U.S. stocks in freefall

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willthrill81
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Re: U.S. stocks in freefall

Post by willthrill81 » Thu Jul 26, 2018 12:27 pm

MJW wrote:
Thu Jul 26, 2018 12:20 pm
david1082b wrote:
Wed Jul 25, 2018 10:13 pm
Am prepared for a wave of "Facebook stock in freefall" threads over the next few days.
+ "I know we're not supposed to time the market, but should I buy Facebook now that it has dropped?"
What do you know that everyone else doesn't know? If nothing, then no.
“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

limeyx
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Re: U.S. stocks in freefall

Post by limeyx » Thu Jul 26, 2018 12:43 pm

MJW wrote:
Thu Jul 26, 2018 12:20 pm
david1082b wrote:
Wed Jul 25, 2018 10:13 pm
Am prepared for a wave of "Facebook stock in freefall" threads over the next few days.
+ "I know we're not supposed to time the market, but should I buy Facebook now that it has dropped?"
Definitely shouldn't have bought it yesterday :)

gmaynardkrebs
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Re: U.S. stocks in freefall

Post by gmaynardkrebs » Thu Jul 26, 2018 12:54 pm

MNGopher wrote:
Thu Jul 26, 2018 12:27 pm
david1082b wrote:
Wed Jul 25, 2018 10:13 pm
Am prepared for a wave of "Facebook stock in freefall" threads over the next few days.
Facebook's market value has dropped more than 120 billion in the past 24 hours. That's more than the entire market value of McDonalds! A good reminder why individual stocks are risky.
riskier.

MJW
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Re: U.S. stocks in freefall

Post by MJW » Thu Jul 26, 2018 12:55 pm

willthrill81 wrote:
Thu Jul 26, 2018 12:27 pm
MJW wrote:
Thu Jul 26, 2018 12:20 pm
david1082b wrote:
Wed Jul 25, 2018 10:13 pm
Am prepared for a wave of "Facebook stock in freefall" threads over the next few days.
+ "I know we're not supposed to time the market, but should I buy Facebook now that it has dropped?"
What do you know that everyone else doesn't know? If nothing, then no.
I was being facetious....

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Re: U.S. stocks in freefall

Post by oldcomputerguy » Thu Jul 26, 2018 1:05 pm

market timer wrote:
Wed Jul 25, 2018 8:30 pm
Facebook is down over 20% after hours on poor revenue guidance. Nasdaq down 1.5%. Maybe we just passed the peak?
This forum needs a "yawning" / "ennui" smilie. :twisted:
It’s taken me a lot of years, but I’ve come around to this: If you’re dumb, surround yourself with smart people. And if you’re smart, surround yourself with smart people who disagree with you.

spookyfudge
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Re: U.S. stocks in freefall

Post by spookyfudge » Thu Jul 26, 2018 1:09 pm

The market is up today with the EU appearing to come to an agreement with the President on tariffs, so no the market is not down 500 points

lostdog
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Re: U.S. stocks in freefall

Post by lostdog » Thu Jul 26, 2018 1:48 pm

spookyfudge wrote:
Thu Jul 26, 2018 1:09 pm
The market is up today with the EU appearing to come to an agreement with the President on tariffs, so no the market is not down 500 points

This news doesn't reflect the total international market index currently.

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FIREchief
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Re: U.S. stocks in freefall

Post by FIREchief » Thu Jul 26, 2018 2:22 pm

thangngo wrote:
Thu Jul 26, 2018 9:54 am
FIREchief wrote:
Wed Jul 25, 2018 10:53 pm
ruralavalon wrote:
Wed Jul 25, 2018 8:54 pm
Total return of Vanguard Total Stock Market Index Fund Admiral Shares (VTSAX) is currently up 7.84% year to date. That's not bad at all for just 6.75 months.
Which only goes to prove that we're going to drop for the rest of the year. All the experts told us back in January that, based upon academic research by Nobel prize winning authors, returns would only be 3% to 4% per year for the next ten years. They are sooooo smart that they can not be wrong, so I'm selling all my stocks immediately. I'll buy more stocks when these same experts tell me to. :sharebeer
They do good services by toning down people's expectation. How do you feel if you use 12% rate (as suggested by Dave Ramsey) for planning and then find out you don't have enough money to retire when you turn 60?
A lot of us have no real expectations when it comes to the stock market, other than a faith in capitalism and the expectation that companies will continue to be able to conduct their businesses in a profitable manner and provide some type of return to shareholders over time.
I am not a lawyer, accountant or financial advisor. Any advice or suggestions that I may provide shall be considered for entertainment purposes only.

