U.S. stocks in free fall

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Bluce
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Re: U.S. stocks in free fall

Post by Bluce » Mon Dec 02, 2019 2:34 pm

Stinky wrote:
Mon Dec 02, 2019 2:21 pm
Bluce wrote:
Mon Dec 02, 2019 2:13 pm
WHERE'S STINKY???? :shock: :shock:
I’m holding my breath until stocks start soaring again.

I’m already turning blue.
The new "soaring" Stinky . . . ? !!

Looks more like he's running for the exit. :shock:

Image

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nedsaid
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Re: U.S. stocks in free fall

Post by nedsaid » Mon Dec 02, 2019 3:13 pm

The market is having its second down day in a row. I wouldn't read too much into this. 'Tis the season for tax loss selling.
A fool and his money are good for business.

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willthrill81
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Re: U.S. stocks in free fall

Post by willthrill81 » Mon Dec 02, 2019 3:16 pm

nedsaid wrote:
Mon Dec 02, 2019 3:13 pm
The market is having its second down day in a row. I wouldn't read too much into this. 'Tis the season for tax loss selling.
Unless someone bought last Wednesday, I don't see how they could be TLHing much today.
“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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nedsaid
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Re: U.S. stocks in free fall

Post by nedsaid » Mon Dec 02, 2019 3:24 pm

willthrill81 wrote:
Mon Dec 02, 2019 3:16 pm
nedsaid wrote:
Mon Dec 02, 2019 3:13 pm
The market is having its second down day in a row. I wouldn't read too much into this. 'Tis the season for tax loss selling.
Unless someone bought last Wednesday, I don't see how they could be TLHing much today.
In general, December has traditionally been the time when people do their tax loss selling in preparation for the tax preparation season. A combination of taking profits and selling losers to offset the gains. Hard to say exactly what moves the markets on a particular day but the before mentioned effect takes hold in December and sometimes even earlier than that. On Friday, the market was open the day after Thanksgiving, the trading day was shortened and many traders probably had taken the day off.
A fool and his money are good for business.

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

Post by H-Town » Mon Dec 02, 2019 3:34 pm

nedsaid wrote:
Mon Dec 02, 2019 3:24 pm
willthrill81 wrote:
Mon Dec 02, 2019 3:16 pm
nedsaid wrote:
Mon Dec 02, 2019 3:13 pm
The market is having its second down day in a row. I wouldn't read too much into this. 'Tis the season for tax loss selling.
Unless someone bought last Wednesday, I don't see how they could be TLHing much today.
In general, December has traditionally been the time when people do their tax loss selling in preparation for the tax preparation season. A combination of taking profits and selling losers to offset the gains. Hard to say exactly what moves the markets on a particular day but the before mentioned effect takes hold in December and sometimes even earlier than that. On Friday, the market was open the day after Thanksgiving, the trading day was shortened and many traders probably had taken the day off.
I have no idea on the reasons why the market does what the market does... But if I could order a stock sale like last December, I would... :mrgreen:

UpperNwGuy
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Re: U.S. stocks in free fall

Post by UpperNwGuy » Mon Dec 02, 2019 3:37 pm

There was a new tariff announced today. Of course the market is down.

MotoTrojan
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Re: U.S. stocks in free fall

Post by MotoTrojan » Mon Dec 02, 2019 3:53 pm

UpperNwGuy wrote:
Mon Dec 02, 2019 3:37 pm
There was a new tariff announced today. Of course the market is down.
The more interesting question is why did long-treasury yields pop for the upside with news like that.

TNOA
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Re: U.S. stocks in free fall

Post by TNOA » Tue Dec 03, 2019 12:11 am

MotoTrojan wrote:
Mon Dec 02, 2019 3:53 pm
UpperNwGuy wrote:
Mon Dec 02, 2019 3:37 pm
There was a new tariff announced today. Of course the market is down.
The more interesting question is why did long-treasury yields pop for the upside with news like that.
Exactly. That was the question I was asking. And why gold and silver were down.

retiringwhen
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Re: U.S. stocks in free fall

Post by retiringwhen » Tue Dec 03, 2019 7:06 am

TNOA wrote:
Tue Dec 03, 2019 12:11 am
MotoTrojan wrote:
Mon Dec 02, 2019 3:53 pm
UpperNwGuy wrote:
Mon Dec 02, 2019 3:37 pm
There was a new tariff announced today. Of course the market is down.
The more interesting question is why did long-treasury yields pop for the upside with news like that.
Exactly. That was the question I was asking. And why gold and silver were down.
I would guess that the market move was to cash yesterday.

