[HN Gopher] Trading halted as U.S. stocks plummet
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Trading halted as U.S. stocks plummet
Author : batmenace
Score : 485 points
Date : 2020-03-09 13:41 UTC (9 hours ago)
(HTM) web link (www.axios.com)
(TXT) w3m dump (www.axios.com)
| [deleted]
| sebastianconcpt wrote:
| I wonder how different things would be if instead of those
| stepped halts, a super high granular delay is injected into the
| system. Like instead of halting, making it go on but in "slow-
| motion". And depending on the strength of the drop, the slow-
| motion factor to inject in the system.
|
| I say this because halting tries to "cool down" emotion but it
| still "feels like" panic while making it all go slow would "feel
| kind of crappy yet normal" hence "buying" time to cool things
| down while still working.
|
| Wouldn't that reward going up and penalize/protect going down?
| Seenso wrote:
| > I say this because halting tries to "cool down" emotion but
| it still "feels like" panic while making it all go slow would
| "feel kind of crappy yet normal" hence "buying" time to cool
| things down while still working.
|
| I don't think so. Halting would allow the traders to get a cup
| of coffee and switch to another mental gear. A slowdown would
| probably just keep them in gear and result in a lot of anxious
| refreshes and attempts to wrestle the system.
| sebastianconcpt wrote:
| Immediately yes, it will keep them in gear, but it will have
| no consequence because the output would come forcibly
| delayed, so the result will come not so immediately. Hence
| being anxious has no payout and being cool does.
|
| Wouldn't be that with time, the next generation of traders
| for example, they will relax more when things feel bearish
| and put the "normal gear" when it feels bullish?
| Seenso wrote:
| > so the result will come not so immediately. Hence being
| anxious has no payout and being cool does.
|
| That's assuming people are way more rational and less
| emotional than they really are.
| sebastianconcpt wrote:
| Actually no because the output (reward or penalty) is not
| selective on your rationale. You can be bullish or
| bearish. The the input and the output are both allowed,
| just working at asymmetrical speeds (slower for bearish).
|
| Wouldn't overall cause a "sustentation effect" similar to
| the asymmetrical speed in the airflow in the wings of a
| plane?
|
| I'm not convinced myself of this, but the idea made me
| curious and maybe worth of experimenting with in a
| limited context?
| bawana wrote:
| How valid is it to look to the past when there is so much cash
| floating around? With so much more demand for roi, I would think
| that in itself would bias the markets up. Almost like an
| invisible Keynesian injection eager to happen
| LatteLazy wrote:
| Asia sneezes and America gets a cold...
| frgtpsswrdlame wrote:
| Currently only 6% down, perhaps (anecdotal) evidence that halts
| work?
| endorphone wrote:
| Days with a large pre-market drops often follow this pattern.
| As the end of the day approaches the selling often becomes
| panicked again.
| jsf01 wrote:
| Interesting. Is that based on your experience or is there
| somewhere I can read more on that trend?
| hogFeast wrote:
| Yep, that is due to order flow from retail investors. They
| always put their orders in at the open (that is why Mondays
| can be risky) or at the close.
|
| You can see this by looking at the difference between the
| return on stocks in the first/last hour against the return
| over the rest of the day. I have no idea if this effect still
| exists today but you used to be able to print money from this
| (and I am sure it still works in places like China with lots
| of retail investors).
| geerlingguy wrote:
| Either that or frantic buying at the end. Impossible to
| predict.
| bilekas wrote:
| Genuine question: They can just do that ? Issue a trading halt
| because they don't like the direction it's going ?
|
| > "There's a reason why they have those circuit breakers -- it's
| to give people time to come back from panicked feelings,"
|
| Seems strange that the market is kinda able to be manipulated
| like that. I'm not saying this is a bad move, just surprised that
| someone can do it.
| danmaz74 wrote:
| IIRC this was instituted after the crash of 1987, when they
| realised that automated trading could set off a crazy plunge.
| At any rate, it's public knowledge, not some sort of ad-hoc
| manipulation.
| wycy wrote:
| When you think about it, the whole market sort of follows these
| arbitrary-seeming rules. The actual prices of stocks are
| constantly changing 24/7/365, but the market is only open from
| 9:30am-4:00pm on weekdays excluding holidays.
| airstrike wrote:
| The _exchange_ is open from 9:30am to 4:00pm, but you and I
| are free to trade amongst ourselves at midnight on a Friday
| if we 'd like
| wycy wrote:
| Aren't we also free to trade amongst ourselves during a
| market circuit breaker event?
| airstrike wrote:
| Yes, but it's much, much slower to trade directly than
| through a market-maker in the exchange
| lbotos wrote:
| how does one actually technically go about that? I have
| no plans to do it, just been curious about it over the
| past few months.
| will4274 wrote:
| You ask your broker for the physical copy of the stock
| certificate. The buyer asks their bank for some physical
| cash. They hand you the cash, you hand them the stock
| certificates. Same as buying or selling anything else,
| basically.
|
| Of course, for a transaction of a certain value, you
| wouldn't want to hold the cash or certificate, so instead
| you write out a contract and sign it at the moment of
| exchange. Which is the same as buying or selling
| something else (e.g. car, house) beyond a certain value.
| jkulubya wrote:
| In my part of the world, tell your broker that you've
| done a deal with someone, tell that someone to tell their
| broker that they done a deal with you. The brokers should
| be able to report it to the exchange for publishing. Then
| they should see through the clearing and settlement. Of
| course your brokers might feel that your little deal is
| just not worth the hassle, and ask you to take your
| business elsewhere.
| caymanjim wrote:
| > The actual prices of stocks are constantly changing
| 24/7/365
|
| They are not. For any meaningful interpretation of "actual",
| the only price is the market price during trade hours.
| Speculative overnight agreements between private parties at
| agreed-upon values are contract agreements. The stock price
| doesn't change between market close and open.
| totalZero wrote:
| What is the "market price"?
|
| Is it the bid? Is it the offer? Is it the last trade? The
| VWAP?
|
| The stock market only tells you where shares have traded
| and where the order book would trade them. There is no
| observable "actual price."
|
| A useful way to think about the price is to imagine a
| theoretical fair value that is always changing, and a
| theoretical bid/offer that is always floating around the
| fair value.
|
| This theoretical fair value is not posted anywhere. Some
| people give the name "price discovery" to the process of
| identifying where the theoretical fair value lies. With
| liquid stocks like AAPL on calm days, price discovery is a
| simple affair. With other assets, price discovery can be
| more opaque.
|
| When the stock is trading steadily at high volume, then
| sure. The last trade is a great representation of the
| theoretical fair price. But in choppy trading, when there
| are dislocations between related assets and spreads are
| wide? The last trade is not representative of the whole
| picture.
|
| Consider assets whose transactions must be reported to
| TRACE. If you are long, you have an incentive not to sell
| aggressively because a downtick will mark down the value of
| your position. So what's the fair price? Is it the last
| trade? Not necessarily, because that trade may not
| represent the current state of the market.
|
| Also, there is generally some illiquid trading taking place
| pre-/post-market. And US futures trade overnight in other
| markets. And companies may be exposed to assets that trade
| outside of US trading hours (eg, refiners that have storage
| tanks full of crude, or companies that have currency
| exposure).
| xenocyon wrote:
| It turns out nobody really trusts the "free market" :)
| war1025 wrote:
| I trust electricity to be generally a safe and efficient way
| to improve my life, but I also sure as hell want circuit
| breakers in place to keep my house from burning down.
| oh_sigh wrote:
| Yes
| darawk wrote:
| I believe it's true for the other direction as well, it's just
| pretty rare to see a 7% upward move in a single day. I mean,
| it's rare to see it on the downside too, but not as rare.
|
| Limit up/down rules are not discretionary. They're circuit
| breakers that fire deterministicly.
| _se wrote:
| It's important to note that limit up/limit down (LULD) is not
| the same thing as the circuit breakers. They have a very
| specific meaning and operate independently (with much more
| complicated rules as well). You probably know this, but
| others reading your comment will probably not!
|
| There is also no automatic upside circuit breaker.
| _se wrote:
| "They" don't do anything - this is called a circuit breaker,
| and is automatically triggered. There are three breakers:
|
| L1 - 7% down before 3:25pm - 15 minute halt
|
| L2 - 13% down before 3:25pm - 15 minute halt
|
| L3 - 20% down - halted for the remainder of the day
|
| Only a single L1 and a single L2 breaker can occur in a single
| day, e.g. the market falling below 7%, rising, then falling
| again will not trigger a second L1 breaker, but falling to 7%,
| up to 5%, then down to 13% would trigger an L2.
|
| FYI this is the kind of thing you have to know to become
| registered as a securities representative.
| bilekas wrote:
| Okay thats fine, but who implements/decides these circuit
| breakers ? And what purpose to they serve only to limit a
| mass sell off ?
|
| Nice point about only 2 daily. But still seems crazy.
| emberswitch wrote:
| The exchange does. Exchanges are companies too.
| allovernow wrote:
| AFAIK people can still trade in private, just not on the
| NYSE.
|
| So don't worry, it's only us regular guys that get screwed.
| Big firms can still contact each other to make deals.
| airstrike wrote:
| > So don't worry, it's only us regular guys that get
| screwed. Big firms can still contact each other to make
| deals.
|
| And when everyone is selling, who do you think is buying?
| No one is moving much of anything for those 15 minutes
| allovernow wrote:
| How do you sell stock if no one is buying? If people are
| selling, others are buying.
| bluGill wrote:
| Market makers are buying - their job is to always buy or
| sell stock from everybody. They (generally computers, but
| humans traditionally) will always buy your stocks, or
| sell you stocks. Their algorithm is simple: buy for $.10
| (or some other tiny number) less than you sell - if the
| amount of stock owned is too low raise the price, if the
| amount is too much lower the price. They pretty much
| always make money in the long run.
| tialaramex wrote:
| For agreeing to do this (and having the _capital_ to do
| it) the Market Maker for a stock typically secures
| certain benefits from the market in respect of that
| stock.
|
| For a very popular stock on a typical day the market
| maker isn't really necessary. Your trades would
| absolutely execute immediately based on positions other
| people wanted.
|
| When your stock is more thinly traded, or when things are
| a bit frantic the market maker is your saviour. When
| everybody and their dog is selling, the market maker will
| buy anyway.
|
| Under some circumstances market makers can signal they
| intended to cease to make a market for specific stocks.
| When the market makers exit, all hobbyists should make
| sure they are gone too. Once there is no market maker for
| the stock you're holding, you will need somebody else to
| actually take the other side of your trades. "Prices"
| without a market maker are just a guess, there may be
| nobody actually promising to take your stock at any
| price, even if the last trade was for $1.40 your stock
| might be not sell even at 14C/. This makes for an
| exciting space in which to gamble with money you can
| afford to lose if you really know what you're doing,
| otherwise it's just a way to throw money away.
| thawaway1837 wrote:
| The idea that the little guys largely have a chance
| actively trading in a fast moving market like today's
| where they are gonna be crushed by algos is ridiculous to
| begin with.
|
| If anything this is helps the little guy, by not
| completely crushing their stock value, and hurts the big
| guys who can outlast huge swings (something little guys
| cannot).
| evanpw wrote:
| Nope, trading stops everywhere. Even Canada stops trading
| when the US has a market-wide halt.
| mumblemumble wrote:
| Having worked for one of the (smaller) big firms, and had
| a chance to watch from the sidelines and seen how days
| like this work: No, these circuit breakers don't screw
| the regular guys. They discourage the regular guys from
| screwing themselves.
|
| There are a lot of firms whose core business strategy is
| to keep a level head and take advantage of people who
| panic and (over)react on days like this. They get _damn_
| rich doing it, too.
| allovernow wrote:
| > They discourage the regular guys from screwing
| themselves.
|
| If you're a little guy who believes that, say, 2019ncov
| is about to tear the world a new asshole, that's probably
| a decision you'd like to make for yourself.
|
| I don't doubt what you're saying, but it's a matter of
| perspective. Sometimes the "panic" is the correct
| reaction. We're sitting on top of a perfect storm which
| is shaping up to be a massive potential black swan. And
| with the current circuit breakers, trading is only
| interrupted for something similar in concept to "the
| 99%".
|
| Across all indicators, too! Oil price, US markets,
| international markets, t-notes, gold price, and a bunch
| I'm probably not aware of because I'm not a professional
| investor. China just shut it's economy down for two
| weeks. Long term outlook is rightfully poor.
| candiodari wrote:
| But that exactly is one of those fallacies. If 2019ncov
| "tears the world a new ..." then your shares are going to
| be worth about the same as bills in your hand: nothing.
| Nobody will seriously risk their health for money.
|
| And what's the rational thing to do in such a case? Let's
| say you're at a poker game. And you have a deal: you
| lose, you get shot, you win, you get your winnings. What
| is the rational thing to do?
|
| You should go all-in. It is one of the very few cases it
| is actually rational to do that.
| wbl wrote:
| You can take that position after we all wait 15 min and
| take a breath.
| kortilla wrote:
| If you're a little guy that truly believed that, you
| wouldn't have waited until the panic to happen to sell
| then.
| [deleted]
| karlkatzke wrote:
| > Sometimes the "panic" is the correct reaction.
|
| Panic is almost never the correct reaction. Deciding that
| there's going to be a downturn and you should prepare
| yourself for it financially is one thing, but under what
| circumstances would it be optimal for you as an
| individual to panic-sell?
|
| In my mind, panic is the thing you do when you realize
| that you haven't prepared. That you don't have enough
| resources for an extended downturn, that you're
| financially over-leveraged, and that you are in danger of
| losing your home and being unable to feed yourself and
| your family. There are TONS of people who are
| experiencing this right now in China and Italy, and many
| others of us who will be experiencing it the next few
| weeks in the rest of the world.
|
| But panic also implies that you don't have time to fix
| that, and there's nothing you can do as an individual to
| change it. If that's the case, you probably don't have a
| lot of investments in the stock market anyway. Or if you
| do, and you're over-leveraged in the markets because you
| were gambling with your money instead of investing with
| it, then yes, you're panic-selling right now.
| bluGill wrote:
| Panic sell is the correct thing when your doctor gives
| you a short time to live. Since your money will be
| worthless no matter what happens you may as well get it
| all now and spend it on whatever can buy a moment
| happiness.
|
| There is an exception if your religion lets you take your
| stock with you. I don't believe in one, but I guess if
| you want to.
| [deleted]
| umanwizard wrote:
| How exactly are you getting personally screwed by a
| 15-minute stop in trading?
| totaldude87 wrote:
| https://www.nasdaq.com/articles/market-wide-circuit-
| breakers...
| londons_explore wrote:
| Really it's just saying "the market is now closed". But you
| can still sell those securities on other markets or direct
| to someone who wants to buy or sell.
| [deleted]
| HolyLampshade wrote:
| Mass sell offs tend to create unorderly markets, which is
| not beneficial for anyone.
|
| The concept was introduced in US equities after the '87
| crash, but was only consistently implemented for NYSE-
| listed stocks. In '13 these were made consistent and market
| wide (thus MWCB), set against a widely published value of
| the S&P (so that the control was predictable; thus how it
| executed today).
|
| FYI, there are also bidirectional halts that exist intraday
| (Limit-Up/Limit-Down) that serve a similar purpose and
| control rapid, uncontrolled movements in individual stocks.
| These are also defined in exchange regulation and are well
| defined so that they are predictable.
| rwmj wrote:
| _> Mass sell offs tend to create unorderly markets, which
| is not beneficial for anyone._
|
| It's beneficial for people who want to buy stocks cheaply
| or if we truly believe that markets are about price
| discovery.
| HolyLampshade wrote:
| > markets are about price discovery
|
| Exactly, and when you have an unorderly market, price
| discovery becomes problematic.
|
| It's the same reason the single stock LULD bands exist
| (which put the brakes on both rapid downward _and_ rapid
| upward movement). Stopping for 15 minutes (or 5 in the
| case of a LULD pause) is not detrimental to the process
| of establishing orderly price discovery.
|
| In the event a stock is going to keep rising or falling
| due to legitimate changes in valuation it will continue
| to do so (look at NASDAQ's halts page today to see stocks
| that have hit their bands multiple times).
| leetcrew wrote:
| > we truly believe that markets are about price
| discovery.
|
| this is not incompatible with the believe that prices
| over a single day (or hour) can be dangerously noisy.
| jrockway wrote:
| > if we truly believe that markets are about price
| discovery
|
| I think you can discover the price tomorrow.
| bilekas wrote:
| > Mass sell offs tend to create unorderly markets
|
| So are we saying the market will be perpetual because
| it's not allowed to fail ?
|
| At what point does the
| https://en.wikipedia.org/wiki/Pareto_efficient not apply
| ?
|
| If it's manipulated, the efficient seems moot.
| azernik wrote:
| Pareto efficiency does not apply, because it is a
| theoretical construct that assumes perfectly rational
| actors. It's useful for thinking about the market, but
| not an actual law.
|
| (For a more humorous statement:
| https://www.youtube.com/watch?v=oap6_U8-HvI)
| isoskeles wrote:
| > Only a single L1 or L2 breaker can occur in a single day.
|
| Then why does L2 exist? It seems redundant, L1 would get
| triggered before L2, and only one can occur in a single day,
| so why have L2 at all? What am I missing here?
|
| Edit: Also, anyone who downvoted me for posting the same
| question as someone at the same minute, you know what to do.
| kick wrote:
| No matter how much you didn't deserve downmodding,
| complaining about them only invites more. You have a better
| chance of recovery by not bringing them up, and the News
| Guidelines ask that you don't.
|
| _Please don 't comment about the voting on comments. It
| never does any good, and it makes boring reading._
|
| https://news.ycombinator.com/newsguidelines.html
| rat9988 wrote:
| Your paragraph was a lot more annoying than his sentence.
| dang wrote:
| It's true that such comments are annoying, but they're
| necessary as a feedback mechanism to regulate the site.
| Otherwise the guidelines would have negligible effect.
|
| They're more tedious to write than to read, if that helps
| at all.
|
| https://hn.algolia.com/?dateRange=all&page=0&prefix=true&
| que...
| Der_Einzige wrote:
| I just gave him an upvote because that rule is stupid and
| should be changed. No, you SHOULD call people out for
| this BS
| _se wrote:
| See my other response to a similar comment - I will edit
| the original.
| isoskeles wrote:
| Makes sense, thanks.
| [deleted]
| Frost1x wrote:
| To address OPs point, someone _did_ do this. Someone (or more
| accurately, a lot of people) stepped in and introduced an
| artificial construct that constrains trading under certain
| conditions.
|
| It's not intrinsically a "bad" thing per se and it was
| something already established long before the current set of
| conditions arose. But none the less, it's an artificial
| constraint introduced on trade systems that is _likely_
| beneficial.
| SubiculumCode wrote:
| To those who believe that all markets are rational and
| efficient, that interventions cause more harm than good, y,
| an enforced halt seems to be anti-capitalist.
|
| But we are not rational actors. We can get into panics.
| Panics can stir more panic. Forced breaks allow for the
| market to reassess data for a few minutes without fear of
| loss for not acting immediately.
| bo1024 wrote:
| You would think, by the same arguments, that the stock
| market could always just trade at 15-minute intervals.
| Why not? But people go crazy when researchers (e.g. Eric
| Budish at U. Chicago) suggest lowering the frequency to
| milliseconds, let alone seconds or minutes.
| [deleted]
| twic wrote:
| There are different, additional, objections to that. For
| example, it would make life rather difficult for market
| makers, which would mean a lot of the liquidity would dry
| up, which means the spread would widen out, which means
| trading would be more expensive.
|
| I think there is scope for designing market mechanisms
| which have the volatility-reduction effects of periodic
| auctions, but which still allow market makers to hedge. I
| hope people are working on those.
| odyssey7 wrote:
| And then there are questions like: Should trading be
| convenient? Inexpensive?
| phs318u wrote:
| > which means trading would be more expensive
|
| And how is that a bad thing in and of itself? It would
| presumably knock out some of the ultra-low-margin HFT but
| so what? If it would have the effect of turning the stock
| market into less of a roulette table, with fewer gamblers
| compared to bona fide investors - isn't that a good
| thing?
| tomatocracy wrote:
| The circuit breakers also have an important function in
| relation to the role algorithmic traders play - it allows
| a bit more time for humans to step in and either switch
| off or tweak the algorithms if appropriate.
| jagged-chisel wrote:
| > Only a single L1 or L2 breaker can occur in a single day.
|
| I don't follow. You'd hit 7% before 13%, so how would L2 ever
| execute?
| _se wrote:
| Sorry - I meant that neither L1 nor L2 can trigger twice in
| a day, E.g. down 8%, up 2%, down 9% does not trigger a
| second L1 breaker.
| rococode wrote:
| Especially relevant today since after hovering around -5%
| for most of the session after the first halt, right now
| we're at -6.9% and threatening to push below 7% again.
| jagged-chisel wrote:
| > neither L1 nor L2 can trigger twice in a day
|
| This phrasing makes sense. Thanks!
| rogerkirkness wrote:
| This means each execute once, not mutually exclusive.
| patleeman wrote:
| I'm pretty sure these need to be hit consecutively.
| [deleted]
| [deleted]
| [deleted]
| TeMPOraL wrote:
| As I understand GP: L1 and L2 can each fire only once per
| day. So if you hit L1, and after a brief rebound the market
| still goes down, you'll hit L2. If after that it _still_
| keeps falling, it 'll get stuck at L3.
| seanmccann wrote:
| We hit 7% earlier today. If we hit 7% again today, nothing
| will happen. If we hit 13% we hit L2.
| jilles wrote:
| L1 hit today and there was a 15 minute halt this morning.
| If the S&P continues to plunge and hit -13% during today,
| there will be another 15 minute halt.
| ericmay wrote:
| It's only a 15 minute halt. So if you hit 7% and trigger
| L1, trading is halted for 15 minutes, but then it resumes.
| If it drops down to 13% another 15 minute trigger happens.
|
| But each of the L1 or L2 can only occur in a single day,
| not one or the other. You can hit L1, and then later hit
| L2, but you can't hit L1 twice.
|
| Does that help clear things up?
| noja wrote:
| Do they have circuit breakers in the other direction?
| oarabbus_ wrote:
| Why would you need them?
| kasey_junk wrote:
| No. This is just one of several places where the laws
| systematically favor the bulls.
| apcragg wrote:
| You are wrong about that. See T5, T6, and H10 halts.
| anigbrowl wrote:
| Those seem to me be to be directed more at price
| manipulation of individual stocks (eg pump and dump
| schemes) than restraining enthusiasm across the whole
| market. I'm open to correction on this (and will not
| demand a halt).
| kasey_junk wrote:
| The T5/T6 are not really directional circuit breakers
| though. They are momentum breakers that don't bias
| towards downward momentum.
| SilasX wrote:
| Because my google-fu is so bad ... has a major exchange
| ever actually stopped trading because it gained too much?
| 3fe9a03ccd14ca5 wrote:
| T5: Single Stock Trading Pause in Effect Trading has been
| paused by NASDAQ due to a 10% or more price move in the
| security in a five-minute period.
|
| T6: Halt - Extraordinary Market Activity Trading is
| halted when extraordinary market activity in the security
| is occurring; NASDAQ determines that such extraordinary
| market activity is likely to have a material effect on
| the market for that security; and 1) NASDAQ believes that
| such extraordinary market activity is caused by the
| misuse or malfunction of an electronic quotation,
| communication, reporting or execution system operated by
| or linked to NASDAQ; or 2) after consultation with either
| a national securities exchange trading the security on an
| unlisted trading privileges basis or a non-NASDAQ FINRA
| facility trading the security, NASDAQ believes such
| extraordinary market activity is caused by the misuse or
| malfunction of an electronic quotation, communication,
| reporting or execution system operated by or linked to
| such national securities exchange or non- NASDAQ FINRA
| facility.
|
| H10: Halt - SEC Trading Suspension The Securities and
| Exchange Commission has suspended trading in this stock.
| jeffdavis wrote:
| I don't know if that's a good way to look at it. It's not
| just "bears" selling when you have a big drop. It's
| people who need the money for something and are worried
| about liquidity.
|
| Trading halts may or may not fix that, but that's their
| purpose.
| kelnos wrote:
| > _It 's people who need the money for something and are
| worried about liquidity._
|
| Then they're doing it wrong. You shouldn't have money
| that you _need immediately_ in the stock market. Yes,
| people will do that anyway, but I 'm not sure we should
| cater to those people when the health of the markets as a
| whole are at stake (assuming circuit breakers are
| effective; up for debate).
| kortilla wrote:
| Because bulls and bears aren't equal. The laws _should_
| be favored towards not destroying the economy needlessly.
| munk-a wrote:
| Because extremely bull markets are a strong indicator of
| a bubble the laws should be equal to prevent bubble
| bubble bubbling.
| shawnz wrote:
| Are they? The market reaches all time highs almost every
| year, so would you say that we spend most of our time in
| bubbles?
|
| It is actually expected that the market will typically go
| up, not down. Otherwise there would be no difference
| between investing and gambling.
| munk-a wrote:
| It's a question of velocity - markets go up and down all
| the time... but speed breaks to prevent the market from
| going down to fast also need to prevent the reverse case
| - some sudden inexplicable and extreme price spiking.
|
| Basically - we should protect against any really dramatic
| sudden changes as chances are that something is wrong.
|
| In the last year the S&P grew ~22% prior to this recent
| drop, that's fine... and on a day swings in the low
| single digits might be fine. But if we woke up tomorrow
| and the S&P had recovered the pre-drop value and then
| grown 20% over that price - something weird is clearly
| going on and we should be worried.
| jasonmp85 wrote:
| This isn't the economy
| ghouse wrote:
| Believe this is not a "law" but a "policy" Regardless,
| your sentiment is spot-on.
| kasey_junk wrote:
| Its an enforcement policy directed by the SEC. Its
| effectively a law, you can't opt out for instance.
| hawaiianbrah wrote:
| Well, you can choose not to follow laws (but you'll face
| the consequences if caught!).
| EthanHeilman wrote:
| You can easily sell a market to zero, however it is much
| harder to buy a market to infinity.
| awb wrote:
| * It's very difficult to sell a market to zero, but
| impossible to buy it to infinity.
| EthanHeilman wrote:
| Has any stock or financial instrument ever been valued at
| infinity? I don't know enough about finance to rule that
| out and it seems unlikely but at least possible.
|
| For instance here is a toy example of unbounded value:
| Consider a market for a stock in which the only market
| participants are two bots with the behavior that they
| trade the stock back and forth at an asymptotically
| increasing price. The buys are backed by loans from a
| zero interest government bank. Since the bank is
| efficiently hedged to losses. Both sides of the trade owe
| the bank, the seller can also pay the bank the money the
| bank needs to back the buyers loan. Thus, the bank could
| allow both these loans to go to infinity causing the
| value of the asset to approach infinity.
|
| Similar things have happened with flash loans in the
| cryptocurrency space.
| shawnz wrote:
| At what point does a finite increase of the price turn it
| from a finite number into infinity?
| forkexec wrote:
| No. Money is a scarce resource and modern algorithmic
| trading has limits to prevent another LTCM.
| nullc wrote:
| What is the price of a share that isn't listed for sale?
|
| Emptying out all the asks is a thing that happens.
| rafiki6 wrote:
| I thought these circuit breakers actually existed to stop
| algo's from going haywire?
| throwsprtsdy wrote:
| They exist to stop any participant, human or electronic,
| from going haywire.
| asdfman123 wrote:
| "Let's all take a deep breath, y'all."
| bluGill wrote:
| They have existed since the crash of 1929. There were no
| algorithms in place then. The goal was just to force human
| traders caught up in the moment to take a break and stop
| panicking.
|
| I assume they have been tweaked since 1929, but they
| started with the crash back then.
|
| Edit: someone else is claiming 1987 as the start. My memory
| says 1929. If this matters do your own research.
| jcape wrote:
| https://www.investopedia.com/terms/c/circuitbreaker.asp
| bluGill wrote:
| Well something was put into place after 1929...
