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

[CNY rider]

Originally Posted by froze

It can drop 16% or more, and I won't care! Because in the stock market world the market works in reverse of gravity, what goes down eventually goes up more.

You may believe this, but history tells us that most market participants will sell in a serious decline, often at the worst possible time.
When this kind of glib optimism and confidence exists, it's not time to buy.

[saab2000]

Originally Posted by CNY rider

You may believe this, but history tells us that most market participants will sell in a serious decline, often at the worst possible time.
When this kind of glib optimism and confidence exists, it's not time to buy.

I'm no expert but it seems that the worst possible time to sell is in a decline. And the best time to buy is in a decline.

Of course, trying to time the market is a fool's errand. Anyway, I'd bet most market participants aren't 'investors' per se. They are savers saving for retirement and I think the worst thing anyone can do is try to time this stuff and move money around during fluctuations.

Everything I've ever read says to ride these storms out until they calm. The only exceptions would seem to be if one is really nearing retirement and will need access to this money.

[Elefantino]

To mis-quote Sun Tzu:

"In chaos, there is profit."

[oldpotatoe]

Originally Posted by Elefantino

To mis-quote Sun Tzu:

"In chaos, there is profit."

According to Sun Tzu, the following are essential to be a successful leader: A leader leads by example, not by force.

copy to don

[jimcav]

Originally Posted by fa63

This is true, if you have time and the means to ride it out.

We are hoping to retire early in about 10 years, and I have to say the thought of a "lost decade" is starting to weigh more heavily on my mind (it would mean that we can't retire when we want to). Not the end of the world, but not great either.

I'd hoped to retire for good when my youngest heads off to school--given college costs I feel compelled to work to pay down our house and save for their college before I hang it up, but a significant portion of my assets are tied to the market. Last year I very seriously thought about selling when the trade war stuff started, but didn't want to take the tax hit, now my account has gone down about what the "hit" would have been ( I think it is 12% capital gains). Now I worry about selling in case it continues down, versus waiting for recovery of what went down. Just proves i should have socked more away when i was younger. At least I am very fortunate to have a pension, so worst case we will move to a much more affordable area, but we hope to NOT have to do that.

[echappist]

Originally Posted by CNY rider

You may believe this, but history tells us that most market participants will sell in a serious decline, often at the worst possible time.
When this kind of glib optimism and confidence exists, it's not time to buy.

Yes and no. It's optimism from a position of privilege, and that privilege, as alluded to by @fa63, is the privilege of time.

For instance, 4% withdraw rate is generally considered to be safe (as in, one won't run out of principle in a 25-year retirement). The question then, is when is it not safe, and the answer is when one takes really big hits in the first few years of retirement, such that there's not enough left to sustain the retirement.

So if one is near retirement, that retirement might get pushed out (though it has to be said that the exposure of equity decline near retirement really ought to be low); if one's in first years of retirement, one may be royally screwed.

Originally Posted by saab2000

I'm no expert but it seems that the worst possible time to sell is in a decline. And the best time to buy is in a decline.

Of course, trying to time the market is a fool's errand. Anyway, I'd bet most market participants aren't 'investors' per se. They are savers saving for retirement and I think the worst thing anyone can do is try to time this stuff and move money around during fluctuations.

Everything I've ever read says to ride these storms out until they calm. The only exceptions would seem to be if one is really nearing retirement and will need access to this money.

with long enough time to retirement, this is indeed the case. However, it's hard to have the gumption to "go for it" and buy the falling knives when one's in the middle of it all. I always had it in my mind that anything past a 15% dip, I should act. Question is, act how and when? These questions should be decided upon in calmer times and carried out as if it were a military order, as to prevent one from "chickening out" when the actual decision needed to be made

Originally Posted by fa63

This is true, if you have time and the means to ride it out.

We are hoping to retire early in about 10 years, and I have to say the thought of a "lost decade" is starting to weigh more heavily on my mind (it would mean that we can't retire when we want to). Not the end of the world, but not great either.

