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 » Sat Mar 07, 2020 7:44 am

willthrill81 wrote:
Sat Mar 07, 2020 1:08 am
Bluce: I've been trying to avoid the subject for a couple of weeks now, but no matter where I go that's all I see/hear.

But I am quite safe watching old sitcoms. Andy Griffith is on as I type! Home Improvement up next :beer
Funny you should mention that. We've been binge watching Andy Griffith for the last couple of weeks! :wink:
LOL, although I haven't watched that show in a year or so, I always go back. Good stuff there, aside from the humor.

And I actually had an "Aunt Bea" (Beatrice) although we called her "Aunt Bee Bee." She was not unlike "Aunt Bea." :beer
"There are no new ideas, only forgotten ones." -- Amity Shlaes

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prudent
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Re: U.S. stocks in free fall

Post by prudent » Sat Mar 07, 2020 7:49 am

Removed some off-topic posts that were only about the virus.

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grayfox
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Re: U.S. stocks in free fall

Post by grayfox » Sat Mar 07, 2020 8:25 am

market timer wrote:
Fri Mar 06, 2020 10:37 pm
I find it helpful to decompose equity price movements into two factors: a change in future earnings, a change in the discount rate. The contrast between 2018 and 2020 are striking.

In 2018, the Fed was the catalyst and in control of the downturn. As the Fed tried to remove the punch bowl, long term real rates rose by ~50bps between August and November 2018, from a range of 0.8-0.9% to 1.3-1.4%. A 50bp rise in the discount rate for a 30-year duration security is a 15% decline, roughly what we saw in equities. Future earnings were not impaired, we just deflated asset values a bit, and increased expected returns, a good thing for savers.

It is different in 2020. Earnings are being impaired, and real yields are declining. If not for the dramatic plunge in real yields, the equity decline would be much more severe. At this moment, the 30-year real yield is -0.18%, a decline of 150bps since November 2018 and by 76bps YTD. This plunge in real yields has bolstered asset prices from equities to gold. If real yields had been flat, equities might have dropped an additional 20-25%, a severe bear market.

For a long term buy-and-hold investor, the 2018 decline was simply a chance to pick up assets with higher expected returns. The 2020 decline has not only cost us 10-15% on our equity holdings, but also pulled forward future returns due to the drop in real yields. The future is now not as bright as it was at the beginning of the year, about 0.75%/year less bright over the long term. For me, as a saver in accumulation mode, that is why 2020 is much worse than 2018.
Good Analysis.

1. Future Earnings. How much effect will it have on future earnings. It will definitely effect the next quarter. What about all of 2020? 2021 and further out?

2. Discount rate. The discount rate for equities would be a risk free rate + some equity risk premium. The risk free rate has come down, but what about the equity risk premium erp? There is more uncertainty w.r.t earnings, so I would think that the erp would increase. In other words, I would discount future earnings to a greater degree because so much is uncertain.
Last edited by grayfox on Sat Mar 07, 2020 8:56 am, edited 1 time in total.
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Seasonal
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Re: U.S. stocks in free fall

Post by Seasonal » Sat Mar 07, 2020 8:56 am

market timer wrote:
Fri Mar 06, 2020 10:37 pm
willthrill81 wrote:
Fri Mar 06, 2020 7:57 pm
I don't recall there being nearly this many posts or this concern during the ~20% drawdown in late 2018.
I find it helpful to decompose equity price movements into two factors: a change in future earnings, a change in the discount rate. The contrast between 2018 and 2020 are striking.

In 2018, the Fed was the catalyst and in control of the downturn. As the Fed tried to remove the punch bowl, long term real rates rose by ~50bps between August and November 2018, from a range of 0.8-0.9% to 1.3-1.4%. A 50bp rise in the discount rate for a 30-year duration security is a 15% decline, roughly what we saw in equities. Future earnings were not impaired, we just deflated asset values a bit, and increased expected returns, a good thing for savers.

It is different in 2020. Earnings are being impaired, and real yields are declining. If not for the dramatic plunge in real yields, the equity decline would be much more severe. At this moment, the 30-year real yield is -0.18%, a decline of 150bps since November 2018 and by 76bps YTD. This plunge in real yields has bolstered asset prices from equities to gold. If real yields had been flat, equities might have dropped an additional 20-25%, a severe bear market.

For a long term buy-and-hold investor, the 2018 decline was simply a chance to pick up assets with higher expected returns. The 2020 decline has not only cost us 10-15% on our equity holdings, but also pulled forward future returns due to the drop in real yields. The future is now not as bright as it was at the beginning of the year, about 0.75%/year less bright over the long term. For me, as a saver in accumulation mode, that is why 2020 is much worse than 2018.
Very well stated.

Not all price declines are good for the long-term accumulator, despite numerous posts here to the contrary.

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Re: U.S. stocks in free fall

Post by minimalistmarc » Sat Mar 07, 2020 10:38 am

Seasonal wrote:
Sat Mar 07, 2020 8:56 am
market timer wrote:
Fri Mar 06, 2020 10:37 pm
willthrill81 wrote:
Fri Mar 06, 2020 7:57 pm
I don't recall there being nearly this many posts or this concern during the ~20% drawdown in late 2018.
I find it helpful to decompose equity price movements into two factors: a change in future earnings, a change in the discount rate. The contrast between 2018 and 2020 are striking.