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willthrill81
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Re: U.S. stocks in freefall

Post by willthrill81 » Thu Jul 26, 2018 2:40 pm

MJW wrote:
Thu Jul 26, 2018 12:55 pm
willthrill81 wrote:
Thu Jul 26, 2018 12:27 pm
MJW wrote:
Thu Jul 26, 2018 12:20 pm
david1082b wrote:
Wed Jul 25, 2018 10:13 pm
Am prepared for a wave of "Facebook stock in freefall" threads over the next few days.
+ "I know we're not supposed to time the market, but should I buy Facebook now that it has dropped?"
What do you know that everyone else doesn't know? If nothing, then no.
I was being facetious....
Oh. It's hard to convey sarcasm and facetiousness in a post. :wink:
“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

MJW
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Re: U.S. stocks in freefall

Post by MJW » Thu Jul 26, 2018 4:29 pm

willthrill81 wrote:
Thu Jul 26, 2018 2:40 pm
MJW wrote:
Thu Jul 26, 2018 12:55 pm
willthrill81 wrote:
Thu Jul 26, 2018 12:27 pm
MJW wrote:
Thu Jul 26, 2018 12:20 pm
david1082b wrote:
Wed Jul 25, 2018 10:13 pm
Am prepared for a wave of "Facebook stock in freefall" threads over the next few days.
+ "I know we're not supposed to time the market, but should I buy Facebook now that it has dropped?"
What do you know that everyone else doesn't know? If nothing, then no.
I was being facetious....
Oh. It's hard to convey sarcasm and facetiousness in a post. :wink:
I used quotations!

Anyhow, after I posted that I saw someone mentioned in another thread that they purchased more Facebook today. :P

MotoTrojan
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Re: U.S. stocks in freefall

Post by MotoTrojan » Thu Jul 26, 2018 5:18 pm

lostdog wrote:
Thu Jul 26, 2018 1:48 pm
spookyfudge wrote:
Thu Jul 26, 2018 1:09 pm
The market is up today with the EU appearing to come to an agreement with the President on tariffs, so no the market is not down 500 points

This news doesn't reflect the total international market index currently.
Currency adjustment perhaps?

columbia
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Re: U.S. stocks in freefall

Post by columbia » Fri Jul 27, 2018 9:40 am

Twitter stock down > 18% today.
https://finance.yahoo.com/quote/TWTR/

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Re: U.S. stocks in freefall

Post by pokebowl » Fri Jul 27, 2018 1:12 pm

http://www.isthisthebottom.com/

I base all my investment forecasts on this. :mrgreen:
There is nothing more expensive than something offered for free.

david1082b
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Re: U.S. stocks in freefall

Post by david1082b » Fri Jul 27, 2018 1:38 pm

Some US-listed stocks in freefall:

LOGM LogMeIn, Inc. -25.11%
VIRT Virtu Financial, Inc. -17.84%
SAM The Boston Beer Company, Inc. -12.16%
Under Armour, Inc. -10.14%

https://finance.yahoo.com/losers/

Don't forget the little stocks that crash each day!

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Re: U.S. stocks in freefall

Post by LadyGeek » Fri Jul 27, 2018 3:21 pm

^^^ LOGM (LogMeIn) is the parent company of LastPass, the password manager I use. SAM is Sam Adams beer. Both tanked due to their 2nd quarter earnings reports.
Wiki To some, the glass is half full. To others, the glass is half empty. To an engineer, it's twice the size it needs to be.

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Re: U.S. stocks in freefall

Post by pokebowl » Wed Aug 15, 2018 7:00 am

Its shaping up to be a good buy day again for both US and International. Same "stressors" as last week depending on which doom and gloom article you read. Continued rally to the Earth's core confirmed. :beer
There is nothing more expensive than something offered for free.

