Anybody else surprised by the reactions to the market dropping?

[AnnaGrowsAMustache]

Anyway, my country already has millions of young people who know how to use firearms.

Your rate of accidental firearms deaths suggest otherwise.

American civilians are really good at killing themselves. American soldiers are really good at killing other people.

But hey, power on, thanks to old Drumpf taking American back to isolationism, thank God, your daftness is no longer as much of a problem for the rest of us.




https://www.buzzfeednews.com/article/ryanhatesthis/its-not-just-food-and-hand-sanitizer-panicked-coronavirus

snigger

[Buffaloski Boris]

You're missing the oil price crisis...the price will drop under $30/bbl - probably even under $20/bbl.

...An oil price crash will send many of these companies to the wall, and this will give the US a repeat of the 2008 debt bubble bursting...

...US debt will be harder to finance, and a $1 trillion deficit will not be able to exist.
...Cutting the military will lead to millions of unemployed young people who know how to use firearms.

Raised eyebrows at deficit not being able to exist, laughed at the last line.

The US military only employs 1.3 million full timers in the first place. How is cheap oil going to make it fire a remarkable 150% of its workforce?

Anyway, my country already has millions of young people who know how to use firearms. We have more guns than people. Hundreds of millions of each. What difference would an extra 1.3 million make?

In the unlikely event that the market drop causes a newly unemployed soldier to burst into my house and gun me down, I will tap out an acknowledgement before losing consciousness and slipping to the floor. But until then - yes, I am surprised that writing about "millions of unemployed young people who know how to use firearms" is one of the reactions to the market dropping.

I saw that as well.  There are something like 400 million+ firearms in the US and I reckon about half the population has at least a practical understanding of how they work. Study I saw indicates that there are over 17 million people with concealed handgun permits, not to mention those 14 states that don't even require the permits. The firearms genie was never in the bottle and isn't going in at this point. 

About the only impact I would expect to see in a hypothetical surge in the number of former military is how quickly they'd be hired in preference to others. Employers snap them right up.  The Weimar Republic isn't coming to the US.

[bwall]

in the last 10 years the US has developed shale oil, which is hideously expensive and polluting to produce, but it was developed at the same time as the US opened up the credit markets again after the 2008 crash, so they've accumulated a lot of debt they can never repay. An oil price crash will send many of these companies to the wall, and this will give the US a repeat of the 2008 debt bubble bursting, and a recession.

As I was saying:-

https://www.reuters.com/article/us-global-oil-shale-cuts-exclusive/exclusive-u-s-shale-urges-service-firms-offer-at-least-25-price-cuts-executives-letter-idUSKBN21004B

So, one company is going to take three drilling rigs out of production and this is going to bring about a repeat of 2008? I find that a fascinating proposition, especially as the total rig count in the USA has gone UP in the past week. One year ago the total rig count was over 830. Somehow 150 rigs were idled and the US economy just kept humming along.

You can see the total US rig count here:
https://ycharts.com/indicators/us_oil_rotary_rigs

[BicycleB]

Anyway, my country already has millions of young people who know how to use firearms.

Your rate of accidental firearms deaths suggest otherwise.

American civilians are really good at killing themselves. American soldiers are really good at killing other people.

But hey, power on, thanks to old Drumpf taking American back to isolationism, thank God, your daftness is no longer as much of a problem for the rest of us.




https://www.buzzfeednews.com/article/ryanhatesthis/its-not-just-food-and-hand-sanitizer-panicked-coronavirus

So your contention is that millions of laid-off, currently employed US soldiers will... what? Start killing civilians?

Ok, I'll bite. The link you offered showed civilians buying weapons, ammo, body armor, and other violence-related supplies. I would argue that the article supports a view that panicked civilians could start shooting people, not soldiers. But let's suppose your contention is right.

When are the laid-off soldiers going to start shooting people?

Are they going to attack the federal government, or local police, or civilians?

How many shootings does it take for us to say that your prediction is correct (other than the mathematical impossibility of laying off 2 million employees out of 1.3 million)? Are you going claim correct prediction if one laid-off soldier shoots her spouse / domestic partner, leaving me the avenue of saying that's only a drop in the bucket compared to the existing homicide rate? Or would you accept my criteria that the prediction isn't "right" unless it produces a substantial increase in homicides traceable to laid-off soldiers, such as 10% or more increase in the national homicide rate plus proof that the increase is due to the laid-off soldiers?

If your prediction doesn't happen, is there a date at which you would acknowledge that it didn't happen? Or is this one of these wild remarks that will be left open with no definable closure, no admission that the prediction was inaccurate?

I continue to be surprised this is a reaction in our presumably even-keeled forum. But if I'm wrong, I will acknowledge that. All I propose is that you specify a proof/disproof criterion in advance. What's your standard of proof, and your timeline for evaluating the prediction?

[Kyle Schuant]

https://www.reuters.com/article/us-global-oil-shale-costs-analysis/few-u-s-shale-firms-can-withstand-prolonged-oil-price-war-idUSKBN2130HL

[dougules]

Is it just me, or are the doom-and-gloomers, gold bugs, end-of-the-world types, and the it's-different-this-time crowd getting really loud in the forum here?  Why are they on the MMM forum anyway?  Is the pandemic and oil war going to be painful both health-wise and economically?  Yes.  Is that relevant to your investment strategy?  No.  The folks saying otherwise could add to the damage, though, because panic and emotional reactions have real economic consequences. 

