Stocks Off Sharply as Market Upheaval Grows • Hacker News Board

Re: Stocks Off Sharply as Market Upheaval Grows

#201

Post by bunderbunder » Mon, Aug 24, 2015, 4:10 PM UTC

rsmckinney wrote: post #183

acjohnson55 wrote: post #152

A whole lot of aphorisms in this commentary about falling knives and dead cats, but very little actual information. If you're trying to time the bottom you may as well take your money to the blackjack table. The quants are probably going to make a bunch of money, but if you're just a regular person, you should probably just continue making your regularly scheduled 401k contributions and diversified investments. Histo…

"Historically speaking" Historically speaking, when has the Fed kept interest rates at ZERO for 7 years? After pumping QE full throttle at $80B/mo? The economy has been in continuous "recovery" mode since '08, but not much has actually recovered. The market is going to collapse my friend because, historically speaking, we are in dark, uncharted territory and have lost our way back.

Historically we've always been in dark, uncharted territory.

There are only two things you can guarantee about the market: First, it will fluctuate. Second, those fluctuations will be unwittingly used as a Rorschach test by everyone with a political axe to grind.

Re: Stocks Off Sharply as Market Upheaval Grows

#202

Post by acconrad » Mon, Aug 24, 2015, 4:10 PM UTC

rsmckinney wrote: post #183

acjohnson55 wrote: post #152

A whole lot of aphorisms in this commentary about falling knives and dead cats, but very little actual information. If you're trying to time the bottom you may as well take your money to the blackjack table. The quants are probably going to make a bunch of money, but if you're just a regular person, you should probably just continue making your regularly scheduled 401k contributions and diversified investments. Histo…

"Historically speaking" Historically speaking, when has the Fed kept interest rates at ZERO for 7 years? After pumping QE full throttle at $80B/mo? The economy has been in continuous "recovery" mode since '08, but not much has actually recovered. The market is going to collapse my friend because, historically speaking, we are in dark, uncharted territory and have lost our way back.

We were also in uncharted territory when the stock market collapsed in 1929. The market had never crashed like that before.

The market had also never crashed like 2000 because the internet tech sector had never existed like that before.

The market had also never crashed like in 2008 because home loans had never been so lax in terms of lending such highly-leveraged loans to such low quality lenders.

Every new crash lies within dark, uncharted territory because no one can predict the future and a crash could only come about from a set of new circumstances we couldn't have predicted before (or else it wouldn't have crashed).

Re: Stocks Off Sharply as Market Upheaval Grows

#203

Post by dave_sullivan » Mon, Aug 24, 2015, 4:13 PM UTC

acjohnson55 wrote: post #152

A whole lot of aphorisms in this commentary about falling knives and dead cats, but very little actual information. If you're trying to time the bottom you may as well take your money to the blackjack table. The quants are probably going to make a bunch of money, but if you're just a regular person, you should probably just continue making your regularly scheduled 401k contributions and diversified investments. Histo…

Ah, but those quants are going to make a bunch of money...

There's a cottage industry forming around finding market distortions caused by bad algos. You'd think that there wouldn't be a bunch of bots running around making stupid decisions, but there are a lot of bots that haven't been updated in some time and were put in place according to some idealized rule-based model in some esoteric area of finance that one guy came up with.

It's kind of like asking yourself seriously how many computers out there are running outdated software. The less fundamentals matter, the more computers handle various activities that have a more or less direct impact on prices of marketable securities, the more this is a valid strategy. It's basically anomaly detection on very messy data.

If transaction costs keep coming down and data becomes cheaper (both of which seem likely), trading as an independent might become less ludicrous than it is. And to be clear, it is currently ludicrous. Transaction costs will eat up any potential gains on the retail side unless you're operating with very large amounts of money.

Re: Stocks Off Sharply as Market Upheaval Grows

#204

Post by iaskwhy » Mon, Aug 24, 2015, 4:14 PM UTC

saryant wrote: post #67

kasey_junk wrote: post #35

Earlier quoted context omitted.

This is only true if your investment horizon is sufficiently long (I expect you know this, but it's important to point out for correctness).

(Not writing this for your benefit but for passer-by who may not be familiar) The unwritten context of "buy and hold an index fund" is that it's for retirement—people with 20, 30 or 40 years before they actually need the money. That's enough time to ride out swings in the market. If you need the money to buy a house or start a company in a few years, keep it in cash.

