OT - Dow plunges 1,175 - worst point decline in history

[Jeff N.]

...gettin' real serious, folks.

[Tony T]

Seems like just yesterday we were knocking on the door of DOW 30K.

[oldpotatoe]

Originally Posted by Tony T

The Fed will most likely indicate a rate cut soon, probably today

Don't get that. This crisis is COVID19 driven. It doesn't indicate anything fundamentally wrong with the economy, just how the economy interacts with YUGE economies like China's. BUT, no doubt there have been frantic phone calls to Powell..'save me, save me'.....

I believe that any cuts now (and the past 3 cuts) will be politically motivated.

No kidding. And Powell said he wouldn't be influenced by anything but sound economic data..yeh, righto Mr Powell.

[Tony T]

Originally Posted by oldpotatoe

Don't get that. This crisis is COVID19 driven. It doesn't indicate anything fundamentally wrong with the economy, just how the economy interacts with YUGE economies like China's. BUT, no doubt there have been frantic phone calls to Powell..'save me, save me'.....

I believe that any cuts now (and the past 3 cuts) will be politically motivated.

[FlashUNC]

What would a cut do? And what's left to cut when the rate is set where it is now?

This is the danger of a Fed using all it's dry powder to keep an economy ticking along at 2 percent growth, when the real crisis starts, there's no lever left to pull that'll kickstart the economy.

[Tony T]

Originally Posted by FlashUNC

What would a cut do? And what's left to cut when the rate is set where it is now?

This is the danger of a Fed using all it's dry powder to keep an economy ticking along at 2 percent growth, when the real crisis starts, there's no lever left to pull that'll kickstart the economy.

The Fed has used other methods in the past when rates were set at or near 0.
Rates can also go negative (but never has in the US)

I don't believe that a cut now is necessary, and didn't think it was necessary in 2018. I felt that the FED was on the right path when they were raising rates, but it became clear to me that the FED, while independent, is affeted by political pressure (and this is not new, see: https://pubs.aeaweb.org/doi/pdf/10.1257/jep.20.4.177)

[goonster]

Originally Posted by FlashUNC

And what's left to cut when the rate is set where it is now?

QE.

But we already have very high levels of liquidity, and inflation has defied all classic models and theories.

[Burnette]

It's too early in the virus crisis to believe that it couldn't break the other way and stocks rebound. It's not time to rattle the Fed yet.

It's good that prices deflated, I get more stocks, bad that it's pressuring earnings in some sectors.

A virus isn't a fundamentally influenced bottom, it's a public scare that slows consumption and production. It's a temporary dip that will be lessened at some point.

[seanile]

Originally Posted by seanile

I wrote myself a crash plan a couple months ago:

Graduated buy-in between 8% and 20% drops from all-time high. With 75% of my available cash, invest 20% @8%, 30% @13%, 50% @18%. Invest remaining 25% available cash and available Bonds at 20% and lower.

Until then im doing my usual per-paycheck investments

just executed stage 1.

Originally Posted by verticaldoug

actually, the secondary damage the shutdowns will cause to contain the virus and slowdown in overall economic activity will be interesting.

The world is geared for just in time delivery. If you start shutting down parts of the global economy, eventually you will get ripples. Large ripples.

I think we will find out just how fragile the modern global economy is.

yea, he and i were mostly speaking in terms of health risk rather than economy. the economy's supply chains are getting screwed up with crippled supply chains and immovable inventory right now.

Originally Posted by joosttx

I did my Ph.D. dissertation on a virus. You could ask me those questions.

would be fun to put you two in touch. he's about to move to st. louis with his PI while still under the harvard umbrella (where he is right now)

[jimcav]

quote [I wrote myself a crash plan a couple months ago:

Graduated buy-in between 8% and 20% drops from all-time high. With 75% of my available cash, invest 20% @8%, 30% @13%, 50% @18%. Invest remaining 25% available cash and available Bonds at 20% and lower.]

why not do 25% (or even the 30%) of your funds when it hits 18% down, and 50% if it is below 20% drop, sort of like maximizing dollar cost averaging if you foresee recovery, or are you thinking drop below 20 is unlikely?

thanks!

[seanile]

Originally Posted by jimcav

why not do 25% (or even the 30%) of your funds when it hits 18% down, and 50% if it is below 20% drop, sort of like maximizing dollar cost averaging if you foresee recovery, or are you thinking drop below 20 is unlikely?

thanks!

my breakdown isn't too scientific, just graduated based on historical averages.
the internet tells me that, "The average correction for the S&P 500 since World War II lasts four months and sees equities slide 13 percent before bottoming.
But bear markets average a loss of 30.4 percent and last 13 months; it takes stocks nearly 22 months, on average, to recover."

so i was trying to get two points of investment on the more common corrections (8% & 13%), and one big one on an average bear market (18%), with a 25% portion reserve for when the **** gets real hairy between that 20% and 30% stretch.

i can always pace out the investments however i like of course. the 8% mark is more of an opportunity impulse, while the latter ones will be taking note of the current conditions and momentum.

[bigbill]

Originally Posted by jimcav

quote [I wrote myself a crash plan a couple months ago:

Graduated buy-in between 8% and 20% drops from all-time high. With 75% of my available cash, invest 20% @8%, 30% @13%, 50% @18%. Invest remaining 25% available cash and available Bonds at 20% and lower.]

why not do 25% (or even the 30%) of your funds when it hits 18% down, and 50% if it is below 20% drop, sort of like maximizing dollar cost averaging if you foresee recovery, or are you thinking drop below 20 is unlikely?

thanks!

I just moved funds to my main mutual fund since it's close to a two year low. If it tanks, I still have healthcare and enough to eat.

[shinomaster]

I have a small IRA rollover sitting at Fidelity which I need to invest... is now a good time to buy anything? I know absolutely nothing about any of this.

[fa63]

Originally Posted by shinomaster

I have a small IRA rollover sitting at Fidelity which I need to invest... is now a good time to buy anything? I know absolutely nothing about any of this.

It is more or less impossible to time the markets, but it seems now may not be a bad time to invest if you have some funds available. I had stockpiled a bit of cash, and I have moved about 20% of it into a SP500 index fund in the last two days.

[MattTuck]

Originally Posted by shinomaster

I have a small IRA rollover sitting at Fidelity which I need to invest... is now a good time to buy anything? I know absolutely nothing about any of this.

Several competing aphorisms.

"Don't try to catch a falling knife."
"Time in the market is more important than timing the market."
"Buy when there is blood in the streets."
"Sell when your shoe shine boy is giving you stock tips."


a "small IRA" could mean different things to different people. Let's say it is $10,000. I don't think it is a bad idea to commit to investing 25% of it now, and doing so again every 6 months. Averaging in over 2 years is going to insulate you from investing into a big down turn.