U.S. stocks in free fall

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Robot Monster
Posts: 710
Joined: Sun May 05, 2019 11:23 am
Location: New York

Re: U.S. stocks in free fall

Post by Robot Monster » Fri Jul 31, 2020 11:04 am

abuss368 wrote:
Fri Jul 31, 2020 10:59 am
A 50% stock and 50% bond portfolio with 20% of stock to international is 10% overall to international and 90% to US. I do not believe that moves the needle much, if at all.
This 20% cap on international investing is like a dude who sits by the side of the pool with only his legs in the water, while his friends call out "that ain't swimming, bro!"
Investors often exhibit a tendency to evaluate the performance of their portfolio over very short horizons (e.g. days) even when their actual investment time horizon is quite long (e.g. decades).

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TheTimeLord
Posts: 7897
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Re: U.S. stocks in free fall

Post by TheTimeLord » Fri Jul 31, 2020 11:05 am

An activity Free Fall thread always makes me think I am about to make money.
IMHO, Investing should be about living the life you want, not avoiding the life you fear. | Run, You Clever Boy! [9085]

Blue456
Posts: 811
Joined: Tue Jun 04, 2019 5:46 am

Re: U.S. stocks in free fall

Post by Blue456 » Fri Jul 31, 2020 11:11 am

abuss368 wrote:
Fri Jul 31, 2020 10:59 am
A 50% stock and 50% bond portfolio with 20% of stock to international is 10% overall to international and 90% to US. I do not believe that moves the needle much, if at all.
Then adjust to your comfort level. I’m at 28% allocation to international of my entire portfolio but I hold 70% equity. For 50:50 portfolio that comfort maybe 0% and rightfully so given that half of your assets are held in very safe vehicle.

Blue456
Posts: 811
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Re: U.S. stocks in free fall

Post by Blue456 » Fri Jul 31, 2020 11:19 am

Robot Monster wrote:
Fri Jul 31, 2020 11:04 am
abuss368 wrote:
Fri Jul 31, 2020 10:59 am
A 50% stock and 50% bond portfolio with 20% of stock to international is 10% overall to international and 90% to US. I do not believe that moves the needle much, if at all.
This 20% cap on international investing is like a dude who sits by the side of the pool with only his legs in the water, while his friends call out "that ain't swimming, bro!"
Or it’s like driving in a car with lap only seat belt. During a crash you will break your nose and get concussion but you won’t end up on the asphalt with your head cracked open painting the road in red.

nigel_ht
Posts: 1003
Joined: Tue Jan 01, 2019 10:14 am

Re: U.S. stocks in free fall

Post by nigel_ht » Fri Jul 31, 2020 2:14 pm

willthrill81 wrote:
Fri Jul 31, 2020 10:53 am
nigel_ht wrote:
Fri Jul 31, 2020 10:41 am
willthrill81 wrote:
Fri Jul 31, 2020 10:16 am
nigel_ht wrote:
Thu Jul 30, 2020 6:17 pm
I’d rather have international than more bonds...that’s kind of how I treat them...a necessary evil to hedge against a really bad decade...
The problem with that approach is that for U.S. investors, owning ex-U.S. has been a lost decade. Actually, it's been a lost 13.5 years. The real return of ex-U.S. since 2007 was .08% annualized.

I'm not saying that there isn't value in owning ex-U.S. nor that non-existent returns will continue. But I find it ironic that the potential for a lost decade that many were trying to hedge against materialized with what they bought to hedge against that event.
Yah, I kept the bare (heh bear?) minimum but it is rather ironic. But actually for me it's just a hedge against a Nikkei style cratering rather than a lost decade...

5% gold and 10% international is kinda my limit for stuff that exist for diversification in case something really bad happens to the US economy.
Is 10% in ex-U.S. likely to be an effective hedge against an event like what happened to Japan? I really doubt that it would.
That and gold and bonds. Some combination of those three, plus real estate, will hopefully keep us fed in our later years.

Robot Monster
Posts: 710
Joined: Sun May 05, 2019 11:23 am
Location: New York

Re: U.S. stocks in free fall

Post by Robot Monster » Fri Jul 31, 2020 2:17 pm

nigel_ht wrote:
Fri Jul 31, 2020 2:14 pm
willthrill81 wrote:
Fri Jul 31, 2020 10:53 am
nigel_ht wrote:
Fri Jul 31, 2020 10:41 am
willthrill81 wrote:
Fri Jul 31, 2020 10:16 am
nigel_ht wrote:
Thu Jul 30, 2020 6:17 pm
I’d rather have international than more bonds...that’s kind of how I treat them...a necessary evil to hedge against a really bad decade...
The problem with that approach is that for U.S. investors, owning ex-U.S. has been a lost decade. Actually, it's been a lost 13.5 years. The real return of ex-U.S. since 2007 was .08% annualized.

