U.S. stocks in free fall

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Enzo IX
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Re: U.S. stocks in free fall

Post by Enzo IX »

At least the market is broadening out of tech, making the overall market fall less.

The tech momentum people are having to make some hard decisions; buy, sell, or hold.
Semantics
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Re: U.S. stocks in free fall

Post by Semantics »

Jags4186 wrote: Fri Sep 11, 2020 12:37 pm Fauci just said he does not really anticipate things getting back to normal until late 2021. One wonders how long high flyers can sustain these price levels (or even grow) and how long struggling industries can survive.
As Siegel is fond of pointing out, more than 90% of the value of stocks is based on earnings >1 year out. Do you think the pandemic is going to ruin the earnings of Apple, Microsoft, etc. in 2030? If not then there is no reason to think they won't sustain their current prices.
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Re: U.S. stocks in free fall

Post by Semantics »

Does anyone know where all the money that's flowing out of the market during this correction is going? Treasuries have been relatively flat, as has gold. Are investors just moving to large cash positions, perhaps to combat uncertainty around the election?
rockstar
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Re: U.S. stocks in free fall

Post by rockstar »

jay22 wrote: Fri Sep 11, 2020 12:33 pm Man, this has been a bloodbath!
Losing August's gains isn't really a blood bath. Folks need to ride roller coasters more and develop a stomach for the volatility or watch the market less.
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Re: U.S. stocks in free fall

Post by index245 »

Semantics wrote: Fri Sep 11, 2020 2:37 pm Does anyone know where all the money that's flowing out of the market during this correction is going? Treasuries have been relatively flat, as has gold. Are investors just moving to large cash positions, perhaps to combat uncertainty around the election?
Yup, big money is keeping some cash around. Hmm....
atdharris
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Re: U.S. stocks in free fall

Post by atdharris »

Odd to see tech struggling. The longer this pandemic drags out, the more they will benefit. I, for one, would not be chomping at the bit to dump money into the travel industry.
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Re: U.S. stocks in free fall

Post by Jags4186 »

Semantics wrote: Fri Sep 11, 2020 2:34 pm
Jags4186 wrote: Fri Sep 11, 2020 12:37 pm Fauci just said he does not really anticipate things getting back to normal until late 2021. One wonders how long high flyers can sustain these price levels (or even grow) and how long struggling industries can survive.
As Siegel is fond of pointing out, more than 90% of the value of stocks is based on earnings >1 year out. Do you think the pandemic is going to ruin the earnings of Apple, Microsoft, etc. in 2030? If not then there is no reason to think they won't sustain their current prices.
What makes you think investors will be willing to continue to spending $30, $40, or $967 for each $1 in potential earnings in 2030?
rockstar
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Re: U.S. stocks in free fall

Post by rockstar »

Enzo IX wrote: Fri Sep 11, 2020 2:27 pm At least the market is broadening out of tech, making the overall market fall less.

The tech momentum people are having to make some hard decisions; buy, sell, or hold.
One month loss of gains doesn't change the reality that QQQ still has outperformed VOO by a lot. It makes sense that it gives up some of that spread. However, there are a lot of companies in VOO that aren't making a whole lot of money post COVID. And earnings matter.

Let's see what happens after Apple announces their new products later this month.
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Re: U.S. stocks in free fall

Post by rockstar »

atdharris wrote: Fri Sep 11, 2020 2:47 pm Odd to see tech struggling. The longer this pandemic drags out, the more they will benefit. I, for one, would not be chomping at the bit to dump money into the travel industry.
If I were to gamble on travel, I'd buy Delta Airlines. But I don't see air travel getting back to normal until COVID is behind us. I have no clue what that timeline looks like.
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Re: U.S. stocks in free fall

Post by grabiner »

Semantics wrote: Fri Sep 11, 2020 2:37 pm Does anyone know where all the money that's flowing out of the market during this correction is going? Treasuries have been relatively flat, as has gold. Are investors just moving to large cash positions, perhaps to combat uncertainty around the election?
Money doesn't flow out of the market when the market falls. For every seller, there must be a buyer. If the buyer buys a stock at a lower price than the previous trade, the total value of the stock declines. Money only flows when it is taken into or out of the market, such as a dividend payment or IPO.

