U.S. stocks in free fall
- jabberwockOG
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Re: U.S. stocks in freefall
I'd loved a 30-40% drop, or even 10% drop, when I was still in accumulation phase.
These days in retirement and no longer accumulating we keep 4-5 years of yearly expenses in CDs/Short term bond/Savings bucket so likely will never have to touch equities in a down market.
I did buy a few shares of my favorite stock this morning as it was down $10 a share. Never attempting to market time but buying the dips when I have extra cash has worked extremely well over the years.
And in terms of explaining this weeks market action - nobody has a clue what is going to happen. It is all pure, simple BS.
Remember a simple truth - Anyone with the skill set to actually reliably know what will happen to the market will tell no one and quietly make themselves a billionaire. The BS artists that actually have no chance of reliable predicting market behavior are happy to earn a moderate living by spouting their financial theories on TV and in media articles and news stories.
These days in retirement and no longer accumulating we keep 4-5 years of yearly expenses in CDs/Short term bond/Savings bucket so likely will never have to touch equities in a down market.
I did buy a few shares of my favorite stock this morning as it was down $10 a share. Never attempting to market time but buying the dips when I have extra cash has worked extremely well over the years.
And in terms of explaining this weeks market action - nobody has a clue what is going to happen. It is all pure, simple BS.
Remember a simple truth - Anyone with the skill set to actually reliably know what will happen to the market will tell no one and quietly make themselves a billionaire. The BS artists that actually have no chance of reliable predicting market behavior are happy to earn a moderate living by spouting their financial theories on TV and in media articles and news stories.
- goodenyou
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Re: U.S. stocks in freefall
In competitive golf, every shot makes someone happy. In the stock market, every day makes someone happy.
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Re: U.S. stocks in freefall
Looks like he decided to stick around and show off his cuteness.GoldenFinch wrote: ↑Thu Oct 04, 2018 6:54 pmHe is kinda cute, but does he have to stick around?
"The broker said the stock was 'poised to move.' Silly me, I thought he meant up." ― Randy Thurman
- ruralavalon
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Re: U.S. stocks in freefall
If the hoped-for 10-15% stock market drop coincides with layoff, job loss, serious illness, disabling injury, etc. then an investor could be in deep trouble, whether the investor has planned well or not.MotoTrojan wrote: ↑Fri Oct 05, 2018 11:38 amWhy? Harvest some losses, pay less taxes, accumulate more shares, historically result in a better/earlier retirement. 10-15% shouldn’t kill anyone’s well planned retirement either.ruralavalon wrote: ↑Fri Oct 05, 2018 10:18 amBe careful what you wish for.
No one is immune to these possible problems.
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Wiki article link: Bogleheads® investment philosophy
Re: U.S. stocks in freefall
Let's see what Ciovacco says today. Either the lines will say we're in a confused period, or they'll say we're still looking beautiful for another decade of bull running.Yesterdaysnews wrote: ↑Fri Oct 05, 2018 11:36 am Yeah, something about this drop feels a little different.
Re: U.S. stocks in freefall
Why?ruralavalon wrote: ↑Fri Oct 05, 2018 10:18 amBe careful what you wish for.
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- Earl Lemongrab
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Re: U.S. stocks in freefall
That doesn't matter. What the OP said was that a deeper decline is more probable because the first part (the 10-15% decline) had happened. On a probability basis that's false. Now, if the momentum theories are correct then recent trends of the market might presage future trends, but I addressed that previously.lukestuckenhymer wrote: ↑Fri Oct 05, 2018 12:58 pmThe probability of a 10-15% decline and a 40-50% decline on any given day are two different probabilities. The coin flip/gambler's fallacy is not a good comparison.Earl Lemongrab wrote: ↑Fri Oct 05, 2018 12:50 pmUh, what? You could argue on momentum grounds that further drop is more likely, but what you state makes no sense. Every streak of coin flips that yields five heads in a row starts with four heads in a row. That doesn't mean that getting four heads makes it more probable for a fifth.
Re: U.S. stocks in freefall
More people wanted to sell at the old price than buy at the old price.
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Re: U.S. stocks in freefall
Momentum is not the argument. You are confusing conditional and absolute probability. Lots of people do.Earl Lemongrab wrote: ↑Fri Oct 05, 2018 12:50 pmUh, what? You could argue on momentum grounds that further drop is more likely, but what you state makes no sense. Every streak of coin flips that yields five heads in a row starts with four heads in a row. That doesn't mean that getting four heads makes it more probable for a fifth.
