U.S. stocks in freefall

Discuss all general (i.e. non-personal) investing questions and issues, investing news, and theory.
User avatar
watchnerd
Posts: 1417
Joined: Sat Mar 03, 2007 11:18 am
Location: Seattle, WA, USA

Re: U.S. stocks in freefall

Post by watchnerd » Wed Oct 10, 2018 11:08 pm

AlphaLess wrote:
Wed Oct 10, 2018 11:03 pm
nedsaid wrote:
Wed Oct 10, 2018 8:15 pm
I think what is happening is that interest rates are moving, so far in October the yield on the 10 year treasury has moved up from 3.09% to 3.22%. Pretty good move in just 10 days! The 30 year US Treasury has moved from a yield of 3.24% to 3.39%. That is a fairly big move in a few days.

No one knows 100% for certain, but one could guess that the markets are spooked by the rapidity of rate increases. I think that is a pretty good guess.
Good guess.

US Treasury is in a big, deep hole. They are issuing like crazy. Remember, that not only are they issuing for deficit, but also for maturing securities.

Federal Reserve is not buying. Neither are foreigners. China is pissed, and for Europeans it does not make sense, economically.

So yields have nowhere but to go up.

The impact of the tax cut is fully priced in. We have some buybacks coming in, but nothing compared to the valuation levels.
If it hits 4%, I'm shifting my AA.
Tax Sheltered: 35% US Stock | 35% ex-US Stock | 30% TTM || Taxable: 35% US Stock | 35% ex-US Stock | 15% TTM | 15% Munis

mikeyzito22
Posts: 78
Joined: Sat Dec 02, 2017 5:42 pm

Re: U.S. stocks in freefall

Post by mikeyzito22 » Wed Oct 10, 2018 11:35 pm

peterinjapan wrote:
Wed Oct 10, 2018 9:18 pm
Aaaand two years of profits from DAL wiped out.

Damn it.
DAL 39.00 a share Oct 2016
DAL 52.70 a share Oct 2018
I'm a missing something?

blackcat allie
Posts: 66
Joined: Wed Jan 24, 2018 11:54 pm

Re: Stocks tumbling?

Post by blackcat allie » Thu Oct 11, 2018 12:01 am

{ delete please }

sco
Posts: 788
Joined: Thu Sep 24, 2015 2:28 pm

Re: U.S. stocks in freefall

Post by sco » Thu Oct 11, 2018 12:07 am

mikeyzito22 wrote:
Wed Oct 10, 2018 11:35 pm
peterinjapan wrote:
Wed Oct 10, 2018 9:18 pm
Aaaand two years of profits from DAL wiped out.

Damn it.
DAL 39.00 a share Oct 2016
DAL 52.70 a share Oct 2018
I'm a missing something?
Yep, that's the share price. You've had the dividend since then too :sharebeer

rgs92
Posts: 2164
Joined: Mon Mar 02, 2009 8:00 pm

Re: U.S. stocks in freefall

Post by rgs92 » Thu Oct 11, 2018 1:19 am

Vanguard Balanced Index has a year-to-date return today of about 5.6%.
So if you stayed the course this year, you still have reason to celebrate today.
To me, this says it all. And there is still room for more losses that should not shake your confidence.

So don't run and hide and don't try to be a hero either.
Last edited by rgs92 on Thu Oct 11, 2018 1:26 am, edited 3 times in total.

User avatar
CaliJim
Posts: 2982
Joined: Sun Feb 28, 2010 8:47 pm
Location: California, near the beach

Re: U.S. stocks in freefall

Post by CaliJim » Thu Oct 11, 2018 1:21 am

FREEFALL shmeefall. I didn't get hit very hard at all w/ a 45/65 asset allocation, with bond tilted towards shorter durations.

Freefall is down 30%

please. do not trample over your fellow investors rushing for the exits. remain calm and walk, do not run, towards the nearest exit, and by something from our great concessionaires on your way out the door. please observe all traffic regulations in the parking lots and have a safe trip home.
-calijim- | | For more info, click this Wiki

User avatar
nedsaid
Posts: 10314
Joined: Fri Nov 23, 2012 12:33 pm

Re: U.S. stocks in freefall

Post by nedsaid » Thu Oct 11, 2018 1:36 am

AlphaLess wrote:
Wed Oct 10, 2018 11:03 pm
nedsaid wrote:
Wed Oct 10, 2018 8:15 pm
I think what is happening is that interest rates are moving, so far in October the yield on the 10 year treasury has moved up from 3.09% to 3.22%. Pretty good move in just 10 days! The 30 year US Treasury has moved from a yield of 3.24% to 3.39%. That is a fairly big move in a few days.

No one knows 100% for certain, but one could guess that the markets are spooked by the rapidity of rate increases. I think that is a pretty good guess.
Good guess.

US Treasury is in a big, deep hole. They are issuing like crazy. Remember, that not only are they issuing for deficit, but also for maturing securities.

Federal Reserve is not buying. Neither are foreigners. China is pissed, and for Europeans it does not make sense, economically.

So yields have nowhere but to go up.

The impact of the tax cut is fully priced in. We have some buybacks coming in, but nothing compared to the valuation levels.
Well, not quite. For one thing, do some study of sectoral balances. Wikipedia has a good article on this. Pretty much the surpluses and deficits of the foreign, government, and private sector balances must be zero. If we ran trade deficits, other nations will run surpluses with us and those surpluses will ultimately be invested in Treasuries. If you have excess US Dollars, those dollars will find themselves in US Treasuries. Similarly, if the Government sector is in deficit, the private sector will be in surplus.

In rough terms our trade deficits have been about 2% to 3% of GDP. Countries that have trade surpluses with us either have to make US investments into our economy, to the extent that they don't buy such things as businesses, property, plant, and equipment; they have to purchase treasuries. Our budget deficits are about 4%-5% of GDP. This implies a private sector savings rate of 2% to 3%. So a US Budget deficit is a surplus for someone else, that is for the Foreign sector or the Private Sector or both. Notice how as the Budget Deficits surged so did private sector savings. The individual savings rate is now about 6% to 7%. In the late 1990's and the very early 2000's, we ran budget surpluses and the individual savings rate was about zero.

So pretty much, the US National Debt is a US Dollar Savings Account for Foreign nations that run trade surpluses with us and for the Private Sector. It can be no other way. This is why relatively large US Deficits have never crowded out private borrowing. Indeed, probably most of the new monies created by new debt occurs within the private banking system through the money multiplier effect. A new loan to one party is a bank deposit to another party. In the same way, what is debt to the US Treasury is an asset on someone else's books.

Also keep in mind that interest rates were kept artificially low for about a decade in order to stave off a second Great Depression. Much of what we are seeing is interest rates returning to normal.