| jahlove wrote:
| > Regulators put the first circuit breakers in place
| following the market crash of October 19th 1987, when the
| Dow Jones Industrial Average (DJIA) shed 508 points
| (22.6%) in a single day. The crash, which began in Hong
| Kong and soon affected markets worldwide, came to be
| known as Black Monday.
| jahlove wrote:
| > In 1933, the U.S. Congress passed the Glass-Steagall
| Act mandating a separation between commercial banks,
| which take deposits and extend loans, and investment
| banks, which underwrite, issue, and distribute stocks,
| bonds, and other securities.
|
| https://en.wikipedia.org/wiki/1933_Banking_Act
| forkexec wrote:
| It was repealed in 1999.
|
| https://en.wikipedia.org/wiki/Aftermath_of_the_repeal_of_
| the...
| phinnaeus wrote:
| Seems like that kind of thing would be implemented on the
| algorithm side, not the market.
| jaywalk wrote:
| You'd hope so, but why not have protection on the other
| end as well?
| TallGuyShort wrote:
| It probably doesn't make sense for an individual actor to
| stop trading when all the assets it holds are tanking.
| Everyone's selling to cut their short-term losses.
| Crashes aren't always feedback loops.
| azernik wrote:
| You do not want to trust your market's health to some
| random trading firm's coding skills and goodwill, just
| like you wouldn't open up a public webservice without
| some basic rate-limiting.
| AgentME wrote:
| No one would self-impose the limit on themselves, because
| you could profit if you trade while everyone else isn't
| trading.
| daenz wrote:
| Consider the alternative.
| totally wrote:
| Would they also circuit break on 7% increase, in order to give
| people time to come back from positive feelings?
| airstrike wrote:
| No, because if the market is up 50% because we humanity has
| discovered an immortality serum, nobody is panicking.
|
| There's no downside in great news (other than the possibility
| of a quick reversal thereafer...)
| throwsprtsdy wrote:
| Piling in on the buy side because of a fear of missing out
| counts as panicking.
| airstrike wrote:
| That's hardly symmetrical to the fear of losing the money
| that you have already invested - investors feel they have
| no choice but to sell before it gets worse, whereas in
| the rally you can always choose not to buy.
| throwsprtsdy wrote:
| > That's hardly symmetrical to the fear of losing the
| money that you have already invested...
|
| It's pretty symmetrical. Choosing not to buy is not as
| easy as it looks, when you are under pressure to do so.
| Madoff took advantage of this. The crash of 1929 was
| preceded by unhinged buying.
| totalZero wrote:
| Short squeezes are akin to declines in terms of the
| psychology involved.
| airstrike wrote:
| The average investor isn't subject to short squeezes...
|
| Even better: the percentage split between long and short
| holders isn't 50%/50%
| sm2i wrote:
| Actually, i think it is symmetrical. The fear of missing
| out on making a ton of money is just as scary for a
| trader.
| anarazel wrote:
| Looks like it's also on increases, yes:
|
| https://www.sec.gov/oiea/investor-alerts-
| bulletins/investor-...
| evanpw wrote:
| Single-stock volatility halts happen in either direction,
| but market-wide circuit breakers only happen on down moves.
| mattkrause wrote:
| Limit-up/Limit-down applies to individual equities that are
| moving strongly in either direction.
|
| The market-wide circuit breakers, which triggered this
| morning, only apply to declines.
| andrewla wrote:
| The limits for individual stocks are up/down limits, but
| the market-wide halts are only for declines.
| WrtCdEvrydy wrote:
| Of course not... that doesn't help the rich get richer...
| codeulike wrote:
| Now thats a really good question.
| ryanmarsh wrote:
| There's a great book on behavior like this, "Extraordinary
| Popular Delusions and The Madness of Crowds" by Charles MacKay.
| It was first published in 1841 but feels like it could have
| been written today. McKay was editor of The Illustrated London
| News in 1850's.
|
| https://www.amazon.com/gp/product/B081ZD9CL1/ref=dbs_a_def_r...
| draw_down wrote:
| Everyone loves free markets until they don't.
| A4ET8a8uTh0 wrote:
| Without going into too much detail, short answer is yes. Most
| people don't seem to know how far away current setup is from
| 'free market' touted in school.
|
| It is weird given that this information is not hidden. It is
| just not widely spread.
| chungus_khan wrote:
| The reasons for that, both in private institutions like stock
| exchanges, and in terms of regulation, have mostly to do with
| how hideously volatile 'freer' markets tend to be, and the
| frequent, devastating effects banking crises, panics, etc
| used to have.
| eej71 wrote:
| These rules are completely in keeping with the free market.
| [deleted]
| [deleted]
| A4ET8a8uTh0 wrote:
| Would you care to elaborate? I would argue that guard rails
| and controlled falls are in opposition to actual free
| market. The qualifier 'completely' seems misplaced.
| eej71 wrote:
| These rules are chosen by the participants. By the owners
| of the property. They are not government imposed.
|
| Consider an analogy. Suppose you were a stamp collector
| and you wanted to run a weekly stamp exchange. You and
| your fellow collectors may establish rules about how the
| trading should happen and the agreed upon behaviors. By-
| laws if you will. You could of course have no rules. Or
| you could choose some that promote the overall longevity
| of the venue and that encourage robust participation. The
| choice is up to the owners. Both are free. But one will
| be more successful than the other.
| OscarCunningham wrote:
| Sure, but I think it makes sense to say that one market
| is more free than another, even when neither is
| controlled by a government. In many cases the reasons why
| it's good for governments to allow free markets are also
| reasons why its good for private entities to allow free
| markets.
| dantheman wrote:
| Free markets are about voluntary interaction. This is a
| group of people deciding the rules that they'll trade
| with voluntarily. There's no reason the hours are what
| they are - the market could be open 1 hour or 24 --
| deciding the opening times doesn't not mean it's not a
| free market.
| A4ET8a8uTh0 wrote:
| Hmm, the problem with analogies is that they are
| analogies. I don't think NYSE or ICE has the same kind of
| impact on the market as a stamp collectoe. Hell, NYSE is
| almost literally the market. Thus any rules enforced by
| it are, for all practical purposes, market rules. They
| may agree with themselves that saving the market is the
| right thing to do, but guiding it does not make it free.
| It makes it not free.
| grandmczeb wrote:
| The stock market is a privately owned entity that does
| not represent the broader market referred to in the
| phrase "the free market."
| cglace wrote:
| You would argue that rules set up by private institutions
| are in opposition to the free market?
|
| Even anarcho-capitalism doesn't go that far.
| A4ET8a8uTh0 wrote:
| I think you are misrepresting my argument and attempt to
| dismiss it in an odd way.
|
| I am arguing that rules set up by the market do not
| automagically enforce free market. I am arguing that
| rules explicitly do the opposite by introducing guard
| rails, which DO restrict movement in that free market.
|
| Do you honestly believe that rules derive its effects
| from who sets them up?
| grandmczeb wrote:
| To be perfectly honest I'm not sure I find your argument
| coherent at all.
|
| Can you define what you mean by free market? Is two
| parties freely coming to a mutually beneficial agreement
| that they are then constrained by (i.e. a contract)
| consistent with that definition?
| A4ET8a8uTh0 wrote:
| It is possible I have not made it very clear. For the
| sake of the argument, I am ok with the definition
| presented by you.
|
| That said, I am not sure what you disagree with. Please
| elaborate.
| grandmczeb wrote:
| Two private parties, an exchange and individual trading
| firms, have freely agreed to a set of rules in order to
| transact on that exchange. What about that is not
| consistent with the free market?
| A4ET8a8uTh0 wrote:
| Well, first I would like to point out that in your
| example there are three parties with the exchange being
| the intermediary and trading firms transacting.
|
| Assuming you agree with my characterization, on the
| surface nothing about the transaction facilitated by the
| intermediary makes it not consistent. You have my full
| support here.
|
| Now, your argument appears to revolve around knee jerk
| reaction to me saying that in real free market, the rules
| would not artificially prop the market. My argument is
| that in a true free market, the rules would not restrict
| it arbitrarily.
|
| Ergo, we do not have a truly free market, but just a
| reasonable approximation agreed for by various parties.
|
| Would you accept that?
| grandmczeb wrote:
| > Well, first I would like to point out that in your
| example there are three parties with the exchange being
| the intermediary and trading firms transacting.
|
| The agreement to restrictions is still between two
| parties, but you can read it as "two classes of parties"
| if it makes you feel better.
|
| > Now, your argument appears to revolve around knee jerk
| reaction to me saying that in real free market, the rules
| would not artificially prop the market. My argument is
| that in a true free market, the rules would not restrict
| it arbitrarily.
|
| It seems like you're confused about a couple of concepts
| here and I think it may stem from overloading the words
| "free market" and the concept of "the free market"
| generally.
|
| The stock exchange, like any real world marketplace, has
| many restrictions on trading. These make it a _market_
| that is not _free_ in the sense that you cannot trade
| however or whenever you like. However, _the free market_
| is a distinct concept from any individual exchange. It
| means that parties involved in the open market (i.e.
| everyone) are able to freely exchange goods and services
| as they choose. This may involve entering into agreements
| (like contracts) that restrict future actions, but as
| long as those agreements are freely agreed to, this is
| still consistent with the concept of a free market
| generally. Thus, the fact the stock market has
| restrictions is still consistent with the concept of a
| free market so long as the participants freely agreed to
| those restrictions.
|
| Does that clear anything up?
| A4ET8a8uTh0 wrote:
| I think I am willing to concede to on the free market
| being an overloaded term the way I used it.
|
| I will sleep on it a little, but thank you for trying to
| clear it up for me.
| [deleted]
| wait_a_minute wrote:
| I'm a fan of free markets and I'll be the first to admit that
| it's nonsense to have a black and white perception of the
| world. It's not either 100% free markets or state-driven
| economy. There's a huge world in-between both extremes. Being
| a fan of free markets simply means you err towards one side
| more than the other.
|
| Having common sense regulations and tools like
| circuitbreakers are fine with me. I wouldn't say it's
| meaningfully less of a free market just because we have these
| tools in place to protect us against the automation we use.
| A4ET8a8uTh0 wrote:
| Agreed. This is by far the most reasonable post I read
| today.
| HideousKojima wrote:
| The stock exchange is privately owned, the owners/management
| of the NYSE and other exchanges chose to implement circuit
| breakers like this. The exchanges still have to operate
| within the bounds of regulations, but nothing is stopping Joe
| Blow (other than capital, expertise, navigating regulations,
| etc.) from setting up his own stock exchange that doesn't
| have any circuit breakers put in place to prevent flash
| crashes.
| easytiger wrote:
| > from setting up his own stock exchange that doesn't have
| any circuit breakers put in place to prevent flash crashes.
|
| If you are facilitating the trading of regulated
| instruments this is wrong and there are indeed SEC
| regulated circuit breakers you will have to implement.
| totalZero wrote:
| The SEC would indeed stop Joe Blow from setting up his
| exchange in a way that skirts regulations.
| IAmEveryone wrote:
| There is no market separate from society that has any
| "interests" such as not being manipulated. We get to design
| such systems in whatever way best serves us.
|
| It's funny how this "ideology of the pure market" has become
| popular. This idea here is essentially the same as the outrage
| when obviously wrong transactions are rolled back. The number
| of people willing to, or entirely oblivious of the possibility
| not to, let (others) be harmed by fraud or mistakes, in pursuit
| of some romanticized purity is astonishing.
| eej71 wrote:
| These are well documented rules. They have been built up over
| years of experience. Not to say its perfect. But they are
| established and understood by the participants. Further
| refinements may happen based on today's experience.
| Isamu wrote:
| Also because of algorithmic trading. You don't want to get into
| an accelerated get-out-now spiral.
| take_a_breath wrote:
| This sounds like something we should teach the algorithms.
| Isamu wrote:
| Heh, yeah but it's an adversarial problem. Do you assume
| the other bots are going to "do the right thing" and not
| intensify the panic? Maybe not. Maybe you just act on
| immediate information and try to optimize your position for
| the next few milliseconds.
| gpm wrote:
| "We" (the group of people represented by the government) do
| not control the algorithms, so we can't easily and without
| many other side effects force that to happen. We do
| (indirectly) control the stock exchange rules, so we can
| put systems like this in place that limit the damage done
| to us when it does happen.
| abraxas wrote:
| I too think it's inane. Some of us want to get into the market
| but not at these prices. Yet the whole system is built around
| trying to push markets into higher and higher prices at all
| times.
|
| Here's a brilliant idea, introduce a rule that says you can
| only sell a security for more than what you paid. Voila,
| endlessly rising prices forever!
|
| Feels like a con.
| davis_m wrote:
| Would you want to get into the market if it wasn't a system
| built around increasing market value?
| empath75 wrote:
| It's not meant to manipulate the market, it's meant to stop a
| flash crash from automated trading. It gives people time to
| recalibrate their algorithms if something is faulty. If the
| fundamentals are such that it should continue to go down, then
| it will continue to go down.
| burlesona wrote:
| In large part these are designed to break the feedback loops
| that can happen in automated high frequency trading and give
| humans a chance to look at things. These policies were
| implemented by all the stock exchanges after flash crashes
| triggered by ML algorithms encountering something "weird" and
| going into hard sell mode.
|
| https://en.wikipedia.org/wiki/Flash_crash
| [deleted]
| chungus_khan wrote:
| The breakers were originally implemented as a response to
| Black Monday in 87, which was before algorithms were so
| dominant, but it happens that humans are really good at
| panicking and acting irrationally too.
| tomatocracy wrote:
| 87 had a significant algorithmic element to it too though
| according to many accounts via "Portfolio insurance"
| products which were algorithmically traded, as well as
| traders arbitraging between the index futures markets and
| the cash market.
| TremendousJudge wrote:
| Somebody said above that it was due to the 29 crash, which
| one is right?
| totalZero wrote:
| 1987.
|
| From the 1988 "Report of the Presidential Task Force on
| Market Mechanisms : submitted to The President of the
| United States, The Secretary of the Treasury, and The
| Chairman of the Federal Reserve Board":
|
| ---
|
| Our understanding of these events leads directly to our
| recommendations. To help prevent a repetition of the
| events of mid-October and to provide an effective and
| coordinated response in the face of market disorder, we
| recommend that:
|
| * One agency should coordinate the few, but critical,
| regulatory issues which have an impact across the related
| market segments and throughout the financial system.
|
| * Clearing systems should be unified to reduce financial
| risk.
|
| * Margins should be made consistent to control
| speculation and financial leverage.
|
| * Circuit breaker mechanisms (such as price limits and
| coordinated trading halts) should be formulated and
| implemented to protect the market system.
|
| * Information systems should be established to monitor
| transactions and conditions in related markets.
|
| https://archive.org/details/reportofpresiden01unit/mode/2
| up
| tylersmith wrote:
| Why would they not be allowed to manage their platform in this
| way? I'd be surprised if they were unable to.
| mikestew wrote:
| The markets are not a public utility, they have owners (I own a
| teensy, weensy piece of NASDAQ (NDAQ), for instance). The
| owners can do what they want, within regulations. Use whatever
| metaphor works for you, but after 1987, it was thought to be a
| good idea to have an automated breather so that we can get our
| collective heads back in the game instead of panic-selling.
|
| There is, however, no "liking" or "disliking" market direction.
| It's automated, with clearly-outlined rules. There's no
| manipulation; if A, then B.
| headmelted wrote:
| It's really more a protection against recursive trading loops
| by HFT systems.
|
| In the flash crash (2010), it was later determined that the
| largest part of the drop was driven by competing systems racing
| to the bottom solely because competing systems were selling off
| too.
| jcrawfordor wrote:
| One view of the circuit breakers that Matt Levine just
| discussed this morning is that they help to avoid price drop
| due to liquidity issues. That is, algorithmic trading aside,
| many trades are still done by human beings who may not be
| paying rapt attention when a crash happens. The 15-minute pause
| gives them time to find out that something is up, at which
| point they may choose to start buying at the depressed prices,
| which will stabilize things. This also makes sense with the
| fact that the L1 and L2 breakers only trigger once each, once
| an L2 breaker has triggered everyone will probably be paying
| close attention to what's going on traders simply not being at
| their desks will become less of an issue.
| Youden wrote:
| The decision isn't made real-time by actual people like I think
| you're suggesting.
|
| The rules are well-known and set in advance by the SEC and
| exchanges. In this case it's SEC Rule 80B and NYSE Rule 7.12.
|
| You can read more about trading curbs here [0] and this one in
| particular here [1].
|
| [0]: https://www.investopedia.com/terms/t/tradingcurb.asp
|
| [1]: https://www.nyse.com/markets/nyse/trading-info
| fc_barnes wrote:
| Reminder that markets are human creations and not some natural
| phenomenon.
| ouid wrote:
| Those circuit breakers are not to allow people to come back
| from "panicked feelings". It's to stop algorithms from
| deterministically destroying hundreds of billions of dollars.
| Hoasi wrote:
| > Genuine question: They can just do that ? Issue a trading
| halt because they don't like the direction it's going ?
|
| This is a dangerous game, in that it is indeed revealing the
| artificial, make-belief, nature of financial markets.
| icebraining wrote:
| Were people under the belief that financial markets grew on
| trees or were formed by lithification?
| Hoasi wrote:
| That's funny. But I was only pointing out that this is akin
| to markets saying: this game only works as long as we can
| change the rules. This kind of statement is not conducive
| to trust. Unfortunately, the whole financial field needs
| trust to thrive.
| icebraining wrote:
| I'd agree if the rules had been changed on the fly, as a
| response to the current events, but they weren't. The
| rules were known and they were activated as expected.
| anigbrowl wrote:
| Yes, they've been put in after previous panics. I've always
| thought it rather odd that there aren't any corresponding
| restrictions on sharp upward movement, since euphoria can be
| just as dangerous as panic.
| efficax wrote:
| investors are herd animals and nobody has any idea what's going
| on. if everybody else is selling then i better sell too!
| totalZero wrote:
| The trading halt is a result of previously established exchange
| rules. It's not a manipulation, it's a guardrail that is
| visible to every market participant.
|
| If the price is going to go lower for an organic reason, it
| will go lower regardless of a brief delay.
| aganame wrote:
| Trump created a situation that's shaky as hell. I'm glad
| something happened that makes him suffer at least some
| consequences for once.
|
| Too bad it had to be this bad an event.
| dang wrote:
| Please don't take HN threads into partisan flamewar.
|
| We detached this subthread from
| https://news.ycombinator.com/item?id=22525433.
| ailideex wrote:
| Ehh... I mean ... if the whole rest of the world was somehow
| unaffected by this ... then ...
|
| You do get that a reasonably conservative projection is that
| within a year most people in the world would have gotten
| COVID-19? How the heck did Trump do that?
|
| The only means of slowing COVID-19 has massive effects on the
| economy. There is now way in hell this would not have had a
| massively negative impact on the world economy. If you could
| give some meaningful argument for why US is handling it worse
| than the rest of the world, by all means. But just saying
| "Trump is bad" seems to be completely disregarding the reality.
| ericb wrote:
| Well, slowing this is in-control of competent governments,
| and mitigating the damage is entirely possible. For example,
| drafting retired nurse and respiratory care specialists and
| give a path for them to renew their licenses, building out
| temporary hospitals in-advance, using contract tracing and
| _actual testing_ to stop the outbreak, rather than denials
| and calling it a hoax. If everyone shows up at the ICU at
| once, people die. Slowing it makes sense for tons of reasons.
| The lack of those things does fall on Trump, our denialist in
| cheif.
| greedo wrote:
| It doesn't matter how many people eventually get COVID-19.
| What matters is when. If the ramp up is gradual, healthcare
| systems can handle it; if it's exponentially explosive,
| they'll be overwhelmed.
| paulmd wrote:
| > You do get that a reasonably conservative projection is
| that within a year most people in the world would have gotten
| COVID-19? How the heck did Trump do that?
|
| Certainly doesn't help that he fired the US's pandemic
| response team a few years ago (that pesky "deep state" he's
| been ranting about). The rest of the world has their own
| responsibility to some extent but the US usually takes point
| on these kind of things.
|
| https://www.snopes.com/fact-check/trump-fire-pandemic-team/
|
| He's also had the CDC sandbagging testing for it. He's been
| claiming coronavirus is a liberal hoax for weeks now, and
| anyone who contradicts him gets fired.
|
| One of the side effects of that has been the CDC refusing to
| approve states that developed their own testing (as they are
| required to get CDC approval). Because they don't want to be
| seen as arguing that COVID is not a liberal hoax.
| magduf wrote:
| >The rest of the world has their own responsibility to some
| extent but the US usually takes point on these kind of
| things.
|
| The US has 330M people. The rest of the world has over 7B.
| The rest of the world needs to get over this idea that the
| US is the leader on everything; the election of Trump
| should have been the canary in the coalmine that the US
| just can't be trusted for global leadership any more, and
| continuing to do so is dangerous and foolhardy. As you
| said, it's been "a few years" since the pandemic response
| team was fired; so why would _any_ country have trusted the
| US since then for pandemic response ability or competence?
| aganame wrote:
| How did you manage to read what I wrote to mean I was blaming
| Trump for COVID-19?
|
| I am blaming him for taking Obama's legacy of stability and
| growth and destroying it for short-term profit. It would be a
| tragedy if he did not have to answer for that before the
| primary elections.
| dd36 wrote:
| Trump running massive deficits and forcing rate cuts when
| times are good is Trump's shaky ground.
| danans wrote:
| People might forget, but part of his platform was
| supercharging the economy (really, the stock market) past
| the moderate, but steady and unexciting post-financial-
| crisis growth of the Obama era.
|
| To continue the automotive analogy, supercharging an engine
| with major fragilities usually sets it up for a reckoning,
| just waiting for a trigger.
|
| Covid-19 is just a particularly powerful trigger since it
| is globally correlated, and also has its primary effects at
| the local level. It would have shocked any economy, Obama's
| or Trump's, but there is much farther to fall in the
| latter's, because of the huge market rallies and the
| expectations that drove and emerged from it.
| CWuestefeld wrote:
| Trump's shaky ground? Or everybody since at least the turn
| of the century?
|
| (Also, note that Trump doesn't get to run deficits. That's
| Congress's territory.)
| sg47 wrote:
| Wait what? The administration decides the spending that
| Congress can approve or reject. Trump was absolutely
| pushing for the tax cuts when Repubicans had control of
| the House. Why is no Republican harping about the deficit
| now? I can understand if the deficit was due to
| infrastructure spending but giving Zuckerberg a tax cut
| is not going to help the economy.
| jsight wrote:
| I can think of a couple of reasons.
|
| 1. Many people do not care about the deficit to a great
| degree on either side of the political aisle. This
| despite a lot of rhetoric by one party or another.
|
| 2. The party in power seems to always find a way to blame
| their predecessor for their ills. I've personally seen
| Trump supporters blame immigration for the current rising
| deficits.
| ronyfadel wrote:
| A lot of comments are saying that a recession is probable.
|
| Can anyone shed a light on why that is/could be the case?
| aguyfromnb wrote:
| A recession isn't probable, it's _inevitable_. It 's just a
| matter of how much sludge builds up in the economy before the
| over-leveraged have to unwind. That's the business cycle.
|
| Covid19 and the ensuing fall in global demand is simply another
| blob on the pile.
| adam12 wrote:
| Recessions happen every 4 to 7 years. We haven't had one for 11
| years.
| aazaa wrote:
| > The cash equities market is subject to circuit breakers
| established by the New York Stock Exchange in the wake of the
| 1987 Black Monday crash. Trading will halt for 15 minutes if the
| S&P 500 falls 7% to 2,764.3 at any time before 3:25 p.m. in New
| York. ...
|
| That's less than a 1% drop from here.
|
| Right now, all eyes are on the Fed and the size of the bazooka
| they'll be deploying.
|
| Anything short of outright stock purchases is not going to be
| received well. Despite the desperation that move smells like, the
| Fed would be merely following ground already trodden by the Bank
| of Japan, which now owns around 80% of the Japanese ETF market.
|
| Edit: only 5 points to go.
| ipnon wrote:
| The circuit breaker was already triggered when the market
| opened this morning at 9:30 AM EST.
| aazaa wrote:
| You're right.
| totaldude87 wrote:
| To be honest , the market was in dire need for correction, BUT
| wonder where we will be when companies starts reporting their
| quarterly results and impact of that.
|
| So far this looked more like a correction than a precursor to the
| recession. To make things worse, OPEC dropped bombs which spread
| the wildfire further..
| adrr wrote:
| Market was all screwed up because the interest rate was so low.
| If bonds pay nothing, where else do you put your money?
| trillic wrote:
| Gold?
| proverbialbunny wrote:
| Gold goes down during a recession.
| generalpass wrote:
| > Gold goes down during a recession.
|
| Everything goes down during a recession. The goal is to
| find things going down less.
| gvhst wrote:
| Bonds have both an income return and price return component.
| If interest rates go down, Treasuries go up in price. TLT
| (20+ Year Treasury ETF) has been up nearly 20% since this
| bout of panic set in.
| 3fe9a03ccd14ca5 wrote:
| Oil dropping because an opec monopoly explodes is good news for
| _most_ of the economy (outside of oil industries obviously).
| But a drop in crude because of demand is bad for everybody.
| huac wrote:
| no - oil dependent companies bought oil futures to hedge
| their price risk, so you shouldn't expect much benefit there.
| additionally, the high yield bond sector has a ton of energy
| company exposure, and those are falling through the floor. an
| extended price war could really obliterate those bonds, and
| their lenders.
|
| see eg
| https://twitter.com/TheStalwart/status/1237022304510660608
| kibwen wrote:
| _> good news for most of the economy (outside of oil
| industries_
|
| Not quite, it's bad news for renewables as well to see fossil
| prices fall.
| TeMPOraL wrote:
| It's not good for our emissions budgets either, but I guess
| we can worry about it after the coronavirus mess is behind
| us.
| sjg007 wrote:
| Why was or is the market in need of a correction? What is your
| evidence for that statement?
| cm2187 wrote:
| High P/E ratio, bearish fixed income market, companies unable
| to deploy capital and buying back stocks to sustain bull
| market, QE being drained out, etc. Lots of warning signs that
| we are at the top of the cycle.
| Vesuvium wrote:
| It's widely known state of things because of the current
| situation (low interest rates for very long time, etc.).
| Infact, many financial institutions and experts have been of
| the idea that a major stock crisis was around the corner for
| a while.
|
| You could argue that most would have disagreed, but at the
| end 2018 many stock crisis indicators, models and statistics
| started to turn red and indicate that a crash was close.
|
| 2019 had a couple of close calls like the Turkish lira
| crisis, but there was never widespread panic to feed a
| worldwide crash. Now there is.
| bumby wrote:
| Take this with a train of salt because I'm not an economist,
| but one of the most often touted general points of the need
| for a correction is the cyclically adjusted price to earnings
| ratio being elevated [1].
|
| In other words, stocks are more "expensive" and thus ripe for
| a correction
|
| https://www.multpl.com/shiller-pe
| read_if_gay_ wrote:
| > train of salt
|
| Nice Freudian slip.
| bumby wrote:
| Oops, my phone is not optimized for my cro magnon
| fingers...
| AnimalMuppet wrote:
| Don't apologize. It was a beautiful typo. In fact, I may
| steal it for deliberate use...
| jfengel wrote:
| Note that that's the Shiller P/E ratio, which (even after
| today) is still at 26, which is quite high. The regular P/E
| is still only around 20, which is at the upper limit of
| reasonable.
|
| The whole point of the Shiller ratio is that it's supposed
| to do a better job predicting overheated markets, and it
| may well be doing that here. The regular ratio is based on
| recent earnings, which will be uncharacteristically high
| during a bull economy.
|
| That's not to say it's incorrect. I was just noting that
| your link indicated a higher value than I was expecting,
| and that's why. (It implies that the market could easily
| fall another 25% before reaching reasonable territory.)
| bumby wrote:
| Correct. I deliberately chose the longer CAPE terminology
| because I thought it was more descriptive than the term
| Shiller PE. But thank you for adding a better explanation
| omgwtfbyobbq wrote:
| Definitely, especially in light of a probable recession.
