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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

#391

Post by dntbnmpls »

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.

> Maybe, but why don't you think the markets will bounce back once we're on the other side of this?

Of course. Do you think people will stop working, going out, watching movies, buying cars, etc forever?

Every market decline, people think the world is going to end. But the world just keeps chugging along.

During the 2008 financial crisis, people were predicting the end of the world, bank runs, financial collapse, etc. The most recent ebola scare, people were talking about pandemic, every hospital being at capacity, death rate, triage and the end of the world.

In a few years, we'll do this all over again. The markets will be reinflated, the markets will decline, we'll have another crisis, the news will feed panic for ad money and people will go out of their minds. Then things will return to normal.

Re: Dow Falls 2997 points worst drop since 1987 crash

#392

Post by minwcnt5 »

ScoutOrgo wrote: post #32
lettergram wrote: post #26

Just my 2 cents - Take your assets out of the market. Until we (in the US) see a few senators, a justice or two and / or the VP/president/etc succumb to the disease we haven’t hit peak panic. ~50% of the workforce is about to be out of a job for a few weeks. A large portion of Restaurants are about to go bankrupt, daycares are about to go bankrupt. Houses are about to drop in price (no money, and elderly dying). The…

But if you sit on cash, you will miss the day where it has a huge gain due to some news like a vaccine announced.

To me that's fine. The S&P 500 isn't going to instantly spike back up to 3000. There is real damage being done to corporate bottom lines. The negative growth experienced by companies during a recession compounds into all future earnings -- for the rest of time. So the way I look at it is that the market is pricing all future earnings of companies, and once the volatility has settled it will reach some new baseline that's much lower than the peak, and then continue to grow at a nominal rate, only forward-looking, with no memory of what just happened. It took 4 years for the S&P to reach its previous peak after it bottomed out in 2009. So if you've been holding onto cash, or sold near the 2020 peak, you probably have a lot of time to get back into the market and still end up better off than if you'd bought in a month ago. You don't need to time it perfectly. I can make a lot of money if I do time it correctly, but if I fail to I'm not going to count it a loss.

Re: Dow Falls 2997 points worst drop since 1987 crash

#393

Post by kirse »

rnd33 wrote: post #331
kirse wrote: post #103

Earlier quoted context omitted.

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.

Right now the bulk (>95%) of this short-term correction is tied directly to COVID-19 total infections + infection-rate data. The parasitic drag on second and third-order (and beyond) economic factors have barely kicked in (i.e. lost productivity from WFH, people without jobs, businesses unable to stay afloat because of credit / liquidity / debt servicing issues, etc). The fundamental value-producing capabilities of most companies are exactly the same as they were two weeks ago. Chick-fil-a can still make the same great sandwich, and AMD can still make the same great chips.

Theoretically if someone released a miracle cure today that could be distributed in 2 weeks, you'd witness the greatest bull rally in the history of the US over this remaining week.

All that to say you don't really need to guess on this one right now. So long as we don't see a flattening/slowing of the US infections curve, markets will continue trending downward as compounding negative impacts/expectations on those 2nd/3rd-order economic effects begin to pile up. For now, the right answer is to stay out of the market.

Over the next 4 weeks you'll have all the data you need to decide if this will return as a monster bull rally or a long-term 2020+ drag on the economy. Keep an eye on your COVID-19 dashboard. As soon as the data starts to flatten out, consider an entry point. (with the caveat it doesn't return in full force based on season - look into the 1918 flu). If infections continue to accelerate though (which they currently are), stay out.

Re: Dow Falls 2997 points worst drop since 1987 crash

#394

Post by thorwasdfasdf »

bduerst wrote: post #130
SirensOfTitan wrote: post #25

I’m buying S&P index every day at this point, trying to drive my average down without trying to find the bottom. ...with that being said, I feel really worried about American economic stability long term now. Governors are closing restaurants and businesses leaving tons of folks out of work while providing minimal safety net coverage. Even liberal states like New York are ignoring the downstream economic effects thes…

That's exactly why it's not really that good of a time to buy just yet. There's a chance we have a long ways to go and you'll probably run out of cash if you keep buying down the slide. We bought some on the crash last week but now it's just a waiting game to see how low it's going to bottom out.

that's what I did. bought a little at -3%, a little more at -6%, a lot more at -9%, lott lot more at -12%, by the time it hit -20%, I'm almost entirly in equities. Keep in mind, this is ONLY in my retirement accounts and I do have a 30 year investment horizon. I figure, it's better to get into equities than loose everything (in bonds and cash) once the eventual inflation taxes wipe everything out.

Re: Dow Falls 2997 points worst drop since 1987 crash

#395

Post by thorwasdfasdf »

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…

too late for me, i already bought the dip big time at -6%, -9%, geez.

Re: Dow Falls 2997 points worst drop since 1987 crash

#396

Post by akiselev »

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…

> Not doing any actual airport screening, rejecting the WHO tests so we could develop our own (for some reason),

Let's not forget screwing up the manufacturing of the test. [1]

[1] https://www.cdc.gov/coronavirus/2019-ncov/about/testing.html

Re: Dow Falls 2997 points worst drop since 1987 crash

#397

Post by imperialdrive »

dougmwne wrote: post #83
visualstudio wrote: post #44

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

But what if I need money for food and rent but my emergency fund runs out? If I own stock but cannot sell it that would be a bad thing, right?

I highly doubt anyone uses their portfolio to keep food and rent money in. If you do, you would be in a very small/minority group.

Re: Dow Falls 2997 points worst drop since 1987 crash

#398

Post by kazinator »

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…

> Now is not a good time to sell your stock holdings.

But that's exactly what a good many fools are doing, which explains the downward price pressure.

> I think a severe recession is all but guaranteed at this point. Let's hope we get through this with no more than that.

I suspect it's going to be remembered as a redistribution of wealth from hotter heads to cooler heads.

Re: Dow Falls 2997 points worst drop since 1987 crash

#399

Post by imperialdrive »

seanmcdirmid wrote: post #89
visualstudio wrote: post #44

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

That is sort of like turning off a heart rate monitor during a heart attack.

Think of it as putting someone in a medically induced coma. It's not really a terrible idea. Anyone working in finance could enjoy the downtime and use their time to help local city/hospital/neighbors etc. US bails out finance, finance in turn pitches in. Could be a nice win-win.

Re: Dow Falls 2997 points worst drop since 1987 crash

#400

Post by gbrits »

deanmoriarty wrote: post #380
iMuzz wrote: post #309

Earlier quoted context omitted.

Be weary of catching falling knives. I've made that mistake before.

Why, exactly? If you have a healthy emergency fund in cash to cover your liabilities for 6 months (or even 1 year to be more conservative in this environment), what is the problem in throwing every bit of cash that comes your way (paycheck savings, ...) and you won't need for a few years, at the stock market as it goes down? Over decades the stock market has had an IRR or 8%+, and that IRR includes crashes like these…

“and that IRR includes crashes like these.”

No it doesn’t.

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