Money can flow into or out of stock mutual funds, as investors buy or sell these funds (to sell or buy bonds, or just to contribute to or withdraw from their portfolios). But the mutual funds must then buy or sell stock in the market from someone else.
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Re: U.S. stocks in free fall

Post by SB1234 »

grabiner wrote: Fri Sep 11, 2020 10:16 pm
Semantics wrote: Fri Sep 11, 2020 2:37 pm Does anyone know where all the money that's flowing out of the market during this correction is going? Treasuries have been relatively flat, as has gold. Are investors just moving to large cash positions, perhaps to combat uncertainty around the election?
Money doesn't flow out of the market when the market falls. For every seller, there must be a buyer. If the buyer buys a stock at a lower price than the previous trade, the total value of the stock declines. Money only flows when it is taken into or out of the market, such as a dividend payment or IPO.

Money can flow into or out of stock mutual funds, as investors buy or sell these funds (to sell or buy bonds, or just to contribute to or withdraw from their portfolios). But the mutual funds must then buy or sell stock in the market from someone else.
If investor A bought 10 shares for 10$ each, but then sold one share for 20$ to an investor who earned that 20$ through labor, then hasn't 10$ been added to the market.
anecdotes are not data
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grabiner
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Re: U.S. stocks in free fall

Post by grabiner »

SB1234 wrote: Fri Sep 11, 2020 10:25 pm
grabiner wrote: Fri Sep 11, 2020 10:16 pm
Semantics wrote: Fri Sep 11, 2020 2:37 pm Does anyone know where all the money that's flowing out of the market during this correction is going? Treasuries have been relatively flat, as has gold. Are investors just moving to large cash positions, perhaps to combat uncertainty around the election?
Money doesn't flow out of the market when the market falls. For every seller, there must be a buyer. If the buyer buys a stock at a lower price than the previous trade, the total value of the stock declines. Money only flows when it is taken into or out of the market, such as a dividend payment or IPO.

Money can flow into or out of stock mutual funds, as investors buy or sell these funds (to sell or buy bonds, or just to contribute to or withdraw from their portfolios). But the mutual funds must then buy or sell stock in the market from someone else.
If investor A bought 10 shares for 10$ each, but then sold one share for 20$ to an investor who earned that 20$ through labor, then hasn't 10$ been added to the market.
No, because the share stayed in the market. The share was worth $20 both before and after it was sold, and was in the market at both times.

If the buyer bought an IPO, that would be a flow into the market; a company going public adds stock to the market, and that stock has some value.
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SB1234
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Re: U.S. stocks in free fall

Post by SB1234 »

grabiner wrote: Fri Sep 11, 2020 10:36 pm
SB1234 wrote: Fri Sep 11, 2020 10:25 pm
grabiner wrote: Fri Sep 11, 2020 10:16 pm
Semantics wrote: Fri Sep 11, 2020 2:37 pm Does anyone know where all the money that's flowing out of the market during this correction is going? Treasuries have been relatively flat, as has gold. Are investors just moving to large cash positions, perhaps to combat uncertainty around the election?
Money doesn't flow out of the market when the market falls. For every seller, there must be a buyer. If the buyer buys a stock at a lower price than the previous trade, the total value of the stock declines. Money only flows when it is taken into or out of the market, such as a dividend payment or IPO.

Money can flow into or out of stock mutual funds, as investors buy or sell these funds (to sell or buy bonds, or just to contribute to or withdraw from their portfolios). But the mutual funds must then buy or sell stock in the market from someone else.
If investor A bought 10 shares for 10$ each, but then sold one share for 20$ to an investor who earned that 20$ through labor, then hasn't 10$ been added to the market.
No, because the share stayed in the market. The share was worth $20 both before and after it was sold, and was in the market at both times.

If the buyer bought an IPO, that would be a flow into the market; a company going public adds stock to the market, and that stock has some value.
Yes you are right of course. The original investor gets the 20 back (not 10 as I had mistakenly thought)
anecdotes are not data
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Re: U.S. stocks in free fall

Post by Robot Monster »

There's a new Economist article about how the increased use of derivatives (by both big players like Softbank, and the Robinhood gang) is raising the volatility of tech stocks. The article concludes:
What does this imply about the future performance of tech stocks? Because of the influential role of turbocharged retail investment, prices can be expected to remain choppy. Moreover, the market is entering a period where typical covid-19-related volatility may be exacerbated by the twists and turns of America’s presidential election.