|
| One possible enhancement to the PE ratio I've read about
| that seems really helpful is to make it after tax, since
| the tax rate on companies can vary depending on locality
| and time.
| Kluny wrote:
| I don't know about "need" and I'm no kind of expert, but it
| seems to me that there's a hard drop roughly every ten years
| or so and the last one was 12 years ago. I've only been in
| the market myself for about 15 years, so I don't know that I
| have the instincts to call it, but historically this seems to
| be true.
| fny wrote:
| Valuations were continuing to rise parabolically despite
| slowing earnings and growing debt.
| aaomidi wrote:
| At this point every time something positive happens in the
| market:
|
| "It needs a correction"
|
| Everytime something negative happens:
|
| "It's just a cycle"
|
| Maybe we don't have the best economic system where
| instability is built into its core & foundation?
| jyrkesh wrote:
| I'm having trouble seeing how those two
| positions/statements contradict each other. If markets need
| a correction, and then they get it, that is part of the
| business cycle.
|
| Also, "at this point" is at the point of one of the most
| runaway bull markets of all time. IMO, the correction has
| been needed for a couple years now. I didn't have nor did I
| see that sentiment on HN 5+ years back.
| mdorazio wrote:
| Plot a basic best fit line for the DJIA or S&P 500 over the
| last 30 years and see where it says we should be in a
| rational market (about another 10% below today). If you need
| more evidence, plot a second line showing GDP growth for
| comparison. The markets have been in an unprecedented
| situation for the last decade since the Fed cut rates to the
| bone and then left them there. Effectively, money has been so
| "easy" that all kinds of weird things have been happening to
| boost the markets without much actual underlying structural
| support (actual capital investment, median wage growth, GDP
| output, etc.).
| mrgordon wrote:
| I am not the original poster but I think they are expressing
| that we were ready for some reversion to the mean after many
| years of gains including a spectacular 2019.
| thedance wrote:
| The market has just been unhinged lately, because there are a
| lot of huge positions that would love to sell but just can't
| unwind. Consequently there has not been an effective downward
| pressure on asset prices, and a lot of garbage is overpriced.
|
| I still don't expect a major correction here because there's
| so much underused capital flying around out there and it will
| pour into anything that looks even remotely like a bargain.
| We have entered a regime where the world's economies have
| more capital than they are willing to use, which is novel and
| weird. Expect markets to act in novel and weird ways.
|
| One thing I can easily predict is American governments large
| and small will take the wrong actions. They will cut taxes
| and slash spending when the bond markets are begging them to
| spend more. States and cities should be out there right now
| selling as many bonds as they can.
| darkwizard42 wrote:
| Huh, this was a ton of speculation in 3 paragraphs. Could
| you expand on what are the huge positions that are looking
| to sell? Are there any examples of overpriced equities?
|
| I think your second paragraph makes sense given some large
| cap companies holding so much cash on hand due to inability
| to find anything useful to invest in (and stock buybacks)./
| tempsy wrote:
| Buy S&P puts as a hedge to save your account in times of extreme
| volatility.
|
| I had 270 strike puts for April I bought on Friday for $6 that
| jumped to $15 today and got my account to break even even though
| the value of my stocks went down.
| guhcci wrote:
| Just have to be aware of vega in these market conditions
| though, with the VIX as high as it currently is options
| premiums are through the roof and if there is some breakthrough
| in a vaccine/resolution to the oil price war the IV crush can
| bite hard (learned that the hard way).
| asdfasgasdgasdg wrote:
| What fraction of your account value would you have lost if
| those puts expired (i.e. if the market had not declined)?
| tempsy wrote:
| Well they wouldn't have expired until 4/17, so even if the
| market didn't go down today or went up it wouldn't have
| dropped anywhere close to $0.
| hermitdev wrote:
| I hadn't checked VIX for a few weeks. As I write this, it's
| trading at 54.79. That's insane. It's usually in the high
| teens to low twenties.
| fsloth wrote:
| Or just buy index decade after decade... this of course does
| not work if you attempt to beat the index or have timespan that
| is short.
| tempsy wrote:
| The index has become a bubble in of itself. It's also not as
| diversified as you would think when Microsoft makes up 5-6%
| of the S&P and over 10% of Nasdaq.
| MuffinFlavored wrote:
| 500 of the top American companies is good enough for me.
| (S&P500)
| hrpnk wrote:
| Other indexes, like the German DAX [1] have a hard cap at
| 10% per company.
|
| [1] https://de.wikipedia.org/wiki/DAX
| dlp211 wrote:
| So then purchase and overweight small and mid-caps and
| international indexes if you think that SPY is top heavy.
| You don't need to deviate from index investing just because
| a part of the index is outperforming the rest. Choose an
| allocation, stick to it, rebalance when you hit some
| threshold.
| tempsy wrote:
| I don't want to buy the index?
| Kluny wrote:
| You don't have to stick to the S&P index. There are others
| that follow tech, or commodities, or the Canadian stock
| market, green energy or what have you. You can diversify
| yourself.
| ones_and_zeros wrote:
| What is the end game with this strategy? If you sell the puts
| today to capture the profits, do you also sell your equities?
| If you don't sell your equities isn't there a chance the slide
| further? If you hold the puts to maturity why buy them at all?
| herstjnr5nr wrote:
| If the market drops less than your put strike price, you can
| sell the puts and keep the shares. If it drops more, you
| exercise the put, which results in selling the shares at the
| strike price.
| tempsy wrote:
| The end game is to save the value of my account without
| having to sell holdings I want to keep long term for tax
| reasons.
|
| I'm up 8% for the year instead of down 15%.
| mars4rp wrote:
| Your puts are going to expire at some point, what after
| that? you sell all your holding after expiration? or you
| buy more puts? puts are expensive, I started 2 weeks ago
| and paid 7% of my portfolio in premium just as insurance.
| the_gastropod wrote:
| Maybe you really are more clever than the rest've us, and
| have beat the market. Or maybe you got lucky. Or maybe
| we're only hearing about the winning trades, and you've got
| some losers we're not hearing about... I suspect it's
| option 2 or 3. Regardless, this is bad advice.
| codingslave wrote:
| No he just dampens his returns by protecting against
| extreme downside black swan events
| theincredulousk wrote:
| It isn't bad advice to hedge your position with options,
| although doing it short term as suggested here is an
| active trading strategy and inherently more risky.
|
| Contrary to popular belief that options = gambling, this
| is the #1 real utility of them. If 90% of your
| investments are tied up in S&P 500, it makes sense to
| hedge that with put options which provide a clearly
| defined max-loss over the contract duration of the
| option.
|
| So in a period like this when those put options become
| valuable due to price drop and general IV, you can do as
| suggested and sell them to re-coup losses and maintain
| capital. It doesn't change the lifetime performance of
| your money placed in the corresponding security, but it
| most certainly improves the performance of your portfolio
| as a whole and limits the damage that can be done in any
| given downturn.
|
| If you only hold securities, index or otherwise, your
| only recourse is time. I certainly wouldn't recommend
| trying to time the market, just like I wouldn't buy an
| insurance policy the day before a loss. That doesn't mean
| you avoid insurance altogether because you can't predict
| when you'll need it.
| kccqzy wrote:
| The thing is, these options are generally just so
| overpriced due to high IV. Insurance is expensive. I used
| to sell OTM puts that are about 3-4% below the index.
| Today I can sell far OTM puts that are about 15% below
| the index with higher premium.
| bob1029 wrote:
| Purchasing options is usually terrible advice for anyone who
| hasn't been doing this for a long time. Options are very
| difficult to do right. Even if your intentions are sound
| relative to what is occurring in the market (e.g. volatility
| plays today), you can still get some aspect wrong and lose a
| bunch of money.
|
| My strategy is to operate with a margin account and use
| high/low water marks as the trigger points for adjusting
| leverage. For example:
|
| I prefer to maintain my margin utilization under 40% of my
| overall portfolio balance. I also prefer to maintain a
| value/growth allocation such that my margin is usually self-
| funded via dividends, but I don't mind eating a little bit of
| fee for the long-term opportunity.
|
| If my margin utilization falls below 40%, I will use the
| leverage until its right back at 40% (mandatory minimum).
|
| If my margin utilization is at or higher than 45%, I will stop
| use of additional leverage (mandatory maximum).
|
| The sweet spot for me is 40-45%. This is effectively my
| "options" range for market downturn. Within this range, I have
| granted myself authority to purchase equities based on daily
| market conditions. The window is narrow, but this morning I
| purchased a bunch of equities on margin right up until the 45%
| mark was hit. I obviously went for the ones in scope that were
| hit the hardest today.
|
| Tomorrow, I will re-run that ruleset and act accordingly. The
| advantages of using margin to acquire shares is that you have
| the actual shares and can hold them long term. Contracts mean
| you get to pay taxes right away and have nothing to show for it
| after everything clears.
| walrus01 wrote:
| Serious question, is anyone watching this carefully and trying to
| determine when things will bottom out (perhaps in a week or two),
| to buy stocks, ETFs, and such at the bottom of the dip?
|
| Hindsight is 20:20 of course, but there's a number of equities
| that one could have purchased shortly after the 2008 financial
| crisis that proceeded to make significant gains between 2009 and
| 2019.
| HideousKojima wrote:
| The most important rules to follow when investing in stocks:
|
| The market can stay irrational for longer than you can stay
| solvent
|
| and
|
| Don't bet any more on the market than you're willing to lose
| kazinator wrote:
| That's almost a tautology since the market never stops being
| irrational.
| disease wrote:
| In my experience it's always good to buy when sentiment is bad.
| If this is just a minor dip that will bounce back up, then you
| got a nice little discount on your equities. If it is the start
| of a major downturn then you have taken the first step towards
| buying at a greater and greater discount and can continue
| buying all the way down.
|
| I don't consider this to be timing the market. You should
| always be investing but when sentiment is bad you just buy more
| than you would normally.
| elihu wrote:
| I do something similar, which is that I reduce my 401k
| contribution when I think the market is overpriced, and
| increase it when stocks are down.
| senordevnyc wrote:
| Unless you have a source of cash that can only be accessed
| when markets are declining, that's still timing the market.
| mythrwy wrote:
| Inbalances accumulated over the course of a decade of free
| money likely won't resolve within 2 weeks. There is a lot of
| junk and baseless speculation that still has to wash out. Many
| people will hold for a time in hope it's just a blip and goes
| right back up. When these give up and flush out, then things
| are nearing support and the market has a solid base from which
| to rise again.
|
| My (non professional, this is not financial advice) opinion is
| it will take awhile (at least 3-6 months or so) for everything
| to shake out and reevaluation to occur.
| SuoDuanDao wrote:
| I'm not, but I have a system that will do something similar: I
| target 70%stocks, 30% cash. If it gets to 60-40 or 80-20, I buy
| or sell enough to get back to 70-30.
|
| Since I started investing in 2012, I've only ever triggered a
| rebalance through putting in more cash, but I'm making a list
| of stocks I plan to buy if my portfolio goes outside that
| bound.
| danmaz74 wrote:
| I was delaying investing in the stock market waiting for the
| next recession. My intention though isn't to try to time the
| bottom (which nobody can predict), but just to start buying
| when I think prices are "good enough".
| astura wrote:
| Are they good enough now?
| m3kw9 wrote:
| You cannot time it, just ask yourself last weekend who could
| have guessed Russia would back out of the opec deal of limiting
| supplies?
| airstrike wrote:
| I've heard things will bottom out as soon as we have good news
| about the virus. That's not happening next week.
|
| Disclaimer: this does not constitute investment advice in any
| way, shape or form. Do whatever you want.
| allovernow wrote:
| No one will be able to time this. We don't even know if this is
| the start of a [global?] recession or depression.
|
| If you haven't already, put your retirement into bonds and hold
| on. Honestly it might be a good idea to grab some cash from the
| bank to keep at home - bank runs are not outside the realm of
| possibility, although we have credit cards and other internet
| based payment methods now so it's probably less of a concern
| now.
|
| Edit: let me just preface my advice by saying if you have
| extremely high risk tolerance, now is a good time to buy, but
| be prepared to lose. If you are near retirement, now is
| probably the time to pull all of your funds out of the markets
| and into something safer. Based on the 100 year history of the
| DJIA, and the fact that the virus is just starting to spread in
| the U.S., the floor could be much lower.
| zyang wrote:
| Please don't shuffle your retirement investments based on
| market volatility. Best thing is just do nothing and ride it
| out.
| the_gastropod wrote:
| I'd tweak this advice _slightly_. After this pretty
| significant swing, it's probably a good time to re-visit
| your asset allocation. If you're, for example, holding 10%
| bonds, your allocation is now going to be overweight bonds.
| So it's a good time to sell some bonds, buy equities, and
| get back to your 90%/10% allocation.
| allovernow wrote:
| This isn't market volatility. The is a global geopolitical
| event exposing the weakness of the US and global markets
| that people have been warning about for something like 3
| years.
|
| Some treasury notes have dropped by more than 30%. We're
| years overdue for a cyclical recession. The fed has little
| room to lower rates. I could go on but the point is this is
| the closest we've been to a Black swan in decades.
| nostrademons wrote:
| If it's really your retirement money then presumably you
| are 20-40 years out from needing it. Cyclical recessions
| typically last 1-2 years, and even the biggest Black Swan
| events like the Great Depression last maybe 10 years. By
| the time you retire you will have largely forgotten about
| this.
|
| (If your retirement is less than 5-10 years away, you
| should have diversified away from stocks years ago, and
| it's a little late now. Most target-date funds and
| financial advisors do this anyway.)
| thedance wrote:
| This advice is both common and crazy. Each individual does
| not live the average life. Being able to recognize once-in-
| a-lifetime events, and act on them, is a rational strategy,
| even if it seems like it is not the optimal strategy for
| the perfectly spherical portfolio belonging to a person
| with infinite lifetime.
| jfengel wrote:
| I'm not sure it is possible to rationally recognize once-
| in-a-lifetime events, since by definition you've never
| seen them before and don't know how they'll play out.
| anm89 wrote:
| Well said.
| axaxs wrote:
| I agree with this. I'd never touched my 401k until now,
| well, a few weeks ago. Anyone who couldn't see that this
| virus was a world-changing event wasn't paying attention.
| I did 'time' my way out of the market, but not so much
| back in. Even if I miss some gains, I just want things to
| stabilize some before going back in long.
| jamesjyu wrote:
| "No one will be able to time this"
|
| "put your retirement into bonds and hold on"
|
| _facepalm_
| allovernow wrote:
| What? That's how you minimize risk because there's a good
| chance the markets will continue to slide. It's literally
| _why_ the markets are down - because investors are pulling
| out and parking their cash in safer havens.
| twblalock wrote:
| > What? That's how you minimize risk because there's a
| good chance the markets will continue to slide.
|
| You don't minimize risk by reacting to daily market
| fluctuations. You minimize risk by choosing an asset
| allocation that allows you to ignore those fluctuations.
| allovernow wrote:
| The market has been dropping for a week. Indicators
| across the board are long term negative. We are well past
| the realm of daily market fluctuations.
| anm89 wrote:
| I don't disagree with your read, but you are certainly
| trying to time here.
| gtaylor wrote:
| If you are approaching retirement, you should already
| have a good % of your portfolio in bonds and other lower
| risk investments. If you have indeed done that, there is
| little reason to rush off and potentially buy high and
| sell low right before retirement.
|
| For everyone else not near retirement, most are going to
| be better served by ignoring the volatility and
| continuing to invest as usual. Time in the market vs
| timing the market and all of that jazz.
| the_gastropod wrote:
| I think you're missing the point "Nobody can time this"
| and "If you haven't already, put your retirement into
| bonds and hold on" are completely at odds. Pulling out of
| equities to buy bonds _is_ timing this.
|
| People should have an asset allocation, and stick to it.
| Right now, people _should_ be re-balancing by selling off
| their now overweight bond allocation to buy equities.
| What you 're suggesting is counter-productive.
| allovernow wrote:
| Look, until two weeks ago my 401k was tracking 14% gains.
| By gradually moving it over the last week and last night,
| I've locked in 10% gains. The alternative would have been
| 0% gains as of today (market is back about where it was
| when Trump was elected) and losses in the likely case
| that the market continues to slide this week.
|
| At this point we have likely entered recession or
| depression territory. The rebound is unlikely to be
| instantaneous (unless a convenient cure is found) and
| when things calm down I can put my money back into the
| market starting from a 10% locked in gain.
| blackearl wrote:
| If you're not yet close to retirement, what happens today
| in the markets will have almost no effect on what your
| portfolio looks like in 10, 20, 30 years. Making any big
| changes would be stupid. Maintain a diverse portfolio and
| basically forget it exists outside of maxing it out every
| year. This is especially true if you're lazy and have it
| all in something like a retirement target fund like
| Vanguard.
| strunz wrote:
| Vanguard retirement funds do exactly this for you, what
| are you talking about?
| blackearl wrote:
| Yes I mentioned Vanguard, and in fact have a good amount
| invested in their retirement funds. OP is saying to pivot
| based on recent news. Those retirement funds adjust on a
| scale of 40-50 years whereas OP is looking at a month of
| activity, possibly even just today's 7% drop.
| sweeneyrod wrote:
| "there's a good chance the markets will continue to
| slide" By saying that, you are trying to time it
| (claiming that the bottom is in the future).
| unethical_ban wrote:
| All of this advice is a bit too late.
|
| If you're near retirement, you should have already had a
| large percentage of your allotment in bonds and cash. If you
| are not near retirement (> 5-10 years) then ride it out.
|
| I am 30+ years from retirement and I don't think this is
| world ending, so my high-volatility mutual funds will stay
| right where they are.
| rlucas wrote:
| Dear Lord please DO NOT put your entire retirement into bonds
| right now.
|
| Bond yields are at an _all time low_. That means prices are
| at an all time high.
|
| This is _not_ the time to massively rotate into an asset
| class at an all-time high price due to fear /risk aversion.
| anm89 wrote:
| >If you haven't already, put your retirement into bonds and
| hold on.
|
| Good lord is this terrible advice. Please nobody do this.
| wincent wrote:
| > If you haven't already, put your retirement into bonds and
| hold on.
|
| Are you advising to sell equities right after they've taken a
| beating? Sounds awfully close to "buy high, sell low".
| creaghpatr wrote:
| Depends on your retirement horizon, but if it's inside of 5
| years the investor should have already tamped down the risk
| profile.
| allovernow wrote:
| If you look at the 100 year history of the DJIA, there's
| still a LOONG way for it to potentially drop.
|
| It's about minimizing risk. Those with high risk tolerance
| I would advise to buy now, but be prepared to lose
| everything. If you're close to retirement you lose nothing
| by pulling out now.
| the_gastropod wrote:
| > Those with high risk tolerance I would advise to buy
| now, but be prepared to lose everything. If you're close
| to retirement you lose nothing by pulling out now.
|
| If your risk tolerance can't handle what's happening,
| your asset allocation was already wrong. Trying to "fix"
| that now, as a response to this downturn, would very
| likely be a mistake.
| kazinator wrote:
| Well, "nick checks out", at least. :)
| hogFeast wrote:
| People telling you to hold off buying are idiots (the majority
| as always on here).
|
| This is what every mug retail investor thinks. They always get
| hosed down. They are usually the people who were in cash until
| 2018...because they were waiting for the bottom.
|
| If you are investing regularly, continue to do so. If you have
| cash, deploy it. This doesn't matter if you are young. You are
| getting a better price. It is good news.
|
| If you aren't a mug, look at individual stocks. Do your
| analysis, and you will find out whether they are cheap or not.
| No-one who invested at the bottom in 2008 knew it was the
| bottom. They saw individual stocks were cheap, they bought.
|
| But really do not try this last one unless you know what you
| are doing. Parts of the market are looking cheap right now, a
| minority of this is stuff that has sold off recently. If you
| can't work out where this value is, just buy an index fund and
| spend your time worrying about stuff you can control (I used to
| work in research at a financial adviser, I didn't work directly
| with clients but the biggest issue for most investors are their
| emotions...99.9% of people don't have the emotional equipment
| for this stuff...the harder you try, the worse you will do).
| [deleted]
| raesene9 wrote:
| I'm sure huge numbers of people are watching for exactly that
| opportunity, but if it was easy to reliably spot the tops and
| bottoms of markets, there'd be a lot more rich day-traders out
| there :)
| savanaly wrote:
| It's specifically because there are huge numbers of people
| watching this carefully and trying to do that that it is
| irrational on the margin to try to do so.
| lm28469 wrote:
| This, it's not 1940 anymore, the average Joe can setup an
| investment account in 5 min on his phone and heard his
| buddies talking about "buying the dips is a foolproof way to
| become a millionaire".
| walrus01 wrote:
| As an example I saw a lot of discussion about buying the
| drop of Boeing stock, about 1 month after the 737-max were
| grounded, expecting things to be back to normal and a quick
| rebound. People who bought it at 370 now have stock with
| about 230/share... And still dropping.
| Litmus2336 wrote:
| All you need to correctly pick the bottom and peak of a year is
| 365 people. 366 in leap years.
| Tepix wrote:
| You need 365 * 365 to get both the bottom and peak right
| Litmus2336 wrote:
| For a person to get _both_ bottom and peak right. But hey,
| I 'm less picky
| rsync wrote:
| "Serious question, is anyone watching this carefully and trying
| to determine when things will bottom out (perhaps in a week or
| two), to buy stocks, ETFs, and such at the bottom of the dip?"
|
| I am watching very carefully to see if the VIX goes to an
| outlandish number, such as 90 or 100. To give some context, the
| all-time high of the VIX was ~80 during the 2008 financial
| crisis, etc.
|
| It is a fools errand to try to predict, and make bets upon, the
| VIX.
|
| However, while we can't say anything for certain about how long
| markets can stay calm or how long markets can stay euphoric,
| _we can say_ with some certainty that you can 't panic sell
| forever. Your hair can only be on fire for a little while. You
| can only throw yourself off the top of a building once.
|
| So if you believe you see a VIX-crisis-top it is a very good
| bet that the movement from there will be in only one direction
| and _very precipitous_.
|
| IANA*.
| hrpnk wrote:
| VIX converges long-term towards 0, so you will be successful
| investing in this instrument only for very short periods of
| times with close to perfect market timing...
| thedance wrote:
| I think the VIX did hit 90 mid-session in late 2008.
| NelsonMinar wrote:
| There's a colorful term for this: "catching falling knives".
| chasd00 wrote:
| i'll add one of my favorites slightly modified: "a great way
| to make a small fortune timing the markets is to start with a
| large fortune".
| habitue wrote:
| > is anyone watching this carefully and trying to determine
| when things will bottom out (perhaps in a week or two), to buy
| stocks, ETFs, and such at the bottom of the dip
|
| Yes, hedge funds do this. They hire a lot of smart people to
| dig full-time into all the same hunches you or I might have
| (plus some more things we haven't thought about), and make bets
| about what's going to rebound. What happens is that to the
| extent that the future is unpredictable, the hedge funds lose
| those bets (along with everyone else on average), and to the
| extent that their predictions are right, they make a profit.
| chewz wrote:
| You start buying when nobody wants to have anything to do with
| stocks.
|
| As long as you hear (even here, today) that this is a good
| opportunity, good time for buying at a discount - it is not a
| time for buying stocks.
| senordevnyc wrote:
| Yes, but I think a week or two is laughably naive. I think we
| could easily drop another 20-30%, maybe more. The market
| dropped ~50% for the great recession and I'm unconvinced that
| this isn't going to be worse.
|
| But I got out almost at the all time high, so as long as I get
| back in before that, I'm good with sitting on the sidelines. I
| don't need to call the exact bottom. I'll likely buy back in
| once I can see that there's some kind of realistic path forward
| with COVID-19 that doesn't destroy the economies in its wake.
| ipnon wrote:
| Yes, it's Wall Street's job to watch this carefully and
| determine when things will bottom out. Financial services
| account for 20% the US GDP.[0]
|
| I don't think it's well understood by the general public how
| many people work in finance or the scale of their endeavors.
|
| [0] https://www.washingtonpost.com/news/monkey-
| cage/wp/2016/03/2...
| RobertDeNiro wrote:
| I think you're better off trying to predict when the
| Coronavirus epidemic will be over. In a way it's more
| predictable, because we have a fairly good understanding of how
| it spreads and under what conditions.
| alasdair_ wrote:
| I expect more crazy volatility for the rest of the month,
| followed by another drop after Q1 numbers come out (and a
| second, smaller, drop after Q2).
| forkexec wrote:
| Well, according to a Harvard epidemiologist, 40-70% of humans
| will contract this virus, which implies 120-168 million people
| will die. That's going to impact economic activity and so will a
| Saudi / Russian oil price war. It's going to lead to the dreaded
| "R"-word and usually sinks whomever happens to be the current
| POTUS and their chances for re-election.
| AnimalMuppet wrote:
| Hmm. It might also boost Sanders with respect to Biden...
| gigatexal wrote:
| But buy buy. All long term investors should be buying here imo.
| I'm not a big player but I'm picking up some shares at these
| lows.
| ptah wrote:
| how is this "circuit breaker" meant to help? surely it will just
| fuel emotions and make things worse if people can't get rid of
| stock they don't want?
| dbcurtis wrote:
| I thought it was more about kicking automated trading bots to
| the curb for a while. Stop an algorithm-driven flash-crash.
| grioghar wrote:
| My first thought was the dead cat bounce from last week.
|
| Hang onto your butts...
| hsnewman wrote:
| Let's call it what it is, the start of the Trump recession. Move
| your money to FDIC insured if you value it.
| deugtniet wrote:
| Just to clarify the title:
|
| Trading was halted for 15 minutes.
| pureagave wrote:
| Correct. 7% decline is a pause.
|
| If it drops 13% it will pause for another 15 minutes. If it
| drops 20% it will end trading for the day.
| Waterluvian wrote:
| I'm going to say it. It can't possibly collapse 20% in one
| day... can it?
| deugtniet wrote:
| Based on the rules it cannot drop _more_ than 20% in a day
| :-)
|
| There are examples of it happening in other countries
| though. Zimbabwe and Argentina come to mind for some crazy
| inflation and stock numbers.
| JumpCrisscross wrote:
| > _Based on the rules it cannot drop _more_ than 20% in a
| day_
|
| Asset pricing is not continuous. A single trade can take
| pricing from -18% to -X%, with X having any value between
| infinity and -100.
|
| The breaker triggers at -20%. If the market crosses at
| -18% and then trades -25%, that trade will cross and
| _then_ trip the breaker.
| umanwizard wrote:
| That's about how much it collapsed on Black Monday in 1987,
| so, yes, it can.
| MS90 wrote:
| Looks like it's only happened once, 22.61% on Oct 19, 1987.
|
| Even the 1929 crash wasn't that much, though it did drop
| about 24.5% over two days, Oct 28 and 29, 1929.
|
| https://en.wikipedia.org/wiki/List_of_largest_daily_changes
| _...
| vitaflo wrote:
| The crash in 1987 is why they put these halting rules in
| place.
| harambaebae69 wrote:
| This is incorrect, it was somewhere during/after the 2008
| recession that these circuit breakers went into effect
| (because I remember they didn't exist at that time)
| jkachmar wrote:
| I don't believe this is correct.
|
| My understanding is that these automatic limit down rules
| were added in response to the flash crash in 2010, during
| which the Dow Jones lost 1000 points over the course of
| minutes.
| findjashua wrote:
| not exactly - circuit breaker was put in place after the
| 1987 crash, but the 3-tier system (7-13-20) went into
| effect only in 2013:
| https://www.wikiwand.com/en/Trading_curb
| anm89 wrote:
| It's up what, 30 % over the last few months? The real economy
| didn't grow nearly that much.
|
| In terms of real value, the only way for the economy to take
| that degree of a hit in a day would be a natural disaster.
| But these numbers are mostly speculation, so yeah they can go
| up and down very fast minus techinal restrictions like these
| halts.
| sandov wrote:
| Wouldn't that incentivize people to sell before the pause/end
| of the trading day, creating a snowball effect?
| azernik wrote:
| It would indeed, but if it's an irrational panic or an
| algorithmic mess-up it also allows people to stop and think
| for a bit. It's a tradeoff, and the main goal is to reduce
| the extreme failures.
