U.S. stocks in free fall

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GP813
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Re: U.S. stocks in free fall

Post by GP813 »

quattro73 wrote: Tue Jan 25, 2022 7:24 pm MSFT had $16B in net income for the 06/30/2018 YE.

MSFT had $61B in net income for the 06/30/2021 YE.

Just for some perspective on why valuations of some companies might have gone up. They have accelerated earnings at a rapid pace.
Image

Yes, software is still eating the world. Look at this chart of European cloud providers. The overall market is growing like crazy and the European companies are losing market share in their own backyard. MSFT is one of the U.S. companies they're losing market share to.
SantaClaraSurfer
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Re: U.S. stocks in free fall

Post by SantaClaraSurfer »

Stalyn wrote: Tue Jan 25, 2022 7:20 pm So.., what are you saying? Is wise to good domestic and international?
I wouldn't change a thing about the Int'l allocation, personally, and am happy with my experiment, since, back of the envelope, we might be able to purchase a [car|vacation|cool big ticket item] down the road with just these invested cash back dollars, which would be kind of a cool outcome over frittering it away on non essentials.

Bottom line, I have a blended fund I've randomly been adding $5, $10 or $25 to since July 2020 and it's up 6.6%, not the 28% I'd have if I'd invested all the money in the S+P 500 on the front end on July 1, 2020.

6.6% isn't even matching inflation for the same timeframe.

So when people say that US equities have had a great run in the context of the market being down, that does assume that we all had money in the market ten years ago, or more. Yes, I agree that if that's true, this is a small correction.

However, some folks with more recent investment horizons will start to see numbers like I'm seeing, esp. if this market keeps cooling.

Nothing wrong, or chicken little, about realizing that's going to be true for some people.

If you started more recently, you just have to keep your eyes on the long term horizon and keep saving and investing.
000
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Re: U.S. stocks in free fall

Post by 000 »

Tomorrow will be interesting. :twisted:
jarjarM
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Re: U.S. stocks in free fall

Post by jarjarM »

000 wrote: Tue Jan 25, 2022 8:06 pm Tomorrow will be interesting. :twisted:
It's going to be a battle of the bear and the bull.... :wink:
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Beensabu
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Re: U.S. stocks in free fall

Post by Beensabu »

bogledogle87 wrote: Tue Jan 25, 2022 6:38 pm What is with all the market-timing speculators invading this thread!? Was not expecting this! :confused
You are here --> The Hourly Financial News and Armchair Macro Economic Forecasting Thread

It's good reading, and it's only going to get better.
"The only thing that makes life possible is permanent, intolerable uncertainty; not knowing what comes next." ~Ursula LeGuin
BanquetBeer
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Re: U.S. stocks in free fall

Post by BanquetBeer »

SantaClaraSurfer wrote: Tue Jan 25, 2022 8:06 pm Bottom line, I have a blended fund I've randomly been adding $5, $10 or $25 to since July 2020 and it's up 6.6%, not the 28% I'd have if I'd invested all the money in the S+P 500 on the front end on July 1, 2020.

6.6% isn't even matching inflation for the same timeframe.

So when people say that US equities have had a great run in the context of the market being down, that does assume that we all had money in the market ten years ago, or more. Yes, I agree that if that's true, this is a small correction.

However, some folks with more recent investment horizons will start to see numbers like I'm seeing, esp. if this market keeps cooling.

Nothing wrong, or chicken little, about realizing that's going to be true for some people.

If you started more recently, you just have to keep your eyes on the long term horizon and keep saving and investing.
I don’t think it’s correct to look at returns on periodic contributions and compare that based on inflation from the starting point.
The $10 you invested last week did not experience 7%+ inflation but it is factored into your total returns.
andypanda
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Re: U.S. stocks in free fall

Post by andypanda »

"Tomorrow will be interesting."

It will be if it's warm enough to go fishing, otherwise I get to trim back a dozen tall rosebushes and begin figuring where to move 5 English boxwoods that have to be moved before they start the deck replacement. I'm too old for this nonsense, but she's raised them since they were little. (And no, I wasn't around when she planted them next to the deck.)
Maybe I'll take the truck and my grandfather's logging chain and rip them out when she isn't looking. :sharebeer

I don't watch the financial news.
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fetch5482
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Re: U.S. stocks in free fall

Post by fetch5482 »

Here is my prediction for tomorrow.

Market will start lower until the FOMC meeting. After that it'll reverse direction since I don't think there will be anything of surprise in that meeting. S&P500 will end in positive territory end of day. Emerging markets will end negative.

Disclaimer: I'm very poor at predictions, so remove your blinders, wear your seatbelts & helmets. There may or may not be life vests🤣
(AGE minus 23%) Bonds | 5% REITs | Balance 80% US (75/25 TSM/SCV) + 20% International (80/20 Developed/Emerging)
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HomerJ
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Re: U.S. stocks in free fall

Post by HomerJ »

drk wrote: Tue Jan 25, 2022 6:53 pm Via the MSFT News tab in Think or Swim, these consecutive headlines:
The Stock Market Needed Good News From Microsoft. It Got It. -- Barrons.com
The Stock Market Needed More From Microsoft. It's Set to Drop Again. -- Barrons.com
:oops:
Financial websites are all completely worthless...

