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US Stocks Suffer Worst Week in a Decade

sahlberg

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Try this then

The stockmarket has boomed over the last 10 years. A lot due to the cost of money being 0. (zero or near zero interest rates).
This drives money away from savings accounts, bonds or termed deposits towards something that pays better interest.

That used to be stockmarket since everything else paid near 0 interest.


FED is now changing this and increasing interests. Pulling money from stocks towards savings accounts.
You increase the interest for savings accounts and people will sell their shares and put money in their savings accounts instead.


This is a very simplified view of it. Still you can make a LOT of money when you spot these trend shifts. A LOT

I.e. sentiment changes from :

"Why should I keep money in my savings account when an index fund pays so much more".

to instead be :

"Hey, my savings account has a pretty decent interest and doesn't always lose money like that fscking index fund does".


Self-fulfilling death spiral.
Simplified again.
 

sahlberg

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Can't be surprised when imaginary money evaporates. Can't remember the last time stock prices were tied to anything other than perception.
You have no 401k I gather? Ask your dad about retirement savings, 401k, and how little he cares about the stock market.
EDIT: for your dad the money is not imaginary. It is whether he can retire in 10 years time or not.
 
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danielberg

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Well at least this will stop obama traveling around trying to steal achievements and will stop the whole "thanks obama" nonsense, when the market picks up again this dumb "thanks obama" stuff wont fly anymore.
 
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Madonis

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There are multiple factors affecting this outcome, but Trump's trade wars and poor rhetoric don't help.
 

HenkDV

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Well at least this will stop obama traveling around trying to steal achievements and will stop the whole "thanks obama" nonsense, when the market picks up again this dumb "thanks obama" stuff wont fly anymore.
Replace 'traveling around' with 'tweeting' and 'Obama' with 'Trump'
fun stuff
 

longdi

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Try this then

The stockmarket has boomed over the last 10 years. A lot due to the cost of money being 0. (zero or near zero interest rates).
This drives money away from savings accounts, bonds or termed deposits towards something that pays better interest.

That used to be stockmarket since everything else paid near 0 interest.


FED is now changing this and increasing interests. Pulling money from stocks towards savings accounts.
You increase the interest for savings accounts and people will sell their shares and put money in their savings accounts instead.


This is a very simplified view of it. Still you can make a LOT of money when you spot these trend shifts. A LOT
I read Jack Boggle book, he is predicting next 10 years of 4% growth in stocks.
2% from dividends
2.5% from GDP growth
-1-0.5% from speculative, ie. p/e of companies in stockmarket. As of last 10 years, the p/e blown up because of easy money. People are paying proportionally more (p) than earnings growth (e).

Better save up and put in crypto or something!
 

epicnemesis

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There are a lot of people in this thread saying they’ve lost money. I would like to remind everyone that you only lose money in the stock market if you sell your good assets at a bad time. I’m assuming most/all in here are at least 5 years from retirement. As an advisor, one of the biggest things I do to help my clients save money is to stop getting them to think about beating the market on their retirement accounts, and instead let your money ride the waves in a diversified portfolio so you can get steady growth. Your 401k will not care about the December 2018 slump in the market by the time you start drawing down against it.*

*This is assuming you and/or your advisor has you in multiple asset classes.

If you were looking to cash out tomorrow from your brokerage account then you are justified in your stress. If you have the luxury of time you will be fine in the long run, and if you aren’t then the entire system collapsed and you need to rewatch mad max and take notes.
 
Nov 23, 2010
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Dow soars 500 points as stock market bounces back

My friendly recommendation would be to follow the advice by epicnemesis if you're fortunate enough to be investing and tune out the noise good/bad until you're ready to cash out. If you do nothing else, simply ignore people who are saying really bad things are going to happen soon. These folks are really bad at predicting the future and you're wasting your time if you're hoping they can help you make $$$.

As far as I can tell, all of them on TV, Twitter and in the papers are people who didn't see the financial crisis coming. But somehow they can tell you when the next big thing is going to come. They're clearly guessing and emotionally invested in saying see, "I was right about Trump!" I wouldn't listen to them if I were you.
 