[nemesis]

This crisis has highlighted how stupid the masses are.  The run on TP and other supplies, people massively over-reacting by over-selling equities, etc.

It's the herd mentality.  Lead a herd on a path off a cliff, they will all stampede each other to run off the cliff.

If history is ANY guide, the markets will recover, and life will get back to normal.  Society has been through so much worse before...major world wars that killed so many people and destroyed so many cities, major diseases that seemed to wipe humanity off the face of the earth.  Humanity always recovered and moved on.

I had thought in the much more enlightened modern age of free information and the availability of critical information everywhere and at the tips of your fingers, people would react better than the uneducated populace of the past.

Nope...proven completely wrong here.  People will be people and act like the animals they are...things never change.

I'll sit back, open some popcorn and enjoy the entertainment.  It's a shame the human race is so inundated with stupidity and divisiveness.

[nemesis]

Is it just me, or are the doom-and-gloomers, gold bugs, end-of-the-world types, and the it's-different-this-time crowd getting really loud in the forum here?  Why are they on the MMM forum anyway?  Is the pandemic and oil war going to be painful both health-wise and economically?  Yes.  Is that relevant to your investment strategy?  No.  The folks saying otherwise could add to the damage, though, because panic and emotional reactions have real economic consequences.

There seems to be an element that revels in being trolls and cause chaos.  You have to do your best to try to ignore it and live reasonably and with common sense.

The sad part is a large of group of people who can't seem to filter out this nonsense or don't have enough IQ to filter this stuff out. 

It is like the movie Idiocracy...where the dumb get dumber and drive society to ruin.

[tooqk4u22]

This crisis has highlighted how stupid the masses are.  The run on TP and other supplies, people massively over-reacting by over-selling equities, etc.

It's the herd mentality.  Lead a herd on a path off a cliff, they will all stampede each other to run off the cliff.

If history is ANY guide, the markets will recover, and life will get back to normal.  Society has been through so much worse before...major world wars that killed so many people and destroyed so many cities, major diseases that seemed to wipe humanity off the face of the earth.  Humanity always recovered and moved on.

I had thought in the much more enlightened modern age of free information and the availability of critical information everywhere and at the tips of your fingers, people would react better than the uneducated populace of the past.

Nope...proven completely wrong here.  People will be people and act like the animals they are...things never change.

I'll sit back, open some popcorn and enjoy the entertainment.  It's a shame the human race is so inundated with stupidity and divisiveness.

I thought opposite, with information able to spread faster than ever, way faster than the virus can,  just means all the fear, concern and craziness spreads even faster.     

[nemesis]

This crisis has highlighted how stupid the masses are.  The run on TP and other supplies, people massively over-reacting by over-selling equities, etc.

It's the herd mentality.  Lead a herd on a path off a cliff, they will all stampede each other to run off the cliff.

If history is ANY guide, the markets will recover, and life will get back to normal.  Society has been through so much worse before...major world wars that killed so many people and destroyed so many cities, major diseases that seemed to wipe humanity off the face of the earth.  Humanity always recovered and moved on.

I had thought in the much more enlightened modern age of free information and the availability of critical information everywhere and at the tips of your fingers, people would react better than the uneducated populace of the past.

Nope...proven completely wrong here.  People will be people and act like the animals they are...things never change.

I'll sit back, open some popcorn and enjoy the entertainment.  It's a shame the human race is so inundated with stupidity and divisiveness.

I thought opposite, with information able to spread faster than ever, way faster than the virus can,  just means all the fear, concern and craziness spreads even faster.   

I get that....but there is SO much data about how the stock market has recovered from EVERY single crisis and went on to new highs, it should give people the big picture to look at.

But nope, seems like there are a lot of short-sighted illiterate people who seem to have zero knowledge of the stock market and the long term trends.

[utaca]

Is it just me, or are the doom-and-gloomers, gold bugs, end-of-the-world types, and the it's-different-this-time crowd getting really loud in the forum here?  Why are they on the MMM forum anyway?  Is the pandemic and oil war going to be painful both health-wise and economically?  Yes.  Is that relevant to your investment strategy?  No.  The folks saying otherwise could add to the damage, though, because panic and emotional reactions have real economic consequences.

I don't know if they're louder here than elsewhere. IRL in the last two days , I've head from relatively bright people that: (i) Covid 19 is a conspiracy to put us into the Matrix; (ii) Covid 19 is a conspiracy by Trump to defeat China in a trade war; and, (iii) Covid 19 is a conspiracy by China to take over the world! So the flights of fancy here are pretty tame in comparison I'd say.

[Alternatepriorities]

Is it just me, or are the doom-and-gloomers, gold bugs, end-of-the-world types, and the it's-different-this-time crowd getting really loud in the forum here?  Why are they on the MMM forum anyway?  Is the pandemic and oil war going to be painful both health-wise and economically?  Yes.  Is that relevant to your investment strategy?  No.  The folks saying otherwise could add to the damage, though, because panic and emotional reactions have real economic consequences. 

I actually came back to this tread to say the reaction that most surprises me a couple weeks in is how MMM's optimist views seem to have evaporated from this forum. Usually I come to this forum for a does of optimism but lately what I've been reading is so much worse than what I am actually seeing on the ground here. Seeing some newbies who have never seen a crash panic is one thing, but reading long time members I respect panic makes me question my own optimism.

