Fed Minutes don't seem to have had much of an impact so far. Things could take another leg down tomorrow, but I don't think the immediate fed news will be the catalyst.
U.S. stocks in free fall
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Re: U.S. stocks in free fall
Re: U.S. stocks in free fall
the temptation to use SQQQ is mainly born of FOMO based on certain days/weeks where it would have brought amazing returns.
I might buy one share at close to remind myself that I'm not smarter than the market.
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Re: U.S. stocks in free fall
Re: U.S. stocks in free fall
Nvidia reports after the bell. If they miss and drop a ton, that could bring the market down. We will see.alfaspider wrote: ↑Wed May 25, 2022 1:28 pmFed Minutes don't seem to have had much of an impact so far. Things could take another leg down tomorrow, but I don't think the immediate fed news will be the catalyst.
Re: U.S. stocks in free fall
Re: U.S. stocks in free fall
I dunno, I don't think the outcome of the kentucky derby has anything to do with the TSM
Re: U.S. stocks in free fall
I hope stocks would go down tomorrow. It would be 31 days that I can do a round-trip TLH back to VTASX (VTI) and VTIAX (VXUS). Otherwise I am stuck with VLCAX and VFWAX for now.alfaspider wrote: ↑Wed May 25, 2022 1:28 pmFed Minutes don't seem to have had much of an impact so far. Things could take another leg down tomorrow, but I don't think the immediate fed news will be the catalyst.
Time is the ultimate currency.
Re: U.S. stocks in free fall
Losing the steam already...
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Re: U.S. stocks in free fall
Up until recently, it was also known as the "Wham, Bam, Thank You, Powell!"Robot Monster wrote: ↑Wed May 25, 2022 10:30 am Does anyone else have an extreme dislike for the words pump and dump? They're icky. If you were dining with Queen Elizabeth, would you dare voice something so undignified, so graceless? Dearest me!
Re: U.S. stocks in free fall
I removed an off-topic interchange regarding politically biased reporting of the CBO report. As a reminder, see: Non-actionable (Trolling) Topics
If readers can't do anything with the content of a topic other than argue about it, it does not belong here. Examples include:
- US or world economic, political, tax, health care and climate policies
- conspiracy theories of any type
- discussions of the crimes, shortcomings or stupidity of other people, whether they be political figures, celebrities, CEOs, Fed chairmen, subprime mortgage borrowers, lottery winners, federal "bailout" recipients, poor people, rich people, etc. Of course, you are welcome to talk about the stupid financial things you have done.
Re: U.S. stocks in free fall
I just can't come up with any reason to be bullish over the next 1-2 years. This makes it really hard to stay the course and not sell to buy back at lower levels later. It isn't just the fed removing liquidity, its also about valuations. I am worried about earnings going down by a lot. Why wouldn't earnings go back to prepandemic levels or lower even? Has the world population grown so much in two years? Has energy become cheaper? Are corporate taxes about to be lowered? Are we not cracking down on big tech anymore? Is the factory of the world, China, operating at a higher capacity than in 2019? Thw answer to all of those is no. So why are markets still above pre pandemic levels when we had significantly less problems? Add the feds QT on top of all this and we have a recipe for disaster.
This time really makes me admire the approach of some of the more conservative investors on this board who don't seem to worry about any of this. If you are always 50/50, always rebalance, then there is no point in trying to time the market by deviating from your approach. The rewards are too low relative to a 50/50 portfolio and the risks too high.
Thanks for reading. Had to get this off my chest. Am not happy with my investing approach so far.
This time really makes me admire the approach of some of the more conservative investors on this board who don't seem to worry about any of this. If you are always 50/50, always rebalance, then there is no point in trying to time the market by deviating from your approach. The rewards are too low relative to a 50/50 portfolio and the risks too high.
Thanks for reading. Had to get this off my chest. Am not happy with my investing approach so far.
Re: U.S. stocks in free fall
I am far too familiar with Murphy to play any games like that.
