U.S. stocks in freefall

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harvestbook
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Re: U.S. stocks in freefall

Post by harvestbook » Fri Oct 12, 2018 8:53 am

My wife yesterday: "I don't care what the market does, because I still have the same number of shares."

My wife today: "Oh my God, I lost $10,000!"
I'm not smart enough to know, and I can't afford to guess.

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husky1055
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Re: U.S. stocks in freefall

Post by husky1055 » Fri Oct 12, 2018 8:55 am

Just wonder how many people on this board really saw this correction or market freefall coming? I will admit that I was surprised by its intensity and widespread retreat. Not only in equity but in bonds also. All the economic signs were good, earnings, job report, economy humming along, spat with China seemed to be in our favor, and interest rate increase were widely telegraphed and reported daily so no surprise there. And suddenly freefall!!!
I am fairly conservative in my investment and I can sleep well at night, my AA is 50/40/10 stocks/bonds/cash but it hurts that both stocks and bonds were both going down!!! :x

bighatnohorse
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Re: U.S. stocks in freefall

Post by bighatnohorse » Fri Oct 12, 2018 9:19 am

FIREchief wrote:
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
Its variable based on stock market performance with a value ratchet type mechanism that does not descend with the market - it only goes up! So yeah, it's going to be awhile before I see an increase again. Wish I could say the same for my Vanguard funds.

livesoft
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Re: U.S. stocks in freefall

Post by livesoft » Fri Oct 12, 2018 9:20 am

husky1055 wrote:
Fri Oct 12, 2018 8:55 am
Just wonder how many people on this board really saw this correction or market freefall coming?
I just wait for them patiently. I don't try to predict them, but I do try to react to them after they happen. For instance, if I made 3% on my bond fund money by exchanging that bond fund into equities yesterday and saw that those equities were up 3% today, then I would be exchanging back into the bond fund. Note that there was no predicting of anything there.

And if those equities that I bought this week drop further, then I will buy more and wait until they go up enough to rebalance back into the bond fund.
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letsgobobby
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Re: U.S. stocks in freefall

Post by letsgobobby » Fri Oct 12, 2018 9:23 am

The stock market declines six months before the unemployment rate begins to rise. Isn't that a lagging indicator?

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willthrill81
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Re: U.S. stocks in freefall

Post by willthrill81 » Fri Oct 12, 2018 9:25 am

letsgobobby wrote:
Fri Oct 12, 2018 9:23 am
The stock market declines six months before the unemployment rate begins to rise. Isn't that a lagging indicator?
Image
As the chart illustrates, the unemployment rate is a lagging indicator of recession. By the time high unemployment takes hold in an economy, a recession has usually already begun.

In contrast with the absolute level, the trend in the unemployment rate–the direction that the rate is moving in–is a coincident indicator of recession, and can sometimes even be a leading indicator. As the table below shows, in each of the eleven recessions that occurred since 1948, the trend in the unemployment rate turned higher months before the recession began. The average lead for the period was 3.45 months.
http://www.philosophicaleconomics.com/2016/02/uetrend/
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retiringwhen
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Re: U.S. stocks in freefall

Post by retiringwhen » Fri Oct 12, 2018 9:26 am

husky1055 wrote:
Fri Oct 12, 2018 8:55 am
Just wonder how many people on this board really saw this correction or market freefall coming?
I've been "expecting" a retreat all year, just because they happen and 2 years of growth in the market seems unsustainable even with very good earnings, etc. (classic market running to fast ahead of good news.)

This week? didn't expect it at all.

Thus we stay the course.....

BTW, I have a personal 'nedsaid' like predictor. For that last year, I have had several large new money (not previously available for investment) additions that needed to be put in the market. I have put 3 big chunks in market during the past 12 months, Last December, February and this month... I more or less lump summed them (put it in over several days to a week as logistics dictated). We have appeared to hit short term highs every time. Sigh.

We're up on the DEC buy, as of yesterday negative on the FEB buy, and down for last week's......

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Re: U.S. stocks in freefall

Post by flyingaway » Fri Oct 12, 2018 9:59 am

livesoft wrote:
Fri Oct 12, 2018 9:20 am
husky1055 wrote:
Fri Oct 12, 2018 8:55 am
Just wonder how many people on this board really saw this correction or market freefall coming?
I just wait for them patiently. I don't try to predict them, but I do try to react to them after they happen. For instance, if I made 3% on my bond fund money by exchanging that bond fund into equities yesterday and saw that those equities were up 3% today, then I would be exchanging back into the bond fund. Note that there was no predicting of anything there.