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firebirdparts
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Re: U.S. stocks in free fall

Post by firebirdparts » Tue Dec 03, 2019 7:47 am

willthrill81 wrote:
Mon Dec 02, 2019 3:16 pm
nedsaid wrote:
Mon Dec 02, 2019 3:13 pm
The market is having its second down day in a row. I wouldn't read too much into this. 'Tis the season for tax loss selling.
Unless someone bought last Wednesday, I don't see how they could be TLHing much today.
This forum needs a like button.
A fool and your money are soon partners

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Stinky
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Re: U.S. stocks in free fall

Post by Stinky » Tue Dec 03, 2019 8:39 am

Futures market down sharply this morning. Looks like a pretty gloomy open for Wall Street today.

If this keeps up for another day or too, we'll start seeing articles in the popular press like - "What To Do As The Stock Market Crashes".
It's a GREAT day to be alive - Travis Tritt

retiringwhen
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Re: U.S. stocks in free fall

Post by retiringwhen » Tue Dec 03, 2019 9:18 am

Stinky wrote:
Tue Dec 03, 2019 8:39 am
If this keeps up for another day or too, we'll start seeing articles in the popular press like - "What To Do As The Stock Market Crashes".
Marketwatch has one every day just to cover the bases.

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corn18
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Re: U.S. stocks in free fall

Post by corn18 » Tue Dec 03, 2019 9:31 am

Glad I paid off my mortgage instead of lump summing into the market. :sharebeer :twisted:
Don't do something, just stand there!

CoastalWinds
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Re: U.S. stocks in free fall

Post by CoastalWinds » Tue Dec 03, 2019 9:33 am

finally! Love the red!

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Bluce
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Re: U.S. stocks in free fall

Post by Bluce » Tue Dec 03, 2019 9:45 am

Yay! Treasurys are UP!!! :sharebeer

grettman
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Re: U.S. stocks in free fall

Post by grettman » Tue Dec 03, 2019 9:48 am

THIS IS IT! ITS THE BIG ONE!

Today will justify my decision to sit in cash for 11 years!

I’ll buy the dip when it bottoms out!

Jokes!

lostdog
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Re: U.S. stocks in free fall

Post by lostdog » Tue Dec 03, 2019 10:05 am

Heading sideways again.
Total World Stock and Total World Bond. The simple two fund diversified portfolio. "Simplicity is the master key to financial success."

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Bluce
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Re: U.S. stocks in free fall

Post by Bluce » Tue Dec 03, 2019 10:20 am

grettman wrote:
Tue Dec 03, 2019 9:48 am
THIS IS IT! ITS THE BIG ONE!

Today will justify my decision to sit in cash for 11 years!

I’ll buy the dip when it bottoms out!

Jokes!
Plz let me know when it bottoms. :shock:

MotoTrojan
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Re: U.S. stocks in free fall

Post by MotoTrojan » Tue Dec 03, 2019 11:50 am

Bluce wrote:
Tue Dec 03, 2019 9:45 am
Yay! Treasurys are UP!!! :sharebeer
Yes I was very happy to see that. Cashed out my Excellent Adventure leveraged portfolio and dumped it all into domestic and international small-value, which were having a nice down day (especially S&P600).

flyingaway
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Re: U.S. stocks in free fall

Post by flyingaway » Tue Dec 03, 2019 11:57 am

It has been crazy for people to buy up the market recently in hope of a trade deal.

However, market will go down whether there is a trade deal or not. (If there is a trade deal, there will be no more incentive to push the market higher).

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oldzey
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Re: U.S. stocks in free fall

Post by oldzey » Tue Dec 03, 2019 12:10 pm

Nice - hopefully equity index funds will be on sale for my January 2020 Roth IRA contribution. 8-)
"The broker said the stock was 'poised to move.' Silly me, I thought he meant up." ― Randy Thurman

flyingaway
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Re: U.S. stocks in free fall

Post by flyingaway » Tue Dec 03, 2019 12:46 pm

I look for up to a 5% drop (a trade deal) or up to a 10% drop (no trade deal).