That said, much of the tech recovery from the lows in March was rooted in fundamental shifts, like policy interventions, or pandemic-prompted changes to consumer behaviour, such as online shopping, that have helped firms like Amazon. Even if the giddy obsession with tech firms exhibited during the summer fades, there may be little reason for investors to throw in the beach towel yet.
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Semantics
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Re: U.S. stocks in free fall

Post by Semantics »

grabiner wrote: Fri Sep 11, 2020 10:16 pm
Semantics wrote: Fri Sep 11, 2020 2:37 pm Does anyone know where all the money that's flowing out of the market during this correction is going? Treasuries have been relatively flat, as has gold. Are investors just moving to large cash positions, perhaps to combat uncertainty around the election?
Money doesn't flow out of the market when the market falls. For every seller, there must be a buyer. If the buyer buys a stock at a lower price than the previous trade, the total value of the stock declines. Money only flows when it is taken into or out of the market, such as a dividend payment or IPO.
Money absolutely flows out of the market when the market falls. If I own a stock that is $20, and decide to sell it and it therefore declines from $20 to $10 because I increased the supply, and then decide to buy a $10 treasury bond with my proceeds causing the price to rise to $20 because I decreased the supply, then that's $10 that moved from stocks to bonds.

Prices are determined by supply and demand, and if the demand for stocks declines while the demand for treasuries increases, we can understand that as value having moved from stocks to treasuries.
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Re: U.S. stocks in free fall

Post by firebirdparts »

Semantics wrote: Mon Sep 14, 2020 10:01 pm
grabiner wrote: Fri Sep 11, 2020 10:16 pm
Semantics wrote: Fri Sep 11, 2020 2:37 pm Does anyone know where all the money that's flowing out of the market during this correction is going? Treasuries have been relatively flat, as has gold. Are investors just moving to large cash positions, perhaps to combat uncertainty around the election?
Money doesn't flow out of the market when the market falls. For every seller, there must be a buyer. If the buyer buys a stock at a lower price than the previous trade, the total value of the stock declines. Money only flows when it is taken into or out of the market, such as a dividend payment or IPO.
Money absolutely flows out of the market when the market falls. If I own a stock that is $20, and decide to sell it and it therefore declines from $20 to $10 because I increased the supply, and then decide to buy a $10 treasury bond with my proceeds causing the price to rise to $20 because I decreased the supply, then that's $10 that moved from stocks to bonds.

Prices are determined by supply and demand, and if the demand for stocks declines while the demand for treasuries increases, we can understand that as value having moved from stocks to treasuries.
As long as we all understand it, it doesn’t really matter so much whether people pretend to understand it. If we say one share traded at $10, therefore all shares are worth $10, then you can see that value created by that is not money, and value destroyed by that was never money before it was destroyed. It’s very simple. Even if you get confused about actual trading, nobody would be confused about value gained and lost when you refuse to trade. There simply is no money, and we have to accept it.

So Money cannot really be accumulated In these instruments by trading. It has to be done at issuance. However, the people issuing bonds for instance are planning to spend the money. Even if they put it in “the bank” If you consider all accounts we think of as “cash” are supposed to be loaned to somebody for interest, it really does make you wonder why it isn’t easier to inflate the currency.
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AlohaBill
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Re: U.S. stocks in free fall

Post by AlohaBill »

Semantics,
Morningstar reported today that there are large outflows from stock funds into bond funds. I think for at least the last two months. Cheers.
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Re: U.S. stocks in free fall

Post by lostdog »

So far it's looking like a free fall for tomorrow.
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Re: U.S. stocks in free fall

Post by Stinky »

lostdog wrote: Wed Sep 16, 2020 9:27 pm So far it's looking like a free fall for tomorrow.
The night is young. Hope springs eternal.

But it sure looks pretty red out there.
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Re: U.S. stocks in free fall

Post by TheTimeLord »

Stinky wrote: Wed Sep 16, 2020 9:35 pm
lostdog wrote: Wed Sep 16, 2020 9:27 pm So far it's looking like a free fall for tomorrow.
The night is young. Hope springs eternal.

