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Dow Falls 2997 points worst drop since 1987 crash

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Re: Dow Falls 2997 points worst drop since 1987 crash

#291

Post by _bxg1 »

lancewiggs wrote: post #239
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…

The S&P500, the best general index, closed at 2386 today. It's risen over 300% since the last crash, the GFC in 2007. It's been an extraordinarily lengthy bull run, and well overdue fo a crash. Before the GFC the index was 1550, and after it was ~760 (~50% drop) At the peak of the dotcom boom it was generally under 1500. In 2002 after that crash it was 800. (45% drop) The recent peak was ~3380. A 50% drop is ~1700, w…

The thing with dotcom and GFC is that they both revealed fundamental problems in the marketplace. Dotcom was over-hype around internet startups, GFC was the financial house of cards around subprime mortgages. There was no "going back to the way things were" in those cases.

In this case, on the other hand, the primary mechanism is "people can't work/aren't going out and buying things". That's absolutely going to "go back to the way things were", in some sense. It's just a question of how long it will take, and how much damage will be dealt in the meantime. But it feels very different from those other ones, which could be good or bad.

Put differently, the GFC was like organ failure: things couldn't just heal, they had to be reworked and replaced. The current crisis is like a knife wound: the basic problem will heal on its own, but in the meantime you have to keep from bleeding out and hopefully avoid necrosis.

Re: Dow Falls 2997 points worst drop since 1987 crash

#292

Post by akhilcacharya »

mschaef wrote: post #206
hitpointdrew wrote: post #84

Earlier quoted context omitted.

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.

> As long as you are reasonably sure you can hold your stocks for a few years then just hold on to them. What's 'a few years' mean to you? The Nikkei hit its high of 40K around 1989-89 and hasn't traded above 80% of that in the 30 years since.

Isn’t that misleading given the price of the Yen?

Re: Dow Falls 2997 points worst drop since 1987 crash

#293

Post by coliveira »

dictatorsunion wrote: post #290

I don't understand why people are catching a falling knife. It is as though they have never been in bear markets before. Understand the market psychology and don't waste your money. I have friends who DCA-ed and regret because it took them years just to breakeven. In a standard fear cycle (Google it), we are only at the middle stage between denial and fear. There is an acceleration downwards that we have not experien…

The very fact that there are still so many people willing to "buy the dip" shows that we're just in the beginning of the process. There will be a time (a few weeks from now), when almost everyone will be screaming sell. This is just how ALL bear markets work.

Re: Dow Falls 2997 points worst drop since 1987 crash

#294

Post by rnd33 »

selectodude wrote: post #35
tathougies wrote: post #23

Earlier 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.

The number of confirmed cases in South Korea is flattening out at around 8,200 people out of a population of 52 million (0,016 %), China is flattening out at 81,000 cases (0,006 % of the whole population). Is it really reasonable to assume the number of infected people in the the US will be 3,000 to 8,000 times higher?? If these are the calculations Wall Street are doing then I'm not surprised the stock market is falling...

Re: Dow Falls 2997 points worst drop since 1987 crash

#295

Post by samsonradu »

Reedx wrote: post #118
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…

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.

I wouldn't underestimate the effectiveness and ability to respond of highly developed (and small) states like Singapore, Hong Kong or Taiwan.

They have very good control of their borders and the (medical) resources to act in case of trouble. Not only that but I think they have learned a few lessons after the 2002-2004 SARS outbreak.

Anecdotal, but while in Hong Kong (2014) there were a few things that stood out:

- they had thermal screening for ALL passengers - while walking towards customs an agent asked me to take my hat off and pointed to the thermal cameras. In contrast, at Bucharest's airport they were set up 3 weeks ago. As of 2019, there were 1.2M Romanian citizens living in Italy, about 600k in the northern part.

- banners against spitting in the trash bin - coming with a big fine. More generally speaking, a general state of cleanliness which can't be found in many EU capitals.

- no toilets in the subway - might be sources of contamination. And when you finally found a public toilet, they were as clean as they can be.

I think there are better odds of finding a cure fast than for Europe to contain this. Note, the evening before the Milan area lockdown people were rushing to the train stations - Schenghen area is borderless.

Re: Dow Falls 2997 points worst drop since 1987 crash

#296

Post by pradn »

mschaef wrote: post #206
hitpointdrew wrote: post #84

Earlier quoted context omitted.

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.

> As long as you are reasonably sure you can hold your stocks for a few years then just hold on to them. What's 'a few years' mean to you? The Nikkei hit its high of 40K around 1989-89 and hasn't traded above 80% of that in the 30 years since.

That doesn't include dividends paid out by the companies in the NIKKEI.

Re: Dow Falls 2997 points worst drop since 1987 crash

#297

Post by Swizec »

dictatorsunion wrote: post #290

I don't understand why people are catching a falling knife. It is as though they have never been in bear markets before. Understand the market psychology and don't waste your money. I have friends who DCA-ed and regret because it took them years just to breakeven. In a standard fear cycle (Google it), we are only at the middle stage between denial and fear. There is an acceleration downwards that we have not experien…

> It is as though they have never been in bear markets before.

We haven’t. It’s been 12 years since the last bear market.

I was literally 20, in college, and with nothing to even think about investing.

How many are too young to even remember 2008?

Re: Dow Falls 2997 points worst drop since 1987 crash

#298

Post by agency »

makomk wrote: post #277
vngzs wrote: post #212

Earlier quoted context omitted.

The US lags just about every developed country on testing for Covid-19 disease.[0] ‘It’s Just Everywhere Already’: How Delays in Testing Set Back the U.S. Coronavirus Response[1] [0]: https://www.vox.com/science-and-health/2020/3/12/21175034/co... [1]: https://www.nytimes.com/2020/03/10/us/coronavirus-testing-de...

The person described in that Vox article - upper respiratory symptoms, no direct contact with someone with confirmed Covid-19 - wouldn't meet the criteria for testing anywhere that I know of off-hand. Certainly not in the UK or Australia, probably not in South Korea (though they allow people who don't qualify to buy testing out of pocket), not in a whole bunch of EU states, and Italy has much bigger things to worry a…

You can't have contact with someone with a confirmed case of Covid-19 if nobody is being tested for Covid-19.

Re: Dow Falls 2997 points worst drop since 1987 crash

#299

Post by dictatorsunion »

Swizec wrote: post #297
dictatorsunion wrote: post #290

I don't understand why people are catching a falling knife. It is as though they have never been in bear markets before. Understand the market psychology and don't waste your money. I have friends who DCA-ed and regret because it took them years just to breakeven. In a standard fear cycle (Google it), we are only at the middle stage between denial and fear. There is an acceleration downwards that we have not experien…

> It is as though they have never been in bear markets before. We haven’t. It’s been 12 years since the last bear market. I was literally 20, in college, and with nothing to even think about investing. How many are too young to even remember 2008?

There are industry-based bear markets and bear markets in other countries almost every year. They all work the same.

Re: Dow Falls 2997 points worst drop since 1987 crash

#300

Post by tomp »

say_it_as_it_is wrote: post #244

This is the moment that management cuts staff and pushes survivors to work harder than ever with no more than the threat of the axe. Realizing productivity gains from job insecurity is unethical, so it only gets used under the illusion that it is the only way for the employer to survive. The reality is that the employer could have operated like this all along but couldn't drop the axe without looking like a butcher u…

Seriously?! "Quitting for new work" when in a week or so no companies will even be doing in-person interviews?

This sounds just insane to me. "Quitting before you find a job" is bad advice even in very good economy.

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