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When buying the dip doesn’t work: An analysis of the dot-com crash

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Re: When buying the dip doesn’t work: An analysis of the dot-com crash

#301

Post by farmerstan »

eastbound wrote: post #151
tedunangst wrote: post #75

Earlier quoted context omitted.

Funny that webvan is always cited as an example of a startup that could never work, but really just an early example of do something that doesn't scale and just keep doing it until you somehow make money. But VCs weren't yet ready for the unicorn burn.

Juicero was the mirror product, then: An overpriced orange juice machine, with little packets that you can only buy on subscription, but can’t suspend while on holidays, with a QR code to prevent you from consuming after your holidays. It is also down if it can’t reach the Wifi. It showed that you can overcharge and make everything become a cloud subscription, because money was unlimited on the consumer side this tim…

You, and everyone that responded to you, have no idea what Juicero was. It wasn’t orange juice at all, or any type of fruit juice. It was green juice. The founder made millions selling his chain of green juice stores on the east coast so he short had a history of success.

I have a friend that worked there so I even tried the product. I thought the idea was vastly overpriced, but it definitely had the chance of working. Lots of people are into green juice vs fruit juice and they were trying to create a new market.

Re: When buying the dip doesn’t work: An analysis of the dot-com crash

#302

Post by nabla9 »

fny wrote: post #10

Look at a chart of the S&P 500 from 1920 to 2008 and you'll notice something rather curious: the stock market has gone parabolic ever since the financial crisis. What made this period so unique? Tremendously low interest rates coupled with quantitative easing dissuaded capital from financing the real economy and instead encouraged herding and levering up in the financial economy for returns. At ever dip, it was an op…

>Tremendously low interest rates coupled with quantitative easing dissuaded capital from financing the real economy and instead encouraged herding and levering up in the financial economy for returns.

This is the standard response that people repeat year after year. They are not the full or even major factor. They are more like a result of changes in economy.

>instead encouraged herding and levering up in the financial economy for returns.

Real reason:

Capital intensity has deceased dramatically. Capital intensity is the amount of fixed or real capital present in relation to other factors of production (especially labour).

Re: When buying the dip doesn’t work: An analysis of the dot-com crash

#303

Post by qznc »

anonporridge wrote: post #46
nathanvanfleet wrote: post #18

Sad to think that investing in the stock market, which I have only been able to financially over the last 5 years might have been much riskier than I might have previously thought. What I previously thought as "okay I just leave it in the stock market for a bit of time to recoup" is something I am now realizing would likely have to be 10+ years. It's kind of funny because I was getting shaky about having money in the…

Are you ignoring dividend reinvestment creating compounding growth? Even god couldn't beat dollar cost averaging, https://ofdollarsanddata.com/even-god-couldnt-beat-dollar-co...

There is an inverse question: If you have a cash windfall you want to invest, all-at-once or split it up?

I have seen a similar analysis (but can’t find it right now). Even if you invest at the all time highs, so the market drops right after you buy, you still win with the all-at-once strategy.

The general lesson: Get your money into the market as soon as possible. Maybe more memorable: Time in the market beats timing the market.

Re: When buying the dip doesn’t work: An analysis of the dot-com crash

#304

Post by unicornmama »

ProjectArcturis wrote: post #298
lvl102 wrote: post #278

Random thoughts: (1) People were deeply and extremely risk-averse coming out of the 2008 crisis. And now we are _starting_ to see the other end of that spectrum. However, we are still far from the heights/throes of the dot-com boom. Those were some insane times when nothing even mattered. (2) But keep in mind, the main driver of global economy is still increasing standard of living and middle class. And that’s far fr…

I think the NFT bubble and other crypto stuff is at least as crazy as anything from the dot-com bubble.

Crazy. But so far has remained isolated from the stock and bond markets.

Re: When buying the dip doesn’t work: An analysis of the dot-com crash

#305

Post by TheBigSalad »

ProjectArcturis wrote: post #298
lvl102 wrote: post #278

Random thoughts: (1) People were deeply and extremely risk-averse coming out of the 2008 crisis. And now we are _starting_ to see the other end of that spectrum. However, we are still far from the heights/throes of the dot-com boom. Those were some insane times when nothing even mattered. (2) But keep in mind, the main driver of global economy is still increasing standard of living and middle class. And that’s far fr…

I think the NFT bubble and other crypto stuff is at least as crazy as anything from the dot-com bubble.