70/30, rebalance twice a year, buy when you have the money, sell when you need the money (use cash buffer to separate those two transactions, as it was never meant to be entirely literal).
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Re: U.S. stocks in free fall
I think you have it backwards. If the markets stay bearish over the next 1-2 years, this is a great opportunity to keep buying on the cheap.TheoLeo wrote: ↑Wed May 25, 2022 6:34 pm I just can't come up with any reason to be bullish over the next 1-2 years. This makes it really hard to stay the course and not sell to buy back at lower levels later. It isn't just the fed removing liquidity, its also about valuations. I am worried about earnings going down by a lot. Why wouldn't earnings go back to prepandemic levels or lower even? Has the world population grown so much in two years? Has energy become cheaper? Are corporate taxes about to be lowered? Are we not cracking down on big tech anymore? Is the factory of the world, China, operating at a higher capacity than in 2019? Thw answer to all of those is no. So why are markets still above pre pandemic levels when we had significantly less problems? Add the feds QT on top of all this and we have a recipe for disaster.
This time really makes me admire the approach of some of the more conservative investors on this board who don't seem to worry about any of this. If you are always 50/50, always rebalance, then there is no point in trying to time the market by deviating from your approach. The rewards are too low relative to a 50/50 portfolio and the risks too high.
Thanks for reading. Had to get this off my chest. Am not happy with my investing approach so far.
Q4 2021 was actually a terrible time to be accumulating, as those expensive shares are now in red.
Re: U.S. stocks in free fall
You note very good points, but the proponents of nobody knows nothing and stay the course are not generally wrong.this too shall pass, I planned to sell and buy back in as the Ukraine thing was dragging, fed announcing more QT and easing of their bond sheet..etc etc. Rate hikes are never sure but generally war you cannot just undo by saying we will buy bonds or stimulus checks. It seems the world is still discounting (not talking about nuclear) the long term implications of the global economic repercussions if Ukraine Russia prolongs..it will most definitely have a meaningful impact to US and the greater world due to increased dependencies on each other's economy for export import and of commodities.TheoLeo wrote: ↑Wed May 25, 2022 6:34 pm I just can't come up with any reason to be bullish over the next 1-2 years. This makes it really hard to stay the course and not sell to buy back at lower levels later. It isn't just the fed removing liquidity, its also about valuations. I am worried about earnings going down by a lot. Why wouldn't earnings go back to prepandemic levels or lower even? Has the world population grown so much in two years? Has energy become cheaper? Are corporate taxes about to be lowered? Are we not cracking down on big tech anymore? Is the factory of the world, China, operating at a higher capacity than in 2019? Thw answer to all of those is no. So why are markets still above pre pandemic levels when we had significantly less problems? Add the feds QT on top of all this and we have a recipe for disaster.
This time really makes me admire the approach of some of the more conservative investors on this board who don't seem to worry about any of this. If you are always 50/50, always rebalance, then there is no point in trying to time the market by deviating from your approach. The rewards are too low relative to a 50/50 portfolio and the risks too high.
Thanks for reading. Had to get this off my chest. Am not happy with my investing approach so far.
I had the same doubts and in January decided to covert my 401k to stable value maybe it's dumb market timing I don't take credit for it as in being very smart.
To each his own, my own feeling was I have consistently banked 15 18 19% gains in 100% index stock fund YoY or more last few years and 2020 21 I was shocked to see those kind of gains while the pandemic was in full force yea don't fight the feds..but what If we are adjusting back to actual valuations? This is kind of hard to ignore.
How much can the market rip in 5 to 12 months of uncertainty we know for sure the Fed is not going to brr the stimulus printer any more, interest rate hikes are a real reminder how the same house one has on a measly 2 to 3% fixed will change (monthly payments) when the rates go up to 6 or 7 or 8%..
So one makes your own decision and owns to it.
Atleast..moving from index to stable is not as risky as moving your whole retirement money to GME or Tesla as some have done and banked big gains or lost a lot..the risk is substantially less.