For a while I held onto an old 1995-1996 special edition Money magazine... I remember reading it when I was young, and I devoured all the stuff about mutual funds and hot managers... There was a section on Index Funds, but it seemed boring, and I skipped over it...

Later, I went back to that magazine, and the index funds seemed to make a lot more sense... Then I found Bogleheads.org (check my join date), and I never looked back..

All those financial websites are junk.
"The best tools available to us are shovels, not scalpels. Don't get carried away." - vanBogle59
drk
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Re: U.S. stocks in free fall

Post by drk »

HomerJ wrote: Tue Jan 25, 2022 9:26 pm Financial websites are all completely worthless...

For a while I held onto an old 1995-1996 special edition Money magazine... I remember reading it when I was young, and I devoured all the stuff about mutual funds and hot managers... There was a section on Index Funds, but it seemed boring, and I skipped over it...

Later, I went back to that magazine, and the index funds seemed to make a lot more sense... Then I found Bogleheads.org (check my join date), and I never looked back..

All those financial websites are junk.
Sounds like your origin story contradicts your conclusion. :wink:

This example made me laugh because the Barron's reporter had the same story ready to go with diametrically opposed headlines. They had the same publication timestamp, so I assume he (or his editor) had a moment of panic at MSFT's immediate drop after its earnings release. Unfortunately, the news feed isn't as forgiving as their CMS. :twisted:
A useful razor: anyone asking about speculative strategies on Bogleheads.org has no business using them.
000
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Re: U.S. stocks in free fall

Post by 000 »

HomerJ wrote: Tue Jan 25, 2022 9:26 pm Financial websites are all completely worthless...

For a while I held onto an old 1995-1996 special edition Money magazine... I remember reading it when I was young, and I devoured all the stuff about mutual funds and hot managers... There was a section on Index Funds, but it seemed boring, and I skipped over it...

Later, I went back to that magazine, and the index funds seemed to make a lot more sense... Then I found Bogleheads.org (check my join date), and I never looked back..

All those financial websites are junk.
Sounds more like user error to me. :mrgreen:
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mrspock
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Re: U.S. stocks in free fall

Post by mrspock »

quattro73 wrote: Tue Jan 25, 2022 7:24 pm MSFT had $16B in net income for the 06/30/2018 YE.

MSFT had $61B in net income for the 06/30/2021 YE.

Just for some perspective on why valuations of some companies might have gone up. They have accelerated earnings at a rapid pace.
Yup, the S&P 500 as a whole has had earnings growth of over 11% over the last decade. At this rate you expect valuations to more than double every 7 years, as the market is leading indicator. And PEs *declined* over the last 12 months.... think about that. From a high of 39 in December of 2020, to just 25 now, and we are still waiting on a bunch of earning reports.

Again... anyone selling right now.... well, they probably didn't deserve their money in the first place. They don't know what they are doing. But that's ok, I have a nice home for it in my Schwab account.
Last edited by mrspock on Tue Jan 25, 2022 10:05 pm, edited 3 times in total.
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HomerJ
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Re: U.S. stocks in free fall

Post by HomerJ »

drk wrote: Tue Jan 25, 2022 9:46 pm
HomerJ wrote: Tue Jan 25, 2022 9:26 pm Financial websites are all completely worthless...

For a while I held onto an old 1995-1996 special edition Money magazine... I remember reading it when I was young, and I devoured all the stuff about mutual funds and hot managers... There was a section on Index Funds, but it seemed boring, and I skipped over it...

Later, I went back to that magazine, and the index funds seemed to make a lot more sense... Then I found Bogleheads.org (check my join date), and I never looked back..

All those financial websites are junk.
Sounds like your origin story contradicts your conclusion. :wink:
Heh, good point... Money magazine did indeed talk about index funds in the 1990s... I wish I still had that magazine (it was special thick edition, and I did hold onto it for like 5-10 years).

But the same magazine talked up Janus 20 fund and I totally got into that (just like ARKK people today), so I'm guessing the index fund section was less than glowing.
"The best tools available to us are shovels, not scalpels. Don't get carried away." - vanBogle59
Minty
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Re: U.S. stocks in free fall

Post by Minty »

000 wrote: Tue Jan 25, 2022 8:06 pm Tomorrow will be interesting. :twisted:
A universal truth.
Core Four w/ nominal bonds & TIPS. Refi Rampage: Purchase: 3.875% 30 -> R1 3% 20 -> R2 2.375% 15 -> R3 1.99% 15 -> R4 1.875% 15
marcopolo
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Re: U.S. stocks in free fall

Post by marcopolo »

sureshoe wrote: Tue Jan 25, 2022 2:15 pm
marcopolo wrote: Tue Jan 25, 2022 12:41 pm
sureshoe wrote: Tue Jan 25, 2022 12:26 pm
carminered2019 wrote: Tue Jan 25, 2022 12:00 pm
goodenyou wrote: Tue Jan 25, 2022 10:38 am

I wonder if Japanese investors said the same thing in 1990.
We are not in Japan and never invest based on the end of the world scenario!!
There is no reason to believe the market won't do exactly what Japan did back in the 90s. The US market did it in the 2000s. We certainly could repeat that.
You think Japan like scenario happened in US in the 2000's?!?

That would be news to me.
From 1990 to 2000, "The Lost Decade", saw effectively a flat return for 10 years (since the following years stayed messy). It's not entirely the same thing, but 2000-2009 had a similar problem.

