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Re: U.S. stocks in freefall

Posted: Mon Jan 05, 2015 12:43 pm
by Imbros
Bump and my first ever post in this thread due to today's (at least) 1.5% fall.

Slightly OT:
I began my investment journey in 2008 and I have been pretty optimistic about both US and International markets all this time, until now. I just have this gut feeling that there is at least 15-20% correction about to happen sometime early this year. Anyone else have the same feeling? How long can a bull market last?

Re: U.S. stocks in freefall

Posted: Mon Jan 05, 2015 12:51 pm
by Tom_T
Imbros wrote:Bump and my first ever post in this thread due to today's (at least) 1.5% fall.

Slightly OT:
I began my investment journey in 2008 and I have been pretty optimistic about both US and International markets all this time, until now. I just have this gut feeling that there is at least 15-20% correction about to happen sometime early this year. Anyone else have the same feeling? How long can a bull market last?
I don't know about you, but my "gut feelings" are often wrong.

Re: U.S. stocks in freefall

Posted: Mon Jan 05, 2015 12:54 pm
by Leeraar
Imbros wrote:Bump and my first ever post in this thread due to today's (at least) 1.5% fall.

Slightly OT:
I began my investment journey in 2008 and I have been pretty optimistic about both US and International markets all this time, until now. I just have this gut feeling that there is at least 15-20% correction about to happen sometime early this year. Anyone else have the same feeling? How long can a bull market last?
Here's an exercise for you:

Find some market total return data for every month since 1970. You save $100 per month, but you only invest your accumulated cash:

A) At the peak before a decline of at least 20%

OR:

B) At the bottom following a decline of at least 20%

OR:

C) Every month.

How much will you have in each of these three scenarios?

L.

Re: U.S. stocks in freefall

Posted: Mon Jan 05, 2015 12:54 pm
by FullYellowJacket
Now if only if I had been lazy enough to not max out both Roth IRAs yet. Today would have been the perfect day to do that.

C'est la vie.

Re: U.S. stocks in freefall

Posted: Mon Jan 05, 2015 12:56 pm
by Grt2bOutdoors
Imbros wrote:Bump and my first ever post in this thread due to today's (at least) 1.5% fall.

Slightly OT:
I began my investment journey in 2008 and I have been pretty optimistic about both US and International markets all this time, until now. I just have this gut feeling that there is at least 15-20% correction about to happen sometime early this year. Anyone else have the same feeling? How long can a bull market last?
Sure, it's going to happen, and it will happen several more times over my lifetime and I'm sure yours as well. You should view these declines in one of two ways: (1) equities are on sale, when things are on sale if I have extra cash I like to "stock" up, especially if I use those products/good/services and (2) if your portfolio is 80% equities and the market declines by 20%, then you are down roughly 15% - stinging I'm sure, but unless you are planning on cashing out every last penny of your account the day the market closes down in which case you should not have been 80% in equities, then you have time to recoup and increase the value of your overall account.

Re: U.S. stocks in freefall

Posted: Mon Jan 05, 2015 12:57 pm
by Grt2bOutdoors
FullYellowJacket wrote:Now if only if I had been lazy enough to not max out both Roth IRAs yet. Today would have been the perfect day to do that.

C'est la vie.
I'm doing it today. :)

Re: U.S. stocks in freefall

Posted: Mon Jan 05, 2015 1:02 pm
by GingerU
I'm curious also about this freefall today. I had planned to buy some ETFs today (ITOT and AGG) but seeing the declines I'm wondering if I should wait to see if things go lower. I'm not a fan of timing the market as I have learned thru this forum but would it be reckless for me to invest now?

Re: U.S. stocks in freefall

Posted: Mon Jan 05, 2015 1:08 pm
by Rob Bertram
GingerU wrote:I'm curious also about this freefall today. I had planned to buy some ETFs today (ITOT and AGG) but seeing the declines I'm wondering if I should wait to see if things go lower. I'm not a fan of timing the market as I have learned thru this forum but would it be reckless for me to invest now?
No more reckless now than Friday (prior trading day) or tomorrow.