And if those equities that I bought this week drop further, then I will buy more and wait until they go up enough to rebalance back into the bond fund.
Are you supposed to have a holding period of one month for any funds?

flyingaway
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Re: U.S. stocks in freefall

Post by flyingaway » Fri Oct 12, 2018 10:03 am

husky1055 wrote:
Fri Oct 12, 2018 8:55 am
Just wonder how many people on this board really saw this correction or market freefall coming? I will admit that I was surprised by its intensity and widespread retreat. Not only in equity but in bonds also. All the economic signs were good, earnings, job report, economy humming along, spat with China seemed to be in our favor, and interest rate increase were widely telegraphed and reported daily so no surprise there. And suddenly freefall!!!
I am fairly conservative in my investment and I can sleep well at night, my AA is 50/40/10 stocks/bonds/cash but it hurts that both stocks and bonds were both going down!!! :x
Even if these signs are good (I don't know) in real term, it does not mean the stock prices can go over roof. There must be a ceiling when all buyers run out of money.

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Re: U.S. stocks in freefall

Post by CULater » Fri Oct 12, 2018 10:04 am

The only people who should be upset about Freefall are people who are at or near retirement and are cashing out their stock holdings. Everyone else should be celebrating -- but that's not what's happening is it?
If you expect to be a net saver during the next five years, should you hope for a higher or lower stock market during that period? Many investors get this one wrong. Even though they are going to be net buyers of stocks for many years to come, they are elated when stock prices rise and depressed when they fall. In effect, they rejoice because prices have risen for the “hamburgers” they will soon be buying. This reaction makes no sense. Only those who will be sellers of equities in the near future should be happy at seeing stocks rise. Prospective purchasers should much prefer sinking prices.
~ Warren Buffett
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

flyingaway
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Re: U.S. stocks in freefall

Post by flyingaway » Fri Oct 12, 2018 10:09 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.
They are not market timers. They just want to have fun with small amounts of money. Their main part investment portfolio is staying the course.
In other words, market timers are defined as going out of market and getting in it with the majority of the portfolio if not all from time to time.

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ruralavalon
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Re: U.S. stocks in freefall

Post by ruralavalon » Fri Oct 12, 2018 10:15 am

The S&P 500 index is up 1.49% so far today :D .
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Re: U.S. stocks in freefall

Post by livesoft » Fri Oct 12, 2018 10:20 am

flyingaway wrote:
Fri Oct 12, 2018 9:59 am
Are you supposed to have a holding period of one month for any funds?
I can do anything I want, but I usually (not always) use ETFs.
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letsgobobby
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Re: U.S. stocks in freefall

Post by letsgobobby » Fri Oct 12, 2018 10:24 am

will, gotcha, you are using, what, the derivative of the unemployment rate?

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Re: U.S. stocks in freefall

Post by kacang » Fri Oct 12, 2018 10:25 am

ruralavalon wrote:
Fri Oct 12, 2018 10:15 am
The S&P 500 index is up 1.49% so far today :D .
Of course, just as I was going to TLH today :annoyed

letsgobobby
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Re: U.S. stocks in freefall

Post by letsgobobby » Fri Oct 12, 2018 10:36 am

I can assure you the market will decline sharply from here today, and next week, as I used this morning to perform part of this half year’s value averaging, and bought VFVA. I have to complete the rest by the end of October.

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Re: U.S. stocks in freefall

Post by willthrill81 » Fri Oct 12, 2018 10:51 am

letsgobobby wrote:
Fri Oct 12, 2018 10:24 am
will, gotcha, you are using, what, the derivative of the unemployment rate?
The current UER compared to its 12 month moving average, which is what is referenced in the quote I linked to.
“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

MJS
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Re: U.S. stocks in freefall

Post by MJS » Fri Oct 12, 2018 11:02 am

letsgobobby wrote:
Fri Oct 12, 2018 10:36 am
I can assure you the market will decline sharply from here today, and next week, as I used this morning to perform part of this half year’s value averaging, and bought VFVA. I have to complete the rest by the end of October.
Thank you! I'm beginning Roth conversion, now that I know how much tax space I have. Your contribution to the welfare of investors is much appreciated.

