U.S. stocks in freefall

Discuss all general (i.e. non-personal) investing questions and issues, investing news, and theory.
retiringwhen
Posts: 276
Joined: Sat Jul 08, 2017 10:09 am
Location: New Jersey, USA

Re: U.S. stocks in freefall

Post by retiringwhen » Mon Apr 16, 2018 11:38 am

cfs wrote:
Mon Apr 16, 2018 11:32 am
The Running of the Bulls

Oh boy, they are back, at least for the past couple of minutes.

You just don't want to be out of this market for ONE day!

Gracias por leer ~cfs~
Don’t you know. I had about 3% of our portfolio out of the market over the previous weekend due to a rebalancing trade from a MF to an ETF that required the MF sale to settle before making the buy during Monday trading last week. I was on pins and needles :-)

User avatar
cfs
Posts: 4139
Joined: Fri Feb 23, 2007 1:22 am
Location: ~ Mi Propio Camino ~

Re: U.S. stocks in freefall

Post by cfs » Mon Apr 16, 2018 1:08 pm

Well, Mister Retiringwhen, by switching between accounts you are NOT out of the market. On the other hand, I have read about some posters waiting for the right moment to jump back IN the market (to them I say, what are you waiting for). As I have said ad nauseam, you just don't want to be out of this market for ONE day! Gracias por leer ~cfs~
~ Member of the Active Retired Force since 2014 ~

User avatar
cfs
Posts: 4139
Joined: Fri Feb 23, 2007 1:22 am
Location: ~ Mi Propio Camino ~

Re: U.S. stocks in freefall

Post by cfs » Mon Apr 16, 2018 1:34 pm

Interesting article by Mister Russel Kinnel from Morningstar.

"Who Got Burned in the Sell-Off"

http://www.morningstar.com/articles/859 ... lloff.html

Good luck, y gracias por leer ~cfs~

p.s. You just don't want to be out of this market for ONE day!
~ Member of the Active Retired Force since 2014 ~

User avatar
cfs
Posts: 4139
Joined: Fri Feb 23, 2007 1:22 am
Location: ~ Mi Propio Camino ~

Re: U.S. stocks in freefall

Post by cfs » Tue Apr 17, 2018 3:37 pm

The Running of the Bulls

They are running, but some of us are still sitting on the sidelines waiting for the right time to jump back IN or looking for the right product to invest our American Pesos. Need help deciding? Here is a good article by Karen Wallace from Morningstar with some good ideas on core-holders.

"The list below contains our 20 highest-conviction core holding index funds and exchange-traded funds. They are all compelling offerings that efficiently track a broadly diversified and representative benchmark at a low cost. "

Our Favorite Core Passive Funds and ETFs: http://www.morningstar.com/articles/859 ... -etfs.html

Good luck, y gracias por leer ~cfs~

p.s. You just don't want to be out of this market for ONE day!
~ Member of the Active Retired Force since 2014 ~

robertmcd
Posts: 144
Joined: Tue Aug 09, 2016 9:06 am

Re: U.S. stocks in freefall

Post by robertmcd » Tue Apr 17, 2018 4:08 pm

The yield curve continuing to flatten these past 2 days even as stocks going up.

MotoTrojan
Posts: 1715
Joined: Wed Feb 01, 2017 8:39 pm

Re: U.S. stocks in freefall

Post by MotoTrojan » Tue Apr 17, 2018 4:18 pm

Less than 2 weeks from my windfall and it is falling the wrong way :(.

Thesaints
Posts: 1390
Joined: Tue Jun 20, 2017 12:25 am

Re: U.S. stocks in freefall

Post by Thesaints » Tue Apr 17, 2018 4:20 pm

robertmcd wrote:
Tue Apr 17, 2018 4:08 pm
The yield curve continuing to flatten these past 2 days even as stocks going up.
This time troubles will be signaled by a curve increasingly sloping...

robertmcd
Posts: 144
Joined: Tue Aug 09, 2016 9:06 am

Re: U.S. stocks in freefall

Post by robertmcd » Tue Apr 17, 2018 5:22 pm

Except if that happens, global asset prices will get obliterated. I would love for the distortions that the Fed has created to naturally correct themselves as they would in a free market, but we don't have a free market and that cannot happen at this point. It would have been easy to dig out from the 2001 collapse, but instead the Fed blew a monster mortgage bubble. It would have been tough but we could have dug our way out of the 2008 recession, but instead the Fed kicked the can again, and now we have a situation that we cannot get out of. My money is on continued can kicking with ever decreasing interest rates and bigger asset bubbles. Nothing would make me happier than to lose 50% of my net worth in stocks and long dated treasuries at my age of 24 because as of right now I feel I am in even bigger trouble because I never got a chance to accumulate assets with my wages.

Thesaints
Posts: 1390
Joined: Tue Jun 20, 2017 12:25 am

Re: U.S. stocks in freefall

Post by Thesaints » Tue Apr 17, 2018 5:25 pm

When has ever the Fed not "distorted" the market ?

robertmcd
Posts: 144
Joined: Tue Aug 09, 2016 9:06 am

Re: U.S. stocks in freefall

Post by robertmcd » Tue Apr 17, 2018 5:41 pm

They have since its creation, but the recent foray into ZIRP after 2000, and massive QE after 2008 show that the insanity is accelerating. Look at the BOJ for the future direction we are headed. They own 75% of Japanese ETF's and they have become the only buyer of japanese government debt.

