elusive 5% drop

I added two two of my natural gas positions and to one co-op preferred stock today when the market was down about 700 points. Kind of a small rebalance.

I also sold a 5 contract put and one covered call. The put was @ $50 (09/24/21 exp) on OKE, a stock that got called from me @ $55 Friday. Rather than just buy it back, I placed the put sale. I'd like to buy it around $50 as I have done before. It's one of my nat gas plays.
 
Here's the video I saw last week of home buyers protesting outside an Evergrande office, when they realized the homes they had on contract will never get finished and delivered.

From a Time Magazine article:

A key feature of China’s property market is that many buyers pay the full price upfront rather than relying on mortgages.
Click to expand...


And it happened time and time again. Makes me wonder how the people keep ponying up their hard-earned savings for a contract not worth the paper it is printed on. But that's the Chinese way, where the consumers get no protection. So sad.


See: https://time.com/6099000/china-evergrande/.



 
I just ran my numbers this morning. My last peak was on 9/3, up 15.29% for the year. I'm now up 11.13%. So, I've been knocked back 4.16%. Not quite 5% yet, for me, but it's in the realm of possibility.
 
Heh, heh, looks like the market is doing what I've been too lazy to do: Rebalance my "excessive" equity position back to 30%. YMMV
 
Andre1969 said:
I just ran my numbers this morning. My last peak was on 9/3, up 15.29% for the year. I'm now up 11.13%. So, I've been knocked back 4.16%. Not quite 5% yet, for me, but it's in the realm of possibility.
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:LOL: Actually that glass is still 72% full. Pretty good.

I don't think I've ever done that kind of calculation on our portfolio. No reason to, really, as the number is not actionable. A comparison to a benchmark can be interesting and I have been doing that on some nonprofits' portfolio, but our stash is indexed so nothing really to watch.
 
OldShooter said:
:LOL: Actually that glass is still 72% full. Pretty good.

I don't think I've ever done that kind of calculation on our portfolio. No reason to, really, as the number is not actionable. A comparison to a benchmark can be interesting and I have been doing that on some nonprofits' portfolio, but our stash is indexed so nothing really to watch.
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Yeah, if I watch too much, I just might DO something. Usually, doing something has led to a mistake on my part. YMMV
 
Koolau said:
Yeah, if I watch too much, I just might DO something. ...
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Yes. The behavioral finance studies have shown that on average retail investors who watch too closely have inferior returns compared to those who do not.

It has to do with humans' risk aversion bias. The "downs" make a bigger impression on us than the "ups," leading to excessive selling.
 
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Andre1969 said:
I just ran my numbers this morning. My last peak was on 9/3, up 15.29% for the year. I'm now up 11.13%. So, I've been knocked back 4.16%. Not quite 5% yet, for me, but it's in the realm of possibility.
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You made me look. As of yesterday, I was down 3.9% from my high watermark. Thought that was bad, but the S&P was down roughly the same from its high.

However, my stash and the S&P reached their respective high points on different dates. Additionally, I am not 100% in stock, so my stuff has a higher beta than the index, and I have always kept that in mind.
 
OldShooter said:
Yes. The behavioral finance studies have shown that on average retail investors who watch too closely have inferior returns compared to those who do not.

It has to do with humans' risk aversion bias. The "downs" make a bigger impression on us than the "ups," leading to excessive selling.
Click to expand...

Heh, heh, apparently we developed those defense mechanisms back when the bears had big teeth and sharp claws instead of now when the bears are measured in points on an index. :cool:
 
Koolau said:
Heh, heh, apparently we developed those defense mechanisms back when the bears had big teeth and sharp claws instead of now when the bears are measured in points on an index. :cool:
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Yeah. Evolution has given us quite a few baked-in behaviors that are not well-suited to modern times.

Another one is the "endowment effect." This shows up in investing as "I'm going to sell it as soon as it gets back to what I paid for it."

Richard Thaler ("Misbehaving") and Daniel Kahneman ("Thinking Fast and Slow") have a lot to teach investors.
 
OldShooter said:
Another one is the "endowment effect." This shows up in investing as "I'm going to sell it as soon as it gets back to what I paid for it."
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The example given sounds to me like the concept of loss aversion.

The endowment effect is assigning a higher value to something that one owns versus something that one would want to own. The classic example I think is randomly distributing concert tickets to a class, and the holders of the ticket ask a higher price to sell than the non-holders are willing to offer.
 
SecondCor521 said:
The example given sounds to me like the concept of loss aversion.

The endowment effect is assigning a higher value to something that one owns versus something that one would want to own. The classic example I think is randomly distributing concert tickets to a class, and the holders of the ticket ask a higher price to sell than the non-holders are willing to offer.
Click to expand...
Actually I think it's both. Thaler's endowment effect experiments began with coffee mugs. https://www.coglode.com/research/endowment-effect

Fascinating stuff.
 
Koolau said:
Heh, heh, looks like the market is doing what I've been too lazy to do: Rebalance my "excessive" equity position back to 30%. YMMV
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Anecdotally, it seems like there’s almost always an autumn tumble like this. The reasons that the financial press drum up are always different, but tumble in September-October it often does.
 
Markola said:
Anecdotally, it seems like there’s almost always an autumn tumble like this. The reasons that the financial press drum up are always different, but tumble in September-October it often does.
Click to expand...

And to my credit or to my shame, I haven't even looked at my portfolio since my June 30 statements arrived (Sept. 30 is coming right up - I can wait until then to get the "bad" news.) For several years, I've not watched the financial porn channels as they are (for me) worse than nothing. I figure if the world comes to an end, I'll hear about it someplace. YMMV as always.
 
Yeah, once a month when the (paper) statements come in and I remove the old from the 3 ring binder and install the new.
 
The buy on the dip crowd didn't seem to be quite as active as I expected today. The ides of September/October?
 
I am knocked back to late August. But then, I don't track one-on-one with the S&P.
 
The drop and pop this week shows how difficult it is to time the market. I wonder how may who go out before the dump are still on the sidelines waiting to get back in and missed the pop. Could drop again, could go up, could move sideways. I have found that my crystal ball just isn't reliable enough to forecast the market movement.

I did get lucky as I put away a stash of cash (just lucky - but I'm OK with being lucky) and had dry powder to use and bought on the dip.
 
Was it a 5% drop? I'm not sure how to calculate it? The DOW? S&P? :confused:

Also curious how many bought the drop?

I missed it for two reasons. I wasn't watching and I don't have extra cash. Other than that, it would seem like a possible strategy to buy on the drop. YMMV
 
ejman said:
The buy on the dip crowd didn't seem to be quite as active as I expected today. The ides of September/October?
Click to expand...

I have some money I want to move from bonds to stocks. I moved about 1/5th of this money on Monday after the close (Vanguard MFs).

My plan is to continue doing so on the dips. If it had dropped more, or when it does drop again, I'll move more chunks over.

Mathematically this is wrong. I should just reallocate now. But (a) it's a really small amount of money (about 1% of NW), (b) it doesn't matter (I'm at <1% net WR), and (c) it makes me feel better when the market is dropping that I'm at least buying at "bargain" prices.

(I also could just spend more, which in my spreadsheet math would also fix my minor AA issue.)
 
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