I will make a bold prediction. When the US Treasury issues new debt, there will be buyers for it. Keep in mind that higher interest rates plus a stronger US economy will make the US Dollar more attractive for foreigners to hold. Rising interest rates are a factor in a higher dollar though of course other things are in play.

So what I am saying is counterintuitive. But if you think it through, you will see that I am right. Furthermore, for us to finance our trade deficits and to have private sector savings, then Federal Budget deficits almost have to be this high.
A fool and his money are good for business.

User avatar
CaliJim
Posts: 2982
Joined: Sun Feb 28, 2010 8:47 pm
Location: California, near the beach

Re: U.S. stocks in freefall

Post by CaliJim » Thu Oct 11, 2018 1:43 am

nedsaid wrote:
Thu Oct 11, 2018 1:36 am
AlphaLess wrote:
Wed Oct 10, 2018 11:03 pm
nedsaid wrote:
Wed Oct 10, 2018 8:15 pm
I think what is happening is that interest rates are moving, so far in October the yield on the 10 year treasury has moved up from 3.09% to 3.22%. Pretty good move in just 10 days! The 30 year US Treasury has moved from a yield of 3.24% to 3.39%. That is a fairly big move in a few days.

No one knows 100% for certain, but one could guess that the markets are spooked by the rapidity of rate increases. I think that is a pretty good guess.
......
money multiplier effect. A new loan to one party is a bank deposit to another party. In the same way, what is debt to the US Treasury is an asset on someone else's books.
There was a noob posting just the other day looking for info on how to get rich quick. We forgot to tell him about the magic "money multiplier effect".

How do we get in on that trade as little guys w/ no clout?

I get how credit expands the Money supply.
Last edited by CaliJim on Thu Oct 11, 2018 1:53 am, edited 1 time in total.
-calijim- | | For more info, click this Wiki

User avatar
nedsaid
Posts: 10314
Joined: Fri Nov 23, 2012 12:33 pm

Re: U.S. stocks in freefall

Post by nedsaid » Thu Oct 11, 2018 1:46 am

CaliJim wrote:
Thu Oct 11, 2018 1:43 am
nedsaid wrote:
Thu Oct 11, 2018 1:36 am


I think what is happening is that interest rates are moving, so far in October the yield on the 10 year treasury has moved up from 3.09% to 3.22%. Pretty good move in just 10 days! The 30 year US Treasury has moved from a yield of 3.24% to 3.39%. That is a fairly big move in a few days.

No one knows 100% for certain, but one could guess that the markets are spooked by the rapidity of rate increases. I think that is a pretty good guess.

......
money multiplier effect. A new loan to one party is a bank deposit to another party. In the same way, what is debt to the US Treasury is an asset on someone else's books.
There was a noob posting just the other day looking for info on how to get rich quick. We forgot to tell him about the magic "money multiplier effect".

How do we get in on that trade as little guys w/ no clout?
The money multiplier effect is a well known effect in the private banking sector. It isn't a scam and it is something else that is counterintuitive. Credit expansion fuels economic expansion.

I would recommend Ray Dalio's video on "How the Economy Works." Very informative and will give you good insight as to how this all works. Also would recommend Cullen Roche and his blog Pragmatic Capitalism.
A fool and his money are good for business.

User avatar
CaliJim
Posts: 2982
Joined: Sun Feb 28, 2010 8:47 pm
Location: California, near the beach

Re: U.S. stocks in freefall

Post by CaliJim » Thu Oct 11, 2018 1:54 am

nedsaid wrote:
Thu Oct 11, 2018 1:46 am
CaliJim wrote:
Thu Oct 11, 2018 1:43 am
nedsaid wrote:
Thu Oct 11, 2018 1:36 am


I think what is happening is that interest rates are moving, so far in October the yield on the 10 year treasury has moved up from 3.09% to 3.22%. Pretty good move in just 10 days! The 30 year US Treasury has moved from a yield of 3.24% to 3.39%. That is a fairly big move in a few days.

No one knows 100% for certain, but one could guess that the markets are spooked by the rapidity of rate increases. I think that is a pretty good guess.

......
money multiplier effect. A new loan to one party is a bank deposit to another party. In the same way, what is debt to the US Treasury is an asset on someone else's books.
There was a noob posting just the other day looking for info on how to get rich quick. We forgot to tell him about the magic "money multiplier effect".

How do we get in on that trade as little guys w/ no clout?
The money multiplier effect is a well known effect in the private banking sector. It isn't a scam and it is something else that is counterintuitive. Credit expansion fuels economic expansion.

I would recommend Ray Dalio's video on "How the Economy Works." Very informative and will give you good insight as to how this all works. Also would recommend Cullen Roche and his blog Pragmatic Capitalism.
thanks. I didn't mean to imply it was a scam. I just like the sound of it. "money multiplier". I get how ez credit expands the money supply. Never thought of it or heard it called a money muItiplier. It just sounds like something I need to have in my life. I need to channel a little Wayne Dyer and set an intention to benefit from the money multiplier. I guess owning some VTI since QE started has been a way to participate in it.! LOL.

ll look up Ray Dalio's video.
DD and DW are threatening to take away my youtube privs. :-(
They did not find the cat talking to the crow as fascinating for funny as I did. https://www.bing.com/videos/search?q=+c ... ORM=VRDGAR
I'm still trying to find the viral video of the (armless/disabled?) bear that was steeling some guys fruit off his fruit trees, and then something bad happened between the orchardist and the bear.....and apparently it was hilarious.
-calijim- | | For more info, click this Wiki

User avatar
oldzey
Posts: 1028
Joined: Sun Apr 13, 2014 8:38 pm
Location: Land of Lincoln

Re: U.S. stocks in freefall

Post by oldzey » Thu Oct 11, 2018 4:57 am

Image
"The broker said the stock was 'poised to move.' Silly me, I thought he meant up." ― Randy Thurman

Duffydog1
Posts: 57
Joined: Sat Dec 03, 2016 1:42 pm

Re: U.S. stocks in freefall

Post by Duffydog1 » Thu Oct 11, 2018 7:21 am

nedsaid wrote:
Thu Oct 11, 2018 1:36 am
AlphaLess wrote:
Wed Oct 10, 2018 11:03 pm
nedsaid wrote:
Wed Oct 10, 2018 8:15 pm
I think what is happening is that interest rates are moving, so far in October the yield on the 10 year treasury has moved up from 3.09% to 3.22%. Pretty good move in just 10 days! The 30 year US Treasury has moved from a yield of 3.24% to 3.39%. That is a fairly big move in a few days.

No one knows 100% for certain, but one could guess that the markets are spooked by the rapidity of rate increases. I think that is a pretty good guess.
Good guess.

US Treasury is in a big, deep hole. They are issuing like crazy. Remember, that not only are they issuing for deficit, but also for maturing securities.

