U.S. stocks in free fall

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Triple digit golfer
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Re: U.S. stocks in free fall

Post by Triple digit golfer »

JoinTheLocalizer wrote: Tue Jan 18, 2022 8:39 am
Triple digit golfer wrote: Tue Jan 18, 2022 8:34 am Nice deep red to start the week!
Sometimes a case of the Mondays ain't so bad. (Well, it feels like Monday because my company had MLK as holiday)
It's kind of like a Wednesday for me. We did not have yesterday off and I am taking PTO on Friday. :happy
tvubpwcisla
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Re: U.S. stocks in free fall

Post by tvubpwcisla »

Is everything okay with the stock market? Not sure if it is just me; however, I feel like the tone of the market has changed this year. Still hoping for good and positive returns!
BogleCPA
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Re: U.S. stocks in free fall

Post by BogleCPA »

As a young investor who has only been investing regularly for about 8 years after graduating college, I'm starting to have the feeling that we are entering my first real bear market. I don't really count March of 2020 since the dip was so short-term.

With time on my side, I am totally comfortable buying my equities "on sale" for a while. When I see the numbers in the red, all it makes me want to do is buy more, which gives me comfort that my asset allocation is appropriate.
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TheTimeLord
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Re: U.S. stocks in free fall

Post by TheTimeLord »

BogleCPA wrote: Tue Jan 18, 2022 9:46 am As a young investor who has only been investing regularly for about 8 years after graduating college, I'm starting to have the feeling that we are entering my first real bear market. I don't really count March of 2020 since the dip was so short-term.

With time on my side, I am totally comfortable buying my equities "on sale" for a while. When I see the numbers in the red, all it makes me want to do is buy more, which gives me comfort that my asset allocation is appropriate.
You might find this interesting. Seems like a reasonable article from pre pandemic days.

https://intelligent.schwab.com/article/ ... t-uncommon
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Re: U.S. stocks in free fall

Post by minesweep »

The RBD talk has simmered down.
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fetch5482
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Re: U.S. stocks in free fall

Post by fetch5482 »

minesweep wrote: Tue Jan 18, 2022 10:02 am The RBD talk has simmered down.
Been waiting for one, they haven't happened in a while. Several 1-1.5% down days, but no 2.5% down days lately.
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BogleCPA
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Re: U.S. stocks in free fall

Post by BogleCPA »

TheTimeLord wrote: Tue Jan 18, 2022 9:52 am
BogleCPA wrote: Tue Jan 18, 2022 9:46 am As a young investor who has only been investing regularly for about 8 years after graduating college, I'm starting to have the feeling that we are entering my first real bear market. I don't really count March of 2020 since the dip was so short-term.

With time on my side, I am totally comfortable buying my equities "on sale" for a while. When I see the numbers in the red, all it makes me want to do is buy more, which gives me comfort that my asset allocation is appropriate.
You might find this interesting. Seems like a reasonable article from pre pandemic days.

https://intelligent.schwab.com/article/ ... t-uncommon
Image
Thanks for sharing. Perhaps I've lived through a few more "bumps in the road" than I've given myself credit for. Still, I'm confident that my game plan is a long-term one and I'm ready to ride out whatever comes our way.
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Re: U.S. stocks in free fall

Post by Visitor76 »

tvubpwcisla wrote: Tue Jan 18, 2022 9:24 am Is everything okay with the stock market? Not sure if it is just me; however, I feel like the tone of the market has changed this year. Still hoping for good and positive returns!
Historically January has been a down month. Let's not focus too much on the market performance over the past couple of weeks as a testament of how the rest of the year and decade will turn out. If the market was up the last two weeks, everyone would be talking about Roaring 20's 2.0.

Stay the course.
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Re: U.S. stocks in free fall

Post by willthrill81 »

There is about a 6% divergence between SCV and TSM so far this year (as measured by AVUV and VTI). That's a big gap in a short time.
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Re: U.S. stocks in free fall

Post by GP813 »

I like the Microsoft deal. If a company that large thinks a better use of their capital is to acquire a large video game company it speaks to their bullishness on the future.
Last edited by GP813 on Tue Jan 18, 2022 10:56 am, edited 2 times in total.
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Re: U.S. stocks in free fall

Post by drk »

gas_balloon wrote: Tue Jan 18, 2022 10:05 am Been waiting for one, they haven't happened in a while. Several 1-1.5% down days, but no 2.5% down days lately.
Yeah, it seems like VTI has to get one before exiting this little tantrum tempest.
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Re: U.S. stocks in free fall

Post by Tom_T »

I don't think the purpose of this thread is to debate energy policy.
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Re: U.S. stocks in free fall

Post by peskypesky »

tvubpwcisla wrote: Tue Jan 18, 2022 9:24 am Is everything okay with the stock market? Not sure if it is just me; however, I feel like the tone of the market has changed this year. Still hoping for good and positive returns!
This could be a good year for accumulating stocks, as they might be on sale for much of the year. The Federal Reserve has said they will be making moves to curb inflation, and the moves they are expected to make are the kinds that generally cause stock prices to fall.

But...there are some who think the Fed won't have the strength to stick to their guns if the market starts dropping too much.

We will all have to wait and see how it plays out.

"Worries over sooner-than-expected interest rate increases have weighed on equity markets in 2022 so far. The S&P 500 is down 2.79% year-to-date, while the Dow has lost 1.84%. The Nasdaq has shed a whopping 5.93% since the start of this year, with more than one-third of companies in the index at least 50% from their 52-week highs, according to Bloomberg data."
https://finance.yahoo.com/news/stock-ma ... 06186.html
Victor Eremita
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Re: U.S. stocks in free fall

Post by Victor Eremita »

Will dip buyers will keep equities floating this year? I mean there is no alternative. What are the other options?
- go to bonds where you'll take a loss for sure?
- keep holding cash and lose out on inflation?

I think I will just stay the course and buy some dips along the way.
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Re: U.S. stocks in free fall

Post by gougou »

It looks like energy stocks are mostly flat/slightly up. Historically, energy stocks have outperformed when inflation is high or the economy is bad. Brent hitting $88 means trouble. If it goes over $100 and stays there for years then it means a whole lot of trouble.

It’s interesting that energy is only about 3% of SP500. It looks like index funds like to buy cyclical stocks when they are expensive and dump them when they are cheap. If we have a massive bull run in energy stocks the indexers will mostly be left out of the gains.
The sillier the market’s behavior, the greater the opportunity for the business like investor.
Victor Eremita
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Re: U.S. stocks in free fall

Post by Victor Eremita »

gougou wrote: Tue Jan 18, 2022 12:00 pm It looks like energy stocks are mostly flat/slightly up. Historically, energy stocks have outperformed when inflation is high or the economy is bad. Brent hitting $88 means trouble. If it goes over $100 and stays there for years then it means a whole lot of trouble.

It’s interesting that energy is only about 3% of SP500. It looks like index funds like to buy cyclical stocks when they are expensive and dump them when they are cheap. If we have a massive bull run in energy stocks the indexers will mostly be left out of the gains.
$VDE is down 1% today. Not as bad as everything else though for sure.
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JoinTheLocalizer
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Re: U.S. stocks in free fall

Post by JoinTheLocalizer »

Victor Eremita wrote: Tue Jan 18, 2022 11:59 am Will dip buyers will keep equities floating this year? I mean there is no alternative. What are the other options?
- go to bonds where you'll take a loss for sure?
- keep holding cash and lose out on inflation?

I think I will just stay the course and buy some dips along the way.
I mentioned before in this thread that holding cash was a great idea back in 2008. You were able to purchase foreclosed rental properties and luxury goods on the cheap. Even though consumer prices did not significantly deflate, you were winning out by purchasing stocks, homes, and other physical assets for pennies on the dollar from less fiscally solvent entities. We could see a similar dynamic where physical assets lose value, as well as the stock indices. In such a case you are not "losing out to inflation" in the slightest.
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Re: U.S. stocks in free fall

Post by morsk »

Forester, I know it's tempting, but I beg you man, please don't post. I want a [real] pullback as much as you but every time you post, it's like an omen -- the market rips up the next day and forever thereafter. Beg man dont post doooonnnttt posssttttttttttttttt
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Re: U.S. stocks in free fall

Post by gougou »

Victor Eremita wrote: Tue Jan 18, 2022 12:04 pm
gougou wrote: Tue Jan 18, 2022 12:00 pm It looks like energy stocks are mostly flat/slightly up. Historically, energy stocks have outperformed when inflation is high or the economy is bad. Brent hitting $88 means trouble. If it goes over $100 and stays there for years then it means a whole lot of trouble.

It’s interesting that energy is only about 3% of SP500. It looks like index funds like to buy cyclical stocks when they are expensive and dump them when they are cheap. If we have a massive bull run in energy stocks the indexers will mostly be left out of the gains.
$VDE is down 1% today. Not as bad as everything else though for sure.
VDE excludes all MLPs so it doesn’t cover all the US energy companies. MLPA is basically flat today.
The sillier the market’s behavior, the greater the opportunity for the business like investor.
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Re: U.S. stocks in free fall

Post by RXfiles »

gougou wrote: Tue Jan 18, 2022 12:00 pm It looks like energy stocks are mostly flat/slightly up. Historically, energy stocks have outperformed when inflation is high or the economy is bad. Brent hitting $88 means trouble. If it goes over $100 and stays there for years then it means a whole lot of trouble.

It’s interesting that energy is only about 3% of SP500. It looks like index funds like to buy cyclical stocks when they are expensive and dump them when they are cheap. If we have a massive bull run in energy stocks the indexers will mostly be left out of the gains.
the index buys what's in the index. if energy stocks run up you'll buy them as their running up. and as they go down youll buy the other stocks that are running up. thats kinda how it works ya know...
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JoinTheLocalizer
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Re: U.S. stocks in free fall

Post by JoinTheLocalizer »

gougou wrote: Tue Jan 18, 2022 12:00 pm It looks like energy stocks are mostly flat/slightly up. Historically, energy stocks have outperformed when inflation is high or the economy is bad. Brent hitting $88 means trouble. If it goes over $100 and stays there for years then it means a whole lot of trouble.

It’s interesting that energy is only about 3% of SP500. It looks like index funds like to buy cyclical stocks when they are expensive and dump them when they are cheap. If we have a massive bull run in energy stocks the indexers will mostly be left out of the gains.
It is not just energy. Tobacco and shipping are performing quite well today also. DAC and BTI for example.
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Re: U.S. stocks in free fall

Post by drk »

gougou wrote: Tue Jan 18, 2022 12:00 pm It’s interesting that energy is only about 3% of SP500. It looks like index funds like to buy cyclical stocks when they are expensive and dump them when they are cheap. If we have a massive bull run in energy stocks the indexers will mostly be left out of the gains.
:confused That's not how it works for buy-and-hold indexers. If one group of companies go from 3% of the index to 30%, that shows up in the fund's composition with no action needed.
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Re: U.S. stocks in free fall

Post by gonefishing01 »

This level on the S&P is getting familiar. Will we break lower this week?
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Re: U.S. stocks in free fall

Post by willthrill81 »

tvubpwcisla wrote: Tue Jan 18, 2022 9:24 am Is everything okay with the stock market? Not sure if it is just me; however, I feel like the tone of the market has changed this year. Still hoping for good and positive returns!
I'm more than a bit befuddled by the recent sharp decline of U.S. large-caps (SCV is up so far this year). The only meaningful change in the waters I'm aware of is the Fed's statement of their intention to raise rates this year, which is very likely to increase the cost of new capital for stocks, but everyone should have been expecting that when inflation topped 7%. Maybe the market was expecting fewer rate increases than the Fed announced.