In your example, what is the probability of flipping five heads in a row, after already flipping four heads in a row? 50% of course - which is much higher than the probability of flipping five heads in a row before any flips are made (3.125%).
That is exactly what is being said here.
What is the probability of the market declining 40-50%, after already declining 10-15%? Difficult to say, but certainly higher than the probability of it declining 40-50% without having yet declined at all. The reason, just as in the coin flip example, is that we’ve already eliminated the sequences of outcomes in which the first steps in the sequence could not possibly result in the final outcome we’re looking for.
If someone cares to do so, this could easily be confirmed historically by finding A) the set of trading days in which the S&P 500 was trading down 40% or more from a previous all time high, B) the set of trading days in which the S&P was trading down 10% or more from a previous all time high, C) the total set of all trading days - and noting that there is a higher proportion of A in B than A in C. That is to say, the probability of A given B is higher than the probability of A given C.
And of course, this all just gets back to, be careful what you wish for!
Re: U.S. stocks in freefall
Ah, how I would wish we get a nice 20%+ drop in the next 3-4 months.
I don't carry a signature because people are easily offended.
Re: U.S. stocks in freefall
If the bear comes out in the winter, would it be the polar variety?
I don't carry a signature because people are easily offended.
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Re: U.S. stocks in freefall
We will. Rest assured. What is your plan when that happens?
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- Hawaiishrimp
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Re: U.S. stocks in freefall
I'd love to see a 20-30% drop.
I save and invest my money, so money can make money for me, so I don't have to make money eventually.
- ruralavalon
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Re: U.S. stocks in freefall
If the desired 10-15% stock market drop coincides with layoff, loss of job, serious illness or disabling injury, then you could be in an awful fix having to sell off investments at a reduced price in order to have money to live on.
No one is immune from such events.
"Everything should be as simple as it is, but not simpler." - Albert Einstein |
Wiki article link: Bogleheads® investment philosophy
Re: U.S. stocks in freefall
Oh, I have 8.5 years of living expenses, paid off house, no debts, working spouse...I'll take my chances.ruralavalon wrote: ↑Sat Oct 06, 2018 8:08 amIf the desired 10-15% stock market drop coincides with layoff, loss of job, serious illness or disabling injury, then you could be in an awful fix having to sell off investments to live on.
No one is immune from such events.
Global stocks, IG/HY bonds, gold & digital assets at market weights 75% / 19% / 6% || LMP: TIPS ladder
- ruralavalon
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Re: U.S. stocks in freefall
You have 8.5 years of living expenses in cash, not invested in something with a positive real return?watchnerd wrote: ↑Sat Oct 06, 2018 8:10 amOh, I have 8.5 years of living expenses, paid off house, no debts, working spouse...I'll take my chances.ruralavalon wrote: ↑Sat Oct 06, 2018 8:08 amIf the desired 10-15% stock market drop coincides with layoff, loss of job, serious illness or disabling injury, then you could be in an awful fix having to sell off investments to live on.
No one is immune from such events.
"Everything should be as simple as it is, but not simpler." - Albert Einstein |
Wiki article link: Bogleheads® investment philosophy
Re: U.S. stocks in freefall
1 year in CD, the rest in bonds.ruralavalon wrote: ↑Sat Oct 06, 2018 8:19 amYou have 8.5 years of living expenses in cash, not invested in something with a positive real return?watchnerd wrote: ↑Sat Oct 06, 2018 8:10 amOh, I have 8.5 years of living expenses, paid off house, no debts, working spouse...I'll take my chances.ruralavalon wrote: ↑Sat Oct 06, 2018 8:08 amIf the desired 10-15% stock market drop coincides with layoff, loss of job, serious illness or disabling injury, then you could be in an awful fix having to sell off investments to live on.
No one is immune from such events.
Global stocks, IG/HY bonds, gold & digital assets at market weights 75% / 19% / 6% || LMP: TIPS ladder
Re: U.S. stocks in freefall
I work in a counter-cyclical industry. The recession will boost my total compensation, I will get to buy stocks cheaper, and the net result will probably better retirement outcomes for me.WanderingDoc wrote: ↑Sat Oct 06, 2018 1:43 amWe will. Rest assured. What is your plan when that happens?
I don't carry a signature because people are easily offended.
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Re: U.S. stocks in freefall
Interesting. Curious to hear more. Ideal situation.AlphaLess wrote: ↑Sat Oct 06, 2018 10:54 amI work in a counter-cyclical industry. The recession will boost my total compensation, I will get to buy stocks cheaper, and the net result will probably better retirement outcomes for me.WanderingDoc wrote: ↑Sat Oct 06, 2018 1:43 amWe will. Rest assured. What is your plan when that happens?