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Re: U.S. stocks in freefall

Post by ReformedSpender » Wed Aug 15, 2018 8:10 am

Asia markets got rocked last night. Too early to tell how the US market will fair today.

:beer
Market history shows that when there's economic blue sky, future returns are low, and when the economy is on the skids, future returns are high. The best fishing is done in the most stormy waters.

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Re: U.S. stocks in freefall

Post by jehovasfitness » Wed Aug 15, 2018 8:25 am

pokebowl wrote:
Wed Aug 15, 2018 7:00 am
Its shaping up to be a good buy day again for both US and International. Same "stressors" as last week depending on which doom and gloom article you read. Continued rally to the Earth's core confirmed. :beer
always seems to go decrease right after the 401k buys go through

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CyclingDuo
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Re: U.S. stocks in freefall

Post by CyclingDuo » Wed Aug 15, 2018 8:37 am

jehovasfitness wrote:
Wed Aug 15, 2018 8:25 am
pokebowl wrote:
Wed Aug 15, 2018 7:00 am
Its shaping up to be a good buy day again for both US and International. Same "stressors" as last week depending on which doom and gloom article you read. Continued rally to the Earth's core confirmed. :beer
always seems to go decrease right after the 401k buys go through
Keep in mind that many are on bi-weekly paychecks and 401k contributions, so the 15th is a purchase day as well for many. :beer
"Everywhere is within walking distance if you have the time." ~ Steven Wright

flyingaway
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Re: U.S. stocks in freefall

Post by flyingaway » Wed Aug 15, 2018 9:06 am

Too bad. I was thinking to do a large rebalance into bonds today to build my bond tent. Looks like I have to do it tomorrow.

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willthrill81
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Re: U.S. stocks in freefall

Post by willthrill81 » Wed Aug 15, 2018 9:09 am

CyclingDuo wrote:
Wed Aug 15, 2018 8:37 am
jehovasfitness wrote:
Wed Aug 15, 2018 8:25 am
pokebowl wrote:
Wed Aug 15, 2018 7:00 am
Its shaping up to be a good buy day again for both US and International. Same "stressors" as last week depending on which doom and gloom article you read. Continued rally to the Earth's core confirmed. :beer
always seems to go decrease right after the 401k buys go through
Keep in mind that many are on bi-weekly paychecks and 401k contributions, so the 15th is a purchase day as well for many. :beer
My last buy was the 13th. :oops: My HSA contributions go through one business day prior to payday, but my 401k contributions go through 2-3 business days after. Go figure.
“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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bligh
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Re: U.S. stocks in freefall

Post by bligh » Wed Aug 15, 2018 9:12 am

I put in a tiny bit into the market this morning. Nice to see a good RBD just as I had a bit of of cash available. Wish I had more cash I could put in but oh well.

FootballFan5548
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Re: U.S. stocks in freefall

Post by FootballFan5548 » Wed Aug 15, 2018 9:12 am

flyingaway wrote:
Wed Aug 15, 2018 9:06 am
Too bad. I was thinking to do a large rebalance into bonds today to build my bond tent. Looks like I have to do it tomorrow.
I was planning on the same thing. I had meant to put an order in yesterday to move $20k of S&P to Bonds to rebalance..... I didn't do that and now I think I'll wait a few days.

Riley15
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Re: U.S. stocks in freefall

Post by Riley15 » Wed Aug 15, 2018 9:24 am

willthrill81 wrote:
Wed Aug 15, 2018 9:09 am
My last buy was the 13th. :oops: My HSA contributions go through one business day prior to payday, but my 401k contributions go through 2-3 business days after. Go figure.
You mentioned to be trend following so how come you're still investing with periodic contributions, weekly or bi-weekly. Wouldn't you only buy and sell in large amounts (I am guessing total equity allocation) when it's dictated by said metrics?

