Dow Falls 2997 points worst drop since 1987 crash • Hacker News Board

Re: Dow Falls 2997 points worst drop since 1987 crash

#421

Post by jdhn » Tue, Mar 17, 2020, 1:10 AM UTC

seanmcdirmid wrote: post #156

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.

A lot of ventures that were hanging on by threads will be ruined by this, so the pandemic is likely to clear out a lot of the weaker businesses as any good recession or crash is apt to. It will take a while for the marker to grow around that loss (though good in the long term, there is pain in the short). It could also trigger a housing correction, which has ripple effects on the construction industry, and those peop…

>It could also trigger a housing correction

What would a housing correction look like? Demand still outstrip supply in hot markets, so the worst thing that'll happen is that the housing prices will have a slight dip, and that's it. Also, with the Fed lowering interest rates to zero and possibly lower, that'll continue to inflate the value of assets such as houses.

Re: Dow Falls 2997 points worst drop since 1987 crash

#422

Post by dictatorsunion » Tue, Mar 17, 2020, 1:19 AM UTC

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…

In any case I am just trying to help people limit their downside by giving some simple advice. It's always better to make less money and yet be able to sleep well, then always fearing your portfolio goes to naught with some naive strategy. Not worth shortening your life by a few years with all that underlying anxiety just to make a potential 10-20% more. But definitely I would say this strategy would at least increase your upside and minimize your downside than a pure DCA, because it factors in the psychology of a bear market. Just trying to help here, I stand no gains, just don't like to see people losing their minds and sleep over losses that could have been avoided.

Re: Dow Falls 2997 points worst drop since 1987 crash

#423

Post by [deleted] » Tue, Mar 17, 2020, 1:38 AM UTC

pathseeker wrote: post #417

AznHisoka wrote: post #68

Earlier quoted context omitted.

To add further perspective: The S&P is just below where it was in December of 2018. Do you still have the same optimism about the US (and even the world) economy now than you did then? For me, the answer is a resounding No.

But companies have expanded since then. It doesn't take the same optimism to invest at the same price points as 2018 as it did in 2018 (even ignoring inflation).

[deleted]

Re: Dow Falls 2997 points worst drop since 1987 crash

#424

Post by Sargos » Tue, Mar 17, 2020, 1:41 AM UTC

aguyfromnb wrote: post #387

coliveira wrote: post #119

Earlier quoted context omitted.

Goldman Sachs already said they expect a further drop of 20%. Of course, this is just the beginning.

> Goldman Sachs already said they expect a further drop of 20%. Of course, this is just the beginning. In November, Goldman Sachs was calling for 3.5% Global GDP growth. They are guessing, like the rest of us.

They would have likely been right if not for Covid 19. It's not just guessing.

Re: Dow Falls 2997 points worst drop since 1987 crash

#425

Post by harambae » Tue, Mar 17, 2020, 1:41 AM UTC

jdhn wrote: post #421

seanmcdirmid wrote: post #156

Earlier quoted context omitted.

A lot of ventures that were hanging on by threads will be ruined by this, so the pandemic is likely to clear out a lot of the weaker businesses as any good recession or crash is apt to. It will take a while for the marker to grow around that loss (though good in the long term, there is pain in the short). It could also trigger a housing correction, which has ripple effects on the construction industry, and those peop…

>It could also trigger a housing correction What would a housing correction look like? Demand still outstrip supply in hot markets, so the worst thing that'll happen is that the housing prices will have a slight dip, and that's it. Also, with the Fed lowering interest rates to zero and possibly lower, that'll continue to inflate the value of assets such as houses.

If it gets bad enough (and I don't want to seem insensitive here) a bunch of elderly people die and their houses are on the market.

Re: Dow Falls 2997 points worst drop since 1987 crash

#426

Post by seanmcdirmid » Tue, Mar 17, 2020, 1:43 AM UTC

fock wrote: post #352

seanmcdirmid wrote: post #339

Earlier quoted context omitted.

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.

so, only a fraction will be infected? What's your evidence for that assumption? Or it's burnt out in Wuhan? How can Italy have like the same fatality number for _a lot_ less people? Basically we don't know and we've been following experts claiming "it's a flu" for about 3 months. Then people started dying in Wuhan, Iran, Italy? Don't you think that we should maybe try something different now?

For the death rate to rise, a lot of people have to get infected and die. Keep in mind there are a lot of deaths from everything else, so for the corona virus to bring that overall death rate number up in any meaningful way, it would have to be huge.

Re: Dow Falls 2997 points worst drop since 1987 crash

#427

Post by seanmcdirmid » Tue, Mar 17, 2020, 1:44 AM UTC

jdhn wrote: post #421

seanmcdirmid wrote: post #156

Earlier quoted context omitted.

A lot of ventures that were hanging on by threads will be ruined by this, so the pandemic is likely to clear out a lot of the weaker businesses as any good recession or crash is apt to. It will take a while for the marker to grow around that loss (though good in the long term, there is pain in the short). It could also trigger a housing correction, which has ripple effects on the construction industry, and those peop…

>It could also trigger a housing correction What would a housing correction look like? Demand still outstrip supply in hot markets, so the worst thing that'll happen is that the housing prices will have a slight dip, and that's it. Also, with the Fed lowering interest rates to zero and possibly lower, that'll continue to inflate the value of assets such as houses.

The same was true up until the 2008 crash. If it happens, it will be a cliff, not a gently sloping down fall.

Re: Dow Falls 2997 points worst drop since 1987 crash

#428

Post by seanmcdirmid » Tue, Mar 17, 2020, 1:45 AM UTC

imperialdrive wrote: post #399

seanmcdirmid wrote: post #89

Earlier quoted context omitted.

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.

Well, you would really have to be in a coma though where you or any company didn’t need any liquidity the market provided.

Re: Dow Falls 2997 points worst drop since 1987 crash

#429

Post by anonu » Tue, Mar 17, 2020, 1:55 AM UTC

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 fo a crash.

Not sure why a crash has to be expected or should be the norm.

Re: Dow Falls 2997 points worst drop since 1987 crash

#430

Post by dougmwne » Tue, Mar 17, 2020, 1:55 AM UTC

imperialdrive wrote: post #397

dougmwne wrote: post #83

Earlier quoted context omitted.

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.

Well typical financial advice is to keep at least 3 months of expenses in a savings account or other very liquid account as an emergency fund. So plenty of people likely follow that advice.

The US govt just said that strict social distancing measures could last till August, plus there could be a recession coming. It's entirely possible that many people could be laid off and may run low on emergency funds if this goes on long enough. And many Americans could be facing huge medical bills to pay for treatment.

I'd say it's extremely likely that some unfortunate people are going to need to do hardship withdrawals from their 401ks to avoid eviction. Not everyone is in such a secure position that they could be cut off from their assets all in the name of calming the financial news.