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Re: U.S. stocks in freefall

Post by lostdog » Fri Oct 12, 2018 11:06 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.
"They also believe that past performance is a reliable predictor of future returns, both in the short term and in the long term."

And the U.S. only investors. There is no such thing as buying the haystack.

Crisium
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Re: U.S. stocks in freefall

Post by Crisium » Fri Oct 12, 2018 11:33 am

My 401k buys on Monday so I'm still hoping for the bears to take over today. Please.

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dwickenh
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Re: U.S. stocks in freefall

Post by dwickenh » Fri Oct 12, 2018 11:43 am

kacang wrote:
Fri Oct 12, 2018 10:25 am
ruralavalon wrote:
Fri Oct 12, 2018 10:15 am
The S&P 500 index is up 1.49% so far today :D .
Of course, just as I was going to TLH today :annoyed
Foreign funds down more- harvested total international this week and hit my 3000.00 goal for the year in tax savings!

Dan
The market is the most efficient mechanism anywhere in the world for transferring wealth from impatient people to patient people.” | — Warren Buffett

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dwickenh
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Re: U.S. stocks in freefall

Post by dwickenh » Fri Oct 12, 2018 11:45 am

husky1055 wrote:
Fri Oct 12, 2018 8:55 am
Just wonder how many people on this board really saw this correction or market freefall coming? I will admit that I was surprised by its intensity and widespread retreat. Not only in equity but in bonds also. All the economic signs were good, earnings, job report, economy humming along, spat with China seemed to be in our favor, and interest rate increase were widely telegraphed and reported daily so no surprise there. And suddenly freefall!!!
I am fairly conservative in my investment and I can sleep well at night, my AA is 50/40/10 stocks/bonds/cash but it hurts that both stocks and bonds were both going down!!! :x
Are we supposed to see it coming?

I am with you on the stocks and bonds dropping as I am also 50/46/4 stocks/bonds/cash

Oh well, I have cash to live on and don't have to sell either one.

Best to you husky1055!
The market is the most efficient mechanism anywhere in the world for transferring wealth from impatient people to patient people.” | — Warren Buffett

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FIREchief
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Re: U.S. stocks in freefall

Post by FIREchief » Fri Oct 12, 2018 2:37 pm

Well it looks like my 2017 Roth conversions will stick. No more recharacterizations unless the tax laws revert. :?
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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TomatoTomahto
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Re: U.S. stocks in freefall

Post by TomatoTomahto » Fri Oct 12, 2018 2:47 pm

husky1055 wrote:
Fri Oct 12, 2018 8:55 am
[snip]... spat with China seemed to be in our favor...
I think it's apolitical to point out that there really are no winners in a trade "spat," no matter who is spinning the story.

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Earl Lemongrab
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Re: U.S. stocks in freefall

Post by Earl Lemongrab » Fri Oct 12, 2018 2:52 pm

I didn't see it coming, but I never do. My first real portfolio was established in fall of 2007. That's why a core principle of my plan is that I have NO talent for market-timing. So I don't have to worry about trying to see the future.
This week's fortune cookie: "Your financial life will be secure and beneficial." So I got that going for me, which is nice.

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JoMoney
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Re: U.S. stocks in freefall

Post by JoMoney » Fri Oct 12, 2018 3:08 pm

TomatoTomahto wrote:
Fri Oct 12, 2018 2:47 pm
husky1055 wrote:
Fri Oct 12, 2018 8:55 am
[snip]... spat with China seemed to be in our favor...
I think it's apolitical to point out that there really are no winners in a trade "spat," no matter who is spinning the story.
There might be winners/losers, I think the idea that "free trade" without any hindrance benefits everyone is oversold. The market in aggregate benefits, but there are winners and losers in the market, and the dispossessed on the bottom end need to be treated with some level of dignity as well. Not to mention that when the "free trade" isn't omni-directional it means some can game the system to their advantage.
Without government intervention, labor wouldn't have a voice/bargaining chip in trade, and would have to compete to the lowest common denominator on a global scale for wages and benefits. Governments lose their tax base when it moves to a lower tax regime. The enforcement of intellectual property rights and care for basic human rights/working conditions is a concern where there are losers.
"To achieve satisfactory investment results is easier than most people realize; to achieve superior results is harder than it looks." - Benjamin Graham

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Re: U.S. stocks in freefall

Post by flyingaway » Fri Oct 12, 2018 3:20 pm

I was planning to buy some dips today. Since it bounced back, I decided to buy a 25 day trip to Europe, Asia, and Africa.

