Dow losing almost -1000 Friday .. when will it end? Do we get a V recovery?

Remember this sage advice:

"Don’t gamble!

Take all your savings and buy some good stock and hold it till it goes up, then sell it.

If it don’t go up, don’t buy it."
 
Turbo29 said:
Back in my twenties I was really into horse racing. For those who don't know, the odds are set in real time by the amount of money wagered on a given horse (in the US). One result of this is the track could care less who wins, they take all the money bet, take their (and the government's) cut off the top and then just redistribute what's left to the winners.

The interesting thing was that statistically the horse with the most amount of money bet was the most likely to win; second highest amount of money, second most likely to win, and so on down to the horse with the least amount of money bet being least likely to win. The betting public knew in aggregate which was the best horse; all the known information was baked into the betting. Sort of like the market.

Why not bet on the favorite each time? Well unfortunately even though they won the most often, they still lost ~70% of the time and when they did win, it didn't pay enough to make up for the losses.
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That's why you always bet the favorite to show. Small return, but usually positive.
 
24601NoMore said:
Many people (me included) believe earnings estimates are WAY too high and will start to come down. In fact, we're already starting to see that in guidance from companies that have announced results already.

If earnings estimates are indeed too high and have to come down, forward PE won't be 18X and will be more like 20-25-30X.

I personally believe that's a big part of why the selloff has happened and is likely to continue. One estimate I saw (from Morgan Stanley) was forecasting SPX 3,200 - 3,600 near-term. Whether that happens or not is TBD, but it's quite plausible if earnings forecasts continue to weaken.
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Yes, companies are revising their earning projections downward. Inflation due to higher costs of energy and raw materials hurts their profitability.

Will anyone be surprised if the market drops tomorrow? I am kicking myself for not selling more covered call options today, when I had the chance. I did sell some, but could have done a whole lot more.
 
luckydude said:
Powell is the same guy who last year said that inflation was transitory despite mounting evidence to the contrary, and look how that has turned out. The man has very little credibility at this point and I wouldn't take anything he says at face value.
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Duh, inflation is still transitory, and it is going down in some areas, and it is transitory because the pandemic is not quite over and no one (not Powell) predicted the Russian-Ukraine war causing oil to spike in February - the War was not in anyone's economic model - including yours. No one can see the future, and it's not credibility, it's just war cannot be forecasted. The war is causing global inflation due to oil and new supply chain shortages - not Powell's lack of sight. So, it's not something the Feds could not include in their forecast.
 
cyber888 said:
Duh, inflation is still transitory, and it is going down in some areas, and it is transitory because the pandemic is not quite over and no one (not Powell) predicted the Russian-Ukraine war causing oil to spike in February - the War was not in anyone's economic model - including yours. No one can see the future, and it's not credibility, it's just war cannot be forecasted. The war is causing global inflation due to oil and new supply chain shortages - not Powell's lack of sight. So, it's not something the Feds could not include in their forecast.
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Here's the monthly inflation data since Apr 2021:

Apr 4.2%
May 5%
Jun 5.4%
Jul 5.4%
Aug 5.3%
Sep 5.4%
Oct 6.2%
Nov 6.8%
Dec 7.0%
Jan 7.5%

All this happened before the war. Oil prices also started rising late last year. It's convenient in certain circles to blame inflation and higher oil prices on the war in Ukraine, but while the war certainly exacerbated the problems, it is not the cause of them.

Powell certainly couldn't have predicted the war. But he had 10 months of trailing inflation data to digest prior to the war and decided to do nothing until March. He didn't create the problem but by his lack of timely action, he has certainly made it worse. Last fall, he said that inflation was transitory, and fast forward 6 months, he's now scrambling by doing 50 bps rate hikes with more to come. So no, he has no credibility at this point.
 
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luckydude said:
Here's the monthly inflation data since Apr 2021:

Apr 4.2%
May 5%
Jun 5.4%
Jul 5.4%
Aug 5.3%
Sep 5.4%
Oct 6.2%
Nov 6.8%
Dec 7.0%
Jan 7.5%

All this happened before the war. Oil prices also started rising late last year. It's convenient in certain circles to blame inflation and higher oil prices on the war in Ukraine, but while the war certainly exacerbated the problems, it is not the cause of them.

Powell certainly couldn't have predicted the war. But he had 10 months of trailing inflation data to digest prior to the war and decided to do nothing until March. He didn't create the problem but by his lack of timely action, he has certainly made it worse. Last fall, he said that inflation was transitory, and fast forward 6 months, he's now scrambling by doing 50 bps rate hikes with more to come. So no, he has no credibility at this point.
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100% agree, Powell was wrong then and now is late to the party trying to catch back up. The war in Ukraine is NOT the root of the problem, but I will agree it is a small contributing factor in only the last 2 months. While oil has spiked in last 2 months, it had been going up on a consistent basis since beginning of 2020; long before the Ukraine war. All of that beginning of 2020 and since was mostly due to govt policy changes against oil and favoring renewable. Stating the war in Ukraine is to blame is political deflection for the real issues.

Bacxk to the original topic at hand, looks like the short lived spike yesterday has reversed completely today so far.
 
Markets getting absolutely hammered again today. Dow down almost 1000 - AGAIN. All gains from yesterday on all indices have been vaporized.

I stupidly let groupthink influence my decision making process at end of last year and am absolutely KICKING MYSELF for not selling more at that time than I did (literally only about 1%).