| [deleted]
| tonetheman wrote:
| Free market - until it is not
| neural_thing wrote:
| Trade safe. Historic times. Wouldn't be surprised if all the
| volatility shorts blow up and the S&P goes down 20% in a session.
| cm2187 wrote:
| The volumes on Vix futures are a fraction of what they were two
| years ago. Vix is shooting up but I assume it is following the
| stock market rather than the other way round.
| throwaway3157 wrote:
| For those unaware, this is common practice -- it a control that
| is working as intended. The trading was halted for 15 minutes
| rwmj wrote:
| Isn't this bad for price discovery? I mean, if stocks go down
| X% that's good for people who want to buy stocks cheaply and/or
| discover the true price.
| pacerwpg wrote:
| When was the last time this happened?
| spork12 wrote:
| election night 2016
| dev-ns8 wrote:
| Actually not true. This is the first time ever these
| circuit breakers were triggered during regular trading
| hours. Even still, on election night, stock futures were
| only under the 'limit-down rule'. You could have still been
| buying futures while that restriction was in place, so this
| is very much different and unprecedented
| [deleted]
| marzell wrote:
| Apparently in 1997, so it has been quite a while
|
| https://en.m.wikipedia.org/wiki/Trading_curb#Instances_of_us.
| ..
| jacobush wrote:
| Way before high frequency trading, to put some things in
| perspective.
| thisIsNotTrue wrote:
| This is not at all a common practice.
| harambaebae69 wrote:
| username checks out
| zuminator wrote:
| This is official policy, but not "common practice." According
| to CNBC: "These circuit breakers have never been triggered in
| their current form during regular trading hours."
|
| https://www.cnbc.com/2020/03/09/sp-500-futures-are-frozen-af...
| uptown wrote:
| The current circuit breaker rules went into effect in early
| 2013. There were different rules in-place prior to that date.
| ncallaway wrote:
| I feel like "this is an automated control" would be more
| accurate that common practice.
|
| This is _extremely_ rare.
| dannylandau wrote:
| Already blow past 7% on downside.
| [deleted]
| Lagogarda wrote:
| first time since the 2016 U.S. presidential election after they
| fell more than the daily limit of 5%
| joosters wrote:
| The daily limit is 20%, I believe?
|
| 7% = automatic 15 minute stop
|
| 13% = another 15 minute stop
|
| 20% = stop for rest of day
| gzu wrote:
| Those were futures the night of the election...
|
| Futures have a hault at 5%
|
| Normal trading hours have the 7% stop
| cesarb wrote:
| And from what I read, the futures did halt at 5% yesterday.
| So it was already sort of expected that the 7% stop would be
| hit today.
| csomar wrote:
| Despite all the blood, I see a bull case for Tech and the USA. In
| the last 5 years:
|
| 1- The Nasdaq has gained 99.77% until it's peak. It has corrected
| by 17.41% since the peak. Total gains till today: 64.9%.
|
| 2- The Dow Jones has gained 65% till the peak. Corrected by
| 21.71% since then. Total gains till today: 35.85%.
|
| 3- CAC 40 has gained 20% in the last 5 years till the peak.
| Corrected by 22.12% in this sell-off. Total returns are -6%.
|
| My thoughts:
|
| - Tech used to go up more and down more. Now it went up more and
| down less. This is likely to encourage and push traditional
| investors to invest more in tech. They were afraid from tech
| because of the bloody downturns. Now tech holds better in a
| downturn, so that argument is no longer there.
|
| - Europe is likely to be hit harder from this crisis since they
| rely a lot on Tourism. That means a harder recession. Europe tech
| sector is weak and unlikely to match its American counterpart
| growth in a EU slowdown.
|
| - China might be the biggest loser in this. The world might
| realize we are depending too much on China. The US government
| might force company to build locally or outsource to friendlier
| countries they want to boost. China is not going to the dark ages
| but might face a slow down; though a social revolution is
| definitely not out of the question.
|
| - The oil crisis, if prolonged, is going to change some
| countries. Look at Venezuela. Russia, Middle East, Algeria,
| Canada, etc... These countries might face budget challenges they
| have never been through before if oil goes below $20 for an
| extended time.
|
| - The US tech sector being the only good-yield field and becoming
| a safe haven for investment in a world of worry and chaos will
| boom into a bubble of untold proportions.
|
| Disclaimer: Not a professional advice. Might lose part of your
| money or all of your capital. Might be a total hopium from
| someone is the tech sector seeing lots of red today.
| thefringthing wrote:
| The practice of referring to increases in the price of an
| instrument as "gains" but any decline as a "correction" is
| bizarre.
| organsnyder wrote:
| We really could refer to all of them as "corrections".
| csomar wrote:
| It's not. It's trading lingo. If the pricing was on a
| downturn "losses", then an upward move is a correction.
| anigbrowl wrote:
| Except that in practice nobody says that. I've worked with
| both large financial institutions and tiny hedge funds
| going back nearly 30 years, traders are cognitive bias on
| legs. There's a reason Wall Street has a statue of a giant
| bull but not of a bear.
| yskchu wrote:
| > The practice of referring to increases in the price of an
| instrument as "gains" but any decline as a "correction" is
| bizarre.
|
| Its not any decline - it needs to be 10% or more:
|
| https://www.investopedia.com/terms/c/correction.asp
| kortilla wrote:
| Tech doesn't look too rosy if there is a problem with the
| entire hardware supply pipeline in China.
| 01100011 wrote:
| The entire pipeline isn't in China. Taiwan seems to hold some
| of it and they're doing just fine. They've apparently managed
| to contain the virus quite well.
| aazaa wrote:
| This will be blamed on COVID-19, but the problems go much deeper.
| Last year the Fed lost control of the repo market. the event was
| widely discounted at the time as an end-of-tax-year fluke. It
| wasn't. Six month ago, the yield curve inverted. People who
| should have known better said "this time is different."
|
| Speculators have been trained over the course of 10+ years to buy
| the dip. The Fed has your back.
|
| What we're seeing is the beginning of the end of that resolve.
|
| The last time this happened was during the GFC. It's not normal,
| and it's probably not a one-time event, either.
| dobleboble wrote:
| Do you have a reference for the claims about the repo market? I
| see so much FUD posted, and so few references to primary
| sources. Reader beware of grand proclamations and doomsday
| predictions, especially from new accounts, especially when they
| don't provide reputable sources.
| foota wrote:
| Like... whether it happened?
| https://www.bloomberg.com/news/articles/2020-01-06/why-
| the-u...
| snarf21 wrote:
| You are correct. Equities have been propped up by free money
| for too long. I thought we would have to wait until the
| election to trigger this correction but better sooner than
| later. However, the Fed needs to raise rates and we need fiscal
| policy to fix this, not monetary. There is still too much money
| out there with nowhere to go. A ton of that money is going to
| come right back in and run it back up some. At least they are
| buying the dip even if earnings will crater.
| throwaway713 wrote:
| > This will be blamed on COVID-19, but the problems go much
| deeper
|
| This is a strong claim. Can you prove it?
| feistypharit wrote:
| The quantitative easing that was going on is a start...
|
| https://www.marketwatch.com/story/the-federal-reserve-is-
| stu...
| voisin wrote:
| Is turning Global Financial Crisis into an acronym necessary?
| It certainly isn't standard. Turning things into acronyms that
| are used a single time in a written statement without reference
| or explanation is one of the most obnoxious things in this
| industry. Paraphrasing grandmas everywhere, if you can't write
| things properly, don't write anything at all.
| Youden wrote:
| I get your objection but I don't agree with it in this case.
| As someone who is neither you nor OP, I see GFC as a pretty
| well-known acronym, especially in this context (recessions,
| financial troubles).
| dreamcompiler wrote:
| The Market is like a supercooled liquid. It's been poised to
| freeze for months, just waiting for a crystallization seed.
| COVID-19 and the Saudis gave it two.
| NikolaeVarius wrote:
| So what are you shorting?
| senordevnyc wrote:
| Buying puts on SPY. Realized gains (so far) are $30k from an
| initial "investment" of $1k about three weeks ago. Currently
| have about $10k riding with expirations in April and May. If
| the market shoots up because the Fed announces stimulus, I'll
| buy more. It's pretty clear that the virus is going to
| decimate the world economy for many months, maybe years. And
| watching the complete mismanagement by the US only increases
| my confidence.
|
| I also moved $600k to cash, about 80% of it a month ago.
| Never done that in 20 years of investing, and probably
| wouldn't advise it to anyone now either. But when China
| locked down the whole country, I knew it was time to stand on
| the sidelines. Worst case, I'd lose out on a few percentage
| points of growth and jump back in once the threat had passed.
| I also still have significant indirect exposure through
| unvested employer stock.
|
| To be clear, this is all fairly risky and ill-advised.
| aguyfromnb wrote:
| Why do you have to short anything? The idea was to get more
| defensive months ago. Long term treasuries are up almost 50%
| y-o-y.
|
| If you think it's easy to short things in a volatile market
| like this, then you've probably never tried to...
| papito wrote:
| I started getting defensive right after the election of
| 2016.
|
| Modern history does not have an example of you know which
| party going on a tax cutting, over-spending, self-dealing,
| deregulation binge that did _not_ end in a catastrophe. Add
| to that complete lack of competency when it comes to
| dealing with a not self-made crisis (a matter of time), and
| only a chump would think the good times would keep on
| rolling.
|
| The market so far has absorbed the dumb trade war by pure
| optimism, and we only narrowly avoided a war with Iran. It
| all has been blind luck so far, and it just ran out.
| vikramkr wrote:
| Your everyday investor probably shouldn't be shorting in
| ultra high volatility periods like this. Markets spike for
| one day in the course of leading to a recession leads to a
| margin call and you can't post collateral, then you're done.
| Doesn't matter if it goes to zero a week after.
| aguyfromnb wrote:
| I'll add certain "tech companies" making no money doubling and
| tripling in a matter of months. The blow-off top was obvious,
| Covid19 was a mere catalyst.
| king_panic wrote:
| Would it have happened without COVID-19?
| whatshisface wrote:
| > _Six month ago, the yield curve inverted. People who should
| have known better said "this time is different."_
|
| How does your story jive with the fact that the yield curves
| went back to normal? Either they are an indicator or they
| aren't.
| throw0101a wrote:
| > _Either they are an indicator or they aren 't._
|
| Because:
|
| * https://yourlogicalfallacyis.com/black-or-white
|
| The link is statistical and not causal:
|
| > _Shortly after 6 a.m. ET on Wednesday, the yield on the
| 10-year U.S. Treasury bond dipped below the yield on the
| 2-year U.S. Treasury as the 10-year fell 1 basis point below
| the 2-year. The yield curve inversion has a strong track
| record of predicting a recession; each of the last seven
| recessions (dating back to 1969) were preceded by the 10-year
| falling below the 2-year._
|
| * https://finance.yahoo.com/news/yield-curve-inverts-for-
| first...
|
| Bond rates are like a thermometer or barometer. So the fact
| that (economic) storm clouds are gathering are not caused by
| the measuring instrument (bond rates), but rather the metric
| is reading the (business) atmosphere.
| SkyBelow wrote:
| >Either they are an indicator or they aren't.
|
| Third option is that it is an indicator as long as people
| aren't treating it as one, but once people react to it then
| it ceases having the power to indicate what is happening.
| danans wrote:
| For the curious, this is known as Goodhart's Law.
| dpau wrote:
| also applies to psychohistory in asimov's foundation
| aguyfromnb wrote:
| > _Either they are an indicator or they aren 't._
|
| Because after the inversion the market (and Fed) reacted? No
| indicator is infallible or static.
| rtkwe wrote:
| I've been skeptical of the whole yield curve as metric
| thing because it's not directly tied to the actual state of
| the economy directly just to the sentiment about the market
| X years in the future. Given how much we know the whole
| market is prone to group think, self delusion, and outright
| manipulation I've grown very skeptical of any indicator
| about the market that comes directly from the market.
| prmph wrote:
| But the actual economy _is_ still about sentiment, no?
| rtkwe wrote:
| In most places yeah which is why the kind of highly
| instrumented self reflection of the sentiment like the
| yield curve inversion can be dangerous. It's not a sign
| that says there's going to be a recession it's just a
| sign the people in that market think there will be one.
| jakeinspace wrote:
| From consumers and suppliers (to some degree), not so
| much from buyers of treasury notes.
| gmtx725 wrote:
| I always wonder how much of a self-fulfilling prophecy it
| is, especially now the yield-curve-inversions-precede-
| recessions thing is so well known, i.e. people see the
| yield curve inverts and therefore believe the market will
| drop, therefore it does. Markets are just a reflection of
| aggregate human beliefs after all.
| bumby wrote:
| According to Planet Money/The Indicator the normalization of
| the curve is part of the pattern that happens prior to
| recessions if I remember correctly
| azhenley wrote:
| The indicator is that it stays inverted for a quarter. It
| going back is not part of the indicator.
| gdubs wrote:
| Another way to put it is that Coronavirus is forcing people to
| realize that we've been papering-over weaknesses with easy
| money for quite some time. That said, "economists have
| predicted 5 out of the last 3 recessions" -- people have been
| warning against one for years now.
|
| But the problem is that coronavirus is threatening the real
| "brick and mortar" economy -- travel, restaurants, retail, etc.
| Its hard to address that without fiscal stimulus, and we
| haven't seen much talk in terms of that yet.
|
| Add to the list sub-prime auto loans, a huge amount of student
| loan debt...
| tmpz22 wrote:
| It would be interesting to see what percentage of student
| loans are serviced by brick and mortar retail, bar tending,
| barista, etc. types of gigs.
| toomuchtodo wrote:
| https://www.nbcnews.com/news/us-news/student-loan-
| statistics...
|
| Check out the graphs presented, particularly the last one.
| Default is very likely for those most likely to have
| student loan debt (younger workers in lower quality service
| jobs), but there isn't a systemic risk as the federal
| government is the insurer of last resort. These are loans
| in name only; they are, in actuality, taxes you can't
| default on (or so was traditionally thought; we're making
| headway in having the ability to default on these
| obligations and get out from underneath them [1]).
|
| [1] https://www.natlawreview.com/article/student-loan-
| discharged...
| cm2187 wrote:
| I kind of think that the Fed will not let this go too far in
| the middle of an election year, particularly given Trump. But
| yeah, the market was clearly overextended, and stock price
| growth was accelerating.
| jurassic wrote:
| It's really not up to the Fed; they had an emergency rate cut
| last week and it was just a minor blip on the overall
| downward slide. This is a demand-driven crisis, not a
| liquidity crisis or credit crunch like 2008. Monetary policy
| isn't going to get you very far this time.
| cm2187 wrote:
| No the Fed can push asset prices through QE
| hn_throwaway_99 wrote:
| The multi-trillion dollar question, though, is whether the
| Fed actually has much ability to help much with the current
| situation. Flooding the economy with cash probably isn't
| going to make people want to book a cruise anytime soon.
| aswanson wrote:
| Correction is way overdue. Problem is, Fed has no ammo left
| with interest rates at near zero. We're in for rough days,
| people.
| ngcc_hk wrote:
| It is not a problem with correction or even recession.
| Without one you cannot eliminate those weak and continue the
| rich as rich. You need some cycle. Desperately need it.
| rtkwe wrote:
| Only if restricted to the relatively arms length levers like
| interest rates. There's still plenty of room for more drastic
| measures like buying stock directly in companies like Japan
| has done or huge prop ups like a new WPA.
| adventured wrote:
| The Fed has as much ammo as there is wealth held in dollars.
| Which is to say, a lot.
|
| First, there is negative rates. Punishing people for holding
| cash. The ECB and Bank of Japan have done a lot of pioneering
| work there, the Fed will have already extensively studied
| what they did, what worked, what didn't work.
|
| Second, they have QE, monetizing debt & debasing dollar
| wealth, which is exactly what they'll unleash for the next
| recession. Inflation isn't much of a concern right now, so
| they'll feel free to 'print' rather wildly.
|
| Annual budget deficits will blowout, probably up to $2
| trillion or more, with the next recession, so the Fed will
| have to print dramatically to fund that regardless.
| take_a_breath wrote:
| ==First, there is negative rates. Punishing people for
| holding cash. The ECB and Bank of Japan have done a lot of
| pioneering work there, the Fed will have already
| extensively studied what they did, what worked, what didn't
| work.
|
| Second, they have QE, monetizing debt & debasing dollar
| wealth, which is exactly what they'll unleash for the next
| recession. Inflation isn't much of a concern right now, so
| they'll feel free to 'print' rather wildly.==
|
| I'm not sure I see where either of these options has
| worked. Can you share the successes of either of these
| measures?
|
| In option 1, you have a stagnant Japan with a lost
| generation.
|
| Option 2, is what we have been doing for 12 years and has
| led us to this point. The inflation seems to be hiding in
| asset prices (housing, stocks) not household items.
|
| Since 2007, there has been one year with GDP growth [1]
| above the annual deficit as % of GDP [2]. That was 2015,
| with 2.4% deficit and 2.9% GDP growth. 2018 saw the US
| spending 3.8% of GDP in deficits to generate 2.9% GDP
| growth. Does that sound like a "strong" economy?
|
| [1] https://www.macrotrends.net/countries/USA/united-
| states/gdp-...
|
| [2] https://fred.stlouisfed.org/series/FYFSGDA188S
| lotsofpulp wrote:
| Housing is not a household item?
| take_a_breath wrote:
| No, it's not. You can't buy houses at WalMart or Costco
| because they sell household goods, not housing. [1]
|
| [1] https://en.wikipedia.org/wiki/Household_goods
| vanniv wrote:
| I love how everyone uses Japan as an example of central
| bank success.
|
| Their economy crashed in the 1980s and still hasn't
| recovered.
|
| If that "success", I'll stick with failure.
| steveeq1 wrote:
| I can practically just smell the inflation.
| Majromax wrote:
| > I can practically just smell the inflation.
|
| Then the Fed _isn 't out of ammunition_.
|
| The purpose of Fed easing would be precisely to
| generate/maintain target levels of inflation. The idea
| that the "Fed is out of ammunition" is that its
| conventional policy tool (rate changes) is seen as near a
| limit, such that the Fed can't generate further inflation
| if it wants to.
|
| But here, you "smell the inflation," so by definition the
| contemplated actions are in fact ammunition.
| aaronblohowiak wrote:
| The yield on the 10 year... Now is the perfect time to
| finance a bunch of govt spending (not that I expect this
| admin to embrace fiscal policy)
| dylan604 wrote:
| This administration has a single minded project that has
| been a struggle to get financed. It would be a huge coup
| for them to use this downturn to get it financed without
| borrowing from Peter to pay Paul. Then again, this is all
| probably just fake news.
| travisoneill1 wrote:
| Right. Borrow $5 trillion for infrastructure and pay <$50
| billion / year. That's a positive ROI for sure. Only issue
| is you would flood the markets and raise those rates, so
| you wouldn't get all of it, but still a lot. I have always
| though that the government should act strategically and
| take advantage of low rates like other market participants.
| mech1234 wrote:
| Trump runs huge deficits during boom times. He'll probably
| run even huger deficits during bust times.
| azhenley wrote:
| It is possible for interest rates to be negative. Not that
| I'm recommending that to happen!
| Insanity wrote:
| Something that actually happened in Sweden! Although it
| seems like it's not like that anymore:
|
| https://www.thelocal.se/20191219/sweden-abandons-negative-
| in...
| sschueller wrote:
| It's still negative but less than others: https://en.wiki
| pedia.org/wiki/List_of_countries_by_central_b...
| frandroid wrote:
| Interest rates have been negative on deposits at the
| European Central Bank since _2014_ ... The rate currently
| sits at -0.50%
| 0xcafecafe wrote:
| Real rates are (and have been) negative. :/
| [deleted]
| ailideex wrote:
| > This will be blamed on COVID-19
|
| Good. Because I don't buy for a moment that without COVID-19
| the situation would be what it is now. Hindsight is 2020 and
| predictions of doom and stock market collapse is a dime a
| dozen.
| hi5eyes wrote:
| markets knew about covid for a month before it started
| tanking
| rchaud wrote:
| The markets may have "priced in" the impact of COVID-19
| based on a couple of scenarios. But they may also have
| priced in other factors, such as the plateauing impact of
| US corp tax cuts, share buybacks and cheap capital.
|
| It's likely however that those scenarios didn't attach a
| high weight to the probability like 20 million Italians
| living in a state of quarantine, or that 8,000 plus
| patients in China would die and industrial production
| levels would plummet.
| SilasX wrote:
| There were lay investors that reported betting on a covid
| related drop and profiting significantly by buying options
| (eg Wei Dai on LessWrong, will find direct link when I get
| to desktop).
|
| [Usual caveat about reading too much into plays like this.]
|
| Edit: Here's the thread, and _sincere_ apologies for the
| flaketastic LW interface now, they don 't even have a
| parent button and it took several seconds for the thread to
| render after the page loaded:
|
| https://www.lesswrong.com/posts/jAixPHwn5bmSLXiMZ/open-
| and-w...
| Johnny555 wrote:
| They didn't (and still don't) know the true financial
| impact of the virus (even epidemiologists don't know what
| it's going to take to get it under control), so the true
| effect of the virus wasn't priced into the market, plus now
| many investors are trading on fear.
| ailideex wrote:
| I also knew about it a month ago, I was more optimistic
| then. If no new information ever comes into play or if
| views and outlooks never changes then markets would be
| static. People knew about viruses for decades now also ...
| does not mean all possible consequences of viruses are
| already priced in.
| theseadroid wrote:
| markets started to know the scale of U.S. government's
| incompetence in handling Covid 19 now.
| 76543210 wrote:
| In 2013 I wouldn't be predicting a recession.
|
| In 2017 after Trump announced tariffs and it was ~10 years
| since the last recession. I was concerned.
|
| Maybe stock prices were fine, but multiple companies I've
| worked for became unprofitable and got rid of tens of
| thousands of contractors.
|
| Recession? Definitions are toxic to the real problem.
| ailideex wrote:
| > Recession? Definitions are toxic to the real problem.
|
| Okay, then lets not use them. Is what we are seeing now
| primarily a consequence of of COVID-19 or not?
| paulmd wrote:
| > Is what we are seeing now primarily a consequence of of
| COVID-19 or not?
|
| "is the 2008 crisis primarily a consequence of mortgages
| or not?"
|
| In the grand scheme of things, no, it's a consequence of
| a bubbled economy that has been goosed with tax cuts,
| extremely low interest rates, and deregulation for too
| long and is overdue for a correction. The proximate cause
| is Covid but it just was the spark that lit the fire,
| there was lots of fuel building up.
|
| https://en.wikipedia.org/wiki/Necessity_and_sufficiency
|
| This is why you don't cut tax rates and keep interest
| rates super low when the economy is already roaring. Now
| we're out of options for dealing with a real financial
| crisis.
|
| Trump of course understands none of this since he's a
| narcissistic con man who just understands "tax cuts =
| economy more better!". Insofar as he can be said to
| understand anything - he's not a man that can be
| described as intellectually curious.
| magduf wrote:
| >Insofar as he can be said to understand anything
|
| Well, while he doesn't seem to have much understanding of
| economics or how to run a government properly, let's give
| credit where credit is due: he certainly seemed to
| understand how to get people to vote for him a lot better
| than his political competitors did.
| mnm1 wrote:
| That's why he got less votes than his opponent.
| magduf wrote:
| Are you seriously bringing that up again? He won the
| election. The number of votes is irrelevant. Maybe that's
| why he won: he actually understands this simple fact
| about how the Constitution works, and people like you
| either don't, or simply refuse to.
| mnm1 wrote:
| > he certainly seemed to understand how to get people to
| vote for him a lot better than his political competitors
| did
|
| This is false. The fact that he won the election is
| completely irrelevant to this point. The election isn't
| won by the candidate who understands how to get people to
| vote for him. If it was, he'd have lost.
| magduf wrote:
| Obviously, you are completely unwilling to accept the
| fact that Trump won the election, and somehow you're
| creating utterly insane logic to continue the fantasy in
| your head.
| fredgrott wrote:
| no no,,, COVID-19 is not the trigger its just one of the
| steps leading to the trigger...you had to have the fed
| manipulation of money to account for the 2008 losses on
| mortgages combined with the firm's stock performance via
| profits etc.
| state_less wrote:
| Agreed, let's not discount COVID-19. You're going to get a
| steady drip of ugly news for months. There is reality to the
| COVID-19 news too. I'm expecting heavy hits to airlines,
| cruises, theme parks, sporting events, etc... Profits will
| decline.
|
| If you're not needing the money soon, you'll probably be fine
| with riding it out like you may have with the great
| recession. I'm pained by the stories of boomers and others
| who sold low during the great recession and didn't catch any
| of the gains when things started turning back around. This
| too shall pass.
| westpfelia wrote:
| I mean personally I think the whole opec thing has a little
| bit more weight behind it then corona.
| saati wrote:
| The "OPEC thing" is a response to dwindling chinese demand,
| because of SARS-CoV-2.
| jsight wrote:
| Maybe, but it seems to me that increased production and
| lower oil prices are likely to create as many winners as
| losers.
| westpfelia wrote:
| Well... that might not be true. Were in a weird spot
| right now where banks handed out billions in loans to oil
| companies. And now it looks like a lot of these companies
| are going to be insolvent well before they can even start
| drilling. So were talking about big banks being hit hard
| with billions in loans not being paid.
| dd36 wrote:
| They usually hedge out 18 months. It would take a
| sustained assault by SA and I really doubt they will have
| that much resolve.
| fancyfredbot wrote:
| This is widely being blamed on oil prices (edit: the virus
| would have been priced in last week to some extent, but the
| decision by Saudi Arabia to increase oil production happened
| over the weekend and hadn't been).
| treis wrote:
| Oil prices going down is a good thing for the economy.
|
| I think people are confusing cause with an
| effect/correlation. Oil going down usually indicates a
| recession. Bad economy -> Lower demand for Oil -> Lower oil
| prices. In that case it's a signal/trailing indicator.
|
| In this case it's: Increased oil supply -> Lower oil prices
| -> Everything gets cheaper to make -> Increased economic
| activity
| pmoriarty wrote:
| _" Increased oil supply -> Lower oil prices -> Everything
| gets cheaper to make -> Increased economic activity"_
|
| There would be increased economic activity if businesses
| don't close left and right because of a combination of
| decreased demand and supply as both consumers and workers
| self-isolate and live in quarantine, and the knock-on
| effects of China's reduced manufacturing capability (soon
| to be followed by reduced manufacturing capability of much
| of the rest of the world).
|
| This stock market crash is just the tip of the iceberg.
|
| The tops of political, administrative, business, and
| military hierarchies tend to be overwhelmingly old, and
| most susceptible to succumbing to this outbreak. As many of
| them die, as the bodies they govern are plunged in to chaos
| and societies around the world go in to crisis mode, the
| markets will respond even more adversely than they have
| already, as the markets don't like uncertainty, and there's
| no end in sight to such uncertainty for the foreseeable
| future.
|
| There is little economic upside from this pandemic. Few
| ways of profiting from it except by shorting nearly
| everything and buying gold. The bond markets and treasuries
| are also likely to suffer as governments default.
| secfirstmd wrote:
| Good for short/medium term economy, terrible for the
| environment though unfortunately. So probably bad for the
| long term economy when carbon/environmental risks take
| effect.
| Mountain_Skies wrote:
| Since when has Wall Street become focused primarily on
| the long term while ignoring the next few quarters?
| adventured wrote:
| > Oil prices going down is a good thing for the economy.
|
| That is no longer strictly correct. The ideal oil price for
| the US economy is a balance between high and low, which
| provides a high degree of employment for the US oil
| industry, oil production and export expansion remain high,
| and provides a reasonable price for US consumers when it
| comes to gasoline.
|
| Oil in a range of perhaps $45 to $75, is ideal.
|
| At $25-$35 you're going to eventually hammer the US oil
| industry and its jobs, as the hedges fall away. That will
| hit the US economy negatively at least as much as the low
| oil prices benefit consumers.