In 2018, the Fed was the catalyst and in control of the downturn. As the Fed tried to remove the punch bowl, long term real rates rose by ~50bps between August and November 2018, from a range of 0.8-0.9% to 1.3-1.4%. A 50bp rise in the discount rate for a 30-year duration security is a 15% decline, roughly what we saw in equities. Future earnings were not impaired, we just deflated asset values a bit, and increased expected returns, a good thing for savers.

It is different in 2020. Earnings are being impaired, and real yields are declining. If not for the dramatic plunge in real yields, the equity decline would be much more severe. At this moment, the 30-year real yield is -0.18%, a decline of 150bps since November 2018 and by 76bps YTD. This plunge in real yields has bolstered asset prices from equities to gold. If real yields had been flat, equities might have dropped an additional 20-25%, a severe bear market.

For a long term buy-and-hold investor, the 2018 decline was simply a chance to pick up assets with higher expected returns. The 2020 decline has not only cost us 10-15% on our equity holdings, but also pulled forward future returns due to the drop in real yields. The future is now not as bright as it was at the beginning of the year, about 0.75%/year less bright over the long term. For me, as a saver in accumulation mode, that is why 2020 is much worse than 2018.
Very well stated.

Not all price declines are good for the long-term accumulator, despite numerous posts here to the contrary.

Anything could happen. There are many obscure ways that coronavirus could boost the economy.

I remain optimistic (and all in equities)

More price declines to buy at even cheaper prices would be a nice gift though

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Re: U.S. stocks in free fall

Post by willthrill81 » Sat Mar 07, 2020 10:43 am

I'm predicting that we'll see (1) a reduction in volatility next week and (2) a rise in stock prices.

My basis for this prediction? The reduced frequency of posts in the 'Coronavirus and the market' thread. :P
“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 Stinky » Sat Mar 07, 2020 10:49 am

willthrill81 wrote:
Sat Mar 07, 2020 10:43 am
I'm predicting that we'll see (1) a reduction in volatility next week and (2) a rise in stock prices.

My basis for this prediction? The reduced frequency of posts in the 'Coronavirus and the market' thread. :P
Maybe we can start calling certain threads in the Forum a "leading economic indicator". :D
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Re: U.S. stocks in free fall

Post by watchnerd » Sat Mar 07, 2020 11:04 am

minimalistmarc wrote:
Sat Mar 07, 2020 10:38 am


Anything could happen. There are many obscure ways that coronavirus could boost the economy.
Because of the county I live in, the company I work for has said all workers must telecommute for the next several weeks. Thousands of workers are impacted.

This may be a great Harvard business study at some point.

And it may be an interesting piece of information when it comes to looking at data about reducing carbon footprints.
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Re: U.S. stocks in free fall

Post by willthrill81 » Sat Mar 07, 2020 11:10 am

watchnerd wrote:
Sat Mar 07, 2020 11:04 am
minimalistmarc wrote:
Sat Mar 07, 2020 10:38 am


Anything could happen. There are many obscure ways that coronavirus could boost the economy.
Because of the county I live in, the company I work for has said all workers must telecommute for the next several weeks. Thousands of workers are impacted.

This may be a great Harvard business study at some point.

And it may be an interesting piece of information when it comes to looking at data about reducing carbon footprints.
For those currently living in VHCOL areas, telecommuting could literally save them a fortune.
“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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watchnerd
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Re: U.S. stocks in free fall

Post by watchnerd » Sat Mar 07, 2020 11:24 am

willthrill81 wrote:
Sat Mar 07, 2020 11:10 am
For those currently living in VHCOL areas, telecommuting could literally save them a fortune.
Not to mention savings in corporate office space.

Hoteling could become more popular, saving huge amounts of cost spent on business real estate.
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stocknoob4111
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Re: U.S. stocks in free fall

Post by stocknoob4111 » Sat Mar 07, 2020 11:27 am

EnjoyIt wrote:
Fri Mar 06, 2020 10:44 pm
Interestingly we did not get the same response when Ebola hit the US in 2014, and Ebola is far more deadly.
Because Ebola happened mid cycle where growth was still strong.. we were at weak growth even before this and investors are assuming a much bigger impact.

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watchnerd
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Re: U.S. stocks in free fall

Post by watchnerd » Sat Mar 07, 2020 11:28 am

willthrill81 wrote:
Sat Mar 07, 2020 11:10 am

For those currently living in VHCOL areas, telecommuting could literally save them a fortune.
On a personal level, I'll probably save:

--60-90 minutes of drive time per day

--Health improvements from less time sitting driving, more time to exercise

--$30 a week in gas, I would guess

--$50-75 a week in food savings (eating lunch at home)

So maybe save $200-$250 over the next 3 weeks.
70% Global Market Weight Equities | 15% Long Treasuries 15% short TIPS & cash || RSU + ESPP

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HomerJ
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Re: U.S. stocks in free fall

Post by HomerJ » Sat Mar 07, 2020 11:28 am

watchnerd wrote:
Sat Mar 07, 2020 11:04 am
minimalistmarc wrote:
Sat Mar 07, 2020 10:38 am


Anything could happen. There are many obscure ways that coronavirus could boost the economy.
Because of the county I live in, the company I work for has said all workers must telecommute for the next several weeks. Thousands of workers are impacted.

