If things are so bad, how come the market is up 900 points today?

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goblue100
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Re: If things are so bad, how come the market is up 900 points today?

Post by goblue100 »

Fremdon Ferndock wrote: Mon Oct 03, 2022 2:03 pm I don't understand why the market can take off when we have this backdrop of gloomy news, such as:
‘We are in deep trouble’: Billionaire investor Druckenmiller believes Fed’s monetary tightening will push the economy into recession in 2023"
Can anyone explain this craziness?
Ben Graham tried.
https://en.wikipedia.org/wiki/Mr._Market
Graham asks the reader to imagine that they are one of the two owners of a business, along with a partner called Mr. Market.[7][8][2] The partner frequently offers to sell their share of the business or to buy the reader's share.[9][10][6] This partner is what today would be called manic-depressive, with their estimate of the business's value going from very pessimistic to wildly optimistic.[2][3][11] The reader is always free to decline the partner's offer, since they will soon come back with an entirely different offer.[12][13][14]
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Tigermoose
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Re: If things are so bad, how come the market is up 900 points today?

Post by Tigermoose »

The stock market is making bets based on the perceived future actions of the Fed. If economic or financial news is bad, that means the Fed is getting closer to stopping the monetary tightening. And vice versa. If labor news is good (less unemployment) that means the Fed needs to tighten more to fight inflation. FOMO traders want to jump in before the next Fed induced bubble. Government and central bank interventions have distorted the economic and financial price signals. It's kind of perverse, but it is what it is.
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trirunner
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Re: If things are so bad, how come the market is up 900 points today?

Post by trirunner »

Stock market doesn't go straight down, typical dead cat bounce, where have you been in the last 9 months.
RJC
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Re: If things are so bad, how come the market is up 900 points today?

Post by RJC »

bugleheadd wrote: Tue Oct 04, 2022 7:49 am The UN asked countries to stop raising interest rates
This is what I have heard as well. I'm sure it was the primary reason for the surge.
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Re: If things are so bad, how come the market is up 900 points today?

Post by H-Town »

tesuzuki2002 wrote: Tue Oct 04, 2022 12:30 am Nice turn around day... I bought some at the open.
It could drop 50% over the next year. You never know.

The lots that I bought in late 2000s looking great, so does every lot that I have bought up to late 2020. :sharebeer As they say, time in the market beats market timing. Just set automatic buy and chill.
Time is the ultimate currency.
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retiredjg
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Re: If things are so bad, how come the market is up 900 points today?

Post by retiredjg »

nedsaid wrote: Mon Oct 03, 2022 7:58 pm
nisiprius wrote: Mon Oct 03, 2022 4:49 pm
yules wrote: Mon Oct 03, 2022 2:20 pm...hasn't it already been determined that we have had two negative quarters, which is the definition of a recession?...
No, that is not the definition of a recession. Not in the US, anyway. It's one of many indicators of a recession, all of which the National Bureau of Economic Research (NBER) takes into account.

The National Bureau of Economic Research (NBER) uses this definition:
...a significant decline in economic activity spread across the market, lasting more than a few months, normally visible in real GDP, real income, employment, industrial production, and wholesale-retail sales...
Two negative quarters of GDP are an indicator of a recession, and it is one of the things the NBER takes into account in determining whether there has been a recession, but it is not the definition of a recession.

The NBER's determinations are AFAIK universally accepted by the financial community. Every chart you see with grey recession bars on it is showing recessions as determined by the NBER.

The NBER only announces the starting and ending dates after the recession is over.

Robins are an indicator of spring, but robins are not the definition of spring.
Nisiprius, two consecutive quarters of negative GDP growth is a commonly accepted definition of a recession.
Two consecutive quarters is a commonly accepted definition of a recession. But I'd have to agree with Nisi on this - the NBER definition is considered the "official" definition by many on the internet and "two consecutive quarters" is only part of the story.

NBER is non-profit and non-partisan. It's been around a long time. Their definition of a recession has nothing to do with who is in power. The fact that the people in power are using the NBER definition should not be surprising or considered word play, in my opinion.

