I love the smell of fear in the markets

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patnmary
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I love the smell of fear in the markets

Post by patnmary » Mon Jun 24, 2013 7:39 am

does anyone else get giddy when the news on the the markets is bad?

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Re: I love the smell of fear in the markets

Post by richard » Mon Jun 24, 2013 7:44 am

Irrational fear can mean buying at a good price. Rational fear can mean future returns will be lower.

Which is it today?

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Re: I love the smell of fear in the markets

Post by Sidney » Mon Jun 24, 2013 7:47 am

my equity account is up about 10% for the year and probably 25% in the last 12 months. I don't smell much.
I always wanted to be a procrastinator.

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Re: I love the smell of fear in the markets

Post by Dandy » Mon Jun 24, 2013 8:09 am

It is a buying opportunity for some and a time of anguish for many. I like the buying opportunity but don't like the anguish it causes many. A time to make prudent moves but no celebration here.

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InvestorNewb
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Re: I love the smell of fear in the markets

Post by InvestorNewb » Mon Jun 24, 2013 8:15 am

I don't really count a 5-10% drop as a buying opportunity. We're just back to the prices we were at 6 months ago.
My Portfolio: VTI [US], VXUS [Int'l], VNQ [REIT], VCN [Canada] (largest to smallest)

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Re: I love the smell of fear in the markets

Post by Valuethinker » Mon Jun 24, 2013 8:28 am

patnmary wrote:does anyone else get giddy when the news on the the markets is bad?
Having lived through those -40% down markets, no. It doesn't feel like we are going to come back -40% this time, but one does remember the cold days of buying and then watching things go down, down and down.

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Re: I love the smell of fear in the markets

Post by Sheepdog » Mon Jun 24, 2013 8:36 am

Giddy? Never. Too many people, many innocent, suffer real losses.
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Re: I love the smell of fear in the markets

Post by IlliniDave » Mon Jun 24, 2013 8:37 am

patnmary wrote:does anyone else get giddy when the news on the the markets is bad?
Yep. It usually means there's risk in the air and that's what we get paid for. Might be things are about to get "fun". (said with a certain amount of sarcasm)
Don't do something. Just stand there!

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Re: I love the smell of fear in the markets

Post by tadamsmar » Mon Jun 24, 2013 8:42 am

patnmary wrote:does anyone else get giddy when the news on the the markets is bad?
"Man is a giddy, flighty thing, that's my conclusion" - Much Ado About Nothing

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Re: I love the smell of fear in the markets

Post by Gleevec » Mon Jun 24, 2013 8:47 am

I dont understand the logic on bogleheads sometimes.

If the premise is, create an appropriate asset allocation based on age/tax/personality and stick with it-- then why are people cheering now?

It seems there is a unilateral bias on this forum to tell people to "stay the course" when they want to sell in a downturn, but when people want to buy during a downturn (which people celebrate Buffett for) it is cheered. But isnt the philosophy stay the course?

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Re: I love the smell of fear in the markets

Post by nisiprius » Mon Jun 24, 2013 8:54 am

patnmary wrote:does anyone else get giddy when the news on the the markets is bad?
No, I do not. I lost my job in October of 2008 when my employer's business dropped 70% month-over-month. And it was a manufacturing business, not anything financial or market-related. ("Your job is a bond" my foot. My bonds coasted straight through 2008-2009, my so-called "human capital" went to zero). When the news on the markets is really bad it is usually because other news about the economy is bad, too.

I am not sure just how smelly the fear is or should be right now--

Image

Incidentally, I hope everyone recognizes that "the smell of fear" is not a figure of speech. I have been fortunate never to be in any situation where anything important was really at stake, but I worked at one time at a Fortune 500 company that was having periodic layoffs, and have experienced the situation of having the elevator doors open on a floor where a layoff was in progress and being hit instantly by a strong whiff of a sort of armpit odor. It smells different from other kinds of armpit odor. Probably the easiest way to recognize it as the odor of fear is that one's instinctive reaction to it is to get scared. It's not something one would put into perfume, even in small amounts.

No, I do not care for the smell of fear, thank you very much.
Last edited by nisiprius on Mon Jun 24, 2013 9:03 am, edited 4 times in total.
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Re: I love the smell of fear in the markets

Post by mhc » Mon Jun 24, 2013 8:56 am

Gleevec wrote:I dont understand the logic on bogleheads sometimes.

If the premise is, create an appropriate asset allocation based on age/tax/personality and stick with it-- then why are people cheering now?

It seems there is a unilateral bias on this forum to tell people to "stay the course" when they want to sell in a downturn, but when people want to buy during a downturn (which people celebrate Buffett for) it is cheered. But isnt the philosophy stay the course?
Yes, the philosophy is to stay the course and tune out the noise. There is a lot of noise right now. I use the noise as an indicator to see if I need to re-balance or TLH. Otherwise, the noise is just noise.