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

Post by H-Town » Tue Dec 03, 2019 12:49 pm

flyingaway wrote:
Tue Dec 03, 2019 12:46 pm
I look for up to a 5% drop (a trade deal) or up to a 10% drop (no trade deal).
25% - 75% drop would be nice. We'll have TLH for years to use.

retiringwhen
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Re: U.S. stocks in free fall

Post by retiringwhen » Tue Dec 03, 2019 12:52 pm

H-Town wrote:
Tue Dec 03, 2019 12:49 pm
25% - 75% drop would be nice. We'll have TLH for years to use.
You were supposed to do that LAST December! I have mine for the next few decades.

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AnalogKid22
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Re: U.S. stocks in free fall

Post by AnalogKid22 » Tue Dec 03, 2019 2:49 pm

oldzey wrote:
Tue Dec 03, 2019 12:10 pm
Nice - hopefully equity index funds will be on sale for my January 2020 Roth IRA contribution. 8-)
My thoughts exactly.

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

Post by J G Bankerton » Tue Dec 03, 2019 3:32 pm

H-Town wrote:
Mon Dec 02, 2019 3:34 pm
I have no idea on the reasons why the market does what the market does... But if I could order a stock sale like last December, I would...
In the words of Coach Berra; "It's deja vu all over again". My buy bots are lighting up like a Christmas tree. Now I'm waiting for Santa and his rally.

Please Santa don't disappoint. I'll leave a beer out for you. :beer
retiringwhen wrote:
Tue Dec 03, 2019 12:52 pm
H-Town wrote:
Tue Dec 03, 2019 12:49 pm
25% - 75% drop would be nice. We'll have TLH for years to use.
You were supposed to do that LAST December! I have mine for the next few decades.
I got 4 1/2 years worth. I'm just hoping for a buy low 2020 Roth.

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ruralavalon
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Re: U.S. stocks in free fall

Post by ruralavalon » Tue Dec 03, 2019 7:02 pm

We made $34.81 today :) . In our area that is almost enough for dinner for two at a moderately priced restaurant.
"Everything should be as simple as it is, but not simpler." - Albert Einstein | Wiki article link:Getting Started

Skeeter1
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Re: U.S. stocks in free fall

Post by Skeeter1 » Tue Dec 03, 2019 7:09 pm

AnalogKid22 wrote:
Tue Dec 03, 2019 2:49 pm
oldzey wrote:
Tue Dec 03, 2019 12:10 pm
Nice - hopefully equity index funds will be on sale for my January 2020 Roth IRA contribution. 8-)
My thoughts exactly.
+2

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Bluce
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Re: U.S. stocks in free fall

Post by Bluce » Tue Dec 03, 2019 7:25 pm

Bonds saved the day! :mrgreen:

My PF was up .07%. :beer

KlangFool
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Re: U.S. stocks in free fall

Post by KlangFool » Tue Dec 03, 2019 7:58 pm

Folks,

S&P 500 drop 0.66%. My 60/40 portfolio drop by 0.1%. It works.

KlangFool

flyingaway
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Re: U.S. stocks in free fall

Post by flyingaway » Tue Dec 03, 2019 8:15 pm

I cannot believe your guys check your portfolio balance every day or on a bad day.

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Bluce
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Re: U.S. stocks in free fall

Post by Bluce » Tue Dec 03, 2019 8:37 pm

flyingaway wrote:
Tue Dec 03, 2019 8:15 pm
I cannot believe your guys check your portfolio balance every day or on a bad day.
It's a hobby, although I *never* make any moves in reaction to what the market is doing. :beer

KlangFool
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Re: U.S. stocks in free fall

Post by KlangFool » Tue Dec 03, 2019 9:30 pm

flyingaway wrote:
Tue Dec 03, 2019 8:15 pm
I cannot believe your guys check your portfolio balance every day or on a bad day.
I am hoping for a big Tax Loss Harvest.

KlangFool

TNOA
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Re: U.S. stocks in free fall

Post by TNOA » Tue Dec 03, 2019 10:39 pm

KlangFool wrote:
Tue Dec 03, 2019 7:58 pm
Folks,

S&P 500 drop 0.66%. My 60/40 portfolio drop by 0.1%. It works.

KlangFool
VTI down 0.6%, VXUS down 0.3% and here we go. Following a 2 decades of under performance, VXUS is finally outperforming the US markets -:). Was so worth the wait.

