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

[ridethecliche]

Originally Posted by kppolich

Nice little buying opportunity this morning, ey?

Depends. If you'd been dollar cost averaging and buying things that were part of long term hold strategy then probably not because things are still more expensive than they were 2-3 months ago. So if you've been holding cash with the goal of investing when the market came down then you're still trying to time the market and it's still a net negative so to speak.

Originally Posted by deluz

I read this was due to overvalued stocks and signs of a recession but this is all really my fault, the market opposes to whatever I do.
My 401K was not going anywhere this year so I put some of my money into an aggressive growth fund (after all the gains were already made) and that is when the market crashed. I figure I have lost $15K since doing that. I am absolutely sure if I took my money out the market would instantly rebound. But no, I am not going to take the loss and leave it in so you can look forward for a further downturn in the market.

You lose nothing if you don't sell. If you panic sell and try to time the bottom then that's when things start getting murky.

Originally Posted by cash05458

I am not a finance economy fellow...but watching, say, the guardian, literally gaslight normal americans for knowing/feeling the economy isn't in good shape and stating that they are listening to propaganda to think otherwise as the economy is in such fantastic shape...

And then this just this morning, says a good bit to me...

https://www.theguardian.com/business...-markets-slump

Part of the reason this hit japan so hard is because they had close to a 0% interest rate for a bit so there was a lot of investment in US stocks. With this anxiety around markets, the currency valuation fluctuated and coupled with the decrease in US markets it caused a ripple effect causing Japanese investors to flee... as I understand it. So few factors at play for japan that hit them harder than most.

[verticaldoug]

Originally Posted by ridethecliche

Part of the reason this hit japan so hard is because they had close to a 0% interest rate for a bit so there was a lot of investment in US stocks. With this anxiety around markets, the currency valuation fluctuated and coupled with the decrease in US markets it caused a ripple effect causing Japanese investors to flee... as I understand it. So few factors at play for japan that hit them harder than most.

Actually a market move like this is usually a force liquidation do to leverage. Because of 30 years of low interest rates, Japanese Yen has been the funding currency of choice.

I think large funds which had shorted to buy US assets, were already feeling the pressure with MOF intervention moving the yen from 161 to low 150's at the end of last month.

When BOJ moved to raise rates, the funds lenders have probably changed margin requirements, forcing the funds to either post more cash or sell assets. The rest is history.

As we like to say in the fund business, Japan is where funds go to get punished for risk.

A smaller version of this occurred at the end of 2022 in the yen, and in March 23, several macro funds announced closures from yen losses.

I expect if the market doesn't rebound, we will hear similar stories in Q4.

The original yen-carry blowup was way back in 1998. Julian Robertson of Tiger Management and Long Term Capital Management had large carry trades on. The forced unwind put LTCM out of business, and Tiger decided to shutter.
(You can read the story in 'When Genius Failed' ) The emergency rate cuts by Greenspan at time are the original moral hazard and probably mark the beginning of the internet bubble of 1999.

Violent moves like this are because of too much leverage not rational investment decisions. I hope the Fed does not panic and do a large emergency cut, we don't need anymore moral hazard. We have it up to our eyeballs already.

On a side note, after Robertson closed, he took some of his remaining money and funded his proteges 'The Tiger Cubs'. The rest is investment legend.

[saab2000]

A bit of wisdom and context.

It recalls somewhat the old story of J. Pierpont Morgan, “the Magnificent,” when someone asked him what the stock market was going to do. “I can tell you exactly what it will do for years to come,” he said. “It will fluctuate.”

[54ny77]

And algo trading. When avg volume is, say, 10-20mm a day, and daily volume hits a few hundred million....there's the spiral (up or down).

Originally Posted by verticaldoug

Violent moves like this are because of too much leverage not rational investment decisions. I hope the Fed does not panic and do a large emergency cut, we don't need anymore moral hazard. We have it up to our eyeballs already.

On a side note, after Robertson closed, he took some of his remaining money and funded his proteges 'The Tiger Cubs'. The rest is investment legend.

[fa63]

As someone who is mostly retired at a relatively young age (40), I somewhat pay attention to these fluctuations since we have a lot of skin in the game. That said, no matter which way I have sliced it (probabilistically using scenarios worse than what history indicates and deterministically using the worst 50-year period of the stock market), at our current withdrawal rate of ~3.5% per year, the chances of our money outlasting us is very good So, if you are retired and drawing down at a similar rate (or even a little higher if you don't need your money to last 50+ years), then I wouldn't pay too much attention to the fluctuations.

If the stock market tanks in unimaginable ways, then I guess we are in trouble but at that point, money might not matter much anyways

We did inadvertently take advantage of yesterday's dip since the 5th is when we automatically buy every month.

[flying]

Originally Posted by fa63

If the stock market tanks in unimaginable ways, then I guess we are in trouble but at that point, money might not matter much anyways
.

Money will always matter even in especially bad times.

Just look at places like Venezuela when they entered hyperinflation in 2016 or further back to Germany Weimar Republic hyperinflation in 1922

The question will be what form of money. One thing you know from all previous examples is it will not be "currency" It will be money (Gold & Silver) & bartering

[JMT3]

The market is crazy. If the Feds would have decreased the prime rate by 1/2 a point the market would still go down because they were expecting 3/4 a point. 2 weeks ago I had the most money I ever had. Over the past week that is gone. Not all of it but a nice bit of money. The good part is I don’t need it now so I can wait it out for a while. I follow the market I just keep my fingers off the phone and only tele-meet with my finance company once a quarter.

[echelon_john]

Weeks like these are when I channel my inner Buddhist.

“Don’t just do something. Sit there.”

Almost always the right decision.

[reuben]

Originally Posted by echelon_john

Weeks like these are when I channel my inner Buddhist.

“Don’t just do something. Sit there.”

Almost always the right decision.

[tylercheung]

there's that and also -(Isaac Newton), what goes down must come up

[OtayBW]

Originally Posted by echelon_john

Weeks like these are when I channel my inner Buddhist.

“Don’t just do something. Sit there.”

Almost always the right decision.

And a corollary to that: 'The moment you open your mouth [to 'explain something'], you're wrong'.....

[saab2000]

Originally Posted by OtayBW

And a corollary to that: 'The moment you open your mouth [to 'explain something'], you're wrong'.....

Analogous to the quote (Mark Twain?), “Better to be thought a fool than to open your mouth and remove all doubt.”

[ridethecliche]

I jumped in on some intel right after it tanked the other day and managed to get out at just about break even because I was getting bad vibes.

Looking at a few things as possible grabs during the up and down fun times (i.e. market correction) that are likely on the way right now.

Kinda bummed I spent so much on VTI over the last few weeks when it was basically closer to its all time high, but hey...I guess I can always just get more if it comes way down again. I used to swing trade VTI in the past and now would be exactly the kind of time I'd do it but it's too much stress to pick up a net of 2-3 shares given the paltry amount I have in it.

[bigbill]

I have an IRA and some mutual funds. The mutual funds are aggressive and tech driven, and the IRA is with Schwab and more conservative. I've lost track of the times I've turned to my wife and said "we made $9K today," and the next day,
"we lost $8K." Throughout all the cycles, it has increased in value even though I'm no longer contributing. During the market tank in early covid, I put a chunk of money into my mutual fund and it has done very well. The IRA is just slowly and steadily increasing and I'm good with that.

I'm 59.5 years old in November, so I could make some withdrawals, but I'm also retired military and my IRA is for stuff and doing things.

[likebikes]

seems like the recession that started last week is already over?