And it is entirely possible that NBER will eventually call this time period a recession. But they haven't yet.
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arcticpineapplecorp.
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Re: If things are so bad, how come the market is up 900 points today?

Post by arcticpineapplecorp. »

because often the best days in the market follow the worst days:

Image
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gubernaculum
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Re: If things are so bad, how come the market is up 900 points today?

Post by gubernaculum »

One word: Russia. Russia has shaved off trillions from the US market. As long as the war is ongoing, it will continue to affect inflation and is devastating European economies, which in turn, affect our companies and profitability. The other is open economic war with China.
TightButAggressive
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Re: If things are so bad, how come the market is up 900 points today?

Post by TightButAggressive »

That thread title :happy

The 2nd part has an answer, but the first part is a heavy dose of uncorrelated assumptions. The trick is, could you have predicted that market would bounce with weak manufacturing numbers (signaling potential that the tightening is working (itself further signaling that interest rate hikes may ease in the future))? Maybe, but not with 100% accuracy. And then further, could you have predicted that the manufacturing numbers would have been weak today? A lesser chance of maybe, and still not with 100% accuracy. Even after unwrapping all that, do any of those minor anecdotes for today even matter for the long term market? NOPE.

People were bringing up the dead cat analogy up thread and it is an easy way to help people understand why the moves aren't always solidly down or up based on all the little micro-indicators that people overweigh, but the real trick IMHO is to understand there is no cat. Once you accept that, then you can go back to simplicity in investing.
Robot Monster
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Re: If things are so bad, how come the market is up 900 points today?

Post by Robot Monster »

TightButAggressive wrote: Tue Oct 04, 2022 12:05 pm ...the real trick IMHO is to understand there is no cat. Once you accept that, then you can go back to simplicity in investing.
No cat?! What heresy is this??
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Re: If things are so bad, how come the market is up 900 points today?

Post by TightButAggressive »

Robot Monster wrote: Tue Oct 04, 2022 12:13 pm
TightButAggressive wrote: Tue Oct 04, 2022 12:05 pm ...the real trick IMHO is to understand there is no cat. Once you accept that, then you can go back to simplicity in investing.
No cat?! What heresy is this??
Or maybe its Schrödinger's cat. Somebody let the cat out of the bag!
BitTooAggressive
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Re: If things are so bad, how come the market is up 900 points today?

Post by BitTooAggressive »

Fremdon Ferndock wrote: Mon Oct 03, 2022 2:03 pm I don't understand why the market can take off when we have this backdrop of gloomy news, such as:
‘We are in deep trouble’: Billionaire investor Druckenmiller believes Fed’s monetary tightening will push the economy into recession in 2023"
Can anyone explain this craziness?
Because the markets are efficient and are worth 3% more today than yesterday.

There are thousands of factors and news items and decisions going on all the time, rational and irrational people making decisions…..
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Lawrence of Suburbia
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Re: If things are so bad, how come the market is up 900 points today?

Post by Lawrence of Suburbia »

Perhaps a bell rang Monday morning, that many of us just didn't hear? ... 😊

My own theory is because Ray Dalio just changed his mind, and declared that "cash ISN'T trash" now ...
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Lawrence of Suburbia
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Re: If things are so bad, how come the market is up 900 points today?

Post by Lawrence of Suburbia »

Robot Monster wrote: Tue Oct 04, 2022 12:13 pmNo cat?! What heresy is this??
Where's Erwin Schrödinger when we need him?
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Fremdon Ferndock
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Re: If things are so bad, how come the market is up 900 points today?

Post by Fremdon Ferndock »

And yet, the headlines keep screaming "watch out below".

Opinion: Stock markets will drop another 40% as a severe stagflationary debt crisis hits an overleveraged global economy

~ Marketwatch
"Risk is what’s left over when you think you’ve thought of everything." ~ Morgan Housel
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Vulcan
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Re: If things are so bad, how come the market is up 900 points today?

Post by Vulcan »

Fremdon Ferndock wrote: Tue Oct 04, 2022 1:02 pm And yet, the headlines keep screaming "watch out below".

