Dow Falls 2997 points worst drop since 1987 crash • Hacker News Board

Re: Dow Falls 2997 points worst drop since 1987 crash

#91

Post by koheripbal » Mon, Mar 16, 2020, 9:03 PM UTC

mgolawala wrote: post #11

To put it into perspective, the last time the market behaved like (multiple drops of this magnitude) this was 90 years ago, in 1929, and it was at the start of the Great Depression. Today was the second largest percentage drop for US Markets in history. Now is not a good time to sell your stock holdings (at least not anymore). This smells of a panic right now. I think a severe recession is all but guaranteed at this…

Two points.

1. Today's drop is sort of misleading because it followed an irrational (IMO) low volume rally on Friday. We're still roughly flat from last week.

2. A recession is pretty much what we're ASKING for in order to stop the virus. People need to stay away from one another. So if it's not online, the business should be closed.

3. (bonus point) Unlike systemic recessions (like 2008), this one is purely externally driven (like 2001) - which means it's temporary. Whether we deploy a vaccine, deploy anti-virals, flatten the curve, or just suffer, it'll still be over in a maximum of 18 months. Since stocks are valued by their 20 year forward earnings, the market is very much oversold. (the exception being for companies that is going to go bankrupt in the next year due to cash flow issues - and receive no bailout).

Re: Dow Falls 2997 points worst drop since 1987 crash

#92

Post by buryat » Mon, Mar 16, 2020, 9:04 PM UTC

SirensOfTitan wrote: post #25

I’m buying S&P index every day at this point, trying to drive my average down without trying to find the bottom. ...with that being said, I feel really worried about American economic stability long term now. Governors are closing restaurants and businesses leaving tons of folks out of work while providing minimal safety net coverage. Even liberal states like New York are ignoring the downstream economic effects thes…

> Even liberal states like New York are ignoring the downstream economic effects these closures will cause.

They also understand the effects of not closing right not in outlook of a deadly decease without available treatment.

Re: Dow Falls 2997 points worst drop since 1987 crash

#93

Post by throw03172019 » Mon, Mar 16, 2020, 9:04 PM UTC

nodesocket wrote: post #60

whatshisface wrote: post #10

All 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.

Great point, all the "big boy" traders who have been raking in profits on put options, VIX volatility, and leveraged inverse etf's eventually will switch their trades to bull. However, keep in mind, a market down 30% requires a 43% gain to break back even.

Sorry for a maybe dumb question but what is the logic for 43% gain needed?

Re: Dow Falls 2997 points worst drop since 1987 crash

#94

Post by badfrog » Mon, Mar 16, 2020, 9:04 PM UTC

hitpointdrew wrote: post #84

badfrog wrote: post #53

Earlier quoted context omitted.

If you think recession is guaranteed, why not sell?

That is opposite of what you should do. You would just be locking in losses (or greatly reduced profits). As long as you are reasonably sure you can hold your stocks for a few years then just hold on to them. Or better yet, go on buying spree and get cheap stocks.

My read of "I think a severe recession is all but guaranteed" was that OP thinks prices will continue to fall. Am I misinterpreting?

Re: Dow Falls 2997 points worst drop since 1987 crash

#95

Post by rconti » Mon, Mar 16, 2020, 9:04 PM UTC

SirensOfTitan wrote: post #25

I’m buying S&P index every day at this point, trying to drive my average down without trying to find the bottom. ...with that being said, I feel really worried about American economic stability long term now. Governors are closing restaurants and businesses leaving tons of folks out of work while providing minimal safety net coverage. Even liberal states like New York are ignoring the downstream economic effects thes…

Every time I see this, I fail to grasp the logic. So you had money sitting on the sidelines for safety during boom times, and you elect to put it in a riskier asset class during a panic?

I'm not saying this isn't likely the most profitable action, I just don't see how the principles are consistent with each other. The former is conservative; the latter is wildly speculative and risky.

Re: Dow Falls 2997 points worst drop since 1987 crash

#96

Post by jfengel » Mon, Mar 16, 2020, 9:05 PM UTC

roywiggins wrote: post #49

nostromo wrote: post #31

Earlier quoted context omitted.

This is similar to 9/11 where politicians would act without thinking just to appear like they were doing something. Security theater was the norm for many years.

They've relaxed the no-liquids rule now! for hand sanitizer only.

Or at least, things claiming to be hand sanitizer. Which just makes the rule more absurd. If you've got a favorite shampoo, time to go looking for a nice large hand sanitizer bottle to transfer it to. (Though I wouldn't do that for contact lens saline, a thing I'd kinda like to bring on in large bottles, since the small ones are absurdly expensive and somewhat less available.)

Re: Dow Falls 2997 points worst drop since 1987 crash

#97

Post by jedberg » Mon, Mar 16, 2020, 9:05 PM UTC

nabla9 wrote: post #78

zizee wrote: post #20

PSA: 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.

I'm not sure why they don't add BRK-B though.

Re: Dow Falls 2997 points worst drop since 1987 crash

#98

Post by koheripbal » Mon, Mar 16, 2020, 9:06 PM UTC

SirensOfTitan wrote: post #25

I’m buying S&P index every day at this point, trying to drive my average down without trying to find the bottom. ...with that being said, I feel really worried about American economic stability long term now. Governors are closing restaurants and businesses leaving tons of folks out of work while providing minimal safety net coverage. Even liberal states like New York are ignoring the downstream economic effects thes…

> Even liberal states like New York are ignoring the downstream economic effects these closures will cause

What do you suggest they do? Keep restaurants open? Also - I think they're hoping that people will still order restaurant food - just at home and have it delivered.

...might be a boon for Chinese restaurants, ironically.

Re: Dow Falls 2997 points worst drop since 1987 crash

#99

Post by mgolawala » Mon, Mar 16, 2020, 9:06 PM UTC

koheripbal wrote: post #91

mgolawala wrote: post #11

To put it into perspective, the last time the market behaved like (multiple drops of this magnitude) this was 90 years ago, in 1929, and it was at the start of the Great Depression. Today was the second largest percentage drop for US Markets in history. Now is not a good time to sell your stock holdings (at least not anymore). This smells of a panic right now. I think a severe recession is all but guaranteed at this…

Two points. 1. Today's drop is sort of misleading because it followed an irrational (IMO) low volume rally on Friday. We're still roughly flat from last week. 2. A recession is pretty much what we're ASKING for in order to stop the virus. People need to stay away from one another. So if it's not online, the business should be closed. 3. (bonus point) Unlike systemic recessions (like 2008), this one is purely external…

I agree with both of your three points. (ha!) It was why I stated that it felt like a panic. The problem is panics are much like stampedes, they can take on a life of their own once they get started.

Re: Dow Falls 2997 points worst drop since 1987 crash

#100

Post by bobbylarrybobby » Mon, Mar 16, 2020, 9:06 PM UTC

hitpointdrew wrote: post #84

badfrog wrote: post #53

Earlier quoted context omitted.

If you think recession is guaranteed, why not sell?

That is opposite of what you should do. You would just be locking in losses (or greatly reduced profits). As long as you are reasonably sure you can hold your stocks for a few years then just hold on to them. Or better yet, go on buying spree and get cheap stocks.

If you think prices will fall, sell now and then buy back in after they’ve fallen