For the US, if you put $10k in the S&P on January 1, 2000, you would have lost about $1k by the end of 2009 - one decade later.
The Nikkei hit a high of around 39k in late December 1989, and has still not recovered to that level.
US 2000's was nothing remotely like that.
Once in a while you get shown the light, in the strangest of places if you look at it right.
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mrspock
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Re: U.S. stocks in free fall

Post by mrspock »

marcopolo wrote: Wed Jan 26, 2022 2:45 am
sureshoe wrote: Tue Jan 25, 2022 2:15 pm
marcopolo wrote: Tue Jan 25, 2022 12:41 pm
sureshoe wrote: Tue Jan 25, 2022 12:26 pm
carminered2019 wrote: Tue Jan 25, 2022 12:00 pm

We are not in Japan and never invest based on the end of the world scenario!!
There is no reason to believe the market won't do exactly what Japan did back in the 90s. The US market did it in the 2000s. We certainly could repeat that.
You think Japan like scenario happened in US in the 2000's?!?

That would be news to me.
From 1990 to 2000, "The Lost Decade", saw effectively a flat return for 10 years (since the following years stayed messy). It's not entirely the same thing, but 2000-2009 had a similar problem.

For the US, if you put $10k in the S&P on January 1, 2000, you would have lost about $1k by the end of 2009 - one decade later.
The Nikkei hit a high of around 39k in late December 1989, and has still not recovered to that level.
US 2000's was nothing remotely like that.
PE of Japanese market was also close to 100 prior to their crash. PE of US market is just 25.

If PE of US market goes this high…. I’d have more in bonds at my present AA than I do in my entire portfolio — by a lot. It wouldn’t matter if the market took 20 years to recover. I wouldn’t care… and neither would most Bogleheads following their AA and rebalancing on the way up.

I suspect north of a PE of 70-80, you’d see many Bogleheads turning into Wall Street Bets market timers… ala John Bogle himself.
nigel_ht
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Re: U.S. stocks in free fall

Post by nigel_ht »

willthrill81 wrote: Tue Jan 25, 2022 1:31 pm
HomerJ wrote: Tue Jan 25, 2022 12:17 pm
willthrill81 wrote: Tue Jan 25, 2022 12:14 pm
HomerJ wrote: Tue Jan 25, 2022 12:11 pm
willthrill81 wrote: Tue Jan 25, 2022 11:04 am That said, I agree that retirees would be well served with resilient portfolios, and the 3-fund does not qualify IMHO.
That's an interesting statement. Your way may be just as good or maybe even better, but you really think the 3-fund portfolio does not serve retirees well?
I didn't say that retirees would not be served well by the 3-fund portfolio. However, the 3-fund portfolio in its most common iterations has been very erratic in its performance over time, and many other portfolios have been much less so. But that's heretical to many here, I know. I don't want to derail this thread, so I'll leave it at that.
Thanks for the response...

You should start a new thread to talk about those other portfolios that were better... I think that would be interesting.
Already did, this one.
That thread got the usual responses around here…
nigel_ht
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Re: U.S. stocks in free fall

Post by nigel_ht »

peskypesky wrote: Tue Jan 25, 2022 10:45 pm I still think the "free fall" thread and the "soaring" thread should be merged. It's a bit absurd to have to keep jumping back and forth.

If the stock market correction causes the Fed to chicken out on raising rates, I think we'll be soaring tomorrow.
No, you don’t get to merge threads when us bears finally have our day after a decade of soaring…maybe have our day.

I guess that still remains to be seen.
nigel_ht
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Re: U.S. stocks in free fall

Post by nigel_ht »

000 wrote: Tue Jan 25, 2022 4:20 pm
CurlyDave wrote: Tue Jan 25, 2022 3:18 am
HomerJ wrote: Mon Jan 24, 2022 5:00 pm
...I'm curious what Curly's plan is... Just wing it? See how he feels day-to-day? Or does he have a plan with entry and exit points?
Thank you. You are one tough commentator, and that helps me. It forces me to clarify my thoughts.

Here I was thinking I had done pretty well, beating BND by 9x over two years without taking on excessive risk. But you are right, I need a re-entry plan. I had entry and exit points but now that part has run its course and I am left holding a thick stack of cash. There are a lot of worse things that could happen to a guy, but now it is time to build on results so far.

Of course, the easy way would be to just buy BND on Tuesday and call it a day.

But YOLO, and I think I will just wing it for a few days. If QQQ goes up by 5% I will probably buy back in. Down another 10% and I will buy back in while declaring victory. No promises either way, except I will tell what I have done.

Homer: what do you think the next move should be?
So if you sell at -15%, then buy at -10.75% (effectively a 19.25% loss), then what? Put another stop loss order in? Now if drops 15% again do you sell for an effective 31.36% loss?

That doesn't sound anything like bonds to me.

If you're skittish enough to need a stop to be invested in something then replacing it with bonds once the successful speculation seems to have run its course might be prudent..... Perhaps a nice chunk of SCHP or LQDI is in your future.
The 32% loss sound scary but if you end up with more money at the end vs bonds you still win.

With bonds where they are vs say 5% it’s seems easier to grind out a win…
Goodenoughforme
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Re: U.S. stocks in free fall

Post by Goodenoughforme »

andypanda wrote: Tue Jan 25, 2022 9:09 pm "Tomorrow will be interesting."