DeepEnigma

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Dec 3, 2013
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Dow soars 500 points as stock market bounces back

My friendly recommendation would be to follow the advice by epicnemesis if you're fortunate enough to be investing and tune out the noise good/bad until you're ready to cash out. If you do nothing else, simply ignore people who are saying really bad things are going to happen soon. These folks are really bad at predicting the future and you're wasting your time if you're hoping they can help you make $$$.

As far as I can tell, all of them on TV, Twitter and in the papers are people who didn't see the financial crisis coming. But somehow they can tell you when the next big thing is going to come. They're clearly guessing and emotionally invested in saying see, "I was right about Trump!" I wouldn't listen to them if I were you.
They are financial equivalence of 'the end is nigh' on the street corners.

"One day, one day we will be right!"
 

HenkDV

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You guys whine about as much about poor daddy trump as people whine about orange man being bad
 

ssolitare

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Dow soars 500 points as stock market bounces back

My friendly recommendation would be to follow the advice by epicnemesis if you're fortunate enough to be investing and tune out the noise good/bad until you're ready to cash out. If you do nothing else, simply ignore people who are saying really bad things are going to happen soon. These folks are really bad at predicting the future and you're wasting your time if you're hoping they can help you make $$$.

As far as I can tell, all of them on TV, Twitter and in the papers are people who didn't see the financial crisis coming. But somehow they can tell you when the next big thing is going to come. They're clearly guessing and emotionally invested in saying see, "I was right about Trump!" I wouldn't listen to them if I were you.
A partial government shutdown, Treasury Secretary Steven Mnuchin's questions about banks' health and signals that President Donald Trump could fire Federal Reserve Chairman Jerome Powell upset markets on Monday, sending the Dow down 653 points.

After markets tanked on Christmas Eve, Trump said Tuesday that he remains confident in Mnuchin, but he renewed his criticism of the Fed, accusing it of hiking rates too fast.

Those doubts come of top of worries about how sharply the US economy might lose steam next year.

The only certain thing about the market this month is uncertainty. The slightest bit of bad news can turn a rally into a rout. For example, stocks were up nearly 400 points on Friday but ended the day down more than 400 points.
It's up 1000 so far today. People just need to do their day to day thing, the fundamentals are good, and Trump just needs to shut up on the negative news quite frankly. That is if he isn't gaming somehow.

Also remember that one good day isn't a trend.
 
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infinitys_7th

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I hope you guys bought some during the downturn....
I was hoping to, but my Roth IRA transfer from my old bank Roth to my brokerage got delayed :( I bought some during the last "downturn", though. Downturns are great for small retirement investors, and everyone in general.

If the stock market drops, then it is guaranteed to eventually rise back up to where it was, often quickly, which allows for some quick 5%+ returns if you are diligent and spare cash. Which is why I own only tracking ETFs - I can take advantage of those dips to buy discounted shares of the economy, which is a guaranteed return over time.
 

infinitys_7th

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DOW went up 800 points today.... I aint worried.
1050 points, more accurately. Or, more importantly, almost 5%:

https://www.washingtonpost.com/business/economy/us-stocks-volatile-as-markets-try-to-recover-from-christmas-eve-freefall/2018/12/26/29f8905e-0928-11e9-85b6-41c0fe0c5b8f_story.html?noredirect=on&utm_term=.1642e7d612a3

Wednesday’s preliminary 4.96 percent climb in the S&P is the best Dec. 26 on record, replacing the 3.06 percent gain record set in 1973.
This is why short downturns are not a bad thing in the slightest - anyone who bought a balanced set of equities during the downturn just got 0%-5% return instantly. Once the market returns to where it was, that return will be even higher. Downturns are wonderful times for the middle class to invest.
 

Mr Nash

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That was a big jump today (over 1,000 points). It'll be interesting to see if all the talk about some pensions having to do a massive fund re-balancing from bonds to stocks was responsible. Or maybe there were some short squeezes in play. Credit markets and junk bonds are still a mess while the most recent sale of US treasuries struggled to find buyers, so things aren't all smiles and sunshine. In any case, these wild swings aren't healthy and scream volatility. Should be a fun next couple of weeks seeing where things go.