Read up on Fed nominee Marvin Goodfriend's ideas about getting past the issue of people holding onto cash in times of negative interest rates. The Fed kicking the can further is to me the simplest solution to keep things humming along. Occam's Razor

Thesaints
Posts: 1390
Joined: Tue Jun 20, 2017 12:25 am

Re: U.S. stocks in freefall

Post by Thesaints » Tue Apr 17, 2018 5:47 pm

robertmcd wrote:
Tue Apr 17, 2018 5:41 pm
They have since its creation, but the recent foray into ZIRP after 2000, and massive QE after 2008 show that the insanity is accelerating. Look at the BOJ for the future direction we are headed. They own 75% of Japanese ETF's and they have become the only buyer of japanese government debt.
Whereas everything would be fine, if a private subject did ?

tesuzuki2002
Posts: 359
Joined: Fri Dec 11, 2015 12:40 pm

Re: U.S. stocks in freefall

Post by tesuzuki2002 » Tue Apr 17, 2018 5:49 pm

retiringwhen wrote:
Mon Apr 16, 2018 11:38 am
cfs wrote:
Mon Apr 16, 2018 11:32 am
The Running of the Bulls

Oh boy, they are back, at least for the past couple of minutes.

You just don't want to be out of this market for ONE day!

Gracias por leer ~cfs~
Don’t you know. I had about 3% of our portfolio out of the market over the previous weekend due to a rebalancing trade from a MF to an ETF that required the MF sale to settle before making the buy during Monday trading last week. I was on pins and needles :-)
Moving money around can be hard some times... esp. during volatility periods. I like to hope I get lucky and sell on the up day so I can buy on the down day!!!

MotoTrojan
Posts: 1715
Joined: Wed Feb 01, 2017 8:39 pm

Re: U.S. stocks in freefall

Post by MotoTrojan » Tue Apr 17, 2018 5:54 pm

robertmcd wrote:
Tue Apr 17, 2018 5:22 pm
Except if that happens, global asset prices will get obliterated. I would love for the distortions that the Fed has created to naturally correct themselves as they would in a free market, but we don't have a free market and that cannot happen at this point. It would have been easy to dig out from the 2001 collapse, but instead the Fed blew a monster mortgage bubble. It would have been tough but we could have dug our way out of the 2008 recession, but instead the Fed kicked the can again, and now we have a situation that we cannot get out of. My money is on continued can kicking with ever decreasing interest rates and bigger asset bubbles. Nothing would make me happier than to lose 50% of my net worth in stocks and long dated treasuries at my age of 24 because as of right now I feel I am in even bigger trouble because I never got a chance to accumulate assets with my wages.
What distortion? How far out of line is the S&P 500's forward P/E right now?

User avatar
willthrill81
Posts: 4562
Joined: Thu Jan 26, 2017 3:17 pm
Location: USA

Re: U.S. stocks in freefall

Post by willthrill81 » Tue Apr 17, 2018 7:01 pm

MotoTrojan wrote:
Tue Apr 17, 2018 5:54 pm
robertmcd wrote:
Tue Apr 17, 2018 5:22 pm
Except if that happens, global asset prices will get obliterated. I would love for the distortions that the Fed has created to naturally correct themselves as they would in a free market, but we don't have a free market and that cannot happen at this point. It would have been easy to dig out from the 2001 collapse, but instead the Fed blew a monster mortgage bubble. It would have been tough but we could have dug our way out of the 2008 recession, but instead the Fed kicked the can again, and now we have a situation that we cannot get out of. My money is on continued can kicking with ever decreasing interest rates and bigger asset bubbles. Nothing would make me happier than to lose 50% of my net worth in stocks and long dated treasuries at my age of 24 because as of right now I feel I am in even bigger trouble because I never got a chance to accumulate assets with my wages.
What distortion? How far out of line is the S&P 500's forward P/E right now?
Out of line with what? Stocks are priced at what the market deems they should be today.
“It's a dangerous business, Frodo, going out your door. You step onto the road, and if you don't keep your feet, there's no knowing where you might be swept off to.” J.R.R. Tolkien,The Lord of the Rings

MotoTrojan
Posts: 1715
Joined: Wed Feb 01, 2017 8:39 pm

Re: U.S. stocks in freefall

Post by MotoTrojan » Tue Apr 17, 2018 7:06 pm

willthrill81 wrote:
Tue Apr 17, 2018 7:01 pm
MotoTrojan wrote:
Tue Apr 17, 2018 5:54 pm
robertmcd wrote:
Tue Apr 17, 2018 5:22 pm
Except if that happens, global asset prices will get obliterated. I would love for the distortions that the Fed has created to naturally correct themselves as they would in a free market, but we don't have a free market and that cannot happen at this point. It would have been easy to dig out from the 2001 collapse, but instead the Fed blew a monster mortgage bubble. It would have been tough but we could have dug our way out of the 2008 recession, but instead the Fed kicked the can again, and now we have a situation that we cannot get out of. My money is on continued can kicking with ever decreasing interest rates and bigger asset bubbles. Nothing would make me happier than to lose 50% of my net worth in stocks and long dated treasuries at my age of 24 because as of right now I feel I am in even bigger trouble because I never got a chance to accumulate assets with my wages.
What distortion? How far out of line is the S&P 500's forward P/E right now?
Out of line with what? Stocks are priced at what the market deems they should be today.
Trying to understand what the quoted person was using as a metric for this out of line bubble. I don’t agree but I presumed they were using some metric that is far above historic norm (cape10) but what matters most, forward returns, is quite healthy.