Disclaimer: I don't know much about this.

Let's say I'm 30 and want to save for retirement and let's imagine these crashes keep happening at around the same frequency (every 8 years or so?). This means when I reach my retirement age I might have to wait around 8 years for the market to rebound if I'm not lucky enough to buy my shares on the bottom of the charts, right?

The reason I'm asking is because I keep reading about how an index fund will eventually, given time, be worth it, even with these frequent crashes of late, but when I'm 60 it might not be possible for me to wait for a better time to cash out, in particular given my country's (men) life expectancy of around 75. In my view, this doesn't seem as safe as it sounds but I might be missing something.

Let's pretend I have my own retirement fund as a savings acount at around 1%, a very slow but pretty much safe growth. This way I might end up having with a more stable outcome when actually retiring which I believe is what most people would be looking like. I hate reading a market crash could wipe out poor and middle class retirement funds and have a hard time understanding the point besides greed or lack of knowledge.

Again, I'm most probably the one with lack of knowledge on this, just sharing my doubt as a very very conservative investor, if at all.

Re: Stocks Off Sharply as Market Upheaval Grows

#205

Post by Cshelton » Mon, Aug 24, 2015, 4:15 PM UTC

logicchains wrote: post #71

Cshelton wrote: post #6

I think it's a bad sign when they can write an article and get it out in under 25 minutes...but by the time they release the article, the market has gone up by half the amount it fell on opening. This market is severely flawed.

Would you consider it less flawed if it hadn't rebounded after the drop? I thought being able to recover quickly from market shocks was considered a good thing.

I am considering it flawed in that we shouldn't have these drops, or gains,...this volatility, like we have today. The high frequency trading, the quarterly outlook, the amount of emotion, etc in the market is flawed.

The average person should not have to worry about the market... ever. It shouldn't be the massive, speculative thing that it is today. Short term trading, as it is, needs to stop. Business does not work like that and their stock prices should not either.

This is a very surface level explanation, I could write a paper and go on forever. To sum it up, we shouldn't have huge corrections because we shouldn't have 'cheer-leader'ed it up in the first place.

Re: Stocks Off Sharply as Market Upheaval Grows

#206

Post by brianclements » Mon, Aug 24, 2015, 4:16 PM UTC

dataker wrote: post #132

code4tee wrote: post #7

Broadly speaking the US economy is quite healthy and people were expecting a correction in the stock market for some time. Within tech, it will have some negative impact on the plans of some companies as it will be harder to get lofty valuations based on 'fluff'... during such times investors want to see hard facts and real results to back-up value--but that's a broader trend thats been slowly developing for some tim…

Regardless of your ideological background, you cannot possibly assert the U.S economy is healthy. 0% interest rate for several years is not healthy. QE is not healthy. 100+ % debt:GDP ration is not healthy. Inflating assets is not healthy. A vanishing middle-class is not healthy.

>100+ % debt:GDP ration is not healthy

By itself, there's no reason it's unhealthy if it's spent on solid investments in the country. After WWII when it was last way above 100%, the composition of that spending had a much better effect on the country. Now? What's the nature of the current debt? I'd agree that it's not so wisely spent.

Re: Stocks Off Sharply as Market Upheaval Grows

#207

Post by forgetsusername » Mon, Aug 24, 2015, 4:16 PM UTC

MCRed wrote: post #58

ramblerman wrote: post #43

Earlier quoted context omitted.

Thank you. This cognitive fallacy of "I knew" and "I was saying it long ago" etc... really irks me. Especially in something like stocks you are 100% right, put your money where your mouth is and spare us the story of your grand predictive prowesses.

I predicted the 2008 crisis in 2001. (Well an article on http://mises.org made it clear it would happen.) This was before the housing bubble started to inflate, and was easy to expect due to the changes in the CRA and the artificially low interest rates. I profited from the bubble quite well, decided the top had been hit when things got really wonky and got out of the market in 2007. I was a year early, but I'm not c…

>downvoted across all of my comments

Maybe you're being down-voted because you're just a guy on the internet, bragging about how you saw it coming (7 years in advance!), timed it perfectly, made a bunch of money, and are now lecturing us on how it's "easy"...without a shred of evidence?