Re: U.S. stocks in freefall

Posted: Mon Jan 05, 2015 1:09 pm
by FullYellowJacket
GingerU wrote:I'm curious also about this freefall today. I had planned to buy some ETFs today (ITOT and AGG) but seeing the declines I'm wondering if I should wait to see if things go lower. I'm not a fan of timing the market as I have learned thru this forum but would it be reckless for me to invest now?
In hindsight, right now is a better time to buy these ETFs than yesterday was. As for the future, to quote another Boglehead, my crystal ball is cloudy.

Re: U.S. stocks in freefall

Posted: Mon Jan 05, 2015 1:11 pm
by dbCooperAir
GingerU wrote:I'm curious also about this freefall today. I had planned to buy some ETFs today (ITOT and AGG) but seeing the declines I'm wondering if I should wait to see if things go lower. I'm not a fan of timing the market as I have learned thru this forum but would it be reckless for me to invest now?
You could wait a day or week and see what happens, if it does go up you must still invest though!

Re: U.S. stocks in freefall

Posted: Mon Jan 05, 2015 1:33 pm
by Browser
The way it should work is that you have a financial goal, which drives your asset allocation decision. You invest based on your AA. If you're not comfortable doing that right now, then maybe your AA is wrong, and you should reassess and reset as necessary. Once you've settled on that, then the data tells us it is best just to go ahead and enact your AA without fooling around. Remember, whatever your AA is you have to live with it when it is fully funded too. If you can't live with it now, then how do you plan to live with it later without bailing out?

Re: U.S. stocks in freefall

Posted: Mon Jan 05, 2015 1:48 pm
by Tom_T
Browser wrote:The way it should work is that you have a financial goal, which drives your asset allocation decision. You invest based on your AA. If you're not comfortable doing that right now, then maybe your AA is wrong, and you should reassess and reset as necessary. Once you've settled on that, then the data tells us it is best just to go ahead and enact your AA without fooling around. Remember, whatever your AA is you have to live with it when it is fully funded too. If you can't live with it now, then how do you plan to live with it later without bailing out?
So true. To do otherwise is to assume that:

1. Stocks are "too high" right now.
2. I know they are going to fall / keep falling.
3. I also know how much they will fall, and when it will be time to get back in.
4. The next time the market goes up, I will somehow know once again if it's "too high" or "just right." If "too high", then rinse and repeat.

It's exhausting and impossible. I could never sleep at night doing all this. As long as I have a diversified asset allocation that takes into account when I will need to withdraw money, then I am comfortable.

Re: U.S. stocks in freefall

Posted: Mon Jan 05, 2015 2:31 pm
by Browser
Now if I could just take my own advice. :oops:

Re: U.S. stocks in freefall

Posted: Mon Jan 05, 2015 2:33 pm
by oldzey
FullYellowJacket wrote:Now if only if I had been lazy enough to not max out both Roth IRAs yet. Today would have been the perfect day to do that.

C'est la vie.
I hear ya - I made a Roth contribution last Friday.

However, I've started dollar cost averaging my Roth contributions this year, so I've only invested 1/12th of my $5,500 so far (last year I lumped it all on Jan. 2nd).

Re: U.S. stocks in freefall

Posted: Mon Jan 05, 2015 2:41 pm
by Novine
Where was everyone in 2008 - 2009? I don't get people getting worked up on 300 point declines when the Dow is at 17,500. Nothing like the days of multiple 700 point declines with the Dow heading to half the value it has today.

Re: U.S. stocks in freefall

Posted: Mon Jan 05, 2015 2:50 pm
by Toons
Oh well here we go again,,,, :happy .
It is humorous how this thread springs back to life as soon as a few days of triple digit declines pop up.
Let us :happy hope a 20% correction at minimum is on the horizon,,,,,,It has been a while since we have been offered that kind of opportunity. :sharebeer

Re: U.S. stocks in freefall

Posted: Mon Jan 05, 2015 2:51 pm
by Sheepdog
Novine wrote:Where was everyone in 2008 - 2009? I don't get people getting worked up on 300 point declines when the Dow is at 17,500. Nothing like the days of multiple 700 point declines with the Dow heading to half the value it has today.
Absolutely. How about in October 1987, when the Dow dropped 508 points from 2246 all in one day.....23% in one day!! Today, that percentage would be a 4000 point drop. Cool it!

