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Dow plunges 1000 points

cnbc.com

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Re: Dow plunges 1000 points

#171

Post by adsfasdfsad111 »

DoreenMichele wrote: post #147
jedberg wrote: post #127

Let'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. :)

Non coastal real estate. You know, stuff that will still be land after the seas rise. Plus some company or other in the Netherlands exporting polder technology.

lol might as well get some canned food, bottled water and a shotgun while you're at it.

Re: Dow plunges 1000 points

#172

Post by fwdpropaganda »

Matt_Mickiewicz wrote: post #84

I was just reading: https://static1.squarespace.com/static/5581f17ee4b01f59c2b15... tldr; * The Global Short Volatility trade now represents an estimated $2+ trillion in financial engineering strategies that simultaneously exert influence over, and are influenced by, stock market volatility * Since 2009 Global Central Banks have pumped in $15 trillion in stimulus creating an imbalance in the investment demand for and…

I will never understand what HN downvotes. This was a cool conribution. Weird paper, but substantial.

Re: Dow plunges 1000 points

#174

Post by PoachedSausage »

hsitz wrote: post #141
svachalek wrote: post #119

Earlier quoted context omitted.

The classic explanation is that the economy is growing and thus the overall "pie" being shared is growing even if individual pieces are not as predictable. But I think broader and broader participation in the market via government policies like 401(k) has to be part of the story, and also I worry how much we try to extrapolate from modern financial history which is barely more than a single human lifetime.

William Bernstein has argued pretty well that the growth of economies over the long term has held pretty stable over (surprisingly) the last several hundred years. See his book, "The Birth of Plenty": https://www.amazon.com/Birth-Plenty-Prosperity-Modern-Create... The keys to economic growth he identifies are (1) property rights, (2) scientific rationalism, (3) capital markets, and (4) adequate transportation/communi…

He missed out (5) Abundant fossil fuels.

Re: Dow plunges 1000 points

#175

Post by prepend »

mcguire wrote: post #154
hsitz wrote: post #33

Earlier quoted context omitted.

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.

Cool. I’d like to see that chart because there will need to be some interesting assumptions about taxes.

The 20th century was particularly good and I think the average return was closer to 6 than 3.

Re: Dow plunges 1000 points

#176

Post by rmrm »

part of my biggest sell indication was a visit to the site zerohedge. They are a very bearish - gold centric site. I like to visit sites like these to balance out the generally optimistic news one sees elsewhere. Recently, I have noticed that the site has lost their commenters - they are all making fun of the site and how it cost them so much money, missing out on all these gains. I realized that completely aside from things like inflation upticking, the fed removing some QE, market being incredibly highly valued - that if one of the largest bear sites around had actually lost their crowd, that even that rank and file thought it was stupid to doubt that the DOW would only go up...it might be time to think about taking a step back. At least until post-Brexit next year.

Re: Dow plunges 1000 points

#177

Post by heurist »

bhouston wrote: post #3

I do worry that this is the end of the current bull market and we'll be entered into a recession in the next half year or so.

Investor sentiment from what I've seen has been that the tax cuts pushed the next recession to around 12 months from now. So I doubt this is that crash.

Re: Dow plunges 1000 points

#178

Post by MediumD »

propman wrote: post #102

Inflation 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…

"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?"

What information are you basing this off of? I'm not doubting you, just curious as to where one could find that sort of sentiment of institutional investors?

Re: Dow plunges 1000 points

#180

Post by heurist »

bduerst wrote: post #138
matwood wrote: post #105

Earlier quoted context omitted.

Stock market corrections do not always lead to or cause a recession (or vice versa). Many Americans do not even own stocks, so something like today will be a passing news item barely noticed. If you think a recession is coming, what will be the trigger(s)? Right now companies are making money, wages are finally growing, and jobless claims are near what some would say is full employment. The only real euphoria I see i…

>If you think a recession is coming, what will be the trigger(s)? Not in the immediate timeframe, but there are some potential breakers looming out there that have potential to hit in the next year or three. The first is inflation, and the fact that we just pulled a massive tax cut. This will probably lead to stock buybacks, throwing gasoline onto the already booming economy. Usually it's best to save the cuts for bu…

I recall hearing about a subprime auto loan bubble too.
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