Down Day in the Market !

[audreyh1]

How long has it been since we saw a 5-10% correction? (of course corrections sometimes turn into bears.)

We had a very powerful correction from July of 2015 through Feb of 2016. It coincided with the crash in oil prices.

I think in August alone it dropped 10%, but it didn’t stop until Feb 2016.

 

[ejman]

I usually run a high stock AA of 70-80%. Recently, the covered calls getting in-the-money caused me to sell some stocks, and it's down to 60%. I have been selling put options the last couple of weeks, and if the market drags lower, it will cause me to have to buy stocks and drive the stock AA backup.

Will see if I will regret having to buy, instead of keeping the cash.

Wow, that's quite a quick swing from 80% equities to 60%. Obviously no set AA for you!. Coming from the other side of the fence where I have followed a 50/50 AA ( with a 10% band) upon retirement 15 years ago I must say if I were to follow your approach my sleep point would require some heavy trank as I heard a Brit say. Is there a method to the AA swings or just a gut feel?

 

[GalaxyBoy]

I read the other day that the people who sold everything in 2008 were FINALLY getting back into the market. My reaction was, "uh-oh."

Last week I blew some dough on a new, shiny, top-end iMac (not pro), and just the other day I posted here about being up substantially over the last year. I stopped short of saying the W-word, but you can still blame me a bit.

 

[sanfanciscotreat]

Took my IRA RMD before the drop.
Feels like a good move to me.

 

[vrijheid]

Dippity doo da, dippity ay, my oh my, what a wonderful day![emoji854]

 

[NW-Bound]

Wow, that's quite a quick swing from 80% equities to 60%. Obviously no set AA for you!. Coming from the other side of the fence where I have followed a 50/50 AA ( with a 10% band) upon retirement 15 years ago I must say if I were to follow your approach my sleep point would require some heavy trank as I heard a Brit say. Is there a method to the AA swings or just a gut feel?

Actually, the time I ran 80% stock was when I still had earned income from part-time work. At 2017 year end, I was at a bit more than 70% stock AA, so it was not that drastic a drop down to 60%.

I practice "tactical AA", and will vary it by trying to be a contrarian. Yes, it is more of a gut feel when people are bragging about how much money they make, or when they are lamenting about having to do OMY. Still, I am a stock lover, and only go below 50% stock when things got really bad, such as in 2008.

 

[LOL!]

How long has it been since we saw a 5-10% correction? (of course corrections sometimes turn into bears.)

Not that long ago. 2 years?

 

[txtig]

For me, there was a silver lining in today’s (and this week’s) big drop. Last week, I couldn’t help myself and told DW just how much we had gained over the past few weeks. I should have known better, because she immediately started coming up with ways that we could spend our new found treasure. Well, after I showed her our one day loss today (yikes!) she tells me that it’s a good thing we didn’t spend all those gains we (she) thought we thought we had. I think she’s beginning to understand!

 

[USGrant1962]

Not that long ago. 2 years?

Well, that's a long time since your average correction, defined as a 10% drop, happens about once a year.

 

[Scrapr]

I told Mrs Scrapr at lunch today the market is down big. She says... How big? I reply with a laugh...you know that new Volvo you used to be looking at?

I figured she would hear on the news about the market falling apart. So pre emptive strike

Next week is the MIL. FIL died a few months ago and i am herding her through the Fast Eddie BS. We are likely going to Fidelity or Chuck. But giving the Eddie guy a shot at the book of business. So far he's 3rd in a 3 firm race. She will absolutely ask me about the drop.

 

[HadEnuff]

You say it's only a paper moon
sailing over a cardboard sea.....

 

[limeyx]

Maybe. Maybe not.

There were people not paying attention today, so this weekend they will have a chance to see what happened to their portfolios.

One group will say, "OMG! I lost a ton and need to get out."
Another group will say, "OMG! Buying opportunity!"

We won't know which is the larger group until next week.

Buying monday (so everyone else should probably wait and watch it go down even more due to my luck!)

 

[W2R]

Well, I guess we are finally out of that dreamy la-la land where the market always soars upwards, day after day. Time to get back to the real world.

 

[mathjak107]

Yeah well it isn't a loss unless you need to sell. I see a buying opportunity

down is down , realizing a gain is a tax able event .

there is no difference between closing a position each night and buying the same asset or even another in the morning vs keeping the same money in play over night in the same investment .

there is no such thing as only a loss on paper . if you fell by 50% your net worth is down 50% . it may come back or it may not . setting draw rates is based on portfolio value not whether you sell or not

 

[Midpack]

Yawn. It’s all noise in the long term...

 

[NW-Bound]

How long has it been since we saw a 5-10% correction? (of course corrections sometimes turn into bears.)

We had a very powerful correction from July of 2015 through Feb of 2016. It coincided with the crash in oil prices.

