DOW is taking a slide....

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Almost any time the financial markets are said to be in turmoil is when 95% of folks should turn off the moronic network news and absolutely do not check 401k balances.

The time to be concerned and act is when a meteor takes out central Europe, or China declares war and invades Russia, or POS ISIS nukes a US city, then and only then do you check balances and consider some extreme action. In other words a true catastrophe is what we should be afraid of in terms of long term financial markets.

Barring a true serious event that changes the world, 10-20- even 30% market drops are typically noise that resolves itself in 3 years or less. Stay the course - ignore the network news fear mongering and hype - that is designed to scare you and keep gullible people watching their histrionics so they can sell more high dollar commercial time to sponsors.

Two important factors to stay focused on during volatile market times -

1) Since the market is a zero sum game people who think market is going lower are selling shares being bought by people thinking those very same shares are going up.

2) The only way to lose money in a down market is to sell your shares at a loss. Long term investors understand volatility in share value over time and that the only price that matters is the price they get when they actually sell. To a long term investor market volatility over relatively short periods of time is just noise.
 
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Originally Posted By: cashmoney
Almost any time the financial markets are said to be in turmoil is when 95% of folks should turn off the moronic network news and absolutely do not check 401k balances.

The time to be concerned and act is when a meteor takes out central Europe, or China declares war and invades Russia, or POS ISIS nukes a US city, then and only then do you check balances and consider some extreme action. In other words a true catastrophe is what we should be afraid of in terms of long term financial markets.

Barring a true serious event that changes the world, 10-20- even 30% market drops are typically noise that resolves itself in 3 years or less. Stay the course - ignore the network news fear mongering and hype - that is designed to scare you and keep gullible people watching their histrionics so they can sell more high dollar commercial time to sponsors.

Two important factors to stay focused on during volatile market times -

1) Since the market is a zero sum game people who think market is going lower are selling shares being bought by people thinking those very same shares are going up.

2) The only way to lose money in a down market is to sell your shares at a loss. Long term investors understand volatility in share value over time and that the only price that matters is the price they get when they actually sell. To a long term investor market volatility over relatively short periods of time is just noise.


Say someone puts 50K in a stock (or 3) that tanks 92%.
Rides it down because of pretty much what you said.

What, honestly, do they do?
 
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Say someone puts 50K in a stock (or 3) that tanks 92%.
Rides it down because of pretty much what you said.

What, honestly, do they do?

[/quote]


Putting $50k (which to most is a lot of money) into 1 stock or 3 stocks is more like gambling than investing. Investing in a very small number of stocks is very dangerous for the typical investor. you can easily lose 90% plus and stay down forever.

Most investors should instead be investing only in a portfolio of 3-4 diversified low cost index funds. Example asset allocation portfolio for an older investor, available from Vanguard as low cost index funds - 30% Total Stock index, 20% Total Bond index, 30% Total International Stock index, 20% Inflation protected securities Fund. Younger investors would use same 4 fund portfolio but allocate more % to stock and less % to bond based on their risk tolerance and number of years to retirement.
 
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Originally Posted By: Turk


Say someone puts 50K in a stock (or 3) that tanks 92%.
Rides it down because of pretty much what you said.

What, honestly, do they do?



Originally Posted By: cashmoney


Putting $50k (which to most is a lot of money) into 1 stock or 3 stocks is more like gambling than investing. Investing in a very small number of stocks is very dangerous for the typical investor. you can easily lose 90% plus and stay down forever.

Most investors should instead be investing only in a portfolio of 3-4 diversified low cost index funds. Example asset allocation portfolio for an older investor, available from Vanguard as low cost index funds - 30% Total Stock index, 20% Total Bond index, 30% Total International Stock index, 20% Inflation protected securities Fund. Younger investors would allocate more % to stock and less % to bond based on their risk tolerance.


