Hacker News Board Hacker News, browsed like a classic message board
Live data from Hacker News

Dow Falls 2997 points worst drop since 1987 crash

mortgagerateguru.com

Post reply on HN
Print view View original

441–450 of 499 posts

Re: Dow Falls 2997 points worst drop since 1987 crash

#441

Post by gentle »

rupert1234 wrote: post #209
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…

In 08/09 the market felt this bad, and ended up worse. S&P went from 1576 to 666 iirc. That's almost 60% down. We are only about 30% down now.

You're absolutely right and this is what most of the "buy the dip" idiots don't understand.

Re: Dow Falls 2997 points worst drop since 1987 crash

#442

Post by Supermancho »

anonu wrote: post #429
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…

> well overdue fo a crash. Not sure why a crash has to be expected or should be the norm.

https://www.investopedia.com/terms/b/boom-and-bust-cycle.asp

All you have to do is have an unlikely intersection of events (one being a bust) and you have a crash.

Re: Dow Falls 2997 points worst drop since 1987 crash

#443

Post by [deleted] »

airstrike wrote: post #311
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…

> well overdue for a crash. This is not how markets work.

[deleted]

Re: Dow Falls 2997 points worst drop since 1987 crash

#444

Post by pdonis »

AnimalMuppet wrote: post #437
pdonis wrote: post #414

Earlier quoted context omitted.

> those loan defaults are what lettergram feared would cause the banks to collapse. So they're not independent. You're missing my point. I'm not arguing that the loan defaults are independent of the bank failures; obviously they're not. I'm arguing that the loan defaults, and the consequent bank failures, by themselves don't cause money to disappear. For money to disappear, the defaulted loans have to be written off,…

But if they're going to be restructured - if they're solid enough for that to be possible - would the bank fail? If I understand correctly, the bank becomes insolvent when the loans are written off. (Note well: I am not a banker.)

> if they're going to be restructured - if they're solid enough for that to be possible - would the bank fail?

That depends on the bank's cash flow position and their reserve assets. It's quite possible that the bank might not be able to sustain, say, a couple of months of loans not being repaid even if the loans are ultimately going to be restructured.

Of course, one obvious way to forestall this would be to extend short-term credit to the bank itself. IIRC this was done during the 2008 crisis. I have not seen talk yet of that being done now, but I would not be surprised if it were.

Re: Dow Falls 2997 points worst drop since 1987 crash

#445

Post by Supermancho »

airstrike wrote: post #311
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…

> well overdue for a crash. This is not how markets work.

Curated markets (QE) do. Sometimes it's called a "correction", which makes sense, but does not change the inevitability.

Re: Dow Falls 2997 points worst drop since 1987 crash

#446

Post by tjs8rj »

MrRadar wrote: post #115
screye wrote: post #52

I am not well versed in the economics of depressions, but almost all the ones I know of were preceded by some monetary imbalance or the explosion of a bubble based on falsely propped up ownings. 1929 was stock being leveraged off mortgaged homes and loans, that was clearly no sustainable. 2000 was the dot com burst. 2008 was mass defaults on home loans. Is there any reason why apart from slow business for 2 months du…

Most businesses don't have the cash reserves to handle effectively shuttering for 1-3 months, which is probably what will be required to get a handle on the Coronavirus outbreak without overwhelming our medical systems. This means those businesses will be forced to lay off many (if not most) employees, possibly going bankrupt altogether, and those laid-off employees will themselves have trouble paying their own bills…

1. Most of those problems are being tackled: localities, states, and the fed have interest free loans and many have frozen rent and evictions (for both residential and commercial real estate). As far as that goes, 1-3 months with the above addendums makes me skeptical about mass bankruptcies. 2. This is such a silly point I keep hearing: "Everyone is a socialist in a crisis", "Oh suddenly people realize UBI and universal healthcare are good!" - DUH! Collective problems require collective solutions. Everyone agrees that the tax-payer foots the bill for the healthcare of veterans in WW2, everyone agrees with price-controls when fighting Nazi Germany. Everyone agrees with collective action to fight collective threats because it's necessary.

If you contract a pandemic disease, collective action must be taken for the good of everyone else. If you break your leg falling of your roof on a bender, you and only you should foot the bill. This isn't hard: supporting collective action against Coronavirus doesn't mean M4A is a good idea for more normal situations.

Re: Dow Falls 2997 points worst drop since 1987 crash

#447

Post by mantap »

ksj2114 wrote: post #173
rconti wrote: post #95

Earlier quoted context omitted.

Every time I see this, I fail to grasp the logic. So you had money sitting on the sidelines for safety during boom times, and you elect to put it in a riskier asset class during a panic? I'm not saying this isn't likely the most profitable action, I just don't see how the principles are consistent with each other. The former is conservative; the latter is wildly speculative and risky.

Would I have rather bought two weeks ago at 3000+ or today at 2400? Answer: today! The logic is that eventually the market will recover and you want to buy before that happens.

No the risk/reward is fucked up. Buy at the start of a bull market not the midst of a bear market. In the context of the last recession buying in 2010-13 would have been ideal. Trying to find the bottom is simply gambling, investing isn't an optimisation problem. The goal is to sleep at night, not to make the most money at any cost.

Re: Dow Falls 2997 points worst drop since 1987 crash

#448

Post by alasdair_ »

adamc wrote: post #246
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…

"apt to" -- presented in the hopes it is useful.

>"apt to" -- presented in the hopes it is useful.

"apt get" -- automatically update your Debian machine.

Re: Dow Falls 2997 points worst drop since 1987 crash

#449

Post by alasdair_ »

aguyfromnb wrote: post #369
dnautics wrote: post #220

Earlier quoted context omitted.

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 "…

Or, in my case, I was short (and on margin!) Boeing just before the market crashed.

I just don't tell people that I chickened out and covered on the first rally...

(or that I then put it all into GLD...)

Re: Dow Falls 2997 points worst drop since 1987 crash

#450

Post by breatheoften »

To those that think the market response is likely to become predictable anytime soon — a thought experiment ... how do you think the markets will respond if Warren buffet dies of corona virus? Personally I think this kind of event could trigger a large change in the market (who knows why) and am curious what others think.
Post reply on HN