Either way, I agree with you. I buy at a fair price every time I buy. It’s the market price as you said.

User avatar
willthrill81
Posts: 4562
Joined: Thu Jan 26, 2017 3:17 pm
Location: USA

Re: U.S. stocks in freefall

Post by willthrill81 » Tue Apr 17, 2018 7:07 pm

MotoTrojan wrote:
Tue Apr 17, 2018 7:06 pm
willthrill81 wrote:
Tue Apr 17, 2018 7:01 pm
MotoTrojan wrote:
Tue Apr 17, 2018 5:54 pm
robertmcd wrote:
Tue Apr 17, 2018 5:22 pm
Except if that happens, global asset prices will get obliterated. I would love for the distortions that the Fed has created to naturally correct themselves as they would in a free market, but we don't have a free market and that cannot happen at this point. It would have been easy to dig out from the 2001 collapse, but instead the Fed blew a monster mortgage bubble. It would have been tough but we could have dug our way out of the 2008 recession, but instead the Fed kicked the can again, and now we have a situation that we cannot get out of. My money is on continued can kicking with ever decreasing interest rates and bigger asset bubbles. Nothing would make me happier than to lose 50% of my net worth in stocks and long dated treasuries at my age of 24 because as of right now I feel I am in even bigger trouble because I never got a chance to accumulate assets with my wages.
What distortion? How far out of line is the S&P 500's forward P/E right now?
Out of line with what? Stocks are priced at what the market deems they should be today.
Trying to understand what the quoted person was using as a metric for this out of line bubble. I don’t agree but I presumed they were using some metric that is far above historic norm (cape10) but what matters most, forward returns, is quite healthy.

Either way, I agree with you. I buy at a fair price every time I buy. It’s the market price as you said.
:sharebeer
“It's a dangerous business, Frodo, going out your door. You step onto the road, and if you don't keep your feet, there's no knowing where you might be swept off to.” J.R.R. Tolkien,The Lord of the Rings

User avatar
nedsaid
Posts: 9693
Joined: Fri Nov 23, 2012 12:33 pm

Re: U.S. stocks in freefall

Post by nedsaid » Tue Apr 17, 2018 8:39 pm

Oh Oh. I joked a lot about how this thread was a contrary indicator. With the exception of the August 2015 through February 2016 market correction, it seemed that after this thread would pop up again that the market would rally. Now it seems that every time someone posts after a market rally that the recent correction wasn't all that bad that the market seems to fall again. So I guess this thread is a contrary, contrary indicator. Pretty much, the market falls now when the thread pops up again. :wink: This is why I don't write market timing newsletters. Anywho, I have had a lot of fun with this. Also goes to show that timing indicators work until they don't.
A fool and his money are good for business.

Thesaints
Posts: 1390
Joined: Tue Jun 20, 2017 12:25 am

Re: U.S. stocks in freefall

Post by Thesaints » Tue Apr 17, 2018 11:42 pm

nedsaid wrote:
Tue Apr 17, 2018 8:39 pm
Oh Oh. I joked a lot about how this thread was a contrary indicator. With the exception of the August 2015 through February 2016 market correction, it seemed that after this thread would pop up again that the market would rally. Now it seems that every time someone posts after a market rally that the recent correction wasn't all that bad that the market seems to fall again. So I guess this thread is a contrary, contrary indicator. Pretty much, the market falls now when the thread pops up again.
Oh my gosh! You just described the concept of "uncorrelation" :)

dziuniek
Posts: 435
Joined: Mon Jul 23, 2012 2:54 pm
Location: Corrupticut

Re: U.S. stocks in freefall

Post by dziuniek » Wed Apr 18, 2018 8:50 am

I think people are missing the fact that the FED can't distort something it's a part of. :twisted:
(more so than ever)

robertmcd
Posts: 144
Joined: Tue Aug 09, 2016 9:06 am

Re: U.S. stocks in freefall

Post by robertmcd » Wed Apr 18, 2018 10:07 am

MotoTrojan wrote:
Tue Apr 17, 2018 7:06 pm
willthrill81 wrote:
Tue Apr 17, 2018 7:01 pm
MotoTrojan wrote:
Tue Apr 17, 2018 5:54 pm
robertmcd wrote:
Tue Apr 17, 2018 5:22 pm
Except if that happens, global asset prices will get obliterated. I would love for the distortions that the Fed has created to naturally correct themselves as they would in a free market, but we don't have a free market and that cannot happen at this point. It would have been easy to dig out from the 2001 collapse, but instead the Fed blew a monster mortgage bubble. It would have been tough but we could have dug our way out of the 2008 recession, but instead the Fed kicked the can again, and now we have a situation that we cannot get out of. My money is on continued can kicking with ever decreasing interest rates and bigger asset bubbles. Nothing would make me happier than to lose 50% of my net worth in stocks and long dated treasuries at my age of 24 because as of right now I feel I am in even bigger trouble because I never got a chance to accumulate assets with my wages.
What distortion? How far out of line is the S&P 500's forward P/E right now?
Out of line with what? Stocks are priced at what the market deems they should be today.
Trying to understand what the quoted person was using as a metric for this out of line bubble. I don’t agree but I presumed they were using some metric that is far above historic norm (cape10) but what matters most, forward returns, is quite healthy.

