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

Re: Dow Falls 2997 points worst drop since 1987 crash

#251

Post by bosswipe » Mon, Mar 16, 2020, 9:47 PM UTC

nouveaux wrote: post #127

adrr wrote: post #56

Earlier quoted context omitted.

Why catch a falling knife? I am actively shorting S&P to protect my other holdings. SPY is the largest ETF is now hard to borrow which is just crazy to think about.

While you're not outright advocating a trading strategy here, what you're suggesting is dangerous if you're not talking about the downsides to shorting. Do not, I repeat, do not attempt a short without understanding all the risks. When you buy a stock for $10, the most you can lose when that stock goes to zero is $10. In theory, when you short a stock at $10, your loss is infinite as the stock goes up higher and high…

I bought SDS which is an ETF for shorting S&P500 2x. It's up 41% since I bought it. The trick though is knowing when to cash out.

Re: Dow Falls 2997 points worst drop since 1987 crash

#252

Post by riffic » Mon, Mar 16, 2020, 9:47 PM UTC

bedhead wrote: post #241

I manage a fund for a living and have been doing this stuff for a while. I'm generally an optimist...and I've never been more terrified in my life than now. This makes 2008 look like a keg party. We have a health crisis and the prescription from government has been to induce an economic crisis, one that's possibly (and increasingly more likely) orders of magnitude worse than anything we've ever seen, including the gr…

> last rights

rites

Re: Dow Falls 2997 points worst drop since 1987 crash

#253

Post by tomp » Mon, Mar 16, 2020, 9:48 PM UTC

tinyhouse wrote: post #125

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…

No one knows. You have the entire world working (mostly together) on ending this. I'm optimistic things will get much better in a month or so.

If there's anything I learned about this virus is that my pessimistic predictions were way too optimistic.

Re: Dow Falls 2997 points worst drop since 1987 crash

#254

Post by nostromo » Mon, Mar 16, 2020, 9:48 PM UTC

yitianjian wrote: post #154

nostromo wrote: post #111

Earlier quoted context omitted.

If our response has been commensurate with the threat or an overreaction is definitely an open question. One we probably won't be able to answer definitively for a while.

I saw one really good comment - we'll know for sure if we under reacted, but we'll never know if we overreacted

Oh I think it's very possible we'll know.

"Remember in 2020 when everyone lost their jobs and their houses and their retirement because some octogenarians died from a bad cold?"

Re: Dow Falls 2997 points worst drop since 1987 crash

#255

Post by ailideex » Mon, Mar 16, 2020, 9:48 PM UTC

jmull wrote: post #214

ailideex wrote: post #76

Earlier quoted context omitted.

> If a vaccine is found and is effective, likely the market will calm down and hit the bottom. Realistic timeline for this seems months.

An optimistic timeline is a vaccine will be available next year and I don’t think much of the market is looking that far ahead right now.

By that time we may not even need it anymore.

Re: Dow Falls 2997 points worst drop since 1987 crash

#256

Post by tomrod » Mon, Mar 16, 2020, 9:50 PM UTC

svara wrote: post #213

Reedx wrote: post #118

Earlier quoted context omitted.

Maybe, but why don't you think the markets will bounce back once we're on the other side of this? Have underlying fundamentals changed longer term? South Korea, China, Singapore are encouraging and seeing a return back to (almost) normal life. Granted, we're not dealing with this nearly as effectively and there may be a 2nd wave to come. But at this point they seem to make the case for optimism.

Singapore is an interesting one. Their outbreak looks really benign, but actually they are on an exponential trajectory as well. The rate is just much lower, something like 7% daily. It doesn't register compared to the countries with fast growth, but if it stays like that, they will reach high numbers too. It translates to 10x per month. See https://studylib.net/coronavirus-growth

The have flattened the curve

Re: Dow Falls 2997 points worst drop since 1987 crash

#257

Post by AnimalMuppet » Mon, Mar 16, 2020, 9:50 PM UTC

lettergram wrote: post #85

AnimalMuppet wrote: post #64

Earlier quoted context omitted.

I'm pretty sure banks aren't going to start folding. The Fed is ahead of the curve this time (or at least not nearly as far behind it as in 2008). They seem to be pretty serious about doing whatever is needed to keep things from falling apart.

I said I wouldn't be surprised, not I think they will. For reference, I work at a bank. The opinion is my own. The problem has to do with a run on the bank. All banks are currently reporting negative earnings. Most banks rely on credit, and revenue from said credit. If that breaks down (because people can’t pay). They collapse. I think the fed can bail them out. I also think that requires printing money so inflation…

> I said I wouldn't be surprised, not I think they will.

Fair enough.

> I think the fed can bail them out. I also think that requires printing money so inflation will be high.

If things go that way, I don't think it has to result in inflation. The thing is that, when a bank collapses, some money disappears (because of fractional reserve banking). If the Fed prints exactly the right amount of money to counterbalance that, it doesn't have to be inflationary. (The Fed could mess it up, of course...)

Re: Dow Falls 2997 points worst drop since 1987 crash

#258

Post by mgolawala » Mon, Mar 16, 2020, 9:51 PM UTC

bedhead wrote: post #241

I manage a fund for a living and have been doing this stuff for a while. I'm generally an optimist...and I've never been more terrified in my life than now. This makes 2008 look like a keg party. We have a health crisis and the prescription from government has been to induce an economic crisis, one that's possibly (and increasingly more likely) orders of magnitude worse than anything we've ever seen, including the gr…

So Weird, reading your comment reminded me of how this is similar to how the immune system of an infected host can react with such ferocity that it kills the host. Like a Cytokine storm or a persistently high fever.

Imagine if our reaction to this disease, to prevent human death and suffering... will cause so much poverty, hardship, and social instability that the outcome is more human death and suffering, than if we had just let the virus run its course and had just gone about our daily lives accepting the losses.

I sure hope we are doing the right thing. Makes you wonder.

Re: Dow Falls 2997 points worst drop since 1987 crash

#259

Post by milesvp » Mon, Mar 16, 2020, 9:51 PM UTC

gizmo686 wrote: post #175

rconti wrote: post #95

Earlier quoted context omitted.

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.

Its not fundamentally crazy. In one sense, standard investing advice is to periodically rebalance between investment classes when your holdings diverge too much from you desired profile. In this, for a "simple" investor, that would probably mean transfering from bonds to stocks; since the portion of your portfolio that is in stocks recently fell substantially below your desired portion. Assuming an efficient market,…

You may be missing one of the more fundamental reason to rebalance your portfolio at predetermined points in time to a predetermined balance. That it takes emotion out of the equation. By rebalancing, say, every time you put money into your IRA, you're always "selling high and buying low" without the risk that you'll let emotion overturn a generally good investing strategy.

While you may actually be in a position to time the market, my understanding is that empirical evidence suggests that the vast majority would be better off not trying to time the market. And that people who mechanically follow rebalancing procedures will tend to outperform those who rebalance based on some kind of intuition or market calculation.

Re: Dow Falls 2997 points worst drop since 1987 crash

#260

Post by generalpass » Mon, Mar 16, 2020, 9:52 PM UTC

visualstudio wrote: post #44

Dumb question. Why can't they just turn off all stock markets for a month?

There are many institutional investors such as pension funds and insurance companies (whatever they call their holdings) that rely on returns from things like stocks.

Since they wouldn't be able to sell stocks, they would start selling everything else they've invested in.

Same would go for anyone else requiring cash.

Then everyone holding the other stuff that is liquid, will sell it because why hold onto a plummeting asset when the only reason to own it is the value?