Biggest by absolute value or by percent?
These days you can assume any number in a headline is as big as the editor could reasonably make it without violating too many technicalities.
Dow plunges 1000 points
151–160 of 365 posts
Re: Dow plunges 1000 points
#152Earlier quoted context omitted.
There is no way we enter a recession this year unless something comes out of left field. Interviews with hundreds of economists and they think this is the least likely year to have a recession in history. Gdp is not going to drop due to the tax cuts. The cuts might cause problems in a few years but you have to realize marker doesn't correlate with the economy. In fact it's dropping because the economy is picking up s…
> Interviews with hundreds of economists and they think this is the least likely year to have a recession in history... user furiously shorts the entire economy
lol. seriously. When has there ever been a recession that all economists predicted the months before it happened?
Re: Dow plunges 1000 points
#153It's grim to see how unprepared websites are for sudden activity like this. I'm having a tough time logging in to my accounts.
On the bright side, at least sysadmins are first in line for a bank run.
Re: Dow plunges 1000 points
#154Earlier 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…
Long term returns over the last century have been about 3%, after taxes, inflation, etc. If have to do some digging to find the chart.
"Long term" is longer than 20 years.
Re: Dow plunges 1000 points
#155Earlier quoted context omitted.
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.
Did you mean inflation rates? Because the interest rates control the cost of new money, while inflation reflects the change in value.
No, I meant interest rates. There's an inverse correlation between interest rates and asset prices. Most governments have been keeping interest rates low since the financial crisis to spur investment, which causes asset rates to rise. So while asset prices are high on an absolute level interest rates are also much lower than the historical average. My guess is that if you account for interest rates being so low assets aren't priced all that highly.
Re: Dow plunges 1000 points
#156Let's say you're a smart investor, and you think a big crash is coming. Right now everything you have is in stocks. What do you move it to to hedge your risk?\\ Edit: To clarify, I don't have everything in stocks. I'm just looking for good advice on how to further diversify. I'm aware that timing the market is a fool's errand. :)
Bonds traditionally. Commodities if you know anything about them. Gold/bitcoin if intrinsic value is too 20th century.
Re: Dow plunges 1000 points
#157Unprecedented growth leads to unprecedented correction. This is profit booking but huge players. The market will stabilize and start rising again. The fundamentals are still strong
Last time I heard a lot of people saying "the fundamentals of our economy are still strong" was fall 2008. They are not bad, but you need to recall that the nominal full employment comes with far less financial security than in previous cycles as much of it is in part-time jobs, the gig economy etc., and demand is thus considerably more elastic than in an economy dominated by full-time jobs.
Its different than 98. We had a huge housing bubble. We had people getting no income loans. It doesn't seem the same in this case. The biggest risk is going to be the 1 trillion dollar deficit which is resulting in rising yields which makes stocks less appealing. However if you have a lot of inflation you need to put your money in some assets since the value of the dollar is going to be lower.
Re: Dow plunges 1000 points
#158Inflation finally is going up after years and we can get out of this stagnating economy. Wage growth up 3% in new January report and so we can finally expect interest rates to rise faster like they did in the past. Many investors, especially institutional ones have for years thought the stock market has been over priced but where else to park money because interest rates are too low? Overall the 3% wage growth is hug…
Didn't the top income tax rate decrease by something like 2.5%? Doesn't seem like a lot of room for it to have decreased but still be "significantly higher" than it ended up at.
Re: Dow plunges 1000 points
#159What's with the 600 pt 3pm sell-off and recovery within 5 minutes? Algorithms? I thought massive swing effects are supposed to be under control now?
> I thought massive swing effects are supposed to be under control now?
The optimal strategy during a crash is to sell everything as soon as possible and buy again at the bottom. Massive swings are endemic to the market.
Re: Dow plunges 1000 points
#160A market is like a forest and a market crash is like a forest fire. In order for the market to grow and be healthy in the long term, a purge every now and then is necessary.
Are you paraphrasing Batman Begins? If not, that's an amusing coincidence.
"When a forest grows too wild a purging fire is inevitable and natural"