|
| Russia is playing a bad game of chicken with Saudi Arabia
| and US oil, claiming they can endure ~$30 oil for a decade.
| It's false of course. Their personal incomes have been
| falling for six or seven years in a row. $30 oil will
| contract the Russian economy at worst, and stagnate it at
| best, so it would be ten more years of declining living
| standards in Russia (the last thing Putin wants to see, so
| it's a false bravado on his part, as typical).
|
| Saudi Arabia and Iraq will be crushed fiscally by low oil
| prices. Saudi needs $83 oil to balance their budget. Canada
| will take a modest hit as well.
|
| China is the prime beneficiary as a massive importer with
| modest production, they're in the position the US was in
| previously.
| chadmeister wrote:
| I think you're the only person in this thread presenting
| arguments based on facts. I would just like to say that I
| really appreciate that, especially when everyone else is
| running around like chickens with their heads cut off
| like the sky is falling.
| kaiabwpdjqn wrote:
| That makes a lot of sense to me, but it doesn't seem to be
| the case and I don't understand why.
|
| Is it oil prices down -> large oil based economies at risk
| due to vastly lower margins -> global instability from
| inability to make payments?
| dariusj18 wrote:
| Maybe it's because the US is now a massive oil producer,
| but there are a lot of oil companies in a lot of debt, so
| depressed oil prices will force them to go into
| bankruptcy. Next step will be US government propping up
| the industry somehow, IMO, either with a bailout or by
| buying oil at above market prices and increasing
| strategic reserves.
| JoeAltmaier wrote:
| Its easy to play connect-the-dots. Rarely is that the whole
| story. There are many other dot-to-dot paths that result in
| very different effects. The sum total of all the chains is
| what makes the economy so hard to predict.
| polotics wrote:
| You are not fully correct with "Oil prices going down is a
| good thing for the economy." This is true only as long as
| oil prices are high enough for producers to keep producing.
| Heard of shale-oil margins?
| Digory wrote:
| The Saudis are trying to break the back of US fracking by
| piling on. This won't free up room in the US economy like
| it used to.
|
| If you lean bearish, you're thinking 80s oil bust, S&L
| Crisis, and the Spanish flu.
| dannypgh wrote:
| There's also decreased demand - look at airlines, jet fuel
| uses 1.7 million barrels per day normally, and COVID-19 is
| causing fewer people to want to get on planes.
|
| The fraction of the price drop that can be attributed to
| large producers flexing market power versus the decreased
| demand is a tricky thing to determine.
| solarhoma wrote:
| Say that to the nearly 5 million employed in O&G.
| travisoneill1 wrote:
| Most of those who work in drilling will be laid off in
| the next six months. Been there done that. But it doesn't
| change the fact that it will be over all beneficial to
| the economy.
| solarhoma wrote:
| I do believe you are correct that the money the average
| consumer will have in their pocket will be good. But
| can't help but think there are other economic
| implications in this huge oil drop. The drop was not
| initially put in place by breakdowns in opec talks. But
| COVID-19. So what I am getting at is a drop in
| manufacturing, consumer spending, and travel. I'm just
| scratching the surface but I hope you understand what I'm
| getting at.
| vearwhershuh wrote:
| In a world with zero-to-negative interest rates, unlimited margin
| available for the big players and a generation of boomers sold on
| the idea that stock appreciation (not dividends) is going to fund
| their retirement, what's the value of any company? Who knows?
|
| Until dividends are tax advantaged vs. capital gains, the
| insanity will continue. Leverage, huge risks and various shades
| of fraud, rather than responsible business stewardship will
| continue to dominate the financial system.
| tomrod wrote:
| Exactly my thoughts.
| rytill wrote:
| What is the best way I can contribute to making dividends tax-
| advantaged vs. capital gains?
| vearwhershuh wrote:
| Well, my plan would be to treat dividends as tax deductible
| to the company and then flow through to the owner, as with
| LLCs. Capital gains would be taxed at a windfall rate (e.g.
| the highest marginal income tax + payroll tax rate + 10%).
|
| The nice thing about this is that the progressive income tax
| system then makes equity ownership very attractive to lower-
| income households, and less attractive to rich people,
| thereby distributing ownership over a larger and more
| economically diverse group.
|
| I have no idea how to get people to buy in to this idea. I
| have had no success convincing even my own family that this
| change needs to happen, and my parent post is being
| downvoted. -\\_(tsu)_/-
| jfacoustic wrote:
| And if the media would stop writing alarmist articles, there
| would be far less panic. We're in the golden age of yellow
| journalism. I've learned, in general, panicking creates more
| problems than there were to begin with.
| cletus wrote:
| So, children of summer (there are many here who have only known
| the longest bull market in the last century), let me give you
| some free advice.
|
| If you're looking at this and wondering when to get in, to
| bargain hunt essentially, and you're asking yourself questions
| like "today? next week?", you need to step back and think again.
| Some points to consider:
|
| - If your time horizon is 10+ years out probably none of this
| matters
|
| - If your time horizon is less than 5 years out, you should
| really question if you should be in the stock market at all
|
| - Be familiar with the term "dead cat bounce". This is a
| temporary period of recovery followed by a steeper drop. You're
| going to see this kind of thing.
|
| - Large market drops often lead to or are because of a likely
| recession. This can go on for months or years.
|
| - After the GFC the markets went down and then sideways for over
| a year. You essentially missed nothing by waiting two years. This
| could easily happen again.
|
| - Learn what "reversion to mean" means. It means that at times
| the markets generally follow a long term upward trend. At times
| the market will go above or below that. This can be a useful
| indicator of whether equities are cheap or expensive. In a given
| cycle you have boom (above the mean when equities are overbought)
| to bust (an overcorrection to below the mean when equities are
| oversold).
|
| Bear markets are paved with the blood of optimists.
| m3kw9 wrote:
| Your statement is true if you just blindly invest in an index,
| times like this you need to invest in a trend but is more
| difficult.
| eli_gottlieb wrote:
| Honestly, spring just happens to be the season when I
| contribute to my Roth IRA, so hey, I guess this year I get my
| index funds at a low per-share price. Thanks log-normal random
| walk!
| cletus wrote:
| Before you get too excited about Spring essentially solving
| this problem, I present to you the history of the Spanish Flu
| [1].
|
| > Reported cases of Spanish flu dropped off over the summer
| of 1918, and there was hope at the beginning of August that
| the virus had run its course. In retrospect, it was only the
| calm before the storm. Somewhere in Europe, a mutated strain
| of the Spanish flu virus had emerged that had the power to
| kill a perfectly healthy young man or woman within 24 hours
| of showing the first signs of infection.
|
| [1]: https://www.history.com/news/spanish-flu-second-wave-
| resurge...
| rmah wrote:
| And the decade following the spanish flu epidemic -- which
| killed a massive # of people -- was great (financially).
| cletus wrote:
| True, before it all fell apart. This sort of thing isn't
| unprecedented either [1]:
|
| > In this downturn, however, the ground for the next
| economic explosion after 1500 was being laid. Wages rose
| and huge swathes of society had more money to spend on
| consumer goods, from beer to clothing to furniture. With
| fewer people to feed, the largely agricultural economy
| could focus more on livestock or specialty cash crops
| like hops or sugarcane instead of grain. Diets improved
| and, plague aside, so did health. More and more people
| were drawn into the market economy and trade networks
| grew wider and deeper.
|
| [1]: https://theconcourse.deadspin.com/after-the-black-
| death-euro...
| sombremesa wrote:
| If your time horizon is 10+ years out, make like your 401k and
| invest on schedule regardless of whatever the market is doing.
| (Though you might want to rebalance if no one is doing that for
| you - i.e. if you handpicked your stocks)
|
| And I would reword the 5+ year rule as: don't put any money in
| the stock market that you think you might need within the next
| 5 years.
| throwaway34241 wrote:
| > If you're looking at this and wondering when to get in, to
| bargain hunt essentially, and you're asking yourself questions
| like "today? next week?", you need to step back and think
| again.
|
| > Bear markets are paved with the blood of optimists.
|
| I agree with exercising caution in the sense that trying to
| time the market is difficult and probably inadvisable in
| general, but I don't agree that people should be careful
| specifically because of the recent drop.
|
| IMO the time for caution was weeks ago when the market was much
| nearer all time highs and it was clear the Coronavirus' growth
| rate was not under control (and that the measures necessary to
| contain it might reduce economic growth). Now is a considerably
| worse time to exercise caution.
|
| People investing for the long term should probably have
| equities as a substantial portion of their portfolio. If
| someone doesn't already, I think it would be a mistake to hold
| back just because the market has dropped. The market may go up
| or down from here, but the alternative investments of cash and
| bonds aren't obviously better choices (and it's expected that
| stocks will be pricier than they were in the past if bonds
| return less than nothing after inflation). I think a lot of how
| things play out will depend on future political decisions
| around monetary and fiscal policy that are not realistically
| predictable.
| 01100011 wrote:
| Cash may be a perfectly fine choice over the next year. You
| don't _have_ to invest in something if the conditions are not
| right.
| throwaway34241 wrote:
| Cash may be a perfectly fine choice, it could also be a
| very sub-optimal choice. Same goes for stocks, bonds, gold,
| etc. Of course you don't have to do it if the conditions
| are not right but knowing if the conditions are right is
| the tricky part.
|
| In order for some people to beat the investment average by
| timing the market someone else must underperform the
| average. Active investment management is in general a zero-
| sum game in which you compete with a bunch of math PhDs at
| hedge funds that do it as a day job (and even they have a
| tough time). Of course you can win if your own analysis of
| when the conditions are right is better, but trying to do
| so is usually not recommended for individual investors.
|
| Holding cash sounds simple but if it goes up from here how
| do you know when to buy? If it goes down from here how do
| you know when to buy? And if you never buy, over a couple
| decades you will almost certainly do worse (Japan is a
| different case because at the bubble peak their stocks were
| measurably more overpriced compared to almost anything else
| in history including where the US market is now). In the
| end I think the only simple thing is the advice most
| economics professors would give which is to give up trying
| to time the market and just buy a low-fee mixed stock/bond
| index portfolio (with the ratio based on your risk
| tolerance).
| lisper wrote:
| On the other hand, it's also possible that the CV will recede
| in the summer, and that will very likely make the markets
| bounce back. To quote Carl Sagan, prophecy is a lost art.
| takeda wrote:
| The market already was showing signs of problems, the CV was
| just what broke the camel's back.
| ouid wrote:
| The doubling rate is 3 days. Either we will be in a 3 month
| long quarantine, or in three months the infection rate will
| be slowing because there's no one left to infect.
| in_cahoots wrote:
| That's only true under current conditions. If we move to
| social distancing themselves the doubling rate may slow
| down significantly, which would actually increase the time
| to burnout.
| nostrademons wrote:
| That's the "3 month quarantine" case in his comment.
| munk-a wrote:
| It seems unlikely that will happen in the US due to the
| executive branch messaging very much being "Everything is
| fine folks - oh please don't stop going to work!"
| NeoBasilisk wrote:
| Yep, anyone that started investing in 2012 or later is about to
| learn the true meaning of "Past performance is no guarantee of
| future results."
| ouid wrote:
| When China put 10% of the worlds population on travel
| restrictions, a put on SPY with a strike of 300 expiring this
| Friday was 29 cents.
|
| The optimism is frankly unbelievable.
| senordevnyc wrote:
| A few weeks ago, I spent $730 to buy 73 SPY put option
| contracts expiring this Friday with a strike of $270, so
| about 10 cents per share. Unbelievable. I've been selling
| them over the last week and just finished getting out today
| with a realized gain of about $30k.
|
| Wish I had put $50k in instead of $1k, but I suppose that's
| always the lament when an ultra-risky trade goes your way :)
| idclip wrote:
| Teach me your ways. Literature ?
| ouid wrote:
| If the news says "China puts 760 million people on travel
| restrictions", you should look at the price of puts.
| senordevnyc wrote:
| This.
|
| It was really just insurance. I fully expected the $1k I
| bought to expire worthless, and the first $230 did, but
| these ones I was able to exit for a nice profit.
|
| I highly suspect the expected value of options trading is
| negative, but it's useful as a hedge. Really wish I could
| spend like 10% of my salary on put options for my
| employer in case I get laid off, but it's forbidden
| apparently.
| LegitShady wrote:
| reddit wallstreetbets obviously
| senordevnyc wrote:
| Actually no...I hadn't ever visited before a few days ago
| :)
| kortilla wrote:
| That's not optimism. That's options pricing driven by implied
| volatility and the current price.
| senordevnyc wrote:
| One of us is thinking about implied volatility wrong. My
| understanding is that it's not a measure of actual
| volatility, of either the underlying security or the option
| itself. Rather, it's a measure of how much the price
| reflects _expected_ volatility in the underlying security.
| So in a security with ultra-low expected volatility (IV),
| options that are far out of the money will have much lower
| premiums than those where high volatility is expected in
| the underlying security.
|
| In this way, the poster you're replying to is right. The
| reason premiums were so low was that IV was so low, but
| that was because no one expected the S&P 500 to drop from
| 3350 to 2750 in a few weeks. The IV is pretty high now, but
| it's still bouncing around much more than the actual
| volatility of the SPY index itself. I've seen everything
| from 30-150% over the past few weeks.
| kortilla wrote:
| It's still not optimism because it doesn't imply
| direction. A low implied volatility just means lower
| expectation of big moves _in either direction_.
|
| A stock that has gone up like a rocket ship will have a
| high implied volatility despite no crashes or
| expectations of declines.
| ouid wrote:
| Markets are not wiggly lines.
| 8ytecoder wrote:
| It's unfortunate to ignore the sentimental nature of markets.
| In the history of market there has always been either a
| discount or a premium over fair value. As if by coincidence,
| I'm reading the intelligent investor and a lot of what Graham
| said remains true to this date. There's almost always a
| premium/discount to the fair value of the stock market as a
| whole. The last few years have been extraordinarily good.
| Everyone knew a correction was coming. That's happening now.
| It's impossible to time the market but it's possible to
| differentiate between a correction to a fair value and a huge
| discount on price. In any case, the investor should be willing
| to wait for a while before the market realizes the value that
| they think the stock is worth.
|
| Similar to how the last few years felt like everything was
| getting more and more expensive, the current downturn also
| seems like an over-correction (time will tell if I'm wrong).
| But what I'm sure is this - if the markets are down for a
| prolonged period - over 5 years - we have way bigger problems
| than the rate of return.
|
| Here are the tips that I stick to: - DO NOT try to time the
| market. Exception: when you strongly feel the market went into
| an over-correction or you feel the market is highly over-
| valued. (Graham uses a range between 25% - 75% for stocks vs
| bonds.) - DO NOT invest money that you need in the short term
| in the market. Corollary: keep a buffer in cash/high-interest
| savings account + Treasury bonds for short term needs. - DO NOT
| PANIC - it's really hard to resist the urge to buy when the
| markets are going up (FOMO) and the urge to sell when it's
| crashing. Of all the strategies, this one (buy high, sell low)
| is guaranteed to return a loss. - For most passive investors,
| index funds + dollar cost averaging is the best way to go.
| These days robot managers do a good job of also expanding this
| into stocks + bonds + international coverage covering more
| scenarios - for example, a hedge against the US market or one's
| home market not doing well (enough) in the long run. - Hold
| individual stocks only if you think you'll hold it even if
| there's no ticker for it with up-to-date price info.
|
| I split my portfolio into 1) Cash/short term funds 2) Long term
| retirement fund and 3) Speculative investment. All the money on
| (3) is money I'm willing to lose (not that I want to lose).
| That's the only account where I buy riskier bets which are
| pretty much most individual shares. I keep completely separate
| accounts to make this assumption explicit and clear.
| hosteur wrote:
| > keep a buffer in cash/high-interest savings account
|
| Where do you find such an account?
| aazaa wrote:
| Don't forget the part where the Fed swoops in, making a murky
| situation even murkier with market manipulation.
|
| Expect a massive rally when the Fed announces QE4. Buy the
| rally at your own risk.
|
| The largest DJIA rally in history (15.34%) occurred in the
| middle of the Great Depression in 1933. Second place was yet
| another Depression-era rally of double digits.
|
| https://en.wikipedia.org/wiki/List_of_largest_daily_changes_...
|
| Bear markets suck people in and spit them out. Every rally
| seems like the end of the misery, but it's just more of the
| same.
|
| Only consider buying stocks when nobody but nobody thinks it's
| a good idea. When "buy the dip" has utterly left the popular
| vocabulary. When dividends + valuations are at bargain-basement
| levels.
| arbuge wrote:
| > Only consider buying stocks when nobody but nobody thinks
| it's a good idea. When "buy the dip" has utterly left the
| popular vocabulary. When dividends + valuations are at
| bargain-basement levels.
|
| I would say the above is definitely true for certain sectors
| of the market now. Energy (oil & gas) comes to mind. Perhaps
| banks and emerging markets too.
|
| The broad market, on the other hand, isn't even down 20% yet.
| senordevnyc wrote:
| _Expect a massive rally when the Fed announces QE4._
|
| Let's hope, good chance to scoop up some cheap(er) put
| options.
| gameswithgo wrote:
| as usual, the financial advice is "who knows what to do good
| luck"
| asdfman123 wrote:
| There's no good _active trading_ solution here because no one
| knows what 's going on. People occasionally make the right
| calls, but they also occasionally make the right calls on
| coin flips, too.
|
| There's a reason for that: the only good solution is a
| passive one. Ignore the panic, hold, stay the course, and put
| more money into the stock market when it's down. The large
| majority of active traders do worse than the market average
| because of panic selling in situations just like this one.
| throwaway34241 wrote:
| Plus if you follow a textbook approach with some % stocks /
| bonds you'll end up buying when the market dips and selling
| when it goes up (since if stocks go up you'll have to sell
| a little to bring the percent back down and vice versa). So
| if the market swings up and down a lot you get a little
| extra.
| spelunker wrote:
| Maybe don't buy things yet because it could go down more!
| Dead cat bounce! Bulls take the stairs but bears take the
| elevator! Etc etc
| themagician wrote:
| YOLO options. This is the way.
| vzcx wrote:
| Back to wsb with you! There are no tendies to be had here.
| flatline wrote:
| I think he's saying, invest for the long term without concern
| for the present market movements, and if in the meantime you
| want to gamble, good luck.
| maerF0x0 wrote:
| IMO this is a sort of gamblers ruin that happens in the
| markets. If you can wait long enough you usually will see a
| positive return (across well indexed purchases) . However,
| often times you need the money sooner. This could be because
| that money was actually for a major purchase (like a home) or
| because a recession means you lose your job and are on the
| brink of financial disaster (meaning you have to sell out at
| lower than cost).
| greenshackle2 wrote:
| Buying a house is not like losing your job, you're not
| supposed to put all your money in risky investments if you
| _know_ you 're going to need it in less than 5 years (for
| retirement, to go on extended unpaid leave, to buy a house,
| etc.).
|
| But even for longer time horizons, I think the common wisdom
| that stocks are low risk over a long planning horizon is
| overblown: https://web.archive.org/web/20170911171611/http://
| www.norsta...
| eanzenberg wrote:
| The only people who lose money are selling in a panic (or
| buying during a rut). CV has been with us (in the western
| world) for months now, and people haven't been dropping dead.
| So unless you believe 2% of the world will die then sure, buy
| your bunker and your guns and ammo and wait it out. If you are
| a bit more level headed, you can't go wrong with buying and
| holding now (and when times were/are/will be) good again.
|
| ^For entertainment purposes only, this is not financial advice.
| lottin wrote:
| Exactly right. After all humans co-exist with much more
| serious illnesses in many parts of the world. Somehow people
| adapt to circumstances and life goes on.
| neural_thing wrote:
| The Nikkei is still ~50% below its 1989 high. Hasn't even
| approached that level since. Downturns can go on for decades.
| matchagaucho wrote:
| How frequently do the 225 companies in the Nikkei get
| updated?
|
| Maybe more a reflection of how the index is managed.
| aguyfromnb wrote:
| > _Downturns can go on for decades._
|
| Exactly. It feels like we've swung way too far to the side of
| "put your money into the market and forget about it". We have
| no way of knowing what the future looks like. The _average_
| bear market wipes ~35% or ~4.5 years worth of gains from your
| portfolio. Avoiding even a bit of that can have a
| _substantial_ effect on your savings in the long run.
|
| Of course, timing the market isn't easy, and I'm not giving
| any advice on buying or selling. But the idea that these
| peaks and valleys don't matter simply isn't true. They
| matter, a lot.
| kortilla wrote:
| Yes, and having winning lottery tickets matters, a lot. You
| might as well advise people to just avoid all of the days
| where the market goes down since that will make a massive
| difference to their returns.
|
| Timing the market is just throwing the dice. Go down that
| path and you'll be entering the world of gambling with all
| of the bad psychology that ensues.
| ktta wrote:
| Doesn't that have to do with Japan's specific long term
| problems though?
| greenshackle2 wrote:
| Thankfully the U.S. doesn't have specific long term
| problems.
|
| (Edit to make this less flippant: like bubbles in
| education, housing and stocks.)
| 3fe9a03ccd14ca5 wrote:
| Lifetimes.
| cletus wrote:
| I didn't think this could still be true but apparently you
| are correct [1]. Wow.
|
| That being said, there are factors to contribute to this:
|
| - Essentially zero population growth [2]
|
| - A government and a system that propped up an insolvent
| banking system that likely extended the downturn
| significantly [3]
|
| - A massive asset bubble that we really haven't seen the
| likes of, not even in the subprime era. [1]:
| https://www.macrotrends.net/2593/nikkei-225-index-
| historical...
|
| [2]: https://en.wikipedia.org/wiki/Demographics_of_Japan#Curr
| ent_...
|
| [3]: https://qz.com/198458/zombies-once-destroyed-japans-
| economy-...
| beambot wrote:
| US fertility rate is approx. 1.8, well below population
| sustainability. If it weren't for immigration (a political
| policy question), the US would have negative population
| growth too.
| pjkundert wrote:
| We're about to discover that uncontrolled immigration !=
| societal regeneration, unfortunately.
| akhilcacharya wrote:
| Is that why American society declined in the early 20th
| century when there were effectively open borders? Oh
| wait, no it didn't.
| pjkundert wrote:
| A 3-month harrowing journey into unforeseen circumstances
| is an _excellent_ filter, indeed.
|
| Please do not be flippant or purposely obtuse.
| itsameta4 wrote:
| Like, for instance, thousands of miles through the
| desert?
|
| Or are only sea voyages from Europe harrowing enough?
| jessaustin wrote:
| _Please do not be flippant or purposely obtuse._
|
| If you're saying this, the real conversation is taking
| place over your head.
| thereare5lights wrote:
| Immigration is more controlled today than it was in the
| past.
| Robotbeat wrote:
| It's crazy to me that so many generally pro-business
| folks have suddenly turned against immigration in the US.
| It's pretty much the US's best bet at continued above-
| OECD-average economic growth (until the rest of the world
| becomes middle class). And the US is, culturally (well,
| mythologically) pretty pro-immigration and generally good
| at integration. _sigh_
| cletus wrote:
| Not too be too glib but this reminds me of one of my pet
| truisms:
|
| "If things were different, then things would be
| different."
|
| Japan is way more insular than the US [1]. You can
| theorize about what might happen if we didn't have net
| immigration but it's largely irrelevant because we do.
|
| [1]: https://www.nytimes.com/2003/07/24/world/insular-
| japan-needs...
| dv_dt wrote:
| America has all three of those except immigration is
| allowing for population growth; immigration that the Trump
| admin is busy reducing to zero it seems. And when you look
| at replacement births you have to think about all the
| economic conditions that cause people to decide not to have
| children.
| JackFr wrote:
| > - A government and a system that propped up an insolvent
| banking system that likely extended the downturn
| significantly
|
| Very true. "Extend and pretend" was the rule of thumb on
| debt. By failing to let firms go bankrupt, you ended up
| with tremendous capital (and labor) resources in
| enterprises which do not create value.
| mensetmanusman wrote:
| Yep, over half of GDP growth is tied to population growth.
| If 2% of humanity is about to die...
| kelnos wrote:
| Even if the fatality rate were as high as 2% (which is
| exceedingly unlikely), "2% of humanity is about to die"
| assumes that 100% of all humans will get the disease,
| which is unlikely.
| arcticbull wrote:
| 2% of humanity is absolutely, in no way, shape or form
| about to die. The Korean numbers are approaching 0.5%
| case fatality rate, and those numbers continue to fall.
| It's about the same as the flu, and no, the flu isn't
| killing 2% of humanity either. Y'all need to settle down
| and get back to work.
| claudeganon wrote:
| The case fatality ratio is dependent on slowing the
| spread of the disease such that the healthcare system
| isn't overwhelmed and so that we have time to develop
| treatments (possibly a vaccine).
|
| The US is not only doing effectively nothing to slow the
| spread, but isn't even testing at the level necessary to
| assess relative regional threats and take necessary
| mitigation/containment actions.
|
| Arriving at a result anything like South Korea _entirely
| depends_ on us responding like South Korea, something for
| which the window of opportunity may have already closed
| on in the US. We'll certainly find out in the coming
| weeks and months.
| ncallaway wrote:
| 0.5% is still well over 5x as bad as typical flu. SK is
| closer to 0.7%.
|
| SK also has a far lower recovery percentage (SK total
| cases: 7478, total recoveries: 118; 1.5% of cases have
| recovered, 0.5% of cases have died).
|
| Compare to the worldwide CFR and recovery rate, which has
| a much higher CFR (3.5%). total cases 113,432, total
| recovered 62,494, 55% of world-wide cases have recovered.
|
| That means SK is catching their cases through testing
| much earlier (which is great! This leads to both better
| containment and better clinical outcomes!), but it means
| currently they have a much higher percentage of
| "unresolved" cases than many other countries. We need to
| wait until we start seeing more recoveries in SK before
| we start celebrating too much.
|
| I'm optimistic that there's a good example of a strong
| outcome when there's a robust response in South Korea.
|
| (Data pulled from the John Hopkins global case tracker
| here: https://www.arcgis.com/apps/opsdashboard/index.html
| #/bda7594...
| arcticbull wrote:
| The reason their numbers are lower than elsewhere is the
| widespread testing is catching the low-grade infections,
| the asymptomatic and the so on. Those cases are not
| reflected in, for instance, US numbers as there hasn't
| been any wide-scale testing. In a huge quantity of people
| you wind up with sniffles, a cough or mild flu-like
| symptoms. They don't go in, they don't get tested, so
| they're left out of the denominator.
| generatorguy wrote:
| I haven't read anything that said sniffles or runny nose
| was a symptom. I have a runny nose and was told by the ER
| on the phone in British Columbia not to worry unless I
| get a fever.
| ncallaway wrote:
| That is one factor in the low CFR, but it's far too early
| to say it is the only factor. It totally fails to be
| responsive to the low percentage of resolved cases in the
| South Korean numbers.
|
| If the _only_ explanation was that they were catching far
| more low-grade symptoms, then we should see a lower CFR
| with the resolved cases rising rapidly.
|
| I _hope_ that what you state is the case, and their CFR
| remains where it is while the number of recovered grows.
| But it 's still an unknown, and we won't actually know
| until more data comes in.
| TheOtherHobbes wrote:
| They could just be conservative about reporting
| resolution.
|
| The reality seems to be that if you're not seriously ill
| after 7-10 days, it's unlikely you're going to end up on
| the critical list - never mind dead.
|
| But cases aren't being marked resolved for 2-3 weeks,
| just in case.
| ncallaway wrote:
| Absolutely, but I haven't heard anything about them being
| significantly more conservative than other countries in
| that regard.
|
| I'm not saying the CFR _will_ go up in South Korea. I 'm
| saying it's still early days to make the claim that it
| will definitely stay at 0.7%. When we get from 97% of
| cases being unresolved to something like 85% of cases
| being unresolved, and the CFR is holding steading, I'll
| be much more ready to spike the football and celebrate
| the intervention.
|
| None of which is to say we shouldn't be copying the South
| Korean playbook closely. They've done a damn-near
| miraculous job of keeping the number of cases from
| exploding, _and_ the preliminary CFR does look good. Even
| if it goes up, it still seems likely that they will have
| a lower CFR that many other places with a sizable
| outbreak.