Like someone posted here before , if you panic sell its better to do it sooner than later..if it's already late it may make more sense to just ride it through as is.
Re: U.S. stocks in free fall
I removed an off-topic interchange conjecturing on Russia military actions. Also, conjecture on Fed policy.
Please stay on-topic, which is the market (decreasing).
Please stay on-topic, which is the market (decreasing).
Re: U.S. stocks in free fall
I guess it is too late to sell at this point.
Buy more is the only answer?
Buy more is the only answer?
- Doom&Gloom
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Re: U.S. stocks in free fall
You might want to take a break from this thread. If you are in the accumulation phase you should ignore the noise and just keep investing. If not you should stick to your plan.
Cheers
Re: U.S. stocks in free fall
Too late today, but the market will be open for both selling and buying tomorrow.
"Only answer" to what question?
"To achieve satisfactory investment results is easier than most people realize; to achieve superior results is harder than it looks." - Benjamin Graham
Re: U.S. stocks in free fall
Why nothing > buy?Doom&Gloom wrote: ↑Wed May 25, 2022 8:30 pmIMO: do nothing > buy >> sell
But, like Sgt Schultz, I know nothing!
Re: U.S. stocks in free fall
A 95% drop of a $100 investment equals $5. When that doubles it is $10. Still a 90% loss.HomerJ wrote: ↑Mon May 23, 2022 4:58 pmLong-term investors will be buying those stocks (via the index) at 70%-95% discounts, and will break even long before the market gets back to it's old all-time high.
Deep discounts like that make it fairly easy to break even.
A stock that drops from $100 a share to $5 a share (95% drop like your AMD example), only has to go back to $10 a share before an investor doubles their investment.
By the time the stock gets back to $100 a share, even if it takes 20 years, the investor will have made 20x their investment on that low price.
The price may be "back to even". And the long-term investor's original money is "back to even". But all the new money they invested in those shares when it was down are up 10x,15x,20x.
Which puts the long-term investor at that point at far better than "even".
Say subject “A” had $1million and lost $950k but DCA 20k per year…loss.
Subject “A” sold the million near peak and reinvested years later…win.
20/20 hindsight.
Fun to think about Homer.
Amazon in the dot com bust is a rare exception to dca success.
My ice cube analogies of the selected stocks demise. Small taters.
The icebergs one would navigate around in a ship are interesting. What if they melt?
Let us entertain the idea that there are 5-7 icebergs.
Vanguard and Blackrock via etf and index funds which we bogleheads enjoy are major players in the Neo Equity ice Age.
When I sell VTI and Tony buys it…what if Tony sells…and so on…
Vanguard and Blackrock hold these shares for a fee. No other reason. We don’t buy it…they are gone.
The icebergs at one point were 48% of the nasdaq.
So far there are no bankruptcies, closures, implosions…no real estate foreclosures. Like a fantasy or utopia World?
Everything is fine.
I disagree.
Enjoy this financial side of life everyone,
H
Re: U.S. stocks in free fall
+1. The GFC was a terrifying time. But sticking to my accumulation plan got me to retirement.Marseille07 wrote: ↑Wed May 25, 2022 6:39 pmI think you have it backwards. If the markets stay bearish over the next 1-2 years, this is a great opportunity to keep buying on the cheap.TheoLeo wrote: ↑Wed May 25, 2022 6:34 pm I just can't come up with any reason to be bullish over the next 1-2 years. This makes it really hard to stay the course and not sell to buy back at lower levels later. It isn't just the fed removing liquidity, its also about valuations. I am worried about earnings going down by a lot. Why wouldn't earnings go back to prepandemic levels or lower even? Has the world population grown so much in two years? Has energy become cheaper? Are corporate taxes about to be lowered? Are we not cracking down on big tech anymore? Is the factory of the world, China, operating at a higher capacity than in 2019? Thw answer to all of those is no. So why are markets still above pre pandemic levels when we had significantly less problems? Add the feds QT on top of all this and we have a recipe for disaster.