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willthrill81
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Re: U.S. stocks in freefall

Post by willthrill81 » Wed Aug 15, 2018 9:29 am

Riley15 wrote:
Wed Aug 15, 2018 9:24 am
willthrill81 wrote:
Wed Aug 15, 2018 9:09 am
My last buy was the 13th. :oops: My HSA contributions go through one business day prior to payday, but my 401k contributions go through 2-3 business days after. Go figure.
You mentioned to be trend following so how come you're still investing with periodic contributions, weekly or bi-weekly. Wouldn't you only buy and sell in large amounts (I am guessing total equity allocation) when it's dictated by said metrics?
As I get paid, I invest according to what my strategy says I should currently be invested in.
“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

Riley15
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Re: U.S. stocks in freefall

Post by Riley15 » Wed Aug 15, 2018 9:40 am

willthrill81 wrote:
Wed Aug 15, 2018 9:29 am
Riley15 wrote:
Wed Aug 15, 2018 9:24 am
willthrill81 wrote:
Wed Aug 15, 2018 9:09 am
My last buy was the 13th. :oops: My HSA contributions go through one business day prior to payday, but my 401k contributions go through 2-3 business days after. Go figure.
You mentioned to be trend following so how come you're still investing with periodic contributions, weekly or bi-weekly. Wouldn't you only buy and sell in large amounts (I am guessing total equity allocation) when it's dictated by said metrics?
As I get paid, I invest according to what my strategy says I should currently be invested in.
Okay, so if I understand correctly if you're invested in a fund you keep buying that fund with new contributions but at the time when you're only in Bonds then you only buy bonds with new contributions? What are you invested in right now SP500/Total Market?

foamypirate
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Re: U.S. stocks in freefall

Post by foamypirate » Wed Aug 15, 2018 9:44 am

willthrill81 wrote:
Wed Aug 15, 2018 9:09 am
CyclingDuo wrote:
Wed Aug 15, 2018 8:37 am
jehovasfitness wrote:
Wed Aug 15, 2018 8:25 am
pokebowl wrote:
Wed Aug 15, 2018 7:00 am
Its shaping up to be a good buy day again for both US and International. Same "stressors" as last week depending on which doom and gloom article you read. Continued rally to the Earth's core confirmed. :beer
always seems to go decrease right after the 401k buys go through
Keep in mind that many are on bi-weekly paychecks and 401k contributions, so the 15th is a purchase day as well for many. :beer
My last buy was the 13th. :oops: My HSA contributions go through one business day prior to payday, but my 401k contributions go through 2-3 business days after. Go figure.
Naturally, my 401K buy for this pay period went in yesterday, when the market was up 0.65%...figures I would catch the one up day to buy out of all the recent down days (including today). But, alas, tis' but one single contribution out of 26 in the year, so I think I'll live! :sharebeer

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willthrill81
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Re: U.S. stocks in freefall

Post by willthrill81 » Wed Aug 15, 2018 9:44 am

Riley15 wrote:
Wed Aug 15, 2018 9:40 am
willthrill81 wrote:
Wed Aug 15, 2018 9:29 am
Riley15 wrote:
Wed Aug 15, 2018 9:24 am
willthrill81 wrote:
Wed Aug 15, 2018 9:09 am
My last buy was the 13th. :oops: My HSA contributions go through one business day prior to payday, but my 401k contributions go through 2-3 business days after. Go figure.
You mentioned to be trend following so how come you're still investing with periodic contributions, weekly or bi-weekly. Wouldn't you only buy and sell in large amounts (I am guessing total equity allocation) when it's dictated by said metrics?
As I get paid, I invest according to what my strategy says I should currently be invested in.
Okay, so if I understand correctly if you're invested in a fund you keep buying that fund with new contributions but at the time when you're only in Bonds then you only buy bonds with new contributions?
Riley15 wrote:
Wed Aug 15, 2018 9:40 am
If you don't have sharing what are you invested in right now SP500/Total Market?
It depends on which account I have. My 401k, for instance, only has about a dozen offerings, my HSA has about twenty, and my 457 plan only has about five, while my traditional IRA is with Vanguard, so anything goes there.