I'm not saying that there isn't value in owning ex-U.S. nor that non-existent returns will continue. But I find it ironic that the potential for a lost decade that many were trying to hedge against materialized with what they bought to hedge against that event.
Yah, I kept the bare (heh bear?) minimum but it is rather ironic. But actually for me it's just a hedge against a Nikkei style cratering rather than a lost decade...

5% gold and 10% international is kinda my limit for stuff that exist for diversification in case something really bad happens to the US economy.
Is 10% in ex-U.S. likely to be an effective hedge against an event like what happened to Japan? I really doubt that it would.
That and gold and bonds. Some combination of those three, plus real estate, will hopefully keep us fed in our later years.
Don't eat too much gold on an empty stomach. Learned that the hard way, myself.
Investors often exhibit a tendency to evaluate the performance of their portfolio over very short horizons (e.g. days) even when their actual investment time horizon is quite long (e.g. decades).

nigel_ht
Posts: 1003
Joined: Tue Jan 01, 2019 10:14 am

Re: U.S. stocks in free fall

Post by nigel_ht » Fri Jul 31, 2020 2:37 pm

willthrill81 wrote:
Fri Jul 31, 2020 10:53 am
nigel_ht wrote:
Fri Jul 31, 2020 10:41 am
willthrill81 wrote:
Fri Jul 31, 2020 10:16 am
nigel_ht wrote:
Thu Jul 30, 2020 6:17 pm
I’d rather have international than more bonds...that’s kind of how I treat them...a necessary evil to hedge against a really bad decade...
The problem with that approach is that for U.S. investors, owning ex-U.S. has been a lost decade. Actually, it's been a lost 13.5 years. The real return of ex-U.S. since 2007 was .08% annualized.

I'm not saying that there isn't value in owning ex-U.S. nor that non-existent returns will continue. But I find it ironic that the potential for a lost decade that many were trying to hedge against materialized with what they bought to hedge against that event.
Yah, I kept the bare (heh bear?) minimum but it is rather ironic. But actually for me it's just a hedge against a Nikkei style cratering rather than a lost decade...

5% gold and 10% international is kinda my limit for stuff that exist for diversification in case something really bad happens to the US economy.
Is 10% in ex-U.S. likely to be an effective hedge against an event like what happened to Japan? I really doubt that it would.
Well...for the nikkei 32% invested in the S&P 500 would have done the trick.

1 million start, 4% WR (not inflation adjusted so just a flat $40K every year).

