U.S. stocks in free fall

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alexfoo39
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Re: U.S. stocks in free fall

Post by alexfoo39 » Tue May 14, 2019 9:39 am

OH NO SP500 CRASH AGAIN....SELLLLLLLLLLLLLLLLLL.....

this forum lacks that kind of emotion, haha

DrGoogle2017
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Re: U.S. stocks in free fall

Post by DrGoogle2017 » Tue May 14, 2019 9:40 am

Flashbacks here, the same thing can be said back in 2007, I was wondering what people said here back in 2007.

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J G Bankerton
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Re: U.S. stocks in free fall

Post by J G Bankerton » Tue May 14, 2019 9:51 am

DrGoogle2017 wrote:
Tue May 14, 2019 9:40 am
Flashbacks here, the same thing can be said back in 2007, I was wondering what people said here back in 2007.
Back then I had no capital so I hardly noticed. More money more problems.

H-Town
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Re: U.S. stocks in free fall

Post by H-Town » Tue May 14, 2019 9:56 am

J G Bankerton wrote:
Tue May 14, 2019 9:51 am
DrGoogle2017 wrote:
Tue May 14, 2019 9:40 am
Flashbacks here, the same thing can be said back in 2007, I was wondering what people said here back in 2007.
Back then I had no capital so I hardly noticed. More money more problems.
Problems are probably in your head. Keep it automatic and you won't have a problem. Don't let the money live rent free in your head. The world is a beautiful place. You use money to buy your ways in front of the line to enjoy your life.

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Kevin M
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Re: U.S. stocks in free fall

Post by Kevin M » Tue May 14, 2019 10:06 am

AerialWombat wrote:
Mon May 13, 2019 10:39 pm
Kevin M wrote:
Mon May 13, 2019 7:27 pm
AerialWombat wrote:
Mon May 13, 2019 4:35 pm
Kevin M wrote:
Mon May 13, 2019 2:26 pm
Got it. NLY is indeed a very different animal than VNQ. <snip>
<snp> ... when I started noticing that most of the REIT funds I analyzed were overweight in NLY, I decided to just cut out the middle man and own it directly. No regerts. :)
NLY performance is very different than that of Vanguard REIT index fund (VGSIX). Over the last 10 years, VGSIX has a cumulative return of 306%, while NLY has a cumulative return of 126%. I wouldn't call that cutting out the middle man.
<snip>
I’ve only been investing in securities for one year, so I didn’t personally lose out on anything.
Sure you did (relative to VGSIX). Since 4/30/2018, VGSIX cumulative total return is more than 18%, while NLY return is less than 2.5%.

Kevin
Wiki ||.......|| Suggested format for Asking Portfolio Questions (edit original post)

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J G Bankerton
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Re: U.S. stocks in free fall

Post by J G Bankerton » Tue May 14, 2019 10:12 am

H-Town wrote:
Tue May 14, 2019 9:56 am
Problems are probably in your head. Keep it automatic and you won't have a problem.
It is automatic, I set my limit buy bot and forget it.

kaeltor
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Re: U.S. stocks in free fall

Post by kaeltor » Tue May 14, 2019 10:20 am

H-Town wrote:
Tue May 14, 2019 9:56 am
J G Bankerton wrote:
Tue May 14, 2019 9:51 am
DrGoogle2017 wrote:
Tue May 14, 2019 9:40 am
Flashbacks here, the same thing can be said back in 2007, I was wondering what people said here back in 2007.
Back then I had no capital so I hardly noticed. More money more problems.
The world is a beautiful place. You use money to buy your ways in front of the line to enjoy your life.
The world is indeed beautiful and I'll never get to experience is as long as I am a salary slave !!

jpdion
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Re: U.S. stocks in free fall

Post by jpdion » Tue May 14, 2019 10:28 am

Hmmm . . . I still have the same number of shares today as last week. I'll probably have a few more after dividends are reinvested in a couple weeks. In the mean time all those companies are out there doing business striving to make a profit for their shareholders in spite of all the bad news and dumb economic policies.

Admiral
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Re: U.S. stocks in free fall

Post by Admiral » Tue May 14, 2019 10:44 am

Jags4186 wrote:
Mon May 13, 2019 3:39 pm
Admiral wrote:
Mon May 13, 2019 1:24 pm
MotoTrojan wrote:
Mon May 13, 2019 1:19 pm
Admiral wrote:
Mon May 13, 2019 1:18 pm
michaeljmroger wrote:
Mon May 13, 2019 12:57 pm

I lost close to $40,000 today. Somehow it doesn't feel like a beautiful day to me.
Because you sold? If not, you lost nothing.
This may make you feel better, but it was a real loss. Just like someone who has invested for 25 years and has a $1M in gains truly has made a $1M, even if they haven't sold.

Holders of Enron are still at a total loss, even if they haven't sold.
If the portfolio goes up $40k tomorrow is the money still lost? Or is it found? Or perhaps it was just hidden?

Why are you comparing a single stock (and a scam company at that) to a portfolio that is (hopefully) well diversified?

You gain and lose value. You don’t suffer an actual monetary gain or loss until you sell, locking in one or the other.
Sure if you price things in shares of your favorite ETF or stock. But since I price everything in my world in dollars when my account value drops I have unrealized losses.