Federal Reserve is not buying. Neither are foreigners. China is pissed, and for Europeans it does not make sense, economically.

So yields have nowhere but to go up.

The impact of the tax cut is fully priced in. We have some buybacks coming in, but nothing compared to the valuation levels.
Well, not quite. For one thing, do some study of sectoral balances. Wikipedia has a good article on this. Pretty much the surpluses and deficits of the foreign, government, and private sector balances must be zero. If we ran trade deficits, other nations will run surpluses with us and those surpluses will ultimately be invested in Treasuries. If you have excess US Dollars, those dollars will find themselves in US Treasuries. Similarly, if the Government sector is in deficit, the private sector will be in surplus.

In rough terms our trade deficits have been about 2% to 3% of GDP. Countries that have trade surpluses with us either have to make US investments into our economy, to the extent that they don't buy such things as businesses, property, plant, and equipment; they have to purchase treasuries. Our budget deficits are about 4%-5% of GDP. This implies a private sector savings rate of 2% to 3%. So a US Budget deficit is a surplus for someone else, that is for the Foreign sector or the Private Sector or both. Notice how as the Budget Deficits surged so did private sector savings. The individual savings rate is now about 6% to 7%. In the late 1990's and the very early 2000's, we ran budget surpluses and the individual savings rate was about zero.

So pretty much, the US National Debt is a US Dollar Savings Account for Foreign nations that run trade surpluses with us and for the Private Sector. It can be no other way. This is why relatively large US Deficits have never crowded out private borrowing. Indeed, probably most of the new monies created by new debt occurs within the private banking system through the money multiplier effect. A new loan to one party is a bank deposit to another party. In the same way, what is debt to the US Treasury is an asset on someone else's books.

Also keep in mind that interest rates were kept artificially low for about a decade in order to stave off a second Great Depression. Much of what we are seeing is interest rates returning to normal.

I will make a bold prediction. When the US Treasury issues new debt, there will be buyers for it. Keep in mind that higher interest rates plus a stronger US economy will make the US Dollar more attractive for foreigners to hold. Rising interest rates are a factor in a higher dollar though of course other things are in play.

So what I am saying is counterintuitive. But if you think it through, you will see that I am right. Furthermore, for us to finance our trade deficits and to have private sector savings, then Federal Budget deficits almost have to be this high.
Very interesting comment. I am not impacted by the decline in the market as I only hold about 15% equities that I bought many years ago.However, can you explain what you mean in context of the average investor and possible impact on them.
Thanks for the good work.

Jags4186
Posts: 2457
Joined: Wed Jun 18, 2014 7:12 pm

Re: U.S. stocks in freefall

Post by Jags4186 » Thu Oct 11, 2018 7:37 am

Duffydog1 wrote:
Thu Oct 11, 2018 7:21 am
Very interesting comment. I am not impacted by the decline in the market as I only hold about 15% equities that I bought many years ago.However, can you explain what you mean in context of the average investor and possible impact on them.
Thanks for the good work.
There is little impact on the individual investor.

1) Governments are not businesses so do not apply the same principles of finance you would a business to the government
2) Deficits are not necessarily bad
3) The debt shouldn’t concern you, especially when that debt is denominated in currency you create

There is a podcast called Money for the Rest of Us by David Stein. He does several episodes about the national debt and deficit. You should look into it and listen to episodes 106 and 126. He will explain everything the above poster explained and its effect on you in about an hour.

lostdog
Posts: 1166
Joined: Thu Feb 04, 2016 2:15 pm

Re: U.S. stocks in freefall

Post by lostdog » Thu Oct 11, 2018 7:50 am

We contribute every Friday.

I made the decision a few weeks ago to uninstall Vanguard application on my phone.

I setup auto investments for our Roth and taxable accounts at Vanguard. Any extra money we save are for vacations and other stuff.

The point of doing above is to concentrate more on the budget and work on a higher savings rate. Also to avoid looking at our balance all the time.

staythecourse
Posts: 5981
Joined: Mon Jan 03, 2011 9:40 am

Re: U.S. stocks in freefall

Post by staythecourse » Thu Oct 11, 2018 7:59 am

nedsaid wrote:
Wed Oct 10, 2018 8:15 pm

I think what is happening is that interest rates are moving, so far in October the yield on the 10 year treasury has moved up from 3.09% to 3.22%. Pretty good move in just 10 days! The 30 year US Treasury has moved from a yield of 3.24% to 3.39%. That is a fairly big move in a few days.
This is the problem with listening to the financial media. We are in an age of trading that is done in NANOSECONDS when new news comes into the marketplace. If you are correct then why didn't this move happen yesterday? Or the day before? The answer is there is NO REASON. There was NOTHING new that happened at the nanosecond before yesterday's open to explain it. Even if it did it wouldn't make sense ANY change could explain the market moving 800 points in any direction.

Good luck.

P.s. If you really want the answer it probably has to do with the parameters set by the major players computers on when to buy and sell. Since those are proprietary no one will really know. Since most of the decisions are not automated it HOW the computer trading systems are set up that matter and how they interpret S.D. changes in trading volumes and/ or price points.
"The stock market [fluctuation], therefore, is noise. A giant distraction from the business of investing.” | -Jack Bogle

Calico
Posts: 149
Joined: Thu Jan 01, 2015 5:45 pm

Re: U.S. stocks in freefall

Post by Calico » Thu Oct 11, 2018 8:09 am

For the past couple of weeks I've been asking myself, "is my asset allocation really what I want it to be?" If things dropped suddenly, would I be okay? And I concluded, "yes." I am kind of glad I was asking myself that recently because it helps me feel less stressed about this small downturn than I may have been otherwise.

I am a little stressed though. I have a 529 plan for my daughter. The way our state does it is that it has set "enter college dates" and it automatically adjusts the AA. Still, college is just a little more than three years away so I get uneasy about the value dropping. Although worst case scenario, there are loans and she's a straight A student so maybe we can fall back on scholarships/ grants too. Plus she says she wants to work and pay part of her way.

Maybe the 529 tells me something about myself that I can use when I get closer to retirement, maybe I need to make sure I am a little more conservative than I thought I would want to be. I've been a little more aggressive than what is recommended for my age and though I would be at retirement too as most women in my family live long lives and I am in perfect health/take care of myself.

mc2
Posts: 79
Joined: Wed Jan 13, 2016 10:27 am

Re: U.S. stocks in freefall

Post by mc2 » Thu Oct 11, 2018 8:30 am

Calico wrote:
Thu Oct 11, 2018 8:09 am
For the past couple of weeks I've been asking myself, "is my asset allocation really what I want it to be?" If things dropped suddenly, would I be okay? And I concluded, "yes." I am kind of glad I was asking myself that recently because it helps me feel less stressed about this small downturn than I may have been otherwise.

