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Dow plunges 1000 points

cnbc.com

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Re: Dow plunges 1000 points

#321

Post by [deleted] »

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.

[deleted]

Re: Dow plunges 1000 points

#322

Post by bilkoo »

hedora wrote: post #305
bilkoo wrote: post #294

Earlier quoted context omitted.

Marginal return. If working an extra hour per day will give me $100 pre-tax, tax rate being 10% and 90% will largely determine whether I'd do the extra work, versus spending that hour with family etc. Everyone has different threshold for pay/fun ratios but overall society will be less productive as tax rates go up at least in the static sense (not considering tax money being put into productivity-increasing use).

If people make enough to retire every three years at a 0% tax rate, then most people will retire or switch to a less productive hobby job, because the marginal utility of more money approaches zero after three years. Tax those same people 90%, and they’ll work for 30 years. There is evidence of this phenomenon from the early days of the automobile: Craftsmen building cars by hand could and did retire after a few doze…

Individually, maybe. Let alone the ethical implication of 'tax them high enough so they don't retire early', artificially lowering the income of a trade would - to your point - constrict *supply of labor. And of course this would lower the total productivity of the industry and society.

And the Ford example, while interesting, doesn't have to do with taxes does it? It has to do with Ford lowering the barrier of entry for factory workers AND increasing productivity rate at the same time. I think we can all agree that that advancement was good for society as a whole?

Am I understanding you correctly? Or is there something I am missing?

Re: Dow plunges 1000 points

#323

Post by dang »

eanzenberg wrote: post #162
valuearb wrote: post #14

I hate to be nitpicking about good news, but the S&P 500 is down less than 7% from it's peak, that's hardly a crash. Especially after gaining 26% over the previous year. And, after increasing over 90% the last 5 years. Obviously, either way a decline in the stock market indexes is good news for almost everyone. I'm hoping for a real crash as I need to save lots more money, not just for my retirement but also for my k…

That's great! I hope you feel good profiting off the market crashes that affect millions of people.

Personal attacks will get you banned here. We've warned you about this several times before. I don't want to ban you, but you do need to clean up your act if you want to keep commenting here.

https://news.ycombinator.com/newsguidelines.html

Re: Dow plunges 1000 points

#324

Post by dahart »

state_less wrote: post #302
dahart wrote: post #272

Earlier quoted context omitted.

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 br…

As the tax rate increases, the value you get for increasing your income goes down proportionally. I think if you take it to the limit, you can see the effect more clearly. As the tax rate approaches 100%, say 99%, then even if I make $100,000 before taxes, I'd only keep $1,000. If I push myself hard to earn $200,000, I'd get to keep $2,000. Yes it is still double, and I am doing better, but not much of interest chang…

Ah yes for the working class, I can see a 99% tax rate would very likely have this effect. I'm still wondering if we stayed in more realistic ranges, is a 40% tax rate, or even a very high 60% tax rate by US standards, a real disincentive to earning more money? I feel like it would take a pretty high tax rate before I stopped caring about my income. Does it actually have that effect in Norway, for example?

I realized I'm also mixing a few different thoughts in my head. I've heard the high taxes being an economic disincentive idea applied to the rich and to corporations and to investors, and I think my question applies more to them than to the middle class. You weren't talking about only the rich, I think I'm projecting a little bit.

Is the idea for businesses and investors that with higher taxes, in the aggregate there are always alternative places for the money, and so behavior changes statistically as tax rates increase? Maybe I'm interpreting "incentive" too literally.

Re: Dow plunges 1000 points

#325

Post by satellitec4t »

myrandomcomment wrote: post #290
usaar333 wrote: post #273

Earlier quoted context omitted.

> 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/

Ugh. Just checked the link. I pay more. In CA so state tax deduction loss kills.

Yep, it's designed to punish blue states

Re: Dow plunges 1000 points

#326

Post by quickthrower2 »

d--b wrote: post #312
quickthrower2 wrote: post #288

Earlier quoted context omitted.

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.

Ah VIX - I saw that https://news.ycombinator.com/item?id=16313832

Re: Dow plunges 1000 points

#327

Post by dmode »

refurb wrote: post #311
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.

US savings rate actually dropped to a 12 yr low recently https://www.marketwatch.com/story/why-the-savings-rate-falli...

Re: Dow plunges 1000 points

#328

Post by hamandcheese »

quickthrower2 wrote: post #224
starpilot wrote: post #216

Earlier quoted context omitted.

It looks like it might be in the top 100 though. Considering these are changes per day , and the chart covers around 100 years or 25,000 trading days, this puts it in the top 0.4% of largest percentage daily losses. So, it does appear to be a significant losing day if 99.6% of such days are smaller in magnitude.

About 0.3% of days are my birthday.

Despite the downvotes, the point seems valid on its surface. We should expect a losing day this bad or worse more frequently than once per year, which doesn’t sound that scary.

On the other hand, I wouldn’t expect losing days to be evenly distributed (in the short to medium term at least) but rather clumped together.

Re: Dow plunges 1000 points

#329

Post by dvfjsdhgfv »

valuearb wrote: post #25
dvfjsdhgfv wrote: post #18

Earlier quoted context omitted.

> Obviously, either way a decline in the stock market indexes is good news for almost everyone. I'm hoping for a real crash as I need to save lots more money, not just for my retirement but also for my kids college. Could you elaborate?

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.

But it hardly means "a decline in the stock market indexes is good news for almost everyone". It could be true in some kind of isolated system where a global decline in share prices doesn't negatively affect many other areas of our lives.

Re: Dow plunges 1000 points

#330

Post by enoch_r »

poke111 wrote: post #64
enoch_r wrote: post #49

Earlier quoted context omitted.

> they are very likely to grow more slowly than average (i.e., revert to the mean) I mostly agree with you, but this is basically the gambler's fallacy. If I'm flipping a coin every second for days, and I hit a run of 10 heads in a row, "reversion to the mean" just means that the next 10 flips are likely to be less extreme than the previous 10. It does not mean that I should expect "more tails than usual" for the nex…

No. The gambler's fallacy is when we ascribe dependency to independent events. Stock performance tomorrow is very much NOT independent of stock performance today, e.g. "market correction"

There is a pretty strong empirical support for the random walk hypothesis, the essence of which is that performance tomorrow is independent of performance today.
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