If you went out and bought a T206 Honus Wagner for $3 million and then tomorrow someone discovers a vault of 100,000s of T206 Honus Wagners and now your card is worth $3, have you lost nothing until you sell the card? If you price your life in T206 Honus Wagners then no you haven’t. If you price your life in dollars you certainly did.
It's not a loss. It's a reduction in value. If a 2.5% (temporary) reduction in value upsets you, I suggest putting your statements in a drawer and checking them once a year, and staying off the Internet.


Today's rise (so far) is a perfect example of why a paper loss (or gain) in just that. It's on paper. The person who was upset at "losing" $40k yesterday has now "won" half of it back today. Not to mention a massive (what? 16%?) run up since January. And a 300% run up since 2009?

Rather than lamenting a one-day 2.5% "loss," why not celebrate, every day, that 300% "gain."

It's just a different way of looking at the market, I suppose. I've been investing for almost 30 years and have seen many daily swings, one way or the other. I try to keep my emotions out of it, because that's what sends people off the rails and off their IPS.

If you want to weep about your perceived losses, you are certainly free to do that. I come here to stay the course and stay levelheaded, not cry over things I can't control.

Now, I'm going to sell my Honus Warner and buy TSM. :greedy

MotoTrojan
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Re: U.S. stocks in free fall

Post by MotoTrojan » Tue May 14, 2019 10:57 am

Admiral wrote:
Tue May 14, 2019 10:44 am


It's not a loss. It's a reduction in value. If a 2.5% (temporary) reduction in value upsets you, I suggest putting your statements in a drawer and checking them once a year, and staying off the Internet.


Today's rise (so far) is a perfect example of why a paper loss (or gain) in just that. It's on paper. The person who was upset at "losing" $40k yesterday has now "won" half of it back today. Not to mention a massive (what? 16%?) run up since January. And a 300% run up since 2009?

Rather than lamenting a one-day 2.5% "loss," why not celebrate, every day, that 300% "gain."

It's just a different way of looking at the market, I suppose. I've been investing for almost 30 years and have seen many daily swings, one way or the other. I try to keep my emotions out of it, because that's what sends people off the rails and off their IPS.

If you want to weep about your perceived losses, you are certainly free to do that. I come here to stay the course and stay levelheaded, not cry over things I can't control.

Now, I'm going to sell my Honus Warner and buy TSM. :greedy
I am not weeping about anything, but a reduction in value is the English equivalent of a loss in value which I am happy to refer to as simply "a loss". The market gives and takes so yes, frequently you will lose and then immediately gain. It is still a loss. I'm not going to continue arguing this as I understand how many use it as as mental crutch and it probably enables them to gain a lot more of their life.

There is no government organization or law of the markets that is insuring the loss/reduction is "temporary". I check my portfolio multiple times a day and that won't change my philosophy of investing every dollar I can, as soon as I can, but I still won't lie to myself either.

DrGoogle2017
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Re: U.S. stocks in free fall

Post by DrGoogle2017 » Tue May 14, 2019 11:06 am

Haha, reduction in value meets loss(kettle meets pot kind of thing). Fancy way of saying to reduce hurt feelings. I say a loss is a loss and get over it.

LiterallyIronic
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Re: U.S. stocks in free fall

Post by LiterallyIronic » Tue May 14, 2019 11:09 am

Admiral wrote:
Tue May 14, 2019 10:44 am
Rather than lamenting a one-day 2.5% "loss," why not celebrate, every day, that 300% "gain."
Because not all of us got to participate in that 300% gain. I had $0 invested in 2009, 2010, and 2011. I had about $10k invested by 2016, almost all of which would've been contributions. My first year maxing two Roth IRAs was 2017, when the DJIA was pushing 20,000. A vast majority of my balance has come from contributions + employer match.

Admiral
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Re: U.S. stocks in free fall

Post by Admiral » Tue May 14, 2019 11:11 am

DrGoogle2017 wrote:
Tue May 14, 2019 11:06 am
Haha, reduction in value meets loss(kettle meets pot kind of thing). Fancy way of saying to reduce hurt feelings. I say a loss is a loss and get over it.
If I buy my house for 100k, and the next year its market value is $500k, and the year after that it's market value is $400k, have I lost $100k?

By your logic, I have. I think most people would say this is faulty logic.

MotoTrojan
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Re: U.S. stocks in free fall

Post by MotoTrojan » Tue May 14, 2019 11:22 am

Admiral wrote:
Tue May 14, 2019 11:11 am
DrGoogle2017 wrote:
Tue May 14, 2019 11:06 am
Haha, reduction in value meets loss(kettle meets pot kind of thing). Fancy way of saying to reduce hurt feelings. I say a loss is a loss and get over it.
If I buy my house for 100k, and the next year its market value is $500k, and the year after that it's market value is $400k, have I lost $100k?

By your logic, I have. I think most people would say this is faulty logic.
You had lost $100K in the past year, yes. You could’ve sold the home and had $400K profit but now the most you could profit is $300K.

Losing the houses money (pun intended) hurts less, but it’s still a loss relative to the point of reference. It’s also a handsome gain relative to a 2 year reference point.

Admiral
Posts: 2005
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Re: U.S. stocks in free fall

Post by Admiral » Tue May 14, 2019 11:29 am

MotoTrojan wrote:
Tue May 14, 2019 11:22 am
Admiral wrote:
Tue May 14, 2019 11:11 am
DrGoogle2017 wrote:
Tue May 14, 2019 11:06 am
Haha, reduction in value meets loss(kettle meets pot kind of thing). Fancy way of saying to reduce hurt feelings. I say a loss is a loss and get over it.
If I buy my house for 100k, and the next year its market value is $500k, and the year after that it's market value is $400k, have I lost $100k?