It will be if it's warm enough to go fishing, otherwise I get to trim back a dozen tall rosebushes and begin figuring where to move 5 English boxwoods that have to be moved before they start the deck replacement. I'm too old for this nonsense, but she's raised them since they were little. (And no, I wasn't around when she planted them next to the deck.)
Maybe I'll take the truck and my grandfather's logging chain and rip them out when she isn't looking. :sharebeer

I don't watch the financial news.
I'll add.... for those of you that have 20 plus years for an investing horizon, "be like Rip Van Winkle and ZZZZZZZZZZZ" (Greg Spears Humble Dollar).
John Bogle- You have the ability to control: Risk, Time, and Cost, but not Reward in Investing!
Triple digit golfer
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Re: U.S. stocks in free fall

Post by Triple digit golfer »

This thread and others on this forum and in a couple of Facebook groups I'm in really shows the emotions that so many investors have.

This is a 9% drop after 3 years of 26% compound annual growth rate. Had you told me three years ago that the S&P 500 would be around 4,400 in 2022, I'd have thought that was great.

Imagine in 2015 or 2016, when people were already calling the market over valued, being told that the S&P 500 would more than double by January 2022. An "over valued" market having 14-15% annual returns? Impossible! Yet, here we are. And then we have a little teeny tiny 9% drop and people are sounding the alarms.

Stretch your horizon. Look at the market over longer periods. What the market does in a few weeks is no more relevant than what it does over any given minute or day.
SuperTrooper87
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Re: U.S. stocks in free fall

Post by SuperTrooper87 »

Triple digit golfer wrote: Wed Jan 26, 2022 7:04 am This thread and others on this forum and in a couple of Facebook groups I'm in really shows the emotions that so many investors have.

This is a 9% drop after 3 years of 26% compound annual growth rate. Had you told me three years ago that the S&P 500 would be around 4,400 in 2022, I'd have thought that was great.

Imagine in 2015 or 2016, when people were already calling the market over valued, being told that the S&P 500 would more than double by January 2022. An "over valued" market having 14-15% annual returns? Impossible! Yet, here we are. And then we have a little teeny tiny 9% drop and people are sounding the alarms.

Stretch your horizon. Look at the market over longer periods. What the market does in a few weeks is no more relevant than what it does over any given minute or day.
Agreed. Intraday low was closer to 12-12.5 I think. Same story, year after year. Sometimes looks and feels different, turns out it’s not. I see it as a purchasing opportunity on top of my regularly scheduled DCA. The show goes on…
Keenobserver
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Re: U.S. stocks in free fall

Post by Keenobserver »

What kind of international allocation do folks have here? I know wrong thread, but etf recently added a nice chunk of international to diversify
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jason2459
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Re: U.S. stocks in free fall

Post by jason2459 »

Keenobserver wrote: Wed Jan 26, 2022 7:38 am What kind of international allocation do folks have here? I know wrong thread, but etf recently added a nice chunk of international to diversify
20% is my target and was slightly below that but with the free fall it's now above that.
"In the short run, the stock market is a voting machine; in the long run, it is a weighing machine" ~Benjamin Graham
atdharris
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Re: U.S. stocks in free fall

Post by atdharris »

canadianbacon wrote: Tue Jan 25, 2022 5:25 pm
atdharris wrote: Tue Jan 25, 2022 3:10 pm And now Microsoft is off 5% after hours after posting an excellent quarter. It seems everyone is going to be punished in this market for the time being.
Now *up* 2.7%. I think the only thing we know for sure about the market right now is that it's nuts.
And now up 5%. You're right, I don't know anything
sureshoe
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Re: U.S. stocks in free fall

Post by sureshoe »

peskypesky wrote: Tue Jan 25, 2022 4:14 pm
sureshoe wrote: Tue Jan 25, 2022 3:17 pm
peskypesky wrote: Tue Jan 25, 2022 2:31 pm
sureshoe wrote: Tue Jan 25, 2022 2:25 pm
peskypesky wrote: Tue Jan 25, 2022 1:10 pm

I guess some people are ok with being hit in the face with a hammer.
I think the analogy loses steam and distracts from anything constructive.

If the market losses are serious to you, then what's your recommendation that is actually actionable?
And I don't think your original comments were constructive. And I think the analogy holds steam.
Ok, fine, my comments weren't constructive.

What's your recommendation that is actually actionable?
I'm not a certified financial advisor, so I don't give investing advice.
Ok, so there is no point to these comments other than to express panic, which is fine. If you have advice to help people avoid being "hit in the face with a hammer", I think everyone would enjoy reading it.
sureshoe
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Re: U.S. stocks in free fall

Post by sureshoe »

atdharris wrote: Wed Jan 26, 2022 8:15 am
canadianbacon wrote: Tue Jan 25, 2022 5:25 pm
atdharris wrote: Tue Jan 25, 2022 3:10 pm And now Microsoft is off 5% after hours after posting an excellent quarter. It seems everyone is going to be punished in this market for the time being.
Now *up* 2.7%. I think the only thing we know for sure about the market right now is that it's nuts.
And now up 5%. You're right, I don't know anything
Using MSFT as an example, but really it could apply to anything. What percentage of Microsoft's drop is part of just generic index sell-offs? There has been a lot of chatter on that, but I wonder how much that actually forces down a company like MSFT - and then specific investors swoop in for the value.
atdharris
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Re: U.S. stocks in free fall

Post by atdharris »

sureshoe wrote: Wed Jan 26, 2022 8:33 am
atdharris wrote: Wed Jan 26, 2022 8:15 am
canadianbacon wrote: Tue Jan 25, 2022 5:25 pm
atdharris wrote: Tue Jan 25, 2022 3:10 pm And now Microsoft is off 5% after hours after posting an excellent quarter. It seems everyone is going to be punished in this market for the time being.
Now *up* 2.7%. I think the only thing we know for sure about the market right now is that it's nuts.
And now up 5%. You're right, I don't know anything
Using MSFT as an example, but really it could apply to anything. What percentage of Microsoft's drop is part of just generic index sell-offs? There has been a lot of chatter on that, but I wonder how much that actually forces down a company like MSFT - and then specific investors swoop in for the value.
I'm sure a good portion of its drop is due to indexes falling. I believe it was down 14.5% this year before today. That's a big drop in 17 trading days for a company executing as well as MSFT is currently.
chazas
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Re: U.S. stocks in free fall

Post by chazas »

Keenobserver wrote: Wed Jan 26, 2022 7:38 am What kind of international allocation do folks have here? I know wrong thread, but etf recently added a nice chunk of international to diversify
60 equities/40 fixed income
Within equities, 60 US/40 international.

I'm fairly close to retirement, and the diversification is very helpful to my peace of mind during downward volatility like we've had this week. Still not fun, but less not fun than it would be otherwise.
incognito_man
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Re: U.S. stocks in free fall

Post by incognito_man »

mrspock wrote: Tue Jan 25, 2022 4:13 pm This is almost comical. It reminds me of waaaaaay back in 2020 when the outcome was so obvious and predictable if anyone bothered to understand history. Same deal now.

Here's how the weighing machine is going (since people are too concerned about watching the market moves vs. actual earnings data):

MSFT - Earnings beat
3M - Earnings beat
Verizon - Beats
Texas Instruments - Beats
Nvidia - Goto BestBuy....go try to find a card, they can't make these things fast enough (Crypto, AI etc).
APPL - Expected to post historically high earnings tomorrow

... and on and on.

You can't even order a car right now without waiting months, savings rates are high, wages are increasing, the economy is booming, and the fed pumped in billions into the economy. If we hit -15% or -25%, this is going to be like taking candy from a baby.... I almost feel guilty.

People were in similar denial in 2020, and it was only after successive earnings seasons where bit by bit the narrative of the pandemic causing a prolonged recession began to fall apart -- ultimately the bears were trampled by the bulls. This time it's interest rate hikes and inflation.... let us see how the weighing goes this time!
It sure seems like all of this optimism is already priced in. This is the 2nd most "optimistic" market in history (2nd only to the dot com bubble).

The million dollar question is whether the current exuberance that's priced in is rational or irrational :)
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AnalogKid22
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Re: U.S. stocks in free fall

Post by AnalogKid22 »

Triple digit golfer wrote: Wed Jan 26, 2022 7:04 am This thread and others on this forum and in a couple of Facebook groups I'm in really shows the emotions that so many investors have.

This is a 9% drop after 3 years of 26% compound annual growth rate. Had you told me three years ago that the S&P 500 would be around 4,400 in 2022, I'd have thought that was great.

Imagine in 2015 or 2016, when people were already calling the market over valued, being told that the S&P 500 would more than double by January 2022. An "over valued" market having 14-15% annual returns? Impossible! Yet, here we are. And then we have a little teeny tiny 9% drop and people are sounding the alarms.

Stretch your horizon. Look at the market over longer periods. What the market does in a few weeks is no more relevant than what it does over any given minute or day.
Indeed. In 2018, the DOW broke 25,000 for the first time ever: viewtopic.php?f=10&t=236779
At that time, the comments on this board about the market being overvalued, people sitting on the sidelines, oh, the panic, were the same if not more exaggerated than the last year. Since then, the DOW has added another 10,000 points!!!

Bogle's intent was to take the fear and complexity out of investing for the average person: create a plan, set an AA in a well-diversified portfolio, invest early and often, avoid timing the market, and, though clearly impossible for many, including myself, don't peek. Reacting to daily market swings likely won't accomplish what you "hope" it will and overreacting will usually lead to making poor decisions based on emotion, which has no place in investing because "nobody knows nuthin". If we decide to take on more risk than we can handle, we need to be prepared for the outcomes like we've seen this month. Using terms like "bloodbath" to refer to very minor (normal) corrections should be a red flag that one's AA might be too aggressive. A true "bloodbath" of, say, 30%+, for example, will happen at some point :)
RubyTuesday
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Re: U.S. stocks in free fall

Post by RubyTuesday »

sureshoe wrote: Wed Jan 26, 2022 8:31 am
peskypesky wrote: Tue Jan 25, 2022 4:14 pm
sureshoe wrote: Tue Jan 25, 2022 3:17 pm
peskypesky wrote: Tue Jan 25, 2022 2:31 pm
sureshoe wrote: Tue Jan 25, 2022 2:25 pm
I think the analogy loses steam and distracts from anything constructive.

If the market losses are serious to you, then what's your recommendation that is actually actionable?
And I don't think your original comments were constructive. And I think the analogy holds steam.
Ok, fine, my comments weren't constructive.

