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Ask HN: How to deal with markets down turn? Feeling down

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Re: Ask HN: How to deal with markets down turn? Feeling down

#11

Post by bryanlarsen »

Are you in Europe or the States? The two areas have vastly different economic outlooks.

The outlook in the US can best be described as "uncertain". Valuations are down because the market doesn't like uncertainty, but it doesn't necessarily translate into a future recession -- many of the economic indicators in the US are very positive.

OTOH, Europe is facing a hard winter unless an energy miracle appears.

The market is down 20% on the year, so that means that a lot of people are underwater on their options, so that the fact that yours still has some value means that you are doing better than many.

Re: Ask HN: How to deal with markets down turn? Feeling down

#12

Post by septillianator »

bryanlarsen wrote: post #11

Are you in Europe or the States? The two areas have vastly different economic outlooks. The outlook in the US can best be described as "uncertain". Valuations are down because the market doesn't like uncertainty, but it doesn't necessarily translate into a future recession -- many of the economic indicators in the US are very positive. OTOH, Europe is facing a hard winter unless an energy miracle appears. The market…

What are you referring to as being positive? .i.e. nonfarm payroll growth is not good at this point.

Re: Ask HN: How to deal with markets down turn? Feeling down

#14

Post by H8crilA »

If you bought options your base case should be that they expire worthless, except some very special cases. If you sold options your likely case should be extreme loss, exceeding the premium in double digit multiples.

If you don't know this then you shouldn't have traded, and were misinformed. They're considered complex instruments for a reason, and the ease with which the masses trade them is something of a tragedy.

This has happened multiple times in the past and will happen many times again, as there's nothing new under the sun (from Livermore, one of the greatest speculators).

A fun little book that I like to recommend: "Confusion of confusions". It was written by a Jewish trader working with the 1600s Amsterdam stock and bond exchanges. It is a good proof of how little things have changed, you'll understand pretty much everything once you map the terms and concepts to their modern equivalents.

Re: Ask HN: How to deal with markets down turn? Feeling down

#15

Post by mynameishere »

ThrowawayTestr wrote: post #9

You only lose if you sell.

Options have this thing called "time value", so you lose just by nothing happening.

It's unclear if OP is getting options as part of his remuneration or if he is gambling, so impossible to advise. If he is gambling, he should just stop.

Re: Ask HN: How to deal with markets down turn? Feeling down

#16

Post by sokoloff »

H8crilA wrote: post #14

If you bought options your base case should be that they expire worthless, except some very special cases. If you sold options your likely case should be extreme loss, exceeding the premium in double digit multiples. If you don't know this then you shouldn't have traded, and were misinformed. They're considered complex instruments for a reason, and the ease with which the masses trade them is something of a tragedy.…

In context, I’d assume OP’s options were employer-granted options being far more likely than they were speculating on public market options.

Re: Ask HN: How to deal with markets down turn? Feeling down

#17

Post by sokoloff »

dadoge wrote: post #7
JonChesterfield wrote: post #3

Good time to buy. 90% loss seems severe, possibly also good time to change employer (which is also essentially buying the dip - you get $N of RSU at the low valuation)

Careful. That 90% could lead to a bankruptcy soon. Changing employers might still mean a big drop in stock from when you start. Unemployment still hasn’t ticked down, the Fed is not done with its job of squashing inflation. Good companies are giving solid refreshers to ensure you are paid more fairly moving forward. See if your company will do that, it’s sorta the same as getting a new offer elsewhere. If your curren…

A company worried about bankruptcy wouldn’t seem overly worried about issuing new options (which will become worthless if bankruptcy happens, so cost nothing but some paperwork).

There are many good reasons to leave a company whose performance is declining and where your compensation is cut to well below what you can make elsewhere, of course.

Re: Ask HN: How to deal with markets down turn? Feeling down

#19

Post by throw0101c »

> Market is collapsing.

If you are not retired, then markets being down are a good thing, because everything is "on sale" / at 'discounted' prices. At least for the US† (S&P 500, NASDAQ, Russel 2000), the historical 1-, 3-, 5-, and 10-year returns after a 25% drop are quite good:

* https://awealthofcommonsense.com/2022/10/getting-long-term-b...

If you've been foolish enough to cash out—which should really never been done by 'retail investors':

* https://awealthofcommonsense.com/2014/02/worlds-worst-market...

You should really start making regular contributions to get back in. You should always be fully invested: having cash on the side long-term is generally not a good investment. Even if you new ahead of time when the dips in the market would occur—which is impossible—it's still better to do regular contributions:

* https://ofdollarsanddata.com/even-god-couldnt-beat-dollar-co...

If you try to be clever and skip the worst days in the market, you also tend miss the best days:

* https://theirrelevantinvestor.com/2019/02/08/miss-the-worst-...

At the end of the, there is only one piece of advice that average retail investors (saving for retirement) should follow:

* https://ofdollarsanddata.com/just-keep-buying/

As for myself: I have no idea if I'm down, or by how much, since I haven't logged into my brokerage/trading account since January when I topped it up for the new year; almost all of my investments are automated so I don't need to see/touch things. I have several decades until retirement, so why worry about what happens of the course of a single year?

† I'm in Canada.

Re: Ask HN: How to deal with markets down turn? Feeling down

#20

Post by netsharc »

This was in the NPR recently [1]. It has a good perspective: just like jump ups in your portfolio aren't worth anything until you cash out, drops aren't losses until you cash out.

Or the Warren Buffett philosophy[2] is, don't make a number be the source of your happiness or sadness. Play with your kids, enjoy life, even if that number is horrible, will you be fine? Probably yes...

[1] https://www.npr.org/2022/09/28/1125656030/the-markets-are-do... [2] https://www.cnbc.com/2018/03/20/warren-buffett-doubling-your...

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