Never fails in a down market: people fled in droves

[RobbieB]

I've got a full service broker and the guy never calls.

What is this "churning" you talk about?

[NW-Bound]

Quote:

Originally Posted by JDARNELL I think its good that some people ran for the exits. We need people out there saying how bad the market is to keep the irrational exuberance from returning.

I kind of like irrational exuberance, so that I can sell some more shares. When it crashes, I can buy them back.

If the market just rises steadily at 5-6%/yr at the long-term growth that Bogle says it should have, I would not get to sell or buy anything. Just hold. It's OK. Just no excitement and no fun.

[hgm735]

Quote:

Originally Posted by Lawrence of Suburbia I learned my lesson in '08. Thankfully, only took about 25% of my portfolio to cash, and got back in in '10 or so. Wasn't ruinous.

2008 was ruinous for me - took almost all of my savings out.

Now holding tight and not panicking. ...

[dixonge]

Quote:

Originally Posted by Free bird 9 years of bull market without a real correction. Churning accounts is how the brokerages make the money. You never go broke taking a profit. Its in the brokerages to churn baby churn. Or as Sarah would say drill baby drill.

Brokerages make a good bit of money on churn, this is true. But it's not anything they have to work that hard at. It's built into the system. Investor psychology. They just keep up a steady flow of 'news' articles aimed at their clients. That's all it takes. Otherwise, how did they make any money over the last 9 years?

[DrRoy]

Quote:

2008 was ruinous for me - took almost all of my savings out. Now holding tight and not panicking. ...

Good for you. NO MARKET TIMING!

[audreyh1]

Quote:

Originally Posted by Free bird 9 years of bull market without a real correction. Churning accounts is how the brokerages make the money. You never go broke taking a profit. Its in the brokerages to churn baby churn. Or as Sarah would say drill baby drill.

Where do you get that? July 2015 through Feb 2016 saw not one but two 12% drops. Those were real, and certainly counted as corrections which are defined as at least a 10% drop. So it’s been 2 years, not 9.

[donheff]

I wonder how many people bailed on Monday's drop only to jump back in on Tuesday's rise? What to do after yesterday's closing bell plummet?

[MichaelB]

Quote:

Originally Posted by audreyh1 Where do you get that? July 2015 through Feb 2016 saw not one but two 12% drops. Those were real, and certainly counted as corrections which are defined as at least a 10% drop. So it’s been 2 years, not 9.

There you go again ruining a good story with those facts and stuff. Facts vs truthiness ..

Quote:

Originally Posted by donheff I wonder how many people bailed on Monday's drop only to jump back in on Tuesday's rise? What to do after yesterday's closing bell plummet?

+1
Why does something need to be done? Why not sit on the sideline, watch the scrum, and avoid being trampled?

[donheff]

Quote:

Originally Posted by MichaelB Why does something need to be done? Why not sit on the sideline, watch the scrum, and avoid being trampled?

That is what I was espousing, albeit in code. I would have added sarcasm quotes if there were such a thing.

[MichaelB]

Quote:

Originally Posted by donheff That is what I was espousing, albeit in code. I would have added sarcasm quotes if there were such a thing.

Sorry, I missed the intent. Probably need more coffee. A minor edit to acknowledge my agreement.

One thing I haven't seen reported are "flash crash" type situations where some ETFs fall more than the value of their underlying basket of equities. I was looking for some the other day - no luck. I guess that is a sign that this is no real panic in the markets.

[redduck]

Quote:

Originally Posted by donheff I wonder how many people bailed on Monday's drop only to jump back in on Tuesday's rise?

23

[NW-Bound]

Any poster here that we know of?

Quote:

Originally Posted by MichaelB Sorry, I missed the intent. Probably need more coffee. A minor edit to acknowledge my agreement. One thing I haven't seen reported are "flash crash" type situations where some ETFs fall more than the value of their underlying basket of equities. I was looking for some the other day - no luck. I guess that is a sign that this is no real panic in the markets.

I did not know about that inverse VIX until recently. Could I call its implosion a flash? It was gone in one. XIV went from 150 to 99, then the trading stopped. When it reopened, it was down to a few bucks, and stayed down.

How could anyone bet that volatility would be low after the big stock run-up we had in the last few years?

[MRG]

Quote:

Originally Posted by NW-Bound Any poster here that we know of? I did not know about that inverse VIX until recently. Could I call its implosion a flash? It was gone in one. XIV went from 150 to 99, then the trading stopped. When it reopened, it was down to a few bucks, and stayed down. How could anyone bet that volatility would be low after the big stock run-up we had in the last few years?

Years ago I came across a father/son investment team. Dad had some money and the kid was a recent RIFF from IT. WCGW? They wrote code to predict and buy VIX options.

Daddy ran outa money before junior had debugged his code.

There's a sucker born every minute. Some folks work their whole lives to perfect it!

[RobLJ]

Supposedly XIV was a favorite of many of the hedge funds and was a trade that worked fabulously. . . . until it didn't. In their "defense" there wasn't much hint of increasingly volatility, but a 100% increase in VIX would also trigger a unfurling of the fund to the value of its derivatives.

Quote:

Originally Posted by NW-Bound Any poster here that we know of? I did not know about that inverse VIX until recently. Could I call its implosion a flash? It was gone in one. XIV went from 150 to 99, then the trading stopped. When it reopened, it was down to a few bucks, and stayed down. How could anyone bet that volatility would be low after the big stock run-up we had in the last few years?

[NW-Bound]

Quote:

Originally Posted by RobLJ Supposedly XIV was a favorite of many of the hedge funds and was a trade that worked fabulously. . . . until it didn't. In their "defense" there wasn't much hint of increasingly volatility, but a 100% increase in VIX would also trigger a unfurling of the fund to the value of its derivatives.

Even if the fund goes to zero, how does your portfolio go to zero unless you are 100% in it? I read that some individual investors had a lot in the fund, and they were wiped out.

A single-position portfolio based on that XIV? That's what they get for playing Russian roulette, and with 3 cylinders loaded at that.

[RobLJ]

I'm not sure how an individual investor could convince themselves that a single position in a double leveraged ETN or even a nonleveraged ETN was a good idea.

Now, using the credit card to buy bitcoin is different. . . . . .

[HadEnuff]

Quote:

Originally Posted by RobLJ I'm not sure how an individual investor could convince themselves that a single position in a double leveraged ETN or even a nonleveraged ETN was a good idea. Now, using the credit card to buy bitcoin is different. . . . . .

well, i just figured that if it was so sophisticated that I couldn't understand it, it just had to be a good investment.

[haha]

Quote:

Originally Posted by NW-Bound Any poster here that we know of? I did not know about that inverse VIX until recently. Could I call its implosion a flash?

Hey, on ER.org you can call anything whatever you want. What counts is that we are all good people, not that our words slavishly adhere top some old fogy meaning.

[haha]

Quote:

Originally Posted by NW-Bound Even if the fund goes to zero, how does your portfolio go to zero unless you are 100% in it? I read that some individual investors had a lot in the fund, and they were wiped out.

Margin!

[NW-Bound]

Quote:

Originally Posted by haha Margin!

Yes, indeed! I forgot.

Imagine doing margin on something as scary as that! Now, they are playing Russian roulette with 5 rounds loaded. Aye, aye, aye.

This just gets me thinking. If the recent bull market drives people to take such risk because it seems so easy to make money, and with bitcoins and stuff, even the more traditional stuff that you and I hold is also overbought by less audacious investors. Aye, aye, aye...

My stance is going to be a lot more defensive now.