U.S. stocks in free fall

[TheTimeLord]

I can see the start to a red finish this week starting today....

I can see myself consistently receiving a return on my investments.

[jarjarM]

Late market melt down!!!

[Robot Monster]

Late market melt down!!!

Meanwhile, Vanguard Real Estate ETF went +1.99% on us.

[GeraniumLover]

Late market melt down!!!

Meanwhile, Vanguard Real Estate ETF went +1.99% on us.

Lovely. I sold VNQ last week as part of a planned AA adjustment...

[GeraniumLover]

Late market melt down!!!

Meanwhile, Vanguard Real Estate ETF went +1.99% on us.

Lovely. I reluctantly sold VNQ last week as part of a planned AA adjustment...

[Robot Monster]

Late market melt down!!!

Meanwhile, Vanguard Real Estate ETF went +1.99% on us.

Lovely. I sold VNQ last week as part of a planned AA adjustment...

That kinda stuff happens. Don't let it bother you. Just the nature of the beast.

[Tim_in_GA]

Finally my 401k contribution lines up with a down day.

[Robot Monster]

Finally my 401k contribution lines up with a down day.

Always feels good to contribute on the down. That's why I don't like when stocks go up, cuz I know I'll eventually have to contribute into that rise. Be better if stocks just went down permanently, then we'd always be getting better and better deals.

[jason2459]

Another week of worse then expected jobless claims and worse ever plunge on 2nd quarter GDP announcements of falling near 33% but the expected was around 34%

And still no stimulus package signed. I'm seeing red today.

[Stinky]

Mr Market giveth.

Mr Market taketh away.

This looks like a “taketh away” day.

[lostdog]

Looks like a "buy the dip" day? Big plunge forthcoming.

[jason2459]

I think the big activity will be after the close today with FAAA announcements today.

[bugleheadd]

if markets are forward looking, then why do past GDP numbers cause todays down turn?

[AnalogKid22]

I think the big activity will be after the close today with FAAA announcements today.

I agree. After this morning's grim news from the Fed, if we get less-than-stellar news from these heavyweights, tomorrow's open could be much lower. Or, they have moderate-to-great news and we see a moderate uptick. I'm not expecting a boring end to the week. Of course, the grimmer the news the more likely the Fed will spin up the money machine.

[Triple digit golfer]

if markets are forward looking, then why do past GDP numbers cause todays down turn?

We don't know what caused today's down day. Why do you assume it was past GDP numbers?

Typically the market reacts not to news, but to news that is different than expected. Is GDP down more than it was expected to be down? That could be a part of it. Or it could be something completely different. It doesn't even have to be logical. On any given day, there are probably hundreds or thousands of pieces of news or information related to the thousands of companies in the market.

[Aw0k3n]

if markets are forward looking, then why do past GDP numbers cause todays down turn?

I had same question. I think it may be panic sell but those who stay in the game may not lose once it corrects up. But do recall, that the TSM has bounced back all the way to the March lows, so it may be that, that was an over correction and now it dips lower.
"- I cannot see the future, for if I did the future would be mine to mine"

[Linkin06]

Anyone buying this dip?

[jason2459]

if markets are forward looking, then why do past GDP numbers cause todays down turn?

There's a combo of bad news and no guidance on what's happening with stimulus. If it was just GDP I doubt we would have dropped as that was expected and expected to be slightly more then what's currently reported.

But we don't know what will happen with the stimulus, covid numbers keep climbing, job numbers were worse then expected, Congress is investigating our mega caps, 4 of the megas haven't reported yet, along with historical gdp decline adds to the FUD

So, we're in a holding pattern which doesn't bode well with the main street suffering so there will be some selling.

[jason2459]

Anyone buying this dip?

This is not a RBD. I'm not doing anything special.

[Linkin06]

Close to RBD for VXUS though, right? What’s definition of RBD? -2.5?