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Re: U.S. stocks in free fall

Post by stocknoob4111 » Wed Dec 04, 2019 6:14 am

ruralavalon wrote:
Tue Dec 03, 2019 7:02 pm
We made $34.81 today :) . In our area that is almost enough for dinner for two at a moderately priced restaurant.
lol, I lost $3,273.. more than a nice buffet for sure 😀

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Bluce
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Re: U.S. stocks in free fall

Post by Bluce » Wed Dec 04, 2019 7:40 am

Where's Stinky? :confused

I hope he didn't get suicidal. :(

MotoTrojan
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Re: U.S. stocks in free fall

Post by MotoTrojan » Wed Dec 04, 2019 10:40 am

stocknoob4111 wrote:
Wed Dec 04, 2019 6:14 am
ruralavalon wrote:
Tue Dec 03, 2019 7:02 pm
We made $34.81 today :) . In our area that is almost enough for dinner for two at a moderately priced restaurant.
lol, I lost $3,273.. more than a nice buffet for sure 😀
I appreciate you saying you lost it! Enough with this "it isn't lost unless you sell" garbage; of course it is.

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Bluce
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Re: U.S. stocks in free fall

Post by Bluce » Wed Dec 04, 2019 10:57 am

MotoTrojan wrote:
Wed Dec 04, 2019 10:40 am
stocknoob4111 wrote:
Wed Dec 04, 2019 6:14 am
ruralavalon wrote:
Tue Dec 03, 2019 7:02 pm
We made $34.81 today :) . In our area that is almost enough for dinner for two at a moderately priced restaurant.
lol, I lost $3,273.. more than a nice buffet for sure 😀
I appreciate you saying you lost it! Enough with this "it isn't lost unless you sell" garbage; of course it is.
I would take the other side of that debate. :sharebeer

Portfolio value fluctuates just like real estate values fluctuate (ignoring the differences in liquidity).

If your house value goes down $30k during a recession, does it matter if you have no intention of selling it? It is an unrealized loss, just like when a portfolio falls in value but nothing is sold. 8-)

MotoTrojan
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Re: U.S. stocks in free fall

Post by MotoTrojan » Wed Dec 04, 2019 10:58 am

Bluce wrote:
Wed Dec 04, 2019 10:57 am
MotoTrojan wrote:
Wed Dec 04, 2019 10:40 am
stocknoob4111 wrote:
Wed Dec 04, 2019 6:14 am
ruralavalon wrote:
Tue Dec 03, 2019 7:02 pm
We made $34.81 today :) . In our area that is almost enough for dinner for two at a moderately priced restaurant.
lol, I lost $3,273.. more than a nice buffet for sure 😀
I appreciate you saying you lost it! Enough with this "it isn't lost unless you sell" garbage; of course it is.
I would take the other side of that debate. :sharebeer

Portfolio value fluctuates just like real estate values fluctuate (ignoring the differences in liquidity).

If your house value goes down $30k during a recession, does it matter if you have no intention of selling it? It is an unrealized loss, just like when a portfolio falls in value but nothing is sold. 8-)
There is no investment god that guarantees your investment will go (back) up. By this logic a retiree who has only contributed $500K but has a $5M portfolio only has $500K to their name, but then if they sell it and immediately buy it back they now have $5M. Garbage. It is a nice phrase to say though to keep the emotions at bay when the market turns south, but nothing logical behind it, just like dollar-cost-averaging.

I'll stop there sine these posts will probably get deleted for being off topic. SOAR SOAR SOAR!!!

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305pelusa
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Re: U.S. stocks in free fall

Post by 305pelusa » Wed Dec 04, 2019 11:13 am

Bluce wrote:
Wed Dec 04, 2019 10:57 am
MotoTrojan wrote:
Wed Dec 04, 2019 10:40 am
stocknoob4111 wrote:
Wed Dec 04, 2019 6:14 am
ruralavalon wrote:
Tue Dec 03, 2019 7:02 pm
We made $34.81 today :) . In our area that is almost enough for dinner for two at a moderately priced restaurant.
lol, I lost $3,273.. more than a nice buffet for sure 😀
I appreciate you saying you lost it! Enough with this "it isn't lost unless you sell" garbage; of course it is.
I would take the other side of that debate. :sharebeer

Portfolio value fluctuates just like real estate values fluctuate (ignoring the differences in liquidity).

If your house value goes down $30k during a recession, does it matter if you have no intention of selling it? It is an unrealized loss, just like when a portfolio falls in value but nothing is sold. 8-)
It matters because if you believe returns are independent of past returns, then it is now more unlikely that you will get a higher price in the future for that house (when you do intend to sell it) given that it has lost value now.

