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Dow plunges 1000 points

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Re: Dow plunges 1000 points

#271

Post by kaycebasques »

pfarnsworth wrote: post #269
longerthoughts wrote: post #186

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).

The only ones that matter are the ones that occur after roughly 1995. Most people weren't in mutual funds or stocks the way they are today. When the stock market dropped 50% in 2008/2009, so many people in retirement age were ruined because their retirement money was in the markets. A greater number of people's financial health is based on the stock market in 2018 than it ever did in the 1930s or 40s. In 1987, when t…

> When the stock market dropped 50% in 2008/2009, so many people in retirement age were ruined because their retirement money was in the markets.

Interesting perspective on why central bankers have seemed so complacent about high stock valuations.

I've also heard commentaries that the wealth effect was one of the tactics used to drag the US out of the Great Recession.

https://en.wikipedia.org/wiki/Wealth_effect

Re: Dow plunges 1000 points

#272

Post by dahart »

state_less wrote: post #193
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…

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 quite like your reasonable, balanced approach. I've always been curious about your last point though:

> There needs to be an incentive to to do well and I'd be against cutting into that too deeply.

I've never understood why any tax rate would be a disincentive to do well. Even if the tax rate was 90%, doing well is doing well. If I make more money, I get to keep more money, even if taxes are high.

If we have tax brackets, then yeah sure there could be an unlucky minority of people who just barely land in a higher bracket than someone just under the line, so they pay a higher percentage than someone else.

But if you're well above the threshold, the amount you keep is more the more money you make before taxes. Isn't the primary incentive at all times to make more money, regardless of taxes? Or is the idea of paying a higher percentage than someone else a strong enough motivator to actually keep people from trying? Or am I missing something?

Re: Dow plunges 1000 points

#273

Post by usaar333 »

propman wrote: post #213
dcosson wrote: post #158

Earlier quoted context omitted.

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.

The top rate before was 39.6% for over 480k, over 480k now hits the 35% and 37% mark and that is a HUGE difference. Let's only consider how that effects the top 1% and a rough estimate. Currently that's around 1.73M filers with an average income of 1.4M a year. Under the new tax rules the average 1% will save $40,000 over 480k (will obviously save more under 480k but not counting that). That totals out to be $692B in…

> Under the new tax rules the average 1% will save $40,000 over 480k

It'd probably a lot lower.

You need to consider other code changes. For instance a filer in CA with W2 taxable income of $1.4M saves only $4,500 due to the loss of state income tax deduction offsetting the vast majority of beneficial rate changes.

ref: http://taxplancalculator.com/

Re: Dow plunges 1000 points

#274

Post by cmontella »

longerthoughts wrote: post #232
cmontella wrote: post #199

Earlier quoted context omitted.

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?

This is where the opposing view will typically point at social programs, for starters. I suspect that no amount of feasible cuts to social programs would fully subsidize the spending that you mentioned and reduce the deficit but don't have the numbers. To their point though, a person could reasonably support the tax cuts and seek to reduce the deficit on the premise that reduced spending would satisfy the latter over…

> To their point though, a person could reasonably support the tax cuts and seek to reduce the deficit on the premise that reduced spending would satisfy the latter over time. Whether or not the current administration is making a genuine attempt to do so is a separate argument and one that their comment did not mention.

Right, that would be an argument, but not one that's on the table. The Republicans and the President justified the tax cuts not by saying they would subsequently reduce spending, but by saying the cuts would invigorate the economy so much, any reduction in revenue directly caused by the cuts would be offset by gains in GDP.

Re: Dow plunges 1000 points

#275

Post by dragonwriter »

jorblumesea wrote: post #259
dragonwriter wrote: post #183

Earlier quoted context omitted.

OTOH, stock market crashes are not uncorrelated with recessions.

There are actually a lot of examples where this is not true 1987 stock crash? No recession. 1980-82 recession? No stock crash. 1992 recession? Also no stock crash.

There's a big difference between “X is correlated with Y” and “X both implies and is implied by Y”.

Instances that demonstrate that the latter is not true do not contradict the former.

Re: Dow plunges 1000 points

#276

Post by DaniFong »

astrodust wrote: post #243
matwood wrote: post #98

Earlier quoted context omitted.

So are you making the case the US is going through a systemic change away from growth, and will start a multi-decade economic contraction?

Even during the darkest days of the "lost decade" in Japan their companies never gave up on manufacturing and innovating. There were struggles, failures, but also successes. In that time Sony managed to dominate televisions and, later on, game consoles. The level of utter destruction the US economy will face if it continues to double down on hedge-fund style acquisition/mergering of every one plus dog is hard to fath…

This.

Re: Dow plunges 1000 points

#278

Post by cmontella »

richardknop wrote: post #267
ajmurmann wrote: post #244

Earlier quoted context omitted.

Trying to find a correlation between how the actual economy is doing and the current president is in my opinion a foolish endeavor. It takes way too long for a policy change to actually impact the economy and on top of that it's pretty much impossible to isolate the cause of the economic change. How the market reacts in the short term is even less relevant since it really only says how a certain group of people likes…

> Every time a president claims economic growth to be because of them they reveal themselves to either be a liar or a fool. Every president claims credit if economy is doing well. Same for Obama, Bush and Clinton. All were claiming credit for their periods of solid economy. That's just what you do as politician, take credit for good things and try to blame somebody else for bad things. Part of the political professio…

True, but it's rare that a President claims on an almost daily basis that he alone is responsible for the current standing of the stock market specifically. Just last week he claimed had Clinton been elected, the market would have lost 50% of its value.

Re: Dow plunges 1000 points

#279

Post by arbuge »

jimmytucson wrote: post #257
arthurjj wrote: post #114

For most HN readers this means you should be buying more stock.

Right. Better yet, wait for the end of this correction, then buy more stock. Better still, sell any stock you own, and at the end of this correction, buy it all back and more at a cheaper price. Yeah, that’s the ticket! Guys, all we need to do is find out when this correction is going to end. I feel like we can narrow it down to between one day and one year from now.

>> wait for the end of this correction

How exactly do you decide the end of it has been reached?

Re: Dow plunges 1000 points

#280

Post by CodeSheikh »

Just by looking at the continuously negative % drop over the historical data, there's a pattern in 2008 (The Crash)

9/15/08 9/29/08 10/7/08 10/9/08 10/15/08 10/22/08 12/1/08 −4.42 −6.98 −5.11 −7.33 −7.87 −5.69 −7.70

8/4/11 8/8/11 8/10/11 −4.31 −5.55 −4.62

8/21/15 8/24/15 −3.12 −3.57

2/2/18 2/5/18 −2.54 −4.60

For 2018 to reach 2008 state, lets see if there are more significant (>-4%) drops in 2018 for us to start freaking out.

Again this by all means is not a financial model, it is something that I put together to tell myself "Keep Calm"

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