Which crash have you seen it before it is coming?

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Veiled
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Re: Which crash have you seen it before it is coming?

Post by Veiled » Sat Dec 02, 2017 1:03 pm

BogleMelon wrote:
Wed Nov 29, 2017 4:18 pm
Is there any wise bogle's who have seen or even felt any of the previous crashes coming? And if so, what makes you feel that "something is not right here", and have you done anything about it?
I've been reading through old threads from 2007-2008 and it strikes me that crashes are very difficult to predict, or even recognize once they start brewing. There was one thread on foreclosures increasing in Q3 of 2007, a few on the ridiculous the inflation of RE prices, and one on the yield curve...but that was about it. I think it takes a lot of time watching various asset classes and some knowledge about psychology and risk assessment, which I don't know that many have.
Pardon me as I read these one hundred and fifty-seven SP vs LLC vs Scorp threads...

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Abe
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Re: Which crash have you seen it before it is coming?

Post by Abe » Sat Dec 02, 2017 1:07 pm

I wouldn't say I saw a crash coming, but I knew there was something bad happening prior to 2008 with the housing bubble and banks making home loans to anyone who walked in the door.
It turned out that it was worse than I ever imagined. I didn't do anything. I just rode it out. Now I'm glad I did.
Slow and steady wins the race.

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Re: Which crash have you seen it before it is coming?

Post by technovelist » Sat Dec 02, 2017 1:08 pm

Valuethinker wrote:
Sat Dec 02, 2017 12:49 pm
technovelist wrote:
Sat Dec 02, 2017 12:26 pm
Ged wrote:
Sat Dec 02, 2017 11:29 am
It isn't hard to see a crash coming. Both the tech and housing crashes were the obvious result of clearly irrational financial activity. Are we at that point now?? I don't see the same craziness yet.
I'm not sure about tech, but I believe the housing market is even more insane than it was in 2007. Apparently you can borrow 100% of the property value pretty easily. Also, prices were already back at all-time highs as of about 18 months ago (https://www.realtor.com/news/real-estat ... -may-2016/).
The home lenders should be in a lot better financial position and the securitization has been a lot less rabid. There is not (to any great extent) so much apparent rapacious "create it and flog it" around Mortgage Backed Securities.

Whilst there have been spikes, I suspect most homeowners are not as leveraged. Inflation since 2008 means real housing prices are generally still lower than the 2006 peaks, I believe?

There is a sub prime car loan bubble, but its scale is much much smaller.

US Commercial RE markets are probably over valued, and there's a lot of debt which is distressed (or will be) around shopping malls in particular.

None of these markets is on the same scale of hurt that a US housing crash caused the last time.

If there is a crash out there, it's probably something that we don't see coming-- geopolitical disruption for example. We all seem to be fairly sanguine about the proxy war between Iran and Saudi Arabia which keeps escalating, for example.

Meanwhile, I am buying bitcoin as the perfect financial hedge ;-).
How about the student loan bubble? The loans that are not being paid as originally agreed are in the hundreds of billions of dollars.
In theory, theory and practice are identical. In practice, they often differ.

ANC
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Re: Which crash have you seen it before it is coming?

Post by ANC » Sat Dec 02, 2017 1:09 pm

1. Gold hitting $850 in early 1980
2. The tech bubble, while working in Silicon Valley

I do not invest in gold or short positions, so the only thing I did was on 2, where I titled towards (active) funds light on tech (several years early in hindsight) and bought some long-term zero coupon Treasuries at over 7% yield to maturity.

2pedals
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Re: Which crash have you seen it before it is coming?

Post by 2pedals » Sat Dec 02, 2017 1:34 pm

Looking back at all of my investing years 30+, I did not really predict anything well at all. I had some wins and then big losses in 2007-2008. I spent a lot of time worrying about crashes. I wish I learned to stay the course at a young age because nobody knows nothing. I tended to worry too much about big drops. Predictions can be very harmful in the long run, if you are too worried about the next crash. What about all of lost gains from market run-ups? How many people talk about missing out on market gains because they were out of the market? Who tracks and talks about that?

Dandy
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Re: Which crash have you seen it before it is coming?

Post by Dandy » Sat Dec 02, 2017 3:15 pm

I just remembered the stock around the year 2000 my CD only mother in law wanted to buy and sell in 9 months. AOL!!

anoop
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Re: Which crash have you seen it before it is coming?