Either way, I agree with you. I buy at a fair price every time I buy. It’s the market price as you said.
Just like those buying at the peak of the tech bubble? How about bitcoin at 19K? Efficient market hypothesis didn't work out so well there.

User avatar
willthrill81
Posts: 4562
Joined: Thu Jan 26, 2017 3:17 pm
Location: USA

Re: U.S. stocks in freefall

Post by willthrill81 » Wed Apr 18, 2018 10:13 am

robertmcd wrote:
Wed Apr 18, 2018 10:07 am
MotoTrojan wrote:
Tue Apr 17, 2018 7:06 pm
willthrill81 wrote:
Tue Apr 17, 2018 7:01 pm
MotoTrojan wrote:
Tue Apr 17, 2018 5:54 pm
robertmcd wrote:
Tue Apr 17, 2018 5:22 pm
Except if that happens, global asset prices will get obliterated. I would love for the distortions that the Fed has created to naturally correct themselves as they would in a free market, but we don't have a free market and that cannot happen at this point. It would have been easy to dig out from the 2001 collapse, but instead the Fed blew a monster mortgage bubble. It would have been tough but we could have dug our way out of the 2008 recession, but instead the Fed kicked the can again, and now we have a situation that we cannot get out of. My money is on continued can kicking with ever decreasing interest rates and bigger asset bubbles. Nothing would make me happier than to lose 50% of my net worth in stocks and long dated treasuries at my age of 24 because as of right now I feel I am in even bigger trouble because I never got a chance to accumulate assets with my wages.
What distortion? How far out of line is the S&P 500's forward P/E right now?
Out of line with what? Stocks are priced at what the market deems they should be today.
Trying to understand what the quoted person was using as a metric for this out of line bubble. I don’t agree but I presumed they were using some metric that is far above historic norm (cape10) but what matters most, forward returns, is quite healthy.

Either way, I agree with you. I buy at a fair price every time I buy. It’s the market price as you said.
Just like those buying at the peak of the tech bubble? How about bitcoin at 19K? Efficient market hypothesis didn't work out so well there.
While I don't believe in the EMH, it is impossible for you to know if you're getting a 'bad deal' unless you know what will happen to stocks in the future. Absent from this foreknowledge, stocks are always priced at what the market deems they should be. Whether this is the 'right' price or not is unknowable.
“It's a dangerous business, Frodo, going out your door. You step onto the road, and if you don't keep your feet, there's no knowing where you might be swept off to.” J.R.R. Tolkien,The Lord of the Rings

lostdog
Posts: 985
Joined: Thu Feb 04, 2016 2:15 pm

Re: U.S. stocks in freefall

Post by lostdog » Wed Apr 18, 2018 10:14 am

International today :)
Vanguard Total World Equity Index. Simplicity 100% | | | https://m.youtube.com/watch?v=LwTHLtuToSY

MotoTrojan
Posts: 1715
Joined: Wed Feb 01, 2017 8:39 pm

Re: U.S. stocks in freefall

Post by MotoTrojan » Wed Apr 18, 2018 10:20 am

robertmcd wrote:
Wed Apr 18, 2018 10:07 am
MotoTrojan wrote:
Tue Apr 17, 2018 7:06 pm
willthrill81 wrote:
Tue Apr 17, 2018 7:01 pm
MotoTrojan wrote:
Tue Apr 17, 2018 5:54 pm
robertmcd wrote:
Tue Apr 17, 2018 5:22 pm
Except if that happens, global asset prices will get obliterated. I would love for the distortions that the Fed has created to naturally correct themselves as they would in a free market, but we don't have a free market and that cannot happen at this point. It would have been easy to dig out from the 2001 collapse, but instead the Fed blew a monster mortgage bubble. It would have been tough but we could have dug our way out of the 2008 recession, but instead the Fed kicked the can again, and now we have a situation that we cannot get out of. My money is on continued can kicking with ever decreasing interest rates and bigger asset bubbles. Nothing would make me happier than to lose 50% of my net worth in stocks and long dated treasuries at my age of 24 because as of right now I feel I am in even bigger trouble because I never got a chance to accumulate assets with my wages.
What distortion? How far out of line is the S&P 500's forward P/E right now?
Out of line with what? Stocks are priced at what the market deems they should be today.
Trying to understand what the quoted person was using as a metric for this out of line bubble. I don’t agree but I presumed they were using some metric that is far above historic norm (cape10) but what matters most, forward returns, is quite healthy.

Either way, I agree with you. I buy at a fair price every time I buy. It’s the market price as you said.
Just like those buying at the peak of the tech bubble? How about bitcoin at 19K? Efficient market hypothesis didn't work out so well there.
Those that bought S&P500 at top of the tech bubble are doing okay right now. Bitcoin doesn’t fit within the EMH in my view.

User avatar
cfs
Posts: 4139
Joined: Fri Feb 23, 2007 1:22 am
Location: ~ Mi Propio Camino ~

Re: U.S. stocks in freefall

Post by cfs » Wed Apr 18, 2018 11:45 am

The Running of the Bull

Some of them are running today . . . what are YOU doing?

