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Trading halted as U.S. stocks plummet

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Re: Trading halted as U.S. stocks plummet

#761

Post by FabHK »

cletus wrote: post #376
neural_thing wrote: post #339

Earlier quoted context omitted.

The Nikkei is still ~50% below its 1989 high. Hasn't even approached that level since. Downturns can go on for decades.

I didn't think this could still be true but apparently you are correct [1]. Wow. That being said, there are factors to contribute to this: - Essentially zero population growth [2] - A government and a system that propped up an insolvent banking system that likely extended the downturn significantly [3] - A massive asset bubble that we really haven't seen the likes of, not even in the subprime era. [1]: https://www.ma…

As I highlighted above, the Nikkei ignores dividends, and as such does not reflect actual investment results.

https://news.ycombinator.com/item?id=22530040

Re: Trading halted as U.S. stocks plummet

#762

Post by [deleted] »

cletus wrote: post #376
neural_thing wrote: post #339

Earlier quoted context omitted.

The Nikkei is still ~50% below its 1989 high. Hasn't even approached that level since. Downturns can go on for decades.

I didn't think this could still be true but apparently you are correct [1]. Wow. That being said, there are factors to contribute to this: - Essentially zero population growth [2] - A government and a system that propped up an insolvent banking system that likely extended the downturn significantly [3] - A massive asset bubble that we really haven't seen the likes of, not even in the subprime era. [1]: https://www.ma…

[deleted]

Re: Trading halted as U.S. stocks plummet

#763

Post by brazzy »

bytematic wrote: post #646
ttul wrote: post #625

I notice that there are many commenters here offering opinions on the future price of equities. Note that nobody has any idea where equity prices will be in one day, never mind one year or ten years' time. As a retail investor (i.e. not extremely rich), you can't gain any advantage over the market that overcomes your transaction costs. So relax. There's nothing to do here. If you're contributing to a retirement fund,…

Most people don't seem to understand that you don't pull all your retirement out at once, so the market going up or down doesn't really affect that

But whether you start your retirement at a time the market is down a lot or up a lot can make a surprisingly big difference on how long your money lasts, if you don't adjust your spending.

Re: Trading halted as U.S. stocks plummet

#764

Post by azernik »

phinnaeus wrote: post #332
rafiki6 wrote: post #316

Earlier quoted context omitted.

I thought these circuit breakers actually existed to stop algo's from going haywire?

Seems like that kind of thing would be implemented on the algorithm side, not the market.

You do not want to trust your market's health to some random trading firm's coding skills and goodwill, just like you wouldn't open up a public webservice without some basic rate-limiting.

Re: Trading halted as U.S. stocks plummet

#765

Post by brazzy »

synaesthesisx wrote: post #754
_7fvc wrote: post #740

Earlier quoted context omitted.

I used to subscribe to these investment talking points and believed in the US equity market. I adopted these attitudes from reading Warren Buffett, index fund, financial advice. These are sound principles. I occasionally revisit value investing, dollar-cost averaging. But times are changing. The US equity market will unlikely to deliver exceptional returns. Buffett may have a strong bias since he started his investin…

Realistically stocks can only go up long-term. It's easy to forget during times of chaos, but in the long run there's no way but up.

The question is whether they'll go up as much as they used to - with global population growth slowing down, there is a case to be made that the 7% long term growth that many people treat as a fact of nature is not in fact a long-term thing.

Re: Trading halted as U.S. stocks plummet

#766

Post by azernik »

bilekas wrote: post #743
HolyLampshade wrote: post #239

Earlier quoted context omitted.

Mass sell offs tend to create unorderly markets, which is not beneficial for anyone. The concept was introduced in US equities after the ‘87 crash, but was only consistently implemented for NYSE-listed stocks. In ‘13 these were made consistent and market wide (thus MWCB), set against a widely published value of the S&P (so that the control was predictable; thus how it executed today). FYI, there are also bidirectiona…

> Mass sell offs tend to create unorderly markets So are we saying the market will be perpetual because it's not allowed to fail ? At what point does the https://en.wikipedia.org/wiki/Pareto_efficient not apply ? If it's manipulated, the efficient seems moot.