That's admirable, especially (iirc) since you started working not so long ago? Out of curiosity, how are you plan to tide over medical coverage between retirement and medicare?

[echappist]

Originally Posted by jimcav

I'd hoped to retire for good when my youngest heads off to school--given college costs I feel compelled to work to pay down our house and save for their college before I hang it up, but a significant portion of my assets are tied to the market. Last year I very seriously thought about selling when the trade war stuff started, but didn't want to take the tax hit, now my account has gone down about what the "hit" would have been ( I think it is 12% capital gains). Now I worry about selling in case it continues down, versus waiting for recovery of what went down. Just proves i should have socked more away when i was younger. At least I am very fortunate to have a pension, so worst case we will move to a much more affordable area, but we hope to NOT have to do that.

No offense, but this sort of attitude is akin to cutting off one's nose to spite the face, especially since we appear to be talking about long term capital gains (which is quite low, all things considered). One should consider oneself fortunate to be paying more taxes (regardless of what one's views on taxes may be), because in the current framework, it invariably means that one has generated quite a bit more profit/income. It's like people refusing to take a pay raise for the fear of getting moved into the next marginal bracket. Overall, one is still taking home quite a bit more; yes, one has to pony up a larger part of it to the government, but one still keeps the majority of that pay raise.

[kppolich]

Man, the more I read this thread the happier I am. It feels good to be young, financially independent, diversified, and unable to spend the majority of my investment assets for another 30-35 years. Every time this thread gets bumped with an overreaction I just smile and think - who cares - you can't spend that money without taking a tax hit. Keep contributing the max and let it grow.

The stock market is an investment vehicle, with risk. Line up your investment allocation with your risk tolerance and stop taking financial advice from cycling forums.

TGIF

[93KgBike]

Originally Posted by Elefantino

To mis-quote Sun Tzu:

"In chaos, there is profit."

In chaos, there is opportunity [to do great harm to your enemies].

[Big Dan]

Not time to get out now.
We are a couple of tweets away from a stock market rally.

[Tony T]

The Fed will save us.

[MattTuck]

Originally Posted by Tony T

The Fed will save us.

[jimcav]

Originally Posted by echappist

No offense, but this sort of attitude is akin to cutting off one's nose to spite the face, especially since we appear to be talking about long term capital gains (which is quite low, all things considered). One should consider oneself fortunate to be paying more taxes (regardless of what one's views on taxes may be), because in the current framework, it invariably means that one has generated quite a bit more profit/income. It's like people refusing to take a pay raise for the fear of getting moved into the next marginal bracket. Overall, one is still taking home quite a bit more; yes, one has to pony up a larger part of it to the government, but one still keeps the majority of that pay raise.

although I'm not sure how i'd be spiting my face. i don't think i need to go into super-detail, but if i'd sold, it would have been a hit since a lot of it is in mutual funds, which isn't simply long-term capital gains (LTCG) since some of the stocks in the funds were held less than a year in the fund. that would be ordinary income, which added to my military pension and current salary would have pushed me to the next tax bracket (rare case where making a little less might have been better) and so it is a bigger hit than the usual LTCG. I suppose it is really just anxiety--i saw friends who had retirement plans go up in smoke between 2007-9. IF there is a major recession type drop, my time horizon is such that we will either have to move or I keep working years longer. Like I said, there are worse situations to be in, but it would be nice to feel more secure about what might happen. I do know my retirement goal won't happen if I sold everything now and gained 2.25% in T-bills from now until my last goes to college...I guess goals are just that, and, like all plans, "Gang aft a-gley"

[longlist]

I'm just wondering if His Orangeness is going to celebrate the Dow hitting 25,000 again.... For the THIRD time in this term? Cause it's below right now. Last time, he trumpeted it after the last crash.

[Tony T]

Originally Posted by MattTuck

A little of both...
Last time (December) POTUS berated the Fed not to raise rates (it was expected then that there would be more rate hikes in 2019), and the Fed backed off and said (in Fedspek) that rates would not be hiked, and the market rallied.
I would not be surprised to see the Fed hint of a rate cut soon.