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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

#171

Post by cpeterso »

narrator wrote: post #163

If you want to pick stocks, and not just use a roboadvisor like betterment or wealthfront you have to understand that the market does not always go up. This means you have to have a bear market strategy and know when to switch modes from bull to bear by watching and deeply understanding the federal reserve. Otherwise, just give up and use a roboadvisor. In my case, I sold my tech portfolio when it was clear we were i…

I skimmed an old book (whose title I don’t remember) that simply recommended: when the Fed raises rates, move from bonds to stocks; when the Fed lowers rates, move from stocks to bonds.

Tracking the Fed like that seems like a lagging market indicator. It was probably more effective when bonds had double-digit returns.

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

#172

Post by cloudking »

ekelsen wrote: post #115
cloudking wrote: post #63

Be aware that: 1) we're likely in a declining/sideways market for at least another year until inflation subsides, possibly longer 2) the Fed has most of the control over the inflation/deflation levers (on demand side) 3) markets will most likely recover over the long term, historically speaking The Fed is purposefully reducing their asset holdings and increasing interest rates to slow down demand, which in theory sho…

"markets will most likely recover over the long term, historically speaking" tell that to the Nikkei index. At this point you'll have been waiting 40 years for the recovery. https://www.macrotrends.net/2593/nikkei-225-index-historical...

Fair point, my comment is centered around the US markets, I should have clarified that.

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

#173

Post by cloudking »

bluquark wrote: post #101
cloudking wrote: post #63

Be aware that: 1) we're likely in a declining/sideways market for at least another year until inflation subsides, possibly longer 2) the Fed has most of the control over the inflation/deflation levers (on demand side) 3) markets will most likely recover over the long term, historically speaking The Fed is purposefully reducing their asset holdings and increasing interest rates to slow down demand, which in theory sho…

I agree with most of this, but note that stock prices don't track real-world events as closely as you're suggesting. They're based on competing predictions of the future. The market will (or has already) hit bottom when the average prediction starts being less pessimistic, not when inflation actually subsides or the Fed actually lowers rates. The defining feature of bear markets is not direction, but high volatility…

Yes predictions are a part of stock prices, but the price ultimately comes from supply and demand. If there are more people that want to buy the stock (demand), than people selling (supply) then the price goes up. In this environment where inflation is everywhere and it costs more to borrow money, demand has come down and will likely not return until the Fed switches their policy stance. At least for US markets.

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

#174

Post by francisofascii »

So sorry this happened. Can’t help you feel better other than to say you are not alone. I didn’t suffer as much as you. I went more conservative, or so I thought, and went heavy into bonds, which most 30% over the past year. I guess the moral of the story is stay diversified, and if every asset class goes down, well, we all lose together. Misery loves company.

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

#175

Post by opportune »

throw0101c wrote: post #28
tmn wrote: post #27

Earlier quoted context omitted.

Cash the side line has been a great allocation for this whole year. As the mantra goes, don’t fight the fed.

The problem is getting out before things drop, and getting back in when the drop is "over": * https://awealthofcommonsense.com/2018/10/the-psychology-of-s... By sitting in cash you're also losing money through inflation: * https://ofdollarsanddata.com/the-cost-of-waiting/ At the end of the day you should always be invested, and if you're worried about market undulations then you should own some bonds. And besides red…

By keeping your stocks you lost your money to inflation too, and then another 20+% because you held through a bubble pop.

I think a lot of the personal finance investing advice given to people in the vein of “solid advice for 90% of people to follow without too much expertise” is becoming some weird dogmatic religion. You must never time the market (even at a loose monetary policy induced bubble), you must always hold total market/sp500 ETFs (even when they’re filled with overpriced companies), you should diversify into bonds (the most garbage asset class available for the past 20 years, until the last 6 months, when they became only partially garbage).

This advice has gone from being labeled as generalist advice with asterisks, through many rounds of telephone, to now being something that invites angry replies if you disagree with it.

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

#176

Post by remote_phone »

quesera wrote: post #75
dragontamer wrote: post #29

Earlier quoted context omitted.

> By sitting in cash you're also losing money through inflation: Also by sitting in Stocks, you not only lost 20% this year, but also 9% due to inflation for a total loss of ~30%+. Cash is cash. It gets the job done. I'm not saying go 100% cash btw, but it has its place in this time of uncertainty. You cannot buy the dip if you're 100% invested, you have to be holding cash. --------- I suggest holding 10% cash and re…

> Also by sitting in Stocks, you not only lost 20% this year, but also 9% due to inflation for a total loss of ~30%+. But if you sold the stocks, you would have taken an immediate tax hit of ~20-35%, and you would have to time the bottom to get back in. So, it's not at all clear that getting out makes sense. Depends on the depth of the decline, and that is unknowable.

Only on the profits, if you even have it.

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

#177

Post by opportune »

pzs wrote: post #111
richliss wrote: post #104

Earlier quoted context omitted.

If you cut early and miss the top 5% of profits then buy back in at 5% above the bottom when it rebounds you'll do pretty well.

That sounds great in theory, but you can't implement it in practice. It's often easy in hindsight to identify where are those suboptimal 5%-away-from-perfect-timing points where you should have done a rebalancing, but we have no idea how close we are to the next peak/trough.

It was very easy to identify as it happened, when inflation hit 8% while rates were at 0% and unemployment was at like 4%.

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

#178

Post by Ekaros »

Aulig wrote: post #96
bluGill wrote: post #62

Fidelity did a survey of thier customers whose 401k did the best over the years. The most popular response (about 1/3) was 'I don't have a 401k at fidelity'. They had forgotten about it and left it alone to grow through good and bad. If you know how your investments are doing you know too much

Your first and second sentence made me laugh out loud because I thought it was a joke. The explanation makes perfect sense though - buy and hold beats the average attempt at market timing.

Let's see where things go... Past performance is not indicator of future performance.

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

#179

Post by nurettin »

thehappypm wrote: post #70
actionablefiber wrote: post #50

Earlier quoted context omitted.

Probably to make money? GP mentions margin calls, which suggests they're investing with leverage.

Sounds a lot like gambling.

When you step out of the door, that is gambling. If you choose to stay inside, that also is gambling. You are a gambler.

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

#180

Post by throw0101c »

O__________O wrote: post #114
throw0101c wrote: post #95

Earlier quoted context omitted.

> Fidelity did a survey [citation needed] This is an urban legend from what I recall. (But not touching your investments is generally a good idea.)

Citation: https://www.businessinsider.com/forgetful-investors-performe...

An article from 2015:

> Well, maybe. My Fidelity contact has not heard of such a thing, nor has Morningstar's Fidelity Canada contact. Suffice it to say that none of these citations came linked to the original source. (Such is the Internet.)

* https://www.morningstar.com/articles/964493/from-the-archive...

Unless the citation has fidelity.com in the link (or an archive.org snapshot of said link), I'm calling urban legend.

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