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Trading halted as U.S. stocks plummet

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Re: Trading halted as U.S. stocks plummet

#931

Post by bby »

bob1029 wrote: post #634
tempsy wrote: post #278

Buy S&P puts as a hedge to save your account in times of extreme volatility. I had 270 strike puts for April I bought on Friday for $6 that jumped to $15 today and got my account to break even even though the value of my stocks went down.

Purchasing options is usually terrible advice for anyone who hasn't been doing this for a long time. Options are very difficult to do right. Even if your intentions are sound relative to what is occurring in the market (e.g. volatility plays today), you can still get some aspect wrong and lose a bunch of money. My strategy is to operate with a margin account and use high/low water marks as the trigger points for adju…

bruh you just made it more complex with this answer. just buy puts.

Re: Trading halted as U.S. stocks plummet

#932

Post by anm89 »

zeroonetwothree wrote: post #924
coolspot wrote: post #909

Earlier quoted context omitted.

Seriousness of wuhan virus was known since end of January, but stock market ignored it completely, raging into all-time highs till February 20th. Regular person could absolutely see it and be prepared. Even today market still doesn’t price in Italy-style or China-style lockdowns.

This is called hindsight bias

Claiming this after the fact could represent hindsight bias.

It does not change the fact that the market had an inefficiency in pricing this information into many assets two weeks ago.

If someone bought or sold assets based on a strategy based on this belief (and certainly at least some people did), then they exploited that perceived inefficiency correctly without hindsight.

Re: Trading halted as U.S. stocks plummet

#933

Post by esoterica »

disease wrote: post #263
walrus01 wrote: post #188

Serious question, is anyone watching this carefully and trying to determine when things will bottom out (perhaps in a week or two), to buy stocks, ETFs, and such at the bottom of the dip? Hindsight is 20:20 of course, but there's a number of equities that one could have purchased shortly after the 2008 financial crisis that proceeded to make significant gains between 2009 and 2019.

In my experience it's always good to buy when sentiment is bad. If this is just a minor dip that will bounce back up, then you got a nice little discount on your equities. If it is the start of a major downturn then you have taken the first step towards buying at a greater and greater discount and can continue buying all the way down. I don't consider this to be timing the market. You should always be investing but w…

Your logic is vacuous because you can use the exact same rationale to justify the opposite conclusion.

"It's always good to buy when sentiment is good. If the bullish trend continuous, then you got in early and got a nice discount on your equities. If it is the start of a major downturn then you have taken the first step towards buying at a greater and greater discount and can continue buying all the way down"

Re: Trading halted as U.S. stocks plummet

#934

Post by dzhiurgis »

kelnos wrote: post #803
vortico wrote: post #29

Slightly unrelated, but why does the stock market close each night? If trading was open 24/7, we wouldn't have large spikes like this every morning. We'd only have them when certain news is announced.

Aside from people needing to sleep (back when computers didn't do our trading for us), there's also the matter of information flow: the reason quarterly earnings announcements happen after market close is to avoid giving slightly-faster people an edge. If you could read and digest an earnings announcement faster than all your peers, you could make trades based on the new information before the price has moved. While…

Maybe solution would be freezing certain asset for a week/day/hour after earnings announcement?

Re: Trading halted as U.S. stocks plummet

#935

Post by panarky »

verbify wrote: post #885
mmhsieh wrote: post #875

Earlier quoted context omitted.

+1. it took about 3.5 decades to return to the levels of the pre-'29 crash. bear markets can indeed drag for decades. stockbroker happy-talk tends to gloss over these facts.

If you had reinvested your dividends, you'd have gotten your money back by the end of the war (and you'd only have lost 1 or 2% approximately six years later). 35 years later you would have an annual return (inflation adjusted) of 6% (6.5 times as much as you put in). And this is somebody who invested in the absolute peak of the market in 1929, and then saw the worst crash in history, followed by the worst war in his…

Past performance is not a guarantee of future results.

Markets can grind lower and lower for decades, each new low triggering bargain hunters to buy, only to drop more.

Re: Trading halted as U.S. stocks plummet

#936

Post by outside1234 »

MR4D wrote: post #896
bytematic wrote: post #646

Earlier quoted context omitted.

