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Stocks Off Sharply as Market Upheaval Grows

nytimes.com

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Re: Stocks Off Sharply as Market Upheaval Grows

#331

Post by adt2bt »

vasilipupkin wrote: post #252

I just want to offer everyone a professional piece of advice. Large down moves in equity markets is exactly when you should buy equities because that's when expected returns are at their highest.

This got me thinking - is it possible to develop a profitable long-term investment strategy that takes advantage of stock market dips?

For example, say I have $1000 to invest every month. I'll take that $1000 and put $500 into an index fund and $500 into a savings account. Then, once the market dips 10% from its previous high, all the accumulated money in the savings accounts is invested over 4 weeks.

I made a simple google doc to back-test the strategy 5 years on the DJIA. It's very rudimentary, but I'd love to see if anyone tries a different approach.

https://docs.google.com/spreadsheets/d/18-2rBonJPPlg8n6YkpAj...

Re: Stocks Off Sharply as Market Upheaval Grows

#332

Post by refurb »

ef4 wrote: post #257
AnimalMuppet wrote: post #216

Earlier quoted context omitted.

> After pumping QE full throttle at $80B/mo? They did for a while. That part's over, though.

As those bonds mature, the Fed is continually buying more to keep their balance relatively constant. Nothing is "over" until they manage to withdraw all that extra liquidity. Which is the tricky part.

Exactly! It's happened in the past. Inflation starts to creep up, but the economy is still lagging. The Fed is then stuck between reining in inflation and potentially stunting future growth. Pull back too late and you end up with the Carter years: mediocre growth and an inflation in the teens.

Re: Stocks Off Sharply as Market Upheaval Grows

#333

Post by lmm »

jbooth wrote: post #270
msandford wrote: post #230

Earlier quoted context omitted.

> The equilibrium interest rate is somewhere close to zero Really? Who are all these people who -- with their own money -- are willing to lend $100mm today for $100.05mm in a decade? If there are people willing to lend OTHER PEOPLE's money for near-zero rates, that doesn't count. Because ostensibly all money has to be someone's money. And if it's not -- like say if it's the Fed's money -- then that's clearly some kin…

People ARE buying federal bonds at that rate, right? You can find a figure for the sales, look at the yield curve, and quantify exactly how many people are acting that way with their own money (or how much money, at least). Looking at http://www.treasury.gov/resource-center/data-chart-center/in... , the yield for 10 years is actually more like 2%. Less than a year is very close to 0, so there are apparently a ton of…

There are a ton of people out there who will lend the fed money at that rate. But the fed is in a rather special position.

Re: Stocks Off Sharply as Market Upheaval Grows

#334

Post by wutbrodo »

forgetsusername wrote: post #194
jes wrote: post #162

Earlier quoted context omitted.

Unfunded liabilities (money that is owed, but not currently on-hand) in the United States are said to be greater than $127T: http://www.forbes.com/sites/realspin/2014/01/17/you-think-th... This does not account for unfunded liabilities owed by the states. The situation there is very difficult as well. You also mention that China is rampant with corruption. In my view, with respect to politics and cronyism, I think th…

> Unfunded liabilities (money that is owed, but not currently on-hand) in the United States are said to be greater than $127T: This is classic one-sided accounting. That money is not vaporized, never to be seen again when it's paid out. It is paid to US citizens as income . Out one pocket, into another.

I'm far from a reflexive debt hawk, but when someone mentions something like this, aren't they usually referring to the instability inherent in unfunded liabilities (as opposed to what you seem to be assuming (s)he means, which is that the money is illusory)?

Re: Stocks Off Sharply as Market Upheaval Grows

#335

Post by lmm »

Cshelton wrote: post #205
logicchains wrote: post #71

Earlier quoted context omitted.

Would you consider it less flawed if it hadn't rebounded after the drop? I thought being able to recover quickly from market shocks was considered a good thing.

I am considering it flawed in that we shouldn't have these drops, or gains,...this volatility, like we have today. The high frequency trading, the quarterly outlook, the amount of emotion, etc in the market is flawed. The average person should not have to worry about the market... ever. It shouldn't be the massive, speculative thing that it is today. Short term trading, as it is, needs to stop. Business does not work…

> The average person should not have to worry about the market... ever.

And they don't. The market, the real-time market, is there for those that need it. If you're not one of those, just ignore it.

Re: Stocks Off Sharply as Market Upheaval Grows

#336

Post by bsbechtel »

jusben1369 wrote: post #322
dataker wrote: post #132

Earlier quoted context omitted.

