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Dow plunges 1000 points

cnbc.com

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Re: Dow plunges 1000 points

#341

Post by refurb »

dmode wrote: post #327
refurb wrote: post #311

Earlier quoted context omitted.

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...

Thanks for sharing that.

Considering the noise in that chart (savings rate drops from 11% to 5% in one month?!?), I would question whether it's really a trend and how accurate the data is.

One of my pet peeves with economic data - some leading indicator plummets after being high for years. Mass panic in news headlines, only for it to return to normal the next month.

Re: Dow plunges 1000 points

#342

Post by fallingfrog »

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.

A stock market crash only leads to recession if the preceding bubble was financed with debt. Which, sadly, might be the case this time due to leveraged buyouts and buybacks. In 2008, the housing bubble was financed with easy credit. In 1929, the stocks were all bought on the margin. Then it's really painful to unwind the bubble. If that is the case this time around, we'll know when all those companies that bought their own shares back at inflated prices go bankrupt at the same time.

Re: Dow plunges 1000 points

#343

Post by losvedir »

gaius wrote: post #337
pfarnsworth wrote: post #269

Earlier quoted context omitted.

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…

One of the great feats of social engineering that Wall Street has done in the several decades is convincing regular people that they should have their money in the stock market. Ironically you could call this “owning the means of production”

Too true! I sometimes wonder why the marxist/socialist types aren't pushing for some sort of government fund that owns a percentage of all listed stocks. That's essentially what they want, right? All the pieces are in place to easily and relatively painlessly do this. I mean I kind of like it as the basis for a basic income. The basic income can start small, but as the economy grows, even if that includes via robots and automation, the basic income will grow as well.

Re: Dow plunges 1000 points

#344

Post by jonbarker »

This is also the first downward correction after a 59 year record month over month gain run of 10 consecutive up months. It's also been about 9 years since the last true recession so I'd say the alarmism in the headlines is warranted.

Re: Dow plunges 1000 points

#345

Post by Brockenstein »

dkhenry wrote: post #195
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).

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.

You know, I get the sentiment of these sorts of posts. But it doesn't really seem to matter at which point in history you think is the golden age of journalism, they were still selling the news and that often meant sensationalist headlines on the front page fairly often to grab attention and pull readers in. This is not a new thing on any level.

You can quibble that news stories were "less" sensationalist in the past, but that's very debatable. It's not as if anyone in this thread from 2018 can rattle off the ten headlines from 1918 or pretty much any year they didn't live through. So I would take any appraisal's of today's news compared to the past without some hard data to back it up with a few grains of salt. I'm of the mind the more things change, the more they stay the same as far as this subject goes.

Re: Dow plunges 1000 points

#346

Post by allenbrunson »

mcintyre1994 wrote: post #142
outside1234 wrote: post #132

Earlier quoted context omitted.

A smart investor will always have a set of numbers in mind - say 60% stocks and 40% bonds - and every 6 months will rebalance the portfolio to that. Over decades this will return better returns at dramatically less stress than any other approach.

I'm sure there's some dimensions it's not optimal on, but Vanguard LifeStrategy is a single low fee fund that does this for you. IIRC they have 20/40/60/80/100% equity options.

Here’s my own anecdote ...

After hearing so many people say positive things about Vanguard for so long, I set up an account there. They had pretty much all my disposable cash, in a Roth IRA, for about two years. Rather than begin the predictable uptick in wealth I expected, my results, having about $25K parked there, was that I lost about 300 bucks. I sent several messages asking what I could do about it, their responses were gobbledygook that I did not understand, so I took all my money back out. Praying that I don’t wind up with a huge tax burden this year, due to this mistake.

Here’s my message: regardless of the hype, Vanguard is not for unsophisticated investors. I am looking for an actual human being who can help me invest, now.

Re: Dow plunges 1000 points

#347

Post by w0m »

mtanski wrote: post #218
leggomylibro wrote: post #197

Earlier quoted context omitted.

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…

>If salaries rise, the expectation is that people will spend more and push inflation higher. Sure sucks to be a worker. When your salary rises your real gains will be inflated away.

but your equivalent spending power vs your neighbor will be higher! That's what mattes... right?

Re: Dow plunges 1000 points

#348

Post by piva00 »

xienze wrote: post #318
sokoloff wrote: post #217

Earlier quoted context omitted.

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.

Yes, it gives, because oneself decision to give back US$ 2k in a year to the government is peanuts, you don't impact anything, disagreeing on tax cuts in a societal level means more money is on the pot to be divided in projects that benefit the society.

You can't stand your ground on every issue that demands that a large part of society support it to work, that's not how it works. A lot of principles are only helpful if a larger part of society shares and act on them, individually they are useless.

Re: Dow plunges 1000 points

#349

Post by graeme »

imtringued wrote: post #336
prepend wrote: post #181

Earlier quoted context omitted.

You can definitely eat stuff bought with the earnings of assets. Retirement is non-ponzi like because the assets appreciate in value due to increased predicted future earnings. This is totally different from paying out what others pay in. Assets can appreciate in value and income even without new investment.

>You can definitely eat stuff bought with the earnings of assets. Saving money is an illusion. The government can't just put your pension contributions into a savings account and withdraw it decades in the future. It must use the contributions of current workers to pay the pensions of current retirees. Food doesn't last forever. If you buy food in your 40s the food is no longer edible in your 60s. If you don't buy fo…

Actually the government could save into a savings or investment account, then withdraw later.

It doesn't change the fact that your second paragraph is true though - just a nitpick.

Re: Dow plunges 1000 points

#350

Post by talmand »

starpilot wrote: post #216
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).

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.

But then you could compare a different day and say it's in the top 200. Or the top 300. At which point does "X falls within top Y" no longer means anything?
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