I am a little stressed though. I have a 529 plan for my daughter. The way our state does it is that it has set "enter college dates" and it automatically adjusts the AA. Still, college is just a little more than three years away so I get uneasy about the value dropping. Although worst case scenario, there are loans and she's a straight A student so maybe we can fall back on scholarships/ grants too. Plus she says she wants to work and pay part of her way.

Maybe the 529 tells me something about myself that I can use when I get closer to retirement, maybe I need to make sure I am a little more conservative than I thought I would want to be. I've been a little more aggressive than what is recommended for my age and though I would be at retirement too as most women in my family live long lives and I am in perfect health/take care of myself.
I also have 529's largely 65/35 for my 11 yo and 75/25 for my 7/9 yo. I guess that's on the aggressive side of things, but I really don't let financial institutions' target date allocations influence my decisions. That old 70/30-60/40 stock-bond idea seems to be pretty solid, and I'm sticking inside that pocket-leaning a bit more towards 65-70/30-35 as a 46 yo.

hightower
Posts: 510
Joined: Mon Dec 12, 2016 2:28 am

Re: U.S. stocks in freefall

Post by hightower » Thu Oct 11, 2018 8:33 am

EVERYONE! SELL! SELL! SELL! Stocks are crashing! Get out now! Don't delay! Sell your entire portfolio asap!






So I can buy, buy, buy;)

2pedals
Posts: 582
Joined: Wed Dec 31, 2014 12:31 pm

Re: U.S. stocks in freefall

Post by 2pedals » Thu Oct 11, 2018 9:02 am

hightower wrote:
Thu Oct 11, 2018 8:33 am
EVERYONE! SELL! SELL! SELL! Stocks are crashing! Get out now! Don't delay! Sell your entire portfolio asap!






So I can buy, buy, buy;)
Too late? Stock stabilized into the green after the short drop on the open. I might have to wait for the next sell signal.

User avatar
nedsaid
Posts: 10314
Joined: Fri Nov 23, 2012 12:33 pm

Re: U.S. stocks in freefall

Post by nedsaid » Thu Oct 11, 2018 9:17 am

Duffydog1 wrote:
Thu Oct 11, 2018 7:21 am
nedsaid wrote:
Thu Oct 11, 2018 1:36 am
AlphaLess wrote:
Wed Oct 10, 2018 11:03 pm
nedsaid wrote:
Wed Oct 10, 2018 8:15 pm
I think what is happening is that interest rates are moving, so far in October the yield on the 10 year treasury has moved up from 3.09% to 3.22%. Pretty good move in just 10 days! The 30 year US Treasury has moved from a yield of 3.24% to 3.39%. That is a fairly big move in a few days.

No one knows 100% for certain, but one could guess that the markets are spooked by the rapidity of rate increases. I think that is a pretty good guess.
Good guess.

US Treasury is in a big, deep hole. They are issuing like crazy. Remember, that not only are they issuing for deficit, but also for maturing securities.

Federal Reserve is not buying. Neither are foreigners. China is pissed, and for Europeans it does not make sense, economically.

So yields have nowhere but to go up.

The impact of the tax cut is fully priced in. We have some buybacks coming in, but nothing compared to the valuation levels.
Well, not quite. For one thing, do some study of sectoral balances. Wikipedia has a good article on this. Pretty much the surpluses and deficits of the foreign, government, and private sector balances must be zero. If we ran trade deficits, other nations will run surpluses with us and those surpluses will ultimately be invested in Treasuries. If you have excess US Dollars, those dollars will find themselves in US Treasuries. Similarly, if the Government sector is in deficit, the private sector will be in surplus.

In rough terms our trade deficits have been about 2% to 3% of GDP. Countries that have trade surpluses with us either have to make US investments into our economy, to the extent that they don't buy such things as businesses, property, plant, and equipment; they have to purchase treasuries. Our budget deficits are about 4%-5% of GDP. This implies a private sector savings rate of 2% to 3%. So a US Budget deficit is a surplus for someone else, that is for the Foreign sector or the Private Sector or both. Notice how as the Budget Deficits surged so did private sector savings. The individual savings rate is now about 6% to 7%. In the late 1990's and the very early 2000's, we ran budget surpluses and the individual savings rate was about zero.

So pretty much, the US National Debt is a US Dollar Savings Account for Foreign nations that run trade surpluses with us and for the Private Sector. It can be no other way. This is why relatively large US Deficits have never crowded out private borrowing. Indeed, probably most of the new monies created by new debt occurs within the private banking system through the money multiplier effect. A new loan to one party is a bank deposit to another party. In the same way, what is debt to the US Treasury is an asset on someone else's books.

Also keep in mind that interest rates were kept artificially low for about a decade in order to stave off a second Great Depression. Much of what we are seeing is interest rates returning to normal.

I will make a bold prediction. When the US Treasury issues new debt, there will be buyers for it. Keep in mind that higher interest rates plus a stronger US economy will make the US Dollar more attractive for foreigners to hold. Rising interest rates are a factor in a higher dollar though of course other things are in play.

So what I am saying is counterintuitive. But if you think it through, you will see that I am right. Furthermore, for us to finance our trade deficits and to have private sector savings, then Federal Budget deficits almost have to be this high.
Very interesting comment. I am not impacted by the decline in the market as I only hold about 15% equities that I bought many years ago.However, can you explain what you mean in context of the average investor and possible impact on them.
Thanks for the good work.
Well, there are a couple of concerns. First rising interest rates will make the interest on the National Debt a higher and higher part of the Federal Budget. Second, there is concern that too much money creation could lead to higher inflation. Seeing that our National debt is denominated in our own currency, we can always make more currency to service our debt, so higher inflation and not default is the concern here. The classic too much money chasing too few goods and services argument.

I do want to point out that the Reagan and Obama administrations ran relatively high budget deficits and yet both inflation and interest rates fell during both administrations. The Reagan Administration saw strong US economic growth and the Obama Administration saw relatively tepid economic growth after the financial crisis. Furthermore, the causes of recession that preceded Reagan and that preceded Obama were different. I am trying to say two things here, first there is no relationship between the level of interest rates and budget deficits. I learned this in economics class in college. Second, the economy is very complex and there are a lot of factors at work.

The standard textbook explanations don't always seem to work here and much of this is counterintuitive. Part of the reason for this is that the way that finance works for a government and the way finance works for a household are much different.

Bottom line is that both economic growth, inflation, and interest rates are ticking up. To me, inflation is public enemy number one for the average investor. At some point, if interest rates keep going up, it will cause recession as higher rates discourage lending. How high is too high is a great question, we just don't know.
A fool and his money are good for business.

