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Dow plunges 1000 points

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191–200 of 365 posts

Re: Dow plunges 1000 points

#191

To put things in perspective: https://en.wikipedia.org/wiki/List_of_largest_daily_changes_... Saying "Biggest Point Drop in History" is a deliberate attention-grabber and incites more fear than it probably should. We should be more concerned with percentage changes and at -4.6% this doesn't even make the top 20 daily percentage drops, which cuts off at -6.98% for number 20 (see above link).

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Re: Dow plunges 1000 points

#192

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. :)

I mean, if you read Random Walk on Wall Street, you'd think that a smart investor wouldn't try to time the market.

I don't have the stat in front of me, but it's often repeated that all of the biggest gains in the market over the past several decades have occurred on just a handful of days. If you missed those days, you missed those gains.

That is to say that if you try and outsmart the market, the odds are pretty stacked against you that you'll not buy back in at the right time (or you could be wrong about the timing of the correction in the first place.)

This isn't investment advice – usual disclaimer, etc. But, I'd definitely skim through Random Walk if you have a chance.

Re: Dow plunges 1000 points

#193

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…

I wasn't a big fan of the tax cuts, even though I'll see the proceeds from them. Some think that the less you pay, the better, all the way to zero. In my view, taxes are like porridge, you don't want it too hot or too cold. The best amount is not too little or too much. I too worry about the deficit and think we need to tax the biggest gainers a bit more and provide safety nets for the economic losers so they can breath easy and participate in the economy a little more than just sustenance levels. As we've written and read about here in the past, it's expensive to to be poor (e.g. visiting the ER vs. early prevention, overdraft fees, etc). That may not be what you like to hear, but I also don't think we should tax the gainers too much either. There needs to be an incentive to to do well and I'd be against cutting into that too deeply.

Re: Dow plunges 1000 points

#194

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…

how can you simultaneously care about the deficit and support the tax cuts. Cognitive dissonance?

Um... by reducing spending.

Re: Dow plunges 1000 points

#195

To put things in perspective: https://en.wikipedia.org/wiki/List_of_largest_daily_changes_... Saying "Biggest Point Drop in History" is a deliberate attention-grabber and incites more fear than it probably should. We should be more concerned with percentage changes and at -4.6% this doesn't even make the top 20 daily percentage drops, which cuts off at -6.98% for number 20 (see above link).

But I think it clearly shows the standard of journalism we live with. This is a headline about numbers so we can easily debunk it by looking at the numbers, but almost every headline you read has been sensationalized in a similar fashion. This is the kind of reporting you expect from tabloids.

Re: Dow plunges 1000 points

#196

To put things in perspective: https://en.wikipedia.org/wiki/List_of_largest_daily_changes_... Saying "Biggest Point Drop in History" is a deliberate attention-grabber and incites more fear than it probably should. We should be more concerned with percentage changes and at -4.6% this doesn't even make the top 20 daily percentage drops, which cuts off at -6.98% for number 20 (see above link).

You're silly if you just look at one day point/percentage drops. I'm not saying we're in for another recession, but many of the other events in the table you linked are actually part of a cluster of big drops, spread over several days. There was a ~600pt drop last Friday. It'll be fun to see what the rest of the week is like!

Re: Dow plunges 1000 points

#197

To put things in perspective: https://en.wikipedia.org/wiki/List_of_largest_daily_changes_... Saying "Biggest Point Drop in History" is a deliberate attention-grabber and incites more fear than it probably should. We should be more concerned with percentage changes and at -4.6% this doesn't even make the top 20 daily percentage drops, which cuts off at -6.98% for number 20 (see above link).

But I think it clearly shows the standard of journalism we live with. This is a headline about numbers so we can easily debunk it by looking at the numbers, but almost every headline you read has been sensationalized in a similar fashion. This is the kind of reporting you expect from tabloids.

I dunno, I thought the BBC's coverage laid out some possible rationales without being too over-the-top. And while it isn't a tabloid, they aren't exactly a finance-focused paper:

http://www.bbc.com/news/business-42942921

>...It is the largest fall in percentage terms since August 2011, when markets dropped in the aftermath of "Black Monday" when Standard & Poor's downgraded its credit rating of the US.

>US investors are reacting to small but significant changes in the outlook for the American economy, and what that might mean for the cost of borrowing.

>The stock market sell-off accelerated on Friday when the US Labour Department released employment numbers which showed stronger growth in wages than was anticipated.

>If salaries rise, the expectation is that people will spend more and push inflation higher.

>To keep that under control, America's central bank will need to raise interest rates, which is what has spooked investors who were expecting the US Federal Reserve to increase rates only two or three times this year.

>They now predict there may be a few more interest rate rises on the horizon.

>Monday's sell-off was driven by firms moving to sell stocks to put more money into assets such as bonds which benefit from higher rates, says Erin Gibbs, portfolio manager for S&P Global Market Intelligence. ...

Re: Dow plunges 1000 points

#198

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…

I wasn't a big fan of the tax cuts, even though I'll see the proceeds from them. Some think that the less you pay, the better, all the way to zero. In my view, taxes are like porridge, you don't want it too hot or too cold. The best amount is not too little or too much. I too worry about the deficit and think we need to tax the biggest gainers a bit more and provide safety nets for the economic losers so they can bre…

> I wasn't a big fan of the tax cuts, even though I'll see the proceeds from them. Some think that the less you pay, the better, all the way to zero.

So I take it you’ll be paying extra on your federal taxes next year and earmarking the difference for the federal debt or other things you find worthwhile?

Re: Dow plunges 1000 points

#199

Earlier quoted context omitted.

how can you simultaneously care about the deficit and support the tax cuts. Cognitive dissonance?

Um... by reducing spending.

The current admin has proposed a multi billion dollar wall (turns out we will pay for that after all), a trillion dollar infrastructure project, and increases in military spending. What is this "reduced spending" you're talking about?

Re: Dow plunges 1000 points

#200
post #39

Earlier quoted context omitted.

Was 35 I think. They temporary halted inverse derivatives like SVXY.

I highly doubt the halt will be very temporary. SVXY and XIV are undergoing forced unwinds after-hours and will very likely be terminated. XIV in particular terminates at an 80% position loss, per its prospectus.

Actually the intraday indicative value, i.e. the value of the underlying VIX strategy has to go down by 80%, not the market price of the ETN.

Though right now I think we are close. The ticker is XIVIV. I just closed my bbg but I think we were pretty much there. I don't know if non standard trading hours matter though.

The trade was too crowded. Too many people shorting the VIX without looking at the risks. This ETN lost 80% of its value in a matter of days in 2011, and tanked 40% intraday in Aug 2015. It is too easy to forget the risks.

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