U.S. stocks in free fall
- Uncle Pennybags
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Re: U.S. stocks in freefall
I knew it; I felt it in my bones........sell,sell,sell....NOW.
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Re: U.S. stocks in freefall
Can't tell if serious.Uncle Pennybags wrote:I knew it; I felt it in my bones........sell,sell,sell....NOW.
Re: U.S. stocks in freefall
You can't harvest without losses............
Dan
Dan
The market is the most efficient mechanism anywhere in the world for transferring wealth from impatient people to patient people.” |
— Warren Buffett
- Uncle Pennybags
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Re: U.S. stocks in freefall
I rode the 10% up and will ride the 8% down; good thing I never look.fantasytensai wrote:Can't tell if serious.Uncle Pennybags wrote:I knew it; I felt it in my bones........sell,sell,sell....NOW.
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Re: U.S. stocks in freefall
Uncle Pennybags wrote:I rode the 10% up and will ride the 8% down; good thing I never look.fantasytensai wrote:Can't tell if serious.Uncle Pennybags wrote:I knew it; I felt it in my bones........sell,sell,sell....NOW.
Good thing you never look because its down over 5% this morning....
....Made you look!
Re: U.S. stocks in freefall
Oh goody! The thread has popped up again. A market rally is just around the corner!
A fool and his money are good for business.
- willthrill81
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Re: U.S. stocks in freefall
I'm actually hoping for a 20% correction. I still have a long ways yet to go and want to buy some cheaper equities!nedsaid wrote:Oh goody! The thread has popped up again. A market rally is just around the corner!
The Sensible Steward
Re: U.S. stocks in freefall
Hardly what if call a "free fall"!
(AGE minus 23%) Bonds | 5% REITs | Balance 80% US (75/25 TSM/SCV) + 20% International (80/20 Developed/Emerging)
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Re: U.S. stocks in freefall
Were people this nutty before the Internet? What did they do when they only got to see yesterday's stock prices in the newspaper once a day?
I'm not smart enough to know, and I can't afford to guess.
- Uncle Pennybags
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Re: U.S. stocks in freefall
Quicker than I thought. US can't seem to get a good "freefall" going.nedsaid wrote:Oh goody! The thread has popped up again. A market rally is just around the corner!
How you day traders do'n? Some fun, huh?
harvestbook wrote:Were people this nutty before the Internet? What did they do when they only got to see yesterday's stock prices in the newspaper once a day?
- Doom&Gloom
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Re: U.S. stocks in freefall
They worried just as much; they just couldn't bug the crap out of a bunch of strangersharvestbook wrote:Were people this nutty before the Internet? What did they do when they only got to see yesterday's stock prices in the newspaper once a day?
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Re: U.S. stocks in freefall
Today seems like a very chicken little day, but on the other hand, it does seem like some people finally got out of all cash and plunked into the market when it's high.
Re: U.S. stocks in freefall
Actually, there is a LOT of cash on the sidelines. This is from the Investment Company Institute -- "Total money market fund assets decreased by $23.26 billion to $2.65 trillion for the week ended Wednesday, March 22" -- Thanks for reading ~cfs~
~ Member of the Active Retired Force since 2014 ~
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Re: U.S. stocks in freefall
I prefer to harvest gains.dwickenh wrote:You can't harvest without losses............Dan
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Re: U.S. stocks in freefall
I sure you've read what some unhappy people did in the Depression, long before the internet.harvestbook wrote:Were people this nutty before the Internet? What did they do when they only got to see yesterday's stock prices in the newspaper once a day?
- oldcomputerguy
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Re: U.S. stocks in freefall
They developed ulcers while trying to get their broker on the phone. Of course the broker couldn't answer because he was busy on the phone to all the other panicking sellers.harvestbook wrote:Were people this nutty before the Internet? What did they do when they only got to see yesterday's stock prices in the newspaper once a day?
There is only one success - to be able to spend your life in your own way. (Christopher Morley)
- oldcomputerguy
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Re: U.S. stocks in freefall
I can't help but wonder what happened to the guys who shorted S&P500 right before the election. Ouch!Uncle Pennybags wrote: How you day traders do'n? Some fun, huh?