Considering that the average intra-year decline in stocks has been around -14%, this shouldn't have caught anyone off-guard, especially after the ridiculously big runup last year.
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Re: U.S. stocks in free fall

Post by drk »

peskypesky wrote: Tue Jan 18, 2022 11:53 am This could be a good year for accumulating stocks, as they might be on sale for much of the year.
I would be OK with another 2018. :beer
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Re: U.S. stocks in free fall

Post by fetch5482 »

willthrill81 wrote: Tue Jan 18, 2022 12:20 pm
tvubpwcisla wrote: Tue Jan 18, 2022 9:24 am Is everything okay with the stock market? Not sure if it is just me; however, I feel like the tone of the market has changed this year. Still hoping for good and positive returns!
I'm more than a bit befuddled by the recent sharp decline of U.S. large-caps (SCV is up so far this year). The only meaningful change in the waters I'm aware of is the Fed's statement of their intention to raise rates this year, which is very likely to increase the cost of new capital for stocks, but everyone should have been expecting that when inflation topped 7%. Maybe the market was expecting fewer rate increases than the Fed announced.

Considering that the average intra-year decline in stocks has been around -14%, this shouldn't have caught anyone off-guard, especially after the ridiculously big runup last year.
To be honest, this feels normal. The past 2 years (since April 2020) where things just kept going up felt not-so-normal.
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Re: U.S. stocks in free fall

Post by JoinTheLocalizer »

willthrill81 wrote: Tue Jan 18, 2022 12:20 pm
tvubpwcisla wrote: Tue Jan 18, 2022 9:24 am Is everything okay with the stock market? Not sure if it is just me; however, I feel like the tone of the market has changed this year. Still hoping for good and positive returns!
I'm more than a bit befuddled by the recent sharp decline of U.S. large-caps (SCV is up so far this year). The only meaningful change in the waters I'm aware of is the Fed's statement of their intention to raise rates this year, which is very likely to increase the cost of new capital for stocks, but everyone should have been expecting that when inflation topped 7%. Maybe the market was expecting fewer rate increases than the Fed announced.

Considering that the average intra-year decline in stocks has been around -14%, this shouldn't have caught anyone off-guard, especially after the ridiculously big runup last year.
I think it's plausible to assume that retail bullish investors are attempting to call the Fed's bluff. I fear that action may cost them dearly.

Dr Burry may be 3 for 3 on his long-term predictions. Dot com bust, housing bust and perhaps a passive investing bust.
Last edited by JoinTheLocalizer on Tue Jan 18, 2022 12:30 pm, edited 1 time in total.
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Re: U.S. stocks in free fall

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Re: U.S. stocks in free fall

Post by Marseille07 »

JoinTheLocalizer wrote: Tue Jan 18, 2022 12:26 pm Dr Burry may be 3 for 3 on his long-term predictions. Dot com bust, housing bust and perhaps a passive investing bust.
What are you seeing here that indicates a passive investing bust? Imo passive investing isn't that different than active investing, we're just investing very thinly across the board as opposed to picking 5 tickers.
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Re: U.S. stocks in free fall

Post by gougou »

drk wrote: Tue Jan 18, 2022 12:19 pm
gougou wrote: Tue Jan 18, 2022 12:00 pm It’s interesting that energy is only about 3% of SP500. It looks like index funds like to buy cyclical stocks when they are expensive and dump them when they are cheap. If we have a massive bull run in energy stocks the indexers will mostly be left out of the gains.
:confused That's not how it works for buy-and-hold indexers. If one group of companies go from 3% of the index to 30%, that shows up in the fund's composition with no action needed.
You would be holding more of those companies when they were expensive. When they got cheaper your index sold them off, like what happened with the energy sector. Now with a 3% allocation in energy, it doesn’t really matter even if it doubles because it will have little impact on the performance of SP500. If one day energy shines again, SP500 will be buying it at the top again.

If all sectors are highly cyclical indexing will probably perform very poorly.
The sillier the market’s behavior, the greater the opportunity for the business like investor.
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Re: U.S. stocks in free fall

Post by sailaway »

gougou wrote: Tue Jan 18, 2022 12:30 pm
drk wrote: Tue Jan 18, 2022 12:19 pm
gougou wrote: Tue Jan 18, 2022 12:00 pm It’s interesting that energy is only about 3% of SP500. It looks like index funds like to buy cyclical stocks when they are expensive and dump them when they are cheap. If we have a massive bull run in energy stocks the indexers will mostly be left out of the gains.
:confused That's not how it works for buy-and-hold indexers. If one group of companies go from 3% of the index to 30%, that shows up in the fund's composition with no action needed.
You would be holding more of those companies when they were expensive. When they got cheaper your index sold them off, like what happened with the energy sector. Now with a 3% allocation in energy, it doesn’t really matter how it performs because it will have little impact on the performance of SP500. If one day energy shines again, SP500 will be buying it at the top again.