By your logic, I have. I think most people would say this is faulty logic.
You had lost $100K in the past year, yes. You could’ve sold the home and had $400K profit but now the most you could profit is $300K.

Losing the houses money (pun intended) hurts less, but it’s still a loss relative to the point of reference. It’s also a handsome gain relative to a 2 year reference point.
OMG. The point of reference is always the purchase price, not some random out-of-thin air temporary valuation.

If you didn't sell, then who cares? You lost nothing. It's a meaningless price point to dwell on. Are you going to spend your life regretting that you didn't sell? Perhaps if you HAD, the new home you'd have had to buy in that sellers market would have cost $100k more, wiping out your "gain."

Jags4186
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Re: U.S. stocks in free fall

Post by Jags4186 » Tue May 14, 2019 11:42 am

Admiral wrote:
Tue May 14, 2019 11:29 am
MotoTrojan wrote:
Tue May 14, 2019 11:22 am
Admiral wrote:
Tue May 14, 2019 11:11 am
DrGoogle2017 wrote:
Tue May 14, 2019 11:06 am
Haha, reduction in value meets loss(kettle meets pot kind of thing). Fancy way of saying to reduce hurt feelings. I say a loss is a loss and get over it.
If I buy my house for 100k, and the next year its market value is $500k, and the year after that it's market value is $400k, have I lost $100k?

By your logic, I have. I think most people would say this is faulty logic.
You had lost $100K in the past year, yes. You could’ve sold the home and had $400K profit but now the most you could profit is $300K.

Losing the houses money (pun intended) hurts less, but it’s still a loss relative to the point of reference. It’s also a handsome gain relative to a 2 year reference point.
OMG. The point of reference is always the purchase price, not some random out-of-thin air temporary valuation.

If you didn't sell, then who cares? You lost nothing. It's a meaningless price point to dwell on. Are you going to spend your life regretting that you didn't sell? Perhaps if you HAD, the new home you'd have had to buy in that sellers market would have cost $100k more, wiping out your "gain."
Whatever you need to tell yourself to sleep well at night. :sharebeer

H-Town
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Re: U.S. stocks in free fall

Post by H-Town » Tue May 14, 2019 12:33 pm

Admiral wrote:
Tue May 14, 2019 11:29 am
MotoTrojan wrote:
Tue May 14, 2019 11:22 am
Admiral wrote:
Tue May 14, 2019 11:11 am
DrGoogle2017 wrote:
Tue May 14, 2019 11:06 am
Haha, reduction in value meets loss(kettle meets pot kind of thing). Fancy way of saying to reduce hurt feelings. I say a loss is a loss and get over it.
If I buy my house for 100k, and the next year its market value is $500k, and the year after that it's market value is $400k, have I lost $100k?

By your logic, I have. I think most people would say this is faulty logic.
You had lost $100K in the past year, yes. You could’ve sold the home and had $400K profit but now the most you could profit is $300K.

Losing the houses money (pun intended) hurts less, but it’s still a loss relative to the point of reference. It’s also a handsome gain relative to a 2 year reference point.
OMG. The point of reference is always the purchase price, not some random out-of-thin air temporary valuation.

If you didn't sell, then who cares? You lost nothing. It's a meaningless price point to dwell on. Are you going to spend your life regretting that you didn't sell? Perhaps if you HAD, the new home you'd have had to buy in that sellers market would have cost $100k more, wiping out your "gain."
It's called "market value" for a reason. Regardless of whether you sell or not, the market set the price on which buyers and sellers agree to transact at any given moment on a trading day. If the market price goes down and your paper asset worth less than it was before. It's a loss. Whether you intentionally ignore the loss or not, it's still a loss. It works the same way for gain. This is not rocket science. Your way of reasoning might help you to cope with loss in a free falling stock market. But still it doesn't help you to prevent tens of thousands dollars of loss in a week.

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TheTimeLord
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Re: U.S. stocks in free fall

Post by TheTimeLord » Tue May 14, 2019 12:43 pm

H-Town wrote:
Tue May 14, 2019 12:33 pm
Admiral wrote:
Tue May 14, 2019 11:29 am
MotoTrojan wrote:
Tue May 14, 2019 11:22 am
Admiral wrote:
Tue May 14, 2019 11:11 am
DrGoogle2017 wrote:
Tue May 14, 2019 11:06 am
Haha, reduction in value meets loss(kettle meets pot kind of thing). Fancy way of saying to reduce hurt feelings. I say a loss is a loss and get over it.
If I buy my house for 100k, and the next year its market value is $500k, and the year after that it's market value is $400k, have I lost $100k?

By your logic, I have. I think most people would say this is faulty logic.
You had lost $100K in the past year, yes. You could’ve sold the home and had $400K profit but now the most you could profit is $300K.

Losing the houses money (pun intended) hurts less, but it’s still a loss relative to the point of reference. It’s also a handsome gain relative to a 2 year reference point.
OMG. The point of reference is always the purchase price, not some random out-of-thin air temporary valuation.

