For example, if we only consider when CAPE > 30 (about the level it was at the end of 2019), DCA outperformed LS by 2.7% on average over the next 24 months. However, the only time when CAPE was >30 before modern times was the DotCom Bubble!"

https://ofdollarsanddata.com/dollar-cos ... -lump-sum/

So it isn't a terrible rule of thumb to say "Only DCA when CAPE >30". Or in the rare situation where the market is doing a slow decline. Whether the number is CAPE ratio of 27.6 or 30 there's usually a knee in the data where outcomes become a lot more positive for something.

Its important to remember that these are all rare events. 1929 was a rare event. Nikkei 1990 was a rare event. 2000 was a rare event. 2008 was a rare event. But often there are tremors before the earthquakes. So DCA should be a rarely used tool for an event that rarely happens (large windfall) but that's not the same as it's never useful or there is never a situation where the data says DCA beats LS.

2020...the jury is still out.
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Re: U.S. stocks in free fall

Post by Gufomel »

Gufomel wrote: Thu Jun 11, 2020 11:57 am Any bets on when the fed money copter drops back in? I’m not sure whether to pose a bet in terms of days or hours.
Looks like it only took about 2 business days from when I posted this last Thursday at noon. Right on schedule.

https://finance.yahoo.com/news/stock-ma ... 41593.html
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J G Bankerton
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Re: U.S. stocks in free fall

Post by J G Bankerton »

Gufomel wrote: Mon Jun 15, 2020 2:18 pm
Gufomel wrote: Thu Jun 11, 2020 11:57 am Any bets on when the fed money copter drops back in? I’m not sure whether to pose a bet in terms of days or hours.
Looks like it only took about 2 business days from when I posted this last Thursday at noon. Right on schedule.

https://finance.yahoo.com/news/stock-ma ... 41593.html
When things look darkest and all seems lost; don't fight the Fed.

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marcopolo
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Re: U.S. stocks in free fall

Post by marcopolo »

nigel_ht wrote: Mon Jun 15, 2020 2:16 pm
Stef wrote: Mon Jun 15, 2020 10:46 am What I meant is that under no circumstances DCA has better odds than lump sum. Not after 5 years of bull market, after a -20% decline etc. Odds for lump sum are always >50%. They talk about it here for example: https://rationalreminder.ca/podcast/101 Otherwise you could successfully time the market.

I fail to see what actions I could take from the things you said. The only thing I can really do is save as much as possible and invest it in low-cost indexfunds.
I hate podcasts because the information density vs time is very low. His results were the same as Vanguard. 2/3rds of the time lump sum beats DCA historically. So what? It is 38 basis points performance cost for tail insurance. Far left outcomes are worse than the far right outcomes are good. He goes into the which was the worst delta was 1931. I wonder if anything bad happened prior to 1931 would indicate that things might be bad? June 2008 was another. What might have happened before 2008 that might make you DCA?

It's hard to tell without seeing his data but the issue isn't when DCA beats LS but whether the performance premium for avoiding left tail scenarios is worthwhile. The answer to that lies in his data and looking at similar studies and analysis in the past you can see that the average performance costs for doing DCA vs LS decreases at higher CAPE values. These are values for a 24 month DCA vs 12 so the 38 basis points don't match up but when CAPE is above 25 the DCA underperformance drops to 2% vs 45%. And then these are also when DCA wins.

"For example, if we only consider when CAPE > 30 (about the level it was at the end of 2019), DCA outperformed LS by 2.7% on average over the next 24 months. However, the only time when CAPE was >30 before modern times was the DotCom Bubble!"

https://ofdollarsanddata.com/dollar-cos ... -lump-sum/

So it isn't a terrible rule of thumb to say "Only DCA when CAPE >30". Or in the rare situation where the market is doing a slow decline. Whether the number is CAPE ratio of 27.6 or 30 there's usually a knee in the data where outcomes become a lot more positive for something.

Its important to remember that these are all rare events. 1929 was a rare event. Nikkei 1990 was a rare event. 2000 was a rare event. 2008 was a rare event. But often there are tremors before the earthquakes. So DCA should be a rarely used tool for an event that rarely happens (large windfall) but that's not the same as it's never useful or there is never a situation where the data says DCA beats LS.

2020...the jury is still out.
That's a lot of nice hand waving, and claims of these inflection points being easy to spot. They are easy to spot in hindsight. Much tougher to come up with specific set of rules (is it cape 30 OR 27? the difference matters, 27 would have had you DCA in recently, 30 would not), that will work going forward, not just in hindsight. If it were so easy, everyone would be doing it. I suppose it is possible you are one of the few with a working crystal ball.
Once in a while you get shown the light, in the strangest of places if you look at it right.
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whodidntante
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Re: U.S. stocks in free fall

Post by whodidntante »

Sesamebean123 wrote: Fri Jun 12, 2020 1:02 pm I currently have 420k around that I'm trying to get into the market. Previously I was considering lump summing or DCAing it in, but what are peoples thoughts about trying to time the market during this all-time volatility? It seems the market has demonstrated peak volatility during this time where we may be able to capture large daily drops. I'm consider putting in 100k at a time during times the markets drop.
Anything you do will be wrong. Do you need help entering the buy order? :twisted:
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HomerJ
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Re: U.S. stocks in free fall

Post by HomerJ »

nigel_ht wrote: Mon Jun 15, 2020 2:16 pmSo it isn't a terrible rule of thumb to say "Only DCA when CAPE >30".
This is only known in hindsight. CAPE of 20 used be very high. It crossed that before the Panic of 1901, the Panic of 1907, in 1929 of course, 1937, and in the 1960s... All those periods were followed by stock market crashes and poor returns.