Regardless of your ideological background, you cannot possibly assert the U.S economy is healthy. 0% interest rate for several years is not healthy. QE is not healthy. 100+ % debt:GDP ration is not healthy. Inflating assets is not healthy. A vanishing middle-class is not healthy.

> 0% interest rate for several years is not healthy That's not healthy or unhealthy. It's just a thing. > QE is not healthy Ask Europe that didn't do quantitative easing (or did too little too late) which economy they'd rather have right now. And it's no longer a thing - because it ran its course and largely worked. >Inflating assets is not healthy Some classes of assets are inflating. Some are deflating. Again it's…

Europe can't really do QE in the same way the US can because there isn't a central bank tied to a central government. In addition: http://www.cnbc.com/2015/08/18/st-louis-fed-official-no-evid...

Re: Stocks Off Sharply as Market Upheaval Grows

#337

Post by svachalek »

FilterSweep wrote: post #51
MCRed wrote: post #44

Earlier quoted context omitted.

Warren Buffett says "If you're buying hamburger your whole life, do you want the price to be low or high?" For me, the situation is such a mess that I don't think we're close yet to what I would consider a buying opportunity. One saying is "buy when there's blood in the streets"... but I don't think we're there yet. Downvoted and slow banned. Why do I even contribute to this site?

When I saw the articles in my local newspaper over the weekend of this happening, I figured its almost time for me, a fresh college graduate, to jump into the markets. But considering how profound the issues of Chinese Real Estate bubble are - they were paying people to make it look like empty, recently-built, luxury apartment complexes had people actually living in them - I think the worst is yet to come and I'm sti…

The "ghost cities" stories are really popular on some sites but if you want another point of view:

https://www.youtube.com/watch?v=AyBBQ-wF87M

I do believe that Chinese real estate is in a bubble but the markets there work very, very differently than they do in the West so it's best not to try to infer too much from 10:00 news stories.

Re: Stocks Off Sharply as Market Upheaval Grows

#338

Post by jes »

forgetsusername wrote: post #194
jes wrote: post #162

Earlier quoted context omitted.

Unfunded liabilities (money that is owed, but not currently on-hand) in the United States are said to be greater than $127T: http://www.forbes.com/sites/realspin/2014/01/17/you-think-th... This does not account for unfunded liabilities owed by the states. The situation there is very difficult as well. You also mention that China is rampant with corruption. In my view, with respect to politics and cronyism, I think th…

> Unfunded liabilities (money that is owed, but not currently on-hand) in the United States are said to be greater than $127T: This is classic one-sided accounting. That money is not vaporized, never to be seen again when it's paid out. It is paid to US citizens as income . Out one pocket, into another.

I suspect whatever fraction of it is to be paid will be stolen from the young / yet-to-be-born and given to others.

That strikes me as extremely corrupt. Politicians steal from the young / unborn and use the money to advance their careers.

But to your point, yes, it's from one American to another, strictly speaking. I don't see that as making it moral.

Re: Stocks Off Sharply as Market Upheaval Grows

#339

Post by vasilipupkin »

debacle wrote: post #305
vasilipupkin wrote: post #252

I just want to offer everyone a professional piece of advice. Large down moves in equity markets is exactly when you should buy equities because that's when expected returns are at their highest.

I'll counter with some amateur advice - things still seem historically overpriced.

stocks are not obviously cheap, I'll give you that. But you have to compare them to other investment alternatives. Cash, Real Estate, Govt Bonds.

Re: Stocks Off Sharply as Market Upheaval Grows

#340

Post by redwood »

rancur wrote: post #318
slg wrote: post #288

Earlier quoted context omitted.

Beyond the slow and steady recommendation, I also think this is a reminder that most people really shouldn't be paying attention to the day to day movement of the stock market. Even after all the panic, standard total market ETFs are currently down between 1-2%. It would look like a perfectly normal day on the market if you ignore the intraday prices. It is amazing how much of the market volatility disappears when yo…

> most people really shouldn't be paying attention eh, IDK about that. I was cooping at a company that bottomed to $2.50 ~February 2008. I had been reading everything I could get my hands on regarding the Fed, their history, and general fiscal policy. I had about $7k in cash I was planning to dump into the company's ticker. But in February, when it was $2.50, I wasn't quite confident of my analysis. In May or so I ha…

this is dangerous stuff because you're implying that a few success stories or missed opportunities are representative of what folks can expect
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