On a somewhat related note, I'm having a bit of a chuckle as talking heads wring their hands about HFT algorithms being a problem while stocks are declining, but there wasn't a peep out of them when the market was on its way up. With that, I do wonder if the computers will bring something new to the table in terms of how the market functions. Major crashes in the past were exacerbated by human emotion and panic. With machines doing so much more of the work, I'd have to imagine that some of this will be smoothed over. Maybe?
 
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Woo-Fu

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You have no 401k I gather? Ask your dad about retirement savings, 401k, and how little he cares about the stock market.
EDIT: for your dad the money is not imaginary. It is whether he can retire in 10 years time or not.
You didn't get my point.
 

Bogey

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There are a lot of people in this thread saying they’ve lost money. I would like to remind everyone that you only lose money in the stock market if you sell your good assets at a bad time.
That's unfortunately not right obviously. The only sensible way to look at what you have is by the sum of the worth of your assets - so yes, lesser portoflio value, lesser overall net worth.
(Otherwise, would you argue there is any difference between someone selling their portfolio now and re-buying a second later, and another person holding it - because the first has somehow "realized" their losses, and the second one hasn't? I'd argue both are precisely equally well off.. well, minus a little transaction cost ;)

Not trying to give you flak, just pointing out as its one of the fundamentals in behavioral finance theory that people cut their losses too late (And realize their profits too early), and that line of argumentation seems to play right into that misbehavior.

That's of course not suggesting that everyone should just neutralize their entire portfolio at the first glance of volatility. Just be cognizant about your portfolio value, including drops, and keep re-evaluating your strategy as you see fit, while not ignoring facts
 
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epicnemesis

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That's unfortunately not right obviously. The only sensible way to look at what you have is by the sum of the worth of your assets - so yes, lesser portoflio value, lesser overall net worth.
(Otherwise, would you argue there is any difference between someone selling their portfolio now and re-buying a second later, and another person holding it - because the first has somehow "realized" their losses, and the second one hasn't? I'd argue both are precisely equally well off.. well, minus a little transaction cost ;)

Not trying to give you flak, just pointing out as its one of the fundamentals in behavioral finance theory that people cut their losses too late (And realize their profits too early), and that line of argumentation seems to play right into that misbehavior.

That's of course not suggesting that everyone should just neutralize their entire portfolio at the first glance of volatility. Just be cognizant about your portfolio value, including drops, and keep re-evaluating your strategy as you see fit, while not ignoring facts
It’s worth less but it isn’t “lost.” To me “lost” in this context means there is no way to regain it, which as long as you hold on to your securities is not true. Losses and gains are realized when you cash out. Everything else is just riding the market. Again this is assuming a well diversified equity portfolio, not individual stocks.
 

Humdinger

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Buy and hold, fellas. Figure out an asset allocation that works for you, and then buy and hold. When the market is down, buy more if you can. Anyone who's actually losing money in this context is stupid, because they're selling low. What goes down must come up. Don't play the market like a day trader. Invest for the long haul. Over the long haul, the market delivers just fine. You can't get shaken by the ups and downs -- or if you are, you need to play it very conservative. Keep your eye on the big picture, not day-to-day fluctuations.
 

Bogey

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It’s worth less but it isn’t “lost.” To me “lost” in this context means there is no way to regain it, which as long as you hold on to your securities is not true. Losses and gains are realized when you cash out. Everything else is just riding the market. Again this is assuming a well diversified equity portfolio, not individual stocks.
To use an analogy - that's a bit like going into a casino, exchanging your cash dollars for casino chips, losing half of them an then saying "it's not lost - I can still make it back, I haven't exchanged it back into dollars yet", though.

Effectively, from an instantaneous view of time, there's no significant difference between holding a reasonably liquid tradeable security, both asset types are reasonably well fungible. So the fact that you were invested in the past, really doesn't benefit you at all in the present for your current strategy - minus a bit of transaction costs. What your past decisions do affect of course is how much in total you can invest (or convert back into cash), which leads back to your overall assets = sum of all your worth, including "unrealized" profits or losses.