Riley15
Posts: 144
Joined: Wed May 11, 2016 9:21 pm

Re: U.S. stocks in freefall

Post by Riley15 » Thu Oct 11, 2018 9:22 am

nedsaid wrote:
Wed Oct 10, 2018 8:15 pm
staythecourse wrote:
Wed Oct 10, 2018 5:41 pm
nedsaid wrote:
Wed Oct 10, 2018 3:11 pm
Wow. Dow 30 Index is now down 831 points today. The market isn't loving the higher interest rates. Something is going on here, are the hedge funds doing something we don't know about? It doesn't make any sense to me but markets sometimes do stuff like this. Pretty irrational.
Why do folks assume there has to be a reason for the market to be down? There is likely NO reason it goes up, down, or sideways on any given day. The single thing that made me a great investor is the day I realized how FOOLISH folks sound (the pundits on t.v. not you) about the explanations of why the market did this or that today. My answer: There is no answer and it would have been the same if it went UP 1000 points today.

Good luck.
Well, something happened. There was an imbalance of buy and sell orders and the prices had to drop to get the orders back into equilibrium. Sometimes it is evident why markets move but no apparent reason for the severity of the move. I suppose you could ask the traders and the institutions what was going on. Other times, markets just do weird things for no apparent reason.

I think what is happening is that interest rates are moving, so far in October the yield on the 10 year treasury has moved up from 3.09% to 3.22%. Pretty good move in just 10 days! The 30 year US Treasury has moved from a yield of 3.24% to 3.39%. That is a fairly big move in a few days.

No one knows 100% for certain, but one could guess that the markets are spooked by the rapidity of rate increases. I think that is a pretty good guess.

Why are the long term interest rates moving up?

Fed only controls short term rates. So for long term rates to go up that means lot of long term bond selling going on, meaning prices dropping and yields going up. If money is moving out of long term bonds it's definitely not going into stocks since stocks were falling too.

So is the flight to safety from long term bonds into short term bonds and money markets? And why is that bad for stocks?

User avatar
nedsaid
Posts: 10314
Joined: Fri Nov 23, 2012 12:33 pm

Re: U.S. stocks in freefall

Post by nedsaid » Thu Oct 11, 2018 9:32 am

staythecourse wrote:
Thu Oct 11, 2018 7:59 am
nedsaid wrote:
Wed Oct 10, 2018 8:15 pm

I think what is happening is that interest rates are moving, so far in October the yield on the 10 year treasury has moved up from 3.09% to 3.22%. Pretty good move in just 10 days! The 30 year US Treasury has moved from a yield of 3.24% to 3.39%. That is a fairly big move in a few days.
This is the problem with listening to the financial media. We are in an age of trading that is done in NANOSECONDS when new news comes into the marketplace. If you are correct then why didn't this move happen yesterday? Or the day before? The answer is there is NO REASON. There was NOTHING new that happened at the nanosecond before yesterday's open to explain it. Even if it did it wouldn't make sense ANY change could explain the market moving 800 points in any direction.

Good luck.

P.s. If you really want the answer it probably has to do with the parameters set by the major players computers on when to buy and sell. Since those are proprietary no one will really know. Since most of the decisions are not automated it HOW the computer trading systems are set up that matter and how they interpret S.D. changes in trading volumes and/ or price points.
You raise a great point about what happens behind the scenes. It can get to be a battle between computers, it could be that the computers went crazy and made all this worse than it should have been.

Markets have been concerned about rising interest rates for a while but until a few days ago had been shrugging this off. One reason is that recent economic growth has been strong. I think what happened was that while the markets priced in slow increases in rates, markets couldn't deal with rates rising faster than expected. It is the old expectations game.

If you step back to get a broader perspective, it is pretty clear to me that recently accelerating interest rate increases have spooked the market. It is also clear to me that the markets overreacted but markets often do this. Markets can be excessively bullish and markets can be excessively bearish.

It is very true that markets can do weird things for no apparent reason but I don't believe that to be the case here. The causes for this, in my view, are fairly clear. What I don't know for sure is why the Dow went down 830 points yesterday instead of let's say 200 points. My guess is that it is the old greed and fear thing, we are seeing less greed and more fear. It shows the power of human emotion.

You are going too far by saying this is all 100% random and we have no idea whatsoever what happened. My belief is that human emotion is a very powerful force and that it moves markets.
A fool and his money are good for business.

robertmcd
Posts: 188
Joined: Tue Aug 09, 2016 9:06 am

Re: U.S. stocks in freefall

Post by robertmcd » Thu Oct 11, 2018 9:37 am

High frequency trading, volatility targeting, momentum, systematic strategies, etc. have the financial markets so tightly wound that this and what we saw back in February are the new normal when it comes to any kind of correction.

retiringwhen
Posts: 456
Joined: Sat Jul 08, 2017 10:09 am
Location: New Jersey, USA

Re: U.S. stocks in freefall

Post by retiringwhen » Thu Oct 11, 2018 9:42 am

nedsaid wrote:
Thu Oct 11, 2018 9:17 am
The classic too much money chasing too few goods and services argument.
An interesting data point related to the too much money question.

At last week's BH conference, Gus Sauter gave a presentation on the Endowment model and Private Equity.

(slides and video are on the forum somewhere.)

A key take away is that there is a lot of un-deployed money (ala BRK) sitting on the sidelines. Jason Zweig stated that there is nearly $1.2T sitting on the sidelines in private equity in the US right now (up from I think Gus said $800B a couple of years ago). It was posited that this is a major driver in the under-performance of Hedge funds and Private Equity for the last decade.

My private thought was that the evidence is there for us to assume that there is a lot of money in the stock market because there is no better place to put it right now and that keeps the market buoyed (there have been threads on BH with almost that as a title)... Rising interest rates at the margin will make debt more attractive and will take some money out of the stock market and lower prices / multiples.

Healthy in the mid to long-term, painful if you watch the minute-by-minute ticker.... Darn you Thomas Edison.... :-)

User avatar
ReformedSpender
Posts: 175
Joined: Fri Mar 16, 2018 1:24 pm
Location: Stone's Throw from Vanguard

Re: U.S. stocks in freefall

Post by ReformedSpender » Thu Oct 11, 2018 9:45 am

Image
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
nedsaid
Posts: 10314
Joined: Fri Nov 23, 2012 12:33 pm

Re: U.S. stocks in freefall

Post by nedsaid » Thu Oct 11, 2018 9:46 am

Riley15 wrote:
Thu Oct 11, 2018 9:22 am

Why are the long term interest rates moving up?

Fed only controls short term rates. So for long term rates to go up that means lot of long term bond selling going on, meaning prices dropping and yields going up. If money is moving out of long term bonds it's definitely not going into stocks since stocks were falling too.

So is the flight to safety from long term bonds into short term bonds and money markets? And why is that bad for stocks?
I can't get into the minds of all the market participants but I can give you my educated guesses.

Long term interest rates are headed up because expectations of both economic growth and inflation are increasing.

