The Money Mustache Community
Learning, Sharing, and Teaching => Investor Alley => Topic started by: frugledoc on June 22, 2016, 02:16:28 PM
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http://www.bbc.co.uk/news/business-36596250
These guys don't realise whatever outcome is already priced in.
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What's priced in is the market's expectation of the probability of each outcome, saying something like "given that we think Britain has a 60% chance of remaining in the EU, this is what we think the price should be."
If the polls were predicting a landslide one way or another I might say that the first trading day after the referendum should be pretty boring because the vote just confirmed what everyone else already thought and had acted on in their previous trading decisions.
However in this case the polls I've seen show that each outcome is reasonably likely, so the voting results are likely to affect prices a bit. It's the difference between "60% chance" (or whatever probability) and "certain."
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Seattlecyclone makes a good point. It's like that whenever the Fed gets together and announces a rate hike or not.
If it's expected to announce a rate hike and does, the markets respond somewhat negatively because there was still a chance they wouldn't hike the rate.
If the Brexit doesn't happen, I expect the markets will react positively, because right now, there's a possibility that the UK will exit the EU. The current pricing is based on the likelihood of the possible outcomes, but not the certainty of one or the other.
It will be interesting to see what happens!
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Leave is coming on strong. Markets could be ugly tomorrow!
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Be aware that the first to report results are generally the areas with smaller populations, which may have different opinions from the areas with larger populations. I'm interested to see what they decide!
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Be aware that the first to report results are generally the areas with smaller populations, which may have different opinions from the areas with larger populations. I'm interested to see what they decide!
I agree. I think you'll see a lot more nationalism (leave) in the rural areas than you will see in more populated areas, that benefit more directly from the EU. I imagine the big population centers are going to vote heavily in staying.
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Storms and flooding in London so the turnout there is down.
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Be aware that the first to report results are generally the areas with smaller populations, which may have different opinions from the areas with larger populations. I'm interested to see what they decide!
I agree. I think you'll see a lot more nationalism (leave) in the rural areas than you will see in more populated areas, that benefit more directly from the EU. I imagine the big population centers are going to vote heavily in staying.
I wonder if the youth vote tends to be highly urban in Britain, as well. It looks like under 40s are heavy remain, and over 65s are heavy leave.
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Looks like it's going to be a leave at this point - probly 2-3% down in the us 4-5% in Europe if these futures and currency moves are any indication. Yuck.
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Just a source for live counting where you can see the regional votes on the map:
http://www.bbc.com/news/politics/eu_referendum/results
I am also looking as I earn USD now and have mortgage in EUR :).
And I plan to visit home this winter, I hope EU will still be there for a while.
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Looks like it's going to be a leave at this point - probly 2-3% down in the us 4-5% in Europe if these futures and currency moves are any indication. Yuck.
Hm... I have no direct dog in this fight, and i'm sure I"m biased, but my bet would be this going the way of the Scottish independence vote. People get cold feet when they stare it down. I think the psycho who killed Jo Cox last week probably helped the "remain" vote, honestly.
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Looks like it's going to be a leave at this point - probly 2-3% down in the us 4-5% in Europe if these futures and currency moves are any indication. Yuck.
Hm... I have no direct dog in this fight, and i'm sure I"m biased, but my bet would be this going the way of the Scottish independence vote. People get cold feet when they stare it down. I think the psycho who killed Jo Cox last week probably helped the "remain" vote, honestly.
That's what it looked like and what most people probably thought I'm just going by the live results- only about a 3% chance of remain some saying now.
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Looks like it's going to be a leave at this point - probly 2-3% down in the us 4-5% in Europe if these futures and currency moves are any indication. Yuck.
Hm... I have no direct dog in this fight, and i'm sure I"m biased, but my bet would be this going the way of the Scottish independence vote. People get cold feet when they stare it down. I think the psycho who killed Jo Cox last week probably helped the "remain" vote, honestly.
That's what it looked like and what most people probably thought I'm just going by the live results- only about a 3% chance of remain some saying now.
Oh, so I guess the results coming in (although they are more pro-remain) are from areas they expected to be heavily pro-remain, so the remain vote is underperforming? Interesting.
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This is really exciting. I don't think many people realize how important this vote is.
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This is really exciting. I don't think many people realize how important this vote is.
This is nuts. It's easily the most impactful result of the nationalistic and populist strain cutting through the western world, at least until/unless Trump somehow wins.
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This is really exciting. I don't think many people realize how important this vote is.
This is nuts. It's easily the most impactful result of the nationalistic and populist strain cutting through the western world, at least until/unless Trump somehow wins.
The pound is getting murdered right now. The market was expecting remