October 10th Market Plunge

[Dash man]

I bought 500 shares of ABC stock today. After watching my equity accounts drop over $100k yesterday and a smaller drop today, I wanted to add something to my equity position.

 

[ABQ2015]

My rollover paperwork got lost in the shuffle this spring and the market had risen sharply by the time it was processed. It was a partial rollover, not all of my investments, but I'm buying a little each day of what I had planned to buy in April.

 

[NW-Bound]

I know you are being facetious, but just to drag this out . . .
Each share of stock represents a claim on current and future earnings of a corporation. If we assume that the present and future earnings of those companies aren't affected by what people paid for the stock yesterday, then my shares also haven't changed in their ultimate value.

Of course, the >price< of the stock, today and in the future, is whatever a buyer is willing to pay for that share of future earnings. As of today, that has dipped a bit, so if I need to sell today I'll get less. But, if I don't need to sell today, or soon, it is irrelevant. In a mark-to-market world, I've lost something. In a "what I get when I sell them" world, I haven't.

Those inflating bolivars don't ultimately represent a claim on anything. I see that as the difference.

I fully see your point, but here's another viewpoint. The shares are valued based on their future earnings, but these are just earning projections. Yes, it's the same shares as you and I had last month, but the market now says that these shares are not worth what we thought they were. Maybe they were really overvalued, and we are just now seeing the truth.

 

[Chuckanut]

Somebody wake me when the market is down 20%. I might buy.

 

[ERD50]

Somebody wake me when the market is down 20%. I might buy.

Let me nap until -35%. Then I'll take a look around. Worked for me in the last big dip.

-ERD50

 

[NW-Bound]

If my stash shrinks by 35%, then my current WR of 2.6%/year becomes.... (drum roll)...

4% WR!

 

[RobbieB]

Then you're still OK.

 

[NW-Bound]

Yes. Thank you.

And I still have SS to be drawn.

Me worry? I only got mad that I could not profit off this crazy market.

 

[MoneyChic]

I invested mid-afternoon today and feel pretty good about it. Kinda like finding a coupon for something you were going to buy anyway!

 

[redduck]

Somebody wake me when the market is down 20%. I might buy.

Let me nap until -35%. Then I'll take a look around...
-ERD50

You two might want to consider getting a room together.

 

[Souschef]

I am sitting tight. I lost over 100K, but IMO, it is funny money until I cash it in. Between DW and I, SS and pension, we net 72K. This covers most, if not all of our expenses.

 

[joel2125]

Aside from the flattening yield curve, there is nothing that points to recession right now. Oct is a nervous month, and 10% corrections are more common than Christmas.

 

[Rickt]

Looks like my portfolio value is <0.9>% YTD as of today.
The dividends cover our living expenses....hope the dividends keep coming at the same rate.

This is our 1st full year of retirement and am still learning how this withdrawal business works. Am a little confused because both bonds and equities are going down together....aren't they supposed to move in opposite directions?

 

[audreyh1]

Aside from the flattening yield curve, there is nothing that points to recession right now. Oct is a nervous month, and 10% corrections are more common than Christmas.

Ironically, the yield curve is not flattening, it's steepening, because long rates have gone up recently. That is what is driving stocks down.

 

[Running_Man]

Actually the move up in yield has been relatively small when comparing to the flattenning that has occurred since 2016.

On CNBC almost universal agreement this is the best time to buy stocks in years. No change in business conditions or profits and stocks are cheaper. That sentiment, and yesterday when a guest stated he thought bull market was ending, the host about had a heart attack and severely criticized him saying he had no basis to claim such a thing and ended the segment early after twice more cutting him off saying there was no basis for what he was saying.

The expectation that a stock market must give positive returns, along with many of the comments here that declines are no big deal and that 2008 has shown that staying in the market is the best course, reveals a very high comfort level with stock ownership.

 

[MichaelB]

The expectation that a stock market must give positive returns, along with many of the comments here that declines are no big deal and that 2008 has shown that staying in the market is the best course, reveals a very high comfort level with stock ownership.