I don't believe this to be a flight to safety as longer term bonds are more volatile than short term bonds. You would expect a flight to safety to be to shorter term bonds.

Higher interest rates in the shorter run are not always bad for stocks. Higher interest rates can mean higher economic growth. Higher economic growth means higher corporate earnings. There is a point at which higher interest rates make borrowing costs too high and an increasing amount of people who want to borrow at some point cannot. Less borrowing means less economic activity and if rates go up too high, the economy can tip into recession. Recessions are not good for stocks.

Also at some point, higher interest rates can become competition for stocks themselves. I remember being able to get 8% from 10 year Zero Coupon Treasuries. Seeing that long term returns from the stock market are 8% to 12%, depending upon when you look, at some point you would rather sit in safer bonds collecting 8% interest without taking all the risks of the stock market. Right now, you can get about 3% interest from 10 year Treasuries, so things are much different now than back in 1989.

Keep in mind that the economy and the markets are quite complex. I could never explain 100% of why certain things are happening. But the above is a good but imperfect explanation.
A fool and his money are good for business.

User avatar
nedsaid
Posts: 10314
Joined: Fri Nov 23, 2012 12:33 pm

Re: U.S. stocks in freefall

Post by nedsaid » Thu Oct 11, 2018 9:52 am

retiringwhen wrote:
Thu Oct 11, 2018 9:42 am
nedsaid wrote:
Thu Oct 11, 2018 9:17 am
The classic too much money chasing too few goods and services argument.
An interesting data point related to the too much money question.

At last week's BH conference, Gus Sauter gave a presentation on the Endowment model and Private Equity.

(slides and video are on the forum somewhere.)

A key take away is that there is a lot of un-deployed money (ala BRK) sitting on the sidelines. Jason Zweig stated that there is nearly $1.2T sitting on the sidelines in private equity in the US right now (up from I think Gus said $800B a couple of years ago). It was posited that this is a major driver in the under-performance of Hedge funds and Private Equity for the last decade.

My private thought was that the evidence is there for us to assume that there is a lot of money in the stock market because there is no better place to put it right now and that keeps the market buoyed (there have been threads on BH with almost that as a title)... Rising interest rates at the margin will make debt more attractive and will take some money out of the stock market and lower prices / multiples.

Healthy in the mid to long-term, painful if you watch the minute-by-minute ticker.... Darn you Thomas Edison.... :-)
You have raised the Velocity of money argument, and it is a great one. My take is that a lot of money was created in the aftermath of the 2008-2009 financial crisis but that in effect a lot of it just sat in vaults. Much of it just sat there doing nothing. A pretty good argument for why inflation didn't pick up, money velocity was low. In the aftermath of the financial crisis, lending demand was low. The argument could be made that money velocity is picking up as private lending has been increasing and that is a reason that inflation is ticking up.
A fool and his money are good for business.

Riley15
Posts: 144
Joined: Wed May 11, 2016 9:21 pm

Re: U.S. stocks in freefall

Post by Riley15 » Thu Oct 11, 2018 10:13 am

nedsaid wrote:
Thu Oct 11, 2018 9:46 am
Riley15 wrote:
Thu Oct 11, 2018 9:22 am

Why are the long term interest rates moving up?

Fed only controls short term rates. So for long term rates to go up that means lot of long term bond selling going on, meaning prices dropping and yields going up. If money is moving out of long term bonds it's definitely not going into stocks since stocks were falling too.

So is the flight to safety from long term bonds into short term bonds and money markets? And why is that bad for stocks?
I can't get into the minds of all the market participants but I can give you my educated guesses.

Long term interest rates are headed up because expectations of both economic growth and inflation are increasing.

I don't believe this to be a flight to safety as longer term bonds are more volatile than short term bonds. You would expect a flight to safety to be to shorter term bonds.

Higher interest rates in the shorter run are not always bad for stocks. Higher interest rates can mean higher economic growth. Higher economic growth means higher corporate earnings. There is a point at which higher interest rates make borrowing costs too high and an increasing amount of people who want to borrow at some point cannot. Less borrowing means less economic activity and if rates go up too high, the economy can tip into recession. Recessions are not good for stocks.

Also at some point, higher interest rates can become competition for stocks themselves. I remember being able to get 8% from 10 year Zero Coupon Treasuries. Seeing that long term returns from the stock market are 8% to 12%, depending upon when you look, at some point you would rather sit in safer bonds collecting 8% interest without taking all the risks of the stock market. Right now, you can get about 3% interest from 10 year Treasuries, so things are much different now than back in 1989.

Keep in mind that the economy and the markets are quite complex. I could never explain 100% of why certain things are happening. But the above is a good but imperfect explanation.
That's a great explanation.

Another take on this is that I think long term bonds and stocks are somewhat correlated, is that they represent the long term confidence in the economy. Stocks can also be thought of as long term bonds. So if long term bond selling is going on, stocks investors are gonna take notice. Also in 2008 long term bonds fell significantly along with stocks but recovered earlier than stocks.

On the other side, long term interest rates are also going up because higher interest rates bonds are issued. And treasury issues the long term bonds based on demand. So they had to increase bond face values to increase demand. So it's not completely accurate to say fed doesn't control long term rates. They do but indirectly?

JW-Retired
Posts: 6908
Joined: Sun Dec 16, 2007 12:25 pm

Re: U.S. stocks in freefall

Post by JW-Retired » Thu Oct 11, 2018 10:16 am

We can't worry about it. On Monday Oct 3rd I re-balanced equities back down about 5 points to my 60/40 target AA. No reason except it was at the edge of the band and I had a whim. Nothing like oldster good luck!

We take RMDs pro-rata and only do high equities side re-balancing. I'm liking this minimal strategy more and more. DW & I will have no investment decisions to think about until our stocks boom up to 65% again on their own. Meanwhile we have nothing to do. That could take years and years. :D
JW
Retired at Last

edgeagg
Posts: 71
Joined: Tue Jan 23, 2018 1:27 pm
Location: WA-US

Re: U.S. stocks in freefall

Post by edgeagg » Thu Oct 11, 2018 10:37 am

JW-Retired wrote:
Thu Oct 11, 2018 10:16 am
We can't worry about it. On Monday Oct 3rd I re-balanced equities back down about 5 points to my 60/40 target AA. No reason except it was at the edge of the band and I had a whim. Nothing like oldster good luck!

We take RMDs pro-rata and only do high equities side re-balancing. I'm liking this minimal strategy more and more. DW & I will have no investment decisions to think about until our stocks boom up to 65% again on their own. Meanwhile we have nothing to do. That could take years and years. :D
JW
Totally agree. From 2009 on to yesterday, there have been 44 days out of 2461 where the market has swung by over 3%. Out of these 44 days, 24 have resulted in losses over 3%. Yet most of the gains for many of us have come during this period. So I'm not sure what the hullabaloo is all about. But data is never looked at in all of these breathless reports by the so-called "financial press" and people like Jim Cramer and others of similar ilk. Bah!