If you didn't sell, then who cares? You lost nothing. It's a meaningless price point to dwell on. Are you going to spend your life regretting that you didn't sell? Perhaps if you HAD, the new home you'd have had to buy in that sellers market would have cost $100k more, wiping out your "gain."
It's called "market value" for a reason. Regardless of whether you sell or not, the market set the price on which buyers and sellers agree to transact at any given moment on a trading day. If the market price goes down and your paper asset worth less than it was before. It's a loss. Whether you intentionally ignore the loss or not, it's still a loss. It works the same way for gain. This is not rocket science. Your way of reasoning might help you to cope with loss in a free falling stock market. But still it doesn't help you to prevent tens of thousands dollars of loss in a week.
So you are saying assets should be marked to market to determine their value. So if you cannot exchange an asset for as much today as you could yesterday it has lost value since yesterday. And if you can exchange it for more tomorrow it will have gained value. Brilliant.
IMHO, Investing should be about living the life you want, not avoiding the life you fear. | Run, You Clever Boy! [9085]

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hisdudeness
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Re: U.S. stocks in free fall

Post by hisdudeness » Tue May 14, 2019 12:45 pm

I will never understand the "it's not a loss unless you sell and lock it in" crowd.
A paper loss IS a loss.

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J G Bankerton
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Re: U.S. stocks in free fall

Post by J G Bankerton » Tue May 14, 2019 1:12 pm

Admiral wrote:
Tue May 14, 2019 10:44 am
It's not a loss. It's a reduction in value.
You never count your money when you're sittin' at the table
There'll be time enough for countin' when the dealing's done


It is only a win or loss after one cashes out. The tax man agrees.

H-Town
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Re: U.S. stocks in free fall

Post by H-Town » Tue May 14, 2019 1:17 pm

J G Bankerton wrote:
Tue May 14, 2019 1:12 pm
Admiral wrote:
Tue May 14, 2019 10:44 am
It's not a loss. It's a reduction in value.
You never count your money when you're sittin' at the table
There'll be time enough for countin' when the dealing's done


It is only a win or loss after one cashes out. The tax man agrees.
Every gambler knows
That the secret to survivin'
Is knowin' what to throw away
And knowin' what to keep
'Cause every hand's a winner
And every hand's a loser
And the best that you can hope for
is to die in your sleep...

H-Town
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Re: U.S. stocks in free fall

Post by H-Town » Tue May 14, 2019 1:19 pm

TheTimeLord wrote:
Tue May 14, 2019 12:43 pm
H-Town wrote:
Tue May 14, 2019 12:33 pm
Admiral wrote:
Tue May 14, 2019 11:29 am
MotoTrojan wrote:
Tue May 14, 2019 11:22 am
Admiral wrote:
Tue May 14, 2019 11:11 am


If I buy my house for 100k, and the next year its market value is $500k, and the year after that it's market value is $400k, have I lost $100k?

By your logic, I have. I think most people would say this is faulty logic.
You had lost $100K in the past year, yes. You could’ve sold the home and had $400K profit but now the most you could profit is $300K.

Losing the houses money (pun intended) hurts less, but it’s still a loss relative to the point of reference. It’s also a handsome gain relative to a 2 year reference point.
OMG. The point of reference is always the purchase price, not some random out-of-thin air temporary valuation.

If you didn't sell, then who cares? You lost nothing. It's a meaningless price point to dwell on. Are you going to spend your life regretting that you didn't sell? Perhaps if you HAD, the new home you'd have had to buy in that sellers market would have cost $100k more, wiping out your "gain."
It's called "market value" for a reason. Regardless of whether you sell or not, the market set the price on which buyers and sellers agree to transact at any given moment on a trading day. If the market price goes down and your paper asset worth less than it was before. It's a loss. Whether you intentionally ignore the loss or not, it's still a loss. It works the same way for gain. This is not rocket science. Your way of reasoning might help you to cope with loss in a free falling stock market. But still it doesn't help you to prevent tens of thousands dollars of loss in a week.
So you are saying assets should be marked to market to determine their value. So if you cannot exchange an asset for as much today as you could yesterday it has lost value since yesterday. And if you can exchange it for more tomorrow it will have gained value. Brilliant.
Brilliant right?

Why don't you call Vanguard and ask that why they keep showing the market value of your portfolio? Should they just show the cost basis of whatever money you put in?

The mark to market asset is the fair presentation of your personal balance sheet at any given moment.

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TheTimeLord
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Re: U.S. stocks in free fall

Post by TheTimeLord » Tue May 14, 2019 1:24 pm

H-Town wrote:
Tue May 14, 2019 1:19 pm
TheTimeLord wrote:
Tue May 14, 2019 12:43 pm
H-Town wrote:
Tue May 14, 2019 12:33 pm
Admiral wrote:
Tue May 14, 2019 11:29 am
MotoTrojan wrote:
Tue May 14, 2019 11:22 am


You had lost $100K in the past year, yes. You could’ve sold the home and had $400K profit but now the most you could profit is $300K.

Losing the houses money (pun intended) hurts less, but it’s still a loss relative to the point of reference. It’s also a handsome gain relative to a 2 year reference point.
OMG. The point of reference is always the purchase price, not some random out-of-thin air temporary valuation.

