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NFT: Dow plummets 830 points in worst drop since February...

M.S. : 10/10/2018 4:19 pm
...don't look at your portfolio tonight.

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Just a correction or signs of something bigger?  
Bold Ruler : Mod : 10/10/2018 4:23 pm : link
?
Oh, oh.  
Stan in LA : 10/10/2018 4:26 pm : link
Previous October's have produced some big falls in the stock market.
RE: Just a correction or signs of something bigger?  
M.S. : 10/10/2018 4:35 pm : link
In comment 14117991 Bold Ruler said:
Quote:
?

In no special order:

(1) Higher interest rates crimping consumers and corporate margins;
(2) Tech sell-off;
(3) Concerns about trade warfare with China, as well as Chinese industrial/digital spying
(4) Market correction... blowing off some steam
Market has been selling off the entire month of October...  
M.S. : 10/10/2018 4:36 pm : link

...corresponding to increasing yields.

Just bumped up the 401k a bit  
UConn4523 : 10/10/2018 4:38 pm : link
.
Ebb and flows  
dep026 : 10/10/2018 4:43 pm : link
Next month it will be back over 26,000. A day like this was bound to happen.
RE: RE: Just a correction or signs of something bigger?  
BigBlueDownTheShore : 10/10/2018 5:49 pm : link
In comment 14118004 M.S. said:
Quote:
In comment 14117991 Bold Ruler said:


Quote:


?


In no special order:

(1) Higher interest rates crimping consumers and corporate margins;
(2) Tech sell-off;
(3) Concerns about trade warfare with China, as well as Chinese industrial/digital spying
(4) Market correction... blowing off some steam


The tech sell off is most likely because of the recent hacks to Facebook and the undisclosed hack to Google+ which led to them shutting it down this week.
...  
WhoCares : 10/10/2018 6:10 pm : link
Increasing interest rates decrease money supply (also makes interest bearing products more attractive). If there is less money to go around, asset prices (ie, stock market) tend to take a hit. I suspect that this is the start of more than a correction
Yeah profit taking and  
section125 : 10/10/2018 6:45 pm : link
auto sell offs. Tomorrow will likely go up 300+ pts.
If youre at a point  
UESBLUE : 10/10/2018 6:56 pm : link
in your life where you are starting to live off your savings its a little scary.
Literally every academic study consistently shows that the way  
baadbill : 10/10/2018 7:04 pm : link
to guarantee that you are the sucker is to try to time the ups and downs of the market.
Jim Cramer sounds very dire  
Bold Ruler : Mod : 10/10/2018 7:38 pm : link
Not '87 or '08 dire...but still very down about where things are headed.
RE: Jim Cramer sounds very dire  
jcn56 : 10/10/2018 8:24 pm : link
In comment 14118252 Bold Ruler said:
Quote:
Not '87 or '08 dire...but still very down about where things are headed.


He probably didn't get his scheduled delivery of his favorite white substance.
I thought this was a good article  
Reb8thVA : 10/10/2018 8:59 pm : link
By Roubini at least regarding the challenges ahead
Correction - ( New Window )
I thought maybe...  
Dan in the Springs : 10/10/2018 9:29 pm : link
Preliminary analysis points to a higher than previously priced CPI report tomorrow, leading to higher rates bringing waiting markets down. Seemed like the kind of event that would trigger an automated sell-off.
Most likely  
pjcas18 : 10/10/2018 9:32 pm : link
someone got a copy of Clarence Beeks' crop report before the Dukes got their hands on it and swapped it out with a fake one to double cross the Dukes who were trying to corner the market.
White noise  
DonQuixote : 10/10/2018 9:53 pm : link
Keep in in the market for the long term, index funds, keep it out of the market if you are paying tuition of the mortgage with it.
Let me try again...  
DonQuixote : 10/10/2018 9:54 pm : link
Keep it in the market for the long term, index funds. Keep it out of the market if you are paying tuition or the mortgage within the next 5 years.
RE: Oh, oh.  
short lease : 10/10/2018 11:57 pm : link
In comment 14117996 Stan in LA said:
Quote:
Previous October's have produced some big falls in the stock market.


Yes, isn't this sort of like tradition going back to the '20's?
Think of it like a Fall sale ...  
short lease : 10/10/2018 11:59 pm : link
at Macy's. Prices are low right now - add to your holdings?
RE: I thought maybe...  
Dang Man : 10/11/2018 6:29 am : link
In comment 14118383 Dan in the Springs said:
Quote:
Preliminary analysis points to a higher than previously priced CPI report tomorrow, leading to higher rates bringing waiting markets down. Seemed like the kind of event that would trigger an automated sell-off.