As it relates to this thread: Given that we want to consume our portfolio of stocks in the future, it returns are independent of past returns, then given this slight pull back, it is more incrementally less likely that we’ll get as good of a price in the future when we do sell.

How much is that “less likeliness worth”? It is exactly equal to the unrealized loss you got today. It all comes full circle

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ruralavalon
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Re: U.S. stocks in free fall

Post by ruralavalon » Wed Dec 04, 2019 11:56 am

stocknoob4111 wrote:
Wed Dec 04, 2019 6:14 am
ruralavalon wrote:
Tue Dec 03, 2019 7:02 pm
We made $34.81 today :) . In our area that is almost enough for dinner for two at a moderately priced restaurant.
lol, I lost $3,273.. more than a nice buffet for sure 😀
It was a day to love our bond fund, Vanguard Intermediate-term Bond Index Fund (VBILX).

It looks like today will be different.
"Everything should be as simple as it is, but not simpler." - Albert Einstein | Wiki article link:Getting Started

Walkure
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Re: U.S. stocks in free fall

Post by Walkure » Wed Dec 04, 2019 1:17 pm

305pelusa wrote:
Wed Dec 04, 2019 11:13 am
Bluce wrote:
Wed Dec 04, 2019 10:57 am
MotoTrojan wrote:
Wed Dec 04, 2019 10:40 am
stocknoob4111 wrote:
Wed Dec 04, 2019 6:14 am
ruralavalon wrote:
Tue Dec 03, 2019 7:02 pm
We made $34.81 today :) . In our area that is almost enough for dinner for two at a moderately priced restaurant.
lol, I lost $3,273.. more than a nice buffet for sure 😀
I appreciate you saying you lost it! Enough with this "it isn't lost unless you sell" garbage; of course it is.
I would take the other side of that debate. :sharebeer

Portfolio value fluctuates just like real estate values fluctuate (ignoring the differences in liquidity).

If your house value goes down $30k during a recession, does it matter if you have no intention of selling it? It is an unrealized loss, just like when a portfolio falls in value but nothing is sold. 8-)
It matters because if you believe returns are independent of past returns, then it is now more unlikely that you will get a higher price in the future for that house (when you do intend to sell it) given that it has lost value now.

As it relates to this thread: Given that we want to consume our portfolio of stocks in the future, it returns are independent of past returns, then given this slight pull back, it is more incrementally less likely that we’ll get as good of a price in the future when we do sell.

How much is that “less likeliness worth”? It is exactly equal to the unrealized loss you got today. It all comes full circle
I would say there is a difference here between houses and equities, though. If your home drops in value, it's because housing in your market has dropped in value, which simultaneously lowers the PV of the stream of imputed rent you gain by living in it. Whereas the price action today can lower the valuation of a stock without lowering the utility function of the PV of the future earnings you stand to gain by continuing to hold it.

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305pelusa
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Re: U.S. stocks in free fall

Post by 305pelusa » Wed Dec 04, 2019 1:30 pm

Walkure wrote:
Wed Dec 04, 2019 1:17 pm
305pelusa wrote:
Wed Dec 04, 2019 11:13 am
Bluce wrote:
Wed Dec 04, 2019 10:57 am
MotoTrojan wrote:
Wed Dec 04, 2019 10:40 am
stocknoob4111 wrote:
Wed Dec 04, 2019 6:14 am


lol, I lost $3,273.. more than a nice buffet for sure 😀
I appreciate you saying you lost it! Enough with this "it isn't lost unless you sell" garbage; of course it is.
I would take the other side of that debate. :sharebeer

Portfolio value fluctuates just like real estate values fluctuate (ignoring the differences in liquidity).

If your house value goes down $30k during a recession, does it matter if you have no intention of selling it? It is an unrealized loss, just like when a portfolio falls in value but nothing is sold. 8-)
It matters because if you believe returns are independent of past returns, then it is now more unlikely that you will get a higher price in the future for that house (when you do intend to sell it) given that it has lost value now.

As it relates to this thread: Given that we want to consume our portfolio of stocks in the future, it returns are independent of past returns, then given this slight pull back, it is more incrementally less likely that we’ll get as good of a price in the future when we do sell.