Re: U.S. stocks in freefall

Posted: Mon Jan 05, 2015 2:55 pm
by leonidas
This is why I also own bonds and Gold.

Re: U.S. stocks in freefall

Posted: Mon Jan 05, 2015 2:57 pm
by stemikger
oldzey wrote:
FullYellowJacket wrote:Now if only if I had been lazy enough to not max out both Roth IRAs yet. Today would have been the perfect day to do that.

C'est la vie.
I hear ya - I made a Roth contribution last Friday.

However, I've started dollar cost averaging my Roth contributions this year, so I've only invested 1/12th of my $5,500 so far (last year I lumped it all on Jan. 2nd).
Yeah, me too! I rebalanced last week. That $17K difference would have felt a lot better going in stocks today. Oh well, I'm sure in ten years it wouldn't matter one bit. That market timing thing just never worked for me. :oops: And supposedly lump sum investing wins out in the end. :moneybag

Re: U.S. stocks in freefall

Posted: Mon Jan 05, 2015 3:03 pm
by VictoriaF
Novine wrote:Where was everyone in 2008 - 2009? I don't get people getting worked up on 300 point declines when the Dow is at 17,500. Nothing like the days of multiple 700 point declines with the Dow heading to half the value it has today.
In an investment forum focused on the index-fund investing, an index hit is a major event. It's similar to a pop culture forum discussing a new music hit.

Victoria

Re: U.S. stocks in freefall

Posted: Mon Jan 05, 2015 3:09 pm
by Random Musings
Well, looking at the past year or so, this feels like a freefall. Unless the S&P rallies hard to go positive at the close, this will be the fourth consecutive down day for the S&P 500. 264 trading days has passed since the last 4 down day streak occured (none occured in 2014). Longest streak since 1928.

Recency sticks in people's minds.

RM

Re: U.S. stocks in freefall

Posted: Mon Jan 05, 2015 3:15 pm
by WorkToLive
I had been lazy in contributing to my 2015 Roth. Just submitted the order to buy $5500 of 500 Index Admiral.

But I am NOT timing the market. It just worked out that I had been putting it off. :happy

Re: U.S. stocks in freefall

Posted: Mon Jan 05, 2015 3:33 pm
by rocketrex
Looks like I got lucky, at least temporarily. Last week I was moving funds from one account to another while I was doing some TLH before year end. I had 46k go into VTSAX just a few hours ago :D

Re: U.S. stocks in freefall

Posted: Mon Jan 05, 2015 3:45 pm
by Browser
For those of us who missed the train when it pulled out the station after this thread was started, we can only hope this is the beginning of a freefall back to the future. I've got my cash reserves waiting (if I can remember where I put them). :D

Re: U.S. stocks in freefall

Posted: Mon Jan 05, 2015 4:00 pm
by Tom_T
Browser wrote:For those of us who missed the train when it pulled out the station after this thread was started, we can only hope this is the beginning of a freefall back to the future. I've got my cash reserves waiting (if I can remember where I put them). :D
Last month, the Dow dropped 900 points in two weeks, then rose 1000 in two weeks. It's getting hard to know when to jump on (or off) the train!

Re: U.S. stocks in freefall

Posted: Mon Jan 05, 2015 4:14 pm
by 22twain
Tom_T wrote:
Browser wrote:For those of us who missed the train when it pulled out the station after this thread was started, we can only hope this is the beginning of a freefall back to the future. I've got my cash reserves waiting (if I can remember where I put them). :D
Last month, the Dow dropped 900 points in two weeks, then rose 1000 in two weeks. It's getting hard to know when to jump on (or off) the train!
And before that, there was the dip in October. And before that, there was late July / early August. And before that, there was late January / early February almost a year ago. And before that...

Re: U.S. stocks in freefall

Posted: Mon Jan 05, 2015 4:44 pm
by Leeraar
Curses!

I fell afoul of the archaic transfer rules once again.

On 1/1/15 I scheduled a transfer from my checking account to my HSA. On 1/2/15 the money is gone from my checking account but not credited in my HSA. It is pending.

I tried to make investments in the HSA today, no can do. I called them. Answer? They have two business days after the next market close to credit me, so I can expect to have the funds available to me on Wednesday.

A pox on their houses.

L.