So crossing 20 in 1992 was a bad sign.. Anyone seriously following CAPE should have been very worried in 1992. But of course, 1992 was an AMAZING time to invest...

Crossing 25 was crazy high.. that had ONLY happened before the Great Depression in 1929. So when it crossed 25 in 1996, that was a sure sign for anyone seriously following CAPE to get out of the market... But 1996 was actually a good time to invest. S&P 500 was in the 500s and 600s in 1996, 24 years ago. Over 9% a year return for anyone who invested in 1996.

Yet CAPE valuations absolutely showed that 1996 should have been a terrible time to invest... Highest valuations in nearly 70 years at the time. Yet it was a good time to invest.

So looking back, we now think CAPE of 20 and 25 are not crazy high.

But only looking back.

How sure can we be that CAPE of 30 is a "rule" of some kind? That for sure, this time, returns will be terrible when investing at CAPE of 30?

Because Shiller said 1996 was a terrible time to invest. He was wrong. He won a Nobel prize for his theory. But his theory hasn't worked to predict stock market returns since he formulated it. Maybe the Nobel prize committee should have read his disclaimer in his 1996 paper...
Our search over economic relations that us to study the price divided by 30-year moving average of earnings may have stumbled upon a chance relation with no significance. In other words, the relation studied here might be a spurious relation, the result of data mining. Neither the statistical tests nor the monte carlo experiments take account of the search over other possible relations.

It is also dangerous to assume that historical relations are necessarily applicable to the future. There could be fundamental structural changes occurring now that mean that the past of the stock market is no longer a guide to the future.
A Goldman Sachs associate provided a variety of detailed explanations, but then offered a caveat, “If I’m being dead-### honest, though, nobody knows what’s really going on.”
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HomerJ
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Re: U.S. stocks in free fall

Post by HomerJ »

nigel_ht wrote: Mon Jun 15, 2020 2:16 pmOr in the rare situation where the market is doing a slow decline.
However this, of course, is NEVER known ahead of time.
A Goldman Sachs associate provided a variety of detailed explanations, but then offered a caveat, “If I’m being dead-### honest, though, nobody knows what’s really going on.”
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calvin+hobbes
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Re: U.S. stocks in free fall

Post by calvin+hobbes »

Sesamebean123 wrote: Fri Jun 12, 2020 1:02 pm I currently have 420k around that I'm trying to get into the market. Previously I was considering lump summing or DCAing it in, but what are peoples thoughts about trying to time the market during this all-time volatility? It seems the market has demonstrated peak volatility during this time where we may be able to capture large daily drops. I'm consider putting in 100k at a time during times the markets drop.
Is this 420k separate from the 90/10 portfolio holdings you described in your thread?
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Stef
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Re: U.S. stocks in free fall

Post by Stef »

If you are sure that the odds for DCA are higher, then you should also sell everything what you already invested and DCA that too. Nobody is doing that.

Anyway, there is an active discussion going on right now about the whole topic: viewtopic.php?f=10&t=316451

So lets focus again on stocks in free fall :D
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Noobvestor
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Re: U.S. stocks in free fall

Post by Noobvestor »

Stef wrote: Tue Jun 16, 2020 1:16 am If you are sure that the odds for DCA are higher, then you should also sell everything what you already invested and DCA that too. Nobody is doing that.

Anyway, there is an active discussion going on right now about the whole topic: viewtopic.php?f=10&t=316451

So lets focus again on stocks in free fall :D
But stocks are going up again :shock: :!: :beer
"In the absence of clarity, diversification is the only logical strategy" -= Larry Swedroe
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Stef
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Re: U.S. stocks in free fall

Post by Stef »

Noobvestor wrote: Tue Jun 16, 2020 1:48 amBut stocks are going up again :shock: :!: :beer
It's funny that this thread has 3 times more replies than the other despite the fact that stocks are only declining 33% of the time.
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Re: U.S. stocks in free fall

Post by drk »

Stef wrote: Tue Jun 16, 2020 1:52 am It's funny that this thread has 3 times more replies than the other despite the fact that stocks are only declining 33% of the time.
That's a useful illustration of pretty standard behavioral finance.
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Stinky
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Re: U.S. stocks in free fall

Post by Stinky »

Stef wrote: Tue Jun 16, 2020 1:52 am
Noobvestor wrote: Tue Jun 16, 2020 1:48 amBut stocks are going up again :shock: :!: :beer
It's funny that this thread has 3 times more replies than the other despite the fact that stocks are only declining 33% of the time.
The “free fall” thread began in August 2011, almost 9 years ago.

The companion “soaring” thread began in August 2018, less than 2 years ago.

Give the soaring thread some time. It will eventually catch up.
It's a GREAT day to be alive - Travis Tritt
minimalistmarc
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Re: U.S. stocks in free fall

Post by minimalistmarc »

Stinky wrote: Tue Jun 16, 2020 4:02 am
Stef wrote: Tue Jun 16, 2020 1:52 am
Noobvestor wrote: Tue Jun 16, 2020 1:48 amBut stocks are going up again :shock: :!: :beer
It's funny that this thread has 3 times more replies than the other despite the fact that stocks are only declining 33% of the time.
The “free fall” thread began in August 2011, almost 9 years ago.

The companion “soaring” thread began in August 2018, less than 2 years ago.

Give the soaring thread some time. It will eventually catch up.
Unless we get a long bear market
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