Finally the Fed has already signaled their planned rate hikes to 3.4% for the funds rate. If we believe in efficient markets then why is this so much of a surprise?

ADAMNOGGI
Posts: 10
Joined: Wed Jun 15, 2016 11:02 am

Re: What You Said

Post by ADAMNOGGI » Thu Oct 11, 2018 10:42 am

ofcmetz wrote:
Mon Aug 08, 2011 3:34 pm
AndroAsc wrote:Why is it drop in stock market indexes are always reported in absolute figures? Not everyone know what the value was a week ago you know... reporting it in percentages would make things much better.
I've always thought this as well. Thankfully my app on my phone shoes me the percentages real time as well.
The headlines should read "Stocks on sale all this week. See your broker now."

[*][*][*]Mathematicians are smart. The rest of us are merely well read to varying degrees./me

carofe
Posts: 344
Joined: Thu Mar 20, 2014 7:21 pm

Re: U.S. stocks in freefall

Post by carofe » Thu Oct 11, 2018 10:56 am

I can't believe the PE10 is going any higher. The Earnings will need to grow like weed, or the Price will go down. Speculation can't hold forever.
Maybe all those predictions that the coming decade was going to be bumpy with low Net Return are starting to look more real.
Anyways, for the first time I feel like my AA is actually good for my risk tolerance. I feel comfortable in these environments. During bull market periods, I wondered many times why I didn't have more in stock, but now I feel it was a good move to keep invested in stock but proceeding with caution. I have an Age-5 in Bonds allocation, and not tilts, simple. Sticking with Bogle's advise is actually working great to keep me from messing with my investments and stay the course.

I think the big "crack" that will cause the stampede will come from China and propagating to many other countries. The panicking because of the Fed raising interest rate ain't going to produce a big fall, IMHO.
US Total Stock Market + Intermediate Term Bond. That's it.

gmaynardkrebs
Posts: 886
Joined: Sun Feb 10, 2008 11:48 am

Re: U.S. stocks in freefall

Post by gmaynardkrebs » Thu Oct 11, 2018 11:29 am

nedsaid wrote:
Thu Oct 11, 2018 9:52 am
retiringwhen wrote:
Thu Oct 11, 2018 9:42 am
nedsaid wrote:
Thu Oct 11, 2018 9:17 am
The classic too much money chasing too few goods and services argument.
An interesting data point related to the too much money question.

At last week's BH conference, Gus Sauter gave a presentation on the Endowment model and Private Equity.

(slides and video are on the forum somewhere.)

A key take away is that there is a lot of un-deployed money (ala BRK) sitting on the sidelines. Jason Zweig stated that there is nearly $1.2T sitting on the sidelines in private equity in the US right now (up from I think Gus said $800B a couple of years ago). It was posited that this is a major driver in the under-performance of Hedge funds and Private Equity for the last decade.

My private thought was that the evidence is there for us to assume that there is a lot of money in the stock market because there is no better place to put it right now and that keeps the market buoyed (there have been threads on BH with almost that as a title)... Rising interest rates at the margin will make debt more attractive and will take some money out of the stock market and lower prices / multiples.

Healthy in the mid to long-term, painful if you watch the minute-by-minute ticker.... Darn you Thomas Edison.... :-)
You have raised the Velocity of money argument, and it is a great one. My take is that a lot of money was created in the aftermath of the 2008-2009 financial crisis but that in effect a lot of it just sat in vaults. Much of it just sat there doing nothing. A pretty good argument for why inflation didn't pick up, money velocity was low. In the aftermath of the financial crisis, lending demand was low. The argument could be made that money velocity is picking up as private lending has been increasing and that is a reason that inflation is ticking up.
Wage growth is still tepid, which has benefited employers, and kept corporate profits at high levels. Demand for lending has been low not because of any lack of willing borrowers, but because stricter lending criteria have cut out many potential borrowers at lower income levels. At some point, employers will have to choose between low wages or having lower demand for their output. I feel that is a factor in the recent market action.

retiringwhen
Posts: 456
Joined: Sat Jul 08, 2017 10:09 am
Location: New Jersey, USA

Re: U.S. stocks in freefall

Post by retiringwhen » Thu Oct 11, 2018 11:54 am

To put a positive spin on today.

At noon today, I was 3rd on the 2018 Bogleheads Contest to predict the value of the SP500 on 12/31/18.

I took the close of 2017 and used an estimated price growth of 3%. that put the number at 2764.... We still get 1.5% dividends too! All is good!

CULater
Posts: 1375
Joined: Sun Nov 13, 2016 10:59 am

Re: U.S. stocks in freefall

Post by CULater » Thu Oct 11, 2018 12:26 pm

Just remember this formula:

Y = ((X / (1- X)) * 100%

Y is the percentage gain in your portfolio value needed to recover from percentage loss X.

Loss (%)....... Req'd Gain
5%................... 5.2%
10%................. 11%
15%................. 18%
20%................. 25%
25%................. 33%
30%................. 43%
35%................. 54%
40%................. 67%
45%................. 82%
50%................. 100%

It's a shorter trip to avoid losing money than it is to make money to end up at the same place.
May you have the hindsight to know where you've been, The foresight to know where you're going, And the insight to know when you've gone too far. ~ Irish Blessing

User avatar
oldcomputerguy
Posts: 3302
Joined: Sun Nov 22, 2015 6:50 am
Location: In the middle of five acres of woods

Re: U.S. stocks in freefall

Post by oldcomputerguy » Thu Oct 11, 2018 12:45 pm

tony_roach wrote:
Wed Oct 10, 2018 7:23 pm
OP if it makes you feel better my overall portfolio went down 20K today and I still purchased in my taxable account.
You know, it just occurred to me, I have absolutely no idea how much my portfolio went down yesterday.
It’s taken me a lot of years, but I’ve come around to this: If you’re dumb, surround yourself with smart people. And if you’re smart, surround yourself with smart people who disagree with you.

DorothyB
Posts: 66
Joined: Wed Oct 17, 2012 6:17 pm

Re: U.S. stocks in freefall

Post by DorothyB » Thu Oct 11, 2018 12:49 pm

oldcomputerguy wrote:
Thu Oct 11, 2018 12:45 pm

You know, it just occurred to me, I have absolutely no idea how much my portfolio went down yesterday.
Me either :) No reason to look as it will go either up or down today . . . and tomorrow . . .

I usually look only once at the end of the month.