Sure but if it's all crashes it will have little effect on the economy. In fact, people expect it to crash and will sit through virtually any dump based on the volatile history.

Re: When buying the dip doesn’t work: An analysis of the dot-com crash

#306

Post by layer8 »

qznc wrote: post #303
anonporridge wrote: post #46

Earlier quoted context omitted.

Are you ignoring dividend reinvestment creating compounding growth? Even god couldn't beat dollar cost averaging, https://ofdollarsanddata.com/even-god-couldnt-beat-dollar-co...

There is an inverse question: If you have a cash windfall you want to invest, all-at-once or split it up? I have seen a similar analysis (but can’t find it right now). Even if you invest at the all time highs, so the market drops right after you buy, you still win with the all-at-once strategy. The general lesson: Get your money into the market as soon as possible. Maybe more memorable: Time in the market beats timin…

Investing in the stock market has the general assumption that, a priori, stocks are more likely to rise than to fall at any given point in time. Under that assumption, the all-at-once strategy has the better expected outcome. Of course, you can be unlucky and end up buying the all-time-high just before a crash. You can avoid that risk by splitting up the investment, at the cost of lowering the overall expected value. So it’s more about how you feel about that risk, and whether you feel avoiding it is worth having a somewhat lower expected return.

Re: When buying the dip doesn’t work: An analysis of the dot-com crash

#307

Post by qznc »

lordnacho wrote: post #241
scrivna wrote: post #120

Earlier quoted context omitted.

The UK is at more or less the same price as it was in 2000. France same as 2008. Meanwhile SPY is up 2.75x in that period. The US seems to be the anomaly. Value doesn’t always go higher. Maybe the USA is special, maybe not.

Is that with dividends? Watch out because the German DAX actually does have reinvestment in it iirc. Most of the others don't.

An index never includes dividends. An index fond might (accumulating) or might not (distributing).

Re: When buying the dip doesn’t work: An analysis of the dot-com crash

#308

Post by lucidlive »

It feels like the vast majority of the comments are negative towards the stock market and essentially saying “we may not recover this time”. The thing is, we always think that. We always think this time is different. We always think this might be the end. When Covid struck? It was different because the world economy was shut. When 2008 happened? It was different. 2000? Different. 1987? Different. Markets will eventually recover. It will not take you 4 decades to recover. Sure, it could take years. But buy good companies, dollar cost average, and realize your loss isn’t realized until you sell. Also realize that the best time to buy stocks is always, but especially when people are flooding forums with negativity.

Re: When buying the dip doesn’t work: An analysis of the dot-com crash

#309

Post by lordnacho »

qznc wrote: post #307
lordnacho wrote: post #241

Earlier quoted context omitted.

Is that with dividends? Watch out because the German DAX actually does have reinvestment in it iirc. Most of the others don't.

An index never includes dividends. An index fond might (accumulating) or might not (distributing).

https://personal-financial.com/2020/11/27/the-dax-and-its-di...

Re: When buying the dip doesn’t work: An analysis of the dot-com crash

#310

Post by zmgsabst »

gabereiser wrote: post #126
zmgsabst wrote: post #90

Earlier quoted context omitted.

That’s ironic. If you’d sold your S&P500 on Monday and bought back on Friday, you’d have gained 2.7 shares per 100 sold. If you’d sold your S&P500 a month prior and bought back on Friday, you’d have gained a 8 shares per 100 sold. If you’d sold your S&P500 six months prior and bought back on Friday, you’d have gained 14 shares per 100 sold.

You just described a hobbyist. Institutions don’t sit on cash for that long, nor do they buy S&P in any significance. [0] Berkshire Hathaway - https://www.dataroma.com/m/holdings.php?m=BRK

Yes — I called it ironic because a hobbyist sitting on cash out performed the market over the past six months.

Institutions “making moves” aren’t magic — and often fail to beat indexes, which in turn failed to beat cash over the past six months.

Sometimes the hobbyist mindset wins.

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