|
| Their response _is_ the bright-spot so far, and we should
| absolutely be copying their playbook. I 'm just saying,
| it's a little early to tell whether their playbooks is
| _excellent_ or just _really good_.
| allovernow wrote:
| China shut down it's economy for two months. Mecca is
| closed. 8% of Iranian parliament was infected as of last
| week and two were dead. Democratic nations are putting
| millions of people on lockdown overnight (see Lombardy,
| Italy and the 2AM press conference).
|
| This isn't the god damn flu and its irresponsible to say
| so at this point.
| arcticbull wrote:
| It is the flu, what's different is not the threat but our
| response to it. So far there have been 95,000 flu deaths
| since October and just shy of 4,000 nCoV-19 but nobody's
| shutting down China, Mecca or Italy over influenza A.
| btilly wrote:
| _It is the flu, what 's different is not the threat but
| our response to it._
|
| At current mortality rates, if this infects a good chunk
| of the world then we are talking about as many people
| dying worldwide as died during WW II.
|
| Making future projections based on past deaths without
| considering the appropriate epidemiological model is like
| being in a car hurtling at a brick wall and saying, "We
| will be fine, none of us are hurt yet!" It is literally
| the same category of mistake.
| arcticbull wrote:
| No, it's not, because the data shows us that the
| mortality rates are low. The sensationalist numbers
| reported by the media are downright negligent. Yes, in
| Italy, we're seeing 4% mortality rates _because the folks
| there have on average 3X as many co-morbid conditions_.
| speleding wrote:
| I realise this sounds cruel, but the age group that's
| most likely to die is not the most economically
| productive part of the population. So even if a
| substantial percentage would die, that does not
| necessarily mean the economy would be affected by a
| similar percentage.
| swader999 wrote:
| They have a lot of assets that would be disposed,
| inheritance tax, capital gains. More selling.
| tunesmith wrote:
| South Korea's fatality rate will be somewhere between
| "deaths / confirmed cases" (currently around 0.7%) and
| "deaths / (deaths + recoveries)" (currently around 28.5%)
| - those numbers will eventually converge.
|
| What really matters though is to keep the raw number of
| confirmed cases low enough so that hospitals don't get
| overwhelmed. If hospitals get overwhelmed, fatality rates
| go up. So containment is key.
| FartyMcFarter wrote:
| How about "deaths / actual cases"?
|
| This number would be smaller than both of the ones you
| mentioned, unless you think that somehow all actual cases
| are detected.
| tunesmith wrote:
| Yes, that's true - although I would expect that countries
| with widespread easy testing would have their "confirmed
| cases" number get pretty close to the "actual cases"
| number.
|
| And "actual cases" would be the people that have the
| actual disease, not the people that just carry the virus.
| For people who are carriers but are not infected, they
| apparently don't want to mix those people into the
| numbers because that's not how other illnesses are
| counted either.
| edraferi wrote:
| > What really matters though is to keep the raw number of
| confirmed cases low
|
| Sure, as long as you mean "actually slow the spread of
| infections through responsible personal and social
| choices" and not "sandbag the numbers because it looks
| bad for you politically."
| tunesmith wrote:
| Of course, because the latter doesn't protect the
| hospitals from getting overwhelmed.
| philwelch wrote:
| I fully expect South Korea to be an outlier in this
| respect.
| arcticbull wrote:
| The WHO is reporting 0.6% in China excluding Wuhan so
| probably not.
| empath75 wrote:
| the number of cases seems to have an impact on the CFR.
| If the health care system is overwhelmed, it'll shoot way
| up. That's why shutting down travel and events is
| important.
|
| It's the difference between .5% CFR and 3.5% CFR.
| bugzz wrote:
| Looking at Korea's numbers, they are reporting 7478
| cases, with 53 deaths. But they are also reporting only
| 133 recoveries so far. So looking at Korea's death rate
| so far is in no way, shape, or form accurate, as more
| than 97% of their cases have not yet resolved by dying or
| recovering. It takes time to die.
| throwaway_tech wrote:
| Why use S.Korea's numbers? Haven't they lead the best
| response in terms of testing and don't they have
| universal healthcare? It seems to me fatality rates would
| likely be higher in countries that: 1) aren't testing so
| aggressively and 2) don't have universal access to care.
|
| Maybe I am wrong though and there is good reason to
| believe S.Korea is the best example right now to use as a
| statistics model to apply across the entire world.
| arcticbull wrote:
| Part of the reason their numbers are so low is _because_
| they 're testing, which is revealing the stacks upon
| stacks of asymptomatic cases or cases which lead to the
| sniffles. That's why we know the actual mortality rates
| are so much lower than the media is screaming
| breathlessly about.
|
| Think about it: not a single story about the myriad
| people who've recovered completely, right? There've been
| 114,000 documented cases so far and _66,000_ have
| recovered. The number of active /unresolved cases remains
| well below its peak.
| altcognito wrote:
| You're wrong, but primarily because you insist on
| treating human life so trivially. Get to work eh? A best
| case scenario, one where the actual CFR is half what the
| evidence shows now is 0.25%. 30% of the population gets
| the flu in a regular year, so, for America that ends up
| being a flu season that kills 10 times more people than
| in an average year.
|
| But you're focus on people hacking and wheezing their way
| to death. You're ignoring upwards of 5-15% of those
| people who will have to be on a ventilator OR WORSE. This
| is NOTHING like the flu.
|
| You would do yourself a favor also to examine what it is
| that Italy, Wuhan and South Korea are going through to
| try and stop it. They certainly aren't "GOING BACK TO
| WORK."
| arcticbull wrote:
| > You're wrong, but primarily because you insist on
| treating human life so trivially.
|
| No, it's because I'm not overweighting risks that are
| trivial for the vast, vast majority of people. Of course
| if you're over 80 and have 3 pre-existing comorbid
| conditions (as is in Italy) you should be careful. If
| you're under 10, nobody's died. In fact nCoV-19 doesn't
| really even spread between children. If you're under 40
| the mortality rate is 0.2%, and that's a worse-case
| number including folks with co-morbid conditions.
|
| Risk exists, and we should be comfortable with it. I
| recommend reading Schneier's essay on our decreasing
| tolerance for risk [1] and how it can often lead to us
| doing ourselves more harm than good.
|
| You have a 1% lifetime risk of dying in a car accident.
| You've got a 2% lifetime risk of dying of an opioid
| overdose.
|
| > But you're focus on people hacking and wheezing their
| way to death. You're ignoring upwards of 5-15% of those
| people who will have to be on a ventilator OR WORSE. This
| is NOTHING like the flu.
|
| Yes, it is like the flu. H1N1 Influenza A has a ~10%
| mortality rate in the elderly, similar to nCoV-19.
|
| > You would do yourself a favor also to examine what it
| is that Italy, Wuhan and South Korea are going through to
| try and stop it. They certainly aren't "GOING BACK TO
| WORK."
|
| Really the economic and individual harm and impact there
| has a lot to do with what they're doing to try and stop
| the spread. The cure is worse than the disease here.
|
| They probably should go back to work, though, and in
| China, they already are. They should wash their hands and
| stay home if they're sick, and get back to work.
|
| [1] https://www.schneier.com/essays/archives/2013/08/our_
| decreas...
| FabHK wrote:
| > Yes, it is like the flu. H1N1 Influenza A has a ~10%
| mortality rate in the elderly, similar to nCoV-19.
|
| Just as a reminder, the 2009 H1N1 pandemic killed maybe
| half a million people (150,000-575,000) with a CFR of
| 0.01-0.08%.
|
| Here, current CFR estimates are 5 to 100 times higher.
|
| https://en.wikipedia.org/wiki/2009_flu_pandemic
| altcognito wrote:
| How many deaths will warrant taking preventive actions I
| wonder? (preventative actions like quarantine, which, was
| the only way it was stopped from spreading before China
| "went back to work")
| arcticbull wrote:
| I'm not saying that the reaction wasn't warranted
| initially when we had no idea how bad the disease was.
| What I'm saying is the level of panic, especially now, is
| _totally_ unjustified. The hoarding canned goods and
| battening down the hatches. Insane relative to risk.
| altcognito wrote:
| And I'm asking you, with the number of infection doubling
| daily in countries that don't batten down the hatches, or
| quarantine because everyone should just get back to work
| as you said -- what is the acceptable number of deaths
| before quarantine is acceptable?
| FabHK wrote:
| FWIW, case numbers don't double every day, they grow by
| 10 to 20% every day, thus doubling every week or half
| week, thus growing by an order magnitude every two to
| three weeks.
| arcticbull wrote:
| That's if you ignore all the people who recover
| completely and are released from hospital. We're still
| down ~20% from peak number of active open cases (47K open
| vs 58K peak).
| arcticbull wrote:
| ~20-50K deaths in the US according to the CDC in the last
| few months alone [1] and 95K worldwide [2] targeting up
| to 650K/yr from the CDC and WHO. And I did answer the
| question you asked: there's no hard and fast rule but
| it's fair to say that we should respond to threats based
| on the threat they pose, and use similar threats as a
| baseline.
|
| [1] https://www.cdc.gov/flu/about/burden/preliminary-in-
| season-e...
|
| [2] https://www.cdc.gov/media/releases/2017/p1213-flu-
| death-esti...
|
| [3] https://www.who.int/mediacentre/news/statements/2017/
| flu/en/
| arcticbull wrote:
| Something that poses the same order of magnitude risk as
| the flu should be responded to/reacted to in the same
| order of magnitude as the flu.
|
| So far 80,000 people have died this flu season alone. If
| you're not hoarding canned goods for influenza, you
| shouldn't hoard canned goods for nCoV-19.
| altcognito wrote:
| Not the question I asked, and it's convenient that you
| didn't provide a citation for that stat, because you well
| know that was the worst flu season in 40 years, AND it
| wasn't "this year".
| throwaway_tech wrote:
| >Part of the reason their numbers are so low is because
| they're testing, which is revealing the stacks upon
| stacks of asymptomatic cases or cases which lead to the
| sniffles.
|
| I don't disagree, but my point is S.Korea is not just
| testing they are treating...if they were not treating
| presumably the mortality rates would increase. In other
| words whereas you suggest testing is proving the
| mortality rate is low, who many of those who tested
| positive received treatment? and further, got better
| because of treatment?
|
| Testing is the key to treatment and minimizing mortality
| rates, other countries are failing on the testing, so it
| can be presumed they are also failing to treat (how can
| you treat when people aren't being tested).
| arcticbull wrote:
| > I don't disagree, but my point is S.Korea is not just
| testing they are treating...
|
| There aren't really any treatments broadly available.
| They're holing people up in hospital beds and providing
| supportive care if needed. There's a few antiviral
| treatments in the pipeline.
| throwaway_tech wrote:
| >They're holing people up in hospital beds and providing
| supportive care if needed.
|
| That is pretty important for people at risk. Consider
| lack of supportive care is what leads to most preventable
| deaths from regular flu progressing to other issues that
| will result in death, not the flu itself. For example
| dehydration and lung infections can be monitored and
| treated.
| FabHK wrote:
| Best study I've seen so far (Univ Bern, Switzerland)
| estimates a CFR (adjusted) for Hubei province of 1.6% (or
| 3.3% if symptomatic). Worse above 60 yrs, better below 40
| yrs.
|
| Presumably you think Korean health care is better? Now
| what a about other countries?
|
| https://www.medrxiv.org/content/10.1101/2020.03.04.200311
| 04v...
| kingkawn wrote:
| There is no way to state with certainty what you've said
| or the opposite. It is prudent of everyone to exercise
| caution and avoid panic that increases the potential for
| harm. Being dismissive is just a destructive as being
| overprotective.
| arcticbull wrote:
| Sure there is: the data.
| lukifer wrote:
| It's a moving target, though. Viruses mutate.
| arcticbull wrote:
| If it moves, we can re-visit, but I don't see any reason
| this one's more likely to mutate than influenza A.
| malandrew wrote:
| I'm wondering if what 2% dies matters. This disease is
| mostly going to kill people past their prime working
| years. There are going to be tons of sociological
| changes. Just speculating here:
|
| - Social security could have it's date of insolvency
| extended. It's currently predicted to be insolvent by
| 2037. Most pension programs in the world will be relieved
| of pressure if many of those over 60 years of age die.
| Many states with pension crises may delay those crises
| many years.
|
| - we may see the largest wealth transfer in history in a
| short period of time as many older folks die and leave
| their heirs with whatever wealth they have that they were
| unable to consume in retirement.
|
| - The economy will "lose" the spending power of this
| older generation, but that spending power will be
| transferred to a younger generation. Except for what the
| government steals via a death tax, this should be net
| zero in terms of money spent in the economy. What will
| change is what the money is being spent on.
|
| - Many homes may go on the market as these older folks
| that own much of the housing stock pass away. Those
| inheriting the homes will sell or rent. In the case of
| multiple children sharing the inheritance, homes will be
| put on the market as those children want their liquid
| share now.
|
| - Those in their prime productive years should carry on,
| so hopefully productivity as measured by GDP remains more
| stable than if this disease killed more people in their
| prime working years.
|
| - What's most worrying is the people this disease kill
| between 40 and 65 years of age, since their is a lot of
| accumulated wisdom, knowledge and expertise in that
| cohort that is still being actively contributed to
| society through work and other forms of productive
| engagement.
|
| If this really does take out 2% and that 2% is largely
| isolated to those over 60 years of age, we're going to be
| living in very very interesting times.
|
| My biggest concern is losing a lot of that voting block
| as older voters often serve as a check against naive
| ideas that younger voters have such as wanting to try
| socialist policies wholesale at scale at the federal
| level instead of experimenting with those ideas in the
| safe confines of state or local municipalities to
| determine if they are actually workable ideas.
| rafiki6 wrote:
| This exactly. Another important point, those who are most
| likely to succumb to an infection are also those who put
| the largest strain on public healthcare systems. Please
| note, I want our older relatives to remain alive and
| healthy for as long as their quality of life is good. We
| all benefit, and we all get to enjoy each other. But at
| the same time, the rhetoric from alarmists is getting
| non-sensical given the reality.
| lukifer wrote:
| > losing a lot of that voting block as older voters often
| serve as a check against naive ideas that younger voters
| have such as wanting to try socialist policies
|
| That swings both ways; older voters also tend to stand in
| the way of necessary reforms, like ending the Drug War,
| or similar "law-and-order" policies that end up being
| counter-productive.
|
| While I won't pretend there isn't a naive, full-blown
| socialist contingent amongst some young backers of Warren
| and Sanders, it's a little frustrating when the signature
| policy (single-payer healthcare) isn't some kooky
| "experiment", but a functioning norm in the rest of the
| industrialized world (usually with statistically better
| outcomes). Obviously that's not trivial to replicate,
| America is larger and less homogenous, there are good
| arguments against single-payer, yada yada yada. But it's
| a _far_ cry from an "experiment", let alone from
| "seizing the means of production".
|
| At any rate, I do favor implementing policies at state
| and local levels, whether socialized medicine, or actual
| experiments like UBI. But let's a keep a little
| perspective, and not succumb to naive categorization
| based on a locally-scoped Overton window.
| tomp wrote:
| > Except for what the government steals via a death tax
|
| Good comment overall but this is just unnecessary. I'm
| guessing you prefer the heirs stealing via birthchance
| tax?
| nostrademons wrote:
| I think it's likely that there'll be second-order
| consequences that are worrisome, too. For example, war
| and revolution is extremely likely as the demographic
| order is remade. Already North Korea is saber-wrattling
| toward South Korea, the U.S. blames this on China, China
| (and Iran) blame it on the U.S, and a large portion of
| the Iranian government may be dead or incapacitated.
|
| If we get war after the plague that'll carry the death
| rate down into young men, and perhaps spark further
| plagues.
| FabHK wrote:
| > [...] that spending power will be transferred to a
| younger generation. Except for what the government steals
| via a death tax
|
| FWIW, it's most definitely not stealing.
| RockIslandLine wrote:
| "Social security could have it's date of insolvency
| extended. It's currently predicted to be insolvent by
| 2037."
|
| The US Federal government has both a literal and a
| figurative money printing press. Congressional
| appropriations create money. Revenue is an obsolete
| concept for currency issuers. As a Federal program, it is
| literally impossible for the program to be "insolvent".
| Social Security benefits can be paid at full rates for as
| long as Congress decides to do so.
| claudeganon wrote:
| Yes, the people who think that universal healthcare might
| be necessary to beat back this pandemic, as compared to
| the patchwork cruelty and parasitism of the current
| American system, are the ones who are naive.
|
| The problem with rugged Capitalism in healthcare is
| eventually you run out of other people's immune systems.
| [deleted]
| virgilp wrote:
| 2% (maybe more actually) is the mortality rate of those
| infected. But so far infection rate was 0.001% ; it would
| need to be 3 full orders of magnitude worse to even
| approach an infection rate of 2%....
| saystupidthings wrote:
| Growth in cases has been exponential, as it should be. It
| just depends on when it turns logistical.
| eCa wrote:
| According to Wikipedia[0], which in turn sources material
| from January (mostly China), each infected person
| infected 2.2-3.9 others on average. So in three
| generations you go from 1 to 27. Three generations more,
| from 27 to 729 (if my math is correct).
|
| [0]
| https://en.wikipedia.org/wiki/Basic_reproduction_number
| badfrog wrote:
| For reference, there have been 3,000 deaths out of
| 11,000,000 people in Wuhan. That's 0.03% of the
| population dead and the number of new deaths per day is
| declining. If the rest of the world comes even close to
| being as good at quarantine as Wuhan, we'll be way under
| 2%.
|
| Source: https://en.wikipedia.org/wiki/2019%E2%80%9320_cor
| onavirus_ou...
| notJim wrote:
| Meanwhile in the US, the CDC appears to be resisting
| testing people, and as far as I can tell, quarantines are
| barely even being considered. Washington state is in the
| top 3 of cases in the country, but 30k people attended a
| soccer game on Saturday. I hate to contribute to the
| panic and tinfoil-hat conspiracies, but I'm really
| concerned about the US response so far.
| btilly wrote:
| _Meanwhile in the US, the CDC appears to be resisting
| testing people..._
|
| They know something that you don't. Which is that the
| test has both a high false negative and a high false
| positive rate. Which means that its effectiveness as a
| decision making tool is limited.
|
| That said, the longer you wait to start quarantine, the
| longer you have to keep quarantine measures in place. But
| on the flip side, if extreme responses are too good, then
| you increase the risk that on the next serious threat,
| people will yawn and fail to comply.
|
| Public health has a wicked problem here. The more
| effective it is, the less that people feel it is needed.
| tdfx wrote:
| Based on the US and Iranian responses, it seems a
| substantial portion of the world will not come remotely
| close to being as effective at quarantining as Wuhan.
| Wuhan appears to be the maximum effectiveness, not the
| average.
| jay_kyburz wrote:
| Yeah, there is no way Police will drag people off the
| street or weld people into their homes in the US or here
| in Australia.
|
| I think a lot of people would rather just let the virus
| spread.
| travisjungroth wrote:
| How long did it take Italy to go up three orders of
| magnitude in infection rate?
| Udik wrote:
| A bit less than 10x, an order of magnitude, every week.
|
| It's been really is very easy to see the future up until
| now. There's 9000 cases in Italy now; by the 16th of
| March, factoring in the containment measures, they could
| be 60-80k.
|
| About 10% need intensive care; there's probably 3000 IC
| beds available now. Very simple.
| travisjungroth wrote:
| Yeah, I'm not sure why I was downvoted. It was a leading
| question to point out that "3 orders of magnitude" isn't
| far away at all.
| FabHK wrote:
| From the statistics I've seen, unless there's effective
| quarantine and countermeasures in effect, you can expect
| an order of magnitude (while most of the population is
| not yet infected, obviously) about every 2 to 3 weeks.
| Yay for exponential growth.
| baq wrote:
| good news (sort of), Italian government did the math and
| shut down all of Italy.
| wahern wrote:
| 2% is the Case Fatality Rate (CFR), not mortality rate.
| Case Fatality Rate is deaths/confirmed, and confirmed is
| _not_ the same as number of infected. See
| https://en.wikipedia.org/wiki/Case_fatality_rate
|
| In most outbreaks, "confirmed" usually means those sick
| enough to seek medical attention and get a diagnosis. If
| asymptomatic testing goes up then CFR declines, but then
| CFR ceases to be a useful metric for comparing and
| contrasting outbreaks. Arguably it already has diminished
| utility in this particular outbreak because of
| inconsistent testing criteria around the world.
|
| I think what most people want to know (and what they
| believe CFR means) is the percentage of deaths among the
| infected. But AFAICT this sort of number isn't very
| common in the literature as ascertaining the total number
| of infected for most outbreaks[1] is very difficult, and
| presumably something that can only be deduced post hoc
| with modeling.
|
| [1] Ebola being one possible exception, given the
| extremely high lethality and distinctive symptoms.
| jmpman wrote:
| Are those 2% that are about to die the consumers which
| drive consumption? Maybe in healthcare, but suspect 70
| and 80 year olds aren't buying a lot of new cars.
| jacquesm wrote:
| I wouldn't get into the Cruise Ship Business today.
| nostrademons wrote:
| If anything that'll prop up stock prices further. We were
| about to hit a demographic time bomb in the mid-2020s as
| the baby boomers started to retire and need to sell their
| 401(k)s to live on and afford medical treatment. If they
| all die suddenly, then their assets get passed on to
| their prime-working-age children, who have no need to
| cash them out. More savings finding their way into a
| dwindling supply of available stock = higher stock
| prices.
|
| That's a few years off, though. During the crisis itself,
| when nobody knows whether they'll live or die or what
| sort of interventions they need stay alive, I expect to
| see massive panic selling.
| kelnos wrote:
| > _If they all die suddenly, then their assets get passed
| on to their prime-working-age children, who have no need
| to cash them out._
|
| It feels morbid talking about this, but:
|
| It depends on how the assets are passed. If most of them
| are in IRAs, then they'll get passed to heirs as
| inherited IRAs, and the new SECURE Act in the US will
| require the heirs to distribute the contents of those
| IRAs over the next 10 years, which is likely similar to
| how the retirees might have timed their withdrawals.
| nostrademons wrote:
| Unless consumer spending goes up significantly (also
| possible, and also good for the economy), the actual
| funds will likely get rolled into other investments after
| paying taxes, though. That's what I did after inheriting
| my dad's IRA: I didn't need the money, so it came out as
| an RMD and then went straight back into a different
| investment account.
|
| I guess it could also go toward the down payment of a
| house, inflating the housing market even more. If lots of
| old people die the stock of houses on the market should
| go way up though, somewhat blunting the impact of this.
| grey-area wrote:
| Sounds just like the situation in the west after 2008.
| FabHK wrote:
| As I highlighted above, the Nikkei ignores dividends, and
| as such does not reflect actual investment results.
|
| https://news.ycombinator.com/item?id=22530040
| [deleted]
| hardtke wrote:
| Aren't all of these factors true for China today?
| neural_thing wrote:
| China's credit bubble is worse than Japan's was. And now
| they are hit with a supply/demand shock. Worst crisis in
| history
| thedance wrote:
| Another good example of long-term decline is gold. In real
| dollars gold has never returned to its 1980 price. It went up
| 10x in the decade to 1980 and some people thought it would
| just go up forever. If you bought the dip after gold peaked,
| you're _still_ underwater.
| chii wrote:
| The reason is that gold is itself a useless piece of metal
| (electronics and jewellery notwithstanding). Its only use
| is as a hedge against the gov't issued currency. Therefore,
| to bet that gold increases in value means you're betting
| against the country you're in doing well.
|
| But in that case, you're better off buying a bunker and
| bullets and long life stored goods. because gold is useless
| if the country you're in fails!
|
| The only other use for gold as far as i see is to dodge a
| country's foreign exchange restrictions, to launder money
| discretely, and to dodge inheritance taxes (if that's even
| possible with gold jewellery...).
| toth wrote:
| You should really adjust for dividends, in which case it is
| still down, but only -7.5%. [1]
|
| [1] https://dqydj.com/nikkei-return-calculator-dividend-
| reinvest... (I did Dec 1989 - Jan 2020. They don't have data
| latter than that)
| eternalban wrote:
| https://vimeo.com/110710752
| mcguire wrote:
| The Japanese economy and especially its financial markets
| were completely insane in the '80s. As in, large scale
| structural problems; some investors were "too important" to
| lose money so the brokers would reimburse them. See also the
| "Lost Decade(s)".
| (https://en.wikipedia.org/wiki/Lost_Decade_(Japan).) The
| Nikkei's decline cannot be described as a normal "downturn".
|
| But, useful inferences for the current market are left to the
| reader.
| OscarCunningham wrote:
| EDIT: This is wrong.
|
| There's no reason to ignore dividends. If you look at total
| return then it's above the high.
| neural_thing wrote:
| According to https://dqydj.com/nikkei-return-calculator-
| dividend-reinvest...
|
| Nikkei is down 36% since January 1990 if you reinvest
| dividends. Do you have a source for your claim?
| OscarCunningham wrote:
| You're right. I read a chart wrong.
| ElonMuskrat wrote:
| The Japanese stock market is so completely different from the
| West - you can draw no applicable conclusions.
| dannylandau wrote:
| With zero or negative growth looming both in China and Germany
| in the coming quarter, it is a safe assumption that this market
| has much lower to go to reflect those new realities.
| joosters wrote:
| You: 1) think know better than the rest of the market, and 2)
| are sure of yourself ('it is a safe assumption...')
|
| Please don't go trading!
| dannylandau wrote:
| Yes, agreed -- will not trade. I'll go with Warren Buffet's
| refrain that trading is for losers.
| tech-historian wrote:
| As an investor, if you believe the market is going to drop,
| there are various ways to profit from this. One of the easiest
| is buying ETFs that move inversely to certain market indexes
| (shorts them).
|
| For example, SH [0] is an ETF that moves inversely proportional
| to the S&P 500 index. So if the S&P 500 is down 2%, SH goes up
| 2%.
|
| More exciting are the leveraged ETFs that track double or
| triple the underlying index. SDS [1] moves 2X the inverse of
| the S&P 500.
|
| ETFs can be bought like stocks. Unlike mutual funds, their
| prices change throughout the day. These funds can be used to
| hedge against losses in your retirement or option portfolios.
| Trade with care!
|
| [0] https://finance.yahoo.com/quote/SH/
|
| [1] https://finance.yahoo.com/quote/SDS/
| ping_pong wrote:
| Inverse or leveraged ETFs are terrible for anyone except for
| day traders. You can't buy and hold them, because they
| degrade over time, especially the leveraged ETFs. If you
| really want to short, then short the stock directly with
| proper stop losses or buy puts, but options are very
| complicated with various types of premium, most importantly
| time premium which also causes prices to degrade.
| atombender wrote:
| Correct in principle -- from what I recall, leverage ETFs'
| beta decay over time is caused by the overhead of the
| leverage. You can see this with SH, for example; while it
| seems to perfectly mirror SPX, there's a slow rate of value
| loss over time.
|
| However, if you look at ETFs like TMF over time, short-term
| gains easily overcome the decay. If you'd invested in TMF
| on Jan 1, you'd be up 92% now.
|
| And it's not like options and shorts don't come with
| premiums. There's no free lunch, but there's the
| possibility of returns wildly beyond your initial
| investment.
| kccqzy wrote:
| Inverse and short ETFs are terrible for medium to long term
| holdings. Because it resets each day. Here is an example of
| what this means:
|
| Consider a hypothetical index having a volatile week (like
| these days). The index was at 100 on day 1, dropped to 90 on
| day 2, recovered back to 100 on day 3, rose to 110 on day 4,
| and finished the week flat at 100.
|
| If you were invested in an ETF that tracks the index, you
| would neither lose nor profit. But if you were invested in an
| inverse ETF, you actually lost money overall: the percentage
| day change of the index is -10%, +11.1%, +10%, -9.1%. So the
| percentage day change of the inverse ETF is +10%, -11.1%,
| -10%, +9.1%. Add one and multiply these, and you would have
| lost 4% overall. This is not even accounting for the
| increased expense ratios of these ETFs.