Most people don't seem to understand that you don't pull all your retirement out at once, so the market going up or down doesn't really affect that

Actually it does, and in a big way. Let me give a simple example using some round numbers just to show the concept. Plug and play any numbers you want to see how the outcome changes... Let’s say you have a million dollars in March of 2000, you just retired, and you need to pull out $100,000 to live on. So, in April, you take out $100,000 and now you have $900,000. So you ended up taking out 10% of your principal. How…

What you really proved is that $1M is not enough to retire.

If you can’t live off the dividends, you don’t have enough to retire.

Re: Trading halted as U.S. stocks plummet

#937

Post by aeternum »

_7fvc wrote: post #901
aeternum wrote: post #874

Earlier quoted context omitted.

The counter-argument to this is that even with the money being pumped into the market by the central banks, we are not seeing significant inflation in consumer goods. This implies that the money is being put to work efficiently and resulting in productivity and QoL improvements for society as a whole.

We have not seen inflation. But we're seeing slow growth and negative interest rate. These are signs of diminishing returns. The market has lost its check-and-balance. Bond and lending were supposed to carry risk and skin in the game. Right now, overall growth is delivered through the Fed pumping money. There is no check-and-balance. With this crisis, governments will likely pump more money. That'll distort the marke…

What we've seen throughout history is that economies are typically ruined by two things:

1) Governments or central banks printing or issuing (often not physically) too much money, resulting in inflation that spirals out of control.

2) Governments, central banks, individuals, businesses hoarding money due to fear or other reasons, resulting in deflation that spirals out of control.

Those two are a form of check & balance. The thesis that most central banks now use is that if we can keep inflation steady, then we will have relative economic stability. The interest/lending rates are simply tools through which inflation can be moderated.

Re: Trading halted as U.S. stocks plummet

#938

Post by Phillipharryt »

hoten wrote: post #893
anm89 wrote: post #872

Earlier quoted context omitted.

>Note that nobody has any idea where equity prices will be in one day, never mind one year or ten years' time This is more or less true. > As a retail investor (i.e. not extremely rich), you can't gain any advantage over the market that overcomes your transaction costs. This is patently absurd. It's an easily falsifiable statement which is a rare feat in economics. On average, the the average retail investor will not…

What does it mean for a market to have inefficiencies?

There are actions that stop people behaving in a way they would in a perfect market. Laws prohibiting certain sales, taxes affecting companies and investors, imperfect information disclosure, are a few of the big ones.

Re: Trading halted as U.S. stocks plummet

#939

Post by logicchains »

RockIslandLine wrote: post #728
malandrew wrote: post #521

Earlier quoted context omitted.

I'm wondering if what 2% dies matters. This disease is mostly going to kill people past their prime working years. There are going to be tons of sociological changes. Just speculating here: - Social security could have it's date of insolvency extended. It's currently predicted to be insolvent by 2037. Most pension programs in the world will be relieved of pressure if many of those over 60 years of age die. Many state…

"Social security could have it's date of insolvency extended. It's currently predicted to be insolvent by 2037." The US Federal government has both a literal and a figurative money printing press. Congressional appropriations create money. Revenue is an obsolete concept for currency issuers. As a Federal program, it is literally impossible for the program to be "insolvent". Social Security benefits can be paid at ful…

>Social Security benefits can be paid at full rates for as long as Congress decides to do so.

Not at "real" rates, because a bunch of stuff Americans consume is produced overseas, and if the government starts printing large sums of money then exporters in other countries are going to demand more of it in payment for goods, so the purchasing power of the amount paid to retirees will decrease.

Re: Trading halted as U.S. stocks plummet

#940

Post by [deleted] »

evanpw wrote: post #707
phreeza wrote: post #677

Earlier quoted context omitted.

The counterexamples that have been brought up elsewhere on this post are Gold (still below 40 year high) and the Nikkei (still below 30 year high).

Gold is a single concentrated bet, not really comparable to a stock-market index, and the Nikkei shows why it's important to diversify outside of your home country. For almost everyone, "buy the global market portfolio and forget about it" is the right advice.

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