[Nightowl99]

It's time to batten down the hatches. I've started watching Ray Dalio on YouTube. He recommends reducing risk by diversifying well in a balanced way, across countries, asset classes, and currencies. I try to be a good Boglehead but this makes sense to me. I don't think it hurts to have 20% or so in foreign funds. I'm not so sure how to go about diversifying for currency risk but am looking into it and have put a little into an Emerging Markets Bond fund. I'm still holding onto a lot of the Total Bond Fund but have shifted some away to shorter-term just to reduce duration risk a little.... Hopefully recovery from the looming crisis will not last long.

[RBD = required beginning date? Not sure.]

[lostdog]

It's time to batten down the hatches. I've started watching Ray Dalio on YouTube. He recommends reducing risk by diversifying well in a balanced way, across countries, asset classes, and currencies. I try to be a good Boglehead but this makes sense to me. I don't think it hurts to have 20% or so in foreign funds. I'm not so sure how to go about diversifying for currency risk but am looking into it and have put a little into an Emerging Markets Bond fund. I'm still holding onto a lot of the Total Bond Fund but have shifted some away to shorter-term just to reduce duration risk a little.... Hopefully recovery from the looming crisis will not last long.

[RBD = required beginning date? Not sure.]

Vanguard Target Date or Life Strategy Fund will work.

RBD=Really Bad Day

RBD days are "buy the dip" days.

[jason2459]

RBD = really bad day

Back in March were some really bad days. Market circuit breakers were going off and halting trading. I pulled from my checking account and invested extra and just tightened my belt for that month.

[Nightowl99]

RBD can also mean really bad day.

[Tim_in_GA]

if markets are forward looking, then why do past GDP numbers cause todays down turn?

I don't think it's the GDP. I think the answer is too political for this place.

[jason2459]

if markets are forward looking, then why do past GDP numbers cause todays down turn?

I don't think it's the GDP. I think the answer is too political for this place.

There is some of that but not as much as other bad news directly effecting the workforce. But yeah I didn't go there like current tweets from this morning...


It all adds up.

[LadyGeek]

RBD can also mean really bad day.

The wiki has some background info: Abbreviations and Acronyms

RBD - Really Bad Day. A Bogleheads' idiomatic term coined by forum member livesoft. An early mention is in this thread: Today was a Really Bad Day.

[longinvest]

RBD can also mean really bad day.

The wiki has some background info: Abbreviations and Acronyms

RBD - Really Bad Day. A Bogleheads' idiomatic term coined by forum member livesoft. An early mention is in this thread: Today was a Really Bad Day.

As a complement of information, here's a link to forum member Rodc's analysis of RBD:
Event-driven rebalancing? Sounds like market timing

[...]
The table below provides summary statistics. The use of RBD did not improve either returns or volatility, and indeed did ever so slightly worse than the respective baseline strategies. The use of RBD triggers greatly increased the number of times rebalancing was required, [...]

Here's his philosophical conclusion:
Really bad days (RBDs) and porfolio performance

[...]
One can use any more or less non-crazy rebalancing scheme and be fine. If they get pleasure out of it, or it makes them feel sophisticated, or even if it helps relieve boredom they should go ahead and do that. But it would be a mistake to think it was going to actually be useful. Of course if thinking it would be useful helps one of those other reasons I guess that is ok too.

[lostdog]

We have a reversal in movement. The bulls are fighting off the bears.

[jason2459]

We have a reversal in movement. The bulls are fighting off the bears.

I could see a melt up to closing on FOMO before the FAAA announcements.

[J G Bankerton]

Mr Market giveth.

Mr Market taketh away.

This looks like a “taketh away” day.

It depends on when one buys. Today was pay day and I bought VOO at 294.99 and 295.50 then the free fall stopped. I bought VUG at 211.14 and sold VTV at 103.17.

Pay day is fun day.

[CurlyDave]

Curly Family Portfolio is positive for the day +0.20%.

NASDAQ is fighting to get positive.

I am going to the soaring thread.

