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Trading halted as U.S. stocks plummet

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Re: Trading halted as U.S. stocks plummet

#951

Post by kccqzy »

juped wrote: post #928
kccqzy wrote: post #843

Earlier quoted context omitted.

Hardly. Options involve a lot more strategy and tactics. Instead of trying to time the market once, you now time the market at least twice: the date you enter the trade and the chosen expiration date. When the expiration date is too close, your option could very well expire worthless before it can do anything; too far, your option has too much wasted time value, not to mention what if the market has recovered. You al…

Then why not write the options and capture those premiums?

You can, if you have the stomach to face occasional big losses.

Re: Trading halted as U.S. stocks plummet

#952

Post by virgilp »

sameerds wrote: post #943
Reedx wrote: post #778

Earlier quoted context omitted.

To help adopt a sober approach, it's worth watching this interview with Warren Buffett who shares his thinking re: market and Coronavirus. https://www.youtube.com/watch?v=JvEas_zZ4fM&t=21s One of the points he makes is that you should think about stocks as businesses. Instead of "I bought a stock" think "I bought a business". That puts you in a better frame of mind and perspective for the long term. i.e., You don't b…

From a retail investor's point of view, both approaches are wrong. The retail investor can neither "play" the game of stocks, nor understand what it means to buy a business. Not because there is anything magical about either, but because the retail investor has a life too, and would rather focus on their own work for their actual income. The correct way to look at stock investment is to say "I bought a stake in the f…

> that makes you realize what a mind-bogglingly large gamble this is with your savings.

Is it a gamble, really? I can't fathom what I could do with my money, should the world economy go to the gutter, big time. Holding cash surely won't help - cash can become worthless, did so many times in the past. Hard assets might help, but it's very tough to know which ones (cans of food maybe, but really? How much can you "invest" in it? And it's really just investing in the apocalypse... you're making a very shitty scenario slightly less shitty for yourself, _maybe_).

The thing is, all we can really do is hope that the future of the world's economy is good; if it isn't, there's really no rock-solid way to isolate yourself from the bad outcomes. Regardless how much you own now.

Re: Trading halted as U.S. stocks plummet

#953

Post by Hoasi »

icebraining wrote: post #788
Hoasi wrote: post #641

Earlier quoted context omitted.

That's funny. But I was only pointing out that this is akin to markets saying: this game only works as long as we can change the rules. This kind of statement is not conducive to trust. Unfortunately, the whole financial field needs trust to thrive.

I'd agree if the rules had been changed on the fly, as a response to the current events, but they weren't. The rules were known and they were activated as expected.

> The rules were known and they were activated as expected.

True, if surprising to me. It's a rule from the onset. I didn't know that.

Re: Trading halted as U.S. stocks plummet

#954

Post by verbify »

panarky wrote: post #935
verbify wrote: post #885

Earlier quoted context omitted.

If you had reinvested your dividends, you'd have gotten your money back by the end of the war (and you'd only have lost 1 or 2% approximately six years later). 35 years later you would have an annual return (inflation adjusted) of 6% (6.5 times as much as you put in). And this is somebody who invested in the absolute peak of the market in 1929, and then saw the worst crash in history, followed by the worst war in his…

Past performance is not a guarantee of future results. Markets can grind lower and lower for decades, each new low triggering bargain hunters to buy, only to drop more.

Sure, but that can happen if:

1) Shares were massively overvalued compared to their yields. E.g. if P/E ratios were 50:1 then I wouldn't buy the market

2) There's a fundamental issue in the economy. Plague, war, asteroid, climate change. Whatever the issue, you probably have bigger things to worry about than your retirement fund, and you have no better bets to place

The stock market is just made up of businesses. Businesses make money. Owning part of a business gives you a return. There's no magic to it, no massive extrapolation based solely on past performance. If you think there's a decent chance businesses aren't making money, then you ought to become a prepper.

Re: Trading halted as U.S. stocks plummet

#955

Post by austhrow743 »

coolspot wrote: post #909
hoten wrote: post #893

Earlier quoted context omitted.

What does it mean for a market to have inefficiencies?

Seriousness of wuhan virus was known since end of January, but stock market ignored it completely, raging into all-time highs till February 20th. Regular person could absolutely see it and be prepared. Even today market still doesn’t price in Italy-style or China-style lockdowns.

Wuhan virus mostly affects the elderly who are largely out of the workforce. It's not the virus that's disrupting markets it's the response, which no, regular people could not see coming. Even experts are commenting on how well China did to respond in such a drastic fashion. Plenty of countries still haven't done anything large scale to address it.

Re: Trading halted as U.S. stocks plummet

#956

Post by austhrow743 »

santoriv wrote: post #704
totalZero wrote: post #667

Earlier quoted context omitted.

> As a retail investor (i.e. not extremely rich), you can't gain any advantage over the market that overcomes your transaction costs. Sure you can. You develop a system, learn how to find information, and make good predictions of future human behavior. You should learn the ins and outs of the product you're trading.

Very few active fund managers can consistently beat their indexes. Why do you believe you would be better over a long period of time? Vanguard Study of Actively Managed Funds vs Index Performance: https://personal.vanguard.com/pdf/ISGIDX.pdf

>Very few active fund managers can consistently beat their indexes.

