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

[verticaldoug]

Originally Posted by echappist

what would be truly scary is something akin to what happened to the Nikkei starting in the late 80's

it was boom town until it wasn't, and the Nikkei barely recovered (on nominal terms) a few years ago. I think it's under that late 80's peak again

edit: apparently the Nikkei hasn't come close to recovering what was a stratospheric 38,000. It hit ~25,000 a few years ago...

The mistake is to equate the price of the stock market as a sign of success of the society. It's just a sign of success of getting high stock prices.

[verticaldoug]

Originally Posted by joosttx

No one takes care of you money or your kids better than you...

This statement only makes sense in that you have been blessed with a country that has rule of law and sound monetary policy.

There are countries where the macro just washes away all your individual choices.

[echappist]

Originally Posted by verticaldoug

The mistake is to equate the price of the stock market as a sign of success of the society. It's just a sign of success of getting high stock prices.

i think the part that i left unsaid (and what many on bogleheads would not wish to consider) is that much of the investing philosophy on that site is due to the underlying assumption that over the long term, investment in the stock market would bear fruits. as @matttuck rightly pointed out, viewing the market as a widget that generates returns is a faulty understanding of the market, yet we have to look at it that way, because we in this country are forced into dipping our toes into the market.

The underlying reason is due to the phasing out of pensions, pensions (for those fortunate enough to have them) usually can't cover all expenses during retirement. Alas, we plow our savings into the S&P, hoping that it would deliver returns. if something similar were to happen to the S&P 500, we'd all be royally screwed.

----------------------

also, i think S&P will hit official bear territory this week. fun times ahead...

opps, hadn't realized that the high was 2940 (as opposed to 2930 as i thought). Appears as if we've already got to bear territory. At least the market closes early...

[Tony T]

Originally Posted by OtayBW

I shutter to think what would be the result if what happened in 2008 happened now....

The only concern I have now is what the drop in 2008 also revealed.
"You never know who's swimming naked until the tide goes out.” ― Warren Buffett"

[Tony T]

Not sure what Steven Mnuchin was drinking in Cabo with his press release yesterday:

[kevinvc]

Originally Posted by OtayBW

No can do on the Fed firing.
Interesting to note that those who happen to have hundreds of millions of $$ in outstanding bank debt will now pay a big premium in additional interest. Just saying...

The POTUS is technically allowed to fire the Fed Chairman for cause, which is an action that has never been tested since every sane President we have had recognized the necessity of an apolitical Fed Reserve. Mnuchin has clarified that he, as Sec of Treasury, does not have the authority to fire the Chairman, but neither he nor the POTUS has stated whether they believe Trump can do so.

The POTUS stated earlier today that the only problem with the economy is the Fed, which he claims "...don't have a fell for the Market (sic)" and is supposedly mad at Mnuchin for recommending Powell for his position. Considering Trump likes to fix issues by firing someone, if the markets continue to drop it would not be surprising to see Mnuchin forced out, or possibly an attempt to get rid of Powell. Either action would be even disruptive and probably cause a bigger drop. The latter action would likely be more severe and protracted as we would move into uncharted territory that would require some entirely new legal interpretations.

This is all very bad.

[OtayBW]

Originally Posted by kevinvc

The POTUS is technically allowed to fire the Fed Chairman for cause, which is an action that has never been tested since every sane President we have had recognized the necessity of an apolitical Fed Reserve. Mnuchin has clarified that he, as Sec of Treasury, does not have the authority to fire the Chairman, but neither he nor the POTUS has stated whether they believe Trump can do so.

The POTUS stated earlier today that the only problem with the economy is the Fed, which he claims "...don't have a fell for the Market (sic)" and is supposedly mad at Mnuchin for recommending Powell for his position. Considering Trump likes to fix issues by firing someone, if the markets continue to drop it would not be surprising to see Mnuchin forced out, or possibly an attempt to get rid of Powell. Either action would be even disruptive and probably cause a bigger drop. The latter action would likely be more severe and protracted as we would move into uncharted territory that would require some entirely new legal interpretations.

This is all very bad.

Yes - correct. As I understand it, there has been no discussion of firing for any justifiable 'cause' (that I'm aware of). The biggest problem, as you alluded, seems to be that those in charge are 'bad golfers who have no short game'....

[kevinvc]

Originally Posted by Tony T

Not sure what Steven Mnuchin was drinking in Cabo with his press release yesterday:

There are only two explanations I can think of for Mnuchin to make those calls and issue this release: either he is incredibly stupid and grossly incompetent; or he was ordered to "do something" to stabilize the markets. If the latter, his options are extremely limited and either he or someone else grasped at this straw, which is more likely to have the opposite effect of what was intended.

[FlashUNC]

Originally Posted by kevinvc

There are only two explanations I can think of for Mnuchin to make those calls and issue this release: either he is incredibly stupid and grossly incompetent; or he was ordered to "do something" to stabilize the markets. If the latter, his options are extremely limited and either he or someone else grasped at this straw, which is more likely to have the opposite effect of what was intended.

Why can't it be both? I'd argue the latter would stem from the former.

[kevinvc]

Originally Posted by FlashUNC

Why can't it be both? I'd argue the latter would stem from the former.

Just following orders? You're right though, even if he was told something as nebulous as "just fix it", which was probably preceded with "this is all your fault for recommending Powell in the first place", this action was worse than some other ineffective things he could have chosen.

Staying silent would be much more helpful, or at least less harmful, than nonsensical tweets and press releases that serve only to sow more loss of confidence, but that doesn't really seem to be an option.

[GregL]

Dow down 653 points today in worst Christmas Eve session on record. So much "winning!" Time for the 22nd Amendment to kick in...

Greg

[Tony T]

And what the hell is Steven Mnuchin doing in Mexico anyway?

[echappist]

Originally Posted by GregL

Dow down 653 points today in worst Christmas Eve session on record. So much "winning!" Time for the 22nd Amendment to kick in...

Greg

you mean the 25th

also, until this thing is well in the rear-view mirror, it's hard to pin the entirety of the blame solely on Trump (and I speak as someone who hold a very dim view of Trump)

That said, the trade wars don't help, and the misguided corporate tax cut may very well have ginned up stock prices (divident yields at this time last year were pitiful).

[Big Dan]

Some of this stuff is self inflicted.
In the meantime regular folks are losing their a$$.

[oldpotatoe]

Originally Posted by Tony T

And what the hell is Steven Mnuchin doing in Mexico anyway?

I vote a good ‘soldier’ saying ignorant things at the behest of the guy sitting in the big chair. Why these hitch their horse to this wagon is beyond me. I guess they care little for their next ‘career’...