This time really makes me admire the approach of some of the more conservative investors on this board who don't seem to worry about any of this. If you are always 50/50, always rebalance, then there is no point in trying to time the market by deviating from your approach. The rewards are too low relative to a 50/50 portfolio and the risks too high.
Thanks for reading. Had to get this off my chest. Am not happy with my investing approach so far.
Q4 2021 was actually a terrible time to be accumulating, as those expensive shares are now in red.
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- Location: Canada
Re: U.S. stocks in free fall
You make all valid points. But, keep in mind the Fed in the minutes today, and Atlanta Fed President Bostic the other day, alluded that the Fed may pause their hikes to see where things are at this fall.TheoLeo wrote: ↑Wed May 25, 2022 6:34 pm I just can't come up with any reason to be bullish over the next 1-2 years. This makes it really hard to stay the course and not sell to buy back at lower levels later. It isn't just the fed removing liquidity, its also about valuations. I am worried about earnings going down by a lot.
In light of how the market seemingly functions today, if the Fed announces that I would expect a healthy spike, regardless of what the economy is doing, because the market will think the Fed Put is back in play.
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Re: U.S. stocks in free fall
You’ve stated that margins are getting crushed several times. Do you have a source for this? Most info I’ve read indicates margins are expanding beyond increases in input costs (look at energy for example). Some are accusing corporations of opportunistic gouging.rockstar wrote: ↑Tue May 24, 2022 12:30 pmNot if you're a business that can't raise prices. Then inflation is a problem debt wise. Wages are going up, so margins are getting crushed for businesses that can't raise prices without negatively impacting demand. Buffett did a great write-up on inflation and how it impact corporations in one of his letters to shareholders back in the early 80s. It's definitely worth reading.alfaspider wrote: ↑Tue May 24, 2022 12:24 pmBut inflation actually provides relief from debts because it cuts the real value of the debt. It's only a problem if you need new debt (which would have to be at a much higher interest rate). In fact, there's a huge disincentive against paying down existing debts right now because those loans are typically at sub-inflation rates.ClassII wrote: ↑Tue May 24, 2022 12:10 pm I guess if I want to predict the next "Bear Stearns" event (knowing full well what a fool's errand that is), I'd say corporate debt is going to be where things start to fall apart once this bear market and Fed tightening does it's thing. It's pretty well established that a lot of companies are completely up to their eyeballs in debt right now. Doing things like stock buy-backs and dividends on the backs of taking on low-interest loans and all before Covid, no less. Some companies did phenomenally in the last 2 years but quite a few did little to fix their debt load (or even took on more thanks to the government's covid programs). But now, with rates going up and the economy contracting it's going to make refinancing that debt extremely difficult. Those cows will come home to roost and we might start to see even some big name companies declare bankruptcy due to inability to refinance.
But again, if the next 2008 is coming we're still way back in 2007 at the moment. A truly boring, normal correction of the stock market. Whether it tips into something more severe and how exactly that'll happen is anyone's guess. But it is fun placing innocent bets (at least for now).
I expect this repricing of risk to continue. However, it does feel good that the 10 year has stabilized for now and that you can buy 10 year TIPS with positive real yields right now.
“Doing nothing is better than being busy doing nothing.” – Lao Tzu
- AnnetteLouisan
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Re: U.S. stocks in free fall
I think this is a healthy correction and the extreme pessimism is overwrought.
- Doom&Gloom
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Re: U.S. stocks in free fall
I've been Bogled!
I know that I don't know where we're going from here. Given enough time, buying should turn out ok. Who knows with selling?
Re: U.S. stocks in free fall
I agree that it's a "healthy correction", whether or not it's overwrought might depend on what/how someone is investing.AnnetteLouisan wrote: ↑Wed May 25, 2022 9:09 pm I think this is a healthy correction and the extreme pessimism is overwrought.