This may be a great Harvard business study at some point.

And it may be an interesting piece of information when it comes to looking at data about reducing carbon footprints.
I'm hoping my company follows suit, and I can prove to them that I can work from home 100% and be just as productive.

And then make that the default after all this blows over.
A Goldman Sachs associate provided a variety of detailed explanations, but then offered a caveat, “If I’m being dead-### honest, though, nobody knows what’s really going on.”

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Re: U.S. stocks in free fall

Post by watchnerd » Sat Mar 07, 2020 11:32 am

HomerJ wrote:
Sat Mar 07, 2020 11:28 am

I'm hoping my company follows suit, and I can prove to them that I can work from home 100% and be just as productive.

And then make that the default after all this blows over.
The weird part is that my wife works at home, too.

We're not used to seeing each other 24 x 7.
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quantAndHold
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Re: U.S. stocks in free fall

Post by quantAndHold » Sat Mar 07, 2020 11:35 am

EnjoyIt wrote:
Fri Mar 06, 2020 10:44 pm
Interestingly we did not get the same response when Ebola hit the US in 2014, and Ebola is far more deadly.
Ebola is deadly, but far harder to catch. Nobody had a reasonable expectation that they might catch it, or that there would be mass quarantines to avoid it.
Yes, I’m really that pedantic.

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Re: U.S. stocks in free fall

Post by EnjoyIt » Sat Mar 07, 2020 12:43 pm

quantAndHold wrote:
Sat Mar 07, 2020 11:35 am
EnjoyIt wrote:
Fri Mar 06, 2020 10:44 pm
Interestingly we did not get the same response when Ebola hit the US in 2014, and Ebola is far more deadly.
Ebola is deadly, but far harder to catch. Nobody had a reasonable expectation that they might catch it, or that there would be mass quarantines to avoid it.
Actually Ebola is much easier to catch when in contact with someone shedding the virus. The thing is, when one is shedding the virus they are pretty sick as opposed to Coronavirus one can be asymptomatic or be mildly ill and therefor can infect others. Eitherway, Ebola is far more deadly with a death rate of over 50% while the Coronavirus is about 2% at worst estimates. Personally I think the death rate is far lower as I believe there have been plenty of people infected who were not tested because of the mild symptoms, got better and moved on with life.
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Re: U.S. stocks in free fall

Post by willthrill81 » Sat Mar 07, 2020 12:45 pm

watchnerd wrote:
Sat Mar 07, 2020 11:32 am
HomerJ wrote:
Sat Mar 07, 2020 11:28 am

I'm hoping my company follows suit, and I can prove to them that I can work from home 100% and be just as productive.

And then make that the default after all this blows over.
The weird part is that my wife works at home, too.

We're not used to seeing each other 24 x 7.
That could have unanticipated consequences.
“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

finite_difference
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Re: U.S. stocks in free fall

Post by finite_difference » Sat Mar 07, 2020 12:45 pm

HomerJ wrote:
Sat Mar 07, 2020 11:28 am
watchnerd wrote:
Sat Mar 07, 2020 11:04 am
minimalistmarc wrote:
Sat Mar 07, 2020 10:38 am


Anything could happen. There are many obscure ways that coronavirus could boost the economy.
Because of the county I live in, the company I work for has said all workers must telecommute for the next several weeks. Thousands of workers are impacted.

This may be a great Harvard business study at some point.

And it may be an interesting piece of information when it comes to looking at data about reducing carbon footprints.
I'm hoping my company follows suit, and I can prove to them that I can work from home 100% and be just as productive.

And then make that the default after all this blows over.
Yeah, it’ll be really interesting to see if there’s a longer term shift in work patterns. It was already happening but this could accelerate things. Technology that enables teleworking does minimize disruptions for those businesses that don’t physically require workers to be on-site. But businesses that run factories or services will be impacted, and the food service industry could be impacted by having it shift more to delivery/take out. Maybe this discussion should be moved though.
The most precious gift we can offer anyone is our attention. - Thich Nhat Hanh

StrangePenguin
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Re: U.S. stocks in free fall

Post by StrangePenguin » Sat Mar 07, 2020 1:28 pm

Noobvestor wrote:
Sat Mar 07, 2020 1:50 am
whodidntante wrote:
Fri Mar 06, 2020 8:23 am
So far in this credit zombie apocalypse, foreign DM and EM have held up better than USA stocks in dollar terms. At least in my portfolio. I wouldn't have predicted that, but this is knocking the shine off the US stocks. I've temporarily directed cash flow to US equities to keep them at the level I want, but if this persists, I shall have to click more buttons and do a rebalancing trade.
I do find it fascinating how hooked everyone is on tracking the Total US Market when international didn't shoot up or plummet as much, and is in the same range it has been for years. Still looks overall to be value-priced to me, but who knows.
I do find it slightly refreshing to watch the needle on the carnage each day (well, half the days this week it was carnage and the other half it was amazing recovery) and see somewhat less movement on the International side.
Noobvestor wrote:
Sat Mar 07, 2020 1:50 am
StrangePenguin wrote:
Fri Mar 06, 2020 2:04 pm
A coworker just stopped by my desk to chat and mentioned that a few days ago he went to 50% bonds. Average Joes are making panicky moves. (So far he's come out well ahead by doing this, of course. The trick is getting back in at the right time.)