There is only one success - to be able to spend your life in your own way. (Christopher Morley)
- oldcomputerguy
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Re: U.S. stocks in freefall
Um, isn't that a bear market?willthrill81 wrote:I'm actually hoping for a 20% correction.nedsaid wrote:Oh goody! The thread has popped up again. A market rally is just around the corner!
There is only one success - to be able to spend your life in your own way. (Christopher Morley)
- Uncle Pennybags
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Re: U.S. stocks in freefall
Have you tried harvesting grains?littlebird wrote:I prefer to harvest gains.
Re: U.S. stocks in freefall
Is there a definition of what freefall means anywhere in this thread? Would it be measured in percentage drop per minute, hour, or day? Is it a sustained drop for a certain amount of time? I need a quantitative measure to properly worry. Qualitative doesn't do it for me.
Emotionless, prognostication free investing. Ignoring the noise and economists since 1979. Getting rich off of "smart people's" behavioral mistakes.
Re: U.S. stocks in freefall
'Thanks Uncle Pennybags, you made my whole day!Uncle Pennybags wrote:Have you tried harvesting grains?littlebird wrote:I prefer to harvest gains.
Bogleheads Wiki: https://www.bogleheads.org/wiki/Main_Page
Re: U.S. stocks in freefall
"Is there a definition of what freefall means anywhere in this thread . . ."
The original post is about the Dow dropping 550 points in just a couple of hours of trading. Thanks for reading ~cfs~
The original post is about the Dow dropping 550 points in just a couple of hours of trading. Thanks for reading ~cfs~
~ Member of the Active Retired Force since 2014 ~
Re: U.S. stocks in freefall
"I prefer to harvest gains."
Me 2.
Thanks for reading ~cfs~
Me 2.
Thanks for reading ~cfs~
~ Member of the Active Retired Force since 2014 ~
Re: U.S. stocks in freefall
NOW I can properly worry! Thanks!cfs wrote:"Is there a definition of what freefall means anywhere in this thread . . ."
The original post is about the Dow dropping 550 points in just a couple of hours of trading. Thanks for reading ~cfs~
Emotionless, prognostication free investing. Ignoring the noise and economists since 1979. Getting rich off of "smart people's" behavioral mistakes.
Re: U.S. stocks in freefall
After all that foofaraw this morning, my 88% equity (50/50 US/Intl) heavily-tilted portfolio ended up down 3 bp for the day.
It just goes to show that you never know. I looked at the global markets this morning and the futures and expected another 1% drop. (I knew the drop in the dollar would offset much of the decline in overseas markets, but I didn't expect the big bounce-back.
It just goes to show that you never know. I looked at the global markets this morning and the futures and expected another 1% drop. (I knew the drop in the dollar would offset much of the decline in overseas markets, but I didn't expect the big bounce-back.
Re: U.S. stocks in freefall
yeah I was planning on DCA'ing another 2500 today ... oh well.
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Re: U.S. stocks in freefall
Why is this noise still active! It's 100% bull!
DMW
DMW
Re: U.S. stocks in freefall
I learned a new word!jhfenton wrote:After all that foofaraw this morning,
Re: U.S. stocks in freefall
Lest We Forget
"The Dow Jones industrial average (INDU) lost 80 points, or 1.2%, to end at 6,547.05, its lowest point since April 15, 1997."
"The Nasdaq composite (COMP) lost 25 points or 2%, to end at 1,268.64, its lowest point since Oct. 9, 2002."
Was everyone eagerly investing in equities then?
If Not ,,
Then Why Not,
Steak Was On Sale
http://money.cnn.com/2009/03/09/markets ... s_newyork/
"The Dow Jones industrial average (INDU) lost 80 points, or 1.2%, to end at 6,547.05, its lowest point since April 15, 1997."
"The Nasdaq composite (COMP) lost 25 points or 2%, to end at 1,268.64, its lowest point since Oct. 9, 2002."
