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Trading halted as U.S. stocks plummet

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Re: Trading halted as U.S. stocks plummet

#971

Post by rytill »

vearwhershuh wrote: post #960
rytill wrote: post #926

Earlier quoted context omitted.

Are there any disadvantages you can think of?

Yes: it punishes reallocation of capital and makes moon-shot style companies less viable. You would have a less dynamic economy with organic growth being the norm. I would allow for in-kind exchanges within a given trading year to make it easier to get out of bad positions (as well as tax free exchange with gold at any time, so gold becomes the medium for non-productive savings.) Now, let me tell you about my banking…

If you actually have a banking system proposal, I'm still curious.

Re: Trading halted as U.S. stocks plummet

#972

Post by yfljzs »

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

I predicted this. I made 100% return on my $4000 investment. That's not hindsight bias.

Re: Trading halted as U.S. stocks plummet

#973

Post by MR4D »

Klinky wrote: post #912
MR4D wrote: post #896

Earlier quoted context omitted.

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…

In this scenario: - This person likely could have drawn social security income, given that it's 2000 and SSI is not bankrupt. - Ideally you have the funds you need to retire in the principal alone, and are only relying on very modest growth rate to fight inflation once you're actually withdrawing from it. - You shouldn't be withdrawing retirement funds from an S&P 500 index fund investment. The funds should have been…

I'm not addressing strategy, just the math to show sequence of returns does impact withdrawals.

Also, while I agree with you position, most people unfortunately are not in that kind of situation (of course, they typically don't have the $1M I used in my example either).

Re: Trading halted as U.S. stocks plummet

#974

Post by MR4D »

outside1234 wrote: post #936
MR4D wrote: post #896

Earlier quoted context omitted.

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.

The dividends (assuming it's in an S&P index fund) are only about $27,000 per year.

You'd actually want a better mix of income generating assets than straight stocks to make sure you have income and are keeping up with inflation.

And a million is more than enough to retire. (Perhaps not enough for you or me, but that's a lifestyle choice.)

Re: Trading halted as U.S. stocks plummet

#975

Post by MR4D »

DarmokJalad1701 wrote: post #900
MR4D wrote: post #896

Earlier quoted context omitted.

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…

10% is not really a safe withdrawal rate though.

Agreed - it was simple math because I typed it on my phone.

Re: Trading halted as U.S. stocks plummet

#976

Post by froindt »

madengr wrote: post #963
froindt wrote: post #819

Earlier quoted context omitted.

>Well you can be fucked by your employers 401k manager. The day my wife quit, she was locked out of here 401k for 2 weeks. They divest everything during that term, and you have no control over the timing. What type of a company did your wife work for? I actively learn about personal finance and retirement plans and have never heard of a lockout from a 401k. > It's volatile enough presently that you could lose $$$ of…

No, $300k. She was locked out for 2 weeks as it was liquidated and a check cut to her IRA. Fortunately there was no volatility then. My employer changed the 401k match (in company stock) to a single purchase in January. Of course you can sell immediately, but it has the effect of boosting the shares when you do it for over 100k employees.

Unfortunately the process to move money from a 401k to an IRA (and moving money in general in he US) isn't great. In many instances the check is sent to the individual who then needs to send it to the receiving institution.

I've also read that upon receiving the money, brokerages don't always show it to the end user right away, using it on their end for a few days (and at scale, that matters).

Fair point regarding the 401k match - but are they issuing new stock to complete the match? I haven't looked at how a match with company stock is funded before, but intuitively I'd think they'd issue new stock, diluting existing stock a tiny bit, but keeping the same overall company valuation.

As originally presented I saw the issue with your wife's 401k and padding the stock price as part of the same issue.

Re: Trading halted as U.S. stocks plummet

#977

Post by dd36 »

danans wrote: post #153
dd36 wrote: post #121

Earlier quoted context omitted.

Trump running massive deficits and forcing rate cuts when times are good is Trump’s shaky ground.

