U.S. stocks in free fall

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lukestuckenhymer
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Re: U.S. stocks in freefall

Post by lukestuckenhymer » Thu Oct 11, 2018 5:13 pm

CULater wrote:
Thu Oct 11, 2018 4:36 pm
Image
But I don't wanna buy the dip!

kaeltor
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Re: U.S. stocks in freefall

Post by kaeltor » Thu Oct 11, 2018 5:40 pm

Ecorp wrote:
Thu Oct 11, 2018 2:43 pm
MJW wrote:
Thu Oct 11, 2018 2:40 pm
I've only been a member of the BH forum for a couple of years, but I'm not sure I've ever seen so many people this antsy.
Because easily over 50% dont follow the theory or philosophy of Bogle. Notice how many people are buying ,,, why do they have all this extra cash sitting around?
That's a good point.

I am following my normal investment routine, investing what is left over after my check is split amongst my budget items.

mortfree
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Re: U.S. stocks in freefall

Post by mortfree » Thu Oct 11, 2018 5:51 pm

MotoTrojan wrote:
Thu Oct 11, 2018 2:49 pm
Woohoo. Congrats to the poster whose name escapes me that said they had buy orders for VTI at $140 and were not buying until they got there.

Wonder if I'll get a chance to TLH my domestic holdings for the first time soon.
Me.

I settled on 10 shares at 143 on Wednesday.

For the longest while you had jinxed me.

Assuming I am who you remember

staythecourse
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Re: U.S. stocks in freefall

Post by staythecourse » Thu Oct 11, 2018 6:01 pm

For those who are waivering... Take a deep breath and go get a drink and if you don't drink go watch a movie. What the market does today or tomorrow or in the next month simply does not matter to the long term investor. If you are an active trader or day trader yes it matters, but for the rest of us it doesn't matter. Just stop paying attention to the noise.

Good luck.
"The stock market [fluctuation], therefore, is noise. A giant distraction from the business of investing.” | -Jack Bogle

invstar
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Re: U.S. stocks in freefall

Post by invstar » Thu Oct 11, 2018 6:04 pm

:thumbsup
staythecourse wrote:
Thu Oct 11, 2018 6:01 pm
For those who are waivering... Take a deep breath and go get a drink and if you don't drink go watch a movie. What the market does today or tomorrow or in the next month simply does not matter to the long term investor. If you are an active trader or day trader yes it matters, but for the rest of us it doesn't matter. Just stop paying attention to the noise.

Good luck.

bighatnohorse
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Re: U.S. stocks in freefall

Post by bighatnohorse » Thu Oct 11, 2018 6:18 pm

I just check our annuities. . .no change. . . still kicking out the same old percentage.

gilgamesh
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Re: U.S. stocks in freefall

Post by gilgamesh » Thu Oct 11, 2018 6:19 pm

Today was not as entertaining as I was hoping...didn’t even hit a 3% loss today...bummer!!!...I’m holding hope for tomorrow...give me at least -5% :twisted:

P.S: I looked at my portfolio...over the 2 days I lost a car, WTH!, sheesh! That’s all!!!.. I wanna lose a house :twisted:

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willthrill81
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Re: U.S. stocks in freefall

Post by willthrill81 » Thu Oct 11, 2018 6:26 pm

Darth Xanadu wrote:
Thu Oct 11, 2018 4:09 pm
Simply bleeding cash. :annoyed

Edit: But, refreshingly indifferent about it :beer
Ditto that. :D
“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
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Re: U.S. stocks in freefall

Post by MotoTrojan » Thu Oct 11, 2018 6:31 pm

myself11 wrote:
Thu Oct 11, 2018 3:47 pm
Question please: with the US Stock Market in free fall I need an advice as I I am planning to liquidate what would be equivalent to $150,000 from my Vanguard portfolio as a downpayment to a new house. I built that Vanguard portfolio earlier this year and I paid for the stocks when they were in their peak price. I already lost quite a bit in the past few days. The portfolio is 80 ETFs and 20 bonds. Any recommendations on what would be the best strategy to sell, in order to suffer minimum possible loss. Should I sell bonds only or any other mix?? Thanks a lot.
What funds? Do you have other assets? ETFs can be stocks, bonds, commodities. I think you mean you had an 80/20 stock to bond ratio. That’s way too aggressive for such a short holding period.

protagonist
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Re: U.S. stocks in freefall

Post by protagonist » Thu Oct 11, 2018 6:34 pm

gilgamesh wrote:
Thu Oct 11, 2018 6:19 pm


I looked at my portfolio...over the 2 days I lost a car, WTH!, sheesh! That’s all!!!.. I wanna lose a house :twisted:
If I am not mistaken, the Dow first hit 25000 around the beginning of this year.

So if you invested your money before 2018, you have not lost anything....you are still ahead. It's like playing with your winnings in the casino.