I am actually sitting on a wad of new cash (bonus) that I would usually dump into stocks/bonds according to my AA. I admit that I can't quite bring myself to lump sum it in this climate, so I think I will put it in in pieces. If some of it goes in "after the bottom" then so be it. I put the first chunk in on Monday and will put another chunk in this coming Monday.
If you're not buying, you're effectively selling - making an active choice not to stick to your plan, and letting inflation erode your cash pile. If you're not comfortable putting in new money after a significant stock drop, when would you be? After a huge stock run-up?

When I see posts like this, all I can think is: this person has too aggressive an allocation and should reevaluate. Just my two cents.
I plead guilty as charged. I don't usually do this type of Dollar Cost Averaging, and to be clear, the amount that I am now DCA'ing into the market instead of lump sum was something like 2% of my total retirement portfolio, and I put almost half of it into the market last Monday (a lot of that was into mutual funds so at the closing price :annoyed ). I don't have any excuse other than my own psychology. I am not tempted to sell any of the stock funds in the other 98% of my assets, except for TLH purposes. When this lump sum is full invested, I will continue investing all available funds once per paycheck as usual.

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Noobvestor
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Re: U.S. stocks in free fall

Post by Noobvestor » Sat Mar 07, 2020 1:50 pm

StrangePenguin wrote:
Sat Mar 07, 2020 1:28 pm
Noobvestor wrote:
Sat Mar 07, 2020 1:50 am
whodidntante wrote:
Fri Mar 06, 2020 8:23 am
So far in this credit zombie apocalypse, foreign DM and EM have held up better than USA stocks in dollar terms. At least in my portfolio. I wouldn't have predicted that, but this is knocking the shine off the US stocks. I've temporarily directed cash flow to US equities to keep them at the level I want, but if this persists, I shall have to click more buttons and do a rebalancing trade.
I do find it fascinating how hooked everyone is on tracking the Total US Market when international didn't shoot up or plummet as much, and is in the same range it has been for years. Still looks overall to be value-priced to me, but who knows.
I do find it slightly refreshing to watch the needle on the carnage each day (well, half the days this week it was carnage and the other half it was amazing recovery) and see somewhat less movement on the International side.
Noobvestor wrote:
Sat Mar 07, 2020 1:50 am
StrangePenguin wrote:
Fri Mar 06, 2020 2:04 pm
A coworker just stopped by my desk to chat and mentioned that a few days ago he went to 50% bonds. Average Joes are making panicky moves. (So far he's come out well ahead by doing this, of course. The trick is getting back in at the right time.)

I am actually sitting on a wad of new cash (bonus) that I would usually dump into stocks/bonds according to my AA. I admit that I can't quite bring myself to lump sum it in this climate, so I think I will put it in in pieces. If some of it goes in "after the bottom" then so be it. I put the first chunk in on Monday and will put another chunk in this coming Monday.
If you're not buying, you're effectively selling - making an active choice not to stick to your plan, and letting inflation erode your cash pile. If you're not comfortable putting in new money after a significant stock drop, when would you be? After a huge stock run-up?

When I see posts like this, all I can think is: this person has too aggressive an allocation and should reevaluate. Just my two cents.
I plead guilty as charged. I don't usually do this type of Dollar Cost Averaging, and to be clear, the amount that I am now DCA'ing into the market instead of lump sum was something like 2% of my total retirement portfolio, and I put almost half of it into the market last Monday (a lot of that was into mutual funds so at the closing price :annoyed ). I don't have any excuse other than my own psychology. I am not tempted to sell any of the stock funds in the other 98% of my assets, except for TLH purposes. When this lump sum is full invested, I will continue investing all available funds once per paycheck as usual.
Well that's good - I was picturing a stockpile (or cash pile, as it were), but 2% falls easily into rounding error territory. Even when I actively rebalance I never hit my 60/40 target exactly, because I get the end-of-day mutual fund price ;)

My advice to anyone else with more significant amounts of cash on the sidelines is simply: treat it as a zero-duration bond - i.e. part of a fixed income portfolio. Having 'cash' in whatever form isn't bad, as long as it's either a small amount or part of a larger plan.
"In the absence of clarity, diversification is the only logical strategy" -= Larry Swedroe

pascalwager
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Re: U.S. stocks in free fall

Post by pascalwager » Sat Mar 07, 2020 6:10 pm

Noobvestor wrote:
Sat Mar 07, 2020 1:50 pm
StrangePenguin wrote:
Sat Mar 07, 2020 1:28 pm
Noobvestor wrote:
Sat Mar 07, 2020 1:50 am
whodidntante wrote:
Fri Mar 06, 2020 8:23 am
So far in this credit zombie apocalypse, foreign DM and EM have held up better than USA stocks in dollar terms. At least in my portfolio. I wouldn't have predicted that, but this is knocking the shine off the US stocks. I've temporarily directed cash flow to US equities to keep them at the level I want, but if this persists, I shall have to click more buttons and do a rebalancing trade.
I do find it fascinating how hooked everyone is on tracking the Total US Market when international didn't shoot up or plummet as much, and is in the same range it has been for years. Still looks overall to be value-priced to me, but who knows.
I do find it slightly refreshing to watch the needle on the carnage each day (well, half the days this week it was carnage and the other half it was amazing recovery) and see somewhat less movement on the International side.
Noobvestor wrote:
Sat Mar 07, 2020 1:50 am
StrangePenguin wrote:
Fri Mar 06, 2020 2:04 pm
A coworker just stopped by my desk to chat and mentioned that a few days ago he went to 50% bonds. Average Joes are making panicky moves. (So far he's come out well ahead by doing this, of course. The trick is getting back in at the right time.)