How much is that “less likeliness worth”? It is exactly equal to the unrealized loss you got today. It all comes full circle
I would say there is a difference here between houses and equities, though. If your home drops in value, it's because housing in your market has dropped in value, which simultaneously lowers the PV of the stream of imputed rent you gain by living in it. Whereas the price action today can lower the valuation of a stock without lowering the utility function of the PV of the future earnings you stand to gain by continuing to hold it.
I think what you’re saying is that a drop in price of a property means you won’t get as much rent out of it (it’s intrinsically worth less) while a drop in stock price can still mean its future stream of return stay intact. Is that right?

Walkure
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Re: U.S. stocks in free fall

Post by Walkure » Wed Dec 04, 2019 1:38 pm

305pelusa wrote:
Wed Dec 04, 2019 1:30 pm
Walkure wrote:
Wed Dec 04, 2019 1:17 pm
305pelusa wrote:
Wed Dec 04, 2019 11:13 am
It matters because if you believe returns are independent of past returns, then it is now more unlikely that you will get a higher price in the future for that house (when you do intend to sell it) given that it has lost value now.

As it relates to this thread: Given that we want to consume our portfolio of stocks in the future, it returns are independent of past returns, then given this slight pull back, it is more incrementally less likely that we’ll get as good of a price in the future when we do sell.

How much is that “less likeliness worth”? It is exactly equal to the unrealized loss you got today. It all comes full circle
I would say there is a difference here between houses and equities, though. If your home drops in value, it's because housing in your market has dropped in value, which simultaneously lowers the PV of the stream of imputed rent you gain by living in it. Whereas the price action today can lower the valuation of a stock without lowering the utility function of the PV of the future earnings you stand to gain by continuing to hold it.
I think what you’re saying is that a drop in price of a property means you won’t get as much rent out of it (it’s intrinsically worth less) while a drop in stock price can still mean its future stream of return stay intact. Is that right?
Approximately. It's also a volatility thing. "Stock prices in free fall" can happen because of a tweet, or an earnings report, or a lawsuit, or an algorithm had a bad day, or a flight to safety. Some of those implicate a change to future earnings, but not all of them, and in most cases it's impossible to tell which way and by how much. Whereas it's difficult to imagine a scenario where home values are "in free fall" absent some larger economic picture that unquestionably diminishes the future benefit of ownership.

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willthrill81
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Re: U.S. stocks in free fall

Post by willthrill81 » Wed Dec 04, 2019 1:46 pm

Walkure wrote:
Wed Dec 04, 2019 1:17 pm
If your home drops in value, it's because housing in your market has dropped in value, which simultaneously lowers the PV of the stream of imputed rent you gain by living in it.
The imputed rent received by owning is independent of the home's market value. It is directly related to the cost of renting an equivalent property, and that may not be closely tied to the market value of homes in that area. For instance, rents did not fall to nearly the same degree as homes' market value in most areas during the financial crisis a decade ago.

If I own a home valued at $200k and it drops in value by $40k but rents remain the same, then I'm still getting the same imputed rent. In fact, while the principal value of my equity has declined, the percentage return on that principal is now higher because rents are the same.
“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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305pelusa
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Re: U.S. stocks in free fall

Post by 305pelusa » Wed Dec 04, 2019 1:52 pm

Walkure wrote:
Wed Dec 04, 2019 1:38 pm
305pelusa wrote:
Wed Dec 04, 2019 1:30 pm
Walkure wrote:
Wed Dec 04, 2019 1:17 pm
305pelusa wrote:
Wed Dec 04, 2019 11:13 am
It matters because if you believe returns are independent of past returns, then it is now more unlikely that you will get a higher price in the future for that house (when you do intend to sell it) given that it has lost value now.

As it relates to this thread: Given that we want to consume our portfolio of stocks in the future, it returns are independent of past returns, then given this slight pull back, it is more incrementally less likely that we’ll get as good of a price in the future when we do sell.

How much is that “less likeliness worth”? It is exactly equal to the unrealized loss you got today. It all comes full circle
I would say there is a difference here between houses and equities, though. If your home drops in value, it's because housing in your market has dropped in value, which simultaneously lowers the PV of the stream of imputed rent you gain by living in it. Whereas the price action today can lower the valuation of a stock without lowering the utility function of the PV of the future earnings you stand to gain by continuing to hold it.
I think what you’re saying is that a drop in price of a property means you won’t get as much rent out of it (it’s intrinsically worth less) while a drop in stock price can still mean its future stream of return stay intact. Is that right?
Approximately. It's also a volatility thing. "Stock prices in free fall" can happen because of a tweet, or an earnings report, or a lawsuit, or an algorithm had a bad day, or a flight to safety. Some of those implicate a change to future earnings, but not all of them, and in most cases it's impossible to tell which way and by how much. Whereas it's difficult to imagine a scenario where home values are "in free fall" absent some larger economic picture that unquestionably diminishes the future benefit of ownership.
I was about to say precisely what Will said. I don’t know much about Real Estate but I assume a drop of 1-2% in home prices (like what we’re discussing here) would have minimal, if any, effect on rents.