[TheTimeLord]

Anyone buying this dip?

I am using it to reposition, but I am always repositioning, I had sold some SPY at close yesterday and had the chance this morning to buy it back at almost 2% cheaper. Who knows what I will have done by EOD.

[J G Bankerton]

I don't think it hurts to have 20% or so in foreign funds.

That hurt my portfolio for years. I sold foreign and bought large cap growth six weeks ago, so far my portfolio is feeling better.

[protagonist]

Worth reading for anybody who still thinks that "the stock market" and "the economy" are the same thing:
https://www.cnn.com/2020/07/30/economy/ ... index.html

[guyinlaw]

Downside risk from policymakers, but Fed has our back.

[CurlyDave]

I don't think it hurts to have 20% or so in foreign funds.

That hurt my portfolio for years. I sold foreign and bought large cap growth six weeks ago, so far my portfolio is feeling better.

About 20% hurt both DW and my portfolios for several years. After about 3-4 years of serious underperformance she told me to switch her foreign to QQQ. Well, like they say: happy wife, happy life.

I watched her portfolio pick up for about another year before I made the switch on my portfolio. This was quite a while ago, and we are now so far ahead of the game that we would need to have the NYSE swallowed up by a volcano to not come out ahead in our lifetimes.

[J G Bankerton]

About 20% hurt both DW and my portfolios for several years. After about 3-4 years of serious underperformance she told me to switch her foreign to QQQ. Well, like they say: happy wife, happy life.

I watched her portfolio pick up for about another year before I made the switch on my portfolio.

I bought large cap growth for the same reason. I convinced my son that being all company stock in his 401k was not a good idea. He has some excellent mutual funds to chose from. He has over 30 years before retirement so I told him to go 100% in the S&P 500 fund. For some reason he wanted to go 1/2 in TRBCX a managed large cap growth fund. This was 4 years ago, TRBCX out performed the S&P500 fund by +6% a year.

I figured 10% large cap growth in my portfolio couldn't hurt, goodbye foreign. I have to keep it at 10% and not get greedy because pigs get slaughtered.

[TechGuy365]

About 20% hurt both DW and my portfolios for several years. After about 3-4 years of serious underperformance she told me to switch her foreign to QQQ. Well, like they say: happy wife, happy life.

I watched her portfolio pick up for about another year before I made the switch on my portfolio.

I bought large cap growth for the same reason. I convinced my son that being all company stock in his 401k was not a good idea. He has some excellent mutual funds to chose from. He has over 30 years before retirement so I told him to go 100% in the S&P 500 fund. For some reason he wanted to go 1/2 in TRBCX a managed large cap growth fund. This was 4 years ago, TRBCX out performed the S&P500 fund by +6% a year.

I figured 10% large cap growth in my portfolio couldn't hurt, goodbye foreign. I have to keep it at 10% and not get greedy because pigs get slaughtered.

Almost exact same story here. In part of my retirement I finally got rid of my SCV (PRSVX) and international 3 years ago after long underperformance and bought TRBCX and PRGFX. Between 15-20% of overall portfolio. Couldn’t be happier to have made that decision. (Safe space in this thread right? )

[nigel_ht]

I’d rather have international than more bonds...that’s kind of how I treat them...a necessary evil to hedge against a really bad decade...

[J G Bankerton]

Almost exact same story here. In part of my retirement I finally got rid of my SCV (PRSVX) and international 3 years ago after long underperformance and bought TRBCX and PRGFX. Between 15-20% of overall portfolio. Couldn’t be happier to have made that decision. (Safe space in this thread right? )

I think that is almost Boglehead compared to some of the posts I have seen here. Larry the stock picker gets * * * * * from Morningstar.

[willthrill81]

I’d rather have international than more bonds...that’s kind of how I treat them...a necessary evil to hedge against a really bad decade...

The problem with that approach is that for U.S. investors, owning ex-U.S. has been a lost decade. Actually, it's been a lost 13.5 years. The real return of ex-U.S. since 2007 was .08% annualized.