Opinion: Stock markets will drop another 40% as a severe stagflationary debt crisis hits an overleveraged global economy

~ Marketwatch
Those who think they know what the markets will do are not in the public predictions business.
If you torture the data long enough, it will confess to anything. ~Ronald Coase
Marseille07
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Re: If things are so bad, how come the market is up 900 points today?

Post by Marseille07 »

Fremdon Ferndock wrote: Tue Oct 04, 2022 1:02 pm And yet, the headlines keep screaming "watch out below".

Opinion: Stock markets will drop another 40% as a severe stagflationary debt crisis hits an overleveraged global economy

~ Marketwatch
Why wouldn't they? Do you think the UN can tell the FRB to stop raising rates? As far as I know, no one's raising rates for fun.
km91
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Re: If things are so bad, how come the market is up 900 points today?

Post by km91 »

Wow, market's really ripping today after EU voted that Apple must use USB-C to charge their products
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Re: If things are so bad, how come the market is up 900 points today?

Post by z3r0c00l »

km91 wrote: Tue Oct 04, 2022 1:26 pm Wow, market's really ripping today after EU voted that Apple must use USB-C to charge their products
Markets up on news of... I prefer to think it is the possible renewed twitter purchase by Musk.
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Robot Monster
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Re: If things are so bad, how come the market is up 900 points today?

Post by Robot Monster »

Is this becoming the grand reopening of the "soaring" thread?
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SB1234
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Re: If things are so bad, how come the market is up 900 points today?

Post by SB1234 »

Todays market action can be properly categorized in the "bad news is good news" bucket.
Bad news -> labor market softening
(Implied) Good News -> Fed is closer to done raising rates.
superstition: belief that market will one day come around to your concept of fair value
LiterallyIronic
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Re: If things are so bad, how come the market is up 900 points today?

Post by LiterallyIronic »

firebirdparts wrote: Mon Oct 03, 2022 2:22 pm I told somebody yesterday, if I'm trying to cause a recession, and I tell you we aren't in one, that tells you all you need to know.
Doesn't tell me a darn thing.
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Fremdon Ferndock
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Re: If things are so bad, how come the market is up 900 points today?

Post by Fremdon Ferndock »

I want to correct the misunderstanding: there is a cat, or you wouldn't get one whack at it.
"Risk is what’s left over when you think you’ve thought of everything." ~ Morgan Housel
JackoC
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Re: If things are so bad, how come the market is up 900 points today?

Post by JackoC »

RJC wrote: Tue Oct 04, 2022 9:12 am
bugleheadd wrote: Tue Oct 04, 2022 7:49 am The UN asked countries to stop raising interest rates
This is what I have heard as well. I'm sure it was the primary reason for the surge.
But today 10yr yield is only down around 3 bps with stock market up almost 100 points (S&P). Yesterday market ended up up almost 100 and 10yr yield down 16bps. That would seem to throw into doubt whether expectation of rates based on a UN statement today (markets paying huge attention to what the UN says? not so common in the past either) being the reason for follow on rally in stocks. But in general arguing about why the market did what it did: limited importance. Since recent price action has little predictive power for near term future price action (if the market is even fairly efficient), it's not really that important to have a good explanation of each day's move.

And as a later post showed with list/graph a lot of biggest up days, and violent rallies over a few days also, in stock market history were during bear markets where the market subsequently went lower. Though violent one or few day rallies are also typical of the early stages of a definitive comeback. It would be really cool if you could reliably tell which was which in real time.
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Fremdon Ferndock
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Re: If things are so bad, how come the market is up 900 points today?

Post by Fremdon Ferndock »

Rates are "tumbling", haven't you heard? I only got 4.1% on a 1-year T-Bill today. :(
I guess 'flation is over and we're partying again. Yea!
"Risk is what’s left over when you think you’ve thought of everything." ~ Morgan Housel
Lynette
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Re: If things are so bad, how come the market is up 900 points today?