What's your recommendation that is actually actionable?
I'm not a certified financial advisor, so I don't give investing advice.
Ok, so there is no point to these comments other than to express panic, which is fine. If you have advice to help people avoid being "hit in the face with a hammer", I think everyone would enjoy reading it.
TBH I wouldn't read it. :?
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Re: U.S. stocks in free fall

Post by mrspock »

incognito_man wrote: Wed Jan 26, 2022 8:53 am
mrspock wrote: Tue Jan 25, 2022 4:13 pm This is almost comical. It reminds me of waaaaaay back in 2020 when the outcome was so obvious and predictable if anyone bothered to understand history. Same deal now.

Here's how the weighing machine is going (since people are too concerned about watching the market moves vs. actual earnings data):

MSFT - Earnings beat
3M - Earnings beat
Verizon - Beats
Texas Instruments - Beats
Nvidia - Goto BestBuy....go try to find a card, they can't make these things fast enough (Crypto, AI etc).
APPL - Expected to post historically high earnings tomorrow

... and on and on.

You can't even order a car right now without waiting months, savings rates are high, wages are increasing, the economy is booming, and the fed pumped in billions into the economy. If we hit -15% or -25%, this is going to be like taking candy from a baby.... I almost feel guilty.

People were in similar denial in 2020, and it was only after successive earnings seasons where bit by bit the narrative of the pandemic causing a prolonged recession began to fall apart -- ultimately the bears were trampled by the bulls. This time it's interest rate hikes and inflation.... let us see how the weighing goes this time!
It sure seems like all of this optimism is already priced in. This is the 2nd most "optimistic" market in history (2nd only to the dot com bubble).

The million dollar question is whether the current exuberance that's priced in is rational or irrational :)
Prices in at a PE of 25? How does that work?
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burritoLover
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Re: U.S. stocks in free fall

Post by burritoLover »

If this month has you panicking, you have way too much in equities. This is nothing.
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Re: U.S. stocks in free fall

Post by Bluemnatra »

AnalogKid22 wrote: Wed Jan 26, 2022 9:06 am
Triple digit golfer wrote: Wed Jan 26, 2022 7:04 am This thread and others on this forum and in a couple of Facebook groups I'm in really shows the emotions that so many investors have.

This is a 9% drop after 3 years of 26% compound annual growth rate. Had you told me three years ago that the S&P 500 would be around 4,400 in 2022, I'd have thought that was great.

Imagine in 2015 or 2016, when people were already calling the market over valued, being told that the S&P 500 would more than double by January 2022. An "over valued" market having 14-15% annual returns? Impossible! Yet, here we are. And then we have a little teeny tiny 9% drop and people are sounding the alarms.

Stretch your horizon. Look at the market over longer periods. What the market does in a few weeks is no more relevant than what it does over any given minute or day.
Indeed. In 2018, the DOW broke 25,000 for the first time ever: viewtopic.php?f=10&t=236779
At that time, the comments on this board about the market being overvalued, people sitting on the sidelines, oh, the panic, were the same if not more exaggerated than the last year. Since then, the DOW has added another 10,000 points!!!

Bogle's intent was to take the fear and complexity out of investing for the average person: create a plan, set an AA in a well-diversified portfolio, invest early and often, avoid timing the market, and, though clearly impossible for many, including myself, don't peek. Reacting to daily market swings likely won't accomplish what you "hope" it will and overreacting will usually lead to making poor decisions based on emotion, which has no place in investing because "nobody knows nuthin". If we decide to take on more risk than we can handle, we need to be prepared for the outcomes like we've seen this month. Using terms like "bloodbath" to refer to very minor (normal) corrections should be a red flag that one's AA might be too aggressive. A true "bloodbath" of, say, 30%+, for example, will happen at some point :)
Very well said!
"The greatest enemy of a good plan is the dream of a perfect plan"
H-Town
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Re: U.S. stocks in free fall

Post by H-Town »

burritoLover wrote: Wed Jan 26, 2022 9:37 am If this month has you panicking, you have way too much in equities. This is nothing.
Well if one has way too much in equities, why one would be panicked? If you have $30 million in VTI, would you be worried at all?
Time is the ultimate currency.
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Re: U.S. stocks in free fall

Post by incognito_man »

mrspock wrote: Wed Jan 26, 2022 9:33 am Prices in at a PE of 25? How does that work?
I believe CAPE is a better indicator than raw PE.
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Re: U.S. stocks in free fall

Post by mikejuss »

burritoLover wrote: Wed Jan 26, 2022 9:37 am If this month has you panicking, you have way too much in equities. This is nothing.
I'm actually kinda bummed that stocks are up today, but I bought some VTSAX anyway. We all need financial-noise-canceling headphones nowadays.
50% VTSAX | 25% VTIAX | 25% VBTLX (retirement), 25% VTEAX (taxable)
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burritoLover
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Re: U.S. stocks in free fall

Post by burritoLover »

H-Town wrote: Wed Jan 26, 2022 9:42 am
burritoLover wrote: Wed Jan 26, 2022 9:37 am If this month has you panicking, you have way too much in equities. This is nothing.
Well if one has way too much in equities, why one would be panicked? If you have $30 million in VTI, would you be worried at all?
Well, I wouldn't put my entire portfolio in VTI, that's for sure. And if this kind of market action worried me, I would have a lot higher bond allocation.
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Re: U.S. stocks in free fall