Re: U.S. stocks in freefall

Posted: Mon Jan 05, 2015 5:25 pm
by Browser
A Bear Market in Stocks Just Became More Likely

Bad news, investors: The Dow Industrials’ 300-plus-point drop Monday markedly increases the likelihood that the bull market has neared its end — if it hasn’t already.

That’s because the stock market’s performance in the first two trading days of January has a surprisingly good record of forecasting the direction for the next 12 months.
http://www.marketwatch.com/story/a-bear ... =afterbell

Wait for it....wait for it.... The train may be a'comin.

Re: U.S. stocks in freefall

Posted: Mon Jan 05, 2015 7:19 pm
by crg11
You would think that the decreasing oil prices would increase consumer spending in the U.S. and give many (non-energy) companies a shot in the arm. It'll be interesting to watch the next couple of months.

Re: U.S. stocks in freefall

Posted: Mon Jan 05, 2015 7:24 pm
by FedGuy
I was amused when I got home tonight, turned on the news at the beginning of the broadcast, and saw a bunch of worried-looking anchors reporting of a "bloodbath" in the markets, then adding that the Dow hasn't been this low in THREE WHOLE MONTHS.

Re: U.S. stocks in freefall

Posted: Tue Jan 06, 2015 11:35 am
by fanmail
Over 4% off the highs. Good time to fund the IRAs for 2015 if you have a long time frame.

Re: U.S. stocks in freefall

Posted: Tue Jan 06, 2015 11:53 am
by Imbros
Leeraar wrote:
Imbros wrote:Bump and my first ever post in this thread due to today's (at least) 1.5% fall.

Slightly OT:
I began my investment journey in 2008 and I have been pretty optimistic about both US and International markets all this time, until now. I just have this gut feeling that there is at least 15-20% correction about to happen sometime early this year. Anyone else have the same feeling? How long can a bull market last?
Here's an exercise for you:
Find some market total return data for every month since 1970. You save $100 per month, but you only invest your accumulated cash:
A) At the peak before a decline of at least 20%
OR:
B) At the bottom following a decline of at least 20%
OR:
C) Every month.
How much will you have in each of these three scenarios?
L.
I didn't do the math but I see your point. Thank you. :)

Routing my available funds to Roth IRA today.

Re: U.S. stocks in freefall

Posted: Tue Jan 06, 2015 12:07 pm
by Tom_T
Browser wrote:
A Bear Market in Stocks Just Became More Likely

Bad news, investors: The Dow Industrials’ 300-plus-point drop Monday markedly increases the likelihood that the bull market has neared its end — if it hasn’t already.

That’s because the stock market’s performance in the first two trading days of January has a surprisingly good record of forecasting the direction for the next 12 months.
http://www.marketwatch.com/story/a-bear ... =afterbell

Wait for it....wait for it.... The train may be a'comin.
His own statistics say that if the first two days is a loss, the Dow rises over the remainder of the year 51% of the time. That's in his article. So his entire premise is based on a coin flip?

Re: U.S. stocks in freefall

Posted: Tue Jan 06, 2015 12:13 pm
by dbCooperAir
What would thread be without some chart porn :wink:
Image
Across the pond does not look much better.
Image

Re: U.S. stocks in freefall

Posted: Tue Jan 06, 2015 1:09 pm
by Leeraar
Imbros wrote:
Leeraar wrote:Here's an exercise for you:
Find some market total return data for every month since 1970. You save $100 per month, but you only invest your accumulated cash:
A) At the peak before a decline of at least 20%
OR:
B) At the bottom following a decline of at least 20%
OR:
C) Every month.
How much will you have in each of these three scenarios?
L.
I didn't do the math but I see your point. Thank you. :)

Routing my available funds to Roth IRA today.
I didn't do it either, but B is not that much better than A. (Others have posted.)

I suspect that C is pretty good because of time in the market.

L.

Re: U.S. stocks in freefall

Posted: Tue Jan 06, 2015 1:14 pm
by chaz
Are we at a Black Swan?

Re: U.S. stocks in freefall

Posted: Tue Jan 06, 2015 1:33 pm
by Browser
Oh, gee. here we are at 1:30 Wall Street time and the DOW is down another 210 points on top of -330 yesterday. That's 540 points so far and the day isn't done! Have we established any criteria for a "freefall"?