Pareto efficiency does not apply, because it is a theoretical construct that assumes perfectly rational actors. It's useful for thinking about the market, but not an actual law.

(For a more humorous statement: https://www.youtube.com/watch?v=oap6_U8-HvI)

Re: Trading halted as U.S. stocks plummet

#768

Post by herstjnr5nr »

ones_and_zeros wrote: post #335
tempsy wrote: post #278

Buy S&P puts as a hedge to save your account in times of extreme volatility. I had 270 strike puts for April I bought on Friday for $6 that jumped to $15 today and got my account to break even even though the value of my stocks went down.

What is the end game with this strategy? If you sell the puts today to capture the profits, do you also sell your equities? If you don't sell your equities isn't there a chance the slide further? If you hold the puts to maturity why buy them at all?

If the market drops less than your put strike price, you can sell the puts and keep the shares. If it drops more, you exercise the put, which results in selling the shares at the strike price.

Re: Trading halted as U.S. stocks plummet

#769

Post by will4274 »

lbotos wrote: post #501
airstrike wrote: post #382

Earlier quoted context omitted.

Yes, but it's much, much slower to trade directly than through a market-maker in the exchange

how does one actually technically go about that? I have no plans to do it, just been curious about it over the past few months.

You ask your broker for the physical copy of the stock certificate. The buyer asks their bank for some physical cash. They hand you the cash, you hand them the stock certificates. Same as buying or selling anything else, basically.

Of course, for a transaction of a certain value, you wouldn't want to hold the cash or certificate, so instead you write out a contract and sign it at the moment of exchange. Which is the same as buying or selling something else (e.g. car, house) beyond a certain value.

Re: Trading halted as U.S. stocks plummet

#770

Post by kccqzy »

tech-historian wrote: post #494
cletus wrote: post #315

So, children of summer (there are many here who have only known the longest bull market in the last century), let me give you some free advice. If you're looking at this and wondering when to get in, to bargain hunt essentially, and you're asking yourself questions like "today? next week?", you need to step back and think again. Some points to consider: - If your time horizon is 10+ years out probably none of this ma…

As an investor, if you believe the market is going to drop, there are various ways to profit from this. One of the easiest is buying ETFs that move inversely to certain market indexes (shorts them). For example, SH [0] is an ETF that moves inversely proportional to the S&P 500 index. So if the S&P 500 is down 2%, SH goes up 2%. More exciting are the leveraged ETFs that track double or triple the underlying index. SDS…

Inverse and short ETFs are terrible for medium to long term holdings. Because it resets each day. Here is an example of what this means:

Consider a hypothetical index having a volatile week (like these days). The index was at 100 on day 1, dropped to 90 on day 2, recovered back to 100 on day 3, rose to 110 on day 4, and finished the week flat at 100.

If you were invested in an ETF that tracks the index, you would neither lose nor profit. But if you were invested in an inverse ETF, you actually lost money overall: the percentage day change of the index is -10%, +11.1%, +10%, -9.1%. So the percentage day change of the inverse ETF is +10%, -11.1%, -10%, +9.1%. Add one and multiply these, and you would have lost 4% overall. This is not even accounting for the increased expense ratios of these ETFs.

But wait, here's more: if you were invested in a 2x leverage ETF, you would have lost 4% as well! The percentage day change would be -20%, +22.2%, +20%, -18.2%. Add one and multiply these and you arrive at the same number.

This is simple math. And I think, this should convince everyone that inverse and leveraged ETFs are terrible in typical volatile market scenarios. Link to spreadsheet: https://docs.google.com/spreadsheets/d/1XEyE4DxXOilXz4PnGBSX...

If you really really want leverage, consider having a long /ES future with suitable level of leverage, and roll quarterly. For the typical Hacker News audience who are not finance professionals, don't even think about shorting the market.

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