Post by anoop » Sat Dec 02, 2017 3:34 pm

I saw the real-estate bubble and avoided buying in early 2004. Instead waited till 2015 to buy! I knew when house prices were at the bottom because of Calculated Risk, but I couldn't buy then because I wasn't willing to move super quick -- buy a house unseen for cash, which is what was going on at that time. I decided instead to wait and find a house I like.

Unfortunately, I also pulled out of stocks in early 2008 (great timing) and never got back in. I wanted to get back in when the S&P500 was around 1000, but I stayed out because I was reading too many gloom-and-doom blogs by then--A big mistake that I am paying for even now, since I am still out of the market.

So I'd say, overall, I have "lost" money (a lot actually) from my foresight, but I have slept well. :)

Right now, my feeling is that we will have a big crash at some point, but we are a few years away. Basically the fed will raise rates ever so slowly and withdraw stimulus (they are making statements about how asset prices are too high already) hoping to engineer a gentle landing, but it won't work out that way with asset prices continuing to inflate, and eventually we will hit a point where the "straw breaks the camels back". This prediction will change if there are policy changes out of Washington, but given what I have seen of the healthcare and tax bills, I see that as very unlikely.

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alpine_boglehead
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Re: Which crash have you seen it before it is coming?

Post by alpine_boglehead » Sat Dec 02, 2017 4:37 pm

Valuethinker wrote:
Sat Dec 02, 2017 12:54 pm
Dandy wrote:
Sat Dec 02, 2017 8:07 am
We are in a nice long bull market which makes people more open to equities and higher allocations. Seem to see a lot of posts where aggressive allocations seem the norm even close to or in retirement. People worrying if the cut back from 70 or 80% to 60% they will lose out on growth. (less concern about asset depletion, lower human capital, etc).

That is what a nice long bull market does -- it subtly changes your confidence and dulls your risk tolerance. You start seeing the size of your next egg as kind of stable vs knowing that the equity portion can drop dramatically and will do so once or twice in a long retirement. The US economy is doing well so the tail wind may last awhile. I see the bull market affecting my thinking and it is hard to fight it. I like seeing my assets going upward vs putting more money in lowly fixed income pay a few percent at best. :oops:
This should be printed & stuck on the wall of every investor.
this. I feel it too. Thanks for the reminder. The fear of missing out on further gains begins to overshadow the usual caution. Even more so here in Europe where the interest rates are painfully lower (1 year US treasury seem to be at 1.6%, 1 year German Bunds at -0,7%). It also reflects in the "mood" around here - too often I read nowadays "if you want any return at all, go into stocks" (uh, oh, the herd is gaining momentum - says the contrarian in me).

I did have some sense of something coming (can't say anymore exactly why) so I dialed back on contributions in late 2006 (and ramped them up again in late 2008). Maybe just luck, things might have been different.

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Re: Which crash have you seen it before it is coming?

Post by iasw » Sat Dec 02, 2017 8:12 pm

I have concern about household consumer debt -- credit card debt is at a high, and auto loans can be had for 7 years of payments. Whaaaat. Whether this leads to anything in the market, I don't know.

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Re: Which crash have you seen it before it is coming?

Post by iasw » Sat Dec 02, 2017 8:35 pm

[/quote]

How about the student loan bubble? The loans that are not being paid as originally agreed are in the hundreds of billions of dollars.
[/quote]

Yes! Not sure what the fallout will be with this. But it is going to be bad. Oh heck, are student loans packaged up as securities for investors?? Yet?

TheAncientOne
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Re: Which crash have you seen it before it is coming?

Post by TheAncientOne » Sat Dec 02, 2017 8:56 pm

I have a friend who went to work for a hedge fund in 2003 or 04. His first day there, the general partner had a meeting to discuss how the fund could best play what the partner saw as a bubble in housing prices. Not only was he way early, they misplayed how to invest on that theory and the fund went down 60% before it shut down.

As Warren Buffett has said of Noah, "Making weather predictions doesn't count. Only building an ark in time matters."

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Re: Which crash have you seen it before it is coming?

Post by technovelist » Sat Dec 02, 2017 9:21 pm

iasw wrote:
Sat Dec 02, 2017 8:35 pm
technovelist wrote:
Sat Dec 02, 2017 12:26 pm
How about the student loan bubble? The loans that are not being paid as originally agreed are in the hundreds of billions of dollars.
Yes! Not sure what the fallout will be with this. But it is going to be bad. Oh heck, are student loans packaged up as securities for investors?? Yet?
Yes, they certainly are: https://www.morningstar.com/news/pr-new ... -date.html
In theory, theory and practice are identical. In practice, they often differ.

iasw
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Re: Which crash have you seen it before it is coming?