Funds profit from managing more money. The more money you manage, the harder it is to find plays that use a significant amount of it. So it makes perfect sense that funds would increase in size until they perform at a rate similar to indexes.

>Why do you believe you would be better over a long period of time?

The fully loaded cost of even a junior analyst would be in the hundreds of thousands a year. Independent day traders can focus on strategies that leverage such a tiny amount of capital and result in such a tiny return that it's not profitable for a fund to be looking at. Keeping in mind that "too small for a fund to worry about" can still be "shitloads of money" for 99% of people.

Re: Trading halted as U.S. stocks plummet

#957

Post by bluGill »

foota wrote: post #708
bluGill wrote: post #666

Earlier quoted context omitted.

Almost nobody is drilling new oil wells, they stopped last year sometime. Almost nobody because there are still investors keeping one skeleton crew running just so they have expertise for when the oil price recovers. Once a well is drilled the cost to drill the well is a sunk cost. You keep pumping oil if the cost to run the pumps is less than the price you get. Most people with oil are large enough to shut down some…

OPEC has failed to reduce output to prop prices up, and they've crashed as a result.

Nobody being willing to make large cuts is different from nobody making cuts. The US is not a member of OPEC, nor are several other oil producing countries: they don't follow OPEC but may still reduce output.

There is rumor OPEC isn't cutting production because they believe they can undercut their competitors and put them out of business - I don't think that is their motivation, but it is something that can't be ignored.

Re: Trading halted as U.S. stocks plummet

#958

Post by NateEag »

virgilp wrote: post #952
sameerds wrote: post #943

Earlier quoted context omitted.

From a retail investor's point of view, both approaches are wrong. The retail investor can neither "play" the game of stocks, nor understand what it means to buy a business. Not because there is anything magical about either, but because the retail investor has a life too, and would rather focus on their own work for their actual income. The correct way to look at stock investment is to say "I bought a stake in the f…

> that makes you realize what a mind-bogglingly large gamble this is with your savings. Is it a gamble, really? I can't fathom what I could do with my money, should the world economy go to the gutter, big time. Holding cash surely won't help - cash can become worthless, did so many times in the past. Hard assets might help, but it's very tough to know which ones (cans of food maybe, but really? How much can you "inve…

I'd argue that investing in skills and training is the best preparation for apocalypse scenarios.

I have a younger sister in medical school, and as I say to her about the debt she's taken on for the degree, "Even if there's a nuclear war and the economy and technology evaporate, people will want to keep you alive for your knowledge. They might break your ankles and chain you up to keep access to your knowledge and skills, but you'll be fed even when almost no one else is."

Not that preparing for an apocalypse is necessarily a great use of time - just saying that skills are a better asset for it than physical goods and resources.

Re: Trading halted as U.S. stocks plummet

#959

Post by chii »

cletus wrote: post #868
chii wrote: post #790

Earlier quoted context omitted.

The reason is that gold is itself a useless piece of metal (electronics and jewellery notwithstanding). Its only use is as a hedge against the gov't issued currency. Therefore, to bet that gold increases in value means you're betting against the country you're in doing well. But in that case, you're better off buying a bunker and bullets and long life stored goods. because gold is useless if the country you're in fai…

> The reason is that gold is itself a useless piece of metal (electronics and jewellery notwithstanding) Gold being an excellent conductor while being mostly inert, solid at room temperature and highly malleable seems to be a pretty useful set of properties. > because gold is useless if the country you're in fails! Not entirely true. You have to look at why gold became one of the earliest mediums for exchange in the…

> Imagine your country stamps gold coins. If you can take a coin of unknown origin and weigh it against a known good coin, you can pretty easily detect a forgery by it having lower weight.

That hasn't been required since the middle ages. So if modern society reverts back to using gold for trade (because there isn't a currency left, that's what the dollar collapse means), I'd rather have stocked up bullets and kill those who has the stuff i want, rather than trade for it. After all, there's no guarentee that they won't just shoot me in the back after the trade anyway.

What i'm saying is that anyone in a western country that invests in gold is implicitly investing in a hedge against collapse of the dollar (or currency in general). And in the event of a collapse, the gold is going to be useless, if you don't have the bullets to back it up and defend yourself.

Or, speculate on the price - sell when it's high, buy when it's low. But that's literal gambling, not investing.

Re: Trading halted as U.S. stocks plummet

#960

Post by vearwhershuh »

rytill wrote: post #926
vearwhershuh wrote: post #450

Earlier quoted context omitted.

Well, my plan would be to treat dividends as tax deductible to the company and then flow through to the owner, as with LLCs. Capital gains would be taxed at a windfall rate (e.g. the highest marginal income tax + payroll tax rate + 10%). The nice thing about this is that the progressive income tax system then makes equity ownership very attractive to lower-income households, and less attractive to rich people, thereb…

Are there any disadvantages you can think of?

Yes: it punishes reallocation of capital and makes moon-shot style companies less viable. You would have a less dynamic economy with organic growth being the norm. I would allow for in-kind exchanges within a given trading year to make it easier to get out of bad positions (as well as tax free exchange with gold at any time, so gold becomes the medium for non-productive savings.)

Now, let me tell you about my banking system proposal...

My family loves me at the dinner table, why do you ask?

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