Post by H-Town »

burritoLover wrote: Wed Jan 26, 2022 9:45 am
H-Town wrote: Wed Jan 26, 2022 9:42 am
burritoLover wrote: Wed Jan 26, 2022 9:37 am If this month has you panicking, you have way too much in equities. This is nothing.
Well if one has way too much in equities, why one would be panicked? If you have $30 million in VTI, would you be worried at all?
Well, I wouldn't put my entire portfolio in VTI, that's for sure. And if this kind of market action worried me, I would have a lot higher bond allocation.
I'd put my entire portfolio in VTI if I have $30 mil. What's the difference? I won't even spend over $6 million in my lifetime according to my current projected spending. If I lost half of $30 mil, I'm still rocking with $15 mil. (and $15 mil of tax loss harvested).
Time is the ultimate currency.
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Re: U.S. stocks in free fall

Post by peskypesky »

sureshoe wrote: Wed Jan 26, 2022 8:31 am
peskypesky wrote: Tue Jan 25, 2022 4:14 pm
sureshoe wrote: Tue Jan 25, 2022 3:17 pm
peskypesky wrote: Tue Jan 25, 2022 2:31 pm
sureshoe wrote: Tue Jan 25, 2022 2:25 pm
I think the analogy loses steam and distracts from anything constructive.

If the market losses are serious to you, then what's your recommendation that is actually actionable?
And I don't think your original comments were constructive. And I think the analogy holds steam.
Ok, fine, my comments weren't constructive.

What's your recommendation that is actually actionable?
I'm not a certified financial advisor, so I don't give investing advice.
Ok, so there is no point to these comments other than to express panic, which is fine. If you have advice to help people avoid being "hit in the face with a hammer", I think everyone would enjoy reading it.
zzzzzzzzz
Last edited by peskypesky on Wed Jan 26, 2022 9:55 am, edited 1 time in total.
H-Town
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Re: U.S. stocks in free fall

Post by H-Town »

Log on to Vanguard account today, go to Cost Basis tab, and all lots show "green". :moneybag :dollar

TLH is a great tool to help me with thinking life is good. :mrgreen:
Time is the ultimate currency.
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burritoLover
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Re: U.S. stocks in free fall

Post by burritoLover »

H-Town wrote: Wed Jan 26, 2022 9:47 am
burritoLover wrote: Wed Jan 26, 2022 9:45 am
H-Town wrote: Wed Jan 26, 2022 9:42 am
burritoLover wrote: Wed Jan 26, 2022 9:37 am If this month has you panicking, you have way too much in equities. This is nothing.
Well if one has way too much in equities, why one would be panicked? If you have $30 million in VTI, would you be worried at all?
Well, I wouldn't put my entire portfolio in VTI, that's for sure. And if this kind of market action worried me, I would have a lot higher bond allocation.
I'd put my entire portfolio in VTI if I have $30 mil. What's the difference? I won't even spend over $6 million in my lifetime according to my current projected spending. If I lost half of $30 mil, I'm still rocking with $15 mil. (and $15 mil of tax loss harvested).
I'm living the high life with that kind of money - not my normal projected spending.
H-Town
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Re: U.S. stocks in free fall

Post by H-Town »

burritoLover wrote: Wed Jan 26, 2022 9:51 am
H-Town wrote: Wed Jan 26, 2022 9:47 am
burritoLover wrote: Wed Jan 26, 2022 9:45 am
H-Town wrote: Wed Jan 26, 2022 9:42 am
burritoLover wrote: Wed Jan 26, 2022 9:37 am If this month has you panicking, you have way too much in equities. This is nothing.
Well if one has way too much in equities, why one would be panicked? If you have $30 million in VTI, would you be worried at all?
Well, I wouldn't put my entire portfolio in VTI, that's for sure. And if this kind of market action worried me, I would have a lot higher bond allocation.
I'd put my entire portfolio in VTI if I have $30 mil. What's the difference? I won't even spend over $6 million in my lifetime according to my current projected spending. If I lost half of $30 mil, I'm still rocking with $15 mil. (and $15 mil of tax loss harvested).
I'm living the high life with that kind of money - not my normal projected spending.
But is it worth it if you still live in fear of losing money?

$30 mil might be just an entry level to high life society. I would rather live the life I want to live and never have to worry about money.
Time is the ultimate currency.
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Re: U.S. stocks in free fall

Post by nigel_ht »

mrspock wrote: Wed Jan 26, 2022 9:33 am
incognito_man wrote: Wed Jan 26, 2022 8:53 am
mrspock wrote: Tue Jan 25, 2022 4:13 pm This is almost comical. It reminds me of waaaaaay back in 2020 when the outcome was so obvious and predictable if anyone bothered to understand history. Same deal now.

Here's how the weighing machine is going (since people are too concerned about watching the market moves vs. actual earnings data):

MSFT - Earnings beat
3M - Earnings beat
Verizon - Beats
Texas Instruments - Beats
Nvidia - Goto BestBuy....go try to find a card, they can't make these things fast enough (Crypto, AI etc).
APPL - Expected to post historically high earnings tomorrow

... and on and on.

You can't even order a car right now without waiting months, savings rates are high, wages are increasing, the economy is booming, and the fed pumped in billions into the economy. If we hit -15% or -25%, this is going to be like taking candy from a baby.... I almost feel guilty.

