U.S. stocks in free fall

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ruralavalon
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Re: U.S. stocks in freefall

Post by ruralavalon »

willthrill81 wrote: Tue Oct 09, 2018 1:27 pm
HEDGEFUNDIE wrote: Tue Oct 09, 2018 1:12 pm TSM is only down 3% from historical highs. Relax everybody.
Indeed. I'm still up almost 10% for the year. You can bet that I would take that every year from here on out. A little downward movement is healthy because it helps to reduce market inflows that would surely come if the market went straight up.
Total return of Vanguard Total Stock Market Index Fund Admiral Shares (VTSAX) is still up 9.01% year to date :) .
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Esq123
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Stocks tumbling?

Post by Esq123 »

[Thread merged into here, see below (next page). --admin LadyGeek]

Anyone know what could potentially be causing this drop? There does not appear to be any significant recent events that could cause investors to be concerned. Trying to mutter to myself "stay the course stay the course." I guess we just need to be patient and wait to see what happens...Trying to block out all the noise.

:sharebeer
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samsoes
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Re: Stocks tumbling?

Post by samsoes »

Interest rates, specifically the 10 year treasury rate, are rising due to a robust economy. This makes business' cost if borrowing higher, thus reducing profitability to a degree.

Once equilibrium has been reached, this, too, shall pass.

Buy! :moneybag
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Re: U.S. stocks in freefall

Post by flyingaway »

The wolf is finally coming.
J295
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Re: Stocks tumbling?

Post by J295 »

Measure in years, not days or weeks or months.
flyingaway
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Re: Stocks tumbling?

Post by flyingaway »

Every "robust" economy was followed by a recession, tech boom in 2000 and housing boom in 2008.
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Re: Stocks tumbling?

Post by Nate79 »

They are? Huh, hadn't been paying attention to stock prices every day.....
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Re: Stocks tumbling?

Post by GammaPoint »

Esq123 wrote: Wed Oct 10, 2018 9:28 am Anyone know what could potentially be causing this drop? There does not appear to be any significant recent events that could cause investors to be concerned.
Bond yields going up. Also, the stock prices went up for a long, long time in absence of any positive recent events to justify those moves. If stocks can go up for no reason, then they can certainly go down too for no reason.
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Re: Stocks tumbling?

Post by lostdog »

It doesn't matter. Just stick to your plan.
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Re: Stocks tumbling?

Post by Sandtrap »

Tumbling today.
Falling tomorrow.
Climbing next week.
Flying and soaring next month.
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goblue100
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Re: Stocks tumbling?

Post by goblue100 »

Esq123 wrote: Wed Oct 10, 2018 9:28 am Anyone know what could potentially be causing this drop? There does not appear to be any significant recent events that could cause investors to be concerned. Trying to mutter to myself "stay the course stay the course." I guess we just need to be patient and wait to see what happens...Trying to block out all the noise.

:sharebeer
If this pimple on the south end of a north facing elephant is causing you distress, you need to reevaluate your risk tolerance. VTI is down what, 2% from it's high?
Last edited by goblue100 on Wed Oct 10, 2018 9:53 am, edited 1 time in total.
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adamthesmythe
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Re: Stocks tumbling?

Post by adamthesmythe »

Sandtrap wrote: Wed Oct 10, 2018 9:49 am Tumbling today.
Falling tomorrow.
Climbing next week.
Flying and soaring next month.
You forgot the "massively" in front of each.

I think it's just a thermodynamic fluctuation.
an_asker
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Re: Stocks tumbling?

Post by an_asker »

Esq123 wrote: Wed Oct 10, 2018 9:28 am Anyone know what could potentially be causing this drop? There does not appear to be any significant recent events that could cause investors to be concerned. Trying to mutter to myself "stay the course stay the course." I guess we just need to be patient and wait to see what happens...Trying to block out all the noise.

:sharebeer
I think it is because more people are motivated to sell than buy ;-). If the total number of shares of a specific stock in the first category below exceeds that in the second category below, that stock will tumble. You can extrapolate it to the rest of the stock market. BTW, this rule is valid ANY day! Please feel free to re-use.

Those motivated to sell:

- parents of high school seniors
- retirees who need to pay for their daily expenses
- sugar daddies who need to buy their girl a toy right now
- folks interested in flipping the stock overnight for a profit
- day traders wanting to sell the stock
- and so on

Those motivated to buy:

- Bogleheads with dry powder (aka cash, before you guys jump to conclusions)
- guys (and gals) just entering the job market
- others who are still in the accumulation phase
- folks interested in flipping the stock overnight for a profit
- day traders wanting to buy the stock
- and so on

Then, don't forget the lemmings and the anti-lemmings. Lemmings will sell just because everyone else is selling; anti-lemmings are the opposite. ;-)
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David Jay
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Re: Stocks tumbling?

Post by David Jay »

adamthesmythe wrote: Wed Oct 10, 2018 9:53 am I think it's just a thermodynamic fluctuation.
What, the market is in "flux"? :wink:
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Re: Stocks tumbling?

Post by Jack FFR1846 »

It's clearly because of a disturbance of the variable reluctance in the recent turbo encabulator.
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Re: Stocks tumbling?

Post by Sandtrap »

adamthesmythe wrote: Wed Oct 10, 2018 9:53 am
Sandtrap wrote: Wed Oct 10, 2018 9:49 am Tumbling today.
Falling tomorrow.
Climbing next week.
Flying and soaring next month.
You forgot the "massively" in front of each.

I think it's just a thermodynamic fluctuation.
"Massive" spacial correlations in stochastic thermodynamics dependent on one's allocation as long as one stays the course.

Actionably: As long as one does not change allocation reactively based on market fluctuation, and sticks to a well thought out IPS Statement, tumbling, rolling, climbing, and soaring, matters not.
Last edited by Sandtrap on Wed Oct 10, 2018 10:05 am, edited 1 time in total.
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wolf359
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Re: Stocks tumbling?

Post by wolf359 »

Assuming you are investing in Total Stock Market or the S&P 500. Don't forget that this asset class is volatile, meaning it will fluctuate up and down. Historically, it has generally gone up and down about 20% from it's mid value. If we're at the top of the bell curve now, it could potentially drop up to 40%. (These numbers are as measured annually.)

Recent fluctuations have been minor. We're down about 2% from the 52 W high. If the current level of volatility is bothering you, then you need to re-examine your risk tolerance. It can get a lot worse than this.
Esq123
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Re: Stocks tumbling?

Post by Esq123 »

It is not causing distress for the record lol. I guess as a young investor I should be taking advantage of any drops in the market. :moneybag
Admiral
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Re: Stocks tumbling?

Post by Admiral »

I like the fire sale. I hope it keeps up until Friday when I buy again :D.

Remember, if you bought stocks a week ago, you're now getting the same thing for less money!
BigMoneyNoWhammies
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Re: Stocks tumbling?

Post by BigMoneyNoWhammies »

Esq123 wrote: Wed Oct 10, 2018 9:28 am Anyone know what could potentially be causing this drop? There does not appear to be any significant recent events that could cause investors to be concerned. Trying to mutter to myself "stay the course stay the course." I guess we just need to be patient and wait to see what happens...Trying to block out all the noise.

:sharebeer
A combo of the Fed fund rate being incrementally increased over the last few quarters, the 10 year treasury note seeing it's highest yield in 7 years, and the ongoing tariff/trade spat with China
robertmcd
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Re: Stocks tumbling?

Post by robertmcd »

Long term rates rising are more likely the reason stocks are falling, due to:

Fed decreasing its balance sheet

Increased treasury debt issuance to fund the increasing deficit

Fed raising short term rates causing long term rates to rise so investors get a term premium
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villars
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Re: Stocks tumbling?

Post by villars »

The only thing I could find was thishttps://tickertape.tdameritrade.com/mar ... rise-17038 about new data:

" Some data checked in early Wednesday, with the headline and core producer price index for September both rising 0.2%. That was in line with Wall Street analysts’ expectations, but up from a negative 0.1% a month earlier. The closely watched consumer price index is due tomorrow morning, ".

In other words, it seems some are anticipating the CPI would come in showing some inflation , ergo the Fed will continue to raise rates, ergo yields on bonds would go up , and stocks will not.

If that is all is true, it just confirms that for us retail investors, the EMH (efficient market hypothesis) is basically true. I saw the dip in the SP500 today and then I looked up the news that caused it. By the time the news reaches us, the price has already incorporated the information.

I am, of course, doing nothing about this news. My bond allocation will continue to increase by 1.5% per year per my plan I wrote in 2014.
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Re: Stocks tumbling?

Post by Admiral »

I don't know about ya'll but I have not seen my Total Bond return over 3% for like a decade so I am loving it!

Course, I don't have to sell...
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Re: Stocks tumbling?

Post by aristotelian »

GammaPoint wrote: Wed Oct 10, 2018 9:42 am
Esq123 wrote: Wed Oct 10, 2018 9:28 am Anyone know what could potentially be causing this drop? There does not appear to be any significant recent events that could cause investors to be concerned.
Bond yields going up. Also, the stock prices went up for a long, long time in absence of any positive recent events to justify those moves. If stocks can go up for no reason, then they can certainly go down too for no reason.
Then 10 year is up .01% today. It does seem odd to see such a big drop in the absence of anything else.
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Re: U.S. stocks in freefall

Post by willthrill81 »

I'm going to go out on a limb and say that this is only a short-lived drop and not the beginnings of a bear market. Unemployment is trending downward and interest rates are not inverted yet.

I certainly don't buy the argument that this is due to yields going up because yields are virtually unchanged from last week to this week. 10 year treasuries are still sitting at 3.2%.

I know the reason for the drop, and it's my fault. I'm buying tomorrow, and the market is doing me the favor of dropping in price before the sale is completed. :mrgreen:
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Re: Stocks tumbling?

Post by GammaPoint »

aristotelian wrote: Wed Oct 10, 2018 10:23 am Then 10 year is up .01% today. It does seem odd to see such a big drop in the absence of anything else.
Stock prices don't respond to only the days events. The events prior to today weigh on investor's minds and then they take action, sometimes after a delay and after having discussed the issue with their advisor. Rates have been rising in the past, and that could be one catalyst for taking some risk off the table.
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Re: Stocks tumbling?

Post by VictoriaF »

an_asker wrote: Wed Oct 10, 2018 9:54 am
Esq123 wrote: Wed Oct 10, 2018 9:28 am Anyone know what could potentially be causing this drop?
Those motivated to sell:
...
- sugar daddies who need to buy their girl a toy right now
...

Those motivated to buy:
- Bogleheads with dry powder (aka cash, before you guys jump to conclusions)
...
Call girls are buying.
Put girls are selling.
Girls' powder is girls' power.

Victoria
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rockonhumblepie
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Re: Stocks tumbling?

Post by rockonhumblepie »

What goes up must come down
Spinnin' wheel got to go round
Talkin bout your troubles, it's a cryin sin
Ride a painted pony,let the spinnin' wheel spin

Name that band...?

I set it and forget it...and listen to some tunes. rockon 8-)
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bligh
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Re: Stocks tumbling?

Post by bligh »

I think it is all about the rising interest rates and the trade war right now... Possibly fear of a political gridlock if the Democrats take the house? Though I seriously doubt that is the impetus behind the selling.

With the 10 year expected returns as low as they are, the age of this bull market, the rising bond yields, the people doing the selling right now may have good reason to be selling equities and moving to safe assets.

I am staying put since I am still accumulating and the current value of those stocks is less important to me.. in fact I prefer them to be cheaper.. what will matter to me is where they are 10-20-30+ years from now.
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Re: U.S. stocks in freefall

Post by MotoTrojan »

willthrill81 wrote: Wed Oct 10, 2018 10:25 am I'm going to go out on a limb and say that this is only a short-lived drop and not the beginnings of a bear market. Unemployment is trending downward and interest rates are not inverted yet.

I certainly don't buy the argument that this is due to yields going up because yields are virtually unchanged from last week to this week. 10 year treasuries are still sitting at 3.2%.

I know the reason for the drop, and it's my fault. I'm buying tomorrow, and the market is doing me the favor of dropping in price before the sale is completed. :mrgreen:
I feel like the TSM dropped more in one day after the January high than we are off from the current high. Why all this discussion...
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corn18
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Re: U.S. stocks in freefall

Post by corn18 »

Well, a drop this big will get me back to my target AA, so there's that. Yeah?
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Re: Stocks tumbling?

Post by VictoriaF »

Sandtrap wrote: Wed Oct 10, 2018 10:03 am
adamthesmythe wrote: Wed Oct 10, 2018 9:53 am I think it's just a thermodynamic fluctuation.
"Massive" spacial correlations in stochastic thermodynamics dependent on one's allocation as long as one stays the course.
Aha! We have deepened from physics envy to thermodynamic envy. Now we can make a bulletproof prediction: entropy will increase.

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Re: U.S. stocks in freefall

Post by willthrill81 »

MotoTrojan wrote: Wed Oct 10, 2018 10:36 am
willthrill81 wrote: Wed Oct 10, 2018 10:25 am I'm going to go out on a limb and say that this is only a short-lived drop and not the beginnings of a bear market. Unemployment is trending downward and interest rates are not inverted yet.

I certainly don't buy the argument that this is due to yields going up because yields are virtually unchanged from last week to this week. 10 year treasuries are still sitting at 3.2%.

I know the reason for the drop, and it's my fault. I'm buying tomorrow, and the market is doing me the favor of dropping in price before the sale is completed. :mrgreen:
I feel like the TSM dropped more in one day after the January high than we are off from the current high. Why all this discussion...
Because there isn't a lot else to discuss...
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Re: U.S. stocks in freefall

Post by AnalogKid22 »

willthrill81 wrote: Wed Oct 10, 2018 10:25 am I'm going to go out on a limb and say that this is only a short-lived drop and not the beginnings of a bear market. Unemployment is trending downward and interest rates are not inverted yet.

I certainly don't buy the argument that this is due to yields going up because yields are virtually unchanged from last week to this week. 10 year treasuries are still sitting at 3.2%.

I know the reason for the drop, and it's my fault. I'm buying tomorrow, and the market is doing me the favor of dropping in price before the sale is completed. :mrgreen:
Agree. Just another January 2018 correction from my perspective. When we watch the day-to-day market moves we obsess over these tiny corrections. Long-term we won't even remember this. This is one reason many investors prefer to only look at quarterly or annual statements: "It was a good/bad quarter/year," rather than "It was a good/bad day/week."
WhiteMaxima
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Re: U.S. stocks in freefall

Post by WhiteMaxima »

From long term perspective, any investor should stay in course in a well diversified folio.
tenkuky
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Re: Stocks tumbling?

Post by tenkuky »

rockonhumblepie wrote: Wed Oct 10, 2018 10:33 am What goes up must come down
Spinnin' wheel got to go round
Talkin bout your troubles, it's a cryin sin
Ride a painted pony,let the spinnin' wheel spin

Name that band...?

I set it and forget it...and listen to some tunes. rockon 8-)
Blood Sweat and Tears :beer

Name this one:
You say that money isn’t everything…
Well, I’d like to see you live without it.
You think you can keep on going living like a king…
Ooh babe, but I strongly doubt it!
flyingaway
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Re: U.S. stocks in freefall

Post by flyingaway »

willthrill81 wrote: Wed Oct 10, 2018 10:25 am I'm going to go out on a limb and say that this is only a short-lived drop and not the beginnings of a bear market. Unemployment is trending downward and interest rates are not inverted yet.

I certainly don't buy the argument that this is due to yields going up because yields are virtually unchanged from last week to this week. 10 year treasuries are still sitting at 3.2%.

I know the reason for the drop, and it's my fault. I'm buying tomorrow, and the market is doing me the favor of dropping in price before the sale is completed. :mrgreen:
Why not buying today?
Shallowpockets
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Re: Stocks tumbling?

Post by Shallowpockets »

Heresy here.
Doesn't matter if stocks tumble. Doesn't matter to a BH. It is ho-hum on it all. BHs have their ducks in a row with a long term plan. Nothing flusters, nothing makes them concerned. It is all just fluff.
At the most, maybe a change in asset alocation, excepting to do now is esentially market timing unless your written AA plan occurs on these recent dates.
I wonder if BHs are so ho-hum in the other parts of their lives.
Lost my job, ho-hum, allows me to look round and maybe get a better job.
Car accident, ho-hum, I can afford it. Maybe get a new car, on BH terms.
Divorce, hey, I had a prenup. All is well, and new possibilities.
Hurricane taking away your house? Come on, it'll be over and sunny before you know it and you can rebuild. You have your emergency fund and your insurance. Not to worry.
All dips or highs from the norm are ho-hum. With a long view you can look down the road 20 years. Would that problem be a problem then? If not, you see there is nothing that here and now upsets the apple cart of belief, unless you can't get that annual max into you IRA or 401.
Are you concerned about the markets? Well, you are not a BH and should get off the train.
To be a BH is to be calm and boring. Most things not even worth talking about. The rationalization based on the long term is the same as not caring about any of life because you look forward to heaven. And that is the true goal.
Last edited by Shallowpockets on Wed Oct 10, 2018 11:25 am, edited 1 time in total.
rgs92
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Re: Stocks tumbling?