I am actually sitting on a wad of new cash (bonus) that I would usually dump into stocks/bonds according to my AA. I admit that I can't quite bring myself to lump sum it in this climate, so I think I will put it in in pieces. If some of it goes in "after the bottom" then so be it. I put the first chunk in on Monday and will put another chunk in this coming Monday.
If you're not buying, you're effectively selling - making an active choice not to stick to your plan, and letting inflation erode your cash pile. If you're not comfortable putting in new money after a significant stock drop, when would you be? After a huge stock run-up?

When I see posts like this, all I can think is: this person has too aggressive an allocation and should reevaluate. Just my two cents.
I plead guilty as charged. I don't usually do this type of Dollar Cost Averaging, and to be clear, the amount that I am now DCA'ing into the market instead of lump sum was something like 2% of my total retirement portfolio, and I put almost half of it into the market last Monday (a lot of that was into mutual funds so at the closing price :annoyed ). I don't have any excuse other than my own psychology. I am not tempted to sell any of the stock funds in the other 98% of my assets, except for TLH purposes. When this lump sum is full invested, I will continue investing all available funds once per paycheck as usual.
Well that's good - I was picturing a stockpile (or cash pile, as it were), but 2% falls easily into rounding error territory. Even when I actively rebalance I never hit my 60/40 target exactly, because I get the end-of-day mutual fund price ;)

My advice to anyone else with more significant amounts of cash on the sidelines is simply: treat it as a zero-duration bond - i.e. part of a fixed income portfolio. Having 'cash' in whatever form isn't bad, as long as it's either a small amount or part of a larger plan.
Noob,

So, even 20% cash (recommended for retirees by Jonathan Clements) could be reasonable as long as it was part of the overall portfolio and part of the rebalancing process? Assume, for example, a 60/20/20 portfolio.

Also, do you intend to maintain your 60/40, high-discipline rebalancing in retirement, including rebalancing through bear markets?
Retired, pension, no SS | Bond funds: TIPS, TBM | Global stocks: total market, large value, small company, emerging market funds

Monsterflockster
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Re: U.S. stocks in free fall

Post by Monsterflockster » Sat Mar 07, 2020 6:47 pm

watchnerd wrote:
Sat Mar 07, 2020 11:28 am
willthrill81 wrote:
Sat Mar 07, 2020 11:10 am

For those currently living in VHCOL areas, telecommuting could literally save them a fortune.
On a personal level, I'll probably save:

--60-90 minutes of drive time per day

--Health improvements from less time sitting driving, more time to exercise

--$30 a week in gas, I would guess

--$50-75 a week in food savings (eating lunch at home)

So maybe save $200-$250 over the next 3 weeks.
You drive 90 minutes a day but only spend $30 in gas?

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willthrill81
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Re: U.S. stocks in free fall

Post by willthrill81 » Sat Mar 07, 2020 6:51 pm

Monsterflockster wrote:
Sat Mar 07, 2020 6:47 pm
watchnerd wrote:
Sat Mar 07, 2020 11:28 am
willthrill81 wrote:
Sat Mar 07, 2020 11:10 am

For those currently living in VHCOL areas, telecommuting could literally save them a fortune.
On a personal level, I'll probably save:

--60-90 minutes of drive time per day

--Health improvements from less time sitting driving, more time to exercise

--$30 a week in gas, I would guess

--$50-75 a week in food savings (eating lunch at home)

So maybe save $200-$250 over the next 3 weeks.
You drive 90 minutes a day but only spend $30 in gas?
Given that he lives around Seattle, he's spending most of that time in traffic, not traveling at 70 MPH. Traffic in that area can be abominable.
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watchnerd
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Re: U.S. stocks in free fall

Post by watchnerd » Sat Mar 07, 2020 6:54 pm

Monsterflockster wrote:
Sat Mar 07, 2020 6:47 pm
watchnerd wrote:
Sat Mar 07, 2020 11:28 am
willthrill81 wrote:
Sat Mar 07, 2020 11:10 am

For those currently living in VHCOL areas, telecommuting could literally save them a fortune.
On a personal level, I'll probably save:

--60-90 minutes of drive time per day

--Health improvements from less time sitting driving, more time to exercise

--$30 a week in gas, I would guess

--$50-75 a week in food savings (eating lunch at home)

So maybe save $200-$250 over the next 3 weeks.
You drive 90 minutes a day but only spend $30 in gas?
$30 per week.