|
| But wait, here's more: if you were invested in a 2x leverage
| ETF, you would have lost 4% as well! The percentage day
| change would be -20%, +22.2%, +20%, -18.2%. Add one and
| multiply these and you arrive at the same number.
|
| This is simple math. And I think, this should convince
| everyone that inverse and leveraged ETFs are terrible in
| typical volatile market scenarios. Link to spreadsheet: https
| ://docs.google.com/spreadsheets/d/1XEyE4DxXOilXz4PnGBSX...
|
| If you really really want leverage, consider having a long
| /ES future with suitable level of leverage, and roll
| quarterly. For the typical Hacker News audience who are not
| finance professionals, don't even think about shorting the
| market.
| platz wrote:
| You could also just buy some long put options or a long put
| spread. That doesn't seem to require being a pro and is a
| limited loss type of play.
| Frost1x wrote:
| >Bear markets are paved with the blood of optimists.
|
| I'm going to shamelessly borrow this.
| shock wrote:
| Make sure to return it in mint condition :)
| 1121redblackgo wrote:
| I wonder if the inverse rings true as well. Bull markets are
| paved with the blood of pessimists.
| kristiandupont wrote:
| Maybe "tears" works better..
| Frost1x wrote:
| So do the meager realists get to avoid bloodshed? Or,
| better yet, capitalize on the blood of pessimists and
| optimists?
| shredprez wrote:
| Rarely! They're mainly collateral damage that gets hurt
| during the downturn AND the upswing.
| Natsu wrote:
| The real money is in collecting some % of the money
| invested as fees.
| camjohnson26 wrote:
| Realists miss out on volatility
| [deleted]
| idclip wrote:
| Hodl, fren. Hodl.
| totalZero wrote:
| Short squeezes, sure. But they're not pessimists. More like
| cynics. In fact, today's most famous short seller, Jim
| Chanos, runs a firm called "Kynikos" (Greek for "cynic").
|
| Apart from short squeezes, markets generally grind higher
| and crash lower. The left tail of the distribution is
| usually the thicker, meatier, juicier one. But the mode is
| usually slightly positive. So it's not usually the blood of
| cynics, but rather the patience of optimists and the
| persistence of hard workers, that brings markets higher.
| pcurve wrote:
| count me into that bucket. I know of many other too. :-(
| kibwen wrote:
| The relevant xkcd: https://xkcd.com/2270/
| raydev wrote:
| Maybe I'm misunderstanding, but there's no blood from the
| pessimists since they don't really lose what they have.
| They just miss out.
| vecter wrote:
| People do short or buy put options.
| mcguire wrote:
| There used to be a saying, something like if you missed
| the best 20 days of the market in the last century, you
| would just about break even.
|
| Missing out is very, very expensive.
| huy-nguyen wrote:
| If you miss the best 10 days in the last 20 years of the
| US market, you lose 2/3 of the gains. If you miss the
| best 20 days, you are slightly underwater.
| https://www.fool.com/investing/2019/04/11/what-happens-
| when-...
| [deleted]
| JohnJamesRambo wrote:
| It seems Mr. Market doesn't get to visit as freely or stay as
| long as he likes sometimes.
| facethrowaway wrote:
| For reference, someone might want to post a chart of the gains
| the markets have made in the past 5 years. I would hardly call
| this a crash.
| empath75 wrote:
| Yeah, it's just getting started.
| VikingCoder wrote:
| The largest daily point loss in the Dow is -1,190. Today we
| briefly hit -2030.
|
| The 19th largest daily percentage loss in the Dow is -7.32%.
| Today we briefly hit -7.9%.
|
| The 19th largest daily percentage loss in the S&P 500 is -7.18.
| Today we briefly hit -7.2%.
|
| If you don't classify that as a "crash," then please state your
| criteria for us to examine. It may not be a major crash, but
| it's definitely notable.
|
| https://en.wikipedia.org/wiki/List_of_largest_daily_changes_...
|
| https://en.wikipedia.org/wiki/List_of_largest_daily_changes_...
| vikramkr wrote:
| Point losses don't make sense because it's percentages that
| matter. The other metrics you mentioned do suggest this is of
| course a noteworthy market crash, but whether that becomes a
| recession or is anything to seriously worry about long run is
| a different question.
| brenden2 wrote:
| They like to cite points in the news because the numbers
| are bigger and it generates more clicks.
| Youden wrote:
| The DJIA is asinine [0], please try not to perpetuate it.
| Look at any other index instead.
|
| [0]: https://www.investopedia.com/articles/investing/010917/o
| pini...
| VikingCoder wrote:
| Like how I looked at the S&P 500 in my comment?
|
| And it's gotten worse, here's an update from CNN:
|
| "The S&P 500 fell by 7.7%, blowing through the first
| circuit-breaker level that it tripped minutes after trading
| opened for the day. The S&P 500 is on pace for its worst
| day since December 1, 2008, when stocks fell by just over
| 9%.
|
| The Nasdaq was down "only" 6.7%."
| tekkk wrote:
| Hah not a crash? Well it kinda is, and if it keeps going
| further down it will definitely cause a recession. The oil
| price drop was a huge punch in the gut, and I wonder what
| happens to US oil production if it stays this low for longer.
| Or well any oil production that can't compete with these
| prices.
| bluGill wrote:
| Almost nobody is drilling new oil wells, they stopped last
| year sometime. Almost nobody because there are still
| investors keeping one skeleton crew running just so they have
| expertise for when the oil price recovers.
|
| Once a well is drilled the cost to drill the well is a sunk
| cost. You keep pumping oil if the cost to run the pumps is
| less than the price you get. Most people with oil are large
| enough to shut down some wells to keep the price up a bit -
| they harm their own profit in the short term though and still
| need to sell enough oil to break even.
| foota wrote:
| OPEC has failed to reduce output to prop prices up, and
| they've crashed as a result.
| unlinked_dll wrote:
| A crash over the coming days wouldn't cause a recession so
| much as reflect the start of one.
| csomar wrote:
| > I wonder what happens to US oil production if it stays this
| low for longer
|
| Probably go under?
| vesinisa wrote:
| Indeed. S&P 500 is still not even below of what it was in the
| end of 2018 after the last major instability. Partly thanks to
| this, 2019 was a marvelous year with stocks gaining almost 40%
| during a single calendar year.
|
| My reading is we're in a normal correction that has been
| exacerbated by COVID and last night's massive fall (-30%) in
| oil price.
| pgwhalen wrote:
| Just because it's "normal" doesn't mean that it's not a
| crash.
| falcolas wrote:
| The fact that these controls on the stock market have been
| triggered reinforces my doubts that our current "profits and
| growth over sustainability" view of how public companies should
| operate is in any way good.
|
| Short of a huge change in COVID-19's mortality rate, few if any
| of these businesses will go under in the next year naturally. The
| fire sale of stocks due to short-term impacts to revenue,
| however, just might do what COVID-19 can't.
| ttul wrote:
| I notice that there are many commenters here offering opinions on
| the future price of equities. Note that nobody has any idea where
| equity prices will be in one day, never mind one year or ten
| years' time. As a retail investor (i.e. not extremely rich), you
| can't gain any advantage over the market that overcomes your
| transaction costs.
|
| So relax. There's nothing to do here. If you're contributing to a
| retirement fund, keep buying. As the market falls, you're getting
| a discount. If you need to retire in the next five years, you
| should already have started moving out of equities. It's too late
| to change that now.
| totalZero wrote:
| > As a retail investor (i.e. not extremely rich), you can't
| gain any advantage over the market that overcomes your
| transaction costs.
|
| Sure you can. You develop a system, learn how to find
| information, and make good predictions of future human
| behavior. You should learn the ins and outs of the product
| you're trading.
| IAmEveryone wrote:
| The efficient market hypothesis would like a word with you.
| manigandham wrote:
| That's the price at a instantaneous moment in time. Trading
| requires that price to move, which it does as new
| information constantly arrives.
|
| You can interpret that data differently, find your own
| data, and make your own predictions on future data.
| deepnotderp wrote:
| Out of the all the casualties of the virus, the efficient
| market hypothesis has got to be one of them...
|
| Where were efficient markets when all news from China
| pointed to a pandemic?
| Raidion wrote:
| They were down slightly, marking the public's general
| consensus that while the news was worrying, that there
| was still a good possibility of containment. If you feel
| like you have a better understanding of risk than the
| markets do, it's pretty dang cost effective to buy puts,
| and you can make a LOT of money with very well understood
| downsides.
|
| In November 2002, when SARS was first identified S&P was
| at ~909, it dropped to 846 in March 2003, and was back up
| as the virus was shown to be under control. Obviously
| lots of factors in play, but we're very susceptible to
| hindsight bias as a species.
| deepnotderp wrote:
| I _did_ buy bear ETFs
| evanpw wrote:
| The human lifespan is too short to distinguish between
| luck and skill for most low frequency traders. You'd have
| to see dozens of potential pandemics as severe as this
| one to know if you were "right". But it's empirically
| true that the average active trader underperforms the
| market. I build short-term trading strategies at my day
| job, but at home I just buy and hold some boring vanilla
| index funds. One nice thing about higher-frequency
| trading is that you have enough statistical power to
| quickly see lots of "obvious" ideas fail miserably. It
| teaches humility.
| totalZero wrote:
| The efficient market hypothesis is that markets are
| efficient to present public information.
|
| If markets were efficient to the present value of the
| future price at all times, then there would be no such
| thing as insider trading and hedge funds would all lose
| money.
|
| You can make money by making inferences about present
| facts, or taking views on future occurrences.
| martinpw wrote:
| I'm not clear why you mention insider trading here?
| Insiders have access to information that is not present
| public information, and so is not priced into the current
| value of the stock.
| thoughtstheseus wrote:
| The the strong form of the EMH includes inside info, all
| info in existence.
| greenshackle2 wrote:
| Exploiting inefficiencies for gains _is_ the mechanism by
| which EMH is supposed to work, so you 're right that
| _some_ people must be making money by trading
| intelligently.
|
| But professionals have advantages that are difficult to
| match for small-time investors like: single-digit
| millisecond latency with exchanges, specialized hardware,
| sophisticated back-testing systems, proprietary data
| sources (market data, weather, retail data, etc. any data
| source you can thing of, some hedge fund is buying it),
| 60+ hours a week to work on their strats, qualified peers
| to bounce ideas, volume-discounted broker fees, etc.
|
| Even then, professionals beat the market pretty
| inconsistently. Many people, including professionals,
| mistake luck for skill. So I think skepticism is
| justified when people online claim to have strategies
| that beat the market.
|
| If you are one of the few who can actually consistently
| come up with strategies that beat the market, unless you
| are already rich, it might be worthwhile to work at a
| hedge fund and take a cut of the profits from trading
| large sums of other people's money instead of trading
| your own.
| totalZero wrote:
| You can't say there are inefficiencies for institutions
| to exploit, but no inefficiencies for anyone else. Choose
| a consistent framework for how you view markets.
|
| There are fast alphas, and there are slow alphas.
|
| If you're an institution making markets on index ETFs,
| you can make money by having more accurate spot prices
| for the basket. Fast alpha.
|
| If you're a vol trader, you are more worried about
| convexity of gap moves and the shape of the vol surface.
| For me, this means following the story of the name and
| thinking about where the vol surface doesn't properly
| reflect tail risk. Slow alpha.
| cryptoz wrote:
| I just googled that to inform myself.
|
| > The efficient market hypothesis in financial economics
| that states that asset prices reflect all available
| information
|
| https://en.wikipedia.org/wiki/Efficient-market_hypothesis
|
| The efficient market hypothesis seems easily disproven with
| a number of modern examples. Climate change for example -
| there is significant information available, but markets act
| as though the information is fake. Leading investors and
| corporations have for decades denied the risks associated
| with economic growth backed on non-renewable, polluting and
| greenhouse-effect-causing energy sources.
|
| The hypothesis does not account for common irrational
| behavior among people; that real news is considered fake,
| or real crises considered non-crises.
| totalZero wrote:
| There is also a matter of weighting. Some facts are known
| but viewed as uncorrelated or unimportant to the stock
| price. Facts may be obvious, but wrongly discarded as
| irrelevant.
|
| I think of markets as a real-time implementation of
| information theory. There are certain facts that exist,
| and they are not all known although they may be
| discoverable. As they become known, or are considered
| more heavily, those facts bleed into market prices.
|
| In this view, the market is a collective model of the
| world and thus it is not reflective of all true
| information.
|
| The model overvalues the confidence and beliefs of people
| who have money. Sometimes, these people trade stock of
| companies that deal more with lower-income individuals.
| Their knowledge of those companies is limited, but over
| time they may converge toward a better understanding.
|
| Also, sometimes there are errors in interpretation of
| easily discoverable facts. After 9/11, interest rates
| went down, but the market didn't price that into auto
| sales despite 0% interest auto loans being offered to the
| market.
|
| The market is a model that perpetually converges to a set
| of facts that are constantly shifting. There is always a
| gradient (like osmotic pressure) between the model and
| the reality it represents, so there is always some motion
| in the market.
|
| And there is always a set of expectations about the
| future that must be reflected in the model. These
| expectations have a wide variety of distributions, some
| are gaussian, others are bimodal, etc. That adds another
| layer of complexity in getting the model to converge to
| an appropriate expected value.
|
| Not only that, but several different assets are
| interlinked. For example, if you buy a large block of
| call options on a high-volatility name, the market-maker
| will probably buy stock as a hedge. But in the absence of
| an upcoming event, he will buy patiently over the course
| of several trading days in order to minimize the price
| change resulting from his purchase ("delta impact"). So
| the market knows that the market-maker traded options,
| but he has an incentive to hide his hedging activity from
| other market participants so that they don't front-run
| him. As a result, it takes time for the purchase of the
| delta via options to be reflected in the underlying stock
| -- even though the options trade was printed on the
| exchange immediately and publicly.
|
| Even if markets were efficient to known information,
| their price moves do not arrive at equilibrium
| instantaneously. There is an information gradient -- a
| kind of osmotic pressure between what is truly happening
| and what is reflected in the price -- that takes time to
| normalize itself.
| santoriv wrote:
| Very few active fund managers can consistently beat their
| indexes. Why do you believe you would be better over a long
| period of time?
|
| Vanguard Study of Actively Managed Funds vs Index
| Performance: https://personal.vanguard.com/pdf/ISGIDX.pdf
| totalZero wrote:
| Beating indices in a correlated bull market isn't the same
| thing as making money consistently.
|
| The contrapositive of your argument is that anyone who is
| holding cash outperformed the S&P today. Though true, it
| sounds silly to say that someone who goes about his day
| with a $100 in his wallet is outperforming the market, no?
|
| In a disperse market, single stocks chosen correctly will
| outperform the index. In a correlated bull market, the
| index will outperform.
|
| We are not exactly in a bull market right now.
| manigandham wrote:
| Note that report is Vanguard marketing material and most
| managed funds have specific mandates (like maintaining a
| certain volatility or investing in certain securities)
| other than maximizing gains.
|
| This is why hedge funds underperform indexes in bull
| markets but beat them in turbulent times.
| nl wrote:
| _This is why hedge funds underperform indexes in bull
| markets but beat them in turbulent times._
|
| Hedge funds have only outperformed the market twice since
| 2008.
|
| Once was during the financial crisis of 2008 (-19% vs
| -37%) and once was 2018 (-4.07 vs -4.38).
|
| It's unclear what benefits you are getting here.
| FabHK wrote:
| > This is why hedge funds underperform indexes in bull
| markets but beat them in turbulent times.
|
| Agreed on the first part; I'd want to see hard statistics
| (after fees) on the second part (and, no, citing the 3 or
| so famous exceptions that are closed to outside investors
| and might have used illegally obtained insider
| information doesn't invalidate the larger point).
| bytematic wrote:
| Most people don't seem to understand that you don't pull all
| your retirement out at once, so the market going up or down
| doesn't really affect that
| DevKoala wrote:
| But it is wonderful for headlines:
|
| "The man who retired on the week the DOW plunged"
| https://www.barrons.com/articles/he-retired-the-week-the-
| dow...
| brazzy wrote:
| But whether you start your retirement at a time the market is
| down a lot or up a lot _can_ make a surprisingly big
| difference on how long your money lasts, if you don 't adjust
| your spending.
| perl4ever wrote:
| Doc, it hurts when I do this!
|
| So...
| t-writescode wrote:
| Every medical expense, every food expense has the result
| of costing more of a percentage of your remaining funds.
| Many costs can't be put off.
| perl4ever wrote:
| All costs are on a spectrum of urgency. Food can be put
| off longer than water. A small plumbing problem can be
| put off longer than a large plumbing problem. A furnace
| problem can be put off longer if it's not cold. Replacing
| a car can be put off longer than fixing the brakes.
|
| There is no such thing as having all your costs due
| immediately with equal urgency.
| thekyle wrote:
| Ideally, shouldn't someone planning to retire have already
| moved more of their money to bonds? Then they could just
| withdrawal from the bonds portion of the portfolio (which
| is likely up right now) while the stock market recovers.
| madengr wrote:
| Well you can be fucked by your employers 401k manager. The
| day my wife quit, she was locked out of here 401k for 2
| weeks. They divest everything during that term, and you have
| no control over the timing. She quit near market peak last
| year (and began re-investing this week), but say she quit
| this week? It's volatile enough presently that you could lose
| $$$ of they decide to sell at a low to boost their stock, and
| you can't re-invest in time.
| kaycebasques wrote:
| > Note that nobody has any idea where equity prices will be in
| one day, never mind one year or ten years' time.
|
| > So relax... keep buying
|
| lol
| jfengel wrote:
| The error, actually, is in the first part rather than the
| second. We don't know where it will be in a day or a year,
| but there's good reason to think we know where it will be in
| ten years: about twice where it is now. It might be only 1.5x
| or it might be 3x, but it's not very likely to fall very far
| outside of that range.
|
| Given that, if you have ten years to wait before you need
| your money, it's as good a place as any to put your surplus
| earnings today. Not to sell your car or borrow money, but as
| a reasonably safe long-term thing to do with money that you
| will use for your retirement.
|
| And then forget about it. Buy a broad index and don't worry
| what it does on a daily basis, even days like today. Perhaps
| _especially_ days like today.
| phreeza wrote:
| The counterexamples that have been brought up elsewhere on
| this post are Gold (still below 40 year high) and the
| Nikkei (still below 30 year high).
| jfengel wrote:
| The Nikkei high was wildly artificial; its price-to-
| earnings ratio indicated that there was an enormous
| bubble. The US stock market is (probably) currently
| inflated, but by a factor closer to 2 (or less) than 10.
|
| (I've looked less into the price of gold, which has a
| weird place in people's minds and would require a lot
| more research than I've put into it.)
|
| It's entirely possible, of course, that the US is
| entering a long-term economic disaster of a kind it has
| been courting for decades: government borrowing, student
| loans, Baby Boomer retirement, etc. But US companies have
| been earning money, and in general that does justify the
| belief that they merit a stock price that's roughly where
| it is now; somewhat lower, but not radically different.
| phreeza wrote:
| Could it be that the E part of the P/E Ratio is currently
| also significantly inflated? For the tech sector I could
| definitely see that happening due to the influx of VC
| money, causing unsustainable b2b spend on cloud&ads,
| which currently show up as earnings for FAANG but may
| quickly subside when VCs pull out?
| evanpw wrote:
| Gold is a single concentrated bet, not really comparable
| to a stock-market index, and the Nikkei shows why it's
| important to diversify outside of your home country. For
| almost everyone, "buy the global market portfolio and
| forget about it" is the right advice.
| phreeza wrote:
| While I agree that this advice is better than picking
| stocks, something always rubs me the wrong way when it is
| repeated like it is an absolute fact. Like they say in
| the commercials, Past Performance Is No Guarantee of
| Future Results.
|
| I can't say what form it will take, but I can definitely
| see a future where the pendulum swings back from ever
| more indexification.
| jfengel wrote:
| I agree with you. I believe the biggest problem with
| indexification is that it encourages a generic flow of
| money into the market, regardless of whether the market
| can handle it or not. Although the market isn't just
| gambling, and there is real underlying value, it's not an
| infinite source of value to give returns to anybody
| buying into it. Eventually there can be too much money
| chasing too little corporate earnings, and the market
| gets overpriced.
|
| I don't think it's unreasonable for a person with spare
| cash to expect to get a reliable 5% or so long term just
| from the inevitable progress of technology. That may not
| continue forever, but if it ends, the problems will be
| bigger than just what index fund to purchase. The world
| will be a very different place.
|
| (Or the market could be, if people stop seeking to raise
| capital there, but that's also a very different future
| and hard to predict.)
| evanpw wrote:
| Every time you buy a stock, someone sold it to you, so
| flow of money into the market isn't something that's easy
| to define in a meaningful way. And even if a lot of the
| invested capital is passive (maybe half of the US stock
| market), almost none of the trading is, and that's what
| determines prices.
| jfengel wrote:
| Money flows into the market when people earn it and use
| it to buy stocks. Every stock purchase is matched by a
| stock sale, but most stock sales turn around and become
| new stock purchases. That's a net long term inflow of
| money into the stock market, from people purchasing
| stocks with their earnings (often, via retirement funds).
|
| Most of the actual trading is traders trading to each
| other, and that shouldn't raise the market cap long term
| (though it does create volatility). But there is also
| real inflow of money into the market.
| evanpw wrote:
| I agree with your first part, but not the second. Even if
| there's a future where the total market has zero (or
| negative) return on average in the long term, it doesn't
| mean that it's any easier to find the temporary
| exceptions. And lower volatility is still good even if
| everything has zero expected return, so diversification
| still helps.
| jjoonathan wrote:
| Also, the fact that the Nikkei's behavior is typically
| attributed, at least in part, to a demographic trend
| that's likely to hit the US within our lifetimes.
| FabHK wrote:
| One thing to keep in mind is that the Nikkei 225 (like
| most indices except the German DAX) is a price index,
| and, (like the Dow) a mediocre one at that.
|
| A better index is the Topix, and that's available in a
| total return (and net return) variant (that is, including
| dividends before (or net of) taxes)).
|
| A fairly low dividend yield would suffice to make the
| total return index exceed the 1990's high by now. (It's
| not trivial to find the data to confirm this for free.)
| tyingq wrote:
| _" There's nothing to do here."_
|
| Maybe. I imagine it's a trigger for some people to review their
| investment mix. Not saying panic sell at this particularly bad
| moment, but downturns are an obvious heads up for people that
| assumed everything would constantly rise. Changing your mix for
| future deposits might not be a bad idea if your current mix is
| higher risk than it should be for your age.
| neogodless wrote:
| Ideally you set yourself up with an Investment Policy
| Statement which includes your ideal asset allocation (based
| in risk tolerance and goal-setting), as well as rules for
| rebalancing, such as 5% drift outside that asset allocation
| you want.
|
| So if equities are down 20% but bonds are stable (or better!)
| you end up selling bonds high and buying equities while they
| are cheaper.
|
| If you didn't plan ahead, you shouldn't be making plans now.
| If you have cash or other assets with less growth potential,
| it may be a good idea to sell some to buy equities. But
| before you do that, zoom out and look at 5 years of index
| fund prices. This 20% correction reaches back to about
| December 2018. But has not appreciably negated the growth
| between 2009 and then!
| Aeolun wrote:
| Probably want to change the mix in a few months, not right
| now.
| edraferi wrote:
| Assuming you're over-concentrated in equities, yeah. But if
| you're under-invested in equities, this would be a decent
| time to start getting more. No telling when the market will
| bottom out though, so as always be careful.
| [deleted]
| Der_Einzige wrote:
| Than why do I keep getting richer on my puts? Maybe it's
| because there are actually ways to make money during a
| crisis...
| FabHK wrote:
| Buying lottery tickets totally works, someone can claim every
| week.
|
| https://xkcd.com/1827/
| neuland wrote:
| If you're trading options, you are not an average retail
| investor. Discussing puts isn't relevant for GP's situation.
| SilasX wrote:
| So? If you want to buy options, it's relatively easy to
| transform yourself into such an investor, so that should be
| fair game for evaluating HNers' potential search space.
| mempko wrote:
| What do you say to someone starting to save now when the
| climate crises is now happening? Humanities ultimate cosmic
| event is happening. How can you reasonably save for something
| like that?
| leakybit wrote:
| Unless you use robinhood which has no transactions fees.
| skellera wrote:
| Not just Robinhood. Charles Schwab and some others have moved
| this direction too.
| perl4ever wrote:
| Virtually everybody went to zero commissions, more or less.
| swsieber wrote:
| > robinhood
|
| It's easy to have no fees if your customers can't make
| transactions.
|
| To be less snarky, I'd avoid them if you're trying to time
| the markets.
| missosoup wrote:
| For those not in the loop: it's been impossible to make
| transactions on a number of platforms including Robinhood
| due to the overwhelmingly high load causing those platforms
| to fail. A lot of people were basically locked out from
| trading.
| chrisjc wrote:
| Or you know... Feb 29th, every four years.
| alasdair_ wrote:
| They completely failed three different times in the past
| couple of weeks. The Feb 29th thing was a red herring.
| lukewrites wrote:
| There are still costs to your transactions, not least of
| which is the information gulf between you and an
| institutional investor with a Bloomberg terminal.
| darawk wrote:
| Not really. The only cost to your transaction is the bid-
| ask spread, which is _extremely_ tight in liquid US
| equities.
| glouwbug wrote:
| Their fees come in the form of unexpected downtime at high
| volume.
|
| A free system gets you only so far
| dnprock wrote:
| I used to subscribe to these investment talking points and
| believed in the US equity market. I adopted these attitudes
| from reading Warren Buffett, index fund, financial advice.
| These are sound principles. I occasionally revisit value
| investing, dollar-cost averaging.
|
| But times are changing. The US equity market will unlikely to
| deliver exceptional returns. Buffett may have a strong bias
| since he started his investing career post WW2. Buffett may
| experience only the correlation between the US equity market
| growth and global growth. Investment return is likely non-
| ergodic. We're entering new terrority where exceptional returns
| may come from other assets.
| dnadler wrote:
| What led you to the conclusion that the market will not
| behave as it has historically over the long-term?
| dnprock wrote:
| I think the dynamic of the US equity market has changed. In
| the old days, you can balance your portfolio between stock
| and bond. This is portfolio advice from Benjamin Graham's
| The Intelligent Investor. We can no longer do this because
| interest rates are heading to 0. Bond investors don't make
| money from interest rates. Bond traders benefit from rate
| drop. Bond was an investment. It's now destroyed. We end up
| with cash and equity.
|
| There's a lot of money pumping into the market by central
| banks. Markets are no longer free. Central banks manipulate
| their markets. With these kinds of manipulations, we get
| diminishing returns. Let's say the economy gets back on its
| feet. Where does it get the leverage to invest? We're
| overloaded with debt. The interest rate is probably 0 or
| negative at that point.
| btilly wrote:
| Over the long term. Let's go back 150 years and invest in a
| random stock market wherever you happened to live.
|
| If you lived in the USA or England, this was a great idea
| and worked out brilliantly.
|
| If you lived in countries like Italy, Germany and Russia,
| you lost everything when those stock markets were closed
| down in the first half of the 20th century.
|
| You can't say "historically over the long term" then
| project forward for the next 50 years based only by the
| results of the last 50 years in the market where things
| have worked out best.
|
| Over our lifetime, equities are indeed the best bet. But
| not a guaranteed safe one.
| carc wrote:
| Lots of bold, unsubstantiated claims. I think every time
| there is a big peak, or a big valley, some percentage of
| people are always peddling "but this is different"
| peisistratos wrote:
| > I think every time there is a big peak, or a big valley,
| some percentage of people are always peddling "but this is
| different"
|
| When stocks crashed in 1929, it was different. In the US we
| got the New Deal, which still exists in some form. In
| Germany we got fascism and then a divided Germany for
| decades. The 1929 crash had effects felt to this day. The
| DJIA did not recover its 1929 level (not inflation
| adjusted) until 1954.