Code: Select all

Year	Nikkei	VBMFX	VFINX		 Nikkei 225	 VBMFX	 VFINX  	 EOY Amt 
1988	15.90%	7.35%	16.22%		 $680,000.00 	 $-   	 $320,000.00 	 $1,000,000.00 
1989	24.90%	13.64%	31.36%		 $788,120.00 	 $-   	 $371,904.00 	 $1,120,024.00 
1990	-10.70%	8.65%	-3.32%		 $951,258.78 	 $-   	 $407,294.49 	 $1,318,553.27 
1991	-25.50%	15.25%	30.22%		 $800,678.29 	 $-   	 $458,434.60 	 $1,219,112.89 
1992	-29.40%	7.14%	7.42%		 $617,602.59 	 $-   	 $449,608.83 	 $1,027,211.42 
1993	29.70%	9.68%	9.89%		 $493,143.66 	 $-   	 $352,177.38 	 $805,321.04 
1994	-4.80%	-2.66%	1.18%		 $710,260.95 	 $-   	 $282,648.36 	 $952,909.30 
1995	-7.00%	18.18%	37.45%		 $616,875.37 	 $-   	 $296,819.81 	 $873,695.18 
1996	13.70%	3.58%	22.88%		 $552,524.83 	 $-   	 $330,410.55 	 $842,935.38 
1997	-17.60%	9.44%	33.19%		 $651,723.92 	 $-   	 $279,395.99 	 $891,119.91 
1998	-22.30%	8.58%	28.62%		 $499,312.31 	 $-   	 $312,077.32 	 $771,389.63 
1999	28.70%	-0.76%	21.07%		 $407,571.42 	 $-   	 $268,023.95 	 $635,595.38 
2000	-17.10%	11.39%	-9.06%		 $556,247.65 	 $-   	 $201,844.75 	 $718,092.41 
2001	-28.20%	8.43%	-12.02%		 $404,803.05 	 $-   	 $255,962.60 	 $620,765.65 
2002	-18.70%	8.26%	-22.15%		 $303,082.62 	 $-   	 $215,390.78 	 $478,473.41 
2003	16.80%	3.97%	28.50%		 $264,519.24 	 $-   	 $165,758.50 	 $390,277.74 
2004	11.40%	4.24%	10.74%		 $309,974.19 	 $-   	 $129,846.96 	 $399,821.15 
2005	43.80%	2.40%	4.77%		 $302,872.52 	 $-   	 $133,367.54 	 $396,240.06 
2006	7.50%	4.27%	15.64%		 $387,459.38 	 $-   	 $129,839.94 	 $477,299.33 
2007	-8.30%	6.92%	5.39%		 $348,905.81 	 $-   	 $159,257.60 	 $468,163.41 
2008	-42.20%	5.05%	-37.02%		 $291,927.98 	 $-   	 $160,179.30 	 $412,107.28 
2009	17.30%	5.93%	26.49%		 $161,974.64 	 $-   	 $138,533.98 	 $260,508.63 
2010	-3.00%	6.42%	14.91%		 $207,792.10 	 $-   	 $88,306.17 	 $256,098.27 
2011	-17.30%	7.56%	1.97%		 $168,922.42 	 $-   	 $87,212.73 	 $216,135.15 
2012	22.90%	4.05%	15.82%		 $121,545.76 	 $-   	 $74,391.99 	 $155,937.75 
2013	56.70%	-2.26%	32.18%		 $130,320.30 	 $-   	 $51,921.03 	 $142,241.33 
2014	7.10%	5.76%	13.51%		 $151,566.68 	 $-   	 $44,488.54 	 $156,055.21 
2015	9.10%	0.30%	1.25%		 $113,651.89 	 $-   	 $52,814.08 	 $126,465.97 
2016	0.40%	2.50%	11.82%		 $93,822.57 	 $-   	 $40,590.52 	 $94,413.09 
2017	19.30%	3.46%	21.67%		 $64,457.70 	 $-   	 $30,967.49 	 $55,425.20 
2018	-12.10%	-0.13%	-4.52%		 $44,963.14 	 $-   	 $18,349.73 	 $23,312.87 
 

User avatar
willthrill81
Posts: 19532
Joined: Thu Jan 26, 2017 3:17 pm
Location: USA

Re: U.S. stocks in free fall

Post by willthrill81 » Fri Jul 31, 2020 2:48 pm

nigel_ht wrote:
Fri Jul 31, 2020 2:37 pm
willthrill81 wrote:
Fri Jul 31, 2020 10:53 am
nigel_ht wrote:
Fri Jul 31, 2020 10:41 am
willthrill81 wrote:
Fri Jul 31, 2020 10:16 am
nigel_ht wrote:
Thu Jul 30, 2020 6:17 pm
I’d rather have international than more bonds...that’s kind of how I treat them...a necessary evil to hedge against a really bad decade...
The problem with that approach is that for U.S. investors, owning ex-U.S. has been a lost decade. Actually, it's been a lost 13.5 years. The real return of ex-U.S. since 2007 was .08% annualized.

I'm not saying that there isn't value in owning ex-U.S. nor that non-existent returns will continue. But I find it ironic that the potential for a lost decade that many were trying to hedge against materialized with what they bought to hedge against that event.
Yah, I kept the bare (heh bear?) minimum but it is rather ironic. But actually for me it's just a hedge against a Nikkei style cratering rather than a lost decade...

5% gold and 10% international is kinda my limit for stuff that exist for diversification in case something really bad happens to the US economy.
Is 10% in ex-U.S. likely to be an effective hedge against an event like what happened to Japan? I really doubt that it would.
Well...for the nikkei 32% invested in the S&P 500 would have done the trick.

1 million start, 4% WR (not inflation adjusted so just a flat $40K every year).