I'm not saying that there isn't value in owning ex-U.S. nor that non-existent returns will continue. But I find it ironic that the potential for a lost decade that many were trying to hedge against materialized with what they bought to hedge against that event.

[Robot Monster]

I’d rather have international than more bonds...that’s kind of how I treat them...a necessary evil to hedge against a really bad decade...

"Necessary evil"? My goodness! You aren't dabbling in the dark arts by going international.

[Blue456]

I’d rather have international than more bonds...that’s kind of how I treat them...a necessary evil to hedge against a really bad decade...

The problem with that approach is that for U.S. investors, owning ex-U.S. has been a lost decade. Actually, it's been a lost 13.5 years. The real return of ex-U.S. since 2007 was .08% annualized.

I'm not saying that there isn't value in owning ex-U.S. nor that non-existent returns will continue. But I find it ironic that the potential for a lost decade that many were trying to hedge against materialized with what they bought to hedge against that event.

But most people don’t go 100% international.
When you look at 80%US and 20% EX-US the difference is not that big. And what I hedge against is not a lost decade but lost 2, 3 or 4 decades.
I also hedge against my own behavioral mistakes but that’s another topic.

[SB1234]

The problem with hedging (like insurance) is that even when the bet/policy pays off I am not really overjoyed. But that doesn't stop me from buying insurance and so it shouldn't stop me from hedging. A little bit of each pie for me please.

[nigel_ht]

I’d rather have international than more bonds...that’s kind of how I treat them...a necessary evil to hedge against a really bad decade...

The problem with that approach is that for U.S. investors, owning ex-U.S. has been a lost decade. Actually, it's been a lost 13.5 years. The real return of ex-U.S. since 2007 was .08% annualized.

I'm not saying that there isn't value in owning ex-U.S. nor that non-existent returns will continue. But I find it ironic that the potential for a lost decade that many were trying to hedge against materialized with what they bought to hedge against that event.

Yah, I kept the bare (heh bear?) minimum but it is rather ironic. But actually for me it's just a hedge against a Nikkei style cratering rather than a lost decade...

5% gold and 10% international is kinda my limit for stuff that exist for diversification in case something really bad happens to the US economy.

[nigel_ht]

I’d rather have international than more bonds...that’s kind of how I treat them...a necessary evil to hedge against a really bad decade...

"Necessary evil"? My goodness! You aren't dabbling in the dark arts by going international.

My wife gives me grief about her 100% US stock portfolio beating mine. So evil I named them and evil they are...and my bonds don't help either but I keep them both anyway.

March was waaaay too short to remind folks the value of diversification. So was 2008 for that matter as much as that sucked.

[willthrill81]

I’d rather have international than more bonds...that’s kind of how I treat them...a necessary evil to hedge against a really bad decade...

The problem with that approach is that for U.S. investors, owning ex-U.S. has been a lost decade. Actually, it's been a lost 13.5 years. The real return of ex-U.S. since 2007 was .08% annualized.

I'm not saying that there isn't value in owning ex-U.S. nor that non-existent returns will continue. But I find it ironic that the potential for a lost decade that many were trying to hedge against materialized with what they bought to hedge against that event.

Yah, I kept the bare (heh bear?) minimum but it is rather ironic. But actually for me it's just a hedge against a Nikkei style cratering rather than a lost decade...

5% gold and 10% international is kinda my limit for stuff that exist for diversification in case something really bad happens to the US economy.

Is 10% in ex-U.S. likely to be an effective hedge against an event like what happened to Japan? I really doubt that it would.

[abuss368]

A 50% stock and 50% bond portfolio with 20% of stock to international is 10% overall to international and 90% to US. I do not believe that moves the needle much, if at all.

[minimalistmarc]

Hope this is a proper free fall and not another fake out. I have a small lump sum coming over the next few months and it will be invested immediately into equities so lower prices would be welcome!