Dow Falls 2997 points worst drop since 1987 crash • Hacker News Board

Re: Dow Falls 2997 points worst drop since 1987 crash

#121

Post by JoshTko » Mon, Mar 16, 2020, 9:10 PM UTC

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…

The problem is that the externally driven factor can cause systemic issues. Having 25% retail & restaurant sales for a year will wipe out savings for a significant portion of the world. Most people will be fearful of spending for a long, long while.

Re: Dow Falls 2997 points worst drop since 1987 crash

#122

Post by m_a_g » Mon, Mar 16, 2020, 9:10 PM UTC

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…

>...this one is purely externally driven (like 2001) - which means it's temporary.

This can't be stressed enough. It may take a while but everything is going to be alright and normal again.

Re: Dow Falls 2997 points worst drop since 1987 crash

#123

Post by pan69 » Mon, Mar 16, 2020, 9:10 PM UTC

dougmwne wrote: post #65

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.

I was under the impression that the money supply can contract since most of it is in the form of debts and asset valuations and not in cash. If my house is worth $1 million but then because of a recession, less people are interested in buying houses and its price goes down to $500k, where did that money go?

Not only that, the initial $1 million you lend from the bank was literally created out of nothing. I.e. it never existed before you lent it.

Re: Dow Falls 2997 points worst drop since 1987 crash

#124

Post by SheinhardtWigCo » Mon, Mar 16, 2020, 9:10 PM UTC

bobbylarrybobby wrote: post #100

hitpointdrew wrote: post #84

Earlier quoted context omitted.

That is opposite of what you should do. You would just be locking in losses (or greatly reduced profits). As long as you are reasonably sure you can hold your stocks for a few years then just hold on to them. Or better yet, go on buying spree and get cheap stocks.

If you think prices will fall, sell now and then buy back in after they’ve fallen

Or hold and hedge by buying UVXY et al

Re: Dow Falls 2997 points worst drop since 1987 crash

#125

Post by tinyhouse » Mon, Mar 16, 2020, 9:10 PM UTC

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…

No one knows. You have the entire world working (mostly together) on ending this. I'm optimistic things will get much better in a month or so.

Re: Dow Falls 2997 points worst drop since 1987 crash

#126

Post by [deleted] » Mon, Mar 16, 2020, 9:10 PM UTC

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?

[deleted]

Re: Dow Falls 2997 points worst drop since 1987 crash

#127

Post by nouveaux » Mon, Mar 16, 2020, 9:10 PM UTC

adrr wrote: post #56

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…

Why catch a falling knife? I am actively shorting S&P to protect my other holdings. SPY is the largest ETF is now hard to borrow which is just crazy to think about.

While you're not outright advocating a trading strategy here, what you're suggesting is dangerous if you're not talking about the downsides to shorting.

Do not, I repeat, do not attempt a short without understanding all the risks.

When you buy a stock for $10, the most you can lose when that stock goes to zero is $10. In theory, when you short a stock at $10, your loss is infinite as the stock goes up higher and higher. In practice, your broker will most likely force you to cover that short long before that. Just know that the loss can be big and fast.

You should apply strategies you are most comfortable with and please do your research before attempting anything besides a long term buy and hold of index funds.

Re: Dow Falls 2997 points worst drop since 1987 crash

#128

Post by avalys » Mon, Mar 16, 2020, 9:10 PM UTC

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?

If the market drops by 50%, e.g. from 20,000 to 10,000, it will need to increase by 100% from that point in order to recover (from 10,000 back to 20,000).

Re: Dow Falls 2997 points worst drop since 1987 crash

#129

Post by xnyan » Mon, Mar 16, 2020, 9:10 PM UTC

koheripbal wrote: post #98

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…

> Even liberal states like New York are ignoring the downstream economic effects these closures will cause What do you suggest they do? Keep restaurants open? Also - I think they're hoping that people will still order restaurant food - just at home and have it delivered. ...might be a boon for Chinese restaurants, ironically.

UBI, tax credits, emergency direct to consumer low interest loans with suspended interest in the crises or all of the above.

Re: Dow Falls 2997 points worst drop since 1987 crash

#130

Post by bduerst » Mon, Mar 16, 2020, 9:11 PM UTC

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…

That's exactly why it's not really that good of a time to buy just yet. There's a chance we have a long ways to go and you'll probably run out of cash if you keep buying down the slide. We bought some on the crash last week but now it's just a waiting game to see how low it's going to bottom out.