A typical Boglehead portfolio is probably going to ride through this just fine, people following HEDGFUNDIES now 'BOGUS JOURNEY' may have to eventually 'FACE THE MUSIC' (which were all the known sequels following 'EXCELLENT ADVENTURE')
"To achieve satisfactory investment results is easier than most people realize; to achieve superior results is harder than it looks." - Benjamin Graham
Re: U.S. stocks in free fall
Did you read the FOMC minutes?
Here's my tldr: Resilience, but it all depends on "consumption spending".
Only language of concern that I noted was this:
They really seem to think that Q2 real GDP rate will be positive (and also Qs 3 & 4). So yeah. I guess we'll see.The staff noted that leverage at key nonbank financial institutions (NBFIs) was elevated and that bank lending to NBFIs continued to increase notably. Relatedly, NBFIs' reliance on bank credit lines to meet unexpected liquidity needs could generate moderate liquidity pressures at large banks during times of financial stress. With regard to funding risk, the staff highlighted structural vulnerabilities in some types of mutual funds as a continuing focus.
"The only thing that makes life possible is permanent, intolerable uncertainty; not knowing what comes next." ~Ursula LeGuin
Re: U.S. stocks in free fall
It's okay that you don't understand the math. Any new money put in at $5 is doubled at $10... And when it gets back to $100, the new money grew 20x.Hoongajji wrote: ↑Wed May 25, 2022 8:48 pmA 95% drop of a $100 investment equals $5. When that doubles it is $10. Still a 90% loss.HomerJ wrote: ↑Mon May 23, 2022 4:58 pmLong-term investors will be buying those stocks (via the index) at 70%-95% discounts, and will break even long before the market gets back to it's old all-time high.
Deep discounts like that make it fairly easy to break even.
A stock that drops from $100 a share to $5 a share (95% drop like your AMD example), only has to go back to $10 a share before an investor doubles their investment.
By the time the stock gets back to $100 a share, even if it takes 20 years, the investor will have made 20x their investment on that low price.
The price may be "back to even". And the long-term investor's original money is "back to even". But all the new money they invested in those shares when it was down are up 10x,15x,20x.
Which puts the long-term investor at that point at far better than "even".
So even if it was a small amount compared the original portfolio, even a year or two buying at those low prices will make a huge difference. Two years of $20k investments will be worth $800k when the $100 investment gets back to "even". And the original $1 million will be back to $1 million as well. And the longer it takes to bounce back, the more money one will invest at the very low prices you are predicting.
Assuming of course you have any idea how far things will actually drop, which you don't (and neither do I).
It's too bad you don't understand how hard it is to time the market either. Or, so far, how unnecessary.Subject “A” sold the million near peak and reinvested years later…win.
Peace.
"The best tools available to us are shovels, not scalpels. Don't get carried away." - vanBogle59
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Re: U.S. stocks in free fall
Even my 6 year old knows that Q2 will be negative and we’ll officially be in a recession. Maybe they should put him on the FedBeensabu wrote: ↑Wed May 25, 2022 9:32 pmDid you read the FOMC minutes?
Here's my tldr: Resilience, but it all depends on "consumption spending".
Only language of concern that I noted was this:
They really seem to think that Q2 real GDP rate will be positive (and also Qs 3 & 4). So yeah. I guess we'll see.The staff noted that leverage at key nonbank financial institutions (NBFIs) was elevated and that bank lending to NBFIs continued to increase notably. Relatedly, NBFIs' reliance on bank credit lines to meet unexpected liquidity needs could generate moderate liquidity pressures at large banks during times of financial stress. With regard to funding risk, the staff highlighted structural vulnerabilities in some types of mutual funds as a continuing focus.
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Re: U.S. stocks in free fall
You know that DE (whatever that is) is going to drop 73%?!?Hoongajji wrote: ↑Wed May 25, 2022 8:48 pmA 95% drop of a $100 investment equals $5. When that doubles it is $10. Still a 90% loss.HomerJ wrote: ↑Mon May 23, 2022 4:58 pmLong-term investors will be buying those stocks (via the index) at 70%-95% discounts, and will break even long before the market gets back to it's old all-time high.