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randomizer
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Re: U.S. stocks in freefall

Post by randomizer » Fri Oct 12, 2018 4:03 pm

The forum sure gets interesting when the market heads into choppy waters. Would be interesting to chart the level of forum activity against market volatility.
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gilgamesh
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Re: U.S. stocks in freefall

Post by gilgamesh » Fri Oct 12, 2018 4:21 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.
I was just being crazy...I don’t care about these minor moves. My AA is assuming a 50% decline for up to 5 years. Even if it’s longer, I have contingencies in place...I was trying to poke fun at the doomsayers.

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sergeant
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Re: U.S. stocks in freefall

Post by sergeant » Fri Oct 12, 2018 5:56 pm

willthrill81 wrote:
Fri Oct 12, 2018 10:51 am
letsgobobby wrote:
Fri Oct 12, 2018 10:24 am
will, gotcha, you are using, what, the derivative of the unemployment rate?
The current UER compared to its 12 month moving average, which is what is referenced in the quote I linked to.
Interesting article, thanks for the link.
Lincoln 3 EOW!

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oldzey
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Re: U.S. stocks in freefall

Post by oldzey » Fri Oct 12, 2018 6:42 pm

Have a good weekend, Bogleheads! :beer

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willthrill81
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Re: U.S. stocks in freefall

Post by willthrill81 » Fri Oct 12, 2018 7:10 pm

flyingaway wrote:
Fri Oct 12, 2018 10:03 am
husky1055 wrote:
Fri Oct 12, 2018 8:55 am
Just wonder how many people on this board really saw this correction or market freefall coming? I will admit that I was surprised by its intensity and widespread retreat. Not only in equity but in bonds also. All the economic signs were good, earnings, job report, economy humming along, spat with China seemed to be in our favor, and interest rate increase were widely telegraphed and reported daily so no surprise there. And suddenly freefall!!!
I am fairly conservative in my investment and I can sleep well at night, my AA is 50/40/10 stocks/bonds/cash but it hurts that both stocks and bonds were both going down!!! :x
Even if these signs are good (I don't know) in real term, it does not mean the stock prices can go over roof. There must be a ceiling when all buyers run out of money.
And beyond that, volatility like we've seen in the last week is to be expected because it has occurred throughout the history of stock markets around the globe. As one fund manager says, "2% is Tuesday." A lot of people were lulled into thinking in 2017 that very low volatility (and almost straight upward movement) was normal. This spring showed that to be false, and the last week is yet another minder of that. Sadly, investors' memories are often not much better than those of other folks.

When he still managed people's money, he always said "I can guarantee you that you will lose money (at some point) with my strategy." Every investor should be aware of this truth.
“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 GoldenFinch » Fri Oct 12, 2018 7:31 pm

Not one bit of this market fluctuation has affected me. Not at all. I watched it happen, but didn’t care. I didn’t even feel the urge to buy stocks on sale. Is something wrong with me?

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JoMoney
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Re: U.S. stocks in freefall

Post by JoMoney » Fri Oct 12, 2018 7:42 pm

GoldenFinch wrote:
Fri Oct 12, 2018 7:31 pm
Not one bit of this market fluctuation has affected me. Not at all. I watched it happen, but didn’t care. I didn’t even feel the urge to buy stocks on sale. Is something wrong with me?
Not if you're a long-term investor. There was nothing especially unusual (so far) with the fluctuation, it's not even as big a 'dip' as we saw earlier this year... (so far)
"To achieve satisfactory investment results is easier than most people realize; to achieve superior results is harder than it looks." - Benjamin Graham

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Earl Lemongrab
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Re: U.S. stocks in freefall

Post by Earl Lemongrab » Fri Oct 12, 2018 7:48 pm

I guess I don't see the big deal either. I mean, the price of the S&P 500 is about where it was in early July. People weren't excitedly buying stocks then.
This week's fortune cookie: "Your financial life will be secure and beneficial." So I got that going for me, which is nice.