Right now, I'm almost entirely in mid-cap growth and large-cap growth. Even with today's dip, I'm up about 11% for the year.
“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

Riley15
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Re: U.S. stocks in freefall

Post by Riley15 » Wed Aug 15, 2018 9:52 am

willthrill81 wrote:
Wed Aug 15, 2018 9:44 am
Riley15 wrote:
Wed Aug 15, 2018 9:40 am
willthrill81 wrote:
Wed Aug 15, 2018 9:29 am
Riley15 wrote:
Wed Aug 15, 2018 9:24 am
willthrill81 wrote:
Wed Aug 15, 2018 9:09 am
My last buy was the 13th. :oops: My HSA contributions go through one business day prior to payday, but my 401k contributions go through 2-3 business days after. Go figure.
You mentioned to be trend following so how come you're still investing with periodic contributions, weekly or bi-weekly. Wouldn't you only buy and sell in large amounts (I am guessing total equity allocation) when it's dictated by said metrics?
As I get paid, I invest according to what my strategy says I should currently be invested in.
Okay, so if I understand correctly if you're invested in a fund you keep buying that fund with new contributions but at the time when you're only in Bonds then you only buy bonds with new contributions?
Riley15 wrote:
Wed Aug 15, 2018 9:40 am
If you don't have sharing what are you invested in right now SP500/Total Market?
It depends on which account I have. My 401k, for instance, only has about a dozen offerings, my HSA has about twenty, and my 457 plan only has about five, while my traditional IRA is with Vanguard, so anything goes there.

Right now, I'm almost entirely in mid-cap growth and large-cap growth. Even with today's dip, I'm up about 11% for the year.
That's really amazing performance for the year, I am only up 2% with buy and hold. So right now you're on the up trend but when you have to sell on the down trend you might have to give up some of those gains while not having to go completely negative. Makes a lot of sense to stick to the strategy.

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Re: U.S. stocks in freefall

Post by MotoTrojan » Wed Aug 15, 2018 10:54 am

Harvested back to my preferred international holding on Monday. Oh well.

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oldzey
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Re: U.S. stocks in freefall

Post by oldzey » Wed Aug 15, 2018 10:57 am

Sell everything - the sky is falling! :P

Image
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corn18
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Re: U.S. stocks in freefall

Post by corn18 » Wed Aug 15, 2018 11:11 am

oldzey wrote:
Wed Aug 15, 2018 10:57 am
Sell everything - the sky is falling! :P

Image
Man, that period from 1999-2011 was tough. No capital growth and lots of big hills. Barfaroni! Anyone who retired in 2010, though should be dancin'! :sharebeer

Broken Man 1999
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Re: U.S. stocks in freefall

Post by Broken Man 1999 » Wed Aug 15, 2018 12:16 pm

Today was a good day!

VNQ (Vanguard REIT Index ETF) was up, so I sold all.
VTI (Vanguard Total Stock Index ETF) was down, so I bought.

Of course VNQ will continue to rise, now that I sold, and VTI will continue to fall, now that I have bought.

Simplified portfolio a little more, fewer moving pieces.

Broken Man 1999
“If I cannot drink Bourbon and smoke cigars in Heaven than I shall not go. " -Mark Twain

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Re: U.S. stocks in freefall

Post by ruralavalon » Wed Aug 15, 2018 1:06 pm

corn18 wrote:
Wed Aug 15, 2018 11:11 am
oldzey wrote:
Wed Aug 15, 2018 10:57 am
Sell everything - the sky is falling! :P

Image
Man, that period from 1999-2011 was tough. No capital growth and lots of big hills. Barfaroni! Anyone who retired in 2010, though should be dancin'! :sharebeer
I retired January 2011, and feel very good :D .
"Everything should be as simple as it is, but not simpler." - Albert Einstein | Wiki article link:Getting Started

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ReformedSpender
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Re: U.S. stocks in freefall

Post by ReformedSpender » Wed Aug 15, 2018 1:19 pm

Interesting fact:

VIX just went from under 10.50 to over 16.50 within 4 trading sessions for only the 3rd time in history. Here are the other 2 times (and today).

Both came 6 months before a massive drop. Yes, n=2 is just silly but these events clearly weren't short term bearish. If you recall the '97 Asia crisis, things began to unravel June/July overseas, however, it was until October of that year where US markets experienced a crash. 3 to 4 months.