(Sorry, I know very stupid example, just to underline from a more intuitive angle: Person A and Person B each got 100$ 2 months ago. Person A invested that directly into some share for 25$ / each, person B hasn't yet. Share drops to 20$. Person B invests their money now. So person A has 4 shares worth 80$ now, person B has 5 shares worth 100$. Clearly, person B got luckier here! The fact that person A didn't "realize" their losses doesn't really change the fact that he's worse off than person B now, and will be worse off in any market scenario in the future. Also, this implies that Person B has not made and profits at all (he had 100$ initially, and still has assets worth exactly $100), and yet is definitely better off than person A. So if person B has made no gains, but is still definitely better off, we can conclude even from a gut feeling kind of view that..
- Person A has definitely not made a gain (person B hasn't either, and person B is strictly better off than person A)
- Person A couldn't have been neutral either (person B's assets' value remainded steady. We know that B is better off than A though, implying that A must have been worse than steady)
- Implying person A must have been suffering from a loss here
 
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infinitys_7th

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That's unfortunately not right obviously. The only sensible way to look at what you have is by the sum of the worth of your assets - so yes, lesser portoflio value, lesser overall net worth.
(Otherwise, would you argue there is any difference between someone selling their portfolio now and re-buying a second later, and another person holding it - because the first has somehow "realized" their losses, and the second one hasn't? I'd argue both are precisely equally well off.. well, minus a little transaction cost ;)
There is no difference because there is no net change. That's the point. If the person who sold and rebought had rebought at a slightly lower price, they would make a little more when the inevitable recovery comes around. Same price, no profit. Higher price, actual loss. If you trade one asset for another asset of equal value with equivalent return prospects, there is no difference. Certain securities also have historically expected gains, such as the S&P 500 having an average >7% annual return for any 30-year period since its inception, including periods with the Great Depression. If you invest today in something which follows the S&P, you will have a statistically guaranteed >7.6 times what you put in after 30 years. There is no loss in the end for long-term investments, unless you are not diversified or the market has an utterly catastrophic collapse that will render your savings moot regardless.

Not trying to give you flak, just pointing out as its one of the fundamentals in behavioral finance theory that people cut their losses too late (And realize their profits too early), and that line of argumentation seems to play right into that misbehavior.
Behavioral theories have no bearing on what advise to give people, merely how well they uptake that advise. Telling people not to do an emotional sell is the best advise you can give them if they are properly diversified and investing for the long-term. No one can tell exactly how far a drop is going to go or how high a sudden spike will peak. We can only look at long-term historical data for decision making.

To use an analogy - that's a bit like going into a casino, exchanging your cash dollars for casino chips, losing half of them an then saying "it's not lost - I can still make it back, I haven't exchanged it back into dollars yet", though.

Effectively, from an instantaneous view of time, there's no significant difference between holding a reasonably liquid tradeable security, both asset types are reasonably well fungible. So the fact that you were invested in the past, really doesn't benefit you at all in the present for your current strategy - minus a bit of transaction costs. What your past decisions do affect of course is how much in total you can invest (or convert back into cash), which leads back to your overall assets = sum of all your worth, including "unrealized" profits or losses.

(Sorry, I know very stupid example, just to underline from a more intuitive angle: Person A and Person B each got 100$ 2 months ago. Person A invested that directly into some share for 25$ / each, person B hasn't yet. Share drops to 20$. Person B invests their money now. So person A has 4 shares worth 80$ now, person B has 5 shares worth 100$. Clearly, person B got luckier here! The fact that person A didn't "realize" their losses doesn't really change the fact that he's worse off than person B now, and will be worse off in any market scenario in the future. Also, this implies that Person B has not made and profits at all (he had 100$ initially, and still has assets worth exactly $100), and yet is definitely better off than person A. So if person B has made no gains, but is still definitely better off, we can conclude even from a gut feeling kind of view that..
- Person A has definitely not made a gain (person B hasn't either, and person B is strictly better off than person A)
- Person A couldn't have been neutral either (person B's assets' value remainded steady. We know that B is better off than A though, implying that A must have been worse than steady)
- Implying person A must have been suffering from a loss here
Your example does not really apply to the average investor. Their money tends to (or should) be tied up in regulated accounts (401ks, IRAs, etc.) where they can not withdraw it without heavy penalty (aside from Roth contributions, of course). Using the S&P example again, there will be very little difference in the return in the end for Person A and Person B.