I hope that makes you feel better.

protagonist
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Re: U.S. stocks in freefall

Post by protagonist » Thu Oct 11, 2018 6:39 pm

protagonist wrote:
Thu Oct 11, 2018 6:34 pm
gilgamesh wrote:
Thu Oct 11, 2018 6:19 pm


I looked at my portfolio...over the 2 days I lost a car, WTH!, sheesh! That’s all!!!.. I wanna lose a house :twisted:
If I am not mistaken, the Dow first hit 25000 around the beginning of this year.

So if you invested your money before 2018, you have not lost anything....you are still ahead. It's like playing with your winnings in the casino.

I hope that makes you feel better.

bayview
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Re: U.S. stocks in freefall

Post by bayview » Thu Oct 11, 2018 6:41 pm

Ecorp wrote:
Thu Oct 11, 2018 2:43 pm
MJW wrote:
Thu Oct 11, 2018 2:40 pm
I've only been a member of the BH forum for a couple of years, but I'm not sure I've ever seen so many people this antsy.
Because easily over 50% dont follow the theory or philosophy of Bogle. Notice how many people are buying ,,, why do they have all this extra cash sitting around?
Well, outside of our floor savings to get us through the next 20 years or so, the rest of our portfolio was 97% stocks with some dry tinder in MM. I bought more yesterday, so now we're 98.5% stocks. So there's that.
The continuous execution of a sound strategy gives you the benefit of the strategy. That's what it's all about. --Rick Ferri

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willthrill81
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Re: U.S. stocks in freefall

Post by willthrill81 » Thu Oct 11, 2018 6:51 pm

protagonist wrote:
Thu Oct 11, 2018 6:34 pm
gilgamesh wrote:
Thu Oct 11, 2018 6:19 pm


I looked at my portfolio...over the 2 days I lost a car, WTH!, sheesh! That’s all!!!.. I wanna lose a house :twisted:
If I am not mistaken, the Dow first hit 25000 around the beginning of this year.

So if you invested your money before 2018, you have not lost anything....you are still ahead. It's like playing with your winnings in the casino.

I hope that makes you feel better.
Except that this casino has been rigged in your favor (over the long-term).
“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

protagonist
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Re: U.S. stocks in freefall

Post by protagonist » Thu Oct 11, 2018 7:02 pm

willthrill81 wrote:
Thu Oct 11, 2018 6:51 pm
protagonist wrote:
Thu Oct 11, 2018 6:34 pm
gilgamesh wrote:
Thu Oct 11, 2018 6:19 pm


I looked at my portfolio...over the 2 days I lost a car, WTH!, sheesh! That’s all!!!.. I wanna lose a house :twisted:
If I am not mistaken, the Dow first hit 25000 around the beginning of this year.

So if you invested your money before 2018, you have not lost anything....you are still ahead. It's like playing with your winnings in the casino.

I hope that makes you feel better.
Except that this casino has been rigged in your favor (over the long-term).
True, so far.
Hopefully that will continue to be the case. Only the future will tell.

AlphaLess
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Re: U.S. stocks in freefall

Post by AlphaLess » Thu Oct 11, 2018 7:20 pm

nedsaid wrote:
Thu Oct 11, 2018 1:36 am
...
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.
Everything you say makes 100% sense.
But the key statement is about rising rates.

Of course, there is a buyer for every dollar of US Treasury issued. As a matter of fact, typically there are 2x to 5x times the buyers (treasury auctions are oversubscribed). However, the main question is: at what rate?
"You can get more with a kind word and a gun than with just a kind word." George Washington

retiringwhen
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Re: U.S. stocks in freefall

Post by retiringwhen » Thu Oct 11, 2018 7:38 pm

noviceinvestor85 wrote:
Thu Oct 11, 2018 3:25 pm
retiringwhen

"Can you sleep at night? Can you hold on? If the answer is no, sell enough equities so you will stay IN the market even on dark days...... As Jack said last week, review you AA and ensure you can sleep at night, if you can't, maybe reduce your equities by 10%, but remember the worst thing you can do is leave the market, it is very hard to get back in."

I can afford to hold on for longer, but not sure how my nerves hold out if it hits 10% or more, might be tempted to [leave --admin LadyGeek] and look to get back in on the way up...
As noted by others, your risk tolerance is being tested now, it may not break today or this week (the markets are and will be a mystery so I am not foretelling the future.) You should really look at some portfolio volatility data and review some ideas on how to create a tolerable risk exposure (Jack's definition, is can you sleep at night, which is a vivid metaphor for the question "I am likely to jump ship at a bad time (like a market bottom)?"

The Wiki has an excellent introduction to Asset Allocation to help in that exercise: https://www.bogleheads.org/wiki/Asset_allocation

I would be especially careful to internalize the implications of the following chart: also seen in: viewtopic.php?f=1&t=6211#p76190

[Max Equity - Exposure Max loss]
20%...............5%
30%..............10%
40%..............15%
50%..............20%
60%..............25%
70%..............30%
80%..............35%
90%..............40%
100%.............50%

This chart implies at my AA of 65/35 I need to be prepared to see a 25 to 30% drop in my portfolio balance in order to stay the course at that allocation.