The mileage and distance isn't far, but rural roads before I get on the freeway don't move fast. Then bumper to bumper freeway.
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Re: U.S. stocks in free fall

Post by Triple digit golfer » Sat Mar 07, 2020 6:56 pm

willthrill81 wrote:
Sat Mar 07, 2020 6:51 pm
Monsterflockster wrote:
Sat Mar 07, 2020 6:47 pm
watchnerd wrote:
Sat Mar 07, 2020 11:28 am
willthrill81 wrote:
Sat Mar 07, 2020 11:10 am

For those currently living in VHCOL areas, telecommuting could literally save them a fortune.
On a personal level, I'll probably save:

--60-90 minutes of drive time per day

--Health improvements from less time sitting driving, more time to exercise

--$30 a week in gas, I would guess

--$50-75 a week in food savings (eating lunch at home)

So maybe save $200-$250 over the next 3 weeks.
You drive 90 minutes a day but only spend $30 in gas?
Given that he lives around Seattle, he's spending most of that time in traffic, not traveling at 70 MPH. Traffic in that area can be abominable.
That sounds about right to me. I spend about the same amount of time commuting. Probably 75 minutes a day. 200 miles a week at 30 mpg and $2.75 per gallon is less than $20 per week in gas. Then add tolls and it doubles. :annoyed That's Illinois for you.

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watchnerd
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Re: U.S. stocks in free fall

Post by watchnerd » Sat Mar 07, 2020 7:44 pm

willthrill81 wrote:
Sat Mar 07, 2020 6:51 pm


Given that he lives around Seattle, he's spending most of that time in traffic, not traveling at 70 MPH. Traffic in that area can be abominable.
Correct.

The same drive in off-peak hours can take 15-20 minutes.
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Re: U.S. stocks in free fall

Post by Tdubs » Sat Mar 07, 2020 8:22 pm

Impact of this on Monday? Italy closing down Milan.

https://www.cnbc.com/2020/03/07/italy-p ... virus.html

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Re: U.S. stocks in free fall

Post by whodidntante » Sat Mar 07, 2020 8:24 pm

Tdubs wrote:
Sat Mar 07, 2020 8:22 pm
Impact of this on Monday? Italy closing down Milan.

https://www.cnbc.com/2020/03/07/italy-p ... virus.html
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watchnerd
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Re: U.S. stocks in free fall

Post by watchnerd » Sat Mar 07, 2020 8:38 pm

Tdubs wrote:
Sat Mar 07, 2020 8:22 pm
Impact of this on Monday? Italy closing down Milan.

https://www.cnbc.com/2020/03/07/italy-p ... virus.html
You go first.

What's your Monday impact forecast?
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Re: U.S. stocks in free fall

Post by 7eight9 » Sat Mar 07, 2020 8:43 pm

Tdubs wrote:
Sat Mar 07, 2020 8:22 pm
Impact of this on Monday? Italy closing down Milan.

https://www.cnbc.com/2020/03/07/italy-p ... virus.html
A Lombardy official confirmed that the measures being discussed would essentially close down the northern region of Lombardy, Italy’s largest and most productive, accounting for a fifth of Italy’s GDP, and would come into force on Sunday and last until April 3. Media have reported they would also ban weddings, funerals, sporting and cultural events, and criminalize bars that did not enforce strict rules about patrons keeping distance. ...

The director of the U.S. Centers for Disease Control and Prevention, Dr. Robert R. Redfield. urged local officials not to give up on fighting the virus’s spread in their communities.

In an interview on Friday night, he pointed to the success countries like China and Singapore had with “aggressive travel restrictions, aggressive containment strategies, early diagnosis, isolation, contract tracing, expanded testing in people coming in with flu-like illness in their hospitals.”

Dr. Redfield said it was not too late for those measures to be effective in the U.S. “We still have a real opportunity to contain, control, the spread of this virus,” he said.
https://www.nytimes.com/2020/03/07/worl ... -news.html

I don't this bodes well for a green Monday.
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Re: U.S. stocks in free fall

Post by HomerJ » Sat Mar 07, 2020 8:43 pm

watchnerd wrote:
Sat Mar 07, 2020 7:44 pm
willthrill81 wrote:
Sat Mar 07, 2020 6:51 pm


Given that he lives around Seattle, he's spending most of that time in traffic, not traveling at 70 MPH. Traffic in that area can be abominable.
Correct.

The same drive in off-peak hours can take 15-20 minutes.
Maybe you should go in early.
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Re: U.S. stocks in free fall

Post by lgs88 » Sat Mar 07, 2020 8:44 pm

technovelist wrote:
Sat Mar 07, 2020 7:33 am
retiringwhen wrote:
Fri Mar 06, 2020 12:55 pm
Grt2bOutdoors wrote:
Fri Mar 06, 2020 11:59 am
If that is truly the reason, and this hiccup lasts 1 year, then truly the company is run poorly. A company should be able to withstand a multi-year cycle of economic outcomes, if it can not the investors have only themselves to blame for choosing such the board of directors who hires inept management, short of a truly calamitous disaster. A virus that has thus far claimed less than .00000001% or more of the total possible flying public is not a disaster. The media on the other hand should be held liable for facilitating the transmission of incomplete and erroneous information which is akin to screaming fire in a dark theater. Let's short-sell all the media stocks......
The airline industry has been a net negative return over it's entire life-time. Airlines are run on very thin margins with gigantic capital requirements, expensive regulation and complex labor relations. They are probably one of the best ways known to lose money over the long-term and as an industry it has shown. Almost, every single Airline has declared bankruptcy (some multiple times), the few that haven't are just lucky so far.