ETA - Nov 2018 there was a 7.2 earthquake about half way between the two houses I own. It was definitely scary, especially for DW who was in the shower at the time. But the damaged was nothing close to the what official news sources reported that day. The quake did cause a lot of damage but initial reports of bridges being down and Anchorage being cut off from the rest of the state were all later proven to be completely false. Summer 2003 the town i lived in had a forest fire start in town. I left work to go fight the fire because it was near my father's house. After the fire was out I learned CNN was reporting that half the town burned to the ground. Three houses were lost and no one was injured. Now I take the headlines for the rumors that they so often are.

[dougules]

I actually came back to this tread to say the reaction that most surprises me a couple weeks in is how MMM's optimist views seem to have evaporated from this forum. Usually I come to this forum for a does of optimism but lately what I've been reading is so much worse than what I am actually seeing on the ground here. Seeing some newbies who have never seen a crash panic is one thing, but reading long time members I respect panic makes me question my own optimism.

I'm not really questioning my own long-term optimism in general.  I'm just disappointed to see panic and hubris winning out in terms of the mood here specifically.  I've said plenty of times that psychology is the biggest threat to investment and the FIRE movement in general, but it's still hard to suddenly see it real life.   It bothers me a little to think about the mood on this forum potentially influencing folks to do something they will regret in a few years. 

I'm not really big on the whole looking down on the stupidity of the masses.  I think we'd be better off if everybody could just admit that we're all emotional animals prone to being irrational.  I know I am.  If we accept that, then we can start creating systems to channel our irrationality in a positive direction and away from the pitfalls we keep stumbling into.  We put guardrails on balconies instead of thinking we're better than the folks who fall off. 

[bluebelle]

I know I'm struggling.....not because of the market drop, that is hard to watch....but knowing the far reaching ramifications of all the shut downs.....thinking about all the people that are going to be wiped out financially, because there are going to be job loses, businesses are going to fail, and the cascade will be devastating.   I am empathetic, knowing I'll be okay and can weather this storm is one thing, thinking about the suffering world wide depresses me beyond belief.

a 20-40% market drop certainly tests you to see if you believe in your investment strategy.   It's easy to have a high risk tolerance with the markets are going up, not so much when they're sinking like a stone.    Seeing lots of herd mentality - selling at a low.

[bluebelle]

I guess I'm having a hard time feeling optimistic about anything.   I believe in the market - it will recover, but it's going to suck for 6 to 12 months, maybe longer.   And it's going to SUCK HARD for people not sitting on reserves or in a service oriented job sector.    I can't be optimistic knowing how many people are going to loose their jobs.

[Alternatepriorities]

I'm not really questioning my own long-term optimism in general.  I'm just disappointed to see panic and hubris winning out in terms of the mood here specifically.  I've said plenty of times that psychology is the biggest threat to investment and the FIRE movement in general, but it's still hard to suddenly see it real life.   It bothers me a little to think about the mood on this forum potentially influencing folks to do something they will regret in a few years. 

I hope it didn't come across as questioning your long term optimism, i meant to be agreeing with you.

[rockstache]

I can't be optimistic knowing how many people are going to lose their jobs.

This. I'm not worried about the market at all, and I'm not very worried about my own situation either. But a lot of people I know and love (and a lot of people I don't know but still care about) are going to end up in a very difficult spot because of this. I'm going to do whatever I can to help both groups. Hopefully everyone else is feeling the same way, and maybe the impact will be lessened somewhat. 

[Alternatepriorities]

I guess I'm having a hard time feeling optimistic about anything.   I believe in the market - it will recover, but it's going to suck for 6 to 12 months, maybe longer.   And it's going to SUCK HARD for people not sitting on reserves or in a service oriented job sector.    I can't be optimistic knowing how many people are going to loose their jobs.

One reason I'm not shorting the market or selling out to try to time my buy back in. If I think about it too much it starts to look a lot like the brothers who bought 18k bottles of hand sanitize. I don't want to add to the problem (in a tiny way) by trying to make extra profit. Someone who was contrarian before all this started buying in now is one thing, but those of us who usually buy and hold would not be much different than the TP hoarders if we panic sell for FOMO.

[dougules]

I guess I'm having a hard time feeling optimistic about anything.   I believe in the market - it will recover, but it's going to suck for 6 to 12 months, maybe longer.   And it's going to SUCK HARD for people not sitting on reserves or in a service oriented job sector.    I can't be optimistic knowing how many people are going to loose their jobs.

Oh definitely.  I really feel for the people who will get pushed off the edge economically, even the ones that put themselves in the situation.  I feel even more for the people who are in high-risk health groups.  I feel for anybody that may end up having to go to the ER for unrelated emergencies and can't get help because of the pandemic. 

Panic and greed about investments are terrible and completely unnecessary additions to that pile of problems. 

[dougules]

I'm not really questioning my own long-term optimism in general.  I'm just disappointed to see panic and hubris winning out in terms of the mood here specifically.  I've said plenty of times that psychology is the biggest threat to investment and the FIRE movement in general, but it's still hard to suddenly see it real life.   It bothers me a little to think about the mood on this forum potentially influencing folks to do something they will regret in a few years. 

I hope it didn't come across as questioning your long term optimism, i meant to be agreeing with you.

I didn't take it that way at all.

[Alternatepriorities]

I can't be optimistic knowing how many people are going to lose their jobs.