I was 85/15 in 2008-9 and saw a drop of 30+% in that time (as best as history I can reconstruct, I tried to not pay attention at the time, that is how I slept at night!)

At 80%, can you withstand a 35% drop to eventually reap the better returns seen at that AA? If so, stay, if not move down the ladder to where you will stay.

Remember the chart above looks at only the negative, here is a look at risk AND return by Vanguard: https://personal.vanguard.com/us/insigh ... ns?lang=en

There is an uneven balance between downside risk on an asset allocation and the long-term upside. You can and will see bigger downsides from time to time, and will be rewarded with smaller repeated upsides over time that will compound to significant return. BUT, if you bail and drop completely out of the market or towards a too conservative position, you will forgo those small repeated long-term gains AND also get punished by selling at the bottom. In other words, unless you really think the equity markets are turning to PERMANENT malaise, you serious punish yourself by leaving the market. Don' t do that, get your AA to the point where you sleep at night and ensure you reap the long-term rewards by Staying the Course at the level of risk and short-term volatility that will let you sleep at night....

MotoTrojan
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Re: U.S. stocks in freefall

Post by MotoTrojan » Thu Oct 11, 2018 8:03 pm

protagonist wrote:
Thu Oct 11, 2018 6:34 pm
gilgamesh wrote:
Thu Oct 11, 2018 6:19 pm


I looked at my portfolio...over the 2 days I lost a car, WTH!, sheesh! That’s all!!!.. I wanna lose a house :twisted:
If I am not mistaken, the Dow first hit 25000 around the beginning of this year.

So if you invested your money before 2018, you have not lost anything....you are still ahead. It's like playing with your winnings in the casino.

I hope that makes you feel better.
While this mantra makes people feel better, it is simply not true. Especially in a tax-advantaged account (taxes out of the equation), every day you don't sell everything you are deciding to invest everything. An extreme example is someone who invested $100 in Bitcoin and didn't sell when that had become $50M. If it goes to zero a year later, you really did lose $50M (pre-tax).

2015
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Re: U.S. stocks in freefall

Post by 2015 » Thu Oct 11, 2018 8:08 pm

bighatnohorse wrote:
Thu Oct 11, 2018 6:18 pm
I just check our annuities. . .no change. . . still kicking out the same old percentage.
Yea, my liability matching income is still there, smiling back at me. So glad I blew all those bucket/no bucket threads out of my nose before choosing to seek optimization over maximization.

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ginmqi
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Re: U.S. stocks in freefall

Post by ginmqi » Thu Oct 11, 2018 8:18 pm

I'm a relatively young investor here in the beginning years of my retirement portfolio accumulation phase. Been with Vanguard for about 5 years now since I started my career.

Currently in 100% equities. And I am EAGERLY awaiting a huge bear market...because it simply means stocks are at a discount. And I fully subscribe to the mantra of buy low, sell high...which no one seems to follow in reality.

Disclaimer: I am not advocating for any job loss or losing families/households, that is horrible. But currently hoping for another bear market as the continuing bull market in the past few years really has me bummed due to the higher stock prices. It's funny because I am probably 1 of only a handful of people that actually gets depressed when I see the market keep going up and up....but I know eventually it will come down which means discounts for shares! :sharebeer

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FIREchief
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Re: U.S. stocks in freefall

Post by FIREchief » Thu Oct 11, 2018 8:26 pm

If the market drops over 19% tomorrow, it means I need to start thinking about recharacterizing my Jan 2017 Roth conversions of VTI. I would still have all weekend to think about it and get my 2017 1040x ready to file by Monday (which is the deadline). :mrgreen:
I am not a lawyer, accountant or financial advisor. Any advice or suggestions that I may provide shall be considered for entertainment purposes only.

brokenrecord
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Re: U.S. stocks in freefall

Post by brokenrecord » Thu Oct 11, 2018 8:31 pm

ginmqi wrote:
Thu Oct 11, 2018 8:18 pm
I'm a relatively young investor here in the beginning years of my retirement portfolio accumulation phase. Been with Vanguard for about 5 years now since I started my career.

Currently in 100% equities. And I am EAGERLY awaiting a huge bear market...because it simply means stocks are at a discount. And I fully subscribe to the mantra of buy low, sell high...which no one seems to follow in reality.

