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Dow plunges 1000 points

cnbc.com

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Re: Dow plunges 1000 points

#31

Post by psyc »

cpncrunch wrote: post #11
nodesocket wrote: post #4

At one point down -1,600. I did a little buying today (BRK.B), this was margin calls, algo trading, and fear.

It's certainly a good idea to buy when stocks are undervalued. However at the moment they are likely still overvalued, and it's also quite early days in this current sell-off. I just sold my entire portfolio (apart from retirement funds) earlier this morning, as we want to buy a house later in the year and don't want to get trapped if the stock market completely crashes.

I’ve been watching for a sell signal for about 6 months, and I also got (mostly) out this morning.

Re: Dow plunges 1000 points

#32

Post by ganeshkrishnan »

t3po7re5 wrote: post #26
valuearb wrote: post #14

I hate to be nitpicking about good news, but the S&P 500 is down less than 7% from it's peak, that's hardly a crash. Especially after gaining 26% over the previous year. And, after increasing over 90% the last 5 years. Obviously, either way a decline in the stock market indexes is good news for almost everyone. I'm hoping for a real crash as I need to save lots more money, not just for my retirement but also for my k…

There was a flash-crash that started around 3PM EST and recovered by 3:16

This probably spiked the VIX The fear index went up like crazy

Re: Dow plunges 1000 points

#33

Post by hsitz »

valuearb wrote: post #25
dvfjsdhgfv wrote: post #18

Earlier quoted context omitted.

> Obviously, either way a decline in the stock market indexes is good news for almost everyone. I'm hoping for a real crash as I need to save lots more money, not just for my retirement but also for my kids college. Could you elaborate?

Buffett had a good quote about it once that I can't find now, but essentially during most of your life you will be a net buyer of stocks. Only at the end, during your retirement, will you be a net seller and only then will you want high prices. Until then, the less you pay for your stock purchases, the better your long term gains will be.

Another way of thinking about it is: on average, stock value over the long term (20+ years) is very likely to be in range of, say, 5%/year, plus or minus (actual number is not that important for our purpose here), after adjusting for inflation. If stocks have been on a recent runup, gaining, say, 50% or 100% over a period of a few years, then they are very likely to grow more slowly than average (i.e., revert to the mean) over the coming years. If you buy during period of inflated prices you will realize a lower than average return if you're holding over the long term.

Robert Shiller (Yale finance professor, of Case/Shiller housing index) likes to make the following analogy. Predicting the stock market is basically the opposite of predicting weather. With weather our short-term predictions can be fairly accurate, but our long term predictions are very poor. With the stock market it's the reverse, short-term predictions are worthless, but long term predictions are generally fairly accurate.

Re: Dow plunges 1000 points

#34

Post by adsfasdfsad111 »

dvfjsdhgfv wrote: post #8
koolba wrote: post #2

Call me old fashioned but it's a nice change of pace to see news about traditional market indexes crashing rather just crypto currencies.

I'd prefer to see the news about cryptocurrencies crashing rather than traditional markets.

Stock market is way overvalued. Prepare for a crash.

Re: Dow plunges 1000 points

#36

Post by valuearb »

gizmo385 wrote: post #27
valuearb wrote: post #16

Earlier quoted context omitted.

Nearly my entire net worth is in BRK.B, and I wouldn't buy at these prices. If you track it's average Price to Book value it's close to the highest ratio it's ever had. I believe it broke over 1.7 last week. When it hit it's all time high P/B ratio of 2.0 in the first internet bubble, buyers returns were very poor for the next decade. I'm hoping for a much bigger sell-off so I can pick up some more below $150.

Seems unnecessarily reckless to put almost all of your net worth into a single stock.

Berkshire has more than 100 subsidaries and a massive stock portfolio. I understand it fairly well, and it doesn't have any significant risks, other than Buffett dying. And if the price tanks when he dies, I'll use that as an opportunity to buy more.

Because I have a good grasp of what it's actual intrinsic value is, I can wait to buy more until it's cheap which increases my long term returns. That's much harder to do with an index fund, indexes don't get as cheap as BRK gets, and tend to remain overpriced. For example, 15 PE used to be considered a fairly priced stock market, but for the last 20 years or so the market has mostly been much higher than that.

Re: Dow plunges 1000 points

#37

Post by workthrowaway27 »

adsfasdfsad111 wrote: post #34
dvfjsdhgfv wrote: post #8

Earlier quoted context omitted.

I'd prefer to see the news about cryptocurrencies crashing rather than traditional markets.

Stock market is way overvalued. Prepare for a crash.

I'd be interested to see the value of the stock market compared to interest rates. My bet is the market is only a little bit high if you account for how low interest rates have been for the past ~10 years.

Re: Dow plunges 1000 points

#38

Post by deckard1 »

valuearb wrote: post #25
dvfjsdhgfv wrote: post #18

Earlier quoted context omitted.

> Obviously, either way a decline in the stock market indexes is good news for almost everyone. I'm hoping for a real crash as I need to save lots more money, not just for my retirement but also for my kids college. Could you elaborate?

Buffett had a good quote about it once that I can't find now, but essentially during most of your life you will be a net buyer of stocks. Only at the end, during your retirement, will you be a net seller and only then will you want high prices. Until then, the less you pay for your stock purchases, the better your long term gains will be.

Right now we have high prices. We're also in the boomer retirement period, of 2014-2023 or so. I wonder what it's going to take to cause boomers to get skittish and panic sell their portfolio. In 2008, they still had time. Now it's a bit different.

Re: Dow plunges 1000 points

#40

Post by JKCalhoun »

valuearb wrote: post #14

I hate to be nitpicking about good news, but the S&P 500 is down less than 7% from it's peak, that's hardly a crash. Especially after gaining 26% over the previous year. And, after increasing over 90% the last 5 years. Obviously, either way a decline in the stock market indexes is good news for almost everyone. I'm hoping for a real crash as I need to save lots more money, not just for my retirement but also for my k…

Not a crash, but the gains of January have just been wiped out in the few days of February trading.
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