People might forget, but part of his platform was supercharging the economy (really, the stock market) past the moderate, but steady and unexciting post-financial-crisis growth of the Obama era. To continue the automotive analogy, supercharging an engine with major fragilities usually sets it up for a reckoning, just waiting for a trigger. Covid-19 is just a particularly powerful trigger since it is globally correlat…

He said a lot of things... often contradictory. And his growth rate hasn't been particularly different than Obama's despite the super stimulus of deficit spending during a non-recession. Maybe it was the trade war or maybe there's just a limit to giving corporations huge tax cuts when they're already awash in abundant profits and capital.

Re: Trading halted as U.S. stocks plummet

#978

Post by thebean11 »

ttul wrote: post #970
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…

I’d like to offer a source to back up my statement about transaction costs: A Random Walk Down Wall Street. It’s true that even a retail investor can research and implement a strategy that beats the market average. However, their transaction cost - which includes the cost of their time doing research - will, over a large number of tries, eat up this advantage. Said another way: could _anyone_ reliably beat the market…

I could randomly select any task and then randomly select a typical retail investor and they'd be unlikely to accomplish it. That doesn't mean nobody should attempt it.

Not that I'm advocating trying to time the market, but I don't buy the "the average person can't do it so you shouldn't try" argument.

Re: Trading halted as U.S. stocks plummet

#979

Post by vearwhershuh »

rytill wrote: post #971
vearwhershuh wrote: post #960

Earlier quoted context omitted.

Yes: it punishes reallocation of capital and makes moon-shot style companies less viable. You would have a less dynamic economy with organic growth being the norm. I would allow for in-kind exchanges within a given trading year to make it easier to get out of bad positions (as well as tax free exchange with gold at any time, so gold becomes the medium for non-productive savings.) Now, let me tell you about my banking…

If you actually have a banking system proposal, I'm still curious.

lol fine:

Banking shouldn't have a reserve ratio. Rather, banks should have to show that they have a claim to each dollar they have loaned out for the period they have loaned it. This means they have to lend short and borrow long.

The insight here is that the problem with banking since time immemorial is rooted in a lie: multiple people have claims of ownership on the same dollar at the same point in time. Rather than using a reserve ratio to paper over this lie, we should simply ban lying. Banks offer CD like products that lock up money for a certain amount of time, and that money can be loaned out for a period less than or equal to that amount of time.

Practically this would imply a balance curve for a bank at time T, B(T) and their loan curve L(T) would need Again, this would mean that banks would not need a reserve ratio. A dollar could theoretically be lended out an infinite number of times, so long as the dollar was put back into the bank at a term longer than the next demanded loan.

Finally, I would make banks a special entity partnership, where partners were held liable for losses up to a certain % of revenues.

Yes, I am this much fun at parties.

Re: Trading halted as U.S. stocks plummet

#980

Post by ltbarcly3 »

Nasrudith wrote: post #962
ltbarcly3 wrote: post #907

Earlier quoted context omitted.

The efficient market hypothesis says you will never find money on the ground, because someone will always find it before you.

That is a misunderstanding akin to saying price differences by location cannot exist. It factors in all /available/ knowledge and the abilities aren't perfect either. Even if everyone was omniscient there is time to converge to the inevitable end state and perfect knowledge doesn't exist. Expecting walking or driving around to provide free money wouldn't be workable. The closest precedent are the venerable profession…

Walking around with the same strategy and constraints as everyone else won't work.

Lots of the money in the market is being traded by people who are managing over a billion dollars. They have to find investments that can absorb hundreds of millions of dollars. Your example of people collecting bottles is a perfect analogy of how anyone not moving millions of dollars can find good investments.

Also, it assumes that information is basically the same as 'news'. It's unlikely you will happen to be set up to respond to news as fast as whoever is fastest. However, to use information requires knowledge and comprehension, which is not considered at all. Most money on the market is being moved around by robots using fairly basic statistical models.

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