Disclaimer: I am not advocating for any job loss or losing families/households, that is horrible. But currently hoping for another bear market as the continuing bull market in the past few years really has me bummed due to the higher stock prices. It's funny because I am probably 1 of only a handful of people that actually gets depressed when I see the market keep going up and up....but I know eventually it will come down which means discounts for shares! :sharebeer
I'd like to believe the same. Unfortunately, I think this is false confidence for me. Time will tell...

whodatheads
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Re: U.S. stocks in freefall

Post by whodatheads » Thu Oct 11, 2018 8:56 pm

FIREchief wrote:
Thu Oct 11, 2018 3:18 pm
whodatheads wrote:
Thu Oct 11, 2018 3:11 pm
FIREchief wrote:
Thu Oct 11, 2018 2:56 pm
whodatheads wrote:
Thu Oct 11, 2018 2:34 pm
FIREchief wrote:
Thu Oct 11, 2018 2:09 pm


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-)
Jan 2? Why this date?
Many of us with long term Roth conversion strategies execute our annual conversions on the first trading day of each year. We believe that the market goes up more often than it goes down and want to save the conversion taxes that would be paid on any growth between the first trading day and a later day in the year when we might otherwise perform a conversion.
So would the date you convert mover earlier if the market goes down precipitately?
I can't move the date for my planned 2019 conversions any earlier than Jan 2. That is the first trading day of 2019. My 2018 conversions were completed on Jan 2 2018.

If the market drops 20% - 30% before the end of this year, I would revisit my long term Roth conversion strategy and decide if I wanted to increase my 2018 conversions into the next tax bracket. It would have no impact on what I plan for 2019.
I have not made my 2018 conversion yet. So this current drop may present a good opportunity for a good tax-friendly Roth conversion. I'm not aware of this conversion strategy. Good to know, thanks.

Elbukari
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Re: U.S. stocks in freefall

Post by Elbukari » Thu Oct 11, 2018 9:42 pm

It goes down and then it goes up, and then down again and up again. But overtime it goes up.

:sharebeer

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watchnerd
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Re: U.S. stocks in freefall

Post by watchnerd » Thu Oct 11, 2018 9:58 pm

I WANT!
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BeBH65
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Re: U.S. stocks in freefall

Post by BeBH65 » Thu Oct 11, 2018 10:14 pm

noviceinvestor85 wrote:
Thu Oct 11, 2018 3:25 pm
retiringwhen

"Can you sleep at night? Can you hold on? If the answer is no, sell enough equities so you will stay IN the market even on dark days...... As Jack said last week, review you AA and ensure you can sleep at night, if you can't, maybe reduce your equities by 10%, but remember the worst thing you can do is leave the market, it is very hard to get back in."

I can afford to hold on for longer, but not sure how my nerves hold out if it hits 10% or more, might be tempted to [leave --admin LadyGeek] and look to get back in on the way up...
On "average", the stockmarkets have a correction (-10%) every year, loose -15% every 3 years, go -20% every 6 years, and once in a while go -30%,-40%,-50% and might not have recovered after several years. (DJIA 1948-2017)

What is your Asset Allocation? Reading your statements you might be way too aggressive.
What happens now is totally normal and expected. What does your IPS (Investment Policy Statement - see our wiki) tell you to do when the market drops with 6%?


Edited to correct data - (see references a few posts down)
Last edited by BeBH65 on Fri Oct 12, 2018 12:47 am, edited 2 times in total.
BeBH65. (only an investment enthusiast, not a financial adviser, perform your due diligence).

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FIREchief
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Re: U.S. stocks in freefall

Post by FIREchief » Thu Oct 11, 2018 10:48 pm

BeBH65 wrote:
Thu Oct 11, 2018 10:14 pm
On "average" the stockmarkets have a correction (-10%) every year, go -20% every 2 years, and once in a while go-30%,-40%,-50% or more and might not have recovered after several years.
I believe that you are overstating that. I mined the S&P history from the early 1950s a few years ago, and the market simply does not drop that much, that often. Certainly, it has approached (or exceeded) that 50% level three times since the great depression, but minus 10% every year and minus 20% every two years? No way.
I am not a lawyer, accountant or financial advisor. Any advice or suggestions that I may provide shall be considered for entertainment purposes only.

CULater
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Re: U.S. stocks in freefall

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

Image
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

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watchnerd
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Re: U.S. stocks in freefall

Post by watchnerd » Thu Oct 11, 2018 11:13 pm

BeBH65 wrote:
Thu Oct 11, 2018 10:14 pm
noviceinvestor85 wrote:
Thu Oct 11, 2018 3:25 pm
retiringwhen

"Can you sleep at night? Can you hold on? If the answer is no, sell enough equities so you will stay IN the market even on dark days...... As Jack said last week, review you AA and ensure you can sleep at night, if you can't, maybe reduce your equities by 10%, but remember the worst thing you can do is leave the market, it is very hard to get back in."