Deep discounts like that make it fairly easy to break even.
A stock that drops from $100 a share to $5 a share (95% drop like your AMD example), only has to go back to $10 a share before an investor doubles their investment.
By the time the stock gets back to $100 a share, even if it takes 20 years, the investor will have made 20x their investment on that low price.
The price may be "back to even". And the long-term investor's original money is "back to even". But all the new money they invested in those shares when it was down are up 10x,15x,20x.
Which puts the long-term investor at that point at far better than "even".
Say subject “A” had $1million and lost $950k but DCA 20k per year…loss.
Subject “A” sold the million near peak and reinvested years later…win.
20/20 hindsight.
Fun to think about Homer.
Amazon in the dot com bust is a rare exception to dca success.
My ice cube analogies of the selected stocks demise. Small taters.
The icebergs one would navigate around in a ship are interesting. What if they melt?
Let us entertain the idea that there are 5-7 icebergs.
Vanguard and Blackrock via etf and index funds which we bogleheads enjoy are major players in the Neo Equity ice Age.
When I sell VTI and Tony buys it…what if Tony sells…and so on…
Vanguard and Blackrock hold these shares for a fee. No other reason. We don’t buy it…they are gone.
The icebergs at one point were 48% of the nasdaq.
So far there are no bankruptcies, closures, implosions…no real estate foreclosures. Like a fantasy or utopia World?
Everything is fine.
I disagree.
Enjoy this financial side of life everyone,
H
Not 72% or 74%, but 73%?
Man, where do I get one of those crystal balls?
Something tells me you actually have no idea how much any of those stocks are going to drop.
Once in a while you get shown the light, in the strangest of places if you look at it right.
Re: U.S. stocks in free fall
You get back in when the Fed announces: "Post pandemic overstaffing and overfilling of inventories has led to significant deflationary pressures und a rise in unemployement. The comittee therefore decided to stop the balance sheet run off and to lower the federal funds rate."manatee2005 wrote: ↑Thu May 26, 2022 12:33 amThe problem is if you sell now when do you get back in?
Maybe never?
So for me the plan is just to be contributing every 2 weeks as I always had.
Re: U.S. stocks in free fall
No such announcement would ever happen. There would be little hints in statements, possibly contradictory, and it would be up to the market to read the tea leaves.TheoLeo wrote: ↑Thu May 26, 2022 4:12 amYou get back in when the Fed announces: "Post pandemic overstaffing and overfilling of inventories has led to significant deflationary pressures und a rise in unemployement. The comittee therefore decided to stop the balance sheet run off and to lower the federal funds rate."manatee2005 wrote: ↑Thu May 26, 2022 12:33 amThe problem is if you sell now when do you get back in?
Maybe never?
So for me the plan is just to be contributing every 2 weeks as I always had.
Re: U.S. stocks in free fall
If the fed can announce in clear language that they are hiking rates then they can also announce in clear language that they will lower rates. Market will of course try to anticipate it by reading between the lines, but eventually the fed makes its intentions clear. Then you buy.Tom_T wrote: ↑Thu May 26, 2022 5:47 amNo such announcement would ever happen. There would be little hints in statements, possibly contradictory, and it would be up to the market to read the tea leaves.TheoLeo wrote: ↑Thu May 26, 2022 4:12 amYou get back in when the Fed announces: "Post pandemic overstaffing and overfilling of inventories has led to significant deflationary pressures und a rise in unemployement. The comittee therefore decided to stop the balance sheet run off and to lower the federal funds rate."manatee2005 wrote: ↑Thu May 26, 2022 12:33 amThe problem is if you sell now when do you get back in?
Maybe never?
So for me the plan is just to be contributing every 2 weeks as I always had.
Re: U.S. stocks in free fall
Suddenly glad I didn't even bother with this
Also was there some kind of news??