Robert Shiller just wrote an article where he feels investor comfort level may be too high. https://www.marketwatch.com/story/d...s-justify-spectacular-stock-prices-2018-09-24 A snippet

That brings us to the current boom in earnings and prices. Apparently, investors believe that this boom is going to last, or at least that other investors think it should last, which is why they are bidding up stock prices in a dramatic response to the earnings increase.

The reason for this confidence is hard to pin down, but it must be rooted in the public’s loss of healthy skepticism about corporate earnings, together with an absence of popular narratives that tie the increase in earnings to transient factors.

 

[ERD50]

.... along with many of the comments here that declines are no big deal and that 2008 has shown that staying in the market is the best course, reveals a very high comfort level with stock ownership.

The talking heads mean nothing to me.

As far as the comments here, I'd say that staying in the market isn't necessarily about a " very high comfort level with stock ownership". I'd say it's more that many of us see no viable alternative. To say it another way, many of us are even less comfortable with an attempt at market timing.

-ERD50

 

[redduck]

I am sitting tight. I lost over 100K.

Yeah, I think sitting tight is the best strategy. If I lost 100K, I wouldn't relax my sphincter muscle even for a second.

 

[marko]

As far as the comments here, I'd say that staying in the market isn't necessarily about a " very high comfort level with stock ownership". I'd say it's more that many of us see no viable alternative. To say it another way, many of us are even less comfortable with an attempt at market timing.

-ERD50

I don't know. From the comments I've seen here I'd say it's a sense that most of us have seen this all many times before and don't take the drop all that seriously.
It's unpleasant, sure, but I don't get the sense that anyone here is anything more than mildly uneasy about this week's events.

 

[W2R]

The talking heads mean nothing to me.

As far as the comments here, I'd say that staying in the market isn't necessarily about a " very high comfort level with stock ownership". I'd say it's more that many of us see no viable alternative. To say it another way, many of us are even less comfortable with an attempt at market timing.

-ERD50

Exactly. I am not comfortable with market timing, and would be more likely to sprout wings and fly than to start investing in real estate or some such thing. Can you imagine what a rotten landlord I'd be? Don't wanna do that, and don't have to.

I don't know. From the comments I've seen here I'd say it's a sense that most of us have seen this all many times before and don't take the drop all that seriously.
It's unpleasant, sure, but I don't get the sense that anyone here is anything more than mildly uneasy about this week's events.

I can't help but think, "Here we go again!" with rolling eyes , but you're right, I am not terribly upset about it because I feel like I have seen this all before.

It's interesting, though! Who knows how this will shake out.

 

[easysurfer]

My crystal ball thinks this is then big one. Regardless, my plan is to wait til Jan to rebalance. I'm hoping to get this market crash thing done with. Kind of like waiting for that big volcano in the news several weeks back to blow its top .

 

[Fedup]

DMT here. I got out of the market before the crash in 2008/2009. I’m sure glad I did. I did get back in later in 2009, slowly, so nothing to brag about. I’ve been exuberant in 2000 and if one thing I’ve learned free m that is to hang on to my gain.

 

[audreyh1]

This particular drop doesn't seem all that seriously, especially as we are still positive YTD.

But that doesn't mean I don't expect a long sell off at some point - I just don't know when! I've been more inclined to expect it in 2019 or 2020. YOY earnings may looks especially great this year due to tax advantages, but next year the comparisons won't have that extra boost. Plus interest rates will likely be higher.

But what do I know?

So I rebalance annually, and take advantage of tax-loss harvesting when I can.

 

[Fedup]

Positive means losing money. If you can earn 2% on MMM then anything less than that is negative. While I might not be able to prevent that, I like to minimize it.

 

[NW-Bound]

Robert Shiller just wrote an article where he feels investor comfort level may be too high. https://www.marketwatch.com/story/d...s-justify-spectacular-stock-prices-2018-09-24 A snippet

Good. Having bought a bit in the last couple of weeks, I would like to see the market come up for me to sell some and then more. This time, I will lower my stock AA to 60% or below, I swear.