I can afford to hold on for longer, but not sure how my nerves hold out if it hits 10% or more, might be tempted to [leave --admin LadyGeek] and look to get back in on the way up...
On "average" the stockmarkets have a correction (-10%) every year, go -20% every 2 years, and once in a while go-30%,-40%,-50% or more and might not have recovered after several years.
Please provide data to support this assertion.
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willthrill81
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Re: U.S. stocks in freefall

Post by willthrill81 » Thu Oct 11, 2018 11:20 pm

FIREchief wrote:
Thu Oct 11, 2018 10:48 pm
BeBH65 wrote:
Thu Oct 11, 2018 10:14 pm
On "average" the stockmarkets have a correction (-10%) every year, go -20% every 2 years, and once in a while go-30%,-40%,-50% or more and might not have recovered after several years.
I believe that you are overstating that. I mined the S&P history from the early 1950s a few years ago, and the market simply does not drop that much, that often. Certainly, it has approached (or exceeded) that 50% level three times since the great depression, but minus 10% every year and minus 20% every two years? No way.
Right. For instance, from 1988 through 1999 (12 years), the maximum month-to-month nominal drawdown of TSM was -17.57%. From 2003-2007, the maximum drawdown was -5.06%, and from 2010 until now, it was -17.74%. Ten percent declines certainly haven't happened every year, and 20% or larger declines are very infrequent. It was very unusual for two such declines to occur between 2000 and 2009.
“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

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SevenBridgesRoad
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Re: U.S. stocks in freefall

Post by SevenBridgesRoad » Thu Oct 11, 2018 11:21 pm

bighatnohorse wrote:
Thu Oct 11, 2018 6:18 pm
I just check our annuities. . .no change. . . still kicking out the same old percentage.
+1 8-)
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CULater
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Re: U.S. stocks in freefall

Post by CULater » Thu Oct 11, 2018 11:23 pm

As it turns out, most of the time there have been 3%+ market losses they occurred when the market was doing a larger correction. So, it probably isn't over yet folks, even if there is a bounce - duck and cover!
Unfortunately, 3%+ down days tend to occur during market sell-offs. I looked back at every double-digit correction or bear market since 1928 and found these downturns contained 252 of the total 345 down 3%+ days in this time.
So there was nearly an 80% chance when stocks were down 3% or worse that it occurred during a correction or bear market
https://awealthofcommonsense.com/2018/10/big-down-days/
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

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willthrill81
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Re: U.S. stocks in freefall

Post by willthrill81 » Thu Oct 11, 2018 11:23 pm

AlphaLess wrote:
Thu Oct 11, 2018 7:20 pm
nedsaid wrote:
Thu Oct 11, 2018 1:36 am
...
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.
Everything you say makes 100% sense.
But the key statement is about rising rates.

Of course, there is a buyer for every dollar of US Treasury issued. As a matter of fact, typically there are 2x to 5x times the buyers (treasury auctions are oversubscribed). However, the main question is: at what rate?
What's all this talk about rising bond yields? The 10 year is sitting at 3.13% right now. That's not what I'd call a substantial move from last week, certainly not enough to 'justify' the current drop in stocks. I blame the latter on Bogle's 'animal spirits' and trading algorithms.
“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

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willthrill81
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Re: U.S. stocks in freefall

Post by willthrill81 » Thu Oct 11, 2018 11:26 pm

CULater wrote:
Thu Oct 11, 2018 11:23 pm
As it turns out, most of the time there have been 3%+ market losses they occurred when the market was doing a larger correction. So, it probably isn't over yet folks, even if there is a bounce - duck and cover!
Unfortunately, 3%+ down days tend to occur during market sell-offs. I looked back at every double-digit correction or bear market since 1928 and found these downturns contained 252 of the total 345 down 3%+ days in this time.
So there was nearly an 80% chance when stocks were down 3% or worse that it occurred during a correction or bear market
https://awealthofcommonsense.com/2018/10/big-down-days/
It's what is known as volatility clustering. Bad days tend to cluster together, and so do good days. This is part of the reason that trend following has worked as well as it has; when negative volatility really shows up, you get out in order to avoid the significant possibility of further negative movement.

That being said, my trend following system is still telling me to stay put, so that's what I'm doing. Stay the course. :wink:
“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

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BeBH65
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Re: U.S. stocks in freefall

Post by BeBH65 » Thu Oct 11, 2018 11:26 pm

FIREchief wrote:
Thu Oct 11, 2018 10:48 pm
BeBH65 wrote:
Thu Oct 11, 2018 10:14 pm
On "average" the stockmarkets have a correction (-10%) every year, go -20% every 2 years, and once in a while go-30%,-40%,-50% or more and might not have recovered after several years.
I believe that you are overstating that. I mined the S&P history from the early 1950s a few years ago, and the market simply does not drop that much, that often. Certainly, it has approached (or exceeded) that 50% level three times since the great depression, but minus 10% every year and minus 20% every two years? No way.
Looking for the article that i read which is a beter reference then this
According to investment firm Deutsche Bank, the stock market, on average, has a correction every 357 days

(better references and corrected info below)
Last edited by BeBH65 on Fri Oct 12, 2018 12:40 am, edited 1 time in total.
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FIREchief
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Re: U.S. stocks in freefall

Post by FIREchief » Thu Oct 11, 2018 11:52 pm

BeBH65 wrote:
Thu Oct 11, 2018 10:14 pm
On "average" the stockmarkets have a correction (-10%) every year, go -20% every 2 years, and once in a while go-30%,-40%,-50% or more and might not have recovered after several years.
Since 1950, 37% of the years have experienced a low that was less than 90% of the close on Jan 1:

January-08 50.48%
January-74 62.49%
January-02 66.95%
January-01 71.56%
January-62 71.77%
January-09 73.84%
January-70 74.53%
January-73 77.12%
January-66 78.20%
January-81 81.17%
January-90 83.34%
January-82 83.39%
January-77 83.76%
January-57 84.37%
January-69 84.77%
January-00 85.35%
January-11 85.46%
January-53 85.57%
January-60 87.13%
January-80 87.30%
January-16 88.81%
January-84 89.29%
January-87 89.38%
January-03 89.67%
January-68 89.90%

This doesn't capture all 10% drops, but does suggest that "every year" is likely inaccurate. I appologize for this, but my data mining was focused on Roth conversion strategies, so not a good fit for this discussion.
I am not a lawyer, accountant or financial advisor. Any advice or suggestions that I may provide shall be considered for entertainment purposes only.

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FIREchief
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Re: U.S. stocks in freefall

Post by FIREchief » Thu Oct 11, 2018 11:54 pm

BeBH65 wrote:
Thu Oct 11, 2018 11:26 pm
Looking for the article that i read which is a beter reference then [url=https://www.fool.com/knowledge-center/6 ... w-about-a-
You lost me at fool.com. Those clowns are in the same realm as Kramer in my experience. A lot of noise, not much signal.
I am not a lawyer, accountant or financial advisor. Any advice or suggestions that I may provide shall be considered for entertainment purposes only.

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Re: U.S. stocks in freefall

Post by sergeant » Thu Oct 11, 2018 11:55 pm

willthrill81 wrote:
Thu Oct 11, 2018 11:26 pm
CULater wrote:
Thu Oct 11, 2018 11:23 pm
As it turns out, most of the time there have been 3%+ market losses they occurred when the market was doing a larger correction. So, it probably isn't over yet folks, even if there is a bounce - duck and cover!
Unfortunately, 3%+ down days tend to occur during market sell-offs. I looked back at every double-digit correction or bear market since 1928 and found these downturns contained 252 of the total 345 down 3%+ days in this time.
So there was nearly an 80% chance when stocks were down 3% or worse that it occurred during a correction or bear market
https://awealthofcommonsense.com/2018/10/big-down-days/
It's what is known as volatility clustering. Bad days tend to cluster together, and so do good days. This is part of the reason that trend following has worked as well as it has; when negative volatility really shows up, you get out in order to avoid the significant possibility of further negative movement.

That being said, my trend following system is still telling me to stay put, so that's what I'm doing. Stay the course. :wink:
Do let us know when your system tells you to get out.
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Re: U.S. stocks in freefall

Post by MJW » Fri Oct 12, 2018 12:07 am

ginmqi wrote:
Thu Oct 11, 2018 8:18 pm
I'm a relatively young investor here in the beginning years of my retirement portfolio accumulation phase. Been with Vanguard for about 5 years now since I started my career.

Currently in 100% equities. And I am EAGERLY awaiting a huge bear market...because it simply means stocks are at a discount. And I fully subscribe to the mantra of buy low, sell high...which no one seems to follow in reality.

Disclaimer: I am not advocating for any job loss or losing families/households, that is horrible. But currently hoping for another bear market as the continuing bull market in the past few years really has me bummed due to the higher stock prices. It's funny because I am probably 1 of only a handful of people that actually gets depressed when I see the market keep going up and up....but I know eventually it will come down which means discounts for shares! :sharebeer
It's so generous of you to wish for a bear market where nothing bad happens to anyone. :wink:

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Re: U.S. stocks in freefall

Post by willthrill81 » Fri Oct 12, 2018 12:12 am

sergeant wrote:
Thu Oct 11, 2018 11:55 pm
willthrill81 wrote:
Thu Oct 11, 2018 11:26 pm
CULater wrote:
Thu Oct 11, 2018 11:23 pm
As it turns out, most of the time there have been 3%+ market losses they occurred when the market was doing a larger correction. So, it probably isn't over yet folks, even if there is a bounce - duck and cover!
Unfortunately, 3%+ down days tend to occur during market sell-offs. I looked back at every double-digit correction or bear market since 1928 and found these downturns contained 252 of the total 345 down 3%+ days in this time.
So there was nearly an 80% chance when stocks were down 3% or worse that it occurred during a correction or bear market
https://awealthofcommonsense.com/2018/10/big-down-days/
It's what is known as volatility clustering. Bad days tend to cluster together, and so do good days. This is part of the reason that trend following has worked as well as it has; when negative volatility really shows up, you get out in order to avoid the significant possibility of further negative movement.