This. I'm not worried about the market at all, and I'm not very worried about my own situation either. But a lot of people I know and love (and a lot of people I don't know but still care about) are going to end up in a very difficult spot because of this. I'm going to do whatever I can to help both groups. Hopefully everyone else is feeling the same way, and maybe the impact will be lessened somewhat.

I wonder what the net worth of the members of this forum is? If everyone on here took a dose from Pete's optimism gun, refused to try to make an extra buck aside from buying more stock to hold long term would it move the needle? Probably not, but at least we wouldn't be part of the problem.

[GuitarStv]

How is buying more stock part of the problem?

[Alternatepriorities]

I guess I'm having a hard time feeling optimistic about anything.   I believe in the market - it will recover, but it's going to suck for 6 to 12 months, maybe longer.   And it's going to SUCK HARD for people not sitting on reserves or in a service oriented job sector.    I can't be optimistic knowing how many people are going to loose their jobs.

Oh definitely.  I really feel for the people who will get pushed off the edge economically, even the ones that put themselves in the situation.  I feel even more for the people who are in high-risk health groups. I feel for anybody that may end up having to go to the ER for unrelated emergencies and can't get help because of the pandemic.

Panic and greed about investments are terrible and completely unnecessary additions to that pile of problems.

That thought crossed my mind yesterday while I was sledding with my niece. On the one hand we were outside and definitely more than 2 meters from other people... on the other we did have and increased risk of breaking something. So, I moved safety up to my number 2 priority for the trip.

[Alternatepriorities]

How is buying more stock part of the problem?

Buying isn't. It should help because companies with higher valuations can borrow money and keep people employed. But it seems to me that shorting or selling out now to try and buy more later could have the opposite effect. It might make me a lot of money and cost someone else their job.

[GuitarStv]

How is buying more stock part of the problem?

Buying isn't. It should help because companies with higher valuations can borrow money and keep people employed. But it seems to me that shorting or selling out now to try and buy more later could have the opposite effect. It might make me a lot of money and cost someone else their job.

Ah.  Gotcha.  I was confused.  When everything tanks, my instinct is to cash out all the bonds and buy more stocks because they're on sale.

Didn't realize that so many people were selling stocks in order to lock in their losses.

[Alternatepriorities]

How is buying more stock part of the problem?

Buying isn't. It should help because companies with higher valuations can borrow money and keep people employed. But it seems to me that shorting or selling out now to try and buy more later could have the opposite effect. It might make me a lot of money and cost someone else their job.

Ah.  Gotcha.  I was confused.  When everything tanks, my instinct is to cash out all the bonds and buy more stocks because they're on sale.

Didn't realize that so many people were selling stocks in order to lock in their losses.

I think it's fear of further losses and I can kind of understand that given the current news, but many people will never buy back in locking in their loses as you pointed out. It just dawned on me today that even if I had perfect timing to sell now and buy the bottom it would still be at the expense of hurting others today. 

[MilesTeg]

How is buying more stock part of the problem?

Buying isn't. It should help because companies with higher valuations can borrow money and keep people employed. But it seems to me that shorting or selling out now to try and buy more later could have the opposite effect. It might make me a lot of money and cost someone else their job.

Ah.  Gotcha.  I was confused.  When everything tanks, my instinct is to cash out all the bonds and buy more stocks because they're on sale.

Didn't realize that so many people were selling stocks in order to lock in their losses.

I think it's fear of further losses and I can kind of understand that given the current news, but many people will never buy back in locking in their loses as you pointed out. It just dawned on me today that even if I had perfect timing to sell now and buy the bottom it would still be at the expense of hurting others today.

So I'm a bad person for preserving my wealth by moving most of my tax sheltered funds to bonds and mo eyes market when it became clear the shit was about to hit the fan?

[Alternatepriorities]

How is buying more stock part of the problem?

Buying isn't. It should help because companies with higher valuations can borrow money and keep people employed. But it seems to me that shorting or selling out now to try and buy more later could have the opposite effect. It might make me a lot of money and cost someone else their job.

Ah.  Gotcha.  I was confused.  When everything tanks, my instinct is to cash out all the bonds and buy more stocks because they're on sale.

Didn't realize that so many people were selling stocks in order to lock in their losses.

I think it's fear of further losses and I can kind of understand that given the current news, but many people will never buy back in locking in their loses as you pointed out. It just dawned on me today that even if I had perfect timing to sell now and buy the bottom it would still be at the expense of hurting others today.

So I'm a bad person for preserving my wealth by moving most of my tax sheltered funds to bonds and mo eyes market when it became clear the shit was about to hit the fan?

Do you think the brothers who bought 18k bottles of hand sanitizer to sell at massive mark ups were bad people or great entrepreneurs?  Personally I'm a little torn on the question and think they could very well be both. My personal values wouldn't let me do it and having realized that I started thinking about where else it applies. Lets say the market ends up down 50% but 0% interest keeps house prices afloat. Do I kick out my tenants in the middle of this mess (they are month to month) and sell my rental so I can invest all the equity in stocks? That would (likely) maximize my profit, but my values say don't do it.

ETA - there are many people on this forum who were convinced equities were over valued well before the panic stuck. I have no doubts about making a market decision based on valuations. I'm only questioning specifically if trying to time the market during a crises is any different than hoarding TP or masks which many people on the forum seem uncomfortable with.

[MilesTeg]

How is buying more stock part of the problem?

Buying isn't. It should help because companies with higher valuations can borrow money and keep people employed. But it seems to me that shorting or selling out now to try and buy more later could have the opposite effect. It might make me a lot of money and cost someone else their job.