- TomatoTomahto
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Re: U.S. stocks in freefall
Bankruptcy attorney? Payday loans?MotoTrojan wrote: ↑Sat Oct 06, 2018 1:33 pmInteresting. Curious to hear more. Ideal situation.AlphaLess wrote: ↑Sat Oct 06, 2018 10:54 amI work in a counter-cyclical industry. The recession will boost my total compensation, I will get to buy stocks cheaper, and the net result will probably better retirement outcomes for me.WanderingDoc wrote: ↑Sat Oct 06, 2018 1:43 amWe will. Rest assured. What is your plan when that happens?
I get the FI part but not the RE part of FIRE.
- willthrill81
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Re: U.S. stocks in freefall
Repossessions? Alcohol?TomatoTomahto wrote: ↑Sat Oct 06, 2018 3:32 pmBankruptcy attorney? Payday loans?MotoTrojan wrote: ↑Sat Oct 06, 2018 1:33 pmInteresting. Curious to hear more. Ideal situation.AlphaLess wrote: ↑Sat Oct 06, 2018 10:54 amI work in a counter-cyclical industry. The recession will boost my total compensation, I will get to buy stocks cheaper, and the net result will probably better retirement outcomes for me.WanderingDoc wrote: ↑Sat Oct 06, 2018 1:43 amWe will. Rest assured. What is your plan when that happens?
The Sensible Steward
Re: U.S. stocks in freefall
Pawn shop?willthrill81 wrote: ↑Sat Oct 06, 2018 3:36 pmRepossessions? Alcohol?TomatoTomahto wrote: ↑Sat Oct 06, 2018 3:32 pmBankruptcy attorney? Payday loans?MotoTrojan wrote: ↑Sat Oct 06, 2018 1:33 pmInteresting. Curious to hear more. Ideal situation.AlphaLess wrote: ↑Sat Oct 06, 2018 10:54 amI work in a counter-cyclical industry. The recession will boost my total compensation, I will get to buy stocks cheaper, and the net result will probably better retirement outcomes for me.WanderingDoc wrote: ↑Sat Oct 06, 2018 1:43 am
We will. Rest assured. What is your plan when that happens?
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- willthrill81
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Re: U.S. stocks in freefall
Come to think of it, I wonder whether a fund that invested in these types of businesses might be a good counter-weight to a traditional stock allocation.watchnerd wrote: ↑Sat Oct 06, 2018 3:46 pmPawn shop?willthrill81 wrote: ↑Sat Oct 06, 2018 3:36 pmRepossessions? Alcohol?TomatoTomahto wrote: ↑Sat Oct 06, 2018 3:32 pmBankruptcy attorney? Payday loans?
The Sensible Steward
Re: U.S. stocks in freefall
Hedge fund. Trading. When volatility and volume are up, our trading proceeds go up a lot.
I don't carry a signature because people are easily offended.
Re: U.S. stocks in freefall
Oh man....that's a bummer....I was so hoping that answer was going to be "repo man / bounty hunter"....
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- jabberwockOG
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Re: U.S. stocks in freefall
Agree - I was also hoping for re-po man or neighborhood loan shark myself.
Re: U.S. stocks in freefall
*sigh* We're so boring
Re: U.S. stocks in freefall
Please stay on-topic.
Re: U.S. stocks in freefall
Maybe you should be selling VIX futures as a hedge against low volatility periods that would result in smaller bonuses for you?
- oldcomputerguy
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Re: U.S. stocks in freefall
If he starts dancing “Gangnam Style”, I’m going to cash.
There is only one success - to be able to spend your life in your own way. (Christopher Morley)
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- Earl Lemongrab
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Re: U.S. stocks in freefall
I think she means the discussion of occupations.PFInterest wrote: ↑Sun Oct 07, 2018 9:30 amAre you trying to say the previous 139 pages were on topic and now we are veering?
Re: U.S. stocks in freefall
^^^ That's what I meant. If there are any further questions, please PM me.
Update: An off-topic post was removed.
Update: An off-topic post was removed.
Re: U.S. stocks in freefall
Thanks for the suggestion, but I don't think it works like that.
During low volatility times, trading profits are just fine, and PA portfolio returns are fine too.
I don't carry a signature because people are easily offended.