Re: U.S. stocks in freefall

Posted: Tue Jan 06, 2015 1:46 pm
by VictoriaF
chaz wrote:Are we at a Black Swan?
Nope. We are not sufficiently surprised.

Victoria

Re: U.S. stocks in freefall

Posted: Tue Jan 06, 2015 1:47 pm
by VictoriaF
Browser wrote:Oh, gee. here we are at 1:30 Wall Street time and the DOW is down another 210 points on top of -330 yesterday. That's 540 points so far and the day isn't done! Have we established any criteria for a "freefall"?
In 1987, this would be a steep decline. But not in 2015.

Victoria

Re: U.S. stocks in freefall

Posted: Tue Jan 06, 2015 1:48 pm
by Angst
Browser wrote:Oh, gee. here we are at 1:30 Wall Street time and the DOW is down another 210 points on top of -330 yesterday. That's 540 points so far and the day isn't done! Have we established any criteria for a "freefall"?
No, not by a long shot.

For me, the criteria was defined in 1987. Today's 210 point drop would need to exceed 3500 points to approach that kind of territory. This is nothing. It's noise.

Re: U.S. stocks in freefall

Posted: Tue Jan 06, 2015 2:35 pm
by Browser
OK, are you suggesting a 3500 drop would define "freefall"? In one day? I think we need to be a little more specific. How much of a drop in one day or over a series of days (how many?) suffices to define a "freefall" in stock prices? Or is it like a "I'll know it when I see it, but I can't explain it" kind of thing?

Re: U.S. stocks in freefall

Posted: Tue Jan 06, 2015 2:53 pm
by basefifty
Tom_T wrote:
Browser wrote:
A Bear Market in Stocks Just Became More Likely

Bad news, investors: The Dow Industrials’ 300-plus-point drop Monday markedly increases the likelihood that the bull market has neared its end — if it hasn’t already.

That’s because the stock market’s performance in the first two trading days of January has a surprisingly good record of forecasting the direction for the next 12 months.
http://www.marketwatch.com/story/a-bear ... =afterbell

Wait for it....wait for it.... The train may be a'comin.
His own statistics say that if the first two days is a loss, the Dow rises over the remainder of the year 51% of the time. That's in his article. So his entire premise is based on a coin flip?

Articles like this one are complete nonsense. You'll notice that all of these financial articles use words like "might", "may", "often", "sometimes" which are basically meaningless. Or they use leading questions like "are we entering a bear market?"

If anyone actually knew what they were talking about they would make declarative statements like "the market will drop at least 10% this year". But of course that would make you accountable...

Re: U.S. stocks in freefall

Posted: Tue Jan 06, 2015 2:57 pm
by Clearly_Irrational
Browser wrote:Oh, gee. here we are at 1:30 Wall Street time and the DOW is down another 210 points on top of -330 yesterday. That's 540 points so far and the day isn't done! Have we established any criteria for a "freefall"?
Personally I'd use greater than four standard deviations as a minimum threshold that gives an expected frequency of 1 in 15787 assuming a normal distribution. (a somewhat iffy assumption but lets keep this simple) I pulled S&P 500 data from 1950 to present from Yahoo since it's easy to get.

For daily numbers that's a loss greater than 3.84%, with 46 recorded events.
For weekly numbers that's a loss greater than 8.11% with 8 recorded events.
For monthly numbers that's a loss greater than 15.91% with 2 recorded events.

Losses from yesterday to today are 2.35% for the SPY ETF (a reasonable and quick proxy for this purpose) so at this point I'd say no, we're not in "freefall". Believe me, in an actual freefall event you won't have to ask, it'll be plastered all over the news and the forum will explode with postings. For reference, the last "freefall" weekly event was 11/17/08, which followed two other bad weeks 10/06/08 & 09/29/08. So calm down, nothing much happening but regular noise. (so far)

Re: U.S. stocks in freefall

Posted: Tue Jan 06, 2015 2:57 pm
by nisiprius
I'll know it when I see it. Let me see... do I see it?

Source: BigCharts
Image

Tell me again, what am I supposed to be seeing? Oh, sure, I see it--that thing in 2011. No? Not that?