But it sure looks pretty red out there.
Down open with a lunchtime turnaround, I can work with that.
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lostdog
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Re: U.S. stocks in free fall

Post by lostdog »

We'll be seeing red today.
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Re: U.S. stocks in free fall

Post by occambogle »

lostdog wrote: Thu Sep 17, 2020 2:48 am We'll be seeing red today.
Given the correlation between the market and you going out on your bike, as clearly demonstrated in the soaring thread yesterday, would you kindly refrain from using it for the rest of the week to give us some more green? :)
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Re: U.S. stocks in free fall

Post by grettman »

I guess yesterday was the time to go all cash. Oh well, I suppose I will have to just sit still and wait this out.
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Re: U.S. stocks in free fall

Post by lostdog »

occambogle wrote: Thu Sep 17, 2020 3:10 am
lostdog wrote: Thu Sep 17, 2020 2:48 am We'll be seeing red today.
Given the correlation between the market and you going out on your bike, as clearly demonstrated in the soaring thread yesterday, would you kindly refrain from using it for the rest of the week to give us some more green? :)

No biking until Sunday. 🚲
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TheTimeLord
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Re: U.S. stocks in free fall

Post by TheTimeLord »

So anyone going to be buying at the open?
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Re: U.S. stocks in free fall

Post by livesoft »

TheTimeLord wrote: Thu Sep 17, 2020 7:34 am So anyone going to be buying at the open?
Maybe if the market drops 5% or so. Doesn't look like that is going to happen.
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Re: U.S. stocks in free fall

Post by ImUrHuckleberry »

I think I need to stop following the markets every day. It's become something to do during my morning and evening routines, but it's wearing on me and I think it was much better when I checked in a few times per year. (Of course back then, I didn't have enough for any losses to be painful. Now they hurt, even when they really shouldn't.)
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Re: U.S. stocks in free fall

Post by TheTimeLord »

ImUrHuckleberry wrote: Thu Sep 17, 2020 8:19 am I think I need to stop following the markets every day. It's become something to do during my morning and evening routines, but it's wearing on me and I think it was much better when I checked in a few times per year. (Of course back then, I didn't have enough for any losses to be painful. Now they hurt, even when they really shouldn't.)
Then you're no daisy.
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Re: U.S. stocks in free fall

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ImUrHuckleberry wrote: Thu Sep 17, 2020 8:19 am I think I need to stop following the markets every day. It's become something to do during my morning and evening routines, but it's wearing on me and I think it was much better when I checked in a few times per year. (Of course back then, I didn't have enough for any losses to be painful. Now they hurt, even when they really shouldn't.)
This is absolutely the wrong thread to follow if volatility turns the stomach to much. I still get excited when the market drops and see buying opportunities. I actually hate seeing the market just climb straight up like it did for so long.
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Re: U.S. stocks in free fall

Post by Stinky »

ImUrHuckleberry wrote: Thu Sep 17, 2020 8:19 am I think I need to stop following the markets every day. It's become something to do during my morning and evening routines, but it's wearing on me and I think it was much better when I checked in a few times per year. (Of course back then, I didn't have enough for any losses to be painful. Now they hurt, even when they really shouldn't.)
I agree.

If following the market causes you stress, turn off the TV and stop following the financial markets so closely.

Check out your portfolio every quarter. Follow your investment policy statement. Stay the course.

And, if all else fails, stop following this thread (and the “soaring” thread).
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lostdog
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Re: U.S. stocks in free fall

Post by lostdog »

ImUrHuckleberry wrote: Thu Sep 17, 2020 8:19 am I think I need to stop following the markets every day. It's become something to do during my morning and evening routines, but it's wearing on me and I think it was much better when I checked in a few times per year. (Of course back then, I didn't have enough for any losses to be painful. Now they hurt, even when they really shouldn't.)
I agree. If it causes you emotional distress then go back to just checking it a few times a year.

If you won't act on the daily gyrations and look at it through the eyes of a vulcan, then stick around and enjoy the ride.

