All you gotta do is buy puts and you'll be able to ride a yacht in a few years when this is all over.
Dow Falls 2997 points worst drop since 1987 crash
71–80 of 499 posts
Re: Dow Falls 2997 points worst drop since 1987 crash
#72All of the return-seeking money that pushed up asset prices in the first place is still out there, because stock market crashes don't destroy money (they just redistribute it). I wonder who has it now, and I also wonder when it will end up back in the market.
...stock market crashes don't destroy money (they just redistribute it). Source needed. Stock market crashes absolutely destroy money by any reasonable definition of the money supply.
> Stock market crashes absolutely destroy money by any reasonable definition of the money supply.
Mind sharing that definition? I don't see that quite squaring with this: https://en.wikipedia.org/wiki/Money_supply#Empirical_measure...
Re: Dow Falls 2997 points worst drop since 1987 crash
#73Earlier quoted context omitted.
Absolutely. I'm 21 -- I have 30 to 40 years to weather this storm. For people of similar age, you could not ask for a shallower entry into the market, albeit a tumultuous one.
It's not so shallow, the stock market is still bubbly, these are the prices of mid 2017, when everyone said that the stock market is a bubble...
Yeah exactly.. people are saying it's the low today? Yeah good luck timing that.
Maybe they are right.. but like you just said- these are prices just a couple years ago. The modern world has never seen what is going on, and the economic impacts are almost unfathomable.
Claiming we are near a bottom just because it's dropped a lot is naive.
Re: Dow Falls 2997 points worst drop since 1987 crash
#74PSA: The Dow Jones industrial average is a terrible measure of the stock market. It tracks just 30 stocks, some which have an outsized influence on the measure. This is not to say the stock market is not in freefall, but there are much better indexes to track general market movement.
Today it correlated with the better indexes. DOW (-12.93%): [1] S&P 500 (-11.98%) https://finance.yahoo.com/quote/%5EGSPC?p=^GSPC [2] NASDAQ (-12.32%) https://finance.yahoo.com/quote/%5EIXIC?p=^IXIC [3] Russel 2000 (-14.27%) https://finance.yahoo.com/quote/%5ERUT?p=^RUT
Also:
NYSE Composite (-11.84%) https://finance.yahoo.com/quote/%5ENYA?p=^NYA&.tsrc=fin-srch
Re: Dow Falls 2997 points worst drop since 1987 crash
#75This is only the first round.
The second round will be over-leveraged investments being uncovered, as any leverage they had in stocks evaporates.
Given that the over-leveraged loan situation was out of control during the 2008 GFC, and nothing structural was done to change behavior, it's extremely likely we're going to see some secondary changes.
Re: Dow Falls 2997 points worst drop since 1987 crash
#76I'd say keep a close eye on the Coronavirus situation. If a vaccine is found and is effective, likely the market will calm down and hit the bottom. After that its about keeping the companies afloat until they can get their revenue back up again. Most likely the quantitative easing programs from the Fed will help in this regard.
> If a vaccine is found and is effective, likely the market will calm down and hit the bottom.
Realistic timeline for this seems months.
Re: Dow Falls 2997 points worst drop since 1987 crash
#77Earlier quoted context omitted.
Housing is unlikely to follow unless more old people die of covid than expected. Rates are so low and big money will be looking to diversify into alternate asset classes.
A million dead, mostly elderly, is not completely out of the realm of possibility, especially if we hit the high end of 150 million infections in the US. Statistically, 150 million infections would kill closer to 4 million.
You really think that 50% of the population is the high end???
Per https://www.thelancet.com/journals/laninf/article/PIIS1473-3... it seems that the basic reproduction number is over 2. Which means that herd immunity only sets in if under 1/3 of the population is vulnerable. Which means over 200 million Americans get it.
The alternatives are permanent lifestyle changes, or a successful eradication of the disease worldwide.
Re: Dow Falls 2997 points worst drop since 1987 crash
#78PSA: The Dow Jones industrial average is a terrible measure of the stock market. It tracks just 30 stocks, some which have an outsized influence on the measure. This is not to say the stock market is not in freefall, but there are much better indexes to track general market movement.
Most of the SP500 movements come from small number of companies too.
Dow Jones is bad index but the narrow number of companies is not the worst part. DJIA is price-weighted index which is completely arbitrary and there is no reason for that. They can't add Berkshire Hathaway into the index without completely changing the rules. BRK-A price is so high. Index would track only BRK-A after that.
Re: Dow Falls 2997 points worst drop since 1987 crash
#79Dumb question. Why can't they just turn off all stock markets for a month?
They may end up doing that to prevent a collapse. They also ban short selling sometimes even if the stock market is kept open.
Re: Dow Falls 2997 points worst drop since 1987 crash
#80Dumb question. Why can't they just turn off all stock markets for a month?
That would cause severe pressure on other financial institutions and invoke immense panic.