Re: U.S. stocks in free fall
Yeah, GDP contracted worse than expected. So of course the market's up!bagastuff wrote: ↑Thu May 26, 2022 9:12 amSuddenly glad I didn't even bother with this
Also was there some kind of news??
Re: U.S. stocks in free fall
Market is happy FOMC minutes don't suggest more drastic measures and initial jobless claims had a slight downtick from last month.bagastuff wrote: ↑Thu May 26, 2022 9:12 amSuddenly glad I didn't even bother with this
Also was there some kind of news??
Re: U.S. stocks in free fall
Yes, nobody knows anything!bagastuff wrote: ↑Thu May 26, 2022 9:12 amSuddenly glad I didn't even bother with this
Also was there some kind of news??
Re: U.S. stocks in free fall
When gme is up another 25% and nasdaq is 2% green what do you do?
Buy sqqq and fngd..
This fake rally will die soon.
Buy sqqq and fngd..
This fake rally will die soon.
Re: U.S. stocks in free fall
Economic slowdown = less demand = less inflation = less rate hikes
Or so the market seems to be thinking. So glad I'll get to buy into this rally on payday tomorrow.
Or so the market seems to be thinking. So glad I'll get to buy into this rally on payday tomorrow.
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Re: U.S. stocks in free fall
I posted earlier that housing market shows signs of slowing down. That indicates that more rate hikes beyond those already planned are likely enough to tamp down the asset bubbles. But there's still going to be a big problem with food and energy costs. I don't think the fed can tame that without raising rates until we are in a pretty bad recession. I guess it's up to the fed how they want to balance that dilemma.
Re: U.S. stocks in free fall
How are rate hikes going to do anything about food prices? I can modify my behavior to use less gas but I still need food to live. Actually maybe high food prices will help solve the obesity epidemic and healthcare crisis. Quick sell off XLV!alfaspider wrote: ↑Thu May 26, 2022 9:21 amI posted earlier that housing market shows signs of slowing down. That indicates that more rate hikes beyond those already planned are likely enough to tamp down the asset bubbles. But there's still going to be a big problem with food and energy costs. I don't think the fed can tame that without raising rates until we are in a pretty bad recession. I guess it's up to the fed how they want to balance that dilemma.
Re: U.S. stocks in free fall
Sales have dropped in my city now for 3 straight months. Prices are still sky high, but as demand lessens, I think prices will begin to drop. We have already peaked at a median home price of over $400k. That really has to change.alfaspider wrote: ↑Thu May 26, 2022 9:21 amI posted earlier that housing market shows signs of slowing down. That indicates that more rate hikes beyond those already planned are likely enough to tamp down the asset bubbles. But there's still going to be a big problem with food and energy costs. I don't think the fed can tame that without raising rates until we are in a pretty bad recession. I guess it's up to the fed how they want to balance that dilemma.
I am not sure how the Fed will control food prices. I think inflation there is more due to supply chain and supply issues, which isn't an area the Fed can really control.
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Re: U.S. stocks in free fall
Part of the food price problem is the energy price problem. Farmers are getting hit hard by increases in fertilizer and diesel. That can be alleviated somewhat by lowering energy demand. That can happen when people shop less, carpool or switch to public transit, stop unnecessary trips, and adjust thermostats.bagastuff wrote: ↑Thu May 26, 2022 9:26 amHow are rate hikes going to do anything about food prices? I can modify my behavior to use less gas but I still need food to live. Actually maybe high food prices will help solve the obesity epidemic and healthcare crisis. Quick sell off XLV!alfaspider wrote: ↑Thu May 26, 2022 9:21 amI posted earlier that housing market shows signs of slowing down. That indicates that more rate hikes beyond those already planned are likely enough to tamp down the asset bubbles. But there's still going to be a big problem with food and energy costs. I don't think the fed can tame that without raising rates until we are in a pretty bad recession. I guess it's up to the fed how they want to balance that dilemma.