Post by rgs92 »

This one is all about interest rate hikes by the Fed it seems.
So it's perfectly normal and ordinary.
(Oh well, bonds are sinking too. So this is a 1970s style pullback. It's happened before and it's probably an overreaction and will settle down eventually and come back I believe. So, as per the good advice above, stay the course.)
Delta1
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Re: U.S. stocks in freefall

Post by Delta1 »

flyingaway wrote: Wed Oct 10, 2018 10:53 am
willthrill81 wrote: Wed Oct 10, 2018 10:25 am I'm going to go out on a limb and say that this is only a short-lived drop and not the beginnings of a bear market. Unemployment is trending downward and interest rates are not inverted yet.

I certainly don't buy the argument that this is due to yields going up because yields are virtually unchanged from last week to this week. 10 year treasuries are still sitting at 3.2%.

I know the reason for the drop, and it's my fault. I'm buying tomorrow, and the market is doing me the favor of dropping in price before the sale is completed. :mrgreen:
Why not buying today?
Bec tomorrow it will drop even more, gotta time that market!
rockonhumblepie
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Re: Stocks tumbling?

Post by rockonhumblepie »

tenkuky wrote: Wed Oct 10, 2018 10:52 am
rockonhumblepie wrote: Wed Oct 10, 2018 10:33 am What goes up must come down
Spinnin' wheel got to go round
Talkin bout your troubles, it's a cryin sin
Ride a painted pony,let the spinnin' wheel spin

Name that band...?

I set it and forget it...and listen to some tunes. rockon 8-)
Blood Sweat and Tears :beer

Name this one:
You say that money isn’t everything…
Well, I’d like to see you live without it.
You think you can keep on going living like a king…
Ooh babe, but I strongly doubt it!
No bathroom, no sink
tap water is very hard to drink...Silverchair!..rightarm man! :beer
Tomorrow..must think..about tomorrrrow.
Your stock is up
lws
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Re: Stocks tumbling?

Post by lws »

No one knows what is causing the drop.
It is the nature for the market to behave this way.
Stop looking at the market and carry on. Stay the course.
tenkuky
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Re: Stocks tumbling?

Post by tenkuky »

rockonhumblepie wrote: Wed Oct 10, 2018 11:10 am
tenkuky wrote: Wed Oct 10, 2018 10:52 am
rockonhumblepie wrote: Wed Oct 10, 2018 10:33 am What goes up must come down
Spinnin' wheel got to go round
Talkin bout your troubles, it's a cryin sin
Ride a painted pony,let the spinnin' wheel spin

Name that band...?

I set it and forget it...and listen to some tunes. rockon 8-)
Blood Sweat and Tears :beer

Name this one:
You say that money isn’t everything…
Well, I’d like to see you live without it.
You think you can keep on going living like a king…
Ooh babe, but I strongly doubt it!
No bathroom, no sink
tap water is very hard to drink...Silverchair!..rightarm man! :beer
Tomorrow..must think..about tomorrrrow.
Your stock is up
Oooh, it's on. Name this...

Every night before I go to sleep
Find a ticket, win a lottery,
Scoop the pearls up from the sea
Cash them in and buy you all the things you need.
Irisheyes
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Re: Stocks tumbling?

Post by Irisheyes »

Market sharply down
Bogleheads peacefully watch
Stocks will climb in time


:happy
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Re: Stocks tumbling?

Post by White Coat Investor »

Esq123 wrote: Wed Oct 10, 2018 9:28 am Anyone know what could potentially be causing this drop? There does not appear to be any significant recent events that could cause investors to be concerned. Trying to mutter to myself "stay the course stay the course." I guess we just need to be patient and wait to see what happens...Trying to block out all the noise.