Re: Stocks Off Sharply as Market Upheaval Grows

#208

Post by wiremine » Mon, Aug 24, 2015, 4:17 PM UTC

cryoshon wrote: post #83

wiremine wrote: post #38

Earlier quoted context omitted.

The participation rate is down 3.3% from 2005 [1]. Given the huge shift in demographics over the last 10 years [2], I don't think that's a data point that screams "smashed." [1] http://data.bls.gov/timeseries/LNS11300000 [2] Lost of baby boomers retiring and Gen X being such a small demo compared to the boomers and the millennials.

The demographic shift angle doesn't make sense. The boomers are slowly exiting the workforce, sure-- on an individual basis, as they can choose to retire at different times. Many are having to defer retirement or not retire. This isn't an orderly mass exit, it's a trickle. Millenials are a far larger generation than the boomers, and are rapidly leaving college and attempting to enter the workforce-- 100% of them are…

> Millenials are a far larger generation than the boomers

Depends on your definition of "far larger".

- The Millennial cohort is 83.1 million

- The Boomer cohort is 75.4 million, 90% the size of the Millennials.

Source: https://www.census.gov/newsroom/press-releases/2015/cb15-113...

Re: Stocks Off Sharply as Market Upheaval Grows

#209

Post by rwhitman » Mon, Aug 24, 2015, 4:17 PM UTC

piratebroadcast wrote: post #126

I'm a Web Developer with a few years of experience on the East Coast. I do OK, salary wise. I missed the first bubble and am not on the East Coast. What should I expect from this? Layoffs mean more developer supply? Just trying to be cautious and prepared for worst case.

Basically if this is truly something ugly for the US economy and not just a temporary correction, which it doesn't seem to be.. yet.. based on my personal experience circa 2008 as a web developer, here's what I saw from my perspective -

First, older businesses, who have survived other crashes, start tightening their budgets ASAP, pulling back on expensive tech investments. So there's a contraction in big outsourced tech projects with bigger businesses that can start within weeks. If you have big things planned with these guys, close the deal right.now.

Then, many startups who have been too reliant on investor capital for survival get into a pickle when investors stop being as generous dishing out venture and angel rounds. Any company dependent on raising a round of financing in the next 6 months is in a tough place. If you work for any of these guys, polish your resume.

So you start to see layoffs at big consulting firms, then startups start to fail when funds get antsy. This puts a lot of engineering talent on the market, first at job interviews and later for freelance after they've been on the market for a few months. Increased supply means lower salaries and freelance rates. Last time around the big tech cos like Google and Facebook went on a feeding frenzy and drove the supply down, and the mobile thing happened. So salaries bounced back and then went bezerk

I have a feeling if this is another big one, this time around there will be less feeding frenzy and more pruning - the tech giants can use this as an excuse to lay off engineers hired on inflated salaries and not performing. The mobile bubble popped already, and the current bubble is in AI and big data which needs more more specialized brainpower and probably won't pick up a lot of the supply

We also have tons of very junior developers swamping the market with training from coding bootcamps right now. So at the low end of the developer spectrum there's potentially a huge surplus. If things get sour in the market this will be a very tough time for an entry level developer, a pay cut for a mid level developer, and a minor worry for a good developer. For companies with healthy cash reserves, it's a big win though..

Re: Stocks Off Sharply as Market Upheaval Grows

#210

Post by saryant » Mon, Aug 24, 2015, 4:19 PM UTC

iaskwhy wrote: post #204

saryant wrote: post #67

Earlier quoted context omitted.

(Not writing this for your benefit but for passer-by who may not be familiar) The unwritten context of "buy and hold an index fund" is that it's for retirement—people with 20, 30 or 40 years before they actually need the money. That's enough time to ride out swings in the market. If you need the money to buy a house or start a company in a few years, keep it in cash.

Disclaimer: I don't know much about this. Let's say I'm 30 and want to save for retirement and let's imagine these crashes keep happening at around the same frequency (every 8 years or so?). This means when I reach my retirement age I might have to wait around 8 years for the market to rebound if I'm not lucky enough to buy my shares on the bottom of the charts, right? The reason I'm asking is because I keep reading…

As you near retirement, you shift your asset allocation to be more conservative (more bonds, less equity). You don't need all of your retirement funds the day you turn 65.

http://www.bogleheads.org/wiki/Bogleheads%C2%AE_investment_p...

Unless you're able to make huge contributions, a savings account is unlikely to provide the funds you need for retirement.