Ah.  Gotcha.  I was confused.  When everything tanks, my instinct is to cash out all the bonds and buy more stocks because they're on sale.

Didn't realize that so many people were selling stocks in order to lock in their losses.

I think it's fear of further losses and I can kind of understand that given the current news, but many people will never buy back in locking in their loses as you pointed out. It just dawned on me today that even if I had perfect timing to sell now and buy the bottom it would still be at the expense of hurting others today.

So I'm a bad person for preserving my wealth by moving most of my tax sheltered funds to bonds and mo eyes market when it became clear the shit was about to hit the fan?

Do you think the brothers who bought 18k bottles of hand sanitizer to sell at massive mark ups were bad people or great entrepreneurs?  Personally I'm a little torn on the question and think they could very well be both. My personal values wouldn't let me do it and having realized that I started thinking about where else it applies. Lets say the market ends up down 50% but 0% interest keeps house prices afloat. Do I kick out my tenants in the middle of this mess (they are month to month) and sell my rental so I can invest all the equity in stocks? That would (likely) maximize my profit, but my values say don't do it.

ETA - there are many people on this forum who were convinced equities were over valued well before the panic stuck. I have no doubts about making a market decision based on valuations. I'm only questioning specifically if trying to time the market during a crises is any different than hoarding TP or masks which many people on the forum seem uncomfortable with.

Hording needed supplies is in a completely different universe than preserving money that one has worked an entire lifetime for.

The line of thinking you are going down is dangerously close to undermining the very idea of FIRE. If you are being frugal and building your wealth, you aren't contributing to the economy as much as you could (especially to the lower classes that rely on the jobs funded by consumer spending!) and are therefore harming others for your own personal gain.How many service industry jobs (and corporate value) have been lost due to all the people who refuse to buy services like good little consumers!

To be clear, I am absolutely NOT arguing the above, I'm simply pointing out the similarities in thoughts.

[John Galt incarnate!]

Is it just me, or are the doom-and-gloomers, gold bugs, end-of-the-world types, and the it's-different-this-time crowd getting really loud in the forum here?  .

I actually came back to this tread to say the reaction that most surprises me a couple weeks in is how MMM's optimist views seem to have evaporated from this forum. Usually I come to this forum for a does of optimism but lately what I've been reading is so much worse than what I am actually seeing on the ground here. Seeing some newbies who have never seen a crash panic is one thing, but reading long time members I respect panic makes me question my own optimism.

For me the current sell-off is neither   a matter of optimism nor pessimism.

This bear market is simply  a matter of the   reality that bear markets are a predictable,  normal phase of stock-market activity proven by the history of stock-market performance.

In light of this factuality I must say I find some Mu$tachian$' pessimism puzzling.

After all, one of the purposes of this website is to instruct  members  about the basics of investing such as stock-market fluctuations, risk tolerance, asset allocation, etc.

Having said this I do understand that this sell-off's  convulsions  disconcert some of  the most seasoned investors.

[John Galt incarnate!]

How is buying more stock part of the problem?

Buying isn't. It should help because companies with higher valuations can borrow money and keep people employed. But it seems to me that shorting or selling out now to try and buy more later could have the opposite effect. It might make me a lot of money and cost someone else their job.

Ah.  Gotcha.  I was confused.  When everything tanks, my instinct is to cash out all the bonds and buy more stocks because they're on sale.

Didn't realize that so many people were selling stocks in order to lock in their losses.

I think it's fear of further losses and I can kind of understand that given the current news, but many people will never buy back in locking in their loses as you pointed out. It just dawned on me today that even if I had perfect timing to sell now and buy the bottom it would still be at the expense of hurting others today.

There is no doubt that this bear market will   scare some investors  and potential investors out of stocks for the rest of their lives.

[MilesTeg]

How is buying more stock part of the problem?

Buying isn't. It should help because companies with higher valuations can borrow money and keep people employed. But it seems to me that shorting or selling out now to try and buy more later could have the opposite effect. It might make me a lot of money and cost someone else their job.

Ah.  Gotcha.  I was confused.  When everything tanks, my instinct is to cash out all the bonds and buy more stocks because they're on sale.

Didn't realize that so many people were selling stocks in order to lock in their losses.

I think it's fear of further losses and I can kind of understand that given the current news, but many people will never buy back in locking in their loses as you pointed out. It just dawned on me today that even if I had perfect timing to sell now and buy the bottom it would still be at the expense of hurting others today.

There is no doubt that this bear market will   scare some investors  and potential investors out of stocks for the rest of their lives.

Staying out forever would be counter productive, but letting 50% of your wealth evaporate makes no sense either. A 50% drop would take about 10 years to recover under average market conditions (as one would have to double their money to get back what was lost)

If you're not out by now, it's too late (probably), but that doesn't mean it 2-3 weeks ago when it became evident shit was going to hit the fan it was a bad idea to get out.

[tooqk4u22]

How is buying more stock part of the problem?

Buying isn't. It should help because companies with higher valuations can borrow money and keep people employed. But it seems to me that shorting or selling out now to try and buy more later could have the opposite effect. It might make me a lot of money and cost someone else their job.

Ah.  Gotcha.  I was confused.  When everything tanks, my instinct is to cash out all the bonds and buy more stocks because they're on sale.

Didn't realize that so many people were selling stocks in order to lock in their losses.

