Roller Coaster

[nash031]

Thinking about this reading through doom and gloom posts based on historical similarities, etc.

It struck me that the sheer glut of information available today regarding markets and economics impacts volatility greatly. The economic indicators from 1966 or 2008 may be similar, but society as a whole has changed how we live even since 2008 (and certainly since 1966, 1982, 2000, etc.) with the spread of smartphones allowing folks access to financials in the palm of their hand, 24/7.

As in most cases, I hesitate to use historical anecdotes to impact my investment strategy because rarely is "this time" just like "last time this happened."

 

[Free To Canoe]

Here is a roller coaster from the past.

 

[imoldernu]

10 yr. VIX

 

[splitwdw]

I added to one of my positions yesterday.

 

[robnplunder]

Market (vix) has been very stable for a long time. This "volatility" feels like we are back to more normal market.

 

[audreyh1]

This pattern reminds me of the pattern that preceded the last meltdown(2008). Up 100, down 200. Repeat, repeat... Talking heads saying all sorts of different things. More deflation talk than usual. Oil dropping. Oil plummeted in the last meltdown right? I'm starting to panic somewhat. Just guessing. I'm waiting for an "up" day to move a lot of my equity money back into warm cozy stable value zone.

Last time oil plummeting followed the market sell off, ths time it's leading. Big difference.

 

[Walt34]

I'll probably rebalance the AA tomorrow and ever-so-slightly (2%) increase the AA to the stock index fund since it's down anyway. I thought it was a good idea to own it last week and since it's cheaper this week I should buy more. I haven't touched anything since moving the Fidelity 457 to a Vanguard IRA last March for the lower fees at Vanguard.

 

[clifp]

Market (vix) has been very stable for a long time. This "volatility" feels like we are back to more normal market.

The long term VIX average is 20, so at the current 25 level it is actually closer to being average than it has been the last few years in the 10-15 range.

 

[Looking4Ward]

Today I sold high (Vanguard High Yield Bond fund) and bought low (Wellington).

I used that 5% of my total portfolio to achieve the mix I was ultimately after:

5% Vanguard Energy Fund
5% Vanguard Health Care Fund
12% Wellesley
78% Wellington

Now I'm just going to sit back and stay put for the next 15 years.

 

[harley]

I have never been able to figure out why certain things make the market react like it does.

One thing I seem to see as observation, the market is a bit of herd mentality and self-fulfilling prophecy. So if something happens that is generally viewed as good, then market result is a positive outcome as market follows perception of good news. Same for bad, if consensus is bad, the market result is down. Now figuring out what those perceived good and bad news items are is the hard part!

+1 on the first sentence. As far as the second paragraph, all through 2011-2013 all I was reading was IMO bad news. Yet the market kept going up-up-up. The best I could figure was that as long as the Fed was printing money and buying bonds things were good. That's been borne out by the market getting really shaky any time there was discussion of cutting back on the bond buying.

Now there are all sorts of sort of bad news items (Ebola, China, ISIS, elections, oil, etc.), and the Fed doesn't seem to have the ability to just throw money at the problem this time. It will be interesting to see where it leads.

I can guarantee one thing, though. Whatever happens won't make sense to me.

 

[imoldernu]

The best I could figure was that as long as the Fed was printing money and buying bonds things were good. That's been borne out by the market getting really shaky any time there was discussion of cutting back on the bond buying.

Now there are all sorts of sort of bad news items (Ebola, China, ISIS, elections, oil, etc.), and the Fed doesn't seem to have the ability to just throw money at the problem this time. It will be interesting to see where it leads.

I can guarantee one thing, though. Whatever happens won't make sense to me.

I think that makes perfect sense...
A little bit of the abstract, but looking at the situation in Greece today, could be a microcosm of what could happen to the US as the FED stops selling bonds, and goes away from quantitative easing. Greece is considering some options to stop relying on the IMF, World Bank, and the European Central Bank. They are also looking at departing the Euro. None of these options are good, and could result in bankruptcy.

In any case, Greece could be a bellwether for the US... not today or tomorrow, but in the years ahead. The current US Debt is $18 trillion, or about $56K per US citizen, while the total unfunded liabilities are more than $115 trillion, which works out to nearly $1 million per Taxpayer. It's not possible for the FED to print that much money.

So, just for curiosity's sake, watching what happens with Greece in the next year, should prove interesting. Of all the PIGGs plus Ireland, Greece may be the closest parallel with the US.

Nothing to fear in the near time, but 5 to 10 years is well within current company's lifespan.

 

[shotgunner]

I think the wild card as of 10/15/14 is Ebola. It's an infectious and very deadly disease and by many accounts our government and medical system has failed badly in handling it. More importantly a large majority of Americans feel the government has mishandled it and they have a lack of confidence and growing fear. Ebola has the potential to disrupt both commerce and daily life. Would any of you willing go to Texas Presbyterian Hospital for treatment today? Would you go to work if someone there was taken for observation of the disease? Would you let your child attend a school where there has been a case or even a suspected case of Ebola? The disruption to commerce will start with reduced foreign travel, reduced air travel, reduced eating out, reluctance to go to hospital or Dr. Office and so on. If it turns out that CDC protocols even when followed perfectly do not prevent infection among medical workers, how many medical workers will keep going to work? Hopefully the situation with Ebola in the US will be brought under control but this has a ways to go to play out.

On the plus side, it this gets out of control and becomes a pandemic we won't need a 30 year plan with 100% certainty of not failing. Could be a 70% chance you will only need a plan that survives for about a year maybe two

 

[bad_LNIP]

In trying to preserve at least some of my profits I am selling some stock today. Will get 4 pm price. I think the market will go much lower in the next few months. Good luck all!

So what did you short? You should make a killing if the market is going much lower.

 

[John Galt III]

So what did you short? You should make a killing if the market is going much lower.

I didn't short anything. I just unloaded some equities so that if the market drops I will lose less. So far the market has gone back up from my sell point, so I would have been better off doing nothing, of course. So far, at least.

 

[RetireBy90]

Since there at least a couple that don't claim to know why market does what it does, let me add to that auspicious set of non-knowledge.

My take is that ups and downs of the market are driven by people, not financial basis. People can be influenced by the CNBC news, or financial news, but the only impact on the market is how that filters through the individuals. May not sound like a big difference, but it allows me to forget the talking heads and watch my AA and savings levels (for the most part).

You can also go Warren B. Like and when people are crazy, take a contrarian position.

IMO, which isn't worth a PE of more than 1 :')