Here's what Warren Buffett said in 2002:
“If a capitalist had been present at Kitty Hawk back in the early 1900s, he should have shot Orville Wright. He would have saved his progeny money. But seriously, the airline business has been extraordinary. It has eaten up capital over the past century like almost no other business because people seem to keep coming back to it and putting fresh money in. You've got huge fixed costs, you've got strong labor unions and you've got commodity pricing. That is not a great recipe for success. I have an 800 (free call) number now that I call if I get the urge to buy an airline stock. I call at two in the morning and I say: 'My name is Warren and I'm an aeroholic.' And then they talk me down.”
And yet Buffett increased his position in Delta last week. Go figure! Did the 800 number get disconnected?
merely an interested amateur

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Re: U.S. stocks in free fall

Post by Tdubs » Sat Mar 07, 2020 8:45 pm

watchnerd wrote:
Sat Mar 07, 2020 8:38 pm
Tdubs wrote:
Sat Mar 07, 2020 8:22 pm
Impact of this on Monday? Italy closing down Milan.

https://www.cnbc.com/2020/03/07/italy-p ... virus.html
You go first.

What's your Monday impact forecast?
I don't think the market has priced this in.

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watchnerd
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Re: U.S. stocks in free fall

Post by watchnerd » Sat Mar 07, 2020 8:51 pm

HomerJ wrote:
Sat Mar 07, 2020 8:43 pm
watchnerd wrote:
Sat Mar 07, 2020 7:44 pm
willthrill81 wrote:
Sat Mar 07, 2020 6:51 pm


Given that he lives around Seattle, he's spending most of that time in traffic, not traveling at 70 MPH. Traffic in that area can be abominable.
Correct.

The same drive in off-peak hours can take 15-20 minutes.
Maybe you should go in early.
When possible, I did the opposite -- took calls / meetings from home, went in late.

But that's diminishing returns as the population growth has caused others to do the same, so the rush hour widens.
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Noobvestor
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Re: U.S. stocks in free fall

Post by Noobvestor » Sat Mar 07, 2020 11:24 pm

pascalwager wrote:
Sat Mar 07, 2020 6:10 pm
Noobvestor wrote:Well that's good - I was picturing a stockpile (or cash pile, as it were), but 2% falls easily into rounding error territory. Even when I actively rebalance I never hit my 60/40 target exactly, because I get the end-of-day mutual fund price ;)

My advice to anyone else with more significant amounts of cash on the sidelines is simply: treat it as a zero-duration bond - i.e. part of a fixed income portfolio. Having 'cash' in whatever form isn't bad, as long as it's either a small amount or part of a larger plan.
Noob,

So, even 20% cash (recommended for retirees by Jonathan Clements) could be reasonable as long as it was part of the overall portfolio and part of the rebalancing process? Assume, for example, a 60/20/20 portfolio.

Also, do you intend to maintain your 60/40, high-discipline rebalancing in retirement, including rebalancing through bear markets?
I absolutely believe that cash can be a substantial part of a rational, long-term AA. I use 'bonds' as shorthand for 'fixed income,' but my 40% non-equities portion contains between 5% and 10% in cash (savings, money markets, etc...), rules for which are laid out in my IPS.

Basically, I have an intermediate duration fixed-income target and achieve that through a combination of fixed-income assets. One can also argue cash belongs in its own third category (e.g. 60/20/20), but I treat it as essentially like a highly liquid, zero-duration bond. Using your example, for instance, I could be 20% Long-Term Treasuries and 20% cash (i.e. barbell approach) which would balance to an intermediate duration.

My problem is that a lot of people say they are 100% stocks but aren't, then say 'OK now I'm going to invest my cash!' as if they have some separate pile of money just waiting on the sidelines, doing ... nothing, I guess? To my mind, that's just a form of mental accounting. In reality, perhaps that person is 80/20 stocks/cash and they should own up to that allocation, whatever it is, and factor it into their plan.

Maybe their plan is fluid, and allows for some market timing, a shifting ratio or whatever. Regardless, having parameters is a helpful way to stay on course, whatever course that may be and however flexible it may be, rather than making emotional decisions. Even if their plan is 'I will keep between 0% to 20% in cash depending on conditions,' well, I wouldn't recommend it, but at least it takes everything into account.

(It may go without saying, but: the one thing I don't count in this is emergency funds and short-term savings. If you have cash for that then suddenly go to invest it, something is wrong with your plan, in my opinion, because if you need the cash, you can't afford to invest it. And if you can invest it, it should be in your portfolio. In the above discussion I am only talking about asset allocation for one's primary, long-term portfolio).

As to your latter question: yes, I rebalance either when bands are tripped or I notice the market moving significantly and feel like logging in - again, playing within self-set rules that allow for some flexibility on that front. I have an undefined retirement date so it's hard to create a glide path, but 60/40 seems conservative enough for now and I will likely start ratcheting it down to 50/50, then maybe 40/60 as time goes on. However, when that time comes, I aim to plan it out well in advance, and won't be making any short-term changes based on market sentiments.
"In the absence of clarity, diversification is the only logical strategy" -= Larry Swedroe

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Re: U.S. stocks in free fall

Post by fanmail » Sun Mar 08, 2020 12:38 pm

Weekend wall st currently pricing a 2.5% drop from Friday’s close.