Post by iasw » Sun Dec 03, 2017 9:34 am

technovelist wrote:
Sat Dec 02, 2017 9:21 pm
iasw wrote:
Sat Dec 02, 2017 8:35 pm
technovelist wrote:
Sat Dec 02, 2017 12:26 pm
How about the student loan bubble? The loans that are not being paid as originally agreed are in the hundreds of billions of dollars.
Yes! Not sure what the fallout will be with this. But it is going to be bad. Oh heck, are student loans packaged up as securities for investors?? Yet?
Yes, they certainly are: https://www.morningstar.com/news/pr-new ... -date.html
Oh. No. This won't end well.

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Ged
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Re: Which crash have you seen it before it is coming?

Post by Ged » Sun Dec 03, 2017 9:54 am

technovelist wrote:
Sat Dec 02, 2017 9:21 pm
How about the student loan bubble? The loans that are not being paid as originally agreed are in the hundreds of billions of dollars.
iasw wrote:
Sat Dec 02, 2017 8:35 pm
Yes! Not sure what the fallout will be with this. But it is going to be bad. Oh heck, are student loans packaged up as securities for investors?? Yet?
Total student loan debt is quite a bit smaller than housing debt - 1T vs 15T. Corporate debt is the elephant in the room at about 29T. I would be conservative in choosing what corporate debt instruments I have in my portfolio.

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Re: Which crash have you seen it before it is coming?

Post by technovelist » Sun Dec 03, 2017 10:57 am

Ged wrote:
Sun Dec 03, 2017 9:54 am
technovelist wrote:
Sat Dec 02, 2017 9:21 pm
How about the student loan bubble? The loans that are not being paid as originally agreed are in the hundreds of billions of dollars.
iasw wrote:
Sat Dec 02, 2017 8:35 pm
Yes! Not sure what the fallout will be with this. But it is going to be bad. Oh heck, are student loans packaged up as securities for investors?? Yet?
Total student loan debt is quite a bit smaller than housing debt - 1T vs 15T. Corporate debt is the elephant in the room at about 29T. I would be conservative in choosing what corporate debt instruments I have in my portfolio.
"A trillion here, a trillion there; pretty soon we're talking about real money." (quote modified for today's financial system)
In theory, theory and practice are identical. In practice, they often differ.

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Garco
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Re: Which crash have you seen it before it is coming?

Post by Garco » Sun Dec 03, 2017 11:46 am

OK, get ready. THERE WILL BE ANOTHER CRASH. The main question is "When?" Another question is "How severe and for how long?" A related question is "Will the crash be associated with widespread unemployment?"

For me, as a retiree, unemployment doesn't affect me directly but it could well affect my kids and my neighbors. In the case of my kids, I would support them as much as I reasonably could.

But my main response to the next crash is that my investment portfolio is much more conservative than it was 10 or 20 or 30 years ago. While I was working, there was little risk that I'd lose my job even during a recession (proof? I never lost my job in the ~40 years I held full-time employment from the early 1970's.)

But since I'm now living on what's called "fixed income" (which really isn't fixed), I have certain safe havens including Social Security, cash, a moderately conservative allocation in my retirement funds, a completely paid-for home, and enough of a nestegg that I could survive a "normal" recession without permanent impairment of my income or lifestyle.

MathWizard
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Re: Which crash have you seen it before it is coming?

Post by MathWizard » Sun Dec 03, 2017 12:02 pm

HomerJ wrote:
Wed Nov 29, 2017 4:25 pm
I completely saw the 2008 housing crash coming, but had no idea when it would happen or how to profit off my knowledge.

I also felt it wouldn't really affect me, since I already owned a house. Boy was I wrong about that!
+1

My wife and I had EXACTLY the same thoughts.

We knew a day of reckoning was coming in housing, and knew all the mortgages and refi's were being sold,
we knew about liar loans, and derivatives (from the LTCM debacle), but did not know about the CDO's, and
the Credit Default SWAPs that spread the risk well beyond the housing market.

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BuyAndHoldOn
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Re: Which crash have you seen it before it is coming?