Post by Lynette »

livesoft wrote: Mon Oct 03, 2022 2:21 pm What gloomy news? Get out there and embrace all the good things around you!
Here is one for you: https://www.nytimes.com/2022/10/03/opin ... po-67.html though a bit nostalgic.
+1000

What a fantastic article about two young boys aged 9 and 11 going to the Montreal Expo 67 with a cart driven by their faithful donkey King. Well worth reading!
dertere
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Re: If things are so bad, how come the market is up 900 points today?

Post by dertere »

Yesterday and today's pop are solely because my monthly 457b buy goes through after markets close today. Expect freefalling markets to resume once I have the higher price locked in.

Every morning I glance through MSN's business news and see numerous articles predicting that the market will go up, down, and sideways. I take comfort in knowing that at least one of them will be right.
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Beensabu
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Re: If things are so bad, how come the market is up 900 points today?

Post by Beensabu »

LOL. Today's surge primarily due to cruise lines, airlines, and resorts... What on earth did I miss? Did the world officially declare covid over?

Edit: Nevermind. I guess it was just people deciding they were done shorting, or something.
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PoorHomieQuan
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Re: If things are so bad, how come the market is up 900 points today?

Post by PoorHomieQuan »

Stocks want to go up. When there hasn't been fresh bad news in a while, they will float upwards.

On a technical analysis level, "gaps" want to be filled. Two Fridays back we gapped down at open, today's gap up filled that.

Short covering is a real thing. When the market starts to drift up, some short holders will cover their bets. This magnifies a small bounce into a large one. (Notably this works on the other side too. When sentiment sours, opening shorts artificially pushes markets down.)

This looks like the other 25 dead cat bounces we've had this year. The problem is that when the real recovery starts, it will look exactly like this as well. The stock market will resume its upward trajectory long before inflation is confirmed to have abated and the Fed formally pivots. We will have N anticipation-rallies and N - 1 of them will be crushed by fresh worries or Fed hawkishness. Is this the Nth or the (N - x)th? The law of probabilities tell me that it's most likely not the Nth and final, but missing out on the Nth would be costly indeed, so I stay invested.

All that said, what could be the good news that's right around the corner?
  • there's been some real progress in Ukraine. If we don't get a nuclear war, the conflict may be over sooner than we thought
  • Lael Brainard said something about trying to not crush the economy, somewhat less hawkish than Jpow's old testament fire and brimstone speech from Jackson Hole.
  • The UN also pleaded with central banks not to let DXY run rampant.
  • Ratio of job seekers to job openings has started to climb (less pressure on wages)
  • Some indications from the manufacturing sector that inflation (and production) is falling ("growth recession"/"soft landing" could be possible)
  • There are early signs that financial markets are cracking (Credit Suisse, English gilts) which may mean the rate hikes we've already endured are going to tighten conditions more than anticipated, and further hikes won't be as necessary
Still I'm not looking forward to Oct 13.
phantom0308
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Re: If things are so bad, how come the market is up 900 points today?

Post by phantom0308 »

Bad news is good news. Investors are waiting for easy money again. The economy getting worse is an indication that the fed will lower interest rates sooner. At least that’s the theory. It’s all just guessing.
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JoeRetire
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Re: If things are so bad, how come the market is up 900 points today?

Post by JoeRetire »

Robot Monster wrote: Tue Oct 04, 2022 12:13 pm
TightButAggressive wrote: Tue Oct 04, 2022 12:05 pm ...the real trick IMHO is to understand there is no cat. Once you accept that, then you can go back to simplicity in investing.
No cat?! What heresy is this??
They promised there would be cats.
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JoeRetire
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Re: If things are so bad, how come the market is up 900 points today?

Post by JoeRetire »

The market didn't go up 900 points yesterday. And it didn't go up 900 points today.

That's nothing but exaggeration! If I've said it once, I've said it a billion times - don't exaggerate!
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Fremdon Ferndock
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Re: If things are so bad, how come the market is up 900 points today?

Post by Fremdon Ferndock »

JoeRetire wrote: Tue Oct 04, 2022 3:57 pm The market didn't go up 900 points yesterday. And it didn't go up 900 points today.

That's nothing but exaggeration! If I've said it once, I've said it a billion times - don't exaggerate!
It did, depending on when you ended your day.
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"Risk is what’s left over when you think you’ve thought of everything." ~ Morgan Housel
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munemaker
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Re: If things are so bad, how come the market is up 900 points today?