Was everyone eagerly investing in equities then?
If Not ,,
Then Why Not,
Steak Was On Sale
http://money.cnn.com/2009/03/09/markets ... s_newyork/
"One does not accumulate but eliminate. It is not daily increase but daily decrease. The height of cultivation always runs to simplicity" –Bruce Lee
- willthrill81
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Re: U.S. stocks in freefall
Yes. Isn't that the best time to invest in equities?oldcomputerguy wrote:Um, isn't that a bear market?willthrill81 wrote:I'm actually hoping for a 20% correction.nedsaid wrote:Oh goody! The thread has popped up again. A market rally is just around the corner!
The Sensible Steward
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Re: U.S. stocks in freefall
It is, but you have to have the dry powder to rebalance into stocks on sale. And you have to have a job stable enough that you won't need the cash if they fall more.willthrill81 wrote:Yes. Isn't that the best time to invest in equities?oldcomputerguy wrote:Um, isn't that a bear market?willthrill81 wrote:I'm actually hoping for a 20% correction.nedsaid wrote:Oh goody! The thread has popped up again. A market rally is just around the corner!
- randomizer
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Re: U.S. stocks in freefall
They need to freefall a bit more before I can harvest any losses. None of my purchased lots, even the most recent, is showing a loss yet.
87.5:12.5, EM tilt — HODL the course!
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Re: U.S. stocks in freefall
What bear market? What freefall? CNBC was going on and on about how today was a record up day! Record close or something.
Stocks seem to be going up and up, they're never coming down. I'm hoping it would correct but now I feel like I missed the boat.
Stocks seem to be going up and up, they're never coming down. I'm hoping it would correct but now I feel like I missed the boat.
Re: U.S. stocks in freefall
The best day to invest is yesterday. The second best day to invest is today.kellykline wrote:Stocks seem to be going up and up, they're never coming down. I'm hoping it would correct but now I feel like I missed the boat.
All in, all the time.
Re: U.S. stocks in freefall
What happened? What is going on?
Re: U.S. stocks in freefall
Dry powder can be in the form of bonds, not just cash. To rebalance, sell bond shares to buy into deflated stocks.Theoretical wrote:It is, but you have to have the dry powder to rebalance into stocks on sale. And you have to have a job stable enough that you won't need the cash if they fall more.willthrill81 wrote:Yes. Isn't that the best time to invest in equities?oldcomputerguy wrote:Um, isn't that a bear market?willthrill81 wrote:I'm actually hoping for a 20% correction.nedsaid wrote:Oh goody! The thread has popped up again. A market rally is just around the corner!
That's better than depleting your emergency cash reserves, which might be needed to pay expenses absent a regular job or other revenue stream.
One more reason that accumulators should include an allocation to bonds in their investment plan.
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Re: U.S. stocks in freefall
Nope. Keeping bonds as "dry powder" will decrease your returns, unless you're an exceptionally skilled market timer. Bonds are good for lowering volatility, but thinking they're good to keep around as dry powder is a mistake. You'll lose more money keeping them out of the market than you'll gain by buying low.digarei wrote:One more reason that accumulators should include an allocation to bonds in their investment plan.
Or, if you manage to actually get better returns by keeping dry powder, you're better off keeping 100% bonds until a crash, then going 100% stocks, and so on. That would give even better returns.
This "dry powder" myth keeps popping up again and again on BH, and it needs to die.
All in, all the time.
Re: U.S. stocks in freefall
OK, then you have to start the wet powder myth. Bonds can be wet powder since they are not explosive.
Re: U.S. stocks in freefall
Not strictly true.Ari wrote:Nope. Keeping bonds as "dry powder" will decrease your returns, unless you're an exceptionally skilled market timer. Bonds are good for lowering volatility, but thinking they're good to keep around as dry powder is a mistake. You'll lose more money keeping them out of the market than you'll gain by buying low.digarei wrote:One more reason that accumulators should include an allocation to bonds in their investment plan.