I know stocks don't go up 27% a year "normally". I was tempted to take profits and sell most everything but fell prey to the "stonks always go up over time, YEAH BABY!!" mantra that permeates ER and so many other areas where people share their opinions.

My gut tells me "this time is different" and we're about to experience a bear market that will literally take a decade or more to recover from.

Really stupid on my part to hold when I was really confident that the party could not, and would not continue, and to ignore such clear economic indicators that said to cash in while the cashing in was good.

We're very likely headed to the mid or low 3s on SPX, gang. Hope everyone has the stomach for it, cuz I sure don't at this point in life. Then there's bond funds..yeah.
 
With inflation roaring at 9% or more though can you afford to pull all of your money out of the market and just hope that in the next decade you won't lose half your purchasing power anyway?
 
Fermion said:
With inflation roaring at 9% or more though can you afford to pull all of your money out of the market and just hope that in the next decade you won't lose half your purchasing power anyway?
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If the choice is..pull $$ out of the market, put them in MYGAs or CDs earning 3.5% and "lose" purchasing power at -5% or so, OR Door #2 - lose 50% in the market that could take 5-10 years to get back to "even", I'll take the -5% a year loss in purchasing power every single day.

Plus, if you're even halfway active vs. passive, you can always buy in lower. It's pretty clear we are far from the bottom. (No, I don't have a crystal ball, as I'm sure someone will say..but TA, sentiment and basic economic indicators are all screaming "run for your lives!". I stupidly ignored them weeks/months ago and posted as much at the time).
 
To define the causes of inflation without including the vastly-increased money supply starting May 2020 is to miss the forest because of the trees, no?

 

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I sense some of the same symptoms of growing despair we saw on the forum in 2008. "This time is different", "run for your lives", and sentiments of doom & gloom.

Time to post this once again and ask the question, "Where are we?"
 

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Good post, REWahoo. Somewhere on the Fear/Desperation/Panic part of the curve, I’d say.
 
The Fed totally messed this up and are still messing it up. First a measly 0.25%, then 0.50%, too little too late. The bonds are thinking the Fed isn't serious and the long rate are popping. We need 6% ASAP and that is just to start.
 
Then I revise to “Desperation.” I’m going for a walk, so someone let me know when we’re back to Optimism.
 
REWahoo said:
I sense some of the same symptoms of panic we saw on the forum in 2008. "This time is different", "run for your lives", and sentiments of doom & gloom.

Time to post this once again and ask the question, "Where are we?"
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This time IS different, for all the reasons I've posted multiple times.

There's strongly credible analysis out there that says SPX 2,400 is entirely possible.

How long do you think it's gonna take to recover from SPX 2,400? Or even SPX 3,600?

Not sure about the rest of you, but I don't want to be "underwater" for 5-10 years. And that could easily happen.

To make things worse, we have the situation with rising yields and decimated bond funds.

Markets dropping 4+% in a single day should tell you guys all you need to know about where people think prices are headed. Ignore that and cheerlead stocks if you will, but the smart money is getting the heck out as selling clearly tells us. Because people don't sell at SPX 4,125 unless they think it's going a lot lower.
 
24601NoMore said:
Markets getting absolutely hammered again today. Dow down almost 1000 - AGAIN. All gains from yesterday on all indices have been vaporized.
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OMG, you're right! I just checked and by now, (11 AM Central) the Dow is down 1135 points already.

OK, so that's a *strong* signal that this is not the time for me to do anything but sit tight, hang on, and wait. We sure do live in interesting times, though! Nobody can deny it. :popcorn: Maybe by the end of the day, it will be up a thousand! Who knows. At least we'll never get bored with all this volatility. :popcorn:

Thank heavens for SS at times like this.
 
Powell's legacy will contain phrases like this from his 2021 policy statements:

...."this inflation is transitory"

....."we are going to let inflation run hot"

Beautiful! ;)
 
Before you sell everything you might want to take a few deep breaths and a couple of chill pills.
 
24601NoMore said:
Plus, if you're even halfway active vs. passive, you can always buy in lower. It's pretty clear we are far from the bottom. (No, I don't have a crystal ball, as I'm sure someone will say..but TA, sentiment and basic economic indicators are all screaming "run for your lives!". I stupidly ignored them weeks/months ago and posted as much at the time).
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Yeah, see, I thought that back in 2020, when S&P500 had recovered to 3600 yet we still had big supply problems and the start of inflation. I pulled out a few hundred k and then the market went from 3600 to 4600. Maybe your crystal ball works better than mine, but I was pretty convinced we had topped out at 3600 back then.
 
I expect something will be done to rally the market closer to the elections.
 
Fermion said:
Yeah, see, I thought that back in 2020, when S&P500 had recovered to 3600 yet we still had big supply problems and the start of inflation. I pulled out a few hundred k and then the market went from 3600 to 4600. Maybe your crystal ball works better than mine, but I was pretty convinced we had topped out at 3600 back then.
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Yes, I sold a lot of individual stocks when the market was low in 2020 to move into an index ETF. I moved a big chunk but then chickened out and moved some into a CD. Now I need to figure out when to move that money back. I really wish I had just stuck to my original plan and moved it all into an index. We have a long way to drop to get back to the 2020 lows.

I was sure in 2020 that we would be in a world of financial hurt with the pandemic and supply chain problems and that the market would crash and stay down for years.
 
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