Grover
Posts: 52
Joined: Sun Apr 19, 2015 3:22 pm

Re: U.S. stocks in freefall

Post by Grover » Thu Oct 11, 2018 1:46 pm

Getting ugly

User avatar
willthrill81
Posts: 5734
Joined: Thu Jan 26, 2017 3:17 pm
Location: USA

Re: U.S. stocks in freefall

Post by willthrill81 » Thu Oct 11, 2018 1:52 pm

oldcomputerguy wrote:
Thu Oct 11, 2018 12:45 pm
tony_roach wrote:
Wed Oct 10, 2018 7:23 pm
OP if it makes you feel better my overall portfolio went down 20K today and I still purchased in my taxable account.
You know, it just occurred to me, I have absolutely no idea how much my portfolio went down yesterday.
I don't know and don't really want to. There's no reason for me to know.

I'm looking at this as a good buying opportunity. Even though I'm a trend follower, my strategy says to stay in, so that's what I'm doing.
“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

FootballFan5548
Posts: 159
Joined: Mon May 01, 2017 2:20 pm

Re: U.S. stocks in freefall

Post by FootballFan5548 » Thu Oct 11, 2018 1:55 pm

Grover wrote:
Thu Oct 11, 2018 1:46 pm
Getting ugly

Yup... just last week I was $4,000 measly dollars away from joining the 2 comma club for the first time. I’d been tracking it closely to see if I’d hit that milestone.
Now I feel much farther away.... bummer

RetireBy55
Posts: 104
Joined: Wed Nov 30, 2016 6:20 pm

Re: U.S. stocks in freefall

Post by RetireBy55 » Thu Oct 11, 2018 2:01 pm

Anyone have a hypothesis as to what in the world is causing the drop this week? We've known for a long time that the Fed is raising rates. I haven't heard "any" significant new news that would lead to what we've seen this week but as I'm doing early retirement starting next month, the timing is definitely not so good.

One can speculate that perhaps it has something to do with the upcoming elections (economy good - good for those currently in office..not so good, vice-versa). NOT to get political but that is the ONLY thing I can think of that would explain this. Good ole' fashioned stoking of fear and panic to cause a stampede. Seems to be working if so.

User avatar
ReformedSpender
Posts: 175
Joined: Fri Mar 16, 2018 1:24 pm
Location: Stone's Throw from Vanguard

Re: U.S. stocks in freefall

Post by ReformedSpender » Thu Oct 11, 2018 2:01 pm

Software glitch on my end! I stand corrected

(Delete)
Last edited by ReformedSpender on Thu Oct 11, 2018 2:18 pm, edited 1 time in total.
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.

RetireBy55
Posts: 104
Joined: Wed Nov 30, 2016 6:20 pm

Re: U.S. stocks in freefall

Post by RetireBy55 » Thu Oct 11, 2018 2:04 pm

ReformedSpender wrote:
Thu Oct 11, 2018 2:01 pm
DOW just flashed down -1793 points, biggest since 2010 :shock:
Over what timeframe? We're currently down 471. Very painful but nowhere near what you posted.

User avatar
pokebowl
Posts: 203
Joined: Sat Dec 17, 2016 7:22 pm
Location: The Orion Spur of the Milky Way galaxy.

Re: U.S. stocks in freefall

Post by pokebowl » Thu Oct 11, 2018 2:04 pm

At least we get to reuse our hats? We have that going for us.

Image
There is nothing more expensive than something offered for free.

User avatar
Mlm
Posts: 285
Joined: Sat Apr 09, 2016 6:00 pm

Re: U.S. stocks in freefall

Post by Mlm » Thu Oct 11, 2018 2:07 pm

Mlm wrote:
Wed Oct 10, 2018 2:46 pm
It could be worse
And it is :shock:

User avatar
FIREchief
Posts: 2684
Joined: Fri Aug 19, 2016 6:40 pm

Re: U.S. stocks in freefall

Post by FIREchief » Thu Oct 11, 2018 2:09 pm

RetireBy55 wrote:
Thu Oct 11, 2018 2:01 pm
Anyone have a hypothesis as to what in the world is causing the drop this week?
One word answer: "fear"

I'm hoping for continued "fear" through December so that my Roth conversions on Jan 2 will be at discount rates.

I wouldn't necessarily call this a drop. "Heavy noise" would be more like it.... 8-)
I am not a lawyer, accountant or financial advisor. Any advice or suggestions that I may provide shall be considered for entertainment purposes only.

User avatar
DanMahowny
Posts: 507
Joined: Sun Aug 06, 2017 8:25 pm

Re: U.S. stocks in freefall

Post by DanMahowny » Thu Oct 11, 2018 2:10 pm

FootballFan5548 wrote:
Thu Oct 11, 2018 1:55 pm
Yup... just last week I was $4,000 measly dollars away from joining the 2 comma club for the first time. I’d been tracking it closely to see if I’d hit that milestone.
Now I feel much farther away.... bummer
Hang in there man. Same thing happened to me around 4-5 years ago.

You'll get there. Now or later.
Funding secured

Glockenspiel
Posts: 523
Joined: Thu Feb 08, 2018 1:20 pm

Re: U.S. stocks in freefall

Post by Glockenspiel » Thu Oct 11, 2018 2:10 pm

oldcomputerguy wrote:
Thu Oct 11, 2018 12:45 pm
tony_roach wrote:
Wed Oct 10, 2018 7:23 pm
OP if it makes you feel better my overall portfolio went down 20K today and I still purchased in my taxable account.
You know, it just occurred to me, I have absolutely no idea how much my portfolio went down yesterday.
I've also lost $20,000 in the last couple days, or as much as I make in about 3 months.

bo105954027
Posts: 57
Joined: Wed Mar 30, 2016 4:00 pm

Re: U.S. stocks in freefall

Post by bo105954027 » Thu Oct 11, 2018 2:12 pm

CULater wrote:
Thu Oct 11, 2018 12:26 pm
Just remember this formula:

Y = ((X / (1- X)) * 100%

Y is the percentage gain in your portfolio value needed to recover from percentage loss X.

Loss (%)....... Req'd Gain
5%................... 5.2%
10%................. 11%
15%................. 18%
20%................. 25%
25%................. 33%
30%................. 43%
35%................. 54%
40%................. 67%
45%................. 82%
50%................. 100%

It's a shorter trip to avoid losing money than it is to make money to end up at the same place.
Besides, market climbs up much slower than sliding down. It's frequently seen that market dropped by 3-4% in a day, but hardly did market happen to climb up by 2% in a day. Falls take place easier than Soars. :oops:
Time in market beats timing the market.

lukestuckenhymer
Posts: 58
Joined: Wed May 30, 2018 11:53 am

Re: U.S. stocks in freefall

Post by lukestuckenhymer » Thu Oct 11, 2018 2:13 pm

pokebowl wrote:
Thu Oct 11, 2018 2:04 pm
At least we get to reuse our hats? We have that going for us.

Image
always makes me cringe

Post Reply