People were in similar denial in 2020, and it was only after successive earnings seasons where bit by bit the narrative of the pandemic causing a prolonged recession began to fall apart -- ultimately the bears were trampled by the bulls. This time it's interest rate hikes and inflation.... let us see how the weighing goes this time!
It sure seems like all of this optimism is already priced in. This is the 2nd most "optimistic" market in history (2nd only to the dot com bubble).

The million dollar question is whether the current exuberance that's priced in is rational or irrational :)
Prices in at a PE of 25? How does that work?
PE 25 is historically overvalued…lol…I almost said that with a straight face…
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Re: U.S. stocks in free fall

Post by am »

burritoLover wrote: Wed Jan 26, 2022 9:37 am If this month has you panicking, you have way too much in equities. This is nothing.
We have been very spoiled in recent years.

It’s not easy to deal with no matter how experienced you are with markets because you don’t know when the bleeding stops. But you know not to do anything. Probably best not to even look at markets. No reason for most of us.
Last edited by am on Wed Jan 26, 2022 9:59 am, edited 1 time in total.
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Re: U.S. stocks in free fall

Post by burritoLover »

H-Town wrote: Wed Jan 26, 2022 9:56 am
burritoLover wrote: Wed Jan 26, 2022 9:51 am
H-Town wrote: Wed Jan 26, 2022 9:47 am
burritoLover wrote: Wed Jan 26, 2022 9:45 am
H-Town wrote: Wed Jan 26, 2022 9:42 am

Well if one has way too much in equities, why one would be panicked? If you have $30 million in VTI, would you be worried at all?
Well, I wouldn't put my entire portfolio in VTI, that's for sure. And if this kind of market action worried me, I would have a lot higher bond allocation.
I'd put my entire portfolio in VTI if I have $30 mil. What's the difference? I won't even spend over $6 million in my lifetime according to my current projected spending. If I lost half of $30 mil, I'm still rocking with $15 mil. (and $15 mil of tax loss harvested).
I'm living the high life with that kind of money - not my normal projected spending.
But is it worth it if you still live in fear of losing money?

$30 mil might be just an entry level to high life society. I would rather live the life I want to live and never have to worry about money.
I might just throw that all in TIPS - I wouldn't be spending it to the ragged edge - a lot of dumb stuff rich people buy I'm not interested in but I'd sure be taking a lot of trips all over the world and other experiences.
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Re: U.S. stocks in free fall

Post by nigel_ht »

H-Town wrote: Wed Jan 26, 2022 9:47 am
burritoLover wrote: Wed Jan 26, 2022 9:45 am
H-Town wrote: Wed Jan 26, 2022 9:42 am
burritoLover wrote: Wed Jan 26, 2022 9:37 am If this month has you panicking, you have way too much in equities. This is nothing.
Well if one has way too much in equities, why one would be panicked? If you have $30 million in VTI, would you be worried at all?
Well, I wouldn't put my entire portfolio in VTI, that's for sure. And if this kind of market action worried me, I would have a lot higher bond allocation.
I'd put my entire portfolio in VTI if I have $30 mil. What's the difference? I won't even spend over $6 million in my lifetime according to my current projected spending. If I lost half of $30 mil, I'm still rocking with $15 mil. (and $15 mil of tax loss harvested).
1929 lost 89%…

I’d be happy at $3.3M starting from where I am today but not starting from $30M…
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Re: U.S. stocks in free fall

Post by peskypesky »

burritoLover wrote: Wed Jan 26, 2022 9:59 am
H-Town wrote: Wed Jan 26, 2022 9:56 am
burritoLover wrote: Wed Jan 26, 2022 9:51 am
H-Town wrote: Wed Jan 26, 2022 9:47 am
burritoLover wrote: Wed Jan 26, 2022 9:45 am
Well, I wouldn't put my entire portfolio in VTI, that's for sure. And if this kind of market action worried me, I would have a lot higher bond allocation.
I'd put my entire portfolio in VTI if I have $30 mil. What's the difference? I won't even spend over $6 million in my lifetime according to my current projected spending. If I lost half of $30 mil, I'm still rocking with $15 mil. (and $15 mil of tax loss harvested).
I'm living the high life with that kind of money - not my normal projected spending.
But is it worth it if you still live in fear of losing money?

$30 mil might be just an entry level to high life society. I would rather live the life I want to live and never have to worry about money.
I might just throw that all in TIPS - I wouldn't be spending it to the ragged edge - a lot of dumb stuff rich people buy I'm not interested in but I'd sure be taking a lot of trips all over the world and other experiences.
No NFT's of Bored Apes for you? Come on! What better way to spend a few mil?
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burritoLover
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Re: U.S. stocks in free fall

Post by burritoLover »

am wrote: Wed Jan 26, 2022 9:59 am
burritoLover wrote: Wed Jan 26, 2022 9:37 am If this month has you panicking, you have way too much in equities. This is nothing.
We have been very spoiled in recent years.

It’s not easy to deal with no matter how experienced you are with markets because you don’t know when the bleeding stops. But you know not to do anything. Probably best not to even look at markets. No reason for most of us.
I feel like if you have to force yourself not to look at your account or market news, your equity allocation is still too high. Unfortunately, because bond yields are low and people have been taking on more risk, I think we are going to see epic levels of panic the next time there's a real, extended bear market.
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