There's also still quite a bit of food waste. I know I've been guilty of tossing old leftovers in favor of making something fresh or going out. In a recession, people are more likely to be careful to avoid waste.
Re: U.S. stocks in free fall
Hoongajji, if you have the benefit of hindsight, then yeah we can be billionaires in simulation.Hoongajji wrote: ↑Wed May 25, 2022 8:48 pmA 95% drop of a $100 investment equals $5. When that doubles it is $10. Still a 90% loss.HomerJ wrote: ↑Mon May 23, 2022 4:58 pmLong-term investors will be buying those stocks (via the index) at 70%-95% discounts, and will break even long before the market gets back to it's old all-time high.
Deep discounts like that make it fairly easy to break even.
A stock that drops from $100 a share to $5 a share (95% drop like your AMD example), only has to go back to $10 a share before an investor doubles their investment.
By the time the stock gets back to $100 a share, even if it takes 20 years, the investor will have made 20x their investment on that low price.
The price may be "back to even". And the long-term investor's original money is "back to even". But all the new money they invested in those shares when it was down are up 10x,15x,20x.
Which puts the long-term investor at that point at far better than "even".
Say subject “A” had $1million and lost $950k but DCA 20k per year…loss.
Subject “A” sold the million near peak and reinvested years later…win.
20/20 hindsight.
Fun to think about Homer.
Amazon in the dot com bust is a rare exception to dca success.
My ice cube analogies of the selected stocks demise. Small taters.
The icebergs one would navigate around in a ship are interesting. What if they melt?
Let us entertain the idea that there are 5-7 icebergs.
Vanguard and Blackrock via etf and index funds which we bogleheads enjoy are major players in the Neo Equity ice Age.
When I sell VTI and Tony buys it…what if Tony sells…and so on…
Vanguard and Blackrock hold these shares for a fee. No other reason. We don’t buy it…they are gone.
The icebergs at one point were 48% of the nasdaq.
So far there are no bankruptcies, closures, implosions…no real estate foreclosures. Like a fantasy or utopia World?
Everything is fine.
I disagree.
Enjoy this financial side of life everyone,
H
Now back to reality, no one can succeed in market timing on a consistent basis. Many Bogleheads members shoulder the responsibilities to manage their 6, 7, or even 8 figure portfolios. It's real and hard earned money. We follow boglehead investing philosophy (See wiki page here for a refresher). We don't just make moves to our portfolio the same way that WSBets/reddit folks do to their few thousands dollars play money.
I hope this helps.
Time is the ultimate currency.
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- Joined: Wed Sep 09, 2015 4:44 pm
Re: U.S. stocks in free fall
The difference between the 2.8% mortgages of a year ago and the 5.3% of today is a pretty huge increase in payments. If I took out my mortgage today (refinanced early 2021), it would be equivalent to paying another 30% for my house. That's likely hitting the sub $400k market the hardest. Part of the runup in median home price is not just increase in prices for a specific house, but also that transactions at the low end just aren't happening. Those buyers are much more cost sensitive and can't just make room in their budget for a 30% higher payment due to mortgage interest rates. At the high end of the market, people are more likely to have some room and also are more likely to pay cash.atdharris wrote: ↑Thu May 26, 2022 9:29 amSales have dropped in my city now for 3 straight months. Prices are still sky high, but as demand lessens, I think prices will begin to drop. We have already peaked at a median home price of over $400k. That really has to change.alfaspider wrote: ↑Thu May 26, 2022 9:21 amI posted earlier that housing market shows signs of slowing down. That indicates that more rate hikes beyond those already planned are likely enough to tamp down the asset bubbles. But there's still going to be a big problem with food and energy costs. I don't think the fed can tame that without raising rates until we are in a pretty bad recession. I guess it's up to the fed how they want to balance that dilemma.
I am not sure how the Fed will control food prices. I think inflation there is more due to supply chain and supply issues, which isn't an area the Fed can really control.