Hacker News Board Hacker News, browsed like a classic message board
Live data from Hacker News

What We've Learned from 150 Years of Stock Market Crashes

morningstar.com

Post reply on HN
Print view View original

21–30 of 97 posts

Re: What We've Learned from 150 Years of Stock Market Crashes

#21

Post by wintermutestwin »

uptownfunk wrote: post #7

People say not to time it but if you took your profits December ish you’re probably much happier than if you had lost everything since then and reset to 6-12m ago unless you’re playing the short. There is a premium on mental health and market volatility.

>There is a premium on mental health and market volatility.

I find that, as soon as I pick up the crystal ball and try to play the prediction game, my mental health suffers greatly. What helps my stress levels the most is to have a portfolio that is well diversified (e.g. a risk parity style portfolio) and stay the course because the portfolio has elements that go up when equities go down.

At the end of the day, the markets can be blatantly irrational (see TSLA) for wildly variable time spans - this means that market timing is inherently gambling. Gambling with your retirement portfolio is incredibly stressful.

Re: What We've Learned from 150 Years of Stock Market Crashes

#22

Post by deadbabe »

uptownfunk wrote: post #7

People say not to time it but if you took your profits December ish you’re probably much happier than if you had lost everything since then and reset to 6-12m ago unless you’re playing the short. There is a premium on mental health and market volatility.

If you took profits in December you would have watched the market continue to climb and it’s entirely possible instead of tanking right now it could have kept going and you’d just be watching it everyday go up and up.

Don’t time the market unless you know something others don’t. Just don’t.

Re: What We've Learned from 150 Years of Stock Market Crashes

#23

Post by mplanchard »

wintermutestwin wrote: post #17
tylerflick wrote: post #14

Earlier quoted context omitted.

People about to retire shouldn’t be that exposed anyway. Target day funds exist for a reason.

>Target day funds exist for a reason. Yes - to make a lot of money on the expense ratio. I guess if you really didn't want to learn a damn thing about modern portfolio construction a taget date fund is your best bet. However, it is incredibly easy to buy 4-6 ETFs that give you the same thing at a lower cost. Yes, you have to do a little work to re-balance these funds, but that is also an advantage to this approach as…

Vanguard target retirement funds have expense rations of 0.08%

Re: What We've Learned from 150 Years of Stock Market Crashes

#24

Post by ram_rar »

While dollar cost averaging and index investing are solid strategies, this article overlooks an important consideration: the Realistic Rate of Return (RoR) needed for retirement planning. Yes, US markets historically recover (lately that notion seems to be challenged more often than not), but timing matters significantly.

What happens if someone's retirement coincides with a market crash? Younger investors have time on their side for recovery, but as retirement approaches, blindly following market-based strategies without carefully considering your required rate of return could be problematic. Age-appropriate risk management becomes increasingly important as your investment horizon shortens.

Re: What We've Learned from 150 Years of Stock Market Crashes

#25

Post by wiredfool »

ebiester wrote: post #19
throw0101c wrote: post #5

A popular post that is often given to folks who are freaking out about drops in their portfolio: * https://awealthofcommonsense.com/2014/02/worlds-worst-market... And for those who want to sit on the sidelines, that's usually not a good idea: * https://ofdollarsanddata.com/even-god-couldnt-beat-dollar-co... The main folks that do have to worry about their portfolio are those who are about to retire, and those that ha…

There are a fair number of us not worried about the drop in our portfolio as much as we are worried that the current decisions will decrease the world's willingness to invest in American companies and markets permanently. What if your hypothesis is that the fundamentals have changed?

So far, this is a minor stock correction coupled with unprecedented political uncertainty.

In my lifetime, there have been multiple -10+% single day drops, one -22%, and a bunch of -10% months. In that time though, no one has questioned the full faith and credit of the US government.

However now -- The Supreme Court had to take a case to rule that the government had to pay contracts that had already been delivered on. The Treasury has yoinked money from NY State over ACH because DOGE disagreed with the program. Musk and DOGE are trying to break departments so hard that there's no putting them back even with a court order. He's threatening Social Security, which has always been the third rail.

The trouble is that some form of stability and law is required for the sort of financial business that powers the US. There are other ways of being rich -- patronage, extractive, but that's not an engine that drives financialization and the ability to start business, get investments, and generally get some return back out of things. You lose the stability and the trustworthiness, the goose goes away, and there are no more golden eggs.

Re: What We've Learned from 150 Years of Stock Market Crashes

#26

Post by wiredfool »

actionfromafar wrote: post #15
xvilka wrote: post #10

Earlier quoted context omitted.

Mostly because of the restrictive Plaza accord[1] and tariffs[2]. [1] https://en.m.wikipedia.org/wiki/Plaza_Accord [2] https://edition.cnn.com/2019/05/24/business/us-china-trade-w...

Tariffs... sounds familiar.

I made sure I had Smoot Hawley on my bingo card for this year.

Re: What We've Learned from 150 Years of Stock Market Crashes

#27

Post by exe34 »

ram_rar wrote: post #24

While dollar cost averaging and index investing are solid strategies, this article overlooks an important consideration: the Realistic Rate of Return (RoR) needed for retirement planning. Yes, US markets historically recover (lately that notion seems to be challenged more often than not), but timing matters significantly. What happens if someone's retirement coincides with a market crash? Younger investors have time…

surely as retirement approaches, you should be taking money out of your investments so that you can either live off those (and traditional savings interest) or investing in safer things like real estate?

Re: What We've Learned from 150 Years of Stock Market Crashes

#28

Post by 317070 »

ram_rar wrote: post #24

While dollar cost averaging and index investing are solid strategies, this article overlooks an important consideration: the Realistic Rate of Return (RoR) needed for retirement planning. Yes, US markets historically recover (lately that notion seems to be challenged more often than not), but timing matters significantly. What happens if someone's retirement coincides with a market crash? Younger investors have time…

Meet Bob.

Bob is the world’s worst market timer.

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

Re: What We've Learned from 150 Years of Stock Market Crashes

#29

Post by sfblah »

For years I've been reading commentators tell me that QE completely and permanently changed the nature of valuations in US markets. Now, perhaps, we'll finally get to see whether that's actually true or not.

If they're right, no sweat. If they're wrong, a recession will trigger a substantial downward revaluation of assets. For a picture of what that might look like, I suggest reading John Hussman's market commentaries, available free online.

Re: What We've Learned from 150 Years of Stock Market Crashes

#30

Post by MilnerRoute »

Wait a minute... The S&P 500 just started spiking back up about 20 minutes ago. It's still down 2.46% for the day -- but that's a much smaller number than the drops reported this morning.

Maybe the real question is: What have we learned from the last 150 minutes?

Post reply on HN