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When buying the dip doesn’t work: An analysis of the dot-com crash

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Re: When buying the dip doesn’t work: An analysis of the dot-com crash

#81

Post by refurb »

bagacrap wrote: post #56
refurb wrote: post #36

Earlier quoted context omitted.

My grandfather had $3M invested in the market in 2007. Lost $1M at the bottom in 2008, but didn't do anything other than rebalance. Now worth $8M. Either you fret over every price move and likely buy/sell at the worst times, or you invest with a long-term vision and stop tracking the price moves everyday.

yes but in that case the Fed rode to the rescue and delivered the greatest bull market in US history. There's absolutely no way the next decade looks like the last so this is a poor comparison. As far as rebalancing --- you may have noticed stocks and bonds falling in unison this year, so rebalancing is not much help.

Take a gander at the PE ratio for the S&P500 over time. A substantial amount of those gains are backed by increased profitability.

https://www.multpl.com/s-p-500-pe-ratio/table/by-year

And not sure what your comment on rebalancing not being much "help" is. Rebalancing is not about "help" it's about sticking to an investing approach.

And I can recall back in the early 2000's when people said "Equity growth will never be like it was the 90's".

Glad I never listened to them.

Re: When buying the dip doesn’t work: An analysis of the dot-com crash

#82

Post by na85 »

sharkweek wrote: post #37
mwattsun wrote: post #25

I lived through the dot-com crash and got out safely after hearing something so ludicrous that I had to ask myself "How insane does this industry have to be for someone to think they can build a high growth internet company out of home cement delivery?" My memory may be playing tricks, but it was something like that. After 2008 I became interested with crashes throughout history. There are so many fascinating little…

Have you seen the movie Margin Call? There’s a great scene where the CEO of a Goldman-style bank is recapping the last 100+ years of global financial collapses and he mentions, “we just can’t help ourselves.” https://youtu.be/LtFyP0qy9XU One of the best banking movies I’ve ever seen. Jeremy Irons absolutely nails his role.

I just watched that a few weeks ago. Great movie, but to be honest I thought Jeremy Irons was unconvincing and played the role poorly/was poorly cast.

Re: When buying the dip doesn’t work: An analysis of the dot-com crash

#83

Post by slaw »

mberning wrote: post #59
anonporridge wrote: post #46

Earlier quoted context omitted.

Are you ignoring dividend reinvestment creating compounding growth? Even god couldn't beat dollar cost averaging, https://ofdollarsanddata.com/even-god-couldnt-beat-dollar-co...

Buy all the time. Only reliable way to win.

Past performance is not indicative of future results. Japan stock market JP225 didn't recover yet from 1990 crash.

Re: When buying the dip doesn’t work: An analysis of the dot-com crash

#84

Post by tedunangst »

fny wrote: post #10

Look at a chart of the S&P 500 from 1920 to 2008 and you'll notice something rather curious: the stock market has gone parabolic ever since the financial crisis. What made this period so unique? Tremendously low interest rates coupled with quantitative easing dissuaded capital from financing the real economy and instead encouraged herding and levering up in the financial economy for returns. At ever dip, it was an op…

Every even modestly exponential curve has the same shape.

https://www.wolframalpha.com/input?i=y+%3D+1.05%5Ex+from+1+t...

Re: When buying the dip doesn’t work: An analysis of the dot-com crash

#85

Post by landemva »

bushbaba wrote: post #73
bagacrap wrote: post #56

Earlier quoted context omitted.

yes but in that case the Fed rode to the rescue and delivered the greatest bull market in US history. There's absolutely no way the next decade looks like the last so this is a poor comparison. As far as rebalancing --- you may have noticed stocks and bonds falling in unison this year, so rebalancing is not much help.

Why not l? If the market returns don’t keep up at 6-7% annualized government pensions will run out of cash. If rates go up drastically, government debt payments go up. The game must go on! *until the us empire collapses, taking down with it the western world

Yes, pensions and Illinois are cooked.

But EU has had negative interest rates for years, and will collapse (break up the eu monetary union) before USA goes under. Dollar strength confirms capital is moving into USA.