Code: Select all

Year	Nikkei	VBMFX	VFINX		 Nikkei 225	 VBMFX	 VFINX  	 EOY Amt 
1988	15.90%	7.35%	16.22%		 $680,000.00 	 $-   	 $320,000.00 	 $1,000,000.00 
1989	24.90%	13.64%	31.36%		 $788,120.00 	 $-   	 $371,904.00 	 $1,120,024.00 
1990	-10.70%	8.65%	-3.32%		 $951,258.78 	 $-   	 $407,294.49 	 $1,318,553.27 
1991	-25.50%	15.25%	30.22%		 $800,678.29 	 $-   	 $458,434.60 	 $1,219,112.89 
1992	-29.40%	7.14%	7.42%		 $617,602.59 	 $-   	 $449,608.83 	 $1,027,211.42 
1993	29.70%	9.68%	9.89%		 $493,143.66 	 $-   	 $352,177.38 	 $805,321.04 
1994	-4.80%	-2.66%	1.18%		 $710,260.95 	 $-   	 $282,648.36 	 $952,909.30 
1995	-7.00%	18.18%	37.45%		 $616,875.37 	 $-   	 $296,819.81 	 $873,695.18 
1996	13.70%	3.58%	22.88%		 $552,524.83 	 $-   	 $330,410.55 	 $842,935.38 
1997	-17.60%	9.44%	33.19%		 $651,723.92 	 $-   	 $279,395.99 	 $891,119.91 
1998	-22.30%	8.58%	28.62%		 $499,312.31 	 $-   	 $312,077.32 	 $771,389.63 
1999	28.70%	-0.76%	21.07%		 $407,571.42 	 $-   	 $268,023.95 	 $635,595.38 
2000	-17.10%	11.39%	-9.06%		 $556,247.65 	 $-   	 $201,844.75 	 $718,092.41 
2001	-28.20%	8.43%	-12.02%		 $404,803.05 	 $-   	 $255,962.60 	 $620,765.65 
2002	-18.70%	8.26%	-22.15%		 $303,082.62 	 $-   	 $215,390.78 	 $478,473.41 
2003	16.80%	3.97%	28.50%		 $264,519.24 	 $-   	 $165,758.50 	 $390,277.74 
2004	11.40%	4.24%	10.74%		 $309,974.19 	 $-   	 $129,846.96 	 $399,821.15 
2005	43.80%	2.40%	4.77%		 $302,872.52 	 $-   	 $133,367.54 	 $396,240.06 
2006	7.50%	4.27%	15.64%		 $387,459.38 	 $-   	 $129,839.94 	 $477,299.33 
2007	-8.30%	6.92%	5.39%		 $348,905.81 	 $-   	 $159,257.60 	 $468,163.41 
2008	-42.20%	5.05%	-37.02%		 $291,927.98 	 $-   	 $160,179.30 	 $412,107.28 
2009	17.30%	5.93%	26.49%		 $161,974.64 	 $-   	 $138,533.98 	 $260,508.63 
2010	-3.00%	6.42%	14.91%		 $207,792.10 	 $-   	 $88,306.17 	 $256,098.27 
2011	-17.30%	7.56%	1.97%		 $168,922.42 	 $-   	 $87,212.73 	 $216,135.15 
2012	22.90%	4.05%	15.82%		 $121,545.76 	 $-   	 $74,391.99 	 $155,937.75 
2013	56.70%	-2.26%	32.18%		 $130,320.30 	 $-   	 $51,921.03 	 $142,241.33 
2014	7.10%	5.76%	13.51%		 $151,566.68 	 $-   	 $44,488.54 	 $156,055.21 
2015	9.10%	0.30%	1.25%		 $113,651.89 	 $-   	 $52,814.08 	 $126,465.97 
2016	0.40%	2.50%	11.82%		 $93,822.57 	 $-   	 $40,590.52 	 $94,413.09 
2017	19.30%	3.46%	21.67%		 $64,457.70 	 $-   	 $30,967.49 	 $55,425.20 
2018	-12.10%	-0.13%	-4.52%		 $44,963.14 	 $-   	 $18,349.73 	 $23,312.87 
 
32% is a lot more than 10%.
“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

nigel_ht
Posts: 1003
Joined: Tue Jan 01, 2019 10:14 am

Re: U.S. stocks in free fall

Post by nigel_ht » Fri Jul 31, 2020 2:53 pm

willthrill81 wrote:
Fri Jul 31, 2020 2:48 pm
nigel_ht wrote:
Fri Jul 31, 2020 2:37 pm
willthrill81 wrote:
Fri Jul 31, 2020 10:53 am
nigel_ht wrote:
Fri Jul 31, 2020 10:41 am
willthrill81 wrote:
Fri Jul 31, 2020 10:16 am


The problem with that approach is that for U.S. investors, owning ex-U.S. has been a lost decade. Actually, it's been a lost 13.5 years. The real return of ex-U.S. since 2007 was .08% annualized.

