Buy puts and shorts and instead of fear and panic you'll have the opposite problem: You'll watch shit burn and be "happy" about it.
As in a memorable scene from the film The Big Short, (nsfw/expletives):
This is your brain on a crashing stock market
61–70 of 77 posts
Re: This is your brain on a crashing stock market
#62Earlier quoted context omitted.
I really strongly disagree. This narrative is aggressively pushed and everyone from the president to folks on Wall Street think that market health is everything to everyone, but people with no skin in the game really don't care. A lot of Americans have no idea what a DOW even is and only know the stock market as "that place where folks gamble". Additionally those folks with mutual funds are mostly ignorant to the mar…
You are underestimating the massive amounts of layoffs that have been happening in the past week and a half. That's the market dying. It's not just stocks. If valuation goes down, that usually means less revenue coming in, which means less money to pay employees, which leads to them getting fired, which leads to less spending, which leads to less revenue going in...
Oh, the layoffs are terrible and a lot of people are in a really bad place - please don't read my statement above as implying the everything is honky dory for everyone. It's just, these two things aren't connected - the market can tail spin or be in a huge surge and things don't really change for most folks on the ground - a few more or a few less yachts are built.
Valuation going down doesn't cause less revenue to come in - less revenue coming in will cause valuation is going down, but a lot of other things (including paniced sell offs, speculation, and everyone and their brother learning what "shorting" is) cause the valuation to go down as well.
The economy is in trouble, but the stock market is only an indicator of the economy, not a vital component of it - so America cares that layoffs are happening, America doesn't give a hoot that the DOW is bearish or bullish.
Re: This is your brain on a crashing stock market
#63Lately 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?
my takeaway from FIRE is that it's largely about getting your spending under control (easier to reduce spending by $50K than earn $50K post-tax) and then getting enough of a cushion to do something better for you personally or the world that might not pay as much as your old job. so some people that did nothing but sit on the beach after FIREing may be uneasy, but a lot of people transition into other fields that jus…
> So some people that did nothing but sit on the beach after FIREing may be uneasy.
They'll be fine; they've been enjoying sitting on the beach. More savings doesn't protect someone from a market collapse, it just exposes them further.
A rational long term investor - assuming the stock market was going to stay like this forever - would have avoided saving any money for the last few years and would probably have been sitting on the beach enjoying themselves.
Re: This is your brain on a crashing stock market
#64Earlier quoted context omitted.
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 ma…
Certainly it goes without saying the head of the Senate intelligence committee has access to classified and top secret information. He sold nearly 100% of his net worth in stocks and his public political position is inconsistent with the sale of the stock which he has at least admitted was influenced by public news reporting. It leaves one to wonder why the public news would guide his financial decisions, when as a S…
Can we watch his buying activity to predict the market bottom?
Re: This is your brain on a crashing stock market
#65Earlier quoted context omitted.
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
That's fine. They can be correlated, so long as the bond one doesn't move nearly as much. You can accomplish the same thing.
"Being correlated" doesn't make it useless.
Re: This is your brain on a crashing stock market
#66Earlier quoted context omitted.
Certainly it goes without saying the head of the Senate intelligence committee has access to classified and top secret information. He sold nearly 100% of his net worth in stocks and his public political position is inconsistent with the sale of the stock which he has at least admitted was influenced by public news reporting. It leaves one to wonder why the public news would guide his financial decisions, when as a S…
Can we watch his buying activity to predict the market bottom?
No, but you could purchase a $10,000 plate at his next fundraiser and he may just tell you, like he told the donors at the last fundraiser before the crash.
Re: This is your brain on a crashing stock market
#67Take 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.
Super confused that anyone would down-vote this. It is empirical reality [1].
[1] https://faculty.fuqua.duke.edu/~charvey/Teaching/BA453_2004/...
Re: This is your brain on a crashing stock market
#68And 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?
Again, I am very surprised that people would down-vote this. The post articulates the core idea behind Arrow-Debreu securities, and taking the question seriously could yield some very interesting discussion about prices.
Re: This is your brain on a crashing stock market
#69Lately 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 follow boglehead strategy. I’m riding this down and will ride it up. It’s an interesting ride but I’m not going to try and time anything. Still investing 70/30 s&p and bonds every 2 weeks. I’ve got lots of time left though (age 35). Time will tell if it was the right call!
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Re: This is your brain on a crashing stock market
#70Take 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.
which finance podcasts do you like? i just know Macro Voices
Yeah that’s where I heard it. There was a question about remote work.