That $50k can be 3-5% of their investing money, so it doesn't derail someone, but still, it's a lot to lose (on paper).

Sell? Selling "locks in" the loss.
Sit on it? Pretty much have to, right?
 
Originally Posted By: Turk

Say someone puts 50K in a stock (or 3) that tanks 92%.
Rides it down because of pretty much what you said.

What, honestly, do they do?


First, they fire their financial advisor, who is clearly a moron. Not for picking that stock, but for having them over 4-5% of portfolio in any individual stock. Never put more than 4% of your portfolio in any one stock. Period.

I've got individual stocks. Not all have been winners. Some have done very well. Some, not so much, but I can take a risk with 4% of the portfolio.

If your hypothetical 50K loss happens in a $1.2 Million portfolio, you shrug, look at the stocks that were up 100% (and some of them will be) and smile knowing that your asset allocation was reasonable and that you're doing just fine overall...
 
Originally Posted By: Astro14
And today, the DOW is on its second day of great returns...

Doh! I was waiting for more carnage before buying in...
 
Originally Posted By: Astro14
And today, the DOW is on its second day of great returns...


Only two hours in though?

This happened recently, about a year or so ago, I think. Market had wild wild swings, and evened out after about 5 days. And the news networks then sort of added in the "See? Nothing to worry about" - after hyping collapses, world downfall, etc.

A lot like when the news says 18"-24" BLIZZARD, New Jersey, warning, travel ban.. and there is nice crisp weather, and maybe flurries. Meanwhile, persons such as myself may have missed work, and drive anyways on the roads that are in no way unsafe.. Before the cops catch on that there is technically something they could ticket for in effect, before that awareness comes to light. And then the newscasters, burned so badly, don't even TRY to predict totals, after being wrong on every single storm or weather event in the winter.. then return to forecasting totals just after a week later, like nothing ever happened.

Or, when you go and buy a firearm and keep it in your home, after the hysteria about heinous uses of firearms - what about other things? - dies down.. like nothing ever happened.

Circle Of Life.
 
The swings of the last few days are considerable...and those kind of days haven't happened in the last couple of years.

A 10% drop for the year hasn't happened since 2008...and Mrs. Astro and I did very well buying stocks that summer...after all the "sky is falling" financial crisis reporting...

I only wish that we had more cash to invest that summer...
 
Originally Posted By: Astro14
The swings of the last few days are considerable...and those kind of days haven't happened in the last couple of years.

A 10% drop for the year hasn't happened since 2008...and Mrs. Astro and I did very well buying stocks that summer...after all the "sky is falling" financial crisis reporting...

I only wish that we had more cash to invest that summer...


I share the sentiment of wishing I had cash or income that I could invest, in the expectation of seeing return 2 to 5 years later. Buy Low Sell High thing.

Oil. Oil. Oil. Buy...

Of course, living off burritos and water to pay down credit cards and stuff, I find it difficult to invest in energy stocks. Glad my Uncle went all-in after selling his business. He is what you call rich and retired now.. and another of my Uncles chose initially Virginia, now Mechanicsburg PA to retire in. My other Uncle chose Florida.. I have a third that loves NJ enough to be in Ocean County, though I do not know how he keeps that up. Fourth Uncle is also a Floridian.

Three of my Uncles have the right idea, though all of them have considerable bank over about 4 decades of work and two of them in business ownership. My fourth Uncle simply has a decent chunk of money from his title when he was working.. Network Engineer, major NJ company, since the 80s, when all that stuff was new and fascinating and not "Oh, yeah, I have one of those too, and so does everyone that walks through the door. Your other qualifications?" ..
 
Originally Posted By: Astro14
And today, the DOW is on its second day of great returns...


It was rather interesting to watch all of the crazies on here claim that the world was coming to an end, the world economy was collapsing, the elites are all cashing out, and advising us not to give up our guns. I'd like to see this happen more often-the entertainment value it provides is priceless.
 
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