Re: U.S. stocks in freefall

Posted: Tue Jan 06, 2015 2:59 pm
by VictoriaF
basefifty wrote:You'll notice that all of these financial articles use words like "might", "may", "often", "sometimes" which are basically meaningless.
It's another way of hedging.

Victoria

Re: U.S. stocks in freefall

Posted: Tue Jan 06, 2015 3:09 pm
by surfstar
fanmail wrote:Over 4% off the highs. Good time to fund the IRAs for 2015 if you have a long time frame.
Went "all in" with my 2015 Roth today :)
Glad that I was snowboarding last weekend and didn't try to buy on 1/2/15 - I love sales!

Re: U.S. stocks in freefall

Posted: Tue Jan 06, 2015 3:16 pm
by basefifty
GingerU wrote:I'm curious also about this freefall today. I had planned to buy some ETFs today (ITOT and AGG) but seeing the declines I'm wondering if I should wait to see if things go lower. I'm not a fan of timing the market as I have learned thru this forum but would it be reckless for me to invest now?

Unless you have a very specific reason to wait, such as "tomorrow the internet will stop working causing a global crash", or "tomorrow the Fed will raise their rates to 5%", then there is no reason to wait. You cannot time the market. You have no idea what will happen in the next hour, day, week, month or year.

If you are buying equities your timeframe should be at least 10 years. Anyone who funds their Roth IRA ($5,500) by perfectly timing a 2% dip in the market, and with a 30-year timeframe, is literally saving a few pennies per day! You will find more money lying on the ground when you walk home from work

Re: U.S. stocks in freefall

Posted: Tue Jan 06, 2015 3:17 pm
by tigermilk
Thoughts on Vanguard's energy sector fund? I'm keeping an eye on that one. Closed at $51.35 Monday and still heading down. It's the lowest it's been since 2009. If it hits $40, it may be time to stock up! Did not fund my Roth yet, but have been loading up the last 2 days on my taxable account.

Re: U.S. stocks in freefall

Posted: Tue Jan 06, 2015 3:46 pm
by Clearly_Irrational
GingerU wrote:I'm curious also about this freefall today. I had planned to buy some ETFs today (ITOT and AGG) but seeing the declines I'm wondering if I should wait to see if things go lower. I'm not a fan of timing the market as I have learned thru this forum but would it be reckless for me to invest now?
You're wasting your time for the most part. The results from picking one day over the other are fairly small for any sort of regular contribution. I know how and I still don't bother, pick a regular schedule and stick with it, the statistics will work in your favor over the long run. That said, if you insist on trying then here is my forecast:

1) Signals are weak, forecasting accuracy will be mediocre
2) RSI is low but not oversold
3) Bollinger bands are widening and the price move is not yet touching the bottom boundary
4) No 50/200 SMA cross
5) Japanese candlesticks suggest a weakening trend
6) Volume is rising
7) MACD Divergence is widening
8) Chaikin Money Flow is negative and still trending downwards
9) No new P&F pattern, target is still bullish
10) Resistance level at 1972 on the S&P 500

The highest probability is to wait a bit, we're probably not done with the current pullback. Later this week is likely the optimum time, perhaps Friday or thereabouts.

Re: U.S. stocks in freefall

Posted: Tue Jan 06, 2015 3:49 pm
by Angst
Browser wrote:OK, are you suggesting a 3500 drop would define "freefall"? In one day? I think we need to be a little more specific. How much of a drop in one day or over a series of days (how many?) suffices to define a "freefall" in stock prices? Or is it like a "I'll know it when I see it, but I can't explain it" kind of thing?
Yeah, I guess it's more like "I'll know it when I see it". I think I could define it fairly well if I tried (The Dow was down something like 20% in 1987, roughly = 3500 today) but it would require specifying context and I'm not sure it's worth the trouble or even makes a lot of sense to do. Still of course one could define a point, a "freefall", in which they'd implement a plan B, but I don't have a plan B, and I really don't want one. So it wouldn't affect my allocation plan, and in 1987 I didn't sell anything - actually I bought, although I didn't have a lot of cash at the time to buy with. Anyhow, the notion that 330 points yesterday and 210 today constitutes anything close to a "freefall" doesn't require any calculation for me to dispute. "I'll know it's not, when I see it's not" is also good enough for me! Maybe it's just one of those perks of having been around for a long time. :)