Bigger drops (“free falls as you call them”) certainly would have an effect on rents. Then again, you also don’t get serious stock market freefall drops without some underlying economic factor that has driven down the PV of future earnings as well.

As ignorant as I am about RE, I might’ve thought even the opposite: that home price drops might not have much of an effect on rent (since contracts last for a year and I assume it’s unlikely tenants will rent for less just because the price of the home has gone down) while stocks I would expect are extremely sensitive to future earnings and only really drop once future earnings are challenged.

I don’t know which one but I’m not so sure that they’re really that different.

Walkure
Posts: 136
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Re: U.S. stocks in free fall

Post by Walkure » Wed Dec 04, 2019 2:13 pm

305pelusa wrote:
Wed Dec 04, 2019 1:52 pm
Walkure wrote:
Wed Dec 04, 2019 1:38 pm
305pelusa wrote:
Wed Dec 04, 2019 1:30 pm
Walkure wrote:
Wed Dec 04, 2019 1:17 pm
305pelusa wrote:
Wed Dec 04, 2019 11:13 am
It matters because if you believe returns are independent of past returns, then it is now more unlikely that you will get a higher price in the future for that house (when you do intend to sell it) given that it has lost value now.

As it relates to this thread: Given that we want to consume our portfolio of stocks in the future, it returns are independent of past returns, then given this slight pull back, it is more incrementally less likely that we’ll get as good of a price in the future when we do sell.

How much is that “less likeliness worth”? It is exactly equal to the unrealized loss you got today. It all comes full circle
I would say there is a difference here between houses and equities, though. If your home drops in value, it's because housing in your market has dropped in value, which simultaneously lowers the PV of the stream of imputed rent you gain by living in it. Whereas the price action today can lower the valuation of a stock without lowering the utility function of the PV of the future earnings you stand to gain by continuing to hold it.
I think what you’re saying is that a drop in price of a property means you won’t get as much rent out of it (it’s intrinsically worth less) while a drop in stock price can still mean its future stream of return stay intact. Is that right?
Approximately. It's also a volatility thing. "Stock prices in free fall" can happen because of a tweet, or an earnings report, or a lawsuit, or an algorithm had a bad day, or a flight to safety. Some of those implicate a change to future earnings, but not all of them, and in most cases it's impossible to tell which way and by how much. Whereas it's difficult to imagine a scenario where home values are "in free fall" absent some larger economic picture that unquestionably diminishes the future benefit of ownership.
I was about to say precisely what Will said. I don’t know much about Real Estate but I assume a drop of 1-2% in home prices (like what we’re discussing here) would have minimal, if any, effect on rents.

Bigger drops (“free falls as you call them”) certainly would have an effect on rents. Then again, you also don’t get serious stock market freefall drops without some underlying economic factor that has driven down the PV of future earnings as well.

As ignorant as I am about RE, I might’ve thought even the opposite: that home price drops might not have much of an effect on rent (since contracts last for a year and I assume it’s unlikely tenants will rent for less just because the price of the home has gone down) while stocks I would expect are extremely sensitive to future earnings and only really drop once future earnings are challenged.

I don’t know which one but I’m not so sure that they’re really that different.
Fair enough. I've got the topic on my mind because of the "wealthy renter" thread, where I was actually agreeing on the degree to which rents can diverge from home values. I think you raise a good point on the difference in scale between what counts as a free fall on this stock thread versus what constitutes most people's idea of a free fall in home values.

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Bluce
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Location: Finger Lakes, NYS

Re: U.S. stocks in free fall

Post by Bluce » Fri Dec 06, 2019 10:07 am

Bluce wrote:
Wed Dec 04, 2019 10:57 am
MotoTrojan wrote:
Wed Dec 04, 2019 10:40 am
stocknoob4111 wrote:
Wed Dec 04, 2019 6:14 am
ruralavalon wrote:
Tue Dec 03, 2019 7:02 pm
We made $34.81 today :) . In our area that is almost enough for dinner for two at a moderately priced restaurant.
lol, I lost $3,273.. more than a nice buffet for sure 😀
I appreciate you saying you lost it! Enough with this "it isn't lost unless you sell" garbage; of course it is.
I would take the other side of that debate. :sharebeer

Portfolio value fluctuates just like real estate values fluctuate (ignoring the differences in liquidity).