Think Turkey, Italy, etc recently... Coincidence?

Image
Market history shows that when there's economic blue sky, future returns are low, and when the economy is on the skids, future returns are high. The best fishing is done in the most stormy waters.

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corn18
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Re: U.S. stocks in freefall

Post by corn18 » Wed Aug 15, 2018 1:29 pm

ReformedSpender wrote:
Wed Aug 15, 2018 1:19 pm
Interesting fact:

VIX just went from under 10.50 to over 16.50 within 4 trading sessions for only the 3rd time in history. Here are the other 2 times (and today).

Both came 6 months before a massive drop. Yes, n=2 is just silly but these events clearly weren't short term bearish. If you recall the '97 Asia crisis, things began to unravel June/July overseas, however, it was until October of that year where US markets experienced a crash. 3 to 4 months.

Think Turkey, Italy, etc recently... Coincidence?

Image
Howcum it didn't predict the other corrections/bears?

Dang, that VIX is a bouncy beast, isn't it? Not sure it could predict anything. Just seems to react.

Image

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ReformedSpender
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Re: U.S. stocks in freefall

Post by ReformedSpender » Wed Aug 15, 2018 1:35 pm

corn18 wrote:
Wed Aug 15, 2018 1:29 pm


Howcum it didn't predict the other corrections/bears?
VIX is not an instrument used for predictions. Data was simply looked at during historically low levels of VIX (~$10)
Market history shows that when there's economic blue sky, future returns are low, and when the economy is on the skids, future returns are high. The best fishing is done in the most stormy waters.

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willthrill81
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Re: U.S. stocks in freefall

Post by willthrill81 » Wed Aug 15, 2018 3:42 pm

ReformedSpender wrote:
Wed Aug 15, 2018 1:19 pm
Interesting fact:

VIX just went from under 10.50 to over 16.50 within 4 trading sessions for only the 3rd time in history. Here are the other 2 times (and today).

Both came 6 months before a massive drop. Yes, n=2 is just silly but these events clearly weren't short term bearish. If you recall the '97 Asia crisis, things began to unravel June/July overseas, however, it was until October of that year where US markets experienced a crash. 3 to 4 months.

Think Turkey, Italy, etc recently... Coincidence?
It's times like this, when seemingly little more than uncertainty with tiny markets (from a global perspective) can cause meaningful volatility in the world's largest markets, that I am reminded why I believe the efficient market hypothesis to be false (at least not entirely accurate). A large portion of investors can, frankly, do some pretty dumb things, at least in the short-term.

But that's part of the reason that equities have had great returns. Volatility and uncertainty keep out a lot of capital that would otherwise pour in.
“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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HomerJ
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Re: U.S. stocks in freefall

Post by HomerJ » Wed Aug 15, 2018 3:46 pm

ReformedSpender wrote:
Wed Aug 15, 2018 1:19 pm
Interesting fact:

VIX just went from under 10.50 to over 16.50 within 4 trading sessions for only the 3rd time in history. Here are the other 2 times (and today).

Both came 6 months before a massive drop. Yes, n=2 is just silly but these events clearly weren't short term bearish. If you recall the '97 Asia crisis, things began to unravel June/July overseas, however, it was until October of that year where US markets experienced a crash. 3 to 4 months.

Think Turkey, Italy, etc recently... Coincidence?

Image
What are you talking about? That second data point, the "massive" drop happened after an even larger run-up. It never dropped back to the level where the "signal" occurred.

I have NO idea what your point is.
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Castanea_d.
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Re: U.S. stocks in freefall

Post by Castanea_d. » Wed Aug 15, 2018 4:01 pm

It always makes me happy to see this thread pop up. It is an all-time Bogleheads Classic.

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ruralavalon
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Re: U.S. stocks in freefall

Post by ruralavalon » Wed Aug 15, 2018 4:46 pm

Since August 8, 2011 when this thread first started, total return of Vanguard Total Stock Market Index Fund Admiral Shares (VTSAX) is up 172% and $10,000 invested has turned into $27,275.
"Everything should be as simple as it is, but not simpler." - Albert Einstein | Wiki article link:Getting Started

Bastiat
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Re: U.S. stocks in freefall

Post by Bastiat » Wed Aug 15, 2018 4:58 pm

willthrill81 wrote:
Wed Aug 15, 2018 3:42 pm
But that's part of the reason that equities have had great returns. Volatility and uncertainty keep out a lot of capital that would otherwise pour in.
?
Would not that capital cause returns to be even better? Higher demand drives higher prices.