Or, if you manage to actually get better returns by keeping dry powder, you're better off keeping 100% bonds until a crash, then going 100% stocks, and so on. That would give even better returns.
This "dry powder" myth keeps popping up again and again on BH, and it needs to die.
Portfolio 1 is 100% US Stock, Portfolio 2 is 75% US Stock, 25% Long-Term Treasury with annual rebalancing. Period is 1972-2017. As you can see, as recently as 2012 the portfolio with bonds was outstripping the all-stock portfolio. So there is value in combining negatively/zero correlated assets, so long as they both have positive expected returns. Maybe "dry powder" is an imprecise way to think about it, but the more pernicious fallacy is that any amount of bonds will be a major drag on your portfolio's performance. That's what gets people hocked into portfolios with volatility they can't handle.
merely an interested amateur
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Re: U.S. stocks in freefall
^^Regarding the wet and dry powder:
My biggest regret in 2008-2009 was that we were 100% equities and had never heard of rebalancing. At least I didn't sell everytime the market crashed further and my husband said, "Sell, sell!" Now we are better prepared with some bonds.
My biggest regret in 2008-2009 was that we were 100% equities and had never heard of rebalancing. At least I didn't sell everytime the market crashed further and my husband said, "Sell, sell!" Now we are better prepared with some bonds.
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Re: U.S. stocks in freefall
Reserving some "dry gunpowder" is indeed not expected to increase long-term returns.
However, if your reason for not going 100% risky assets is at least in part psychological, then I think the "dry gunpowder" effect can be a big part of the psychological advantage, for at least some people. Basically, it means you are making significant use of any "buying opportunity" in the form of a major price reduction.
But of course that depends on whether you can comfortably stick to your rebalancing plans, or if instead watching a portion of your safe assets be converted to risky assets which are plunging (and may plunge some more before they are done) will freak you out even more.
However, if your reason for not going 100% risky assets is at least in part psychological, then I think the "dry gunpowder" effect can be a big part of the psychological advantage, for at least some people. Basically, it means you are making significant use of any "buying opportunity" in the form of a major price reduction.
But of course that depends on whether you can comfortably stick to your rebalancing plans, or if instead watching a portion of your safe assets be converted to risky assets which are plunging (and may plunge some more before they are done) will freak you out even more.
Re: U.S. stocks in freefall
Wow. Excuse me for my naïvete, but I always invested to MAKE money. By all means take advantage of tax loss harvesting when it makes sense but this seems like letting the tax tail wag the investing dog.randomizer wrote:They need to freefall a bit more before I can harvest any losses. None of my purchased lots, even the most recent, is showing a loss yet.
A fool and his money are good for business.
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Re: U.S. stocks in freefall
So what happened is a severe drop followed by a rapid recovery, which naturally favors the "dry gunpowder" approach. And if you happened to want to entirely liquidate your portfolio in the few years after that severe drop, you'd be SLIGHTLY better off with Portfolio 2. But if you look at any other point of the series, which is the vast majority of it, you'd be better off with Portfolio 1.lgs88 wrote:Portfolio 1 is 100% US Stock, Portfolio 2 is 75% US Stock, 25% Long-Term Treasury with annual rebalancing. Period is 1972-2017. As you can see, as recently as 2012 the portfolio with bonds was outstripping the all-stock portfolio. So there is value in combining negatively/zero correlated assets, so long as they both have positive expected returns. Maybe "dry powder" is an imprecise way to think about it, but the more pernicious fallacy is that any amount of bonds will be a major drag on your portfolio's performance. That's what gets people hocked into portfolios with volatility they can't handle.
What is true is that the cost in terms of total return to holding a modest amounts of safer assets has tended not to be too high relative to the amount of reduced volatility you got. So not a free lunch, but a modestly-priced one.
But outside of very specific and limited circumstances, there has in fact been some sort of cost in terms of lower returns, so your expected returns (applying future probability estimates over the possible return scenarios) should be lower, because odds are you will be withdrawing most of those funds in periods where the all-risky portfolio would have generated higher returns.