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Re: U.S. stocks in free fall

Post by drk » Sun Mar 08, 2020 12:49 pm

fanmail wrote:
Sun Mar 08, 2020 12:38 pm
Weekend wall st currently pricing a 2.5% drop from Friday’s close.
Futures markets haven't opened yet. Where are you inferring this from?

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Re: U.S. stocks in free fall

Post by CurlyDave » Sun Mar 08, 2020 12:53 pm

fanmail wrote:
Sun Mar 08, 2020 12:38 pm
Weekend wall st currently pricing a 2.5% drop from Friday’s close.
Where do you see this?

CNN has futures down 0.01%, investing.com has them down 1.73%. I hate to see such a wide divergence -- probably means something bad is in the works, but neither one is -2.5%.

P.S. Saudis are discounting oil by a lot. I don't know enough to tell if this is good or bad. Certainly good for energy-intensive industries, but possibly it is because they feel the world economy is going bad.

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Re: U.S. stocks in free fall

Post by guyinlaw » Sun Mar 08, 2020 1:00 pm

Futures markets open at 6PM today..

On Friday from 3pm-4pm SP500 ran up from 2902 to 2972. That was jump in 2.5% in an hour, which is nuts..
"Equity markets could get worse if the slowdown extends further, but also realize that the markets will rebound far before economic data improve."

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watchnerd
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Re: U.S. stocks in free fall

Post by watchnerd » Sun Mar 08, 2020 1:02 pm

CurlyDave wrote:
Sun Mar 08, 2020 12:53 pm


P.S. Saudis are discounting oil by a lot. I don't know enough to tell if this is good or bad. Certainly good for energy-intensive industries, but possibly it is because they feel the world economy is going bad.
Stories I read opined that the Saudi moves are more about trying to force Russia back to the OPEC negotiating table by hurting their profits.
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Re: U.S. stocks in free fall

Post by fanmail » Sun Mar 08, 2020 1:30 pm

drk wrote:
Sun Mar 08, 2020 12:49 pm
fanmail wrote:
Sun Mar 08, 2020 12:38 pm
Weekend wall st currently pricing a 2.5% drop from Friday’s close.
Futures markets haven't opened yet. Where are you inferring this from?
Weekend Wall Street
https://www.ig.com/en/indices/markets-i ... all-street

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Re: U.S. stocks in free fall

Post by Lee_WSP » Sun Mar 08, 2020 2:52 pm

You two are getting off topic.

One person’s particular circumstance is not representative of the economy.

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watchnerd
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Re: U.S. stocks in free fall

Post by watchnerd » Sun Mar 08, 2020 2:54 pm

Lee_WSP wrote:
Sun Mar 08, 2020 2:52 pm
You two are getting off topic.

One person’s particular circumstance is not representative of the economy.
You're right.

I will delete the unfruitful sidebar.
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Re: U.S. stocks in free fall

Post by LadyGeek » Sun Mar 08, 2020 2:59 pm

^^^ The unfruitful sidebar discussion has been removed.

Please stay on-topic.
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Re: U.S. stocks in free fall

Post by fanmail » Sun Mar 08, 2020 5:08 pm

120 in snp 1100 Dow

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Re: U.S. stocks in free fall

Post by stocknoob4111 » Sun Mar 08, 2020 5:10 pm

fanmail wrote:
Sun Mar 08, 2020 5:08 pm
120 in snp 1100 Dow
oil prices plummet 30%... this thing is going from bad to worse. Italy is now trying to quarantine 16M people and the entire country is in chaos. People are fleeing on trains and cars. All this is coming at the very worst time in the business cycle when growth was already weak...

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Re: U.S. stocks in free fall

Post by dukeblue219 » Sun Mar 08, 2020 5:11 pm

Holy cow. Has oil ever dropped 30% in one session?

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Re: U.S. stocks in free fall

Post by LincolnTunnel » Sun Mar 08, 2020 5:14 pm

stocknoob4111 wrote:
Sun Mar 08, 2020 5:10 pm
fanmail wrote:
Sun Mar 08, 2020 5:08 pm
120 in snp 1100 Dow
oil prices plummet 30%... this thing is going from bad to worse. Italy is now trying to quarantine 16M people and the entire country is in chaos. People are fleeing on trains and cars. All this is coming at the very worst time in the business cycle when growth was already weak...
I was just listening to Bloomberg radio and there was some discussion that shale producers with leveraged loans could potentially 'threaten the whole financial system'. I'm not knowledgeable enough to know what to make of that but it doesn't sound very good.

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Re: U.S. stocks in free fall

Post by grok87 » Sun Mar 08, 2020 5:17 pm

dow futures down 1,000 points as of 6 pm sunday
RIP Mr. Bogle.

drk
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Re: U.S. stocks in free fall

Post by drk » Sun Mar 08, 2020 5:17 pm

stocknoob4111 wrote:
Sun Mar 08, 2020 5:10 pm
oil prices plummet 30%... this thing is going from bad to worse.
Just to be clear: the oil price movement is unrelated to COVID-19. Saudi Arabia declared a price war on crude oil this weekend.

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