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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

#361

Post by rnd33 »

dictatorsunion wrote: post #320
rnd33 wrote: post #317

Earlier quoted context omitted.

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.

I'm not saying everyone is rational, I'm just saying there is no reliable way of predicting when the market has bottomed out.

DCA-ing on the way down means I will at least buy lower than a year ago. I have no way of knowing when we will bottom out, or if it will be -25%, -30% or -50% and beyond.

Re: Dow Falls 2997 points worst drop since 1987 crash

#362

Post by tathougies »

rnd33 wrote: post #294
selectodude wrote: post #35

Earlier quoted context omitted.

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 fal…

The stock market is falling because (a) individuals and businesses are liquidating positions to have cash on hand and (b) people are worried that, without a liquidity package from the government, major businesses are in danger of being liquidated.

Re: Dow Falls 2997 points worst drop since 1987 crash

#363

Post by rnd33 »

joezydeco wrote: post #340
_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…

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.

How is there a lack of supply and not of demand right now? Most of China is already back to work, and we'll see lack of demand in the coming weeks/months when people isolate themselves and not going out buying things.

Re: Dow Falls 2997 points worst drop since 1987 crash

#364

Post by endorphone »

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.

There is going to be a wave of airline bankruptcies. There is going to be a wave of retail bankruptcies. Add in cruise lines, tourism, restaurants, etc. Now add the secondary effects and most indicators are flashing red.

A significant cause for the massive drop today is that indicators out of China are that the disruption is much, much larger than anyone accounted for.

A few days ago there was a guy talking about refinancing his house and putting 20% of the value into the market[1]. He asked whether it was a bad time. I said it was a bad time -- not that it was going up or down but that there is enormous uncertainty and a long way to drop -- and got moderated down to the gray. The non-gray comments were all that this is a great time. Buy 'em on sale is a claim that has been foolishly made again and again.

No, it isn't a great time. Anyone deluding themselves that there is a market "bottom" that it is bouncing off of has been proven wrong repeatedly. Over the past couple of days the federal government has done more to try to fix the markets than they did during the entire housing crash, but compressing it all into a weekend. They have essentially nothing left.

And here we are, staring into the abyss.

Things will improve, and at one point we'll laugh about this and consider it all an overreaction, etc. But there's a lot of downside between now and then. And if history is any example, once we bottom out we'll hang around for a while.

[1] Oh add that we have historic debt levels, bubbled house prices in some areas, and the simple idea of financing the current, elevated value of a house seems risky.

Re: Dow Falls 2997 points worst drop since 1987 crash

#365

Post by [deleted] »

baybal2 wrote: post #207
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.

29 here Entered the workforce right after 2007, in my 16, after moving to Singapore from small town Russia as an exchange student. Financial fortunes of my patents went nowhere, and I had to keep myself afloat for pretty much 2.5 years. Made not so bad money selling low end electronics to the third world on Alibaba, and such. Then, my parents made me dump all my money on the best things since sliced bread: "Business…

[deleted]

Re: Dow Falls 2997 points worst drop since 1987 crash

#366

Post by aguyfromnb »

_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…

>That's absolutely going to "go back to the way things were"

China printed money in the past 10 years on a scale we've never before seen in history (300% Debt-to-GDP). They remain in a trade war with the US, are being blamed for the virus and their economy has shut down. Things aren't "going back to normal".

Re: Dow Falls 2997 points worst drop since 1987 crash

#367

Post by styren »

amiga_500 wrote: post #63
mullingitover wrote: post #14

Earlier quoted context omitted.

Consumer spending is kind of the foundation of the economy, and as of today in the US it's about to go into freefall. Especially services. This fall is pricing in the inevitable waves of bankruptcies in the service industry.

Why don't the fed just print money, a program could order stuff on amazon and they could deliver it to a land fill (obviously the landfill would have to be automated by robots). for services they could just automate making bookings with a deposit and not show up. or a little zoomba vacuum thing could show up. wouldn't be inflationary as cash is being destroyed like mad as we are all replaced by robots, so that won't…

Okay lets see if anybody else has a suggestion

Re: Dow Falls 2997 points worst drop since 1987 crash

#368

Post by minwcnt5 »

pradn wrote: post #296
mschaef wrote: post #206

Earlier quoted context omitted.

> 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.

Even with dividends reinvested the Nikkei's return over the past 30 years is negative.

Re: Dow Falls 2997 points worst drop since 1987 crash

#369

Post by aguyfromnb »

dnautics wrote: post #220
joe_the_user wrote: post #177

Earlier quoted context omitted.

South Korea and China itself are the best models for countries that have (sort of) bounced back. And they leveraged a variety of mass mobilizations the US hasn't started with. So basically we're in for a LOT of pain in dealing this. Exogenous shocks usually don't provoke recessions but is going to be like a planet-wide tidal wave. Things are going to be very different at the end. Huge, efficient enterprises may well…

The assumption is that mass mobilization is 1) effective and 2) necessary. We simply don't have enough data to know one way or another. Not saying self-isolating isn't prudent, but you can't really make reliable long term economic forecasts assuming any particular disease profile. Full disclosure: I've been short term short the market for the last three weeks.

>Full disclosure: I've been short term short the market for the last three weeks

You hit the exact peak of the market before deciding to short? Wow. Can you share with us your prognostications on just how "short-term" you expect this to be, or will you update us with hindsight on that, too?

"I've been short the market" after a 30% draw-down is the new version of all prisoners claiming they're innocent. It's never "I started to get defensive 6 months ago" or "I went to half cash expecting a crash near-term". Top tick and went short. Every forum, every time.

This is where /r/wallstreetbets has it right: if you aren't going to post your trade in advance or verify it, don't talk about it.

Re: Dow Falls 2997 points worst drop since 1987 crash

#370

Post by engineeringwoke »

zone411 wrote: post #360
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…

Do you have any research showing that waiting for VIX below 30 after it was high is a correct strategy? You can just test it in around 20 lines of Python or just in Excel. Or that buying in a situation like now is a bad idea? Did you run a historical backtest? Did you test the trend following and the 200-day SMA? Please share. Of course, to show that any of them are promising models, you need to do much more than jus…

You should really check your tone as well. This is good advice.
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