Post by BuyAndHoldOn » Sun Dec 03, 2017 6:14 pm

For those who didn't connect the Housing Bubble (2007 into 2008 crash) to the Financial Crisis: I don't blame you. You would *also* have to have known that the "CDOs" containing subprime mortgages, along with other types of illiquid assets, were being used to *create* tremendous liquidity and leverage throughout the financial system.

I don't know if everything is worded or explained properly, but this [paper below] is the best explanation I have found for that phenomenon.
http://www.zerohedge.com/sites/default/ ... broken.pdf

For whenever the link stops working, the title is: "Are the Brokers Broken" by Matt King of Citigroup (Who still works there, I believe).

HenrysPlan2
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Re: Which crash have you seen it before it is coming?

Post by HenrysPlan2 » Sun Dec 03, 2017 11:16 pm

Portfolio7 wrote:
Wed Nov 29, 2017 6:35 pm
Hmm. This may sound self serving, but it is what it is. In any case, I'm not wise, maybe got a bit lucky and borrowed some decent insights.

In Jan of 2000 I was convinced it was a matter of time before the market took a big dive. In particular there were multiple articles discussing the valuation issues with respect to dot.com stocks. It was pretty clearly frothy, but I don't know why I felt ok in 1998/9, and not in 2000. I make financial forecasts for a living, including some commodity prices & some business activity; maybe I'm sensitive to data I don't realize I'm picking up. However, I had no idea really what to do or to what extent. I believe in probabilities, not binary certainties, so I'm not one to just sell all my equities. I just held on tight and kept plowing money into savings. It was very painful to keep contributing and watch it keep falling. I was determined to do something in the next crash. I really started my financial education then, though it was haphazard.

In 2007, (and still haphazard) I was following a lot of former wall street and hedge fund guys on financial blogs. You can find every opinion under the sun there, but there was a common theme across a lot of them - a lot of concern over the size and stability of derivatives (and that derivatives nominal valuation was vastly greater than that of actual honest-to-god real assets.) Housing, no-doc & liar loans, and lack of accountability were also topics I remember, and there were a few folks who noted the culpability of the big banks and financial companies in the unregulated derivatives trade, though I don't recall seeing housing and derivatives connected until after it all began. I was 100% equities at the time. I spent much of the 2H of 2007 trying to build the case for a crash, and also trying to destroy that case. In October 2007 I was convinced that a crash was more than 50% likely, though I had no idea about timing. I never make big moves all at once, but knew I wanted to reduce my risk. In November I sold 10% of my equities and bought bonds/stable value (I don't remember exactly which in what proportion). I did the same in December. I skipped a month here or there, but most months my view seemed confirmed by the price action, and most months I sold equities. By early 2009 I was 100% fixed income. I lost 13% in 2008. It should have been 10%, but I was buried in a crazy project at work, lots of overtime, for Jul and August and skipped the 10% transaction those months. I waited most of 2009 and bought back in at roughly 10% a month in 2010. My account recovered it's total value a little sooner than the S&P500, but I'm not sure I'd have been much worse off with a buy and hold approach, since my participation in the recovery was muted, just as my participation in the crash had been. Still, it was an interesting experience, and luckily not a damaging one.

At no other time have I had any worry about a significant crash. All that said... I don't feel like there is currently anything much to worry about, but who knows? I don't pretend to be any kind of guru, and I don't have faith I'll predict the next one. I mean, despite a 2 for 2 track record, there is no process - none for identification of the crash, for timing it, for knowing when to sell, what to sell, when to buy back in, what to buy... I'm more into ratcheting risk up or down a bit now, which is still a very non-Boglehead approach. I am about 5% equity heavy right now vs my base AA, fwiw.

You said you have only 5% in equity , meaning Are you predicting a crash soon?

flyingaway
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Re: Which crash have you seen it before it is coming?

Post by flyingaway » Sun Dec 03, 2017 11:43 pm

MathWizard wrote:
Sun Dec 03, 2017 12:02 pm
HomerJ wrote:
Wed Nov 29, 2017 4:25 pm
I completely saw the 2008 housing crash coming, but had no idea when it would happen or how to profit off my knowledge.

I also felt it wouldn't really affect me, since I already owned a house. Boy was I wrong about that!
+1

My wife and I had EXACTLY the same thoughts.