If all sectors are highly cyclical indexing will probably perform very poorly.
The buying and selling mostly happens when a stock enters or leaves and index. The percentages generally are self adjusting with the stock prices.
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Re: U.S. stocks in free fall

Post by JoinTheLocalizer »

Marseille07 wrote: Tue Jan 18, 2022 12:29 pm
JoinTheLocalizer wrote: Tue Jan 18, 2022 12:26 pm Dr Burry may be 3 for 3 on his long-term predictions. Dot com bust, housing bust and perhaps a passive investing bust.
What are you seeing here that indicates a passive investing bust? Imo passive investing isn't that different than active investing, we're just investing very thinly across the board as opposed to picking 5 tickers.
I honestly don't know if that'll play out, but it does seem logical to see a "bust". What is a bust? Maybe just a 20% correction? There are many new factors that have contributed to the devaluing of passive investing. Those are but are not limited to:

Social media effect (WallStreetBets)
Greater access to retail investing (Robinhood)
Tilt towards growth related and tech companies in S&P (note thread about only 3% in energy)
Massive leverage vis-a-vis options and margin accounts

I rather like passive investing for the VERY long term. When the Fed gets things under control and a potential major correction in the indices, things will be rather bullish going forward.
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Re: U.S. stocks in free fall

Post by gougou »

RXfiles wrote: Tue Jan 18, 2022 12:13 pm
gougou wrote: Tue Jan 18, 2022 12:00 pm It looks like energy stocks are mostly flat/slightly up. Historically, energy stocks have outperformed when inflation is high or the economy is bad. Brent hitting $88 means trouble. If it goes over $100 and stays there for years then it means a whole lot of trouble.

It’s interesting that energy is only about 3% of SP500. It looks like index funds like to buy cyclical stocks when they are expensive and dump them when they are cheap. If we have a massive bull run in energy stocks the indexers will mostly be left out of the gains.
the index buys what's in the index. if energy stocks run up you'll buy them as their running up. and as they go down youll buy the other stocks that are running up. thats kinda how it works ya know...
Yes, but a 3% current allocation means it has very little impact on the performance.

The way index works means it will sell into the losses of the cyclical sectors and miss out the gains there.
The sillier the market’s behavior, the greater the opportunity for the business like investor.
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Re: U.S. stocks in free fall

Post by drk »

gougou wrote: Tue Jan 18, 2022 12:30 pm You would be holding more of those companies when they were expensive. When they got cheaper your index sold them off, like what happened with the energy sector. Now with a 3% allocation in energy, it doesn’t really matter even if it doubles because it will have little impact on the performance of SP500. If one day energy shines again, SP500 will be buying it at the top again.

If all sectors are highly cyclical indexing will probably perform very poorly.
Again, that's not how it works. The fund isn't buying/selling in response to capitalization changes because it already owns the stocks. The value of its assets go up/down with capitalization changes. New money will result in purchases at current values, but that's a minuscule percentage of the assets in something like VFIAX.
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Re: U.S. stocks in free fall

Post by alfaspider »

JoinTheLocalizer wrote: Tue Jan 18, 2022 12:26 pm
willthrill81 wrote: Tue Jan 18, 2022 12:20 pm
tvubpwcisla wrote: Tue Jan 18, 2022 9:24 am Is everything okay with the stock market? Not sure if it is just me; however, I feel like the tone of the market has changed this year. Still hoping for good and positive returns!
I'm more than a bit befuddled by the recent sharp decline of U.S. large-caps (SCV is up so far this year). The only meaningful change in the waters I'm aware of is the Fed's statement of their intention to raise rates this year, which is very likely to increase the cost of new capital for stocks, but everyone should have been expecting that when inflation topped 7%. Maybe the market was expecting fewer rate increases than the Fed announced.

Considering that the average intra-year decline in stocks has been around -14%, this shouldn't have caught anyone off-guard, especially after the ridiculously big runup last year.
I think it's plausible to assume that retail bullish investors are attempting to call the Fed's bluff. I fear that action may cost them dearly.

Dr Burry may be 3 for 3 on his long-term predictions. Dot com bust, housing bust and perhaps a passive investing bust.
I don't quite understand how you could have a "passive investing bust." If the entire market is down such that passive is down, then the market is just down. Some active investors will do even worse. ARK funds are doing MUCH worse than passive funds this year.

I also don't see how retail investors are "calling the Fed's bluff." Retail investors use all sorts of strategies, from boggleheads, to memestocks, to active funds, and everyone in between. Most retail investors put money in the market whenever they have excess funds to do so. A few may follow the Fed closely, but most probably do not.
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Re: U.S. stocks in free fall

Post by Marseille07 »

JoinTheLocalizer wrote: Tue Jan 18, 2022 12:33 pm I honestly don't know if that'll play out, but it does seem logical to see a "bust". What is a bust? Maybe just a 20% correction? There are many new factors that have contributed to the devaluing of passive investing. Those are but are not limited to:

Social media effect (WallStreetBets)
Greater access to retail investing (Robinhood)
Tilt towards growth related and tech companies in S&P (note thread about only 3% in energy)
Massive leverage vis-a-vis options and margin accounts

I rather like passive investing for the VERY long term. When the Fed gets things under control and a potential major correction in the indices, things will be rather bullish going forward.
The first 2 points refer to the active investors pulling money in/out. If they go to the sidelines then some money certainly leaves the market and would be bad for passive investing.

Tilt towards growth is simply just market cap weighting, I don't think it'd impact passive investing much. If tech sinks then somebody else rises as this is all relative.

The leverage is an interesting one. If those GME / AMC option holders start unwinding their options, presumably huge selling pressure could occur on those stocks and they can crash hard.
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Re: U.S. stocks in free fall

Post by gougou »

JoinTheLocalizer wrote: Tue Jan 18, 2022 12:15 pm
gougou wrote: Tue Jan 18, 2022 12:00 pm It looks like energy stocks are mostly flat/slightly up. Historically, energy stocks have outperformed when inflation is high or the economy is bad. Brent hitting $88 means trouble. If it goes over $100 and stays there for years then it means a whole lot of trouble.

It’s interesting that energy is only about 3% of SP500. It looks like index funds like to buy cyclical stocks when they are expensive and dump them when they are cheap. If we have a massive bull run in energy stocks the indexers will mostly be left out of the gains.
It is not just energy. Tobacco and shipping are performing quite well today also. DAC and BTI for example.
Yes, Tobacco stocks like MO pay big dividends. Index fund reallocates these dividends away from the dividend payers, so it’s kind of against shareholder-friendliness. Companies that retain all the money or issue more shares are favored.
Last edited by gougou on Tue Jan 18, 2022 12:48 pm, edited 1 time in total.
The sillier the market’s behavior, the greater the opportunity for the business like investor.
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JoinTheLocalizer
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Re: U.S. stocks in free fall

Post by JoinTheLocalizer »

alfaspider wrote: Tue Jan 18, 2022 12:38 pm
JoinTheLocalizer wrote: Tue Jan 18, 2022 12:26 pm
willthrill81 wrote: Tue Jan 18, 2022 12:20 pm
tvubpwcisla wrote: Tue Jan 18, 2022 9:24 am Is everything okay with the stock market? Not sure if it is just me; however, I feel like the tone of the market has changed this year. Still hoping for good and positive returns!
I'm more than a bit befuddled by the recent sharp decline of U.S. large-caps (SCV is up so far this year). The only meaningful change in the waters I'm aware of is the Fed's statement of their intention to raise rates this year, which is very likely to increase the cost of new capital for stocks, but everyone should have been expecting that when inflation topped 7%. Maybe the market was expecting fewer rate increases than the Fed announced.

Considering that the average intra-year decline in stocks has been around -14%, this shouldn't have caught anyone off-guard, especially after the ridiculously big runup last year.
I think it's plausible to assume that retail bullish investors are attempting to call the Fed's bluff. I fear that action may cost them dearly.

Dr Burry may be 3 for 3 on his long-term predictions. Dot com bust, housing bust and perhaps a passive investing bust.
I don't quite understand how you could have a "passive investing bust." If the entire market is down such that passive is down, then the market is just down. Some active investors will do even worse. ARK funds are doing MUCH worse than passive funds this year.

I also don't see how retail investors are "calling the Fed's bluff." Retail investors use all sorts of strategies, from boggleheads, to memestocks, to active funds, and everyone in between. Most retail investors put money in the market whenever they have excess funds to do so. A few may follow the Fed closely, but most probably do not.
We're seeing that the market is doing fairly poorly, but certain portfolios are definitely up. If you are invested in "things" and movement of goods: oil, fertilizer, shipping...you are doing great!

Maybe everything goes down and the sectors I mentioned above go down less? Many possibilities are available.

An honest assessment of the current S&P makeup shows that it consists of a lot of high PE companies. The debt levels are out of this world also.

As the S&P is remade during the imminent debt contraction, it will IMHO begin to look like a great long term investment again.

https://www.macrotrends.net/stocks/char ... uity-ratio
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fetch5482
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Re: U.S. stocks in free fall

Post by fetch5482 »

I still feel fundamentally big-tech companies are doing well. PE ratios are not crazy high, they are sitting on a TON of cash, and have been consistently improving their margins.
(AGE minus 23%) Bonds | 5% REITs | Balance 80% US (75/25 TSM/SCV) + 20% International (80/20 Developed/Emerging)
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JoinTheLocalizer
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Re: U.S. stocks in free fall

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gas_balloon wrote: Tue Jan 18, 2022 12:49 pm I still feel fundamentally big-tech companies are doing well. PE ratios are not crazy high, they are sitting on a TON of cash, and have been consistently improving their margins.
If you're speaking of blue chip companies, I would partly agree with you. They are not all at nosebleed levels. The question for those "stock picking" is whether the company has honest-to-goodness positive guidance.

Another industry people haven't spoken about is fertilizer. Not to be too flippant, but cow manure has massively outperformed tech. :o

UAN has gone from 6.5 to about 100 since COVID began and pays 4.5% yield to boot.
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HomerJ
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Re: U.S. stocks in free fall

Post by HomerJ »

JoinTheLocalizer wrote: Tue Jan 18, 2022 12:51 pm
gas_balloon wrote: Tue Jan 18, 2022 12:49 pm I still feel fundamentally big-tech companies are doing well. PE ratios are not crazy high, they are sitting on a TON of cash, and have been consistently improving their margins.
If you're speaking of blue chip companies, I would partly agree with you. They are not all at nosebleed levels. The question for those "stock picking" is whether the company has honest-to-goodness positive guidance.

Another industry people haven't spoken about is fertilizer. Cow manure companies have massively outperformed tech.

UAN has gone from 6.5 to about 100 since COVID began.
I assume UAN is in the Vanguard Total Stock Market Index Fund, and I owned it this whole time.