🖖
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Re: U.S. stocks in free fall

Post by Robot Monster »

Stinky wrote: Thu Sep 17, 2020 8:28 am
ImUrHuckleberry wrote: Thu Sep 17, 2020 8:19 am I think I need to stop following the markets every day. It's become something to do during my morning and evening routines, but it's wearing on me and I think it was much better when I checked in a few times per year. (Of course back then, I didn't have enough for any losses to be painful. Now they hurt, even when they really shouldn't.)
...And, if all else fails, stop following this thread (and the “soaring” thread).
Unfortunately, this might also mean staying away from this forum, because it's impossible not to notice which thread, soaring or freefall, is active.
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Re: U.S. stocks in free fall

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"U.S. stocks fell for a second day...as signs of a gradual economic recovery added to investor anxiety over the levels of stimulus. “...markets are feeling a bit lethargic...does it signal the first signs of a loss of confidence in Fed policy?"...“Powell did not bring up the need for further fiscal support multiple times yesterday just for the sake of it. Monetary policy has its limits, the lack of fiscal policy support leaves significant risks to this recovery.”
Source

"This market is going to test Fed Chair Powell... and Powell is going to test this market." Source
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Re: U.S. stocks in free fall

Post by atdharris »

It might be time to add a little cash into the market.
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Re: U.S. stocks in free fall

Post by occambogle »

Robot Monster wrote: Thu Sep 17, 2020 9:34 am "U.S. stocks fell for a second day...as signs of a gradual economic recovery added to investor anxiety over the levels of stimulus. “...markets are feeling a bit lethargic...does it signal the first signs of a loss of confidence in Fed policy?"...“Powell did not bring up the need for further fiscal support multiple times yesterday just for the sake of it. Monetary policy has its limits, the lack of fiscal policy support leaves significant risks to this recovery.”
Source
I liked this take in The Guardian referring to Dickens' Oliver Twist:

"The evening arrived; the Fed watchers took their places. The Chairman stationed himself at the lectern. The gruel was served out and disappeared. Oliver, desperate and hungry, reckless with misery, rose from the table and advancing to the Chairman, said: “Please, sir, I want some more”.
It’s only been a few weeks since the market cheered the Fed’s plan to target average inflation and allow the economy to run hot for a significant time before even thinking about raising rates. Now, the petulant crowd is disappointed that there’s nothing new to feed it. Such is the market I suppose. No matter that the Fed’s ability to generate any inflation to ignore is highly questionable, or that further easing would make precious little difference."
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Re: U.S. stocks in free fall

Post by Robot Monster »

occambogle wrote: Thu Sep 17, 2020 9:57 am
Robot Monster wrote: Thu Sep 17, 2020 9:34 am "U.S. stocks fell for a second day...as signs of a gradual economic recovery added to investor anxiety over the levels of stimulus. “...markets are feeling a bit lethargic...does it signal the first signs of a loss of confidence in Fed policy?"...“Powell did not bring up the need for further fiscal support multiple times yesterday just for the sake of it. Monetary policy has its limits, the lack of fiscal policy support leaves significant risks to this recovery.”
Source
I liked this take in The Guardian referring to Dickens' Oliver Twist:

"The evening arrived; the Fed watchers took their places. The Chairman stationed himself at the lectern. The gruel was served out and disappeared. Oliver, desperate and hungry, reckless with misery, rose from the table and advancing to the Chairman, said: “Please, sir, I want some more”.
It’s only been a few weeks since the market cheered the Fed’s plan to target average inflation and allow the economy to run hot for a significant time before even thinking about raising rates. Now, the petulant crowd is disappointed that there’s nothing new to feed it. Such is the market I suppose. No matter that the Fed’s ability to generate any inflation to ignore is highly questionable, or that further easing would make precious little difference."
That is a gem.
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Re: U.S. stocks in free fall

Post by YRT70 »

ImUrHuckleberry wrote: Thu Sep 17, 2020 8:19 am I think I need to stop following the markets every day. It's become something to do during my morning and evening routines, but it's wearing on me and I think it was much better when I checked in a few times per year. (Of course back then, I didn't have enough for any losses to be painful. Now they hurt, even when they really shouldn't.)
Perhaps you're taking on more risk than you are really comfortable with?