Re: U.S. stocks in freefall
That chart has a logarithmic y-axis. So the return advantage from all-stocks is actually quite a bit better than this looks.
Re: U.S. stocks in freefall
Yes, you're right, I worded it carelessly. With long-term bonds the strategy can work. You need an asset which has a comparable return to stocks. This way you might get some dry powder/rebalancing bonus. But I don't think you'd find the same result with short or intermediate-term bonds.lgs88 wrote:Not strictly true.
Portfolio 1 is 100% US Stock, Portfolio 2 is 75% US Stock, 25% Long-Term Treasury with annual rebalancing. Period is 1972-2017. As you can see, as recently as 2012 the portfolio with bonds was outstripping the all-stock portfolio.
All in, all the time.
Re:
Best post in this thread, back in August of 2011.Avo wrote:This is nowhere close to a "freefall". The flash crash was a freefall. Black Monday was pretty close to a freefall.
This is an orderly, completely predictable (and predicted) response to meaningless "news" that's followed a huge run up.
Stay the course.
Re: U.S. stocks in freefall
I was responding to the poster's suggestion that one had to have dry powder in the form of cash to buy into stocks when they fell. If one has a percentage of their portfolio in bonds, they instead of cash can be used to rebalance.Ari wrote:Nope. Keeping bonds as "dry powder" will decrease your returns, unless you're an exceptionally skilled market timer. Bonds are good for lowering volatility, but thinking they're good to keep around as dry powder is a mistake. You'll lose more money keeping them out of the market than you'll gain by buying low.digarei wrote:One more reason that accumulators should include an allocation to bonds in their investment plan.
Or, if you manage to actually get better returns by keeping dry powder, you're better off keeping 100% bonds until a crash, then going 100% stocks, and so on. That would give even better returns.
This "dry powder" myth keeps popping up again and again on BH, and it needs to die.
It's not a universal truth that keeping bonds will decrease returns; there are times when having bonds will improve returns.
Why isn't one "better off keeping 100% bonds until a crash?" Because you can't know before hand when there will be a crash.
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- just frank
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Re: U.S. stocks in freefall
Indeed. By my reading, about 10% over 40 years. Or 0.25%/year.Roothy wrote:That chart has a logarithmic y-axis. So the return advantage from all-stocks is actually quite a bit better than this looks.
Re: U.S. stocks in freefall
Which was my argument exactly. If you can't time the market, you can't gain additional returns by keeping dry powder to invest after a crash. If you can't do it with 100% of your portfolio, you can't do it with 10%.digarei wrote:I was responding to the poster's suggestion that one had to have dry powder in the form of cash to buy into stocks when they fell. If one has a percentage of their portfolio in bonds, they instead of cash can be used to rebalance.Sure. You can use bonds or cash, and both will give you less expected returns than stocks.
Agreed. The expected returns of stocks will always be higher, though. But yes, I was talking on average. You can keep bonds in order to protect yourself from a period of low performance by stocks and high performance of bonds. But it's not by keeping "dry powder". It has nothing to do with buying stocks after a crash. It has to do with bonds outperforming stocks, plain and simple.It's not a universal truth that keeping bonds will decrease returns; there are times when having bonds will improve returns.
Why isn't one "better off keeping 100% bonds until a crash?" Because you can't know before hand when there will be a crash.
I have nothing against bonds. I'm not arguing against holding them. I'm arguing against the misguided idea that it's good to keep some dry powder, in cash or bonds, in order to have something to buy stocks with after a crash. It might be a nice psychological crutch, but it's not going to help your returns.
All in, all the time.
Re: U.S. stocks in freefall
Ari wrote: I have nothing against bonds. I'm not arguing against holding them. I'm arguing against the misguided idea that it's good to keep some dry powder, in cash or bonds, in order to have something to buy stocks with after a crash. It might be a nice psychological crutch, but it's not going to help your returns.
I'm inclined to believe that a nice psychological crutch, even if it's nothing more than that, CAN improve your returns. So many investing mistakes are psychologically-rooted.
merely an interested amateur