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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

#311

Post by airstrike »

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…

> well overdue for a crash.

This is not how markets work.

Re: Dow Falls 2997 points worst drop since 1987 crash

#312

Post by bubbleRefuge »

I think as soon as there is some clarity around fiscal policy, we will see markets stabilize. Fiscal policy is coming, we just don't know the extent. So 2 or 3 months from now the virus will have burned out and we will have massive amounts of fiscal stimulus in the economy and the boom ensues. This is the way our Economy and stock market function. As soon as the stock market begins to see this, it will explode to the upside. That maybe in a week or a month or 2.

Re: Dow Falls 2997 points worst drop since 1987 crash

#313

Post by Waterluvian »

I have a "balanced" index fund with my retirement savings. I'm 33. I'm simply not touching a thing. I hope this is the correct move.

It's amazing. I think I'm a pretty smart guy and I'm finding it very difficult not to second guess these choices. And the worst time to make choices like this is during financial crisis.

Re: Dow Falls 2997 points worst drop since 1987 crash

#314

Post by sovnade »

cm2187 wrote: post #305
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.

Looking at Europe (but the US seems to be taking the same direction). All restaurants, shops, entertainment, tourist industry are closing, and will remain closed for several months. Large businesses will fire people (see airlines now), small businesses will go bust. If these health policies undershoot their targets in term of number of people infected, then we may have to deal with this virus again next fall/winter,…

There's not even any indication that this is seasonal. It's spreading pretty well in Australia/India which are extremely hot right now. It will probably continue to spread in Europe/NA all throughout summer.

Our state and many others have closed schools, made all restaurants take-out/delivery only, barred gatherings of > 10 people, etc. I don't know how the small businesses are going to survive more than a couple weeks of this.

Re: Dow Falls 2997 points worst drop since 1987 crash

#315

Post by treis »

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

This is the attitude that has me worried. It's CYA with a sprinkle of panic.

Re: Dow Falls 2997 points worst drop since 1987 crash

#316

Post by taurath »

_bxg1 wrote: post #291
lancewiggs wrote: post #239

Earlier quoted context omitted.

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 b…

> 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.

This to me is more akin to a natural disaster which wipes out large amounts of our economic infrastructure in the form of consumer spending. How do people and businesses bridge the gap? Businesses are already over-leveraged due to incredibly cheap debt. Some have good balance sheets and will survive, but many many will not. Most small businesses cannot survive 2 months without being in business, let alone 6. The solution can't be for them to take out loans which they'll never be able to pay off.

The thought that this is just an acute problem that will go away is wishful thinking. The effects will be further and wider than many of us can imagine right now.

Re: Dow Falls 2997 points worst drop since 1987 crash

#317

Post by rnd33 »

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…

Are all bear markets the same? If there's a clear signal when to start buying why isn't everyone doing it?

To me technical analysis of the stock market is the modern equivalent of a shaman predicting next year's harvest. It sounds very convincing but there's little scientific evidence that it can predict anything accurately.

Re: Dow Falls 2997 points worst drop since 1987 crash

#318

Post by destitude »

wnmurphy wrote: post #289
gotoeleven wrote: post #185

Earlier quoted context omitted.

What lack of urgency are you talking about?

Not doing any actual airport screening, rejecting the WHO tests so we could develop our own (for some reason), denying that there was even a problem for 4 critical weeks, telling people as recently as a week ago that they should be out going to restaurants and bars... all the failures of leadership that caused us to blow well past containment. In contrast, Japan, Taiwan, Singapore, Thailand, and Hong Kong got right o…

Oklahoma governor was in a crowded restaurant with his family just two days ago telling everyone else to do the same.

Re: Dow Falls 2997 points worst drop since 1987 crash

#319

Post by lowdest »

trophycase wrote: post #236
SheinhardtWigCo wrote: post #124

Earlier quoted context omitted.

Or hold and hedge by buying UVXY et al

Do not buy and hold leveraged ETFs interday. Buy puts if you want.

Good advice, but the IV on most puts makes them incredibly expensive right now. I prefer shorting the 3x long etfs.

Re: Dow Falls 2997 points worst drop since 1987 crash

#320

Post by dictatorsunion »

rnd33 wrote: post #317
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…

Are all bear markets the same? If there's a clear signal when to start buying why isn't everyone doing it? To me technical analysis of the stock market is the modern equivalent of a shaman predicting next year's harvest. It sounds very convincing but there's little scientific evidence that it can predict anything accurately.

It's as though you think everyone is rational. If they are they should be selling, but no, they are buying.
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