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Dow plunges 1000 points

cnbc.com

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Re: Dow plunges 1000 points

#311

Post by refurb »

dmode wrote: post #221

I would not have worried too much of a Dow correction, but I feel like a trifecta of events are coming together that is a bit concerning. First, is the explosion of US government deficit which could potentially lead to austerity measures in the near future. Second is the threat of inflation and overheating. And third is the plunging savings rate of individuals. It almost appears that these three are moving to a confl…

Plunging saving rates? Saving rates jumped after the last crash. They are far higher in the US than countries like Canada, for example.

Re: Dow plunges 1000 points

#312

Post by d--b »

quickthrower2 wrote: post #288
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…

How is Volatility an asset, and how does one take advantage of this?

Banks sell derivatives indexed on vol, like vol swaps and var swaps.

VIX futures also reflect stock market volatility, and their prices are based on S&P option prices.

Re: Dow plunges 1000 points

#313

Post by cinquemb »

refurb wrote: post #309
cinquemb wrote: post #295

Earlier quoted context omitted.

If you're a normal person, who had a decently sized/exposed market retirement account in 2007, it took you about a decade to get back to the same level, inflation adjusted. That's a lot of risk for chasing inflation adjusted returns… Not to mention, there are a couple short volitilty ETFs that will be terminated soon, hope some long term ETF buyers won't be exposed to them or any big names they are holding who were e…

If you're a normal person, who had a decently sized/exposed market retirement account in 2007, it took you about a decade to get back to the same level, inflation adjusted. Jesus! What was this average person invested in? From the bottom of the market to back to the prior peak was 3 years for me. And I was so heavy in equities I lost 1/3 of my portfolio's value. Where does this "decade" come from? The DJIA is nearly…

I had in mind the ^RUA, which only started to break out from the previous top after 5 years, nominally, so you're right, not a decade, but not good for someone trying to retire within that time frame (which doesn't seem like you were).

Still, I worked for a fund that swing traded futures for better returns and less risk than holding the market during this period…

Re: Dow plunges 1000 points

#314

Post by valuearb »

gbacon wrote: post #130
valuearb wrote: post #36

Earlier quoted context omitted.

Berkshire has more than 100 subsidaries and a massive stock portfolio. I understand it fairly well, and it doesn't have any significant risks, other than Buffett dying. And if the price tanks when he dies, I'll use that as an opportunity to buy more. Because I have a good grasp of what it's actual intrinsic value is, I can wait to buy more until it's cheap which increases my long term returns. That's much harder to d…

The question is to what degree fickle investors will return without the perceived Buffett magic.

Berkshire has never been highly valued. It's never gotten a premium because of the "Buffett magic". If investors want to spurn it and let it trade close to book value, I'll happily buy even more.

Re: Dow plunges 1000 points

#315

Post by valuearb »

berberous wrote: post #120
valuearb wrote: post #36

Earlier quoted context omitted.

Berkshire has more than 100 subsidaries and a massive stock portfolio. I understand it fairly well, and it doesn't have any significant risks, other than Buffett dying. And if the price tanks when he dies, I'll use that as an opportunity to buy more. Because I have a good grasp of what it's actual intrinsic value is, I can wait to buy more until it's cheap which increases my long term returns. That's much harder to d…

>> " it doesn't have any significant risks, other than Buffett dying." That's somewhat comical given that he's 87 years old. Life expectancy tables show an expectancy of 5 years. Probably should cut that back a fair bit given his taste for Coca Cola, See's Candies, and burgers.... All that said, given the nature of his business and the strength of those in succession behind him, hopefully Berkshire continues to do we…

To put my point more clearly, when Warren passes away Berkshire's value isn't going to change. It's probably not going to add value at the same pace as it would with him leading it, but it's value is still likely to continue to compound significantly faster than the market. What Warren has built is embedded deep in the core of how the entire company operates.

So that's not much of a risk at all.

Re: Dow plunges 1000 points

#316

Post by state_less »

refurb wrote: post #304
jacobolus wrote: post #220

Earlier quoted context omitted.

It does not at all follow that because someone thinks that top marginal tax rates should be raised (amounting to hundreds of billions or trillions of dollars), they will unilaterally send a few thousand extra dollars beyond their statutory bill to the IRS with the expectation that that would accomplish anything.

It's not about accomplishing anything. It's about the principle of it. If someone thinks sending the gov't an extra $10,000 is money well spent, then they do it regardless if others do it.

Taxes do accomplish something real. They are paying for grandma's healthcare, Johnny's schooling and Jim's GI benefits. Everyone needs to contribute their share or the kids don't get educated, grandma dies and Jim defects. In principle, my individual contribution is not going to maintain a large national program. So if I'm interested in saving a large national program, my individual contribution isn't going to do it. I'll need to adjust the tax policy of an entire nation. This is why my position is more complex than my own personal contribution. Hopefully you'll appreciate this.

Re: Dow plunges 1000 points

#317

Post by valuearb »

cinquemb wrote: post #295
exolymph wrote: post #262

Earlier quoted context omitted.

If you're a normal person, not a day-trader, the time horizon your investments should be on the order of years, not months. If you're a day-trader, then this is just one of the risks of that choice.

If you're a normal person, who had a decently sized/exposed market retirement account in 2007, it took you about a decade to get back to the same level, inflation adjusted. That's a lot of risk for chasing inflation adjusted returns… Not to mention, there are a couple short volitilty ETFs that will be terminated soon, hope some long term ETF buyers won't be exposed to them or any big names they are holding who were e…

If you're a normal person, the market crash in 2007 meant that you got almost a decade to buy additional shares of stock super cheap, and increase your eventual retirement portfolio substantially.

Volatility is not risk.

Re: Dow plunges 1000 points

#318

Post by xienze »

sokoloff wrote: post #217
xienze wrote: post #198

Earlier quoted context omitted.

> 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?

That line of questioning frequently appears in these arguments. I find it disingenuous because if I did pay extra towards my federal taxes, I still (after rounding) have inherited the same amount of future obligation and I should expect, as taxes are invariably raised in the future, that I would be expected to pay towards that future obligation as well. Arguing that we should all collectively pay more does not requir…

>Arguing that we should all collectively pay more does not require one to individually contribute at that higher rate

It’s about sticking to your principals — if you disagree with the tax cut, the last thing you should do is benefit from it. Give the government the money you would’ve paid had there not been a tax cut. Doing otherwise gives you no right to complain about it.

Re: Dow plunges 1000 points

#319

Post by valuearb »

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…

Try building something without capital. It's really really hard.

Re: Dow plunges 1000 points

#320

Post by xienze »

megy wrote: post #282
xienze wrote: post #198

Earlier quoted context omitted.

> 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?

Yes, because obviously me paying an extra $10,000 is the same as everyone paying an extra $10,000. Do you think we just hate money?? Is that where you are coming from?

Well if you and the millions of people whining about the tax cut paid extra...

It’s about the principal of the matter. If you disagree with the tax cut, don’t benefit from it. Take a stand.

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