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Dow Falls 2997 points worst drop since 1987 crash

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Re: Dow Falls 2997 points worst drop since 1987 crash

#101

Post by treis »

seanmcdirmid wrote: post #58
mgolawala wrote: post #11

To put it into perspective, the last time the market behaved like (multiple drops of this magnitude) this was 90 years ago, in 1929, and it was at the start of the Great Depression. Today was the second largest percentage drop for US Markets in history. Now is not a good time to sell your stock holdings (at least not anymore). This smells of a panic right now. I think a severe recession is all but guaranteed at this…

So about 2008? Placing this crash is difficult and will only be clear in hindsight.

2008 was one sector of the economy dragging down everyone else. Shutting down everything for weeks to months is going to wreck everything. There's not a pause button. It's an emergency stop that's going to take a long time to recover from.

Re: Dow Falls 2997 points worst drop since 1987 crash

#102

Post by acchow »

btilly wrote: post #38
whatshisface wrote: post #10

All of the return-seeking money that pushed up asset prices in the first place is still out there, because stock market crashes don't destroy money (they just redistribute it). I wonder who has it now, and I also wonder when it will end up back in the market.

...stock market crashes don't destroy money (they just redistribute it). Source needed. Stock market crashes absolutely destroy money by any reasonable definition of the money supply.

We’re destroying valuations, not money.

Re: Dow Falls 2997 points worst drop since 1987 crash

#103

Post by kirse »

Hasz wrote: post #47
SirensOfTitan wrote: post #25

I’m buying S&P index every day at this point, trying to drive my average down without trying to find the bottom. ...with that being said, I feel really worried about American economic stability long term now. Governors are closing restaurants and businesses leaving tons of folks out of work while providing minimal safety net coverage. Even liberal states like New York are ignoring the downstream economic effects thes…

Absolutely. I'm 21 -- I have 30 to 40 years to weather this storm. For people of similar age, you could not ask for a shallower entry into the market, albeit a tumultuous one.

Having been roughly in your position back during the 2008 dump... https://news.ycombinator.com/item?id=318595

Don't forget, the market can drop 20% a day for awhile. Plenty of smart folks are sitting on the sidelines with cash, but time will tell if this is the trigger for a much larger longer-term 2020 deleveraging.

Markets aren't even where they were pre-Trump election yet, so this 30% haircut from the top isn't even a "correction" from some viewpoints.

I personally wish I was ballsier back in 2008/2009 (Ford for $1, BoA for similar prices, etc), but it'd also be premature to jump into this market if you truly think it's the tip of a recessionary iceberg. Recessions take 3-6 months minimum to spill over into WallSt. If you're not jaw-agape at the prices of some of your favorite companies, it's probably not the bottom just yet.

Further, if you take the pessimistic view (ala Japan Nikkei), you might get stuck holding stock that never recovers. Be patient.

Re: Dow Falls 2997 points worst drop since 1987 crash

#104

Post by koheripbal »

screye wrote: post #52

I am not well versed in the economics of depressions, but almost all the ones I know of were preceded by some monetary imbalance or the explosion of a bubble based on falsely propped up ownings. 1929 was stock being leveraged off mortgaged homes and loans, that was clearly no sustainable. 2000 was the dot com burst. 2008 was mass defaults on home loans. Is there any reason why apart from slow business for 2 months du…

Bankruptcies can be pretty damaging. If we see a lot of loan defaults, we might see a banking crisis.

...but probably not. Banks are very well capitalized these days - much much better than 2008.

Re: Dow Falls 2997 points worst drop since 1987 crash

#105

Post by VikingCoder »

koheripbal wrote: post #91
mgolawala wrote: post #11

To put it into perspective, the last time the market behaved like (multiple drops of this magnitude) this was 90 years ago, in 1929, and it was at the start of the Great Depression. Today was the second largest percentage drop for US Markets in history. Now is not a good time to sell your stock holdings (at least not anymore). This smells of a panic right now. I think a severe recession is all but guaranteed at this…

Two points. 1. Today's drop is sort of misleading because it followed an irrational (IMO) low volume rally on Friday. We're still roughly flat from last week. 2. A recession is pretty much what we're ASKING for in order to stop the virus. People need to stay away from one another. So if it's not online, the business should be closed. 3. (bonus point) Unlike systemic recessions (like 2008), this one is purely external…

Why do you presume there won't be another external or systemic recession in the next 18 months?

You can't just assert it's temporary. You can say, "The causes of this downturn are temporary."

We have no idea what the market will do in the future. We have strong evidence it will recover, but that's not the same thing.

Re: Dow Falls 2997 points worst drop since 1987 crash

#106

Post by reverend_gonzo »

screye wrote: post #52

I am not well versed in the economics of depressions, but almost all the ones I know of were preceded by some monetary imbalance or the explosion of a bubble based on falsely propped up ownings. 1929 was stock being leveraged off mortgaged homes and loans, that was clearly no sustainable. 2000 was the dot com burst. 2008 was mass defaults on home loans. Is there any reason why apart from slow business for 2 months du…

Many believe the economy has been propped up by the Fed (by lowering interest rates) because they've been afraid of a recession. The Fed also doesn't really have any more ammo left to prop things up.

So, the cause is that the Fed has been propping an economy that is ripe for a recession and a reset. The coronavirus is the trigger that will force the hand.

Re: Dow Falls 2997 points worst drop since 1987 crash

#109

Post by jedberg »

throw03172019 wrote: post #93
nodesocket wrote: post #60

Earlier quoted context omitted.

Great point, all the "big boy" traders who have been raking in profits on put options, VIX volatility, and leveraged inverse etf's eventually will switch their trades to bull. However, keep in mind, a market down 30% requires a 43% gain to break back even.

Sorry for a maybe dumb question but what is the logic for 43% gain needed?

100 - 30 = 70

70 * .43 = 30.1

70 + 30.1 = 100.1

Re: Dow Falls 2997 points worst drop since 1987 crash

#110

Post by alkonaut »

skrowl wrote: post #2

This probably isn't the bottom. Wait a little while longer and when things start picking back up, dump in as much as you can afford.

Timing the market is possible if you know more than the market otherwise it’s just gambling.

But what do you do if you got lucky selling now?

I sold three weeks ago figuring it would be bumpy ahead, but I don’t want to miss the bottom entirely. Now I’m thinking the low risk strategy is to buy very slowly over a long period.

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