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Dow plunges 1000 points

cnbc.com

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Re: Dow plunges 1000 points

#41

Post by logfromblammo »

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.

It is acceptable to put all your eggs in one basket if the basket has been engineered to preserve the eggs through a variety of catastrophes.

But in this instance, the single stock is a holding company that is already diversified across several industries. Anything that would negatively impact Berkshire Hathaway to a greater extent than the market as a whole is likely to be the product of intentional malice. As it is now, it's akin to an extremely actively managed mutual fund, in that they generally have at least one seat on the board--or at least VIP seats at the shareholder meeting--for anything they invest in.

Re: Dow plunges 1000 points

#42

Post by sehugg »

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.

Well, you've got both today :) BTC hit a daily low of 6600 at about the same time that the Dow bottomed out.

Re: Dow plunges 1000 points

#43

Post by JoshTriplett »

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.

I once heard it described as "the market is on sale right now".

Re: Dow plunges 1000 points

#44

Post by [deleted] »

workthrowaway27 wrote: post #37
adsfasdfsad111 wrote: post #34

Earlier quoted context omitted.

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.

[deleted]

Re: Dow plunges 1000 points

#45

Post by JKCalhoun »

ganeshkrishnan wrote: post #6
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.

Different reasons. I suspect this is due to traders taking their yearly profits and then stampede set in. The volatility index has a very sudden spike at the end of the market https://finance.yahoo.com/chart/%5EVIX/

> I suspect this is due to traders taking their yearly profits

Thought that happened in December, not February. A short year for traders this year, I guess.

(unintentional pun)

Re: Dow plunges 1000 points

#47

Post by makomk »

deckard1 wrote: post #38
valuearb wrote: post #25

Earlier quoted context omitted.

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.

There's also apparently something interesting happening with the bond market. A fairly standard retirement strategy is to gradually move your investments into more stable bonds as your retirement date approaches. Except that because of boomer retirement, there's quite a lot of people doing this - mix in some quantitative easing, and suddenly a lot of money is chasing a limited pool of bonds, causing low yields and other interestingness: https://www.wsj.com/articles/decade-of-easy-cash-turns-bond-...

Fundamentally, I think there might be a deeper issue at play here. There's a common (and dubious) argument that Social Security is a ponzi scheme because the payments to retirees come from funds contributed by new investors. On some level, though, all of retirement is a little ponzi-like; ultimately you're always relying on the current working population to pay for your retirement, no matter what investments you put into your pension fund. What happens if that goes pop?

Re: Dow plunges 1000 points

#48

Post by BoiledCabbage »

sabujp wrote: post #35

anyone watching daily technicals would have seen the RSI and MACD dropping last week, this should not be a surprise to anyone but noobs

And how many times have RSI and MACD droped and market not collapsed?

You get zero credit for predicting a drop after it happened. And also little credit for "predicting" something based on any indicator with frequent false positives.

Saying "I knew it" because one of 50 indicators showed something the day before is no different than what's happening in non-reproducability of research. State claims and indicators before and shows a track record of prior claims. But please don't after the fact claim "you knew it", everyone is a "newb". It subtracts from the conversation.

Re: Dow plunges 1000 points

#49

Post by enoch_r »

hsitz wrote: post #33
valuearb wrote: post #25

Earlier quoted context omitted.

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…

> they are very likely to grow more slowly than average (i.e., revert to the mean)

I mostly agree with you, but this is basically the gambler's fallacy.

If I'm flipping a coin every second for days, and I hit a run of 10 heads in a row, "reversion to the mean" just means that the next 10 flips are likely to be less extreme than the previous 10. It does not mean that I should expect "more tails than usual" for the next flips. We revert towards the mean, not past it.

Re: Dow plunges 1000 points

#50

Post by encoderer »

deckard1 wrote: post #38
valuearb wrote: post #25

Earlier quoted context omitted.

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.

Most people close to retirement who have been fortunate to build savings rotate slowly into a more conservative portfolio, and retirement is decades long not a binary event.
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