If you didn't sell, then who cares? You lost nothing. It's a meaningless price point to dwell on. Are you going to spend your life regretting that you didn't sell? Perhaps if you HAD, the new home you'd have had to buy in that sellers market would have cost $100k more, wiping out your "gain."
It's called "market value" for a reason. Regardless of whether you sell or not, the market set the price on which buyers and sellers agree to transact at any given moment on a trading day. If the market price goes down and your paper asset worth less than it was before. It's a loss. Whether you intentionally ignore the loss or not, it's still a loss. It works the same way for gain. This is not rocket science. Your way of reasoning might help you to cope with loss in a free falling stock market. But still it doesn't help you to prevent tens of thousands dollars of loss in a week.
So you are saying assets should be marked to market to determine their value. So if you cannot exchange an asset for as much today as you could yesterday it has lost value since yesterday. And if you can exchange it for more tomorrow it will have gained value. Brilliant.
Brilliant right?

Why don't you call Vanguard and ask that why they keep showing the market value of your portfolio? Should they just show the cost basis of whatever money you put in?

The mark to market asset is the fair presentation of your personal balance sheet at any given moment.
I know personally I am not nearly as concerned about what I paid for something as I am with what it is worth today.
IMHO, Investing should be about living the life you want, not avoiding the life you fear. | Run, You Clever Boy! [9085]

DonIce
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Re: U.S. stocks in free fall

Post by DonIce » Tue May 14, 2019 1:27 pm

Price is what you pay, value is what you get. If the fundamentals of the company you invested in and the economy haven't changed, then why should you care about fluctuations in the market price? The markets go up and down every day, averaging a 0.8% move every day. Over the long run though, price movement returns about 4% per year. What that means is that ~98% of all market price movements cancel each other out. Investors frequently become over-pessimistic or over-exuberant, often multiple times within a single day, sending prices up and down for no discernible reason. It's just noise. Ignore it.

DrGoogle2017
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Re: U.S. stocks in free fall

Post by DrGoogle2017 » Tue May 14, 2019 2:01 pm

There are people who keep track of their networth every year, they would notice a loss. But if I put the value of my purchase price of my house, I would be sad, it’s a very small amount. So I suggest getting real, if you have money in the stock market, you will suffer volatility, you will suffer temporary loss, nevertheless it’s a loss.

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ruralavalon
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Re: U.S. stocks in free fall

Post by ruralavalon » Tue May 14, 2019 2:07 pm

Since the start if this "U.S. stocks free fall" thread on August 8, 2011, the total return of Vanguard Total Stock Market Index Fund Admiral Shares (VTSAX) is up 172% and $10,000 invested has turned into $27,170.
"Everything should be as simple as it is, but not simpler." - Albert Einstein | Wiki article link:Getting Started

MotoTrojan
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Re: U.S. stocks in free fall

Post by MotoTrojan » Tue May 14, 2019 3:31 pm

Admiral wrote:
Tue May 14, 2019 11:29 am
MotoTrojan wrote:
Tue May 14, 2019 11:22 am
Admiral wrote:
Tue May 14, 2019 11:11 am
DrGoogle2017 wrote:
Tue May 14, 2019 11:06 am
Haha, reduction in value meets loss(kettle meets pot kind of thing). Fancy way of saying to reduce hurt feelings. I say a loss is a loss and get over it.
If I buy my house for 100k, and the next year its market value is $500k, and the year after that it's market value is $400k, have I lost $100k?

By your logic, I have. I think most people would say this is faulty logic.
You had lost $100K in the past year, yes. You could’ve sold the home and had $400K profit but now the most you could profit is $300K.

Losing the houses money (pun intended) hurts less, but it’s still a loss relative to the point of reference. It’s also a handsome gain relative to a 2 year reference point.
OMG. The point of reference is always the purchase price, not some random out-of-thin air temporary valuation.

If you didn't sell, then who cares? You lost nothing. It's a meaningless price point to dwell on. Are you going to spend your life regretting that you didn't sell? Perhaps if you HAD, the new home you'd have had to buy in that sellers market would have cost $100k more, wiping out your "gain."
You buy $100 of Bitcoin at $0.008 in 2010 and it grows to >$200M in 2017 but you decide to keep on holding. In the year 2030 it declines and you now only have $10,000 of value. Sure you made a 100x return which is pretty incredible in investing, but you also lost $200M from a different reference point. Are you happy or sad?

Why do people who have accumulated enough to retire de-risk their portfolios if it is nearly impossible to lose more than their principal?

sreynard
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Re: U.S. stocks in free fall

Post by sreynard » Tue May 14, 2019 4:58 pm

DonIce wrote:
Tue May 14, 2019 1:27 pm
Price is what you pay, value is what you get. If the fundamentals of the company you invested in and the economy haven't changed, then why should you care about fluctuations in the market price? The markets go up and down every day, averaging a 0.8% move every day. Over the long run though, price movement returns about 4% per year. What that means is that ~98% of all market price movements cancel each other out. Investors frequently become over-pessimistic or over-exuberant, often multiple times within a single day, sending prices up and down for no discernible reason. It's just noise. Ignore it.
+1 One of the stupidest mistakes a person can make is mistaking price and value.

Does anyone really think a temporary squabble is going to affect the market return over the next 20 or 100 years? Current news affects price. Nobody knows if it is going to affect value. Only time will tell that.

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J G Bankerton
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Re: U.S. stocks in free fall

Post by J G Bankerton » Tue May 14, 2019 8:08 pm

My 401K is much smaller than it looks when taxes are considered. Only "realized" gains or losses count; one can count other types of gains anyway they want but it doesn't mean anything in the real world.