We knew a day of reckoning was coming in housing, and knew all the mortgages and refi's were being sold,
we knew about liar loans, and derivatives (from the LTCM debacle), but did not know about the CDO's, and
the Credit Default SWAPs that spread the risk well beyond the housing market.
I knew the housing was a bubble before 2008 but just did not know what to do.

flyingaway
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Re: Which crash have you seen it before it is coming?

Post by flyingaway » Sun Dec 03, 2017 11:52 pm

Ged wrote:
Sun Dec 03, 2017 9:54 am
technovelist wrote:
Sat Dec 02, 2017 9:21 pm
How about the student loan bubble? The loans that are not being paid as originally agreed are in the hundreds of billions of dollars.
iasw wrote:
Sat Dec 02, 2017 8:35 pm
Yes! Not sure what the fallout will be with this. But it is going to be bad. Oh heck, are student loans packaged up as securities for investors?? Yet?
Total student loan debt is quite a bit smaller than housing debt - 1T vs 15T. Corporate debt is the elephant in the room at about 29T. I would be conservative in choosing what corporate debt instruments I have in my portfolio.
I work at a university and I can see the problems of student loans. Many students are encouraged to get the maximum amount of loans, even from families who are rich, because the loans could be forgiven. Universities are increasing tuitions and building luxury dorms because students can "afford" them. In my opinion, student load debt is going to the way of the housing debt, nobody cares about anything, just gets money to spend.

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Re: Which crash have you seen it before it is coming?

Post by BC_Doc » Mon Dec 04, 2017 1:44 am

snowox wrote:
Sat Dec 02, 2017 11:21 am
I was in the transportation industry for 30 years so felt/survived a few meltdowns but both 2000 and 2008 I knew something was up the way tonnage was down and companies were further out on there receivables but not much I could do but sell equipment I wasn't using. 2008 was worse because not enough companies went out of business and everyone was trying to survive for so much longer it hurt that much more. Glad to be out of that crap business. But in both cases I didnt see what was coming the way it did. Though just a typical business cycle
I had a family member involved in energy lending visit me in June 2008– relative who worked in banking told me lending had completely dried up. This was my flashing caution light. At the time I was transferring my investments into a DIY discount brokerage account (I cashed out all the mutual funds prior to transfer). My spidey senses told me to leave the funds in cash. When markets crashed, I started buying back in to Vanguard ETFs (I live in Canada). I ran out of cash a day before the market bottom in March 2009. Luck of the Irish at work. Getting lucky with the timing of my transfer advanced my ready for retirement date by about a decade. I’ve reached/exceeded my magic number but continue to work because I still mostly like my job. My career (ER doc) has a “best before” freshness date so it’s good to have the option of retiring if I suddenly find I’ve burnt out.

yoni_w
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Re: Which crash have you seen it before it is coming?

Post by yoni_w » Mon Dec 04, 2017 3:45 am

Just putting this article here for good measure -
Investors are ignoring warning signs that financial markets could be overheating and consumer debts are rising to unsustainable levels, the global body for central banks has warned in its quarterly financial health check.
https://www.theguardian.com/business/20 ... crisis-bis

snowox
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Re: Which crash have you seen it before it is coming?

Post by snowox » Mon Dec 04, 2017 6:21 am

BC_Doc wrote:
Mon Dec 04, 2017 1:44 am
snowox wrote:
Sat Dec 02, 2017 11:21 am
I was in the transportation industry for 30 years so felt/survived a few meltdowns but both 2000 and 2008 I knew something was up the way tonnage was down and companies were further out on there receivables but not much I could do but sell equipment I wasn't using. 2008 was worse because not enough companies went out of business and everyone was trying to survive for so much longer it hurt that much more. Glad to be out of that crap business. But in both cases I didnt see what was coming the way it did. Though just a typical business cycle
I had a family member involved in energy lending visit me in June 2008– relative who worked in banking told me lending had completely dried up. This was my flashing caution light. At the time I was transferring my investments into a DIY discount brokerage account (I cashed out all the mutual funds prior to transfer). My spidey senses told me to leave the funds in cash. When markets crashed, I started buying back in to Vanguard ETFs (I live in Canada). I ran out of cash a day before the market bottom in March 2009. Luck of the Irish at work. Getting lucky with the timing of my transfer advanced my ready for retirement date by about a decade. I’ve reached/exceeded my magic number but continue to work because I still mostly like my job. My career (ER doc) has a “best before” freshness date so it’s good to have the option of retiring if I suddenly find I’ve burnt out.