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Toons
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Re: U.S. stocks in freefall

Post by Toons » Wed Aug 15, 2018 4:59 pm

Ignorance Is Bliss.
:mrgreen:
"One does not accumulate but eliminate. It is not daily increase but daily decrease. The height of cultivation always runs to simplicity" –Bruce Lee

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willthrill81
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Re: U.S. stocks in freefall

Post by willthrill81 » Wed Aug 15, 2018 5:01 pm

Bastiat wrote:
Wed Aug 15, 2018 4:58 pm
willthrill81 wrote:
Wed Aug 15, 2018 3:42 pm
But that's part of the reason that equities have had great returns. Volatility and uncertainty keep out a lot of capital that would otherwise pour in.
?
Would not that capital cause returns to be even better? Higher demand drives higher prices.
The fact that stocks are volatile is part of the reason that their returns have been so good. If they weren't volatile, markets would become flooded with capital, driving down returns. There are only so many earnings to go around. Apple, for instance, can't double its profits just because demand for its stock doubles.
“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

Bastiat
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Re: U.S. stocks in freefall

Post by Bastiat » Wed Aug 15, 2018 5:32 pm

willthrill81 wrote:
Wed Aug 15, 2018 5:01 pm
Bastiat wrote:
Wed Aug 15, 2018 4:58 pm
willthrill81 wrote:
Wed Aug 15, 2018 3:42 pm
But that's part of the reason that equities have had great returns. Volatility and uncertainty keep out a lot of capital that would otherwise pour in.
?
Would not that capital cause returns to be even better? Higher demand drives higher prices.
The fact that stocks are volatile is part of the reason that their returns have been so good. If they weren't volatile, markets would become flooded with capital, driving down returns. There are only so many earnings to go around. Apple, for instance, can't double its profits just because demand for its stock doubles.
We may be talking at cross-purposes...

Volatility is bad for overall return. Volatility drag, variance drain - whatever you want to call it is negative for returns.
Creating opportunity is not the same thing as being good for returns.

Sure, in a micro sense there are only so many earnings to go around, but the purpose of capital employment is wealth creation.

Regardless of that, Apple would indeed not be able to increase profits automatically due to a doubling of demand for it's stock, but one could expect it's stock price to double, which obviously would increase returns for current shareholders (presumably all of us). Apple would exist as-is at a higher price multiple, and it's cost of equity capital would be cut in half.

The greater abundance of capital being available to the market is one reason PE metrics have risen over time.

AerialWombat
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Re: U.S. stocks in freefall

Post by AerialWombat » Wed Aug 15, 2018 5:49 pm

ruralavalon wrote:
Tue Jun 19, 2018 10:53 am
heyeaglefn wrote:
Tue Jun 19, 2018 10:04 am
I someday hope to live in a world where this thread isn't bumped every time the market is down.
This is Frankenthread, it will never die :wink: :wink:
As a noob 'round these parts, this left me very confused for quite a few minutes.

Then I discovered that this thread was started in 2011. :oops:

All forums need at least one of these. Buy the dip if your IPS so states, and have a beer. :sharebeer

gilgamesh
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Re: U.S. stocks in freefall

Post by gilgamesh » Wed Aug 15, 2018 6:28 pm

AerialWombat wrote:
Wed Aug 15, 2018 5:49 pm
ruralavalon wrote:
Tue Jun 19, 2018 10:53 am
heyeaglefn wrote:
Tue Jun 19, 2018 10:04 am
I someday hope to live in a world where this thread isn't bumped every time the market is down.
This is Frankenthread, it will never die :wink: :wink:
As a noob 'round these parts, this left me very confused for quite a few minutes.

