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This is your brain on a crashing stock market

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Re: This is your brain on a crashing stock market

#41

Post by munk-a »

commandlinefan wrote: post #21
vkou wrote: post #4

And yet, if every investment (including cash, because there is a near-certainty of the government turning to inflation to solve all these problems) is crashing, then isn't it the case that nothing is crashing?

I wonder - it seems like a hyperinflation spiral would actually benefit people who had, say, 30-year mortgages (not that I want that to happen).

Hyperinflation benefits no one - any slight advantage you might see out of it (like a large liability) is going to be entirely washed out by the absolute chaos your economy will be in - if there is rioting in the streets you might be able to forget about your mortgage, but your house might also be looted.

Re: This is your brain on a crashing stock market

#42

Post by 1123581321 »

munk-a wrote: post #35
1123581321 wrote: post #24

Earlier quoted context omitted.

I understand the theory, but since I haven’t found traders to make better decisions in groups, I was wondering what the source was for the increased rates of bad decisions due to remote work.

That says something really interesting about traders - that more of them essentially add no value - but I am also wondering why you think Leadership would have increased presence when folks are remote. People in companies tend to clique up, it's just how humans do, normally, in an office setting, these cliques are rather limited in terms of exclusive discussion to private messaging, lunch & coffee. Part of this is du…

I don’t think leadership would have increased presence overall. It would certainly not be good, either, for leadership to be remote while everyone else worked together in-person—I’m assuming most employees are remote in these situations.

The benefit of more traders/analysts/customer-facing staff is that they can do more work. Part of the groupthink problem is that the work becomes commingled into a few big decisions in which case the value of the additional employees does temporarily become reduced, but the workload is still available the rest of the time. Again, this is in my anecdotal experience, hence the source request.

Re: This is your brain on a crashing stock market

#43

Post by munk-a »

starpilot wrote: post #33
systemvoltage wrote: post #2

Take it with a grain of salt but I am hearing (through finance podcasts) that a lot of hedge fund managers and investment bankers are working alone from home and without physical proximity with their teams, the panic levels are setting in. I think it makes sense to me - when we are not physically banded together, we have a lost sense of safety and security.

Apparently HFT funds are printing money with all this volatility.

Sigh, they aren't printing money[1], nobody in the stock market prints money - it all comes from somewhere. And in this time of crisis the last thing we need is for a huge amount of value to be siphoned off by HFT managers.

1. I know it's just a saying, but it's a bad one that implies some very wrong understandings of the world.

Re: This is your brain on a crashing stock market

#44

Post by stuff4ben »

throwaway_Bees wrote: post #31

Clearly not the brains of those certain congressmen and women that sold off before the crash...not to mention their constituents they likely gave the tip to while maintaining a different political posture publicly. Curious what kinds of bucket loads of cash they made and continue to make shorting with continued access to inside info including classified intelligence.

Was it classified? Did we all not see what happened in China and think it couldn't happen here? People like to knock Burr and all, but I don't think there was anything special he saw that the rest of us didn't see coming. I didn't act, but I'm not going to fault those that did. And what if he did say something to everyone? That would have caused a panic then and there, people would make a run on the banks, and the market still would be down.

Re: This is your brain on a crashing stock market

#45

Post by spking »

seibelj wrote: post #36
spking wrote: post #5

Lately I've been thinking about all of the "F.I.R.E." and "Boglehead" blogs and forums that have proliferated over the past 5-10 years. What percentage of those people are panicking over their plunging index funds vs. those who are ignoring the day-to-day chaos?

I thought the ultimate goal was to have enough in guaranteed fixed income (annuities, CDs, whatever) that no matter what happens you cover expenses. But maybe that's too conservative, even for those guys.

I wonder how the calculus changes in 0% or negative interest rate environments.

Re: This is your brain on a crashing stock market

#48

Post by r-s »

seibelj wrote: post #36
spking wrote: post #5

Lately I've been thinking about all of the "F.I.R.E." and "Boglehead" blogs and forums that have proliferated over the past 5-10 years. What percentage of those people are panicking over their plunging index funds vs. those who are ignoring the day-to-day chaos?

I thought the ultimate goal was to have enough in guaranteed fixed income (annuities, CDs, whatever) that no matter what happens you cover expenses. But maybe that's too conservative, even for those guys.

Generally the FIRE crowd stays heavy in equities and considers a 3-4% withdraw rate to be safe.

Will this slow down a lot of early retirement plans? Almost certainly. However the market is not 0, lots of these people still have substantial amounts of money saved.

Re: This is your brain on a crashing stock market

#49

Post by dbsights »

dmoy wrote: post #9
spking wrote: post #5

Lately I've been thinking about all of the "F.I.R.E." and "Boglehead" blogs and forums that have proliferated over the past 5-10 years. What percentage of those people are panicking over their plunging index funds vs. those who are ignoring the day-to-day chaos?

Even before this thing, there were a number of fire blogs that weren't super honest about the realism of their numbers. I can only imagine that there's more who are facing a ride awakening right now. For someone just following a boglehead index whatever, it should just be business as usual. Treat it as any other crash. That is, do nothing except maybe rebalance stock/bond ratio to match once or twice a year.

Except stocks and bonds are correlated now. So that strategy just, doesn't work any more

Re: This is your brain on a crashing stock market

#50

Post by dwater »

Retric wrote: post #13
aazaa wrote: post #7

No access to article, but an entire generation of money managers have grown up with the Everything Bubble starting in 2009, fueled by Fed largesse. They've never even seen a bear market, let alone a financial panic. Most have completely ignored the alarming rise in valuations and market distortions, engaging in extremely risky behavior for years on end.

Yea, looking at P/E ratios based before COVID most companies only fell to a reasonable level. I’m looking at the market and thinking it’s still a little high. A rising or falling stock market is not inherently good or bad thing. It’s only really relevant as a prediction of future trends.

Yes, I heard a "market analyst" on the radio this morning talking about how the market is probably near the bottom now that COVID19 has been priced in, and it's time to start thinking about economic recovery. Meanwhile, a reasonable analysis of the medical situation in the US leads one to expect there's a lot more downside to be exposed. What will happen to the market when people who thought they had good health coverage are turned away from hospitals, not in Brooklyn but in Kansas City and Peoria? Some forecasts put us 2-4 weeks from that.
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