:sharebeer
This is what the price of stocks does. It fluctuates. Just like you can't pinpoint exactly why they are up this year, you can't pinpoint why they are down today. Once you accept that you only care how they perform over your investment horizon, it frees you up to ignore the more minor movements outside of minor portfolio tasks like rebalancing and tax loss harvesting.
1) Invest you must 2) Time is your friend 3) Impulse is your enemy | 4) Basic arithmetic works 5) Stick to simplicity 6) Stay the course
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Re: Stocks tumbling?

Post by peterinjapan »

Shallowpockets wrote: Wed Oct 10, 2018 10:59 am To be a BH is to be calm and boring. Most things not even worth talking about. The rationalization based on the long term is the same as not caring about any of life because you look forward to heaven. And that is the true goal.
I am a BH, but not as pure as some here. In three days, 2 years of profits in stupid DAL I was holding, gone. I was going to sell and add to my index holdings, now I have nothing to sell. (Well, no profits...)

I am largely an indexer but I have a few things I like to hold for vanity’s sake, or because I’ve held them since forever and don’t want to pay taxes to sell them.

Le sigh.
chevca
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Re: Stocks tumbling?

Post by chevca »

Admiral wrote: Wed Oct 10, 2018 10:08 am I like the fire sale. I hope it keeps up until Friday when I buy again :D.
Funny, I was going to say, don't worry y'all stocks will be back up by Friday since that's my next deferred comp contribution. :happy
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Re: Stocks tumbling?

Post by black cat fortunate »

{ delete please }
Last edited by black cat fortunate on Thu Oct 11, 2018 12:02 am, edited 3 times in total.
KlangFool
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Re: Stocks tumbling?

Post by KlangFool »

Esq123 wrote: Wed Oct 10, 2018 10:06 am It is not causing distress for the record lol. I guess as a young investor I should be taking advantage of any drops in the market. :moneybag
Esq123,

It might be because of this.

https://www.bloomberg.com/news/articles ... of-records

<<Tencent’s $220 Billion Rout Is Breaking All Kinds of Records>>

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nisiprius
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Re: Stocks tumbling?

Post by nisiprius »

Nobody knows. Or just possibly, "those who know don't talk, and those who talk don't know." Don't worry about it. Anything you hear is just something somebody made up.

Some accursed morning, you will see a market,
You will see a market, across a crack of doom,
And somehow you know, you know even then,
It soon will be falling, again and again.

Some accursed morning, you will hear it crashing,
Crashing like a symbol, to end a bounding boom,
And somehow you know, as strange as it seems,
The sound of that crashing will darken your dreams.

Who can explain it? Who can tell you why?
Fools give you reasons, wise men never try.


--Oscar Hammerstein, "Some Enchanted Evening," from South Pacific (adapted)
In 'Stocks for the Long Run,' Jeremy Siegel wrote:On November 15, 1991, when the Dow fell more than 120 points, or nearly 4 percent, Investor's Business Daily ran an article about the market entitled "Dow Plunges 120 in a Scary Stock Sell-Off: Biotechs, Programs, Expiration and Congress Get the Blame." In contrast, the London-based Financial Times published a front-page article by a New York writer entitled "Wall Street Drops 120 Points on Concern at Russian Moves." What is interesting is that such news, specifically that Russian government had suspended oil licenses and taken over the gold supplies, was not mentioned even once in the Investor's Business Daily article!
In 'The Black Swan', Nassim Nicholas Taleb wrote:One day in December 2003, when Saddam Hussein was captured, Bloomberg News flashed the following headline at 13:01: U.S. Treasuries Rise; Hussein Capture May Not Curb Terrorism. ... Half an hour later, they had to issue a new headline. As these U.S. Treasury bonds fell in price (they fluctuate all day long, so there was nothing special about that), Bloomberg News had a new reason for the fall: Saddam's capture (the same Saddam). At 13:31 they issued the next bulletin: U.S. Treasuries Fall; Hussein Capture Boosts Allure of Risky Assets. So it was the same capture (the cause) explaining one event and its exact opposite.
Last edited by nisiprius on Wed Oct 10, 2018 12:26 pm, edited 1 time in total.
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