Hurray for me!
"The best tools available to us are shovels, not scalpels. Don't get carried away." - vanBogle59
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JoinTheLocalizer
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Re: U.S. stocks in free fall

Post by JoinTheLocalizer »

HomerJ wrote: Tue Jan 18, 2022 12:56 pm
JoinTheLocalizer wrote: Tue Jan 18, 2022 12:51 pm
gas_balloon wrote: Tue Jan 18, 2022 12:49 pm I still feel fundamentally big-tech companies are doing well. PE ratios are not crazy high, they are sitting on a TON of cash, and have been consistently improving their margins.
If you're speaking of blue chip companies, I would partly agree with you. They are not all at nosebleed levels. The question for those "stock picking" is whether the company has honest-to-goodness positive guidance.

Another industry people haven't spoken about is fertilizer. Cow manure companies have massively outperformed tech.

UAN has gone from 6.5 to about 100 since COVID began.
I assume UAN is in the Vanguard Total Stock Market Index Fund, and I owned it this whole time.

Hurray for me!
:sharebeer
alfaspider
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Re: U.S. stocks in free fall

Post by alfaspider »

JoinTheLocalizer wrote: Tue Jan 18, 2022 12:47 pm
alfaspider wrote: Tue Jan 18, 2022 12:38 pm
JoinTheLocalizer wrote: Tue Jan 18, 2022 12:26 pm
willthrill81 wrote: Tue Jan 18, 2022 12:20 pm
tvubpwcisla wrote: Tue Jan 18, 2022 9:24 am Is everything okay with the stock market? Not sure if it is just me; however, I feel like the tone of the market has changed this year. Still hoping for good and positive returns!
I'm more than a bit befuddled by the recent sharp decline of U.S. large-caps (SCV is up so far this year). The only meaningful change in the waters I'm aware of is the Fed's statement of their intention to raise rates this year, which is very likely to increase the cost of new capital for stocks, but everyone should have been expecting that when inflation topped 7%. Maybe the market was expecting fewer rate increases than the Fed announced.

Considering that the average intra-year decline in stocks has been around -14%, this shouldn't have caught anyone off-guard, especially after the ridiculously big runup last year.
I think it's plausible to assume that retail bullish investors are attempting to call the Fed's bluff. I fear that action may cost them dearly.

Dr Burry may be 3 for 3 on his long-term predictions. Dot com bust, housing bust and perhaps a passive investing bust.
I don't quite understand how you could have a "passive investing bust." If the entire market is down such that passive is down, then the market is just down. Some active investors will do even worse. ARK funds are doing MUCH worse than passive funds this year.

I also don't see how retail investors are "calling the Fed's bluff." Retail investors use all sorts of strategies, from boggleheads, to memestocks, to active funds, and everyone in between. Most retail investors put money in the market whenever they have excess funds to do so. A few may follow the Fed closely, but most probably do not.
We're seeing that the market is doing fairly poorly, but certain portfolios are definitely up. If you are invested in "things" and movement of goods: oil, fertilizer, shipping...you are doing great!

Maybe everything goes down and the sectors I mentioned above go down less? Many possibilities are available.

An honest assessment of the current S&P makeup shows that it consists of a lot of high PE companies. The debt levels are out of this world also.

As the S&P is remade during the imminent debt contraction, it will IMHO begin to look like a great long term investment again.

https://www.macrotrends.net/stocks/char ... uity-ratio
In any downturn, there will be some sectors hit harder than others. And of course, if you happen to hold only those sectors you will do better than if not. But I don't think that makes it a "passive investing" crash.

I work in oil and gas, and I have been talking for years about how the sector is underappreciated in the market and that the lack of investment in the wake of the 2014 crash was going to result in underproduction and undersupply. But you know what? I've thought the same thing for the last 5 years. Going overweight in oil would not have been a good strategy over the last 5 years. Even if you correctly see that a sector is undervalued, getting the timing right is impossible.

Burry himself almost went bust during the "big short" because he was a bit early on his timing. If he had been just a bit earlier, nobody would have made a movie. He would have been just another Wall Street type who gambled and lost.
Last edited by alfaspider on Tue Jan 18, 2022 1:01 pm, edited 1 time in total.
gougou
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Re: U.S. stocks in free fall

Post by gougou »

drk wrote: Tue Jan 18, 2022 12:38 pm
gougou wrote: Tue Jan 18, 2022 12:30 pm You would be holding more of those companies when they were expensive. When they got cheaper your index sold them off, like what happened with the energy sector. Now with a 3% allocation in energy, it doesn’t really matter even if it doubles because it will have little impact on the performance of SP500. If one day energy shines again, SP500 will be buying it at the top again.

If all sectors are highly cyclical indexing will probably perform very poorly.
Again, that's not how it works. The fund isn't buying/selling in response to capitalization changes because it already owns the stocks. The value of its assets go up/down with capitalization changes. New money will result in purchases at current values, but that's a minuscule percentage of the assets in something like VFIAX.
Sure, but most of these companies pay dividends and buy back stocks when they think their stocks are cheap. Index fund diverts the dividend and buyback moneys from these high-yield companies.