I'm not saying that there isn't value in owning ex-U.S. nor that non-existent returns will continue. But I find it ironic that the potential for a lost decade that many were trying to hedge against materialized with what they bought to hedge against that event.
Yah, I kept the bare (heh bear?) minimum but it is rather ironic. But actually for me it's just a hedge against a Nikkei style cratering rather than a lost decade...

5% gold and 10% international is kinda my limit for stuff that exist for diversification in case something really bad happens to the US economy.
Is 10% in ex-U.S. likely to be an effective hedge against an event like what happened to Japan? I really doubt that it would.
Well...for the nikkei 32% invested in the S&P 500 would have done the trick.

1 million start, 4% WR (not inflation adjusted so just a flat $40K every year).

Code: Select all

Year	Nikkei	VBMFX	VFINX		 Nikkei 225	 VBMFX	 VFINX  	 EOY Amt 
1988	15.90%	7.35%	16.22%		 $680,000.00 	 $-   	 $320,000.00 	 $1,000,000.00 
1989	24.90%	13.64%	31.36%		 $788,120.00 	 $-   	 $371,904.00 	 $1,120,024.00 
1990	-10.70%	8.65%	-3.32%		 $951,258.78 	 $-   	 $407,294.49 	 $1,318,553.27 
1991	-25.50%	15.25%	30.22%		 $800,678.29 	 $-   	 $458,434.60 	 $1,219,112.89 
1992	-29.40%	7.14%	7.42%		 $617,602.59 	 $-   	 $449,608.83 	 $1,027,211.42 
1993	29.70%	9.68%	9.89%		 $493,143.66 	 $-   	 $352,177.38 	 $805,321.04 
1994	-4.80%	-2.66%	1.18%		 $710,260.95 	 $-   	 $282,648.36 	 $952,909.30 
1995	-7.00%	18.18%	37.45%		 $616,875.37 	 $-   	 $296,819.81 	 $873,695.18 
1996	13.70%	3.58%	22.88%		 $552,524.83 	 $-   	 $330,410.55 	 $842,935.38 
1997	-17.60%	9.44%	33.19%		 $651,723.92 	 $-   	 $279,395.99 	 $891,119.91 
1998	-22.30%	8.58%	28.62%		 $499,312.31 	 $-   	 $312,077.32 	 $771,389.63 
1999	28.70%	-0.76%	21.07%		 $407,571.42 	 $-   	 $268,023.95 	 $635,595.38 
2000	-17.10%	11.39%	-9.06%		 $556,247.65 	 $-   	 $201,844.75 	 $718,092.41 
2001	-28.20%	8.43%	-12.02%		 $404,803.05 	 $-   	 $255,962.60 	 $620,765.65 
2002	-18.70%	8.26%	-22.15%		 $303,082.62 	 $-   	 $215,390.78 	 $478,473.41 
2003	16.80%	3.97%	28.50%		 $264,519.24 	 $-   	 $165,758.50 	 $390,277.74 
2004	11.40%	4.24%	10.74%		 $309,974.19 	 $-   	 $129,846.96 	 $399,821.15 
2005	43.80%	2.40%	4.77%		 $302,872.52 	 $-   	 $133,367.54 	 $396,240.06 
2006	7.50%	4.27%	15.64%		 $387,459.38 	 $-   	 $129,839.94 	 $477,299.33 
2007	-8.30%	6.92%	5.39%		 $348,905.81 	 $-   	 $159,257.60 	 $468,163.41 
2008	-42.20%	5.05%	-37.02%		 $291,927.98 	 $-   	 $160,179.30 	 $412,107.28 
2009	17.30%	5.93%	26.49%		 $161,974.64 	 $-   	 $138,533.98 	 $260,508.63 
2010	-3.00%	6.42%	14.91%		 $207,792.10 	 $-   	 $88,306.17 	 $256,098.27 
2011	-17.30%	7.56%	1.97%		 $168,922.42 	 $-   	 $87,212.73 	 $216,135.15 
2012	22.90%	4.05%	15.82%		 $121,545.76 	 $-   	 $74,391.99 	 $155,937.75 
2013	56.70%	-2.26%	32.18%		 $130,320.30 	 $-   	 $51,921.03 	 $142,241.33 
2014	7.10%	5.76%	13.51%		 $151,566.68 	 $-   	 $44,488.54 	 $156,055.21 
2015	9.10%	0.30%	1.25%		 $113,651.89 	 $-   	 $52,814.08 	 $126,465.97 
2016	0.40%	2.50%	11.82%		 $93,822.57 	 $-   	 $40,590.52 	 $94,413.09 
2017	19.30%	3.46%	21.67%		 $64,457.70 	 $-   	 $30,967.49 	 $55,425.20 
2018	-12.10%	-0.13%	-4.52%		 $44,963.14 	 $-   	 $18,349.73 	 $23,312.87 
 