On the radio this morning, they said the S&P500 was up 12% for the year. That is noise too because there really isn't any actionable information in it.

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Re: I love the smell of fear in the markets

Post by FNK » Mon Jun 24, 2013 9:19 am

We're giving ourselves the pep talk. If you follow an AA, when things fall you have to buy and you need to overcome the irrational fears.

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Re: I love the smell of fear in the markets

Post by cheese_breath » Mon Jun 24, 2013 9:21 am

Sheepdog wrote:Giddy? Never. Too many people, many innocent, suffer real losses.
+1 Excellent comment Sheep.
The surest way to know the future is when it becomes the past.

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Re: I love the smell of fear in the markets

Post by cheese_breath » Mon Jun 24, 2013 9:27 am

I get emotional whichever way the market moves, just different emotions for different directions. But I've learned not to let my emotions drive my investment decisions. Right now I'm still within my intended AA bands so I'm standing pat.
The surest way to know the future is when it becomes the past.

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Re: I love the smell of fear in the markets

Post by FafnerMorell » Mon Jun 24, 2013 9:45 am

It's all my fault - I bought in May rather than selling like I should have.

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Re: I love the smell of fear in the markets

Post by PacNorWest » Mon Jun 24, 2013 11:53 am

Fear, especially irrational fear, is an emotion.
An emotional driven fear can be contagious with resultant panic stampede.
No, I don't like it. It's not good for anyone, anytime.

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Re: I love the smell of fear in the markets

Post by Grt2bOutdoors » Mon Jun 24, 2013 11:57 am

patnmary wrote:does anyone else get giddy when the news on the the markets is bad?
Those who relish other's misfortune have much bigger problems than they realize.
"One should invest based on their need, ability and willingness to take risk - Larry Swedroe" Asking Portfolio Questions

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Re: I love the smell of fear in the markets

Post by ge1 » Mon Jun 24, 2013 1:15 pm

Grt2bOutdoors wrote:
patnmary wrote:does anyone else get giddy when the news on the the markets is bad?
Those who relish other's misfortune have much bigger problems than they realize.
C'mon guys, these comments are getting a bit much. I would argue a falling market is better as you can reinvest at lower prices. And everybody who relies on the income from their bonds in retirement should be glad about the increase in interest rates, maybe one day a savings account will again pay a decent rate.

Also, I don't think the real economy had much to do with the recent run up in asset prices and at the same token, hopefully a decrease in asset prices won't hurt the real economy much either.

So to answer the OP, yes I'm slowly getting giddy. Long way to go though, especially for US equities.

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Re: I love the smell of fear in the markets

Post by gerrym51 » Mon Jun 24, 2013 1:30 pm

it's my fear i worry about. :mrgreen:

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Toons
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Re: I love the smell of fear in the markets

Post by Toons » Mon Jun 24, 2013 1:36 pm

The market gyrations are hardly anything new under the sun,relax ,enjoy the day,don't pay attention to "noise" :happy
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Re: I love the smell of fear in the markets

Post by bengal22 » Mon Jun 24, 2013 1:45 pm

nisiprius wrote:
patnmary wrote:does anyone else get giddy when the news on the the markets is bad?
No, I do not. I lost my job in October of 2008 when my employer's business dropped 70% month-over-month. And it was a manufacturing business, not anything financial or market-related. ("Your job is a bond" my foot. My bonds coasted straight through 2008-2009, my so-called "human capital" went to zero). When the news on the markets is really bad it is usually because other news about the economy is bad, too.

I am not sure just how smelly the fear is or should be right now--

Image

Incidentally, I hope everyone recognizes that "the smell of fear" is not a figure of speech. I have been fortunate never to be in any situation where anything important was really at stake, but I worked at one time at a Fortune 500 company that was having periodic layoffs, and have experienced the situation of having the elevator doors open on a floor where a layoff was in progress and being hit instantly by a strong whiff of a sort of armpit odor. It smells different from other kinds of armpit odor. Probably the easiest way to recognize it as the odor of fear is that one's instinctive reaction to it is to get scared. It's not something one would put into perfume, even in small amounts.

No, I do not care for the smell of fear, thank you very much.

