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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

#331

Post by rnd33 »

kirse wrote: post #103
Hasz wrote: post #47

Earlier 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.

Having been roughly in your position back during the 2008 dump... https://news.ycombinator.com/item?id=318595 Don't forget, the market can drop 20% a day for awhile. Plenty of smart folks are sitting on the sidelines with cash, but time will tell if this is the trigger for a much larger longer-term 2020 deleveraging. Markets aren't even where they were pre-Trump election yet, so this 30% haircut from the top isn't ev…

The problem is separating the great recessions from less dramatic recessions. Was 2008/2009 a once in a decade recession or once in a century recession? In a normal recession you'll never get Ford for $1, and most stocks will never feel that cheap.

Re: Dow Falls 2997 points worst drop since 1987 crash

#332

Post by neuronic »

taurath wrote: post #308
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…

> This smells of a panic right now. It is a panic, but its justifiable to panic over the entire economy being shut down for an undetermined amount of time. No person on earth can say when this will end, given what we currently know about the virus, whether its possible to become reinfected, and how effective our strategies will be.

Everything happening right now are delay strategies to get a vaccine / antiviral treatment. Before we can control this the economy will be shut down. Nothing will be like before, the financial stress in the global economy is too extreme.

Re: Dow Falls 2997 points worst drop since 1987 crash

#333

Post by projektfu »

Kerrick wrote: post #192
badfrog wrote: post #94

Earlier quoted context omitted.

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

The textbook definition of a recession may mean that prices will continue to fall until the recession ends -- in fact, as soon as prices rise it ends the recession. But by that definition, the "great recession" ended in the USA in June 2009. I'm guessing the above poster meant something more like "period of society-wide economic hardship" by recession. By that more colloquial definition, you might say the great reces…

That’s the definition of a bear market.

Re: Dow Falls 2997 points worst drop since 1987 crash

#334

Post by dev-ns8 »

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 look at it this way. Your essentially buying a companies future earnings by buying their stock. For some time here, corporate earnings are going to take a hit. B2C probably the hardest, but B2B will also feel the effects, ripple effect if you will. The strain these quarantines are putting on Small business owners will also ripple into the larger corporate companies that the market is composed off because these SBO are the consumers too.

I don't have a full understanding of the Repo market, but I do get it at a moderate level. I understand that it acts as the "lube" to our financial system and It's obvious it's not functioning correctly. What effect will this happen on the growing corporate debt that's out there? What effect will the lower revenues have on the ability for business' to pay back the debt and interest?

These are questions I have, but don't necessarily have factual answers for. However I don't feel good about the answers to them and for that reason do think were in for a recession.

Re: Dow Falls 2997 points worst drop since 1987 crash

#335

Post by fock »

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…

people dying everywhere (which, with a hopeful 2% letality is still very likely) will also heavily disturb the peace as well as the economy. As long as we are not sure about basic things like that, I'm quite for a lockdown, because a 7% letality is still not off the table (with happy things like reinfection) - and this is basically about double the loss of life of WW2 (which at least had a clear winner, being able to play out its game).

So: how are you sure that the parameters of the pandemic are something, the system can handle? Is there any precedent for that? What reason is there, that our society (that's the people, making up this system) can't overcome this crisis with something different?

Re: Dow Falls 2997 points worst drop since 1987 crash

#336

Post by mntmoss »

qooleot wrote: post #304
_bxg1 wrote: post #291

Earlier quoted context omitted.

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…

Are you sure COVID-19 didn't partially prick a systemic issue that was hard to see on the rise (as many also missed the housing crisis before the fall)? For example, the amount the stock rise was attributed to stock buybacks in an unsustainable manner caused by late stage government policies (tax cuts, low rates). There has been some pretty extreme levels of corporate debt that correlates with this.

In crashes all the vulnerabilities tend to collapse at once like a house of cards, and in a sense we have learned things one crash at a time. When gold was the primary form of money, there were many crashes because of lack of control over money supply. Likewise with fiat, all the crashes from indebted governments trying to print their way out and inducing hyperinflation.

In the 1929 crash there was a run on the banks because there was no confidence in their survival. The world going to a wartime economy and increasing public spending reinvigorated things but it eventually caused high inflation in the US by the 1960's - one of those factors in the country's "1970 turning" in many policies. Fear of the balance sheet getting out of control again created the strategy of huge bailouts in the latter part of the 20th century, but a downside of doing it just through lending is the "crowding out" of those actors who aren't given bailouts - which in prior recent crashes were generally individual workers, homeowners and retail investors who just took it on the chin and were told to lower their expectations.

This time is different. The attention is on individuals and their problems, and I'm seeing an uptick in discussion of UBI and benefits beyond the existing trend. There isn't faith in this crisis being solved through the existing toolset.

Re: Dow Falls 2997 points worst drop since 1987 crash

#337

Post by wahern »

qooleot wrote: post #304
_bxg1 wrote: post #291

Earlier quoted context omitted.

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…

Are you sure COVID-19 didn't partially prick a systemic issue that was hard to see on the rise (as many also missed the housing crisis before the fall)? For example, the amount the stock rise was attributed to stock buybacks in an unsustainable manner caused by late stage government policies (tax cuts, low rates). There has been some pretty extreme levels of corporate debt that correlates with this.

It probably did prick a bubble. But all the economic recovery measures for the pandemic may, ironically, push further out the point at which the systemic issues break the market and force resolution. Especially in the U.S., economic aid invariably ends up contributing far more to corporate balance sheets than it does citizens' wallets. I mean, what was the first response of the GOP to prospective economic issues? Cut taxes, including payroll taxes, which could have dealt a death blow to Social Security and Medicare considering how many Republicans are itching to get rid of those programs entirely.

Once COVID-19 passes I would expect more of the same. For reasons that aren't entirely understood, inflationary effects of monetary stimulus are highly attenuated, at least for the average consumer, although they clearly contribute to the ever increasing wealth of top earners, not to mention financial assets. Who knows how long we can keep going down this road.

Re: Dow Falls 2997 points worst drop since 1987 crash

#338

Post by zone411 »

leetcrew wrote: post #211
bobbylarrybobby wrote: post #100

Earlier quoted context omitted.

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

this is much riskier than just holding. stock prices are about expectations, not necessarily reality. for all we know, everything might spike back up to January 2020 prices the second there's an inflection point in the new infection rate, and you could miss your chance to buy back in.

No. Being in cash is always less risky than being in the market. "Missing a chance" is not what "risky" means.

Re: Dow Falls 2997 points worst drop since 1987 crash

#339

Post by seanmcdirmid »

fock wrote: post #335
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…

people dying everywhere (which, with a hopeful 2% letality is still very likely) will also heavily disturb the peace as well as the economy. As long as we are not sure about basic things like that, I'm quite for a lockdown, because a 7% letality is still not off the table (with happy things like reinfection) - and this is basically about double the loss of life of WW2 (which at least had a clear winner, being able to…

It isn’t clear that the corona virus will have a noticeable effect on death rate in any specific city, region, or country. It would have to kill a lot more people before it even showed up in the statistics in a place like Wuhan that has gotten the brunt of it, I think.

Re: Dow Falls 2997 points worst drop since 1987 crash

#340

Post by joezydeco »

_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…

Previous recessions were a lack of demand. What happens when it’s a lack of supply?

We can’t go back to the way things were if the global supply chain is damaged or completely stopped. And that’s not even considering local businesses that may never come back after this is over.

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