If by automated sell off youíre referring to machine selling, I have doubt that itís the root cause. Most of those programs are momentum and trend based, so while they exacerbate a market slide they donít really start kicking in until the markets already sold off and established enough volume in a certain direction - in this case down. Just my two cents, but I think this is simply profit taking ahead of earnings. The recent move in rates is still in its nascent stages. I believe it takes quarters for the full impact to trickle through, and even now rates are very low on a historical basis.
RE: RE: I thought maybe...  
M.S. : 10/11/2018 6:41 am : link
In comment 14118515 Dang Man said:
Quote:
In comment 14118383 Dan in the Springs said:


Quote:


Preliminary analysis points to a higher than previously priced CPI report tomorrow, leading to higher rates bringing waiting markets down. Seemed like the kind of event that would trigger an automated sell-off.


If by automated sell off youíre referring to machine selling, I have doubt that itís the root cause. Most of those programs are momentum and trend based, so while they exacerbate a market slide they donít really start kicking in until the markets already sold off and established enough volume in a certain direction - in this case down. Just my two cents, but I think this is simply profit taking ahead of earnings. The recent move in rates is still in its nascent stages. I believe it takes quarters for the full impact to trickle through, and even now rates are very low on a historical basis.


Yes, but, if you believe the stock market is a forward-looking barometer (any many academics believe this), then market participants are already discounting stock prices based on the future impact of interest rate hikes... at least in certain interest-rate sensitive industries.
RE: RE: RE: I thought maybe...  
Dang Man : 10/11/2018 8:03 am : link
In comment 14118517 M.S. said:
Quote:
In comment 14118515 Dang Man said:


Quote:


In comment 14118383 Dan in the Springs said:


Quote:


Preliminary analysis points to a higher than previously priced CPI report tomorrow, leading to higher rates bringing waiting markets down. Seemed like the kind of event that would trigger an automated sell-off.


If by automated sell off youíre referring to machine selling, I have doubt that itís the root cause. Most of those programs are momentum and trend based, so while they exacerbate a market slide they donít really start kicking in until the markets already sold off and established enough volume in a certain direction - in this case down. Just my two cents, but I think this is simply profit taking ahead of earnings. The recent move in rates is still in its nascent stages. I believe it takes quarters for the full impact to trickle through, and even now rates are very low on a historical basis.



Yes, but, if you believe the stock market is a forward-looking barometer (any many academics believe this), then market participants are already discounting stock prices based on the future impact of interest rate hikes... at least in certain interest-rate sensitive industries.


100% true, but Banks and utilities have both been down, which tend to be sensitive to rates and outperform in a rising rate environment, as were consumer staples. Guess my point is, a change in market sentiment based on fundamentals tends to be more gradual (albeit the moves also tend to be larger in magnitude and have a longer duration). This broad based selling just seems to me (Iím in the industry but not an expert) like people taking a breather and profit taking in winners (ie tech and high momentum factor names). Seems a lot like February to me. Hope Iím right.

Again just my opinion. And you know what they say about opinions.
Down another 500+...  
M.S. : 10/11/2018 4:30 pm : link

...today, Thursday, October 11th.

Off 1,300 points in two trading days.

A mild correction?
The Dow only has 30 stocks  
MetsAreBack : 10/11/2018 4:59 pm : link
And is still insanely weighted by stock price on top of it

The S&P and Nasdaq are both down 5% over the past two days. Clearly 6 consecutive days now of declines is disconcerting - and I'm not happy about what it means for my portfolio -- but economy still seems to be doing pretty well and odds are this trade war stuff will calm itself (again).

Probably a buying opportunity here but I've already got too much invested , especially in emerging markets, so I'm sitting tight
Stocks are still at historical highs... Schiller PE is still above 30  
baadbill : 10/11/2018 6:51 pm : link
Median Schiller PE is around 15... solid buy is a Schiller PE below 10. The broad based market would have to drop another 50% to get me seriously interested in committing my cash reserves currently sitting on the sideline. Of course, the problem will be that Iíll get anxious to buy way too early.
RE: Stocks are still at historical highs... Schiller PE is still above 30  
MetsAreBack : 10/11/2018 10:12 pm : link
In comment 14119593 baadbill said:
Quote:
Median Schiller PE is around 15... solid buy is a Schiller PE below 10. The broad based market would have to drop another 50% to get me seriously interested in committing my cash reserves currently sitting on the sideline. Of course, the problem will be that Iíll get anxious to buy way too early.