I think it's quite common that people overestimate their risk tolerance. It happened to me too.
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Re: U.S. stocks in free fall

Post by TheTimeLord »

atdharris wrote: Thu Sep 17, 2020 9:37 am It might be time to add a little cash into the market.
I added some near the open this morning.
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Re: U.S. stocks in free fall

Post by Doom&Gloom »

TheTimeLord wrote: Thu Sep 17, 2020 8:21 am
ImUrHuckleberry wrote: Thu Sep 17, 2020 8:19 am I think I need to stop following the markets every day. It's become something to do during my morning and evening routines, but it's wearing on me and I think it was much better when I checked in a few times per year. (Of course back then, I didn't have enough for any losses to be painful. Now they hurt, even when they really shouldn't.)
Then you're no daisy.
Well done, TimeLord!

ImUrHuckleberry, It sounds as if you know what you need to do to lower your personal stress. It might also help you to avoid this thread and its sister, the soaring thread. Those two threads are not the place to be if daily gyrations are stressful. Good luck!
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Re: U.S. stocks in free fall

Post by Forester »

By my calculation, all Nasdaq gains above 8,000 are 100% speculative hot air; 7,000 to 8,000 is "richly priced".
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Re: U.S. stocks in free fall

Post by atdharris »

Still no idea where the money is going except into cash. My TLT shares are nearly flat today despite the market sell-off and have been flat since the drop began 3 weeks ago.
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Re: U.S. stocks in free fall

Post by ImUrHuckleberry »

YRT70 wrote: Thu Sep 17, 2020 10:04 am
ImUrHuckleberry wrote: Thu Sep 17, 2020 8:19 am I think I need to stop following the markets every day. It's become something to do during my morning and evening routines, but it's wearing on me and I think it was much better when I checked in a few times per year. (Of course back then, I didn't have enough for any losses to be painful. Now they hurt, even when they really shouldn't.)
Perhaps you're taking on more risk than you are really comfortable with?

I think it's quite common that people overestimate their risk tolerance. It happened to me too.
I don't think so. I mean I went through 2000 and 2008 at 80 to 90 percent equity without breaking a sweat. Now we are at 60:30:10. I think the issue is that we recently lump summed a significant chuck of new money almost at the recent market tops. And I also just need to get used to how much our account values will swing on a daily basis now.
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Re: U.S. stocks in free fall

Post by lostdog »

Forester wrote: Thu Sep 17, 2020 11:09 am By my calculation, all Nasdaq gains above 8,000 are 100% speculative hot air; 7,000 to 8,000 is "richly priced".
How low will it go?
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Re: U.S. stocks in free fall

Post by Robot Monster »

Forester wrote: Thu Sep 17, 2020 11:09 am By my calculation, all Nasdaq gains above 8,000 are 100% speculative hot air; 7,000 to 8,000 is "richly priced".
Does that calculation utilize a deck of tarot cards?
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willthrill81
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Re: U.S. stocks in free fall

Post by willthrill81 »

It's another great day for us accumulators! :D
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Re: U.S. stocks in free fall

Post by HomerJ »

Forester wrote: Thu Sep 17, 2020 11:09 am By my calculation, all Nasdaq gains above 8,000 are 100% speculative hot air; 7,000 to 8,000 is "richly priced".
Your calculations are worth the same as mine.

Absolutely nothing.
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Re: U.S. stocks in free fall

Post by willthrill81 »

Forester wrote: Thu Sep 17, 2020 11:09 am By my calculation, all Nasdaq gains above 8,000 are 100% speculative hot air; 7,000 to 8,000 is "richly priced".
David Stein of the Money for the Rest of Us podcast recently noted that essentially all of the stock market's gains this year are due to higher valuations rather than higher earnings.
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Re: U.S. stocks in free fall

Post by abuss368 »

atdharris wrote: Thu Sep 17, 2020 11:12 am Still no idea where the money is going except into cash. My TLT shares are nearly flat today despite the market sell-off and have been flat since the drop began 3 weeks ago.
To think of the risk with cash - a guarantee of no return.
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Re: U.S. stocks in free fall

Post by occambogle »

Interesting sub-plot to it all, maybe, who knows?

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Re: U.S. stocks in free fall

Post by 7eight9 »

abuss368 wrote: Thu Sep 17, 2020 1:29 pm
atdharris wrote: Thu Sep 17, 2020 11:12 am Still no idea where the money is going except into cash. My TLT shares are nearly flat today despite the market sell-off and have been flat since the drop began 3 weeks ago.
To think of the risk with cash - a guarantee of no return.
I am more concerned with the return of my money than the return on my money.
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