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TheTimeLord
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Re: U.S. stocks in free fall

Post by TheTimeLord » Tue May 14, 2019 8:25 pm

J G Bankerton wrote:
Tue May 14, 2019 8:08 pm
My 401K is much smaller than it looks when taxes are considered. Only "realized" gains or losses count; one can count other types of gains anyway they want but it doesn't mean anything in the real world.
By your definition Warren Buffet is poor and his wealth doesn't mean anything in the real world since all is wealth is tied up in Berkshire stock and he hasn't realized the gains yet. So is after tax cash all that counts in the "real world"? If I own 100 shares of VTI what is its real world value, the price I paid or the price I can get if I sell it or $0?
Last edited by TheTimeLord on Tue May 14, 2019 9:34 pm, edited 1 time in total.
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Re: U.S. stocks in free fall

Post by willthrill81 » Tue May 14, 2019 9:33 pm

TheTimeLord wrote:
Tue May 14, 2019 8:25 pm
J G Bankerton wrote:
Tue May 14, 2019 8:08 pm
My 401K is much smaller than it looks when taxes are considered. Only "realized" gains or losses count; one can count other types of gains anyway they want but it doesn't mean anything in the real world.
By your definition Warren Buffet is poor and his wealth does mean anything in the real world since all is wealth is tied up in Berkshire stock and he hasn't realized the gains yet. So is after tax cash all that counts in the "real world"? If I own 100 shares of VTI what is its real world value, the price I paid or the price I can get if I sell it or $0?
Correct. If I still have Enron stock certificates that I haven't sold yet, are they still worth anything? Or what about the 100 shares of Berkshire Hathaway class 'A' shares that I bought 40 years ago? Are they worth nothing more than what I paid for them?

All gains or losses, as measured by the current market price, are real, whether they are realized or not.
“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 free fall

Post by MotoTrojan » Tue May 14, 2019 9:39 pm

willthrill81 wrote:
Tue May 14, 2019 9:33 pm
TheTimeLord wrote:
Tue May 14, 2019 8:25 pm
J G Bankerton wrote:
Tue May 14, 2019 8:08 pm
My 401K is much smaller than it looks when taxes are considered. Only "realized" gains or losses count; one can count other types of gains anyway they want but it doesn't mean anything in the real world.
By your definition Warren Buffet is poor and his wealth does mean anything in the real world since all is wealth is tied up in Berkshire stock and he hasn't realized the gains yet. So is after tax cash all that counts in the "real world"? If I own 100 shares of VTI what is its real world value, the price I paid or the price I can get if I sell it or $0?
Correct. If I still have Enron stock certificates that I haven't sold yet, are they still worth anything? Or what about the 100 shares of Berkshire Hathaway class 'A' shares that I bought 40 years ago? Are they worth nothing more than what I paid for them?

All gains or losses, as measured by the current market price, are real, whether they are realized or not.
I'll give you $2600 for one of those Berkshire class A's. Who wouldn't be thrilled about a 10x gain!

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J G Bankerton
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Re: U.S. stocks in free fall

Post by J G Bankerton » Tue May 14, 2019 9:49 pm

TheTimeLord wrote:
Tue May 14, 2019 8:25 pm
So is after tax cash all that counts in the "real world"?
If the Warren Buffett were to liquidate his entire holdings he would only keep 67% or less of what he owns.

It is not what one makes it is what one keeps. What value would a lender put on stocks if they were to be used as collateral?

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Re: U.S. stocks in free fall

Post by dspencer » Wed May 15, 2019 10:02 am

hisdudeness wrote:
Tue May 14, 2019 12:45 pm
I will never understand the "it's not a loss unless you sell and lock it in" crowd.
A paper loss IS a loss.
It's quite baffling. I can only assume that some of it is just a psychological game people play and some of it is created by how the government taxes capital gains.

It's probably hopeless but for those who say that:

Imagine two people who buy a one share of stock in their Roth IRA. The stock price then declines by 50%. One of the people sells their share. The next day they change their mind and buy it back for the same price they sold it. They both still own one share and have the same amount of dollars left over. Has one person lost money while the other has lost nothing even though they started and remain in identical positions?

At the end of the day, what really matters is purchasing power. All assets, including currencies, have rates of exchanges that tend to fluctuate. The dollar is just a convenient and relatively stable reference. People living through a hyperinflation with a horde of cash may not have "lost any money" in terms of whatever currency they own, but they have certainly lost purchasing power if it now takes 1,000 units of currency to buy a loaf of bread that used to cost 5.

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Re: U.S. stocks in free fall

Post by csmath » Wed May 15, 2019 10:20 am

dspencer wrote:
Wed May 15, 2019 10:02 am
At the end of the day, what really matters is purchasing power.
^this +1

This debate always amuses me. Words can have different meaningful definitions in different contexts. At the end of the day, the past is the past and you have options/decisions that can be made now or in the future. Since the past is written in stone and "nobody knows nothing" about the future, then the only thing that matters is what decisions you make now, and at that moment the current value is the only leverage / purchasing power you have.

Call it a loss or not, I think we have all seen people try to avoid taking a loss and pass up a better opportunity because they think that nothing is lost until they sell. Maybe we should all just start using the phrase, "Opportunity Loss".

Ex. "Wow I had an opportunity loss of $40,000 on that RBD!" Of course people would then reply, "What?! The RBD is an Opportunity Gain!!! now I can buy at discount!"