And when you have a massive company like TSLA joining the SP500 and XOM removed from Dow 30, I’m sure the energy companies get diluted/sold off by index funds.
The sillier the market’s behavior, the greater the opportunity for the business like investor.
GP813
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Re: U.S. stocks in free fall

Post by GP813 »

Energy has had a recent bounce back from atrocious levels but has not been a great investment. Over the last decade I can't think of an industry that destroyed more capital than energy with an annualized return of -.60%

https://www.spglobal.com/spdji/en/indic ... /#overview

The problem for fossil fuel companies is they face a revolt on the high side of energy prices. Yes in the short term they can profit with higher energy prices but immediately it sets a domino effect with every nation, municipality, home owner, car buyer, corporation, small business running cost benefit analysis to switch to renewable sources, which are already cheaper and usually held back by logistical or upfront cost concerns. If energy prices spike too high these concerns are not such a concern anymore.
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Re: U.S. stocks in free fall

Post by Marseille07 »

alfaspider wrote: Tue Jan 18, 2022 1:00 pm Burry himself almost went bust during the "big short" because he was a bit early on his timing. If he had been just a bit earlier, nobody would have made a movie. He would have been just another Wall Street type who gambled and lost.
Yeah, and I believe Dr. Burry shorted bonds *last year*, took a loss and folded. Timing is really difficult even for someone like Dr. Burry.
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peskypesky
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Re: U.S. stocks in free fall

Post by peskypesky »

drk wrote: Tue Jan 18, 2022 12:23 pm
peskypesky wrote: Tue Jan 18, 2022 11:53 am This could be a good year for accumulating stocks, as they might be on sale for much of the year.
I would be OK with another 2018. :beer
I'm torn. On the one hand, I'm retired and have about 87% of my assets in the stock market (mostly S&P500 index)...so I don't want the stock market to go down.

On the other hand, I should be getting about $90-100k from an inheritance this year, and it would be nice to use that to buy stocks when they're on sale.

Oh well...just have to see how things go.
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JoinTheLocalizer
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Re: U.S. stocks in free fall

Post by JoinTheLocalizer »

alfaspider wrote: Tue Jan 18, 2022 1:00 pm
JoinTheLocalizer wrote: Tue Jan 18, 2022 12:47 pm
alfaspider wrote: Tue Jan 18, 2022 12:38 pm
JoinTheLocalizer wrote: Tue Jan 18, 2022 12:26 pm
willthrill81 wrote: Tue Jan 18, 2022 12:20 pm

I'm more than a bit befuddled by the recent sharp decline of U.S. large-caps (SCV is up so far this year). The only meaningful change in the waters I'm aware of is the Fed's statement of their intention to raise rates this year, which is very likely to increase the cost of new capital for stocks, but everyone should have been expecting that when inflation topped 7%. Maybe the market was expecting fewer rate increases than the Fed announced.

Considering that the average intra-year decline in stocks has been around -14%, this shouldn't have caught anyone off-guard, especially after the ridiculously big runup last year.
I think it's plausible to assume that retail bullish investors are attempting to call the Fed's bluff. I fear that action may cost them dearly.

Dr Burry may be 3 for 3 on his long-term predictions. Dot com bust, housing bust and perhaps a passive investing bust.
I don't quite understand how you could have a "passive investing bust." If the entire market is down such that passive is down, then the market is just down. Some active investors will do even worse. ARK funds are doing MUCH worse than passive funds this year.

I also don't see how retail investors are "calling the Fed's bluff." Retail investors use all sorts of strategies, from boggleheads, to memestocks, to active funds, and everyone in between. Most retail investors put money in the market whenever they have excess funds to do so. A few may follow the Fed closely, but most probably do not.
We're seeing that the market is doing fairly poorly, but certain portfolios are definitely up. If you are invested in "things" and movement of goods: oil, fertilizer, shipping...you are doing great!

Maybe everything goes down and the sectors I mentioned above go down less? Many possibilities are available.

An honest assessment of the current S&P makeup shows that it consists of a lot of high PE companies. The debt levels are out of this world also.

As the S&P is remade during the imminent debt contraction, it will IMHO begin to look like a great long term investment again.

https://www.macrotrends.net/stocks/char ... uity-ratio
In any downturn, there will be some sectors hit harder than others. And of course, if you happen to hold only those sectors you will do better than if not. But I don't think that makes it a "passive investing" crash.

I work in oil and gas, and I have been talking for years about how the sector is underappreciated in the market and that the lack of investment in the wake of the 2014 crash was going to result in underproduction and undersupply. But you know what? I've thought the same thing for the last 5 years. Going overweight in oil would not have been a good strategy over the last 5 years. Even if you correctly see that a sector is undervalued, getting the timing right is impossible.

Burry himself almost went bust during the "big short" because he was a bit early on his timing. If he had been just a bit earlier, nobody would have made a movie. He would have been just another Wall Street type who gambled and lost.
I guess there's been an overemphasis on oil in this convo. I've reflected on the other areas to give some background on what had interested me in the past year.

Shipping (rail/ship)
Nitrogen
Copper
Lithium
Oil of course
Tobacco
Metals

Is it still overweight in some way? Perhaps. But most importantly the play was recovery and inflation based. It seemed logical as fiscal spending ie broad based money and not simply QE-1-2-3-infinity was pushed to Joe six pack. That money circulated into the economy rather quickly and helped to elevate prices considerably, combined with supply chain issues and employment disruption.

I suppose MU could've been applied here also to work on the base chip shortage play. Unfortunately I missed that boat.
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JoinTheLocalizer
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Re: U.S. stocks in free fall

Post by JoinTheLocalizer »

alfaspider wrote: Tue Jan 18, 2022 1:00 pm
JoinTheLocalizer wrote: Tue Jan 18, 2022 12:47 pm
alfaspider wrote: Tue Jan 18, 2022 12:38 pm
JoinTheLocalizer wrote: Tue Jan 18, 2022 12:26 pm
willthrill81 wrote: Tue Jan 18, 2022 12:20 pm

I'm more than a bit befuddled by the recent sharp decline of U.S. large-caps (SCV is up so far this year). The only meaningful change in the waters I'm aware of is the Fed's statement of their intention to raise rates this year, which is very likely to increase the cost of new capital for stocks, but everyone should have been expecting that when inflation topped 7%. Maybe the market was expecting fewer rate increases than the Fed announced.