Good luck, y gracias por leer ~cfs~

p.s. You just don't want to be out of this market for ONE day!!!
~ Member of the Active Retired Force since 2014 ~

User avatar
nedsaid
Posts: 9693
Joined: Fri Nov 23, 2012 12:33 pm

Re: U.S. stocks in freefall

Post by nedsaid » Wed Apr 18, 2018 6:18 pm

dziuniek wrote:
Wed Apr 18, 2018 8:50 am
I think people are missing the fact that the FED can't distort something it's a part of. :twisted:
(more so than ever)
Except that the Fed did some unprecedented things, for example, the purchase of Mortgage Instruments to help bring down mortgage rates. Historically, the Fed limited its purchases of bonds to Treasuries. They also brought short term rates down to almost zero. Hence the nickname, Helicopter Ben, the mental image of the former Fed Chairman dropping cash from helicopters to the people below. The TARP (Troubled Assets Relief Program) also took very aggressive steps forcing even strong banks to take bailout money and forcing the merger of weak financial institutions into strong ones. Literally, everything but the kitchen sink was thrown at the financial crisis to prevent a second Great Recession. Probably when we weren't looking, probably the kitchen sink was thrown in too. Pretty amazing things happened.
A fool and his money are good for business.

gmaynardkrebs
Posts: 538
Joined: Sun Feb 10, 2008 11:48 am

Re: U.S. stocks in freefall

Post by gmaynardkrebs » Wed Apr 18, 2018 6:33 pm

willthrill81 wrote:
Wed Apr 18, 2018 10:13 am

While I don't believe in the EMH,
it is impossible for you to know if you're getting a 'bad deal' unless you know what will happen to stocks in the future. Absent from this foreknowledge, stocks are always priced at what the market deems they should be.
That is the EMH.

User avatar
willthrill81
Posts: 4562
Joined: Thu Jan 26, 2017 3:17 pm
Location: USA

Re: U.S. stocks in freefall

Post by willthrill81 » Wed Apr 18, 2018 7:21 pm

gmaynardkrebs wrote:
Wed Apr 18, 2018 6:33 pm
willthrill81 wrote:
Wed Apr 18, 2018 10:13 am

While I don't believe in the EMH,
it is impossible for you to know if you're getting a 'bad deal' unless you know what will happen to stocks in the future. Absent from this foreknowledge, stocks are always priced at what the market deems they should be.
That is the EMH.
By definition, stocks must be priced at what the market currently thinks they should be.

The EMH goes further than that and says that asset prices fully reflect all available information. I do not believe that stock prices fully reflect all available information, mainly because the actors are human beings with all of the fallibility and biases pertaining thereto.
“It's a dangerous business, Frodo, going out your door. You step onto the road, and if you don't keep your feet, there's no knowing where you might be swept off to.” J.R.R. Tolkien,The Lord of the Rings

User avatar
JoMoney
Posts: 5251
Joined: Tue Jul 23, 2013 5:31 am

Re: U.S. stocks in freefall

Post by JoMoney » Wed Apr 18, 2018 8:54 pm

willthrill81 wrote:
Wed Apr 18, 2018 7:21 pm
gmaynardkrebs wrote:
Wed Apr 18, 2018 6:33 pm
willthrill81 wrote:
Wed Apr 18, 2018 10:13 am

While I don't believe in the EMH,
it is impossible for you to know if you're getting a 'bad deal' unless you know what will happen to stocks in the future. Absent from this foreknowledge, stocks are always priced at what the market deems they should be.
That is the EMH.
By definition, stocks must be priced at what the market currently thinks they should be.

The EMH goes further than that and says that asset prices fully reflect all available information. I do not believe that stock prices fully reflect all available information, mainly because the actors are human beings with all of the fallibility and biases pertaining thereto.
"The China Hustle" movie (discussed over in this thread) suggests an interesting example of the asymmetry of information sometimes in the market. One the main subjects in the movie made a lot of money shorting the stocks after doing some 'due diligence' and seeing for himself that the businesses were not at all what they reported on paper to be.
"To achieve satisfactory investment results is easier than most people realize; to achieve superior results is harder than it looks." - Benjamin Graham

gmaynardkrebs
Posts: 538
Joined: Sun Feb 10, 2008 11:48 am

Re: U.S. stocks in freefall

Post by gmaynardkrebs » Wed Apr 18, 2018 9:15 pm

JoMoney wrote:
Wed Apr 18, 2018 8:54 pm
willthrill81 wrote:
Wed Apr 18, 2018 7:21 pm
gmaynardkrebs wrote:
Wed Apr 18, 2018 6:33 pm
willthrill81 wrote:
Wed Apr 18, 2018 10:13 am

While I don't believe in the EMH,
it is impossible for you to know if you're getting a 'bad deal' unless you know what will happen to stocks in the future. Absent from this foreknowledge, stocks are always priced at what the market deems they should be.
That is the EMH.
By definition, stocks must be priced at what the market currently thinks they should be.