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Re: U.S. stocks in freefall

Post by willthrill81 » Fri Oct 12, 2018 7:54 pm

Earl Lemongrab wrote:
Fri Oct 12, 2018 7:48 pm
I guess I don't see the big deal either. I mean, the price of the S&P 500 is about where it was in early July. People weren't excitedly buying stocks then.
I think that part of the reason people get excited is that the market has already demonstrated that it could be higher than it currently is. If the market is at an all time high, they are less convinced that it can go higher still.
“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 drk » Fri Oct 12, 2018 8:26 pm

willthrill81 wrote:
Fri Oct 12, 2018 7:54 pm
Earl Lemongrab wrote:
Fri Oct 12, 2018 7:48 pm
I guess I don't see the big deal either. I mean, the price of the S&P 500 is about where it was in early July. People weren't excitedly buying stocks then.
I think that part of the reason people get excited is that the market has already demonstrated that it could be higher than it currently is. If the market is at an all time high, they are less convinced that it can go higher still.
Anchoring is a weird bias.

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Re: U.S. stocks in freefall

Post by Noobvestor » Fri Oct 12, 2018 8:53 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.
If you've been invested only during boom times for stocks, I can imagine the theoretical emotional appeal of a downturn. How you'll actually feel when it comes is a whole other can o worms. I honestly don't know, but good luck to you either way. Personally, I'd diversify /2 cents
"In the absence of clarity, diversification is the only logical strategy" -= Larry Swedroe

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Re: U.S. stocks in freefall

Post by MJW » Fri Oct 12, 2018 11:56 pm

Earl Lemongrab wrote:
Fri Oct 12, 2018 7:48 pm
I guess I don't see the big deal either. I mean, the price of the S&P 500 is about where it was in early July. People weren't excitedly buying stocks then.
My thoughts as well. The nerves around the market have been going for a while. It's not like the events of this week fixed anything.

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FIREchief
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Re: U.S. stocks in freefall

Post by FIREchief » Sat Oct 13, 2018 12:31 am

randomizer wrote:
Fri Oct 12, 2018 4:03 pm
The forum sure gets interesting when the market heads into choppy waters. Would be interesting to chart the level of forum activity against market volatility.
I doubt you would see a blip. Most here have been there/done that.

Do you really think that -5% = "choppy waters?" I would call "choppy waters" at about 20% and rough sailing at over 40%. :sharebeer
Last edited by FIREchief on Sat Oct 13, 2018 2:21 pm, edited 1 time in total.
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rockonhumblepie
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Re: Stocks tumbling?

Post by rockonhumblepie » Sat Oct 13, 2018 1:03 am

simmias wrote:
Wed Oct 10, 2018 1:17 pm
rockonhumblepie wrote:
Wed Oct 10, 2018 10:33 am
What goes up must come down
Spinnin' wheel got to go round
Talkin bout your troubles, it's a cryin sin
Ride a painted pony,let the spinnin' wheel spin

Name that band...?

I set it and forget it...and listen to some tunes. rockon 8-)
Dad, is that you?
Yes son,send $$ from your ST Bond fund ASAP

NYCwriter
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Re: U.S. stocks in freefall

Post by NYCwriter » Sat Oct 13, 2018 2:45 am

Well, I just increased my tax advantaged retirement contribution again and it went through Thursday, so there's that :D

I was already holding unrealized losses in bond funds in all accounts for this year, so the equity drop is a tap on a bruise. Not a blow.

I haven't really added to individual equities for more than a year or two, so with the exception of a few positions, most are still showing hefty gains, with healthy dividend payouts for many.

I have been reducing this year from taxable individual holdings and adding more to short treasuries and index funds (I added to both Thursday) and will probably continue to look for reductions in large growth individual holdings. I'm mostly fully invested (minus my emergency fund) and this may be a reminder to reassess my taste for risk going forward in my 50s, especially with lower earnings.

Beyond that, I just follow my rules. The "sell everything and go to gold the recession is nigh" folks come out every single drop and swan sighting. I can't control for external variables. I can control my "sleeping point."

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randomizer
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Re: U.S. stocks in freefall

Post by randomizer » Sat Oct 13, 2018 5:30 am

FIREchief wrote:
Sat Oct 13, 2018 12:31 am
randomizer wrote:
Fri Oct 12, 2018 4:03 pm
The forum sure gets interesting when the market heads into choppy waters. Would be interesting to chart the level of forum activity against market volatility.
I doubt you would see a blip. Most here have been there/done that.