Then I discovered that this thread was started in 2011. :oops:

All forums need at least one of these. Buy the dip if your IPS so states, and have a beer. :sharebeer
We are on the verge of arguably the longest bull market in the history of us stocks, and yet this thread on " U.S. Stocks on free fall" gets resurrected constantly...that I think is the definition of "frankenthread" :sharebeer

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willthrill81
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Location: USA

Re: U.S. stocks in freefall

Post by willthrill81 » Wed Aug 15, 2018 6:36 pm

gilgamesh wrote:
Wed Aug 15, 2018 6:28 pm
AerialWombat wrote:
Wed Aug 15, 2018 5:49 pm
ruralavalon wrote:
Tue Jun 19, 2018 10:53 am
heyeaglefn wrote:
Tue Jun 19, 2018 10:04 am
I someday hope to live in a world where this thread isn't bumped every time the market is down.
This is Frankenthread, it will never die :wink: :wink:
As a noob 'round these parts, this left me very confused for quite a few minutes.

Then I discovered that this thread was started in 2011. :oops:

All forums need at least one of these. Buy the dip if your IPS so states, and have a beer. :sharebeer
We are on the verge of arguably the longest bull market in the history of us stocks, and yet this thread on " U.S. Stocks on free fall" gets resurrected constantly...that I think is the definition of "frankenthread" :sharebeer
This bull market is only two years old.
“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

gilgamesh
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Re: U.S. stocks in freefall

Post by gilgamesh » Wed Aug 15, 2018 6:48 pm

willthrill81 wrote:
Wed Aug 15, 2018 6:36 pm
gilgamesh wrote:
Wed Aug 15, 2018 6:28 pm
AerialWombat wrote:
Wed Aug 15, 2018 5:49 pm
ruralavalon wrote:
Tue Jun 19, 2018 10:53 am
heyeaglefn wrote:
Tue Jun 19, 2018 10:04 am
I someday hope to live in a world where this thread isn't bumped every time the market is down.
This is Frankenthread, it will never die :wink: :wink:
As a noob 'round these parts, this left me very confused for quite a few minutes.

Then I discovered that this thread was started in 2011. :oops:

All forums need at least one of these. Buy the dip if your IPS so states, and have a beer. :sharebeer
We are on the verge of arguably the longest bull market in the history of us stocks, and yet this thread on " U.S. Stocks on free fall" gets resurrected constantly...that I think is the definition of "frankenthread" :sharebeer
This bull market is only two years old.
Thus my prefix "arguably" :D

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willthrill81
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Location: USA

Re: U.S. stocks in freefall

Post by willthrill81 » Wed Aug 15, 2018 7:08 pm

Bastiat wrote:
Wed Aug 15, 2018 5:32 pm
willthrill81 wrote:
Wed Aug 15, 2018 5:01 pm
Bastiat wrote:
Wed Aug 15, 2018 4:58 pm
willthrill81 wrote:
Wed Aug 15, 2018 3:42 pm
But that's part of the reason that equities have had great returns. Volatility and uncertainty keep out a lot of capital that would otherwise pour in.
?
Would not that capital cause returns to be even better? Higher demand drives higher prices.
The fact that stocks are volatile is part of the reason that their returns have been so good. If they weren't volatile, markets would become flooded with capital, driving down returns. There are only so many earnings to go around. Apple, for instance, can't double its profits just because demand for its stock doubles.
We may be talking at cross-purposes...

Volatility is bad for overall return. Volatility drag, variance drain - whatever you want to call it is negative for returns.
Creating opportunity is not the same thing as being good for returns.

Sure, in a micro sense there are only so many earnings to go around, but the purpose of capital employment is wealth creation.

Regardless of that, Apple would indeed not be able to increase profits automatically due to a doubling of demand for it's stock, but one could expect it's stock price to double, which obviously would increase returns for current shareholders (presumably all of us). Apple would exist as-is at a higher price multiple, and it's cost of equity capital would be cut in half.

The greater abundance of capital being available to the market is one reason PE metrics have risen over time.
Inflows of capital inflate valuations, but this in turns makes stocks less attractive because it drives up the 'cost' of earnings. People aren't willing to pay an infinite price for a dollar of earnings, which is ultimately what stock purchasers are buying.
“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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