The EMH goes further than that and says that asset prices fully reflect all available information. I do not believe that stock prices fully reflect all available information, mainly because the actors are human beings with all of the fallibility and biases pertaining thereto.
"The China Hustle" movie (discussed over in this thread) suggests an interesting example of the asymmetry of information sometimes in the market. One the main subjects in the movie made a lot of money shorting the stocks after doing some 'due diligence' and seeing for himself that the businesses were not at all what they reported on paper to be.
That is the mechanism by which the EMH works, not a disproof. I am sure there have been many discussions of the weak and form strong of the EMH, so I won't belabor the distinction. If you are arguing that the strong form the EMH is too extreme, I agree, but as long as it is mostly right, most of the time, I'm willing to accept the weak form. The weak form does allow for arbitrage and "fallibilities" to exist for short periods. The real problem with the EMH is that, as Paul Samuelson argued, it breaks down at the level of index investing, meaning bubbles can form and be sustained for long periods in large indexes like the S&P500.

dziuniek
Posts: 435
Joined: Mon Jul 23, 2012 2:54 pm
Location: Corrupticut

Re: U.S. stocks in freefall

Post by dziuniek » Thu Apr 19, 2018 8:54 am

nedsaid wrote:
Wed Apr 18, 2018 6:18 pm
dziuniek wrote:
Wed Apr 18, 2018 8:50 am
I think people are missing the fact that the FED can't distort something it's a part of. :twisted:
(more so than ever)
Except that the Fed did some unprecedented things, for example, the purchase of Mortgage Instruments to help bring down mortgage rates. Historically, the Fed limited its purchases of bonds to Treasuries. They also brought short term rates down to almost zero. Hence the nickname, Helicopter Ben, the mental image of the former Fed Chairman dropping cash from helicopters to the people below. The TARP (Troubled Assets Relief Program) also took very aggressive steps forcing even strong banks to take bailout money and forcing the merger of weak financial institutions into strong ones. Literally, everything but the kitchen sink was thrown at the financial crisis to prevent a second Great Recession. Probably when we weren't looking, probably the kitchen sink was thrown in too. Pretty amazing things happened.
Oh absolutely.

That being said, even though it's unprecedented, it's not within the FED's reach. You could say that it's always been a possibility.

zwzhang
Posts: 51
Joined: Thu Jul 25, 2013 10:43 am

Re: U.S. stocks in freefall

Post by zwzhang » Thu Apr 19, 2018 9:03 am

For me, the EMH is a theory that make sense. Of cause, it is far from perfect. But the question is: do we have a better alternative.

gmaynardkrebs
Posts: 538
Joined: Sun Feb 10, 2008 11:48 am

Re: U.S. stocks in freefall

Post by gmaynardkrebs » Thu Apr 19, 2018 9:09 am

dziuniek wrote:
Thu Apr 19, 2018 8:54 am
nedsaid wrote:
Wed Apr 18, 2018 6:18 pm
dziuniek wrote:
Wed Apr 18, 2018 8:50 am
I think people are missing the fact that the FED can't distort something it's a part of. :twisted:
(more so than ever)
Except that the Fed did some unprecedented things, for example, the purchase of Mortgage Instruments to help bring down mortgage rates. Historically, the Fed limited its purchases of bonds to Treasuries. They also brought short term rates down to almost zero. Hence the nickname, Helicopter Ben, the mental image of the former Fed Chairman dropping cash from helicopters to the people below. The TARP (Troubled Assets Relief Program) also took very aggressive steps forcing even strong banks to take bailout money and forcing the merger of weak financial institutions into strong ones. Literally, everything but the kitchen sink was thrown at the financial crisis to prevent a second Great Recession. Probably when we weren't looking, probably the kitchen sink was thrown in too. Pretty amazing things happened.
Oh absolutely.

That being said, even though it's unprecedented, it's not within the FED's reach. You could say that it's always been a possibility.
Given how extensively the FED's powers to act as it did last time have been curtailed, I'd say the FED "put" is not what it used to be. Whether the average equity investor realizes just how much they too were "bailed out" by the FED's actions, and how much less potent its intervention would be today, is questionable.

User avatar
willthrill81
Posts: 4562
Joined: Thu Jan 26, 2017 3:17 pm
Location: USA

Re: U.S. stocks in freefall

Post by willthrill81 » Thu Apr 19, 2018 9:13 am

The bunny market is hopping again today! :P
“It's a dangerous business, Frodo, going out your door. You step onto the road, and if you don't keep your feet, there's no knowing where you might be swept off to.” J.R.R. Tolkien,The Lord of the Rings

gmaynardkrebs
Posts: 538
Joined: Sun Feb 10, 2008 11:48 am

Re: U.S. stocks in freefall

Post by gmaynardkrebs » Thu Apr 19, 2018 9:37 am

willthrill81 wrote:
Thu Apr 19, 2018 9:13 am
The bunny market is hopping again today! :P
?

robertmcd
Posts: 144
Joined: Tue Aug 09, 2016 9:06 am

Re: U.S. stocks in freefall

Post by robertmcd » Thu Apr 19, 2018 10:06 am

gmaynardkrebs wrote:
Thu Apr 19, 2018 9:09 am
dziuniek wrote:
Thu Apr 19, 2018 8:54 am
nedsaid wrote:
Wed Apr 18, 2018 6:18 pm
dziuniek wrote:
Wed Apr 18, 2018 8:50 am
I think people are missing the fact that the FED can't distort something it's a part of. :twisted:
(more so than ever)
Except that the Fed did some unprecedented things, for example, the purchase of Mortgage Instruments to help bring down mortgage rates. Historically, the Fed limited its purchases of bonds to Treasuries. They also brought short term rates down to almost zero. Hence the nickname, Helicopter Ben, the mental image of the former Fed Chairman dropping cash from helicopters to the people below. The TARP (Troubled Assets Relief Program) also took very aggressive steps forcing even strong banks to take bailout money and forcing the merger of weak financial institutions into strong ones. Literally, everything but the kitchen sink was thrown at the financial crisis to prevent a second Great Recession. Probably when we weren't looking, probably the kitchen sink was thrown in too. Pretty amazing things happened.
Oh absolutely.