Considering that the average intra-year decline in stocks has been around -14%, this shouldn't have caught anyone off-guard, especially after the ridiculously big runup last year.
I think it's plausible to assume that retail bullish investors are attempting to call the Fed's bluff. I fear that action may cost them dearly.

Dr Burry may be 3 for 3 on his long-term predictions. Dot com bust, housing bust and perhaps a passive investing bust.
I don't quite understand how you could have a "passive investing bust." If the entire market is down such that passive is down, then the market is just down. Some active investors will do even worse. ARK funds are doing MUCH worse than passive funds this year.

I also don't see how retail investors are "calling the Fed's bluff." Retail investors use all sorts of strategies, from boggleheads, to memestocks, to active funds, and everyone in between. Most retail investors put money in the market whenever they have excess funds to do so. A few may follow the Fed closely, but most probably do not.
We're seeing that the market is doing fairly poorly, but certain portfolios are definitely up. If you are invested in "things" and movement of goods: oil, fertilizer, shipping...you are doing great!

Maybe everything goes down and the sectors I mentioned above go down less? Many possibilities are available.

An honest assessment of the current S&P makeup shows that it consists of a lot of high PE companies. The debt levels are out of this world also.

As the S&P is remade during the imminent debt contraction, it will IMHO begin to look like a great long term investment again.

https://www.macrotrends.net/stocks/char ... uity-ratio
In any downturn, there will be some sectors hit harder than others. And of course, if you happen to hold only those sectors you will do better than if not. But I don't think that makes it a "passive investing" crash.

I work in oil and gas, and I have been talking for years about how the sector is underappreciated in the market and that the lack of investment in the wake of the 2014 crash was going to result in underproduction and undersupply. But you know what? I've thought the same thing for the last 5 years. Going overweight in oil would not have been a good strategy over the last 5 years. Even if you correctly see that a sector is undervalued, getting the timing right is impossible.

Burry himself almost went bust during the "big short" because he was a bit early on his timing. If he had been just a bit earlier, nobody would have made a movie. He would have been just another Wall Street type who gambled and lost.
Burry gets a lot of hate over his bet against housing. I get it. It could be seen as a schadenfreude play, and he profited massively off the backs of fiscally insolvent Americans.

Most important to consider: When Burry achieved his $100M in personal winnings, he did so during a highly deflationary environment. That created a multiplier effect for when he wanted to buy depressed stocks and real assets, as Americans were simultaneously losing their homes/cars/boats/planes and liquidating whatever stocks they could out of panic or just to make ends meet.
alfaspider
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Re: U.S. stocks in free fall

Post by alfaspider »

JoinTheLocalizer wrote: Tue Jan 18, 2022 1:10 pm
alfaspider wrote: Tue Jan 18, 2022 1:00 pm
JoinTheLocalizer wrote: Tue Jan 18, 2022 12:47 pm
alfaspider wrote: Tue Jan 18, 2022 12:38 pm
JoinTheLocalizer wrote: Tue Jan 18, 2022 12:26 pm

I think it's plausible to assume that retail bullish investors are attempting to call the Fed's bluff. I fear that action may cost them dearly.

Dr Burry may be 3 for 3 on his long-term predictions. Dot com bust, housing bust and perhaps a passive investing bust.
I don't quite understand how you could have a "passive investing bust." If the entire market is down such that passive is down, then the market is just down. Some active investors will do even worse. ARK funds are doing MUCH worse than passive funds this year.

I also don't see how retail investors are "calling the Fed's bluff." Retail investors use all sorts of strategies, from boggleheads, to memestocks, to active funds, and everyone in between. Most retail investors put money in the market whenever they have excess funds to do so. A few may follow the Fed closely, but most probably do not.
We're seeing that the market is doing fairly poorly, but certain portfolios are definitely up. If you are invested in "things" and movement of goods: oil, fertilizer, shipping...you are doing great!

Maybe everything goes down and the sectors I mentioned above go down less? Many possibilities are available.

An honest assessment of the current S&P makeup shows that it consists of a lot of high PE companies. The debt levels are out of this world also.

As the S&P is remade during the imminent debt contraction, it will IMHO begin to look like a great long term investment again.

https://www.macrotrends.net/stocks/char ... uity-ratio
In any downturn, there will be some sectors hit harder than others. And of course, if you happen to hold only those sectors you will do better than if not. But I don't think that makes it a "passive investing" crash.

I work in oil and gas, and I have been talking for years about how the sector is underappreciated in the market and that the lack of investment in the wake of the 2014 crash was going to result in underproduction and undersupply. But you know what? I've thought the same thing for the last 5 years. Going overweight in oil would not have been a good strategy over the last 5 years. Even if you correctly see that a sector is undervalued, getting the timing right is impossible.

Burry himself almost went bust during the "big short" because he was a bit early on his timing. If he had been just a bit earlier, nobody would have made a movie. He would have been just another Wall Street type who gambled and lost.
Burry gets a lot of hate over his bet against housing. I get it. It could be seen as a schadenfreude play, and he profited massively off the backs of fiscally insolvent Americans.

Most important to consider: When Burry achieved his $100M in personal winnings, he did so during a highly deflationary environment. That created a multiplier effect for when he wanted to buy depressed stocks and real assets, as Americans were simultaneously losing their homes/cars/boats/planes and liquidating whatever stocks they could out of panic or just to make ends meet.
I'm not hating on Burry for betting against housing. I'm just saying that even if, like Burry, you correctly predict that a segment is over/undervalued, your gamble may not pay off unless the timing is dead-on correct as well.
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