That was a good move for sure :sharebeer ! Yea as I look back fortunately I was in a non-debt position with my business and already selling off assets as I did in 2000 simply from sense and lack of shipments but there were definatley enough signs that I should of even been more aggressive.

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Toons
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Re: Which crash have you seen it before it is coming?

Post by Toons » Mon Dec 04, 2017 6:30 am

87
00
08-09
And all mini crashes in between.
All shares purchased during those time periods are the ones that have gained the most value as of today.
Next One?
When Euphoria reaches it's maximum

Image


:mrgreen: :mrgreen:
"One does not accumulate but eliminate. It is not daily increase but daily decrease. The height of cultivation always runs to simplicity" –Bruce Lee

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Re: Which crash have you seen it before it is coming?

Post by Caduceus » Mon Dec 04, 2017 9:10 am

Bitcoin. :D

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jazman12
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Re: Which crash have you seen it before it is coming?

Post by jazman12 » Mon Dec 04, 2017 10:54 am

I was speeding down the highway before the last crash. I didn't pay attention to any signage and I crashed!! I stayed the course and today I have a new and even better automobile. I'm continuing to follow my IP and I am on the highway again only now I'm in the slow lane and presumably safer :happy

dkturner
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Re: Which crash have you seen it before it is coming?

Post by dkturner » Mon Dec 04, 2017 11:55 am

I've seen all of the crashes since 1973-1974 coming - I just didnt know whether they would start this afternoon, or in 10 years.

stlrick
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Re: Which crash have you seen it before it is coming?

Post by stlrick » Mon Dec 04, 2017 12:40 pm

Which crash have I seen before it is coming?

The next one, and I've been seeing it for 5 years.

Paul Basenberg
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Re: Which crash have you seen it before it is coming?

Post by Paul Basenberg » Mon Dec 04, 2017 5:51 pm

Greetings,

I haven't predicted or known that a crash is coming, either in '01 or '07. However, at some point, I start getting that "edgy" feeling and adjust my portfolio to a more conservative nature in both equities and bonds. I don't mind missing out on the "opportunity" losses that this may cause. I am 73 and do not need to take excessive risk. I like having money in cash and short term bonds to buy if the stuff hits the fan. I made a ton of money after '01 and '07 following my "edgy" feeling. I am currently working my way into my conservative mode. If my "opportunity cost" over the next year or five is 20%/year, I can live with that. Don't get me wrong, I am never out of the market and will lose money in the next correction/crash. However my losses will not be anything I can't live with and then I will begin buying again. When will I being buying? I won't know until it happens.

Regards,
Paul B.

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Portfolio7
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Re: Which crash have you seen it before it is coming?

Post by Portfolio7 » Wed Dec 06, 2017 9:50 pm

HenrysPlan2 wrote:
Sun Dec 03, 2017 11:16 pm
Portfolio7 wrote:
Wed Nov 29, 2017 6:35 pm

At no other time have I had any worry about a significant crash. All that said... I don't feel like there is currently anything much to worry about, but who knows? I don't pretend to be any kind of guru, and I don't have faith I'll predict the next one. I mean, despite a 2 for 2 track record, there is no process - none for identification of the crash, for timing it, for knowing when to sell, what to sell, when to buy back in, what to buy... I'm more into ratcheting risk up or down a bit now, which is still a very non-Boglehead approach. I am about 5% equity heavy right now vs my base AA, fwiw.
You said you have only 5% in equity , meaning Are you predicting a crash soon?
By "5% equity heavy vs my base AA", I mean I am 5% over my base equity asset allocation. I'm at 70% equity instead of 65%, and that extra 5% is in International equities.

For many years I had little idea what might do well or poorly, so I was at my target asset allocation all that time. It's only this year I ratcheted up equities a little. I think variance from my base AA is a big deal, and it should only be done cautiously. Since 2010, this is the only time I've done this. Hubris, with respect to my investments, is my key failing. For this reason I have specific rules in place about how fast I can make changes in my portfolio each month: I can't sell more than 10% of my portfolio in any month if the transaction is equity to bonds or bonds to equity. If the transaction is equity only, I can't move more than 5% of my portfolio between equity classes. I'm still figuring out bonds a bit, but the 5% applies to Fixed Income classes as well. These rules force me to re-assess risk and opportunity each and every time I adjust my portfolio, and gives me time to reflect. I don't know when I'll scale back to target, but I expect it's at least a year out.
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Re: Which crash have you seen it before it is coming?