Re: When buying the dip doesn’t work: An analysis of the dot-com crash

#86

Post by hn_throwaway_99 »

chii wrote: post #29
fny wrote: post #10

Look at a chart of the S&P 500 from 1920 to 2008 and you'll notice something rather curious: the stock market has gone parabolic ever since the financial crisis. What made this period so unique? Tremendously low interest rates coupled with quantitative easing dissuaded capital from financing the real economy and instead encouraged herding and levering up in the financial economy for returns. At ever dip, it was an op…

> dissuaded capital from financing the real economy and instead encouraged herding and levering up in the financial economy for returns. i don't really agree with this - the money used to purchase financial products don't disappear, because for every product bought, there was a seller. This seller now has cash, which would be invested elsewhere. The only concern is low interest rates, which makes the hurdle for any i…

> i don't really agree with this - the money used to purchase financial products don't disappear, because for every product bought, there was a seller. This seller now has cash, which would be invested elsewhere.

But just look at housing, which has exploded well beyond the rate of inflation since the Great Recession bottomed out, and especially in the past couple years.

Yes, if money is plowed into housing, the homeowner has more cash when they sell. But presumably they have to live somewhere, and with housing skyrocketing in basically any halfway desirable place, it means they're just going to spend that cash on another expensive house.

Re: When buying the dip doesn’t work: An analysis of the dot-com crash

#87

Post by john_moscow »

300bps wrote: post #4

The Federal Reserve has taken on $9 trillion onto their balance sheet to flood the economy with money. https://www.federalreserve.gov/monetarypolicy/bst_recenttren... They’ve lowered short-term interest rates to effectively 0 and kept them there for quite a number of years. Federal and State governments have flooded the economy with stimulus. There is so much money that has been injected into the economy that it is n…

This is a good point, but there is a counter-argument as well. America is currently divided into the rank-and-file class vs. the stockholder class. The governments' actions so far have been heavily benefitting the latter. Workers get a $1000 cheque, stockholders get a 20% net worth increase. Mom'n'pop shop closes due to lockdowns, Walmart eats up their niche due to being exempt.

Taking too much money out of the economy at this point would harm the interests of the stockholder class, so they would try to do as little of it as possible. Of course, that would only deepen the divide and push Gen Z into accepting more socialist demagoguery, but the short-term stock market dip might be somewhat less than in the dotcom times.

Re: When buying the dip doesn’t work: An analysis of the dot-com crash

#88

Post by newshorts »

nathanvanfleet wrote: post #18

Sad to think that investing in the stock market, which I have only been able to financially over the last 5 years might have been much riskier than I might have previously thought. What I previously thought as "okay I just leave it in the stock market for a bit of time to recoup" is something I am now realizing would likely have to be 10+ years. It's kind of funny because I was getting shaky about having money in the…

Don’t worry friend, it’s about the savings rate, not the savings return.

Just keep putting a little in here and there. Don’t put in anything you can’t afford to lose and it’ll turn out alright

Re: When buying the dip doesn’t work: An analysis of the dot-com crash

#89

Post by barefeg »

chii wrote: post #64
xeromal wrote: post #60

Earlier quoted context omitted.

I think their analogy is that your investment in the Prussian/Holy Roman Empire/Carthage stock market can still end up ruined regardless of time.

And yes, that's true. Geographic concentration is a real risk. if you purchased a world wide index, you will not suffer from such risk.

Dinosaurs beg to differ

Re: When buying the dip doesn’t work: An analysis of the dot-com crash

#90

Post by zmgsabst »

gabereiser wrote: post #68
bagacrap wrote: post #52

Earlier quoted context omitted.

I've had this same thought, but everyone seems to be sitting in cash? No one wants to invest unless everyone else invests. Seems the emperor is suddenly naked.

You should see the volume of the last 24 hours. No one is sitting on cash unless they are hobbyists.

That’s ironic.

If you’d sold your S&P500 on Monday and bought back on Friday, you’d have gained 2.7 shares per 100 sold.

If you’d sold your S&P500 a month prior and bought back on Friday, you’d have gained a 8 shares per 100 sold.

If you’d sold your S&P500 six months prior and bought back on Friday, you’d have gained 14 shares per 100 sold.

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