32% is a lot more than 10%.
32% implies if you do international at all you should do market weight...but I'm more likely to remove it entirely than do half.

User avatar
willthrill81
Posts: 19532
Joined: Thu Jan 26, 2017 3:17 pm
Location: USA

Re: U.S. stocks in free fall

Post by willthrill81 » Fri Jul 31, 2020 2:58 pm

nigel_ht wrote:
Fri Jul 31, 2020 2:53 pm
willthrill81 wrote:
Fri Jul 31, 2020 2:48 pm
nigel_ht wrote:
Fri Jul 31, 2020 2:37 pm
willthrill81 wrote:
Fri Jul 31, 2020 10:53 am
nigel_ht wrote:
Fri Jul 31, 2020 10:41 am


Yah, I kept the bare (heh bear?) minimum but it is rather ironic. But actually for me it's just a hedge against a Nikkei style cratering rather than a lost decade...

5% gold and 10% international is kinda my limit for stuff that exist for diversification in case something really bad happens to the US economy.
Is 10% in ex-U.S. likely to be an effective hedge against an event like what happened to Japan? I really doubt that it would.
Well...for the nikkei 32% invested in the S&P 500 would have done the trick.

1 million start, 4% WR (not inflation adjusted so just a flat $40K every year).

Code: Select all

Year	Nikkei	VBMFX	VFINX		 Nikkei 225	 VBMFX	 VFINX  	 EOY Amt 
1988	15.90%	7.35%	16.22%		 $680,000.00 	 $-   	 $320,000.00 	 $1,000,000.00 
1989	24.90%	13.64%	31.36%		 $788,120.00 	 $-   	 $371,904.00 	 $1,120,024.00 
1990	-10.70%	8.65%	-3.32%		 $951,258.78 	 $-   	 $407,294.49 	 $1,318,553.27 
1991	-25.50%	15.25%	30.22%		 $800,678.29 	 $-   	 $458,434.60 	 $1,219,112.89 
1992	-29.40%	7.14%	7.42%		 $617,602.59 	 $-   	 $449,608.83 	 $1,027,211.42 
1993	29.70%	9.68%	9.89%		 $493,143.66 	 $-   	 $352,177.38 	 $805,321.04 
1994	-4.80%	-2.66%	1.18%		 $710,260.95 	 $-   	 $282,648.36 	 $952,909.30 
1995	-7.00%	18.18%	37.45%		 $616,875.37 	 $-   	 $296,819.81 	 $873,695.18 
1996	13.70%	3.58%	22.88%		 $552,524.83 	 $-   	 $330,410.55 	 $842,935.38 
1997	-17.60%	9.44%	33.19%		 $651,723.92 	 $-   	 $279,395.99 	 $891,119.91 
1998	-22.30%	8.58%	28.62%		 $499,312.31 	 $-   	 $312,077.32 	 $771,389.63 
1999	28.70%	-0.76%	21.07%		 $407,571.42 	 $-   	 $268,023.95 	 $635,595.38 
2000	-17.10%	11.39%	-9.06%		 $556,247.65 	 $-   	 $201,844.75 	 $718,092.41 
2001	-28.20%	8.43%	-12.02%		 $404,803.05 	 $-   	 $255,962.60 	 $620,765.65 
2002	-18.70%	8.26%	-22.15%		 $303,082.62 	 $-   	 $215,390.78 	 $478,473.41 
2003	16.80%	3.97%	28.50%		 $264,519.24 	 $-   	 $165,758.50 	 $390,277.74 
2004	11.40%	4.24%	10.74%		 $309,974.19 	 $-   	 $129,846.96 	 $399,821.15 
2005	43.80%	2.40%	4.77%		 $302,872.52 	 $-   	 $133,367.54 	 $396,240.06 
2006	7.50%	4.27%	15.64%		 $387,459.38 	 $-   	 $129,839.94 	 $477,299.33 
2007	-8.30%	6.92%	5.39%		 $348,905.81 	 $-   	 $159,257.60 	 $468,163.41 
2008	-42.20%	5.05%	-37.02%		 $291,927.98 	 $-   	 $160,179.30 	 $412,107.28 
2009	17.30%	5.93%	26.49%		 $161,974.64 	 $-   	 $138,533.98 	 $260,508.63 
2010	-3.00%	6.42%	14.91%		 $207,792.10 	 $-   	 $88,306.17 	 $256,098.27 
2011	-17.30%	7.56%	1.97%		 $168,922.42 	 $-   	 $87,212.73 	 $216,135.15 
2012	22.90%	4.05%	15.82%		 $121,545.76 	 $-   	 $74,391.99 	 $155,937.75 
2013	56.70%	-2.26%	32.18%		 $130,320.30 	 $-   	 $51,921.03 	 $142,241.33 
2014	7.10%	5.76%	13.51%		 $151,566.68 	 $-   	 $44,488.54 	 $156,055.21 
2015	9.10%	0.30%	1.25%		 $113,651.89 	 $-   	 $52,814.08 	 $126,465.97 
2016	0.40%	2.50%	11.82%		 $93,822.57 	 $-   	 $40,590.52 	 $94,413.09 
2017	19.30%	3.46%	21.67%		 $64,457.70 	 $-   	 $30,967.49 	 $55,425.20 
2018	-12.10%	-0.13%	-4.52%		 $44,963.14 	 $-   	 $18,349.73 	 $23,312.87 
 