|
| The kings and queens of Europe could point to how things
| never changed over the past millennia, and moved forward as
| they always had, until Charles I had his head lopped off in
| 1649. Then things began changing.
| dnprock wrote:
| It's useful to read the history of the stock market prior
| to WW2. It was a casino back then. Our experience post
| WW2 probably creates a bias. We're used to the stock
| market stability. But it has some serious structural
| problem now (e.g. low/0 interest rate). I would not be
| surprised if it is heading back into casino mode.
| synaesthesisx wrote:
| Realistically stocks can only go up long-term. It's easy to
| forget during times of chaos, but in the long run there's no
| way but up.
| brazzy wrote:
| The question is whether they'll go up as much as they used
| to - with global population growth slowing down, there is a
| case to be made that the 7% long term growth that many
| people treat as a fact of nature is not in fact a long-term
| thing.
| pbourke wrote:
| > The US equity market will unlikely to deliver exceptional
| returns.
|
| With each passing day in this crisis, I think you can make
| the opposite case. Long-term risk in equities is going down,
| not up, as the market falls and stocks move toward relatively
| underpriced from relatively overpriced. Or am I missing
| something?
|
| The expected long-term return from investing $1 in the stock
| market now vs beginning of Feb is higher, is it not?
| Reedx wrote:
| To help adopt a sober approach, it's worth watching this
| interview with Warren Buffett who shares his thinking re:
| market and Coronavirus.
|
| https://www.youtube.com/watch?v=JvEas_zZ4fM&t=21s
|
| One of the points he makes is that you should think about
| stocks as businesses. Instead of "I bought a stock" think "I
| bought a business". That puts you in a better frame of mind and
| perspective for the long term. You don't buy or sell a farm
| based on today's headlines.
|
| As he notes, the real question is whether things have changed
| on a 10 or 20 year time frame for the businesses you hold.
| beeschlenker wrote:
| Global stock markets have lost $6 trillion in value in six days.
| It possibly because Soros, Putin, and others are moving money out
| of the US so that it cannot be taken in lawsuits resulting from
| their involvement in the story below. Unless of course you
| believe it is because of COVID19 aka Coronavirus, a sickness with
| a 2.3% death rate. See below:
|
| http://www.cidrap.umn.edu/news-perspective/2020/02/study-720...
|
| Attorney General Barr is not resigning; not before President
| Trump does. Barr is the same as Mueller,Pelosi,Schiff, & Nadler:
| feign opposition to cover the true motive of obstruction to keep
| Trump in power. Supreme Court Justice Alito & FBI Deputy Director
| Wray also on board. See latest updates
|
| "Impeachment" Is A Diversion And Delay - Part II: Blocking of the
| "impeachment" witnesses was collusion planned before the new
| year. Listen to an FBI agent's disclosure from January 1, 2O2O
| here. The President was to resign late summer securing election
| for DNC. See latest updates.
|
| Here is the zip file, which was also made available in the
| 3Jan2O2O update. The file within is VID_20200101_201948.mp3. Turn
| up the volume and put on headphones.
|
| BB10Mp3Footage31Dec1Jan.zip 122.4mb
|
| https://drive.google.com/file/d/1IXOOhQhHybwky8Z5pGdr9ZXhWpI...
|
| The dialogue about the impeachment starts near the beginning.
| Having Biden in the White House is as good as Trump or anyone
| else in their organization. Obviously Schiff and Nadler pledged
| their allegiance to the organization by raping boys on the
| record, with their task being to drag out an impeachment designed
| to obstruct and delay any real efforts to remove the President,
| thus keeping Trump in power. The witness blocking was to cause an
| apparent uproar delaying things with legal actions until late
| Summer. Soon after, the President would resign, leaving any other
| candidate with not enough time or support to compete with an
| opportunistic Biden, who is as good as Trump or any other
| Illuminati friendly politician in the Presidency.
|
| 176 page PDF [last update: March|7|2O2O]:
|
| https://drive.google.com/file/d/1S7T_kDv48E40eHzus6CTXHxcm0W...
|
| Previously reported:
|
| \Wag The Dog: first was feigned impeachment hearings meant to
| obstruct, now an attack on Iranians in Iraq. Here is what they
| are trying to distract from & cover up to retain power. $100+
| billion in bribes to the highest offices in this country. 915+
| deaths from child rapes to prove loyalty!
|
| See the latest PDF updates: FBI Director Wray, AG Barr, SoD
| Shanahan, & SoS Pompeo each raped boys and were paid billions in
| bribes for a Soros & Koch funded child rape org. So did Trump &
| his "impeachment" team Nadler,Schiff,Mueller.So did media moguls
| Redstone,Murdoch,Moonves. What are they trying to set up? Who can
| arrest them since they are all bribed and in on it ?
|
| Their strategy to stay in every office and obstruct until forced
| to leave no matter what. Feigning impeachment: see page 13O.
|
| \\\if;Download the video/audio file, put on headphones and turn
| up the volume. You will hear these people committing these
| crimes. Audio was broadcast into my apartment by outdated
| surveillance equipment illegally embedded within my walls. This
| very same technology was being used to broadcast me to the
| internet for five years without my consent. I own this footage.
| Please use this to prosecute all found within. Note:: I am
| obliviously speaking throughout the video, and it can be quite
| loud at times relative to the desired content. The are dozens
| more links, including these, that can be found in this PDF that
| was last updated on 7 Mar 2O2O:
|
| https://drive.google.com/file/d/1S7T_kDv48E40eHzus6CTXHxcm0W...
|
| All members of the "Illuminati"; "....an underground organization
| of homosexuals and child rapists..." (from pg 26: Barack Obama
| with Jack Dorsey).
|
| President Donald Trump:
|
| Demands a $4 billion dollar bribe here at 10:18am 4Jan2019:
|
| 3JanCh3_900-1100.avi
|
| https://drive.google.com/file/d/1Grdr8xF2psKNsuYlEnl9dIRV-77...
|
| 3JanCh2_900-1100-avi
|
| https://drive.google.com/file/d/1LUmVygl_q0XVs8h2cWr8jZl-24f...
|
| 3JanCh4_1000-1100.mp3
|
| https://drive.google.com/file/d/1ZpP1pJbJakBgg-y-MWNozTxp3wJ...
|
| President Trump rapes and kills 12 boys, including five boys in a
| "who can rape five boys to death the fastest" game:
|
| 14JanCh3_600.mp3
|
| https://drive.google.com/file/d/1ufPmglde9Mep0m6xYMJ9c4TWTjj...
|
| 14JanCh2_600-700.mp3
|
| https://drive.google.com/file/d/136qLJdEn8eCs9tI4QtIxl4opW_L...
|
| Speaker of the House Nancy Pelosi:
|
| Accepting a $3 billion dollar bribe at 10:33 am on the 17th Jan
| 2019 to ensure Asian boys can get through the border at
| "Monterey" undocumented to be raped:
|
| 17JanCh3_949-1100.avi
|
| https://drive.google.com/file/d/1eodHu4o5Cm3xEWhDqipSuTj-M1C...
|
| 17JanCh4_1017-1100.avi
|
| https://drive.google.com/file/d/1y-nWEQbempkVZSz230j9wTyduZN...
|
| Speaker Nancy Pelosi also "preps" boys with First Lady Melania
| Trump, defined as in she performs oral sex on the boys' penis and
| anus, as a child rapist like Henry Porter would, while trying to
| remove fecal matter from the boy prior to handing them over to be
| raped and then subsequently murdered, for Supreme Court Justice
| Samuel Alito, who apparently decides he would rather just have
| ten billion dollars instead. US Attorney for Western New York
| James Kennedy rapes these boys instead:
|
| 12JanCh3_1533-1638.mp3
|
| https://drive.google.com/file/d/1AgFkDsbPbI4b5Xd3Wbz2EVNNx25...
|
| Attorney General William Barr with FBI Deputy Director
| Christopher Wray raped and killed boys for billions in bribes in
| Buffalo, New York on the 17Jan2019 at 7:50am:
|
| 18JanCh4_700mp3
|
| https://drive.google.com/file/d/1UIdZkS5ZVksZdHYsnHk2t5losi0...
|
| 18JanCh2_700.mp3
|
| https://drive.google.com/file/d/1DFK8IAxm5pQVqZv9L518nfgP7_o...
|
| 18JanCh3_725-.mp3
|
| https://drive.google.com/file/d/1DG5ej59Ic8RT9UhbyMdwT0BDcKI...
|
| Secretary of State Michael Pompeo and Secretary of Defense
| Patrick Shanahan each raped and killed boys on 5th Jan'19 at
| 17:39 for billion$ in bribes:. OINoire wvvk erwol vk.
|
| 5JanCh2_1721-1818.mp3
|
| https://drive.google.com/file/d/1eSlD4otX4KZqWXboQM92Mu-6J02...
|
| Leaders of the "impeachment" effort Jerrold Nadler, Robert
| Mueller, and Adam Schiff all rape and kill boys between 11:20pm
| and 1:10am:
|
| 14JanCh4_2300-0000.mp3 Nadler starts at 20 minutes in-
|
| https://drive.google.com/file/d/1Kuvv2Zmbw5Jw7onbRI2hCZ0M8FU...
|
| 14JanCh2_2304-2359.mp3
|
| https://drive.google.com/file/d/1nofp5xF-aXXcCSgQVwj30KlzE9W...
|
| Mueller at 12:25am, next is Schiff who starts at 12:55-ish:
|
| 15JanCh2_000-100.mp3
|
| https://drive.google.com/file/d/1EsmHfguwBuo2PbavJ1WYyhiML62...
|
| 15JanCh2_100-200.mp3
|
| https://drive.google.com/file/d/1NZnWRnBryalNQu2yJmfJUdS2pA_...
|
| 15JanCh4_000-100.mp3
|
| https://drive.google.com/file/d/1ZEDJR6jb6ARpcNnWJTokBUKb2J2...
|
| 15JanCh4_100-200.mp3
|
| https://drive.google.com/file/d/173aYWvWHH4VGht1h_2nM0IMdw74...
|
| Complete Media Protection: Lester Holt, of NBC NightlyNews,
| apparently a member of the Illuminati since the 1980's, along
| with ABC Nightly News lead anchor David Muir, stop over to the
| Porter studio in Buffalo, New York on 14Jan2019 at 5:00 am. They
| both rape and kill about two dozen boys by 6:00 am. Muir starts
| around 5:15am, then Holt about 5:38 am. Multi-billionaire Rupert
| Murdoch, owner of News Corp and also Fox Corporation, takes his
| turn after Holt. Video links below:
|
| 14JanCh3_500-601.avi
|
| https://drive.google.com/file/d/1i7NKepeyG_FfdQRrM7KsnFOZOOX...
|
| 14JanCh2_530-600.avi
|
| https://drive.google.com/file/d/1NZzgN5ilI7ToroU5cfqMaL4o2u1...
|
| Adding to the media protection and reason this is not picked up
| by the media, CBS and Viacom owner Sumner Redstone and Leslie
| Moonves rape and kill boys following the President.
|
| 14JanCh3_700.avi IOnvkrltwmbrwbgt, ltmr;lmbb
|
| https://drive.google.com/file/d/10XDw6x3ldnnQiq7oIjpdYVENyXa...
|
| 14JanCh2_700-800.avi
|
| https://drive.google.com/file/d/1NS_e6AzEZ05wnfljkGMETGU5CWY...
|
| 176 pg PDF [last updated: MAR|7|2O2O]:
|
| https://drive.google.com/file/d/1S7T_kDv48E40eHzus6CTXHxcm0W...
|
| \\\\. Please repost in USA! Post gets censored in US
|
| Recently more relevant:
|
| From page 49, Senator Mitch McConnell:
|
| At 1632 Senator Mitch McConnell checks into the Porter camera
| system inquiring if he can be part of the "eviction" for $10
| million dollars. He is informed by group members that there are
| enough people for the event already and his participation is not
| necessary. At 1634 McConnell states "I fucked 15 kids, how am I
| not getting paid by you?" He is dismissed by Donald Reeves with
| "I think that will be all Mr. McConnell."
|
| 13JanCh3_1600-1700.avi
| https://drive.google.com/file/d/1L7bqOpvaEWmLiJpMhJNQDrfsQAH...
| lcfcjs2 wrote:
| Yes I lost a million dollars, but hey at least I know what a
| Antarctic Snow Cruiser is!
| chrshawkes wrote:
| I don't know if it was a good bet but I moved all my 401k into
| money market accounts for the time being last Thursday. I feel
| like those who say I should ride the wave down are probably not
| telling me the truth. All indicators seem to suggest a 25%
| correction or more before the end of the year.
|
| I've been buying stocks heavily on the latest dips and so far
| that is all down around 20%. I diversified investments in
| cruises, airlines, real estate, banks, tech and more. It feels
| like 2008 is happening all over again.
| segmondy wrote:
| Good move, Dec I moved 33% to Bond, 2 weeks ago I moved another
| 33% to Bond. I'm kicking myself for not moving the rest, but I
| can stand to be in the market for a very long time. Most
| knowledge that say rid the wave is rubbish. Get out if you know
| that things will be down so you can live to fight another day.
| If you have $100 and market goes down 50%, you have to wait for
| it to come back 100% to break even. Most folks don't understand
| that movement isn't equal in either direction. Market goes down
| 10%, comes back up 10% most folks think it has balanced, but it
| hasn't.
| dbancajas wrote:
| aren't you timing the market though? if it's down 10% today,
| you moved to bonds, then it's up 20% due to recovery and you
| missed the upswing, then you are in a worse spot compared to
| if you haven't done anything?
|
| "but I can stand to be in the market for a very long time" ->
| isn't this the reason to not do anything? So you can recover
| and buy more while everything is on discount?
| derekp7 wrote:
| I think you misinterpret what they are saying. What really
| happens is that even though it was a good move this time, the
| next time you have the same feeling and make the same move,
| what you move it into may go down and what you move it out of
| goes up. Then when you buy back into stocks you are buying at a
| higher price than when you pulled out.
|
| And this second scenario happens more often to people than the
| first one (according to common wisdom).
| oiasdjfoiasd wrote:
| I always have a good laugh at these posts - happens every time
| after a correction.
| jedberg wrote:
| You're not being told to ride the wave down per se, you're
| being told that you can't time the market so there is no point
| in trying.
|
| You got lucky this time, but next time you might pull out just
| as it's about to swing up again.
|
| Or when you eventually buy back in, it might not be the bottom.
| Or more likely, it will be after the bottom on the upswing and
| then you've lost out even more.
| GrumbleGrumble wrote:
| Like others have said, this was just a 15 minute halt when the
| Dow/S&P 500 dipped to -7%. This can happen again at -13% and
| trading will flat out stop at -20% [1]
|
| [1] https://www.investopedia.com/terms/c/circuitbreaker.asp
| adreamingsoul wrote:
| (I'm not a trader) if I wanted to watch the market with a near-
| real-time dashboard, does that exist?
| DyslexicAtheist wrote:
| I wonder if there are any FOSS projects I can self-host. would
| be nice to have such data in a terminal
| csomar wrote:
| IB software is good, though a little complex.
| zelly wrote:
| Trading View and Investing dot com
| aguyfromnb wrote:
| Koyfin:
|
| https://www.koyfin.com/home
| Waterluvian wrote:
| "I don't know how to read most of this, but I do see that
| everything's red."
| Insanity wrote:
| Yeah I'm feeling pretty much the same.
|
| If this was the status of our builds at work, I'd be very
| worried.
|
| It's interesting to see how it spikes up and down though,
| never really paid attention to it until now:
|
| https://www.koyfin.com/charts/gip/INDU_EC?t=SPX&t=NDX&frame
| =...
| robin_reala wrote:
| Maybe not:
|
| HEADS UP, YOU ARE USING A WEB BROWSER THAT IS NOT SUPPORTED
| BY KOYFIN This means that some functionality may not work as
| intended. We recommend using Google Chrome with our site.
| aguyfromnb wrote:
| I use Firefox and have no issues, though I only use it as a
| dashboard for the markets. There may be functionality that
| breaks that I'm unaware of.
| marban wrote:
| Tradingview
| slimginz wrote:
| Quick link to the live view for DJI for anyone who doesn't
| want to search for it:
| https://www.tradingview.com/chart/?symbol=DJI
| marban wrote:
| S&P Futures are probably the better pick for a 24/7
| picture.
| https://www.tradingview.com/chart/?symbol=SPX500USD
| gerty wrote:
| https://www.teletrader.com/ for an old-school terminal-like
| feeling.
| vxxzy wrote:
| polygon.io
| ShorsHammer wrote:
| Bloomberg has view limits now? https://outline.com/7grdK6
| zelly wrote:
| disable JavaScript
| vortico wrote:
| Slightly unrelated, but why does the stock market close each
| night? If trading was open 24/7, we wouldn't have large spikes
| like this every morning. We'd only have them when certain news is
| announced.
| jcfrei wrote:
| Lots of good answers below. Additionally most of the trading
| happens in the opening and closing minutes. So you could trade
| almost the same volume even when the exchange only opened for
| 15 minutes per day (let's say once in the morning and evening).
| naveen99 wrote:
| Futures markets are open 24hrs, but do close Friday - Sunday
| evening
| buboard wrote:
| Traders can trade 24/7 in markets around the world, as well as
| in crypto assets. If all trading was 24/7, what would happen
| probably is centralization of all trading to 1 or 2 huge
| exchanges.
| kelnos wrote:
| Aside from people needing to sleep (back when computers didn't
| do our trading for us), there's also the matter of information
| flow: the reason quarterly earnings announcements happen after
| market close is to avoid giving slightly-faster people an edge.
|
| If you could read and digest an earnings announcement faster
| than all your peers, you could make trades based on the new
| information before the price has moved.
|
| While yes, some types of trading does rely on exploiting
| (usually small) information asymmetries, and "incorrect"
| pricing, it's much fairer if people have time to digest big
| required disclosures and all be able to get their orders in at
| (essentially) the same time: the opening bell the next day.
| steveeq1 wrote:
| Because it was always done that way.
| leemailll wrote:
| There is after hour market, but may not accessible to many
| pradn wrote:
| So we can use garbage-collected languages in trading systems
| without turning on the garbage collector - just collect it all
| at the end of the trading day. I'm joking but this is a real
| technique.
| fancyfish wrote:
| Yeah this is dumb but it's actually par for the course for
| firms I've worked at. Build up all the garbage during trading
| hours (and on days like this hope you don't hit resource
| limits) then start collecting it and rebooting at the end of
| the day.
|
| Most services are shut down after trading/brought up again
| before trading.
|
| After trading you would have accounting and other processes
| that would take hours. These are not done in real time and
| rely on daily downtime.
|
| I honestly can't imagine these firms figuring out 24/7
| trading hours.
| magicsmoke wrote:
| It is, there was this HFT firm I interned at once that
| rebooted all their servers at the end of the trading day to
| make sure they would start clean and fast the next day.
| virtue3 wrote:
| That makes a lot of logical sense. Every single ms counts
| in those cases.
| aaron_m04 wrote:
| Did they also warm up caches before open?
| jacques_chester wrote:
| It also ensures you can come back up after an unexpected
| shutdown.
| bob1029 wrote:
| This is the best reason. Knowing your business systems
| will simply come back with the power, and having that
| tested on a daily basis will quickly put everyone at
| ease.
| bob1029 wrote:
| I've never used this before, but I suspect this is exactly
| what you would want to use if you were on .NET and building
| latency-sensitive systems that see daily reboots:
|
| http://tooslowexception.com/zero-garbage-collector-for-
| net-c...
|
| If I was building something that was on a short fuse like
| this, I'd also be using structs and stack allocation as much
| as humanly possible before leaning onto the "having tons of
| physical memory" crutch. I feel like virtual memory could
| cover your ass for a small period of time before the whole
| thing started to grind to a halt.
| ct0 wrote:
| The market was not always driven by computers like it is now,
| and people running it needed to sleep.
| sethgecko wrote:
| People running hospitals need to sleep too but they dont
| close for the night
| gringoDan wrote:
| People _need_ medical care for emergencies in the middle of
| the night. People don 't have the same need to trade 24/7.
|
| Matt Levine and others argue that shorter trading hours
| would actually increase market liquidity. Synthesize market
| information outside of market hours, then trade during a
| shorter window: https://www.bloomberg.com/opinion/articles/
| 2020-03-09/stuff-...
| pgwhalen wrote:
| The market is still very much driven by humans; the computers
| just help out, to varying degrees. The idea that computers
| are trading unattended is a myth that I hope would die.
| ct0 wrote:
| Sure, while humans are critical to maintaining the
| infrastructure of the various markets, but we are beyond
| the days where markets were tracked on a chalk board. The
| NASDAQ is very much running on servers from an undisclosed
| data center off route 95 in New Jersey.
| narner90 wrote:
| A lot of trading is indeed done by _minimally_ supervised
| computers, i.e. a human only looks at the computer if alarm
| bells ring. Source: was one of those humans
| dna_polymerase wrote:
| Doesn't matter really, most liquidity seems to be in the
| closing 30-minutes anyway. [0]
|
| [0]:
| https://www.ft.com/content/9e1f05b4-43e7-11e8-803a-295c97e6f...
| kchoudhu wrote:
| Compressing hours is good for liquidity and risk managers need
| to sleep, among other things.
| aurelius12 wrote:
| This is a pretty good answer: https://www.quora.com/Why-is-the-
| stock-market-not-open-24-7
|
| TL;DR: Letting markets take regular breathers probably helps
| curb swings in the market. It also lets people who manage money
| get some sleep (though of course there are other markets open
| 24/7).
| shadowgovt wrote:
| In addition to it always being done that way, there's also
| probably some benefit to having there be no such thing as a
| "night shift" in charge of market operations and security,
| given how destructive exploitation of vulnerabilities in the
| system can be.
| leptoniscool wrote:
| Is there any evidence that a temporary trading halt will help to
| stabilize the market?
| findjashua wrote:
| vix is approaching GFC levels - good time to sell some delta
| neutral condors
| tracker1 wrote:
| #hodl
| freenergi wrote:
| Freenergi is a renewable energy startup company based in
| Indonesia. We provide solar power installation, solar as service
| and manufacture solar power products to reduce residential
| customers electricity bill and providing clean energy solutions
| for indoor and outdoor. We are looking for potentional investor
| and cofounder for this early stage startup. Please do not
| hesitate to contact us at freenergi contact page
| leptoniscool wrote:
| The market was up over 30% last year, but GDP growth was
| certainly not 30%.
| perfunctory wrote:
| Well, according to some Thomas Piketty r > g.
| proverbialbunny wrote:
| This is a similar indicator but potentially a better one than
| just GDP: https://fred.stlouisfed.org/series/CPROFIT
|
| If you overlap it with the stock market, the only other time in
| US history where stock continued to go up for multiple years
| where corporate profit stagnated is 1999. Normally the stock
| market and corp profits line up somewhat strongly.
| driverdan wrote:
| What's your point? Those two numbers do not directly correlate.
| ehsankia wrote:
| > Those two numbers do not directly correlate
|
| I think that's the point. Sometimes it's useful to point out
| the obvious.
| favorited wrote:
| It's called the "Buffett Indicator" - the US market cap
| divided by the US GDP. It peaked before the dot-com bubble
| burst, and before the 08 recession, and has been at its all-
| time high recently.
|
| https://finance.yahoo.com/news/buffett-indicator-signals-
| war...
| maerF0x0 wrote:
| Here's a simple thought exercise.
|
| If your company produced the same product, but for less money.
| Would the company be worth more?
|
| If your ownership increased via buy back, would your holdings
| increase in value?
|
| If your debts were financed at a lower average rate would the
| value of your company go up ? (sort of a sub case of expenses)
|
| These are some of the myriad of ways that a portfolio can move
| in disconnect from GDP.
| azhenley wrote:
| GDP is not a perfect indicator.
| kleer001 wrote:
| There are no perfect indicators.
|
| In fact there's no perfect anything. Just good enough for
| purposes.
| Hoasi wrote:
| That much is clear.
| ceejayoz wrote:
| The point, though: Neither is the stock market.
| cm2187 wrote:
| No but earning growth should be and I don't think it
| supported the rally.
| pastor_elm wrote:
| The stock market must break records week after week. This is a
| direct order from the president to the Fed.
| friedman23 wrote:
| This can be explained by market consolidation. GDP and market
| returns are not supposed to be perfectly correlated.
| asdfadsfgfdda wrote:
| I think it's better explained by interest rates dropping over
| 2019. There are now more savers with fewer opportunities to
| make a return on their capital. So even with constant
| corporate earnings, there are more savers trying to buy a
| share of those earnings.
|
| Basically, the opposite of this explanation:
| https://www.thebalance.com/why-do-asset-prices-fall-when-
| int...
| losvedir wrote:
| It seems to me that _falling_ 7% is qualitatively different from
| _opening_ down 7%. Oil fell 30% over the weekend because of OPEC
| issues, and it seems like this could just be a response to that.
| "Plunge" implies a sort of velocity (as opposed to falling 7%
| over several days) which wasn't really the case here.
| 76543210 wrote:
| It did the trick. Everyone is talking about it and my friends are
| buying.
| newfangle wrote:
| I dont think its time to buy yet. If we have a multiple month
| disaster that requires quarantining most of the population the
| market will fall further.
| sgc wrote:
| Don't buy after the first big city is quarantined. Maybe
| after the second or third... But know you are taking an
| incredible risk unless you are using funds you can hold in
| that position for years.
| tasuki wrote:
| > But know you are taking an incredible risk unless you are
| using funds you can hold in that position for years.
|
| Isn't that the case whenever one buys equities? Why is now
| special? It's definitely less risky to buy now than it was
| in January.
| sgc wrote:
| Yes, but I don't want to be the source of somebody doing
| something stupid.
| [deleted]
| A4ET8a8uTh0 wrote:
| Agreed. The temptation is there though. I almost jumped in
| today to capture some of that, but then I saw that the things
| I would consider are still very much overpriced ( nnn,
| berkshire, apple ).
|
| I may end up being wrong, but it seems like we are not near
| bottom.
| frostyj wrote:
| could be a bull trap
| bengale wrote:
| A bunch of people at my office got in last week when the cat
| bounced. Some sad looking faces today. Timing the market is a
| fools game most of the time, definitely right now.
| Analemma_ wrote:
| When your friends lose a ton of money, introduce them to the
| concept of "catching the falling knife" [0]
|
| [0]: https://theirrelevantinvestor.com/2020/03/06/dont-catch-a-
| fa...
| kstenerud wrote:
| When all of your non-trader friends are buying, it's not the
| time to buy.
| xsmasher wrote:
| "You know it's time to sell when shoeshine boys give you
| stock tips. This bull market is over." ~ Joe Kennedy
| marban wrote:
| https://www.wsj.com/articles/lessons-from-the-dot-com-bust-1...
| jaequery wrote:
| This is creating one of the best buy opportunity ever. It's just
| sad that only the rich will benefit. The poor will just get
| poorer.
| thedance wrote:
| You sound a tiny bit like 2006-edition real estate agent.
|
| https://www.millersamuel.com/wp-content/uploads/oldimages/NA...
| justinmeiners wrote:
| It's still less than a year of growth. Were you urgently buying
| a year ago?
| OscarCunningham wrote:
| Why do you think that stocks will go up faster after this crash
| than if it had never happened?
| SuoDuanDao wrote:
| People with low EQ will get poorer because they'll panic. Most
| people of my generation who are in stocks at all are looking
| forward to a buying opportunity, a lot of us have only ever
| traded in up markets.
| marcrosoft wrote:
| TLT,GLD buy buy buy
| silexia wrote:
| TLT is screwed long-term by the fed causing massive inflation.
| I have a ton of money in puts on this right now.
| Freestyler_3 wrote:
| Considering most wealth is in old peoples hands, they are most
| affected by this virus. They are most susceptible to fear-
| mongering too.
| marcrosoft wrote:
| US stock trade (artificial) limits might have existed before but
| I don't remember them. You see these in other countries and
| commodity markets. Limit down. IMO they cause a faster drop in a
| down market because you don't know when you'll be able to exit.
| The market can open limit down within seconds. This can continue
| for weeks.
| azernik wrote:
| IIRC there were limits in 2008.
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