The casino analogy also does not imply to wise retirement investing, as no casino has an expected value in favor of the player. The stock market as a whole is so heavily in favor of investors that it is foolish not to invest. A passive 7% return is fantastic.
 
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Bogey

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There is no loss in the end for long-term investments, unless you are not diversified or the market has an utterly catastrophic collapse that will render your savings moot regardless.
There are quite a lot of periods in the market where it would have taken you an awfully long time just to recoup your losses:


Your example does not really apply to the average investor. Their money tends to (or should) be tied up in regulated accounts (401ks, IRAs, etc.) where they can not withdraw it without heavy penalty (aside from Roth contributions, of course). Using the S&P example again, there will be very little difference in the return in the end for Person A and Person B.
That may absolutely be, I'm not very familar with US investment schemes in the retail markets. Neither would I recommend day-trading around a few % vol here and there in any way, even if it were possible. Just trying to raise a bit of risk awareness, and dispel the saying that stock markets are always a safe bet in the long run.

The casino analogy also does not imply to wise retirement investing, as no casino has an expected value in favor of the player. The stock market as a whole is so heavily in favor of investors that it is foolish not to invest. A passive 7% return is fantastic.
The return figure depends a lot on how you chose the intervals, but more importantly, how much you trust in that historic data. Any dealer relying in historical data for.. anything, really, would have been getting ran over to oblivion in the past decade. If market changes since then have been so disruptive than even basic economic theories didn't hold anymore for the first time ever, I'd say it's quite arguable in how far the current state of the market can be explained by history. So explaining/recommending investment strategies based on past time series is in itself quite a heavy assumption to make. But as always, that's just my skeptical view of things at the moment, who knows what's going to happen!
 

longdi

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There are quite a lot of periods in the market where it would have taken you an awfully long time just to recoup your losses:

The theory goes, you continue buying during the red lines, averaging down, and when the line start turning yellow, your portfolio will improve even before the green line starts. So you have to prepare not to touch your portfolio for 10 years on average. Then there is supposedly some asset allocation, when you see the green line keeping going up, you sell some stocks and buy bonds.

That said, never do lump sum, especially when you are seeing a peak.
 
Nov 17, 2012
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Oh, I see this is an old thread. Was really confused at first as the past month been great for my stock portfolio.
 
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Eiknarf

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Oh, I see this is an old thread. Was really confused at first as the past month been great for my stock portfolio.
Yeah I didn’t want to start a new thread so I figured I’d start one that had anything to do with The Dow. Doing a search this was the only one
 

prag16

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This 👏 is 👏 not 👏 sus👏 tain👏 a 👏ble
True, but in situations like this the contrarians so often lose. People early in this topic were showboating regarding how smart they were for pulling out of the market late last year. I'm sure they missed this entire run up.

You know what they say: Markets can stay irrational longer than you can stay solvent.

Trying to time the market is a fool's errand.
 

rorepmE

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The casino analogy also does not imply to wise retirement investing, as no casino has an expected value in favor of the player. The stock market as a whole is so heavily in favor of investors that it is foolish not to invest. A passive 7% return is fantastic.
Always hate people who compare investing to gambling. A lot of lay people take it as gospel so they never make any investments and end up in the poor house when their working days are over.
 

merlinevo

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Always hate people who compare investing to gambling. A lot of lay people take it as gospel so they never make any investments and end up in the poor house when their working days are over.
Gambling is short term. Investing is long term. Anyone who withdraw money during an economic downturn is foolish and deserves to lose their money.
 

Rentahamster

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some of dees posts did not age like da others
I like how this one aged :

Rentahamster said:
I'm not so sure about crashing stock markets. Maybe short term dips in particular industries that fear his outsourcing tax. I think it's more likely that the market will be glad that the election is over with, and reflect that certainty as such.

Not this one though :

All signs are pointing to a depression within the next couple of years anyway, so I'm not sure it would even matter at this point.
lol