I think it's fear of further losses and I can kind of understand that given the current news, but many people will never buy back in locking in their loses as you pointed out. It just dawned on me today that even if I had perfect timing to sell now and buy the bottom it would still be at the expense of hurting others today.

There is no doubt that this bear market will   scare some investors  and potential investors out of stocks for the rest of their lives.

Its that, but there are also a crap ton of margin calls and necessity to sell simply to have cash to fund whatever in near term.   

[Alternatepriorities]

Hording needed supplies is in a completely different universe than preserving money that one has worked an entire lifetime for.

The line of thinking you are going down is dangerously close to undermining the very idea of FIRE. If you are being frugal and building your wealth, you aren't contributing to the economy as much as you could (especially to the lower classes that rely on the jobs funded by consumer spending!) and are therefore harming others for your own personal gain.How many service industry jobs (and corporate value) have been lost due to all the people who refuse to buy services like good little consumers!

To be clear, I am absolutely NOT arguing the above, I'm simply pointing out the similarities in thoughts.

Is it still hoarding if you sell for a nice profit? I believe long term investing is a great contribution to the economy as it provides capital to those who need it to pursue new ideas and lines of business. I'm questioning speculation which I see as being about the same as the brothers with the hand sanaitizer. Most on here seem to question it on grounds of effectiveness instead of asking if it's actually a net negative for society. 

As someone who started life with literal dirt floor and no electricity or running water I can very much sympathize with wanting to preserve the wealth you've created. And as one who is down several years of spending in the last month perhaps I should have a different asset allocation, but I'm in this for the next 30+ years and history suggests I will do alright over that time period without doing any speculation.

[dougules]

Staying out forever would be counter productive, but letting 50% of your wealth evaporate makes no sense either. A 50% drop would take about 10 years to recover under average market conditions (as one would have to double their money to get back what was lost)

If you're not out by now, it's too late (probably), but that doesn't mean it 2-3 weeks ago when it became evident shit was going to hit the fan it was a bad idea to get out.

Yes, it was a bad idea to get out then just as now.  I just see so many people thinking they can outsmart the rest of the market.  It's different this time.  Except it isn't.  Nothing happening is historically unprecedented. 

[Alternatepriorities]

Staying out forever would be counter productive, but letting 50% of your wealth evaporate makes no sense either. A 50% drop would take about 10 years to recover under average market conditions (as one would have to double their money to get back what was lost)

Maybe I feel okay watching 50% of my non real estate wealth evaporate because more than 50% of it came from the markets in the first place. It's still not present, but it would a much much worse if it was all wages I invested Feb 19th. I'm also expecting the market to rebound faster than 10 years from now. If I'm wrong about that, in three years maybe I can console myself by feeling morally superior. :p

[ender]

Staying out forever would be counter productive, but letting 50% of your wealth evaporate makes no sense either. A 50% drop would take about 10 years to recover under average market conditions (as one would have to double their money to get back what was lost)

If you're not out by now, it's too late (probably), but that doesn't mean it 2-3 weeks ago when it became evident shit was going to hit the fan it was a bad idea to get out.

Alternatively, corona burns itself out, kills a whole ton of old people in the next few months, and then the economy is right back to where it was 3 months ago.

The thing is, no one knows the answer to questions like this.

It's easy to say "the world is going to end" and assume that it will and make investing decisions based on this. And will it for some people? Yeah. I'm concerned about parents and grandparents in my life right now. It's statistically not going to be good for them in any of the worst case/likely case scenarios.

But that doesn't mean the economy is going to suffer a permanent deathblow.

And keep in mind it only took around 3 years from the bottom of the 2009 drop to where it broke its previous high.

Realistically, the heuristic to ask yourself for what to do in this situation is:

• Do I believe the actual economy itself has systemic and long lasting issues or do I believe much of the current reaction is primarily fear/panic based?

I suspect that you can nearly completely split how worried people are on this issue based on that question. I personally do not see the economy having systemic issues that will lead to a long term recession. Thus, I'm not worried about leaving so much invested.

Regardless, you should not be basing largescale financial moves based on fear/panic unless you can clearly articulate the economic factors likely to be that way.

[MilesTeg]

Is it still hoarding if you sell for a nice profit? I believe long term investing is a great contribution to the economy as it provides capital to those who need it to pursue new ideas and lines of business. I'm questioning speculation which I see as being about the same as the brothers with the hand sanaitizer. Most on here seem to question it on grounds of effectiveness instead of asking if it's actually a net negative for society. 

As someone who started life with literal dirt floor and no electricity or running water I can very much sympathize with wanting to preserve the wealth you've created. And as one who is down several years of spending in the last month perhaps I should have a different asset allocation, but I'm in this for the next 30+ years and history suggests I will do alright over that time period without doing any speculation.

The link between stocks and funding for companies is pretty tenuous unless you are talking about a small company and/or an IPO. When you buy or sell a stock, you are almost never trading that stock directly with the company and that company doesn't see even a single penny. You are trading that stock from another stockholder. The only time you are providing funding to a company by buying stock is during an IPO (initial public offering) or a supplementary offering.

Stock price has very little to do with the day to day operation of a company unless it's a small company/start up raising money with stock offerings.

If you are into an index fund (VTI, etc.) you don't hold stock in small companies who rely on selling stock to raise money to continue operations. You hold stock in mega-corporations with well established revenue streams and the only people being "hurt" by you selling your stock are the stockholders.

Don't fool yourself: if you are investing in an index fund you are not helping the economy. You are helping yourself and other stockholders.