That being said, even though it's unprecedented, it's not within the FED's reach. You could say that it's always been a possibility.
Given how extensively the FED's powers to act as it did last time have been curtailed, I'd say the FED "put" is not what it used to be. Whether the average equity investor realizes just how much they too were "bailed out" by the FED's actions, and how much less potent its intervention would be today, is questionable.
The Fed has a lot of room to expand its balance sheet if you look at what the Bank of Japan has done.

https://www.yardeni.com/pub/peacockfedecbassets.pdf

I don't think we have even come close to seeing what the fed is truly capable of. Look up the ideas of aspiring Fed nominee Marvin Goodfriend, who wants to be able to implement negative interest rates, which are hard to get past more than -1% before people decide to just hold on to actual cash. His solution, allowing cash to drop below par value, thus forcing people to buy negative interest bonds or invest in stocks if they want to try and keep their life savings from becoming worthless.

User avatar
willthrill81
Posts: 4562
Joined: Thu Jan 26, 2017 3:17 pm
Location: USA

Re: U.S. stocks in freefall

Post by willthrill81 » Thu Apr 19, 2018 10:07 am

gmaynardkrebs wrote:
Thu Apr 19, 2018 9:37 am
willthrill81 wrote:
Thu Apr 19, 2018 9:13 am
The bunny market is hopping again today! :P
?
'Hopping' between a gain and a loss.
“It's a dangerous business, Frodo, going out your door. You step onto the road, and if you don't keep your feet, there's no knowing where you might be swept off to.” J.R.R. Tolkien,The Lord of the Rings

le_sacre
Posts: 44
Joined: Tue Jan 05, 2016 2:20 am
Location: San Francisco, CA

Re: U.S. stocks in freefall

Post by le_sacre » Thu Apr 19, 2018 12:36 pm

nedsaid wrote:
Wed Apr 18, 2018 6:18 pm
Literally, everything but the kitchen sink was thrown at the financial crisis to prevent a second Great Recession. Probably when we weren't looking, probably the kitchen sink was thrown in too. Pretty amazing things happened.
I don't think that's really true. I mean yes, a remarkable amount of intervention, but not nearly "everything including the kitchen sink." To me, that would have had to include a Works Progress Administration-style infrastructure investment.

sreynard
Posts: 293
Joined: Thu May 02, 2013 8:11 pm

Re: U.S. stocks in freefall

Post by sreynard » Thu Apr 19, 2018 2:29 pm

le_sacre wrote:
Thu Apr 19, 2018 12:36 pm
nedsaid wrote:
Wed Apr 18, 2018 6:18 pm
Literally, everything but the kitchen sink was thrown at the financial crisis to prevent a second Great Recession. Probably when we weren't looking, probably the kitchen sink was thrown in too. Pretty amazing things happened.
I don't think that's really true. I mean yes, a remarkable amount of intervention, but not nearly "everything including the kitchen sink." To me, that would have had to include a Works Progress Administration-style infrastructure investment.
Agree. We saw a lot of intervention, but nowhere near the most they could do. It seems clear though they have a "whatever it takes" attitude. I hope I'm not around to watch when they do decide to throw in the kitchen sink.

In the mean time we're free falling again! :wink:

gmaynardkrebs
Posts: 538
Joined: Sun Feb 10, 2008 11:48 am

Re: U.S. stocks in freefall

Post by gmaynardkrebs » Thu Apr 19, 2018 4:42 pm

le_sacre wrote:
Thu Apr 19, 2018 12:36 pm
nedsaid wrote:
Wed Apr 18, 2018 6:18 pm
Literally, everything but the kitchen sink was thrown at the financial crisis to prevent a second Great Recession. Probably when we weren't looking, probably the kitchen sink was thrown in too. Pretty amazing things happened.
I don't think that's really true. I mean yes, a remarkable amount of intervention, but not nearly "everything including the kitchen sink." To me, that would have had to include a Works Progress Administration-style infrastructure investment.
The "they" here is the FED. They can't establish a WPA, infrastructure or anything of the kind.Only Congress can do that.

david1082b
Posts: 316
Joined: Fri Jun 09, 2017 12:35 pm

Re: U.S. stocks in freefall

Post by david1082b » Thu Apr 19, 2018 7:01 pm

There is no such thing as "the FED" [it's the Fed, short for Federal Reserve System, FRS if you will] and US stocks are not in freefall. This has been your public info broadcast for the day.

finite_difference
Posts: 926
Joined: Thu Jul 09, 2015 7:00 pm

Re: U.S. stocks in freefall

Post by finite_difference » Thu Apr 19, 2018 7:10 pm

nedsaid wrote:
Wed Apr 18, 2018 6:18 pm
dziuniek wrote:
Wed Apr 18, 2018 8:50 am
I think people are missing the fact that the FED can't distort something it's a part of. :twisted:
(more so than ever)
Except that the Fed did some unprecedented things, for example, the purchase of Mortgage Instruments to help bring down mortgage rates. Historically, the Fed limited its purchases of bonds to Treasuries. They also brought short term rates down to almost zero. Hence the nickname, Helicopter Ben, the mental image of the former Fed Chairman dropping cash from helicopters to the people below. The TARP (Troubled Assets Relief Program) also took very aggressive steps forcing even strong banks to take bailout money and forcing the merger of weak financial institutions into strong ones. Literally, everything but the kitchen sink was thrown at the financial crisis to prevent a second Great Recession. Probably when we weren't looking, probably the kitchen sink was thrown in too. Pretty amazing things happened.
You mean second Great Depression?