If your house value goes down $30k during a recession, does it matter if you have no intention of selling it? It is an unrealized loss, just like when a portfolio falls in value but nothing is sold. 8-)
The responses to my point are *missing* the point. It's not complicated.

Assets (stocks, real estate, equipment, machinery, precious metals, collectibles/antiques, art, etc.) change in value depending on supply and demand (depending on the asset, some are instantly liquid -- others are not).

Its probable market value at any particular point in time is just a reference. It only becomes real if it is bought or sold at that point. If you don't believe me, ask the IRS.

Lee_WSP
Posts: 1207
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Location: Arizona

Re: U.S. stocks in free fall

Post by Lee_WSP » Fri Dec 06, 2019 10:17 am

Bluce wrote:
Wed Dec 04, 2019 10:57 am
MotoTrojan wrote:
Wed Dec 04, 2019 10:40 am
stocknoob4111 wrote:
Wed Dec 04, 2019 6:14 am
ruralavalon wrote:
Tue Dec 03, 2019 7:02 pm
We made $34.81 today :) . In our area that is almost enough for dinner for two at a moderately priced restaurant.
lol, I lost $3,273.. more than a nice buffet for sure 😀
I appreciate you saying you lost it! Enough with this "it isn't lost unless you sell" garbage; of course it is.
I would take the other side of that debate. :sharebeer

Portfolio value fluctuates just like real estate values fluctuate (ignoring the differences in liquidity).

If your house value goes down $30k during a recession, does it matter if you have no intention of selling it? It is an unrealized loss, just like when a portfolio falls in value but nothing is sold. 8-)
It is a real loss, it's just not "realized". :beer
Its probable market value at any particular point in time is just a reference. It only becomes real if it is bought or sold at that point. If you don't believe me, ask the IRS.
Well, it's not a taxable event until the transaction is logged. But the loss of market value is no less real.

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305pelusa
Posts: 993
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Re: U.S. stocks in free fall

Post by 305pelusa » Fri Dec 06, 2019 10:27 am

Bluce wrote:
Fri Dec 06, 2019 10:07 am
Bluce wrote:
Wed Dec 04, 2019 10:57 am
MotoTrojan wrote:
Wed Dec 04, 2019 10:40 am
stocknoob4111 wrote:
Wed Dec 04, 2019 6:14 am
ruralavalon wrote:
Tue Dec 03, 2019 7:02 pm
We made $34.81 today :) . In our area that is almost enough for dinner for two at a moderately priced restaurant.
lol, I lost $3,273.. more than a nice buffet for sure 😀
I appreciate you saying you lost it! Enough with this "it isn't lost unless you sell" garbage; of course it is.
I would take the other side of that debate. :sharebeer

Portfolio value fluctuates just like real estate values fluctuate (ignoring the differences in liquidity).

If your house value goes down $30k during a recession, does it matter if you have no intention of selling it? It is an unrealized loss, just like when a portfolio falls in value but nothing is sold. 8-)
The responses to my point are *missing* the point. It's not complicated.

Assets (stocks, real estate, equipment, machinery, precious metals, collectibles/antiques, art, etc.) change in value depending on supply and demand (depending on the asset, some are instantly liquid -- others are not).

Its probable market value at any particular point in time is just a reference. It only becomes real if it is bought or sold at that point. If you don't believe me, ask the IRS.
If you believe that markets are fairly rational and efficient, the value of an asset reflects the closest guess to its true intrinsic value (which is based on future discounted cash flow). So losses really are losses.

But you don’t believe that so let me ask you this:

Since you believe the current price is just a number and has little bearing on the future price you’ll sell it for, then you should OVERbalance whenever the market drops and you have unrealized losses. So did you overbalance past your AA a day ago after the slight drop? And are you planning to OVERsell stocks today after the market increase?

My guess is that you didn’t. And that if you had a small daily unrealized loss/gain, it’s because deep down you think that maybe that means that asset truly is worth a little less or more. So you only rebalance back to your starting AA and stay the course.

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