Post by munemaker »

I think the main thing to keep in mind is the market can do irrational things in the short run. That's why we should ignore the short term swings and not time the market. Just ignore the noise; that's all it is.

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Hebell
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Re: If things are so bad, how come the market is up 900 points today?

Post by Hebell »

As I move money into the market, and have done so for a while, I tend to use sector ETFs. Mainly because I set limit order buy prices based on valuations I think are attractive. Over the past few months they have all fired with the exception of defense stocks, and a decent reentry point for Walmart.

I had rather hoped this last drawdown would allow me to complete my portfolio, which is highly diversified, now that most of them have fired. But with these last two days, I keep moving further away from that goal.
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Lawrence of Suburbia
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Re: If things are so bad, how come the market is up 900 points today?

Post by Lawrence of Suburbia »

Don't worry -- it'll be down again tomorrow (according to the futures market).

I'm doing nothing; not because I'm a committed Boglehead, but because I'm in deer-in-the-headlights mode.
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BitTooAggressive
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Re: If things are so bad, how come the market is up 900 points today?

Post by BitTooAggressive »

JoeRetire wrote: Tue Oct 04, 2022 3:53 pm
Robot Monster wrote: Tue Oct 04, 2022 12:13 pm
TightButAggressive wrote: Tue Oct 04, 2022 12:05 pm ...the real trick IMHO is to understand there is no cat. Once you accept that, then you can go back to simplicity in investing.
No cat?! What heresy is this??
They promised there would be cats.
The markets are both up and down and do not have a value until I check.
UNCHEEL
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Re: If things are so bad, how come the market is up 900 points today?

Post by UNCHEEL »

Even a dead cat bounces.
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JoeRetire
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Re: If things are so bad, how come the market is up 900 points today?

Post by JoeRetire »

BitTooAggressive wrote: Wed Oct 05, 2022 8:49 am
JoeRetire wrote: Tue Oct 04, 2022 3:53 pm
Robot Monster wrote: Tue Oct 04, 2022 12:13 pm
TightButAggressive wrote: Tue Oct 04, 2022 12:05 pm ...the real trick IMHO is to understand there is no cat. Once you accept that, then you can go back to simplicity in investing.
No cat?! What heresy is this??
They promised there would be cats.
The markets are both up and down and do not have a value until I check.
Sounds like a Schrödinger market.
I prefer one with cats.
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Fremdon Ferndock
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Re: If things are so bad, how come the market is up 900 points today?

Post by Fremdon Ferndock »

Here you go -

Image
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Re: If things are so bad, how come the market is up 900 points today?

Post by tesuzuki2002 »

H-Town wrote: Tue Oct 04, 2022 9:15 am
tesuzuki2002 wrote: Tue Oct 04, 2022 12:30 am Nice turn around day... I bought some at the open.
It could drop 50% over the next year. You never know.

The lots that I bought in late 2000s looking great, so does every lot that I have bought up to late 2020. :sharebeer As they say, time in the market beats market timing. Just set automatic buy and chill.

agreed!! I'll but more as it continues down or up
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Beensabu
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Re: If things are so bad, how come the market is up 900 points today?

Post by Beensabu »

JoeRetire wrote: Wed Oct 05, 2022 9:46 am
BitTooAggressive wrote: Wed Oct 05, 2022 8:49 am
JoeRetire wrote: Tue Oct 04, 2022 3:53 pm
Robot Monster wrote: Tue Oct 04, 2022 12:13 pm
TightButAggressive wrote: Tue Oct 04, 2022 12:05 pm ...the real trick IMHO is to understand there is no cat. Once you accept that, then you can go back to simplicity in investing.
No cat?! What heresy is this??
They promised there would be cats.
The markets are both up and down and do not have a value until I check.
Sounds like a Schrödinger market.
I prefer one with cats.
Oh, there's definitely a cat. We just don't know if it's dead or not.
"The only thing that makes life possible is permanent, intolerable uncertainty; not knowing what comes next." ~Ursula LeGuin
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