[MilesTeg]

Staying out forever would be counter productive, but letting 50% of your wealth evaporate makes no sense either. A 50% drop would take about 10 years to recover under average market conditions (as one would have to double their money to get back what was lost)

If you're not out by now, it's too late (probably), but that doesn't mean it 2-3 weeks ago when it became evident shit was going to hit the fan it was a bad idea to get out.

Yes, it was a bad idea to get out then just as now.  I just see so many people thinking they can outsmart the rest of the market.  It's different this time.  Except it isn't.  Nothing happening is historically unprecedented.

It will only have been a "bad idea" if I somehow fall asleep at the wheel and don't buy back in before markets surpass their previous all time highs. I'm quite comfortable with waiting for the markets to show a solid recovery before buying back in. As of today losses are at what, 35-40%? That ain't coming back and being surpassed until the current corona crisis is over, people are back to work, etc.

[Alternatepriorities]

IPOs couldn't raise a dime if the buyers didn't believe they would be able to sell to someone else later on. Their buyers wouldn't buy if they didn't believe the same thing. It's turtles all the way down.

[MilesTeg]

Staying out forever would be counter productive, but letting 50% of your wealth evaporate makes no sense either. A 50% drop would take about 10 years to recover under average market conditions (as one would have to double their money to get back what was lost)

If you're not out by now, it's too late (probably), but that doesn't mean it 2-3 weeks ago when it became evident shit was going to hit the fan it was a bad idea to get out.

Alternatively, corona burns itself out, kills a whole ton of old people in the next few months, and then the economy is right back to where it was 3 months ago.

The thing is, no one knows the answer to questions like this.

It's easy to say "the world is going to end" and assume that it will and make investing decisions based on this. And will it for some people? Yeah. I'm concerned about parents and grandparents in my life right now. It's statistically not going to be good for them in any of the worst case/likely case scenarios.

But that doesn't mean the economy is going to suffer a permanent deathblow.

And keep in mind it only took around 3 years from the bottom of the 2009 drop to where it broke its previous high.

Realistically, the heuristic to ask yourself for what to do in this situation is:

• Do I believe the actual economy itself has systemic and long lasting issues or do I believe much of the current reaction is primarily fear/panic based?

I suspect that you can nearly completely split how worried people are on this issue based on that question. I personally do not see the economy having systemic issues that will lead to a long term recession. Thus, I'm not worried about leaving so much invested.

Regardless, you should not be basing largescale financial moves based on fear/panic unless you can clearly articulate the economic factors likely to be that way.

I've been accused of "panic selling" in another thread. That's not the case at all, I followed my investment strategy (i.e: don't get greedy, err on the side of preventing massive losses). It's about upside vs. downside. 3 weeks ago we were riding high despite the cracks already showing. There was very, very little potential for significant upside (in the near to medium term) and a high potential for a huge downside. If my analysis was wrong, I would have been out a few % gain maybe. I stuck to the plan, and didn't get greedy.

Also, I am not claiming I am some amazing investor.  Doesn't take a crystal ball to see that when factories in China are stopped for months and counties are quarantining 10s of millions that the markets are going to drop. If anything I took more loss than necessary because I didn't follow my plan 100%; I let emotion get in the way (specifically, a little bit of greed crept in).

As to the near future outlook: all across the developed world businesses are shutting down, big businesses are raiding the bank, governments are slashing rates in desperation moves and the economy is grinding to a halt. That's going to have a sustained impact, even if corona gets under control. I'm quite content to continue not being greedy and waiting for the situation to at least stabilize before I buy back in.

[John Galt incarnate!]

Do I believe the actual economy itself has systemic and long lasting issues?

No.

Do I believe much of the current reaction is primarily fear/panic based?


Yes.

[MilesTeg]

IPOs couldn't raise a dime if the buyers didn't believe they would be able to sell to someone else later on. Their buyers wouldn't buy if they didn't believe the same thing. It's turtles all the way down.

Stock price follows profitable companies, not the other way around as you seem to imply. Companies that rely on in person sales are going to take a huge hit to profitability over the next weeks and months. That's just fact now.

[Alternatepriorities]

I've been accused of "panic selling" in another thread. That's not the case at all, I followed my investment strategy (i.e: don't get greedy, err on the side of preventing massive losses). It's about upside vs. downside. 3 weeks ago we were riding high despite the cracks already showing. There was very, very little potential for significant upside (in the near to medium term) and a high potential for a huge downside. If my analysis was wrong, I would have been out a few % gain maybe. I stuck to the plan, and didn't get greedy.

Also, I am not claiming I am some amazing investor.  Doesn't take a crystal ball to see that when factories in China are stopped for months and counties are quarantining 10s of millions that the markets are going to drop. If anything I took more loss than necessary because I didn't follow my plan 100%; I let emotion get in the way (specifically, a little bit of greed crept in).

As to the near future outlook: all across the developed world businesses are shutting down, big businesses are raiding the bank, governments are slashing rates in desperation moves and the economy is grinding to a halt. That's going to have a sustained impact, even if corona gets under control. I'm quite content to continue not being greedy and waiting for the situation to at least stabilize before I buy back in.

I would argue the bold statement differentiates you from someone trying to make a profit specifically on this crisis. If you've employed this strategy for years you've probably missed some gains too and that's okay. This month you are brilliant.