Here is an on-topic comment:
I made 5 trades two days ago on the RBD to contribute to various funds and 2 out of 5 were in at 2:59PM CST but 3 out of 5 were at 3PM CST. I didn't realize it was so late until after I confirmed them and when I saw the time I shrugged thinking maybe it would be down again the next day. It didn't work out that way! Ohh well, not enough to even really make a big difference in the long run but in retrospect I wish I didn't hit the train on the way home!

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J G Bankerton
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Re: U.S. stocks in free fall

Post by J G Bankerton » Wed May 15, 2019 12:49 pm

dspencer wrote:
Wed May 15, 2019 10:02 am
Has one person lost money while the other has lost nothing even though they started and remain in identical positions?
No one lost money because of the wash rule. If they waited 30 days before buying the same stock at the same price they sold it for then they would have a realized loss.

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Re: U.S. stocks in free fall

Post by MotoTrojan » Wed May 15, 2019 1:26 pm

J G Bankerton wrote:
Wed May 15, 2019 12:49 pm
dspencer wrote:
Wed May 15, 2019 10:02 am
Has one person lost money while the other has lost nothing even though they started and remain in identical positions?
No one lost money because of the wash rule. If they waited 30 days before buying the same stock at the same price they sold it for then they would have a realized loss.
Roth IRA.

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Re: U.S. stocks in free fall

Post by H-Town » Wed May 15, 2019 1:57 pm

J G Bankerton wrote:
Wed May 15, 2019 12:49 pm
dspencer wrote:
Wed May 15, 2019 10:02 am
Has one person lost money while the other has lost nothing even though they started and remain in identical positions?
No one lost money because of the wash rule. If they waited 30 days before buying the same stock at the same price they sold it for then they would have a realized loss.
Wait what?

If in taxable account, I can do TLH and ask the IRS to send me money. Last December, I did a good chunk of tax loss harvesting and got a nice chunk of money from the tax man.

It's still a loss though. Then, I got some gain since then. Both loss and gain are real, as well as the refund check from the IRS.

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Re: U.S. stocks in free fall

Post by dspencer » Wed May 15, 2019 3:13 pm

MotoTrojan wrote:
Wed May 15, 2019 1:26 pm
J G Bankerton wrote:
Wed May 15, 2019 12:49 pm
dspencer wrote:
Wed May 15, 2019 10:02 am
Has one person lost money while the other has lost nothing even though they started and remain in identical positions?
No one lost money because of the wash rule. If they waited 30 days before buying the same stock at the same price they sold it for then they would have a realized loss.
Roth IRA.
Yes, thank you. I think that conflating what constitutes a "loss" in terms of money/purchasing power with what constitutes a "realized loss" for tax purposes just confuses the whole issue. That's why I was trying to create a hypothetical that wouldn't involve any tax consequences to make it more plain. In the absence of tax consequences it seems apparent to me that nothing changes if you "lock in" a loss by selling and repurchasing the same asset at the same price.

I assume most people are not saying "you only lose if you sell" about taxes because if anything you get a benefit from realizing the losses in a tax sense.

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J G Bankerton
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Re: U.S. stocks in free fall

Post by J G Bankerton » Wed May 15, 2019 3:30 pm

MotoTrojan wrote:
Wed May 15, 2019 1:26 pm
J G Bankerton wrote:
Wed May 15, 2019 12:49 pm
dspencer wrote:
Wed May 15, 2019 10:02 am
Has one person lost money while the other has lost nothing even though they started and remain in identical positions?
No one lost money because of the wash rule. If they waited 30 days before buying the same stock at the same price they sold it for then they would have a realized loss.
Roth IRA.
Then they can call it whatever makes them happy.

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Re: U.S. stocks in freefall

Post by marcopolo » Wed May 15, 2019 9:13 pm

DanMahowny wrote:
Tue May 15, 2018 1:21 pm
Things will get much more exciting around here when DOW plunges to 16,000 in the next 12-18 months.

We should all decide now how we'll react.
marcopolo wrote:
Tue May 15, 2018 4:56 pm
Just curious how long you have been predicting that, and is it always 12-18 months out, or have you been shorting the horizon as time passes.
For example, when you said Dow 16000 several months ago, was the time window 15-21 months back then?
DanMahowny wrote:
Tue May 15, 2018 5:01 pm
I started selling at the end of Oct 2017. Finished selling at the end of Jan 2018.

The only equities I own are in the Oil/Oil Services industry which represent somewhere between 20-30% of my portfolio. The rest is in cash, short-term treasuries, TIPs, and some gold.

This portfolio hit an all time high today; yet well prepared for tough times ahead.

**And I'll stop saying 12-18 months. Will revise to say "12 months or less"
Well, only off by about 9600 Dow points.

In fairness, I am not brave enough to make any predictions about the direction of the markets, and the above prediction might still turn out to be true in the next 12-18 months.
Once in a while you get shown the light, in the strangest of places if you look at it right.

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Re: U.S. stocks in freefall

Post by willthrill81 » Thu May 16, 2019 12:18 am

marcopolo wrote:
Wed May 15, 2019 9:13 pm
DanMahowny wrote:
Tue May 15, 2018 1:21 pm
Things will get much more exciting around here when DOW plunges to 16,000 in the next 12-18 months.

We should all decide now how we'll react.
marcopolo wrote:
Tue May 15, 2018 4:56 pm
Just curious how long you have been predicting that, and is it always 12-18 months out, or have you been shorting the horizon as time passes.
For example, when you said Dow 16000 several months ago, was the time window 15-21 months back then?
DanMahowny wrote:
Tue May 15, 2018 5:01 pm
I started selling at the end of Oct 2017. Finished selling at the end of Jan 2018.