Re: U.S. stocks in freefall
But during high volatility times, trading profits are great so you’re not currently realizing your average compensation. Profiting from VIX roll during quiet periods in the market could help you get a higher return now and smooth out your earnings. I see what you’re saying about your portfolio, assuming it’s a long equity one in some reasonable part, but it still depends on the size of your currrent portfolio vs your remaining career earnings. If your portfolio is still small, it may not be enough of a hedge vs your job and you could consider selling vol.
Re: U.S. stocks in freefall
It's true. However, two things to remember:Tanelorn wrote: ↑Sun Oct 07, 2018 3:46 pmBut during high volatility times, trading profits are great so you’re not currently realizing your average compensation. Profiting from VIX roll during quiet periods in the market could help you get a higher return now and smooth out your earnings. I see what you’re saying about your portfolio, assuming it’s a long equity one in some reasonable part, but it still depends on the size of your currrent portfolio vs your remaining career earnings. If your portfolio is still small, it may not be enough of a hedge vs your job and you could consider selling vol.
- VIX returns are negatively correlated to market returns (so the same thing can be achieved by being extra long market),
- are VIX returns incrementally beneficial to ones portfolio (beyond what a stock + bond portfolio would provide).
Selling vol is not a trivial addition to ones portfolio.
Strategies / asset possibilities available to professional businesses are quite different vs those available to retail investors.
Not to mention that there are regulatory restrictions on buying / selling various asset classes in my industry.
I don't carry a signature because people are easily offended.
Re: U.S. stocks in freefall
Aside from the *tactical* argument you are making (try to use a third asset class, VOL, to juice up portfolio), when I look at the past, I definitely have not maximized my overall earnings. So your strategic advice is on point.
Considering everything, I think that having a stock allocation significantly north of 100% when I started out, would have definitely been a winning strategy (regardless of the awesome bull market we have had).
There are various reasons for that (including reasons I would rather not disclose here), including the counter-cyclical nature of the pay.
However, industry has other issues, such as ar$e-wh0le personalities and bonus stealing, which are risks that are very hard to hedge.
I have seen very close friends be faced with the above situations. Dollar amounts involved were far from trivial.
I have observed, on multiple occasions, 7 or 8 figure bonuses being stolen.
As they say in high finance:
- you eat (*) what you kill,
(*) But you have to fight to eat it.
I don't carry a signature because people are easily offended.
Re: U.S. stocks in freefall
Looks like the S&P500 is turning positive for the day
Re: U.S. stocks in freefall
Global stocks, IG/HY bonds, gold & digital assets at market weights 75% / 19% / 6% || LMP: TIPS ladder
Re: U.S. stocks in freefall
Tech took it on the chin today. Not that I'm complaining or anything.
"The broker said the stock was 'poised to move.' Silly me, I thought he meant up." ― Randy Thurman
Re: U.S. stocks in freefall
There seems to be an even greater uptick in "Do you think something bad is about to happen?" posts lately.
- ReformedSpender
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Re: U.S. stocks in freefall
Agreed. Took the opportunity to add IJR to my portfolio
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.
- willthrill81
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Re: U.S. stocks in freefall
With unemployment at record lows and trending downward? Historically speaking, extremely unlikely. But a recession isn't necessary for stocks to drop significantly. Just look at 1987.
Will there be a recession at some point? Of course. Is it likely to be already underway? Not at all (IMHO).
The newscasts just need something to keep you tuned in and the advertisers happy.
The Sensible Steward
Re: U.S. stocks in freefall
+1 Nailed it.willthrill81 wrote: ↑Tue Oct 09, 2018 9:38 amWith unemployment at record lows and trending downward? Historically speaking, extremely unlikely. But a recession isn't necessary for stocks to drop significantly. Just look at 1987.
Will there be a recession at some point? Of course. Is it likely to be already underway? Not at all (IMHO).
The newscasts just need something to keep you tuned in and the advertisers happy.
Stocks-80% || Bonds-20% || Taxable-VTI/VXUS || IRA-VT/BNDW
Re: U.S. stocks in freefall
Market can't catch a break!
5 days downward now. (As of this time at least)
5 days downward now. (As of this time at least)
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Re: U.S. stocks in freefall
TSM is only down 3% from historical highs. Relax everybody.
- willthrill81
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Re: U.S. stocks in freefall
Indeed. I'm still up almost 10% for the year. You can bet that I would take that every year from here on out. A little downward movement is healthy because it helps to reduce market inflows that would surely come if the market went straight up.HEDGEFUNDIE wrote: ↑Tue Oct 09, 2018 1:12 pm TSM is only down 3% from historical highs. Relax everybody.
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