[Alternatepriorities]

IPOs couldn't raise a dime if the buyers didn't believe they would be able to sell to someone else later on. Their buyers wouldn't buy if they didn't believe the same thing. It's turtles all the way down.

Stock price follows profitable companies, not the other way around as you seem to imply. Companies that rely on in person sales are going to take a huge hit to profitability over the next weeks and months. That's just fact now.

I was only saying that without secondary investors such as myself no IPO could ever have happened and the giant corporations would never have had the money to get started. I agree the profits are going to take a large hit and lower stock prices are warranted. I assume markets are usually over sold or over bought but I'm not great at spotting when either is the case. I've done well buying throughout the dips and the heights for the last 16 years. Maybe this time is different.

[MilesTeg]

IPOs couldn't raise a dime if the buyers didn't believe they would be able to sell to someone else later on. Their buyers wouldn't buy if they didn't believe the same thing. It's turtles all the way down.

Stock price follows profitable companies, not the other way around as you seem to imply. Companies that rely on in person sales are going to take a huge hit to profitability over the next weeks and months. That's just fact now.

I was only saying that without secondary investors such as myself no IPO could ever have happened and the giant corporations would never have had the money to get started. I agree the profits are going to take a large hit and lower stock prices are warranted. I assume markets are usually over sold or over bought but I'm not great at spotting when either is the case. I've done well buying throughout the dips and the heights for the last 16 years. Maybe this time is different.

Short term volatility isn't going to prevent investors from investing in IPOs.

[MilesTeg]

I've been accused of "panic selling" in another thread. That's not the case at all, I followed my investment strategy (i.e: don't get greedy, err on the side of preventing massive losses). It's about upside vs. downside. 3 weeks ago we were riding high despite the cracks already showing. There was very, very little potential for significant upside (in the near to medium term) and a high potential for a huge downside. If my analysis was wrong, I would have been out a few % gain maybe. I stuck to the plan, and didn't get greedy.

Also, I am not claiming I am some amazing investor.  Doesn't take a crystal ball to see that when factories in China are stopped for months and counties are quarantining 10s of millions that the markets are going to drop. If anything I took more loss than necessary because I didn't follow my plan 100%; I let emotion get in the way (specifically, a little bit of greed crept in).

As to the near future outlook: all across the developed world businesses are shutting down, big businesses are raiding the bank, governments are slashing rates in desperation moves and the economy is grinding to a halt. That's going to have a sustained impact, even if corona gets under control. I'm quite content to continue not being greedy and waiting for the situation to at least stabilize before I buy back in.

I would argue the bold statement differentiates you from someone trying to make a profit specifically on this crisis. If you've employed this strategy for years you've probably missed some gains too and that's okay. This month you are brilliant.

I'm certainly not brilliant, I just don't follow the party line of "don't try to time the market" in situations where the market is obviously a freight train heading toward a cliff, heh.

[Alternatepriorities]

IPOs couldn't raise a dime if the buyers didn't believe they would be able to sell to someone else later on. Their buyers wouldn't buy if they didn't believe the same thing. It's turtles all the way down.

Stock price follows profitable companies, not the other way around as you seem to imply. Companies that rely on in person sales are going to take a huge hit to profitability over the next weeks and months. That's just fact now.

I was only saying that without secondary investors such as myself no IPO could ever have happened and the giant corporations would never have had the money to get started. I agree the profits are going to take a large hit and lower stock prices are warranted. I assume markets are usually over sold or over bought but I'm not great at spotting when either is the case. I've done well buying throughout the dips and the heights for the last 16 years. Maybe this time is different.

Short term volatility isn't going to prevent investors from investing in IPOs.

I think we're missing each other. I am trying to say that the link between stocks and funding for companies is NOT tenuous specifically because without a secondary market the IPOs couldn't sell to anyone who did not want to own a piece of a company forever and therefore would not be able to raise very much capital.

Also lenders are more likely to loan money to a company at a reasonable rate the they believe the company could raise additional capital if it need to by selling stock.

[Alternatepriorities]

I'm certainly not brilliant, I just don't follow the party line of "don't try to time the market" in situations where the market is obviously a freight train heading toward a cliff, heh.

As I've personally have very mixed results with seeing the cliffs that looks pretty brilliant to me.

[MilesTeg]

IPOs couldn't raise a dime if the buyers didn't believe they would be able to sell to someone else later on. Their buyers wouldn't buy if they didn't believe the same thing. It's turtles all the way down.

Stock price follows profitable companies, not the other way around as you seem to imply. Companies that rely on in person sales are going to take a huge hit to profitability over the next weeks and months. That's just fact now.

I was only saying that without secondary investors such as myself no IPO could ever have happened and the giant corporations would never have had the money to get started. I agree the profits are going to take a large hit and lower stock prices are warranted. I assume markets are usually over sold or over bought but I'm not great at spotting when either is the case. I've done well buying throughout the dips and the heights for the last 16 years. Maybe this time is different.

Short term volatility isn't going to prevent investors from investing in IPOs.

I think we're missing each other. I am trying to say that the link between stocks and funding for companies is NOT tenuous specifically because without a secondary market the IPOs couldn't sell to anyone who did not want to own a piece of a company forever and therefore would not be able to raise very much capital.

Also lenders are more likely to loan money to a company at a reasonable rate the they believe the company could raise additional capital if it need to by selling stock.

I agree, especially about the loan part. I'm just saying that investors making temporary moves (like me) don't kill the secondary market.

Thank you for the interesting conversation.