Fine but your cash isn't earning inflation so you are earning negative real interest rate
The idea behind my cash position is that it is a temporary  
baadbill : 10/11/2018 10:26 pm : link
defensive position because both stocks and bonds are at historical highs. My cash position doesnít exist because of the interest rate. It exists because I believe stocks and bonds are too rich and are both likely heading lower, at which point I will buy.

I still hold stocks and bonds. I simply reduced my exposure while prices are so historically high.
RE: The idea behind my cash position is that it is a temporary  
BurberryManning : 10/11/2018 11:19 pm : link
In comment 14121357 baadbill said:
Quote:
defensive position because both stocks and bonds are at historical highs. My cash position doesnít exist because of the interest rate. It exists because I believe stocks and bonds are too rich and are both likely heading lower, at which point I will buy.

I still hold stocks and bonds. I simply reduced my exposure while prices are so historically high.
That sounds like a strategy to time the market. Isn't that precisely what you often argue against?

How long have you had this "defensive" cash position? The total return for the S&P year-to-date is still north of 3% so its not as if a catastrophic loss of capital has befallen those that have stayed invested in large cap U.S. equities.

Unless earnings fall off a cliff, and we'll probably book +20% YoY growth this year and solid growth next year, valuations are suddenly looking reasonable.
RE: RE: The idea behind my cash position is that it is a temporary  
baadbill : 10/12/2018 12:12 am : link
In comment 14122016 BurberryManning said:
Quote:
In comment 14121357 baadbill said:


Quote:


defensive position because both stocks and bonds are at historical highs. My cash position doesnít exist because of the interest rate. It exists because I believe stocks and bonds are too rich and are both likely heading lower, at which point I will buy.

I still hold stocks and bonds. I simply reduced my exposure while prices are so historically high.

That sounds like a strategy to time the market. Isn't that precisely what you often argue against?

How long have you had this "defensive" cash position? The total return for the S&P year-to-date is still north of 3% so its not as if a catastrophic loss of capital has befallen those that have stayed invested in large cap U.S. equities.

Unless earnings fall off a cliff, and we'll probably book +20% YoY growth this year and solid growth next year, valuations are suddenly looking reasonable.


Yes, it s timing the market. And yes, it is exactly against what I believe. I tell myself that the cash is there because I intend to buy stocks (and that is my intent). But it is a problematic position. First, I started reducing my stock exposure a few years ago as I grew close to retirement (I retired in June 2017). It is difficult to know how much retirement played a role versus my belief that the market was too rich. Clearly both were factors. Then in Aug 2018 I moved from 55% fixed income to 65%.

Even if it turns out I was right to reduce stock exposure, and even if stocks fall, I have the additional problem of deciding when to start to buy. And how quickly. Wait for a 25% drop? 40%? Or just a 10%?

And even if a 40% drop takes place, and I donít buy too soon and catch it just right, then I have to decide how much to move into stocks, In 2009 I moved my stock allocation from 60% in Aug 2008 to close to 90% by April 2009. And Iíve been reducing that down from 90% ever since (starting in 2010/2011.

So, even if I time it just right ... getting out and then back in ... Iím retired now and Iím not sure I am prepared to go back to 90% in stocks if we happen to get another 40 to 50% drop. And one of the reasons Iíd be hesitant is because this game Iíve been playing, requires me to then decide on a final stock percentage to consider ďnormalĒ ... in other words, if I go to 90% invested, how long do I stay there and when I start bringing it down to ďappropriate levelsĒ, what percentage do I settle upon?

So, Iím playing games with timing even though I donít believe in it ... probably because I canít decide upon an appropriate stock allocation percentage during retirement when I believe stocks are historically expensive. Iíve always bought during downturns over the past 40+ years of investing ... and even though Iím now retired, Iím prepared to continue to do so. But unlike before, I no longer have a very generous income that allowed my to increase my buying via temporary increases in my saving rate. So now I decrease my exposure to stocks when I ďfeelĒ nervous that the market is over sold.

Iím trying to learn to adjust to a world where I have a negative savings rate. Itís scary as shit. Sorry for the long post, but I wanted to be as open and honest as possible since you take the subject serious enough to actually remember what Iíve said before (and I really appreciate that, even if your position is one of disagreement- I never mind disagreement because thatís how I learn).
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