Let’s also not forget that Congress helped significantly by passing the Economic Stimulus Act of 2008 and the American Recovery and Reinvestment Act of 2009.

It is good Keynesian economics for the government to increase spending in times of economic turndown (when companies are broke), and to turn off spending during economic booms (when companies have capital).
The most precious gift we can offer anyone is our attention. - Thich Nhat Hanh

GoldenFinch
Posts: 1560
Joined: Mon Nov 10, 2014 11:34 pm

Re: U.S. stocks in freefall

Post by GoldenFinch » Thu Apr 19, 2018 7:31 pm

willthrill81 wrote:
Thu Apr 19, 2018 10:07 am
gmaynardkrebs wrote:
Thu Apr 19, 2018 9:37 am
willthrill81 wrote:
Thu Apr 19, 2018 9:13 am
The bunny market is hopping again today! :P
?
'Hopping' between a gain and a loss.
As in, “Holy rabbit ears Batman! This bunny market is HOPPIN’!”

User avatar
cfs
Posts: 4139
Joined: Fri Feb 23, 2007 1:22 am
Location: ~ Mi Propio Camino ~

Re: U.S. stocks in freefall

Post by cfs » Thu Apr 19, 2018 7:41 pm

The Running of the Bulls

Well, we have bulls, bears, and bunnies . . . let's see who decides to show up tomorrow!

Good luck, y gracias por leer ~cfs~

p.s. You just don't want to be out of this market for ONE day !!!
~ Member of the Active Retired Force since 2014 ~

User avatar
LadyGeek
Site Admin
Posts: 46070
Joined: Sat Dec 20, 2008 5:34 pm
Location: Philadelphia
Contact:

Re: U.S. stocks in freefall

Post by LadyGeek » Sat Apr 21, 2018 12:27 pm

I removed an off-topic post and several replies regarding economic policy (government bailout) and monetary policy. The discussion was getting derailed.

Please stay focused on the investing aspects.
Wiki To some, the glass is half full. To others, the glass is half empty. To an engineer, it's twice the size it needs to be.

User avatar
cfs
Posts: 4139
Joined: Fri Feb 23, 2007 1:22 am
Location: ~ Mi Propio Camino ~

Re: U.S. stocks in freefall

Post by cfs » Tue Apr 24, 2018 12:00 pm

The Running of the Bulls

Oh yes, they are running . . . . good luck, y gracias por leer ~cfs~

p.s. You just don't want to be out of this market for ONE day !!!
~ Member of the Active Retired Force since 2014 ~

Da5id
Posts: 2035
Joined: Fri Feb 26, 2016 8:20 am

Re: U.S. stocks in freefall

Post by Da5id » Tue Apr 24, 2018 12:02 pm

cfs wrote:
Tue Apr 24, 2018 12:00 pm
The Running of the Bulls

Oh yes, they are running . . . . good luck, y gracias por leer ~cfs~

p.s. You just don't want to be out of this market for ONE day !!!
Running for the hills maybe? I don't know, being out of the market today seems like a fine idea (not personally out, I'm good with my AA, just saying).

User avatar
ReformedSpender
Posts: 102
Joined: Fri Mar 16, 2018 1:24 pm
Location: Stone's Throw from Vanguard

Re: U.S. stocks in freefall

Post by ReformedSpender » Tue Apr 24, 2018 12:07 pm

cfs wrote:
Tue Apr 24, 2018 12:00 pm

p.s. You just don't want to be out of this market for ONE day !!!
Every single post though :?:

:confused :oops:
Market history shows that when there's economic blue sky, future returns are low, and when the economy is on the skids, future returns are high. The best fishing is done in the most stormy waters.

User avatar
cfs
Posts: 4139
Joined: Fri Feb 23, 2007 1:22 am
Location: ~ Mi Propio Camino ~

Re: U.S. stocks in freefall

Post by cfs » Tue Apr 24, 2018 12:25 pm

Da5id wrote:
Tue Apr 24, 2018 12:02 pm
. . . Running for the hills maybe? . . .
ReformedSpender wrote:
Tue Apr 24, 2018 12:07 pm
. . . Every single post though . . .
Thanks for your notes! Good luck, y gracias por leer ~cfs~
~ Member of the Active Retired Force since 2014 ~

Christine600
Posts: 31
Joined: Sun May 03, 2015 12:09 am

Re: U.S. stocks in freefall

Post by Christine600 » Tue Apr 24, 2018 1:01 pm

It is interesting to see how freaked out people can get just from the interest rate of the 10y hitting the 3% level.

When I bought my first home I never dreamt of an interest rate that low.

User avatar
Doom&Gloom
Posts: 2010
Joined: Thu May 08, 2014 3:36 pm

Re: U.S. stocks in freefall

Post by Doom&Gloom » Tue Apr 24, 2018 1:04 pm

It is still early, but if I had my druthers, I think I would have preferred to be out of this market for THIS ONE DAY.

And undoubtedly more to come. If only I knew which ones they were ...

Post Reply