I think in August alone it dropped 10%, but it didn’t stop until Feb 2016.

I looked at my diary. Audrey has good memory.

On 2015/07/20, the S&P was at 2128. On 2015/08/25, it was at 1868. That's a 12.2% drop.

It climbed back up to 2078 on 2015/12/29, then crashed down to 1829 on 2016/02/11. That's another 12% drop.

But from 2128 in mid 2015 to early 2016, the total drop is only 14%.

The S&P did not regain the high of 2128 until July 2016. So, it's one year of no gain, which is not really that bad.

If one set his rebalance band at 10%, he could have made a few bucks (or not).

 

[NW-Bound]

down is down , realizing a gain is a tax able event .

there is no difference between closing a position each night and buying the same asset or even another in the morning vs keeping the same money in play over night in the same investment .

there is no such thing as only a loss on paper . if you fell by 50% your net worth is down 50% . it may come back or it may not . setting draw rates is based on portfolio value not whether you sell or not

What you said is true, and I agree.

However, when I say "loss" instead of loss, I was referring to giving back some of the recent excessive gains that I did not really deserve.

Still, I prefer to keep all of that undeserved gain. I fail because I am just not a good market timer. How else would I want to lose a 6-figure sum in one week?

 

[mathjak107]

one thing i learned is at any point in time it is all your money the same as a bank account . it is just that investments have a variable balance .

but there is no such thing as it is the house's money . in fact i started in 1987 . today that money is a 7 figure portfolio . if i go by the term the "houses's money " i can lose 98% of my money and call it okay because it wsn't my money .

investors thinking things are only paper losses can make for some poor decisions .

 

[mathjak107]

Yawn. It’s all noise in the long term...

i hope at this age we have a long term lol .

the problem with bear markets is while they recover in nominal terms fairly quick , real returns are another story . we have had quite a few recoveries in nominal terms that were fairly short but actually took more than a decade in dollars to recover . waiting a decade just to break even at 65 can be rough .

but we all invest , hope for the best and keep our fingers crossed

 

[marko]

Yawn. It’s all noise in the long term...

+1 If I hold my chart at arm's length it still looks like a straight line upward. This morning I see that while I was 7 months ahead of my 7% plan, I'm now still 2 months ahead of plan.

Last night, out with friends, I picked up a dinner check for $600 and didn't think twice about the market.

Cash flow-wise, we live off our dividends; the monthly yields came in just fine on Wednesday morning--and will also at the end of this month.

 

[NW-Bound]

Talk about undeserved gains, I may want to take back what I said.

Investing is always perilous. Ideally, the market should go up a steady (insert your number here) 3-4% after inflation. But it doesn't. It goes up 20-30% one year, then drops 10% the next. And so, the occasional outsize gain is to make up for lousy years, such as after a "Wh***".

If the investor jumps in/out at the wrong time and loses money, it's his fault, or at least he does not know how the market works. If he stays in, he is compensated for the patience.

OK, I know how the market works. But can I do even better, meaning conquering greed and fear to buy when others are scared, and sell when they are greedy? Should I not get compensated for being the contrarian trader to provide market liquidity, to be the other side of the trade for those greedy/fearful people?

I looked at my own performance in the above mentioned period of July 2015 to July 2016, when the S&P dropped 14% from 2128, then climbed back up to the same point almost a year later.

It was not that great. I made 1.5%. Hah! That's about the same as the S&P dividend, given my AA. Actually, I should have made a bit more, because my cash also has some low yield to add a bit of return.

While I have a daily log of the total value of my investable accounts, looking up and back analyzing all of my trades would take a lot more work. But I do remember repositioning most of my energy stocks to something else. They made good money for me the previous years, and hanging on to them would mean giving back all that gain.

Hence, the trades I made in that flat year were still good moves. They could have been better, if I did not hang on to those energy stocks that long.

 

[Choices]

We have never sold when the market was down, we used fresh cash from employment to balance things out. We are now retired and next year I have to pull a RMD. Trying not to outthink myself!
Saving was way easier than drawing down but we are damned glad we have something to draw down.
My guess is, some of those 401-k millionaires who were publishing account statements on social media ( who does this ?) may be in for a queezy ride.

 

[donheff]

If this turns into a real correction I will rebalance and get back into an irrationally exuberant mood.

So what is the opposite of "WHEEEEE." We need a slogan and an icon to toss around when bulls are stampeding.

 

[RetiredGypsy]

so what is the opposite of "wheeeee." we need a slogan and an icon to toss around when bulls are stampeding.

eeeeew?

 

[USGrant1962]

investors thinking things are only paper losses can make for some poor decisions .

In other threads I keep seeing people say they "don't want to lock in losses," which is a similarly meaningless concept. Your portfolio does not have memory (except for taxes) and does not know how it got to where it is today. Today's portfolio is all you have.