32% is a lot more than 10%.
32% implies if you do international at all you should do market weight...but I'm more likely to remove it entirely than do half.
I agree and have said something similar many times. If you really want to reduce the impact of a 'Japan 2.0' event, then you should probably be at least 50% international in your stock holdings OR use one of several 'non-BH approved' strategies.
“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

Faisal
Posts: 141
Joined: Sun Dec 18, 2016 6:37 pm

Re: U.S. stocks in free fall

Post by Faisal » Mon Aug 03, 2020 10:09 am

I was informed this was a better place for my post.

Its amazing how disconnected the US stock market is to the fundemental economics of major economies. Its frankly extremely worrying while companies like Apple hit new marks and 2 million value mark, World economies are contracting faster and ever before.

If this continues into the third quarter i assume major layoffs are coming forward. I means its not like there isn't a crisis already but it looks like it is going to get much worse if things continue.

For reference - All in GDP terms

US - 33% contraction
https://edition.cnn.com/2020/07/30/econ ... index.html

France - 14% contraction
https://africa.businessinsider.com/mark ... nd/edcj6pr

Germany - 10% contraction
https://www.dw.com/en/germany-economy-c ... he%20books.

Japan - 22% contraction
https://asia.nikkei.com/Economy/Japan-G ... p-forecast

-------

Yes, yes I know the focus is on stay the course. Don't let the noise bother you etc. Stick to your asset allocation. But its still a fundemental problem with the world GDP is dropping significantly and there are no indications that they will actually rebound in the third or fourth quarters.

The IMF revised its april predictions of a global slump from 2 to 3% to roughly 5%. Meaning that by October expect a revision of that early estimate ona global contraction and a recession.

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willthrill81
Posts: 19532
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Location: USA

Re: U.S. stocks in free fall

Post by willthrill81 » Mon Aug 03, 2020 10:22 am

Faisal wrote:
Mon Aug 03, 2020 10:09 am
Its amazing how disconnected the US stock market is to the fundemental economics of major economies.
Before you get worked up about the validity of that question, you first need to ask yourself how connected the stock market has ever been to 'fundamental economics of major economies'.

For instance, prior to the current recession and downturn, there had been something like nine U.S. recessions but only five bear markets since 1920.

Further, it's important to keep in mind that the stock market is forward looking. Even if today looks rough, if the market is anticipating good times ahead, prices will reflect that anticipation.
“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

Faisal
Posts: 141
Joined: Sun Dec 18, 2016 6:37 pm

Re: U.S. stocks in free fall

Post by Faisal » Mon Aug 03, 2020 10:34 am

willthrill81 wrote:
Mon Aug 03, 2020 10:22 am
Faisal wrote:
Mon Aug 03, 2020 10:09 am
Its amazing how disconnected the US stock market is to the fundemental economics of major economies.
Before you get worked up about the validity of that question, you first need to ask yourself how connected the stock market has ever been to 'fundamental economics of major economies'.