I agree 100%! There seems to be a lack of understanding that the "market" is an accurate reflection of the state of our economy(both U.S. and globally). A true market downturn typically precedes an economic downturn by 8-10 months. The "market" is not some stand alone entity that is similar to a big gaming wheel. I too was in a manufacturing environment that, already troubled, went through a catastrophic period where jobs and pensions were lost. Unless you are in a recession proof industry, such as a member of the Rolling Stones or a utility infielder for the New Yuck Yankees, you don't want an economic downturn or a real market drop. Even if you are in the accumulation part of your life. So maybe this is noise, and normal correction/flucuation, but lets not hope for a downturn please.
"Earn All You Can; Give All You Can; Save All You Can." .... John Wesley

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Re: I love the smell of fear in the markets

Post by madsinger » Mon Jun 24, 2013 2:14 pm

Due to the relatively strong performance in stocks and weak performance in bonds YTD through mid-May, I was nearing my re-balancing bands (to sell my stocks and buy some bonds), but did not quite reach that point. Now, after the past month, I'm closer to my target allocation, but my stocks are still "high" and bonds "low". On the one hand, I could "take advantage" of this buying opportunity, but looking at my AA, if I were to rebalance now, it would mean selling stocks, not buying.

So, no giddiness. No emotional response at all to the market. And, that is just the way I want it.

-Brad.

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Re: I love the smell of fear in the markets

Post by Tom_T » Mon Jun 24, 2013 2:15 pm

InvestorNewb wrote:I don't really count a 5-10% drop as a buying opportunity. We're just back to the prices we were at 6 months ago.
Six months ago? Try two months ago. :)

The Dow is actually off four percent from its high of the year. The sky hasn't fallen on me yet.

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Re: I love the smell of fear in the markets

Post by jeffyscott » Mon Jun 24, 2013 4:31 pm

Fear :?: pfffft this isn't fear, go back to 2008-09, that's when there was (well founded) fear.
press on, regardless - John C. Bogle

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Re: I love the smell of fear in the markets

Post by jebmke » Mon Jun 24, 2013 4:42 pm

jeffyscott wrote:Fear :?: pfffft this isn't fear, go back to 2008-09, that's when there was (well founded) fear.
October, 1987. We stayed off the sidewalks in the financial district (Boston) just in case someone jumped.
When you discover that you are riding a dead horse, the best strategy is to dismount.

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Re: I love the smell of fear in the markets

Post by cheese_breath » Mon Jun 24, 2013 4:43 pm

"let me assert my firm belief that the only thing we have to fear is fear itself"

Franklin Delano Roosevelt
The surest way to know the future is when it becomes the past.

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Re: I love the smell of fear in the markets

Post by harikaried » Mon Jun 24, 2013 4:50 pm

Tom_T wrote:
InvestorNewb wrote:We're just back to the prices we were at 6 months ago.
Six months ago? Try two months ago. :)
Curious, is there a simple tool to find when a stock last closed lower than some price?

Doing some rough resizing of charts:

BND last closed under $79.95 around mid-April 2011
VXUS last closed under $44.34 around mid-November 2012
VTI last closed under $80.92 around mid-April 2013

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Re: I love the smell of fear in the markets

Post by tom0153 » Thu Jun 27, 2013 12:35 pm

nisiprius wrote:
patnmary wrote:does anyone else get giddy when the news on the the markets is bad?
No, I do not. I lost my job in October of 2008 when my employer's business dropped 70% month-over-month. And it was a manufacturing business, not anything financial or market-related. ("Your job is a bond" my foot. My bonds coasted straight through 2008-2009, my so-called "human capital" went to zero). When the news on the markets is really bad it is usually because other news about the economy is bad, too.

I am not sure just how smelly the fear is or should be right now--

Image

Incidentally, I hope everyone recognizes that "the smell of fear" is not a figure of speech. I have been fortunate never to be in any situation where anything important was really at stake, but I worked at one time at a Fortune 500 company that was having periodic layoffs, and have experienced the situation of having the elevator doors open on a floor where a layoff was in progress and being hit instantly by a strong whiff of a sort of armpit odor. It smells different from other kinds of armpit odor. Probably the easiest way to recognize it as the odor of fear is that one's instinctive reaction to it is to get scared. It's not something one would put into perfume, even in small amounts.

No, I do not care for the smell of fear, thank you very much.
I have admired your posts (like this one). I hope you have landed in a good place.
Best, Tom

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Re: I love the smell of fear in the markets

Post by Valuethinker » Fri Jun 28, 2013 4:48 am

jebmke wrote:
jeffyscott wrote:Fear :?: pfffft this isn't fear, go back to 2008-09, that's when there was (well founded) fear.
October, 1987. We stayed off the sidewalks in the financial district (Boston) just in case someone jumped.
And that was an easy one, in retrospect. Markets finished the year up.

The average bear market I remember reading, lasts 18 months. And there have been *12 year* bear markets. In fact, I suspect we are in the middle of 20 year bear market that began in 2000.

It's the grinding bears that hit hard. Then you smell real fear.

I know what a city in fear feels like. On 6th July 2005 London won the 2012 Olympic Games. On 7th July 2005 4 young men armed with home made bombs detonated themselves on 3 Tube trains and one bus. 57 people died, many more were grievously injured.