Post by Thesaints » Thu Dec 07, 2017 1:09 am

Dot.com and subprime; I’m too young for any other. The first I forecasted it 6 months too late and the second one year too early.

HenrysPlan2
Posts: 49
Joined: Tue Dec 06, 2016 9:19 pm

Re: Which crash have you seen it before it is coming?

Post by HenrysPlan2 » Thu Dec 07, 2017 3:40 am

Portfolio7 wrote:
Wed Dec 06, 2017 9:50 pm
HenrysPlan2 wrote:
Sun Dec 03, 2017 11:16 pm
Portfolio7 wrote:
Wed Nov 29, 2017 6:35 pm

At no other time have I had any worry about a significant crash. All that said... I don't feel like there is currently anything much to worry about, but who knows? I don't pretend to be any kind of guru, and I don't have faith I'll predict the next one. I mean, despite a 2 for 2 track record, there is no process - none for identification of the crash, for timing it, for knowing when to sell, what to sell, when to buy back in, what to buy... I'm more into ratcheting risk up or down a bit now, which is still a very non-Boglehead approach. I am about 5% equity heavy right now vs my base AA, fwiw.
You said you have only 5% in equity , meaning Are you predicting a crash soon?
By "5% equity heavy vs my base AA", I mean I am 5% over my base equity asset allocation. I'm at 70% equity instead of 65%, and that extra 5% is in International equities.

For many years I had little idea what might do well or poorly, so I was at my target asset allocation all that time. It's only this year I ratcheted up equities a little. I think variance from my base AA is a big deal, and it should only be done cautiously. Since 2010, this is the only time I've done this. Hubris, with respect to my investments, is my key failing. For this reason I have specific rules in place about how fast I can make changes in my portfolio each month: I can't sell more than 10% of my portfolio in any month if the transaction is equity to bonds or bonds to equity. If the transaction is equity only, I can't move more than 5% of my portfolio between equity classes. I'm still figuring out bonds a bit, but the 5% applies to Fixed Income classes as well. These rules force me to re-assess risk and opportunity each and every time I adjust my portfolio, and gives me time to reflect. I don't know when I'll scale back to target, but I expect it's at least a year out.
I think the market has at least 3 years to continue going up. I just bought a lot of total stock plus some international. I started to invest in taxable just two months ago. I will continue putting money in until I feel the need to balance to bond. As of now, I don’t own any bond

selters
Posts: 450
Joined: Thu Feb 27, 2014 9:26 am

Re: Which crash have you seen it before it is coming?

Post by selters » Thu Dec 07, 2017 8:36 am

I'm seeing the bitcoin crash coming.

alfaspider
Posts: 968
Joined: Wed Sep 09, 2015 4:44 pm

Re: Which crash have you seen it before it is coming?

Post by alfaspider » Thu Dec 07, 2017 8:53 am

iasw wrote:
Sat Dec 02, 2017 8:35 pm

How about the student loan bubble? The loans that are not being paid as originally agreed are in the hundreds of billions of dollars.

Student loans have some features that make it difficult for them to create an acute crisis in the same way housing did. Rather, they are likely to be a long-term slow drag on the economy that's a bit hidden.

For one, the vast majority of student loans are issued and held by the U.S. government. SLABS are a thing, but their growth is limited by the fact that private student loans are a niche market and likely will remain so for the foreseeable future. This prevents major financial institutions from having a level of exposure to SLABS that could possibly jeopardize their existence.

Second, unlike just about any other form of debt, there is almost no way for the loans to be discharged in bankruptcy. There is no asset the student can "walk away" from. If the student defaults, it will stay out there forever- until the borrower's social security starts to be garnished. Over the long term, it can actually be more profitable to lend to a student who defaults, as the interest and fees greatly increase the return.

Third, unlike housing, there's no underlying asset value that is being propped up with the debt. Someone's college education isn't devalued because a bunch of other people defaulted on their debt in the same way someone's home is devalued because of a bunch of foreclosures in the neighborhood. It is true, however, that there are a lot of private colleges and for-profit "colleges" that are being propped up with debt, but I don't see the failure of such institutions as potentially causing systemic financial collapse.

All that being said, the "slow drag" aspect shouldn't be underestimated. When a huge portion of the population has to run with a parachute behind their back, it is not good for economic growth- especially as much of the population ages out of their prime buying years.

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