For instance, prior to the current recession and downturn, there had been something like nine U.S. recessions but only five bear markets since 1920.

Further, it's important to keep in mind that the stock market is forward looking. Even if today looks rough, if the market is anticipating good times ahead, prices will reflect that anticipation.
Didn't think of it that way. Based on that assumption that the Stock market is forward looking, it factors in some basic assumptions that may or may not be realistic. A vaccine that is 100% effective with limited to no side effects, an economic recovery in the short and long term and no political instability come november. Oh yes no new war in the middle east to factor etc.

I agree that the stock market adn the economy have not always seen eye to eye or followed basic economic fundementals but with a globalized world that is harder and harder to achieve.

But I do see your point though I don't necessarily think the market is right to think things will smooth out in the short term.

H-Town
Posts: 2818
Joined: Sun Feb 26, 2017 2:08 pm

Re: U.S. stocks in free fall

Post by H-Town » Mon Aug 03, 2020 10:39 am

Faisal wrote:
Mon Aug 03, 2020 10:34 am
willthrill81 wrote:
Mon Aug 03, 2020 10:22 am
Faisal wrote:
Mon Aug 03, 2020 10:09 am
Its amazing how disconnected the US stock market is to the fundemental economics of major economies.
Before you get worked up about the validity of that question, you first need to ask yourself how connected the stock market has ever been to 'fundamental economics of major economies'.

For instance, prior to the current recession and downturn, there had been something like nine U.S. recessions but only five bear markets since 1920.

Further, it's important to keep in mind that the stock market is forward looking. Even if today looks rough, if the market is anticipating good times ahead, prices will reflect that anticipation.
Didn't think of it that way. Based on that assumption that the Stock market is forward looking, it factors in some basic assumptions that may or may not be realistic. A vaccine that is 100% effective with limited to no side effects, an economic recovery in the short and long term and no political instability come november. Oh yes no new war in the middle east to factor etc.

I agree that the stock market adn the economy have not always seen eye to eye or followed basic economic fundementals but with a globalized world that is harder and harder to achieve.

But I do see your point though I don't necessarily think the market is right to think things will smooth out in the short term.
https://www.bogleheads.org/wiki/Boglehe ... philosophy

It's a good time to review Boglehead's investment philosophy. Pay close attention to the fact that investors do NOT need to evaluate economies, politics, and whatnots.

If you have questions, we can discsuss.

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willthrill81
Posts: 19532
Joined: Thu Jan 26, 2017 3:17 pm
Location: USA

Re: U.S. stocks in free fall

Post by willthrill81 » Mon Aug 03, 2020 10:43 am

Faisal wrote:
Mon Aug 03, 2020 10:34 am
willthrill81 wrote:
Mon Aug 03, 2020 10:22 am
Faisal wrote:
Mon Aug 03, 2020 10:09 am
Its amazing how disconnected the US stock market is to the fundemental economics of major economies.
Before you get worked up about the validity of that question, you first need to ask yourself how connected the stock market has ever been to 'fundamental economics of major economies'.

For instance, prior to the current recession and downturn, there had been something like nine U.S. recessions but only five bear markets since 1920.

Further, it's important to keep in mind that the stock market is forward looking. Even if today looks rough, if the market is anticipating good times ahead, prices will reflect that anticipation.
Didn't think of it that way. Based on that assumption that the Stock market is forward looking, it factors in some basic assumptions that may or may not be realistic. A vaccine that is 100% effective with limited to no side effects, an economic recovery in the short and long term and no political instability come november. Oh yes no new war in the middle east to factor etc.

I agree that the stock market adn the economy have not always seen eye to eye or followed basic economic fundementals but with a globalized world that is harder and harder to achieve.

But I do see your point though I don't necessarily think the market is right to think things will smooth out in the short term.
Certainly the market can be wrong. Several here, including me, couldn't believe that U.S. stocks had not reacted at all to the threat of the Coronavirus back in late February. And some of us acted on that belief (yes, market timing :twisted: ). But doing so is very dangerous on many levels, not the least of which is that being successful with such a move may lead you to believe that you can consistently do so successfully, and you cannot. The only reason I acted was because I thought that it was a very rare opportunity, and it still gave me a lot of grief to deviate from my strategy, never mind all the heat I took on the forum for it. For this latter reason, I won't discuss the issue further in this thread; you can PM me if you want more details.
“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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