The only equities I own are in the Oil/Oil Services industry which represent somewhere between 20-30% of my portfolio. The rest is in cash, short-term treasuries, TIPs, and some gold.

This portfolio hit an all time high today; yet well prepared for tough times ahead.

**And I'll stop saying 12-18 months. Will revise to say "12 months or less"
Well, only off by about 9600 Dow points.

In fairness, I am not brave enough to make any predictions about the direction of the markets, and the above prediction might still turn out to be true in the next 12-18 months.
Another market crash predicted that never came to pass. Mr. Market is an awfully difficult one to figure out. :mrgreen:

And remember about the broken clock...

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“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 free fall

Post by bearcub » Thu May 16, 2019 6:38 am

TimeLord= My balanced funds are in IRAs. Not in taxable accounts.

LiterallyIronic
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Re: U.S. stocks in free fall

Post by LiterallyIronic » Thu May 16, 2019 10:07 am

LiterallyIronic wrote:
Thu May 09, 2019 9:38 am
This seemed as good a time as any to finally bite the bullet and increase my 401k contributions from 10% to 12% of my paycheck (which brings my total investing up to 28% of gross). Maybe after I complete some home improvement projects that are on the docket, I can nudge up to 30%.
LiterallyIronic wrote:
Mon May 13, 2019 2:37 pm
TomCat96 wrote:
Mon May 13, 2019 12:34 pm
what a beautiful day.
Indeed. Let's keep going! But, I can already predict what's going to happen. It's going to shoot back up the day before my 401k contributions go through.
Called it. I bumped my 401k contributions up on May 9th, but the change didn't make it into my paycheck that went through on May 14th, and here we are, up 1% today.

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Re: U.S. stocks in free fall

Post by MisterMister » Thu May 16, 2019 11:31 am

It's a good day for the markets. I've noticed market timers are somewhat like gamblers. You hear about it when they are winning, but you can hear crickets in the background when they're losing. I try to avoid the temptation of market timing (both doing it and talking about it).

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Re: U.S. stocks in free fall

Post by mrspock » Thu May 16, 2019 12:23 pm

MisterMister wrote:
Thu May 16, 2019 11:31 am
It's a good day for the markets. I've noticed market timers are somewhat like gamblers. You hear about it when they are winning, but you can hear crickets in the background when they're losing. I try to avoid the temptation of market timing (both doing it and talking about it).
Good day indeed! Added some new money this morning into the portfolio and within 10 minutes the steep climb started...feels good to be an indexer today.

columbia
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Re: U.S. stocks in free fall

Post by columbia » Thu May 16, 2019 7:58 pm

I guess irrational exuberance carried the day. :o

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Re: U.S. stocks in free fall

Post by Stinky » Thu May 16, 2019 8:09 pm

columbia wrote:
Thu May 16, 2019 7:58 pm
I guess irrational exuberance carried the day. :o
Irrational exuberance has carried several days lately.
It's a GREAT day to be alive - Travis Tritt

finite_difference
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Re: U.S. stocks in free fall

Post by finite_difference » Thu May 16, 2019 9:22 pm

dspencer wrote:
Wed May 15, 2019 10:02 am
hisdudeness wrote:
Tue May 14, 2019 12:45 pm
I will never understand the "it's not a loss unless you sell and lock it in" crowd.
A paper loss IS a loss.
It's quite baffling. I can only assume that some of it is just a psychological game people play and some of it is created by how the government taxes capital gains.

It's probably hopeless but for those who say that:

Imagine two people who buy a one share of stock in their Roth IRA. The stock price then declines by 50%. One of the people sells their share. The next day they change their mind and buy it back for the same price they sold it. They both still own one share and have the same amount of dollars left over. Has one person lost money while the other has lost nothing even though they started and remain in identical positions?

At the end of the day, what really matters is purchasing power. All assets, including currencies, have rates of exchanges that tend to fluctuate. The dollar is just a convenient and relatively stable reference. People living through a hyperinflation with a horde of cash may not have "lost any money" in terms of whatever currency they own, but they have certainly lost purchasing power if it now takes 1,000 units of currency to buy a loaf of bread that used to cost 5.
A paper loss, that is a temporary reduction of the value of your stock (Total Stock Market ETF), is not the same as an actual loss of stock. Because the stock value is expected to recover its price faster than any other known financial instrument. Whereas an actual loss of the stock (I.e. through divorce, losing your ancient paper stock certificate, etc.) is gone forever. You are never getting it back.

So there should be nothing baffling about downplaying paper losses, because it reflects in my opinion a more skillful psychological understanding. An entire field of economics is now devoted to psychology. Psychology is arguably more important than anything else when it comes to investing.

But if it makes you happier to think in terms of paper losses, then by all means please do!

What is the beneficial impact of thinking in terms of paper losses? Will you have paper losses if you never peek?
The most precious gift we can offer anyone is our attention. - Thich Nhat Hanh

marcopolo
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Re: U.S. stocks in free fall

Post by marcopolo » Thu May 16, 2019 9:32 pm

Stinky wrote:
Thu May 16, 2019 8:09 pm
columbia wrote:
Thu May 16, 2019 7:58 pm
I guess irrational exuberance carried the day. :o
Irrational exuberance has carried several days lately.
How do we know it is irrational?
Once in a while you get shown the light, in the strangest of places if you look at it right.

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