That being said, my trend following system is still telling me to stay put, so that's what I'm doing. Stay the course. :wink:
Do let us know when your system tells you to get out.
It's not likely to happen for months at least. I remain long on equities unless both the U.S. unemployment rate is above its 12 month moving average and stocks are below their 7 month moving average. The unemployment rate just hit a 49 year low, so I'm very likely to stand pat for a good while yet.
“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

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Re: U.S. stocks in freefall

Post by FIREchief » Fri Oct 12, 2018 12:14 am

SevenBridgesRoad wrote:
Thu Oct 11, 2018 11:21 pm
bighatnohorse wrote:
Thu Oct 11, 2018 6:18 pm
I just check our annuities. . .no change. . . still kicking out the same old percentage.
+1 8-)
Do check in again when the market is soaring and tell us more about this percentage!! :sharebeer
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Re: U.S. stocks in freefall

Post by fennewaldaj » Fri Oct 12, 2018 12:17 am

willthrill81 wrote:
Thu Oct 11, 2018 6:26 pm
Darth Xanadu wrote:
Thu Oct 11, 2018 4:09 pm
Simply bleeding cash. :annoyed

Edit: But, refreshingly indifferent about it :beer
Ditto that. :D
me too. Since I have at least 14 years till I need the money and I am adding a lot every year compared to what I have currently these bond yield increases and stock drops while earnings are still good the economy is still strong are actively good for me.

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BeBH65
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Re: U.S. stocks in freefall

Post by BeBH65 » Fri Oct 12, 2018 12:39 am

FIREchief wrote:
Thu Oct 11, 2018 10:48 pm
BeBH65 wrote:
Thu Oct 11, 2018 10:14 pm
On "average" the stockmarkets have a correction (-10%) every year, go -20% every 2 years, and once in a while go-30%,-40%,-50% or more and might not have recovered after several years.
I believe that you are overstating that. I mined the S&P history from the early 1950s a few years ago, and the market simply does not drop that much, that often. Certainly, it has approached (or exceeded) that 50% level three times since the great depression, but minus 10% every year and minus 20% every two years? No way.
Still not the study that I remember, but at least better references :-) that also correct my data :-):

American fund has two pages with a history of declines of the DJIA: One for (1948–2017) and one (1900-2013)

A History of Declines:

Code: Select all

Decline      | Frequency (1948-2017)    | Frequency (1900-2013)   
–05% or more | About 3 times a year     | About 3 times a year
–10% or more | About once a year        | About once a year
–15% or more | About once every 3 years | About once every 2 years
–20% or more | About once every 6 years | About once every 3 1/2 years
 | 
Source: Capital Research and Management Company - A history of Declines
    Assumes 50% recovery of lost value
    Measures market high to market low
Yardeni has a nice visual representation for the S&P500


(corrected my posts above - thanks)
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letsgobobby
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Re: U.S. stocks in freefall

Post by letsgobobby » Fri Oct 12, 2018 2:23 am

willthrill81 wrote:
Fri Oct 12, 2018 12:12 am
sergeant wrote:
Thu Oct 11, 2018 11:55 pm
willthrill81 wrote:
Thu Oct 11, 2018 11:26 pm
CULater wrote:
Thu Oct 11, 2018 11:23 pm
As it turns out, most of the time there have been 3%+ market losses they occurred when the market was doing a larger correction. So, it probably isn't over yet folks, even if there is a bounce - duck and cover!
Unfortunately, 3%+ down days tend to occur during market sell-offs. I looked back at every double-digit correction or bear market since 1928 and found these downturns contained 252 of the total 345 down 3%+ days in this time.
So there was nearly an 80% chance when stocks were down 3% or worse that it occurred during a correction or bear market
https://awealthofcommonsense.com/2018/10/big-down-days/
It's what is known as volatility clustering. Bad days tend to cluster together, and so do good days. This is part of the reason that trend following has worked as well as it has; when negative volatility really shows up, you get out in order to avoid the significant possibility of further negative movement.

That being said, my trend following system is still telling me to stay put, so that's what I'm doing. Stay the course. :wink:
Do let us know when your system tells you to get out.
It's not likely to happen for months at least. I remain long on equities unless both the U.S. unemployment rate is above its 12 month moving average and stocks are below their 7 month moving average. The unemployment rate just hit a 49 year low, so I'm very likely to stand pat for a good while yet.
employment is a seriously lagging indicator.

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Re: U.S. stocks in freefall

Post by retiringwhen » Fri Oct 12, 2018 6:14 am

FIREchief wrote:
Thu Oct 11, 2018 11:54 pm
BeBH65 wrote:
Thu Oct 11, 2018 11:26 pm
Looking for the article that i read which is a beter reference then [url=https://www.fool.com/knowledge-center/6 ... w-about-a-
You lost me at fool.com. Those clowns are in the same realm as Kramer in my experience. A lot of noise, not much signal.
Fool.com was part of my investing learning experience by negative reinforcement back in the .com days. 'nough said.

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Re: U.S. stocks in freefall

Post by grabiner » Fri Oct 12, 2018 7:31 am

CULater wrote:
Thu Oct 11, 2018 11:23 pm
As it turns out, most of the time there have been 3%+ market losses they occurred when the market was doing a larger correction. So, it probably isn't over yet folks, even if there is a bounce - duck and cover!
Unfortunately, 3%+ down days tend to occur during market sell-offs. I looked back at every double-digit correction or bear market since 1928 and found these downturns contained 252 of the total 345 down 3%+ days in this time.
So there was nearly an 80% chance when stocks were down 3% or worse that it occurred during a correction or bear market
https://awealthofcommonsense.com/2018/10/big-down-days/
The cause and effect is backwards here. Suppose that the market is down 7% from its peak. If it drops 3% (over one day or a week), there is a 100% chance of a market correction; if it rises 3%, there is a much lower chance that there will be a market correction.

Another effect is that the market is more volatile during bear markets. Once the market is already down, it is more likely to either rise or fall 3% in one day than it would on a random day. (The article even mentions this; more than half of 3% daily increases occurred during market downturns.)

Thus I wouldn't put a large drop as a specific indication that the market is headed down. (As I write this, the market fell again Thursday, but it hasn't yet opened for Friday, and futures are up 1%.)
Wiki David Grabiner

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Re: U.S. stocks in freefall

Post by bgf » Fri Oct 12, 2018 7:40 am

grabiner wrote:
Fri Oct 12, 2018 7:31 am
CULater wrote:
Thu Oct 11, 2018 11:23 pm
As it turns out, most of the time there have been 3%+ market losses they occurred when the market was doing a larger correction. So, it probably isn't over yet folks, even if there is a bounce - duck and cover!
Unfortunately, 3%+ down days tend to occur during market sell-offs. I looked back at every double-digit correction or bear market since 1928 and found these downturns contained 252 of the total 345 down 3%+ days in this time.
So there was nearly an 80% chance when stocks were down 3% or worse that it occurred during a correction or bear market
https://awealthofcommonsense.com/2018/10/big-down-days/
Another effect is that the market is more volatile during bear markets. Once the market is already down, it is more likely to either rise or fall 3% in one day than it would on a random day. (The article even mentions this; more than half of 3% daily increases occurred during market downturns.)
that is an interesting tidbit i had not seen before. it makes intuitive sense from a behavioral perspective. as emotions are more likely to play a role if people are scared/frustrated by recent losses. not sure if there is any explanation for it from an EMH perspective.
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Re: U.S. stocks in freefall

Post by livesoft » Fri Oct 12, 2018 7:55 am

^Yes, there is probably more panic selling on 3% down days than there is on 3% up days.
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Re: U.S. stocks in freefall

Post by protagonist » Fri Oct 12, 2018 8:06 am

Roughly skimming the last few pages of the 146 pages of this thread leads me to the assumption that Bogleheads are strong believers in market timing.
They also believe that past performance is a reliable predictor of future returns, both in the short term and in the long term.

No judgment here....who am I to say if they are right or wrong? I don't have the answers. Just an observation.

Maybe it is just those who respond to this thread though.

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Re: U.S. stocks in freefall

Post by watchnerd » Fri Oct 12, 2018 8:17 am

protagonist wrote:
Fri Oct 12, 2018 8:06 am
Roughly skimming the last few pages of the 146 pages of this thread leads me to the assumption that Bogleheads are strong believers in market timing.
They also believe that past performance is a reliable predictor of future returns, both in the short term and in the long term.

No judgment here....who am I to say if they are right or wrong? I don't have the answers. Just an observation.

Maybe it is just those who respond to this thread though.
My reading is that Bogleheads are deeply satirical and half of the postings are tongue in cheek.
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Re: U.S. stocks in freefall

Post by willthrill81 » Fri Oct 12, 2018 8:43 am

letsgobobby wrote:
Fri Oct 12, 2018 2:23 am
willthrill81 wrote:
Fri Oct 12, 2018 12:12 am
sergeant wrote:
Thu Oct 11, 2018 11:55 pm
willthrill81 wrote:
Thu Oct 11, 2018 11:26 pm
CULater wrote:
Thu Oct 11, 2018 11:23 pm
As it turns out, most of the time there have been 3%+ market losses they occurred when the market was doing a larger correction. So, it probably isn't over yet folks, even if there is a bounce - duck and cover!

https://awealthofcommonsense.com/2018/10/big-down-days/
It's what is known as volatility clustering. Bad days tend to cluster together, and so do good days. This is part of the reason that trend following has worked as well as it has; when negative volatility really shows up, you get out in order to avoid the significant possibility of further negative movement.

That being said, my trend following system is still telling me to stay put, so that's what I'm doing. Stay the course. :wink:
Do let us know when your system tells you to get out.
It's not likely to happen for months at least. I remain long on equities unless both the U.S. unemployment rate is above its 12 month moving average and stocks are below their 7 month moving average. The unemployment rate just hit a 49 year low, so I'm very likely to stand pat for a good while yet.
employment is a seriously lagging indicator.
Employment, yes. Change in employment, no. The UER is well below its 12 month moving average.
“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

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