All public transport was shut down for the next 18 hours. People wandered around in shock looking for accomodation-- there was the wreck of a bus that claimed 13 lives on the square I walked across. American newspapers seized upon 'the British stiff upper lip' and 'the Blitz spirit' but I was there-- it was shock, not courage.

For days after people avoided the top decks of buses-- the last bomber, unable to get onto his target Tube train (shut down due to the earlier detonations) detonated himself on a diverted Number 30 bus. 6 weeks later the Picaddilly Line reopened, and I had a private carriage to myself (the first one, the one that was blown up) to work on the first day. If a dark skinned man with a backpack got on public transport, people stared at him, for the next few weeks.

People sat in pubs and bars drinking, laughing, talking. I followed 2 big South African blokes up the street as they were joking and giggling at the sight of the damaged bus.

The next day the London police in plainclothes would chase a Brasilian electrician onto the Tube, hold his head to the ground, and shoot him full of bullets. A case of mistaken identity and panic by the police.

That's what fear feels like. That sense of shock, and of irrational acts.
Last edited by Valuethinker on Fri Jun 28, 2013 4:52 am, edited 1 time in total.

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Re: I love the smell of fear in the markets

Post by Valuethinker » Fri Jun 28, 2013 4:51 am

nisiprius wrote: Incidentally, I hope everyone recognizes that "the smell of fear" is not a figure of speech. I have been fortunate never to be in any situation where anything important was really at stake, but I worked at one time at a Fortune 500 company that was having periodic layoffs, and have experienced the situation of having the elevator doors open on a floor where a layoff was in progress and being hit instantly by a strong whiff of a sort of armpit odor. It smells different from other kinds of armpit odor. Probably the easiest way to recognize it as the odor of fear is that one's instinctive reaction to it is to get scared. It's not something one would put into perfume, even in small amounts.

No, I do not care for the smell of fear, thank you very much.
They used to do layoffs every Thursday afternoon, with the big hit before Christmas (so year end bonuses were not paid).

Everyone used to sit around from about 9am waiting for the call into the director's office.

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Re: I love the smell of fear in the markets

Post by SPG8 » Fri Jun 28, 2013 6:32 am

tom0153 wrote:
nisiprius wrote:
patnmary wrote:does anyone else get giddy when the news on the the markets is bad?
No, I do not. I lost my job in October of 2008 when my employer's business dropped 70% month-over-month. And it was a manufacturing business, not anything financial or market-related. ("Your job is a bond" my foot. My bonds coasted straight through 2008-2009, my so-called "human capital" went to zero). When the news on the markets is really bad it is usually because other news about the economy is bad, too.

I am not sure just how smelly the fear is or should be right now--

Image

Incidentally, I hope everyone recognizes that "the smell of fear" is not a figure of speech. I have been fortunate never to be in any situation where anything important was really at stake, but I worked at one time at a Fortune 500 company that was having periodic layoffs, and have experienced the situation of having the elevator doors open on a floor where a layoff was in progress and being hit instantly by a strong whiff of a sort of armpit odor. It smells different from other kinds of armpit odor. Probably the easiest way to recognize it as the odor of fear is that one's instinctive reaction to it is to get scared. It's not something one would put into perfume, even in small amounts.

No, I do not care for the smell of fear, thank you very much.
I have admired your posts (like this one). I hope you have landed in a good place.
+1

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Re: I love the smell of fear in the markets

Post by TTU » Fri Jun 28, 2013 7:17 am

Its ok to be excited about an investment opportunity. Just because you are looking forward to future returns doesn't mean you like people getting fired or your grandparents retirement savings getting wiped out. They aren't one and the same.

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Re: I love the smell of fear in the markets

Post by sschullo » Fri Jun 28, 2013 8:00 am

I like the smell of greed better. :D
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Re: I love the smell of fear in the markets

Post by madsinger » Fri Jul 12, 2013 5:29 pm

madsinger wrote:Due to the relatively strong performance in stocks and weak performance in bonds YTD through mid-May, I was nearing my re-balancing bands (to sell my stocks and buy some bonds), but did not quite reach that point. Now, after the past month, I'm closer to my target allocation, but my stocks are still "high" and bonds "low". On the one hand, I could "take advantage" of this buying opportunity, but looking at my AA, if I were to rebalance now, it would mean selling stocks, not buying.

So, no giddiness. No emotional response at all to the market. And, that is just the way I want it.

-Brad.
After the "fear in the markets" post from last month (heck, two weeks ago...), I smiled as I rebalanced out of US stocks and into EM stocks and bonds today. I suppose I could have "made more money" if I had bought stocks two weeks ago, but as I noted then, I was still "over weight" in US stocks then. Now, after quite a run-up in July, my bond and EM bands were hit, and I rebalanced today.

so...as I said a few weeks ago...
madsinger wrote:So, no giddiness. No emotional response at all to the market. And, that is just the way I want it.

-Brad.

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