Do you really thing that -5% = "choppy waters?" I would call "choppy waters" at about 20% and rough sailing at over 40%. :sharebeer
Most? No way. You could probably figure that out by looking at the increasing account creation rate over time, most of which come from new Bogleheads, and many of those young/new investors.

5% is definitely "choppy", and forum activity is up (I'd say), especially on threads like this one. 20% is "rough waters", 50% is looking-like-sinking, and 90% is Titanic.
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minimalistmarc
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Re: U.S. stocks in freefall

Post by minimalistmarc » Sat Oct 13, 2018 5:56 am

randomizer wrote:
Sat Oct 13, 2018 5:30 am
FIREchief wrote:
Sat Oct 13, 2018 12:31 am
randomizer wrote:
Fri Oct 12, 2018 4:03 pm
The forum sure gets interesting when the market heads into choppy waters. Would be interesting to chart the level of forum activity against market volatility.
I doubt you would see a blip. Most here have been there/done that.

Do you really thing that -5% = "choppy waters?" I would call "choppy waters" at about 20% and rough sailing at over 40%. :sharebeer
Most? No way. You could probably figure that out by looking at the increasing account creation rate over time, most of which come from new Bogleheads, and many of those young/new investors.

5% is definitely "choppy", and forum activity is up (I'd say), especially on threads like this one. 20% is "rough waters", 50% is looking-like-sinking, and 90% is Titanic.
90% would make me regret being 100% equities but presumably I will be more worried about other things like a global flu pandemic wiping out the planet

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ruralavalon
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Re: U.S. stocks in freefall

Post by ruralavalon » Sat Oct 13, 2018 7:25 am

Total return of Vanguard Total Stock Market Index Fund Admiral Shares (VTSAX) is up 4.52% year to date.
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IcedDog
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Re: U.S. stocks in freefall

Post by IcedDog » Sat Oct 13, 2018 1:27 pm

minimalistmarc wrote:
Sat Oct 13, 2018 5:56 am
90% would make me regret being 100% equities but presumably I will be more worried about other things like a global flu pandemic wiping out the planet
Haha, 90%...could our nation's financial system even recover from a drop that steep? What's the closest we've come...Great Depression? Great Recession?

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JoMoney
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Re: U.S. stocks in freefall

Post by JoMoney » Sat Oct 13, 2018 1:41 pm

IcedDog wrote:
Sat Oct 13, 2018 1:27 pm
minimalistmarc wrote:
Sat Oct 13, 2018 5:56 am
90% would make me regret being 100% equities but presumably I will be more worried about other things like a global flu pandemic wiping out the planet
Haha, 90%...could our nation's financial system even recover from a drop that steep? What's the closest we've come...Great Depression? Great Recession?
Yup, or close to it. CHART LINK

Wasn't quite as bad in inflation (deflation) adjusted terms, but still obviously bad.
"To achieve satisfactory investment results is easier than most people realize; to achieve superior results is harder than it looks." - Benjamin Graham

2015
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Re: U.S. stocks in freefall

Post by 2015 » Sat Oct 13, 2018 9:56 pm

FIREchief wrote:
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
That's what my Risk Portfolio is for. Those of us with liabilities matched sleep well in good markets and bad. We're interested in optimization as opposed to maximization (the source of all double, double, toil and trouble).

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FIREchief
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Re: U.S. stocks in freefall

Post by FIREchief » Sat Oct 13, 2018 10:41 pm

2015 wrote:
Sat Oct 13, 2018 9:56 pm
FIREchief wrote:
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
That's what my Risk Portfolio is for. Those of us with liabilities matched sleep well in good markets and bad. We're interested in optimization as opposed to maximization (the source of all double, double, toil and trouble).
Well, there you go!! I'm also an LMP/RP type of guy, so I guess we're on the same sunny side of the street here. :sharebeer

(of course, I'm strictly TIPS for the LMP, because I don' t like getting an insurance company involved; but that's another thread for another day....)
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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nedsaid
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Re: U.S. stocks in freefall

Post by nedsaid » Sat Oct 13, 2018 11:07 pm

Riley15 wrote:
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?
Thanks for your comments. Glad that I am adding clarity and not confusion. Warren Buffett's comments about stocks and bonds being sets of cash flows really helped clarify my thinking on this.

I will have to think about your comments, I suppose you might say that stocks are bonds without a maturity date. Keep thinking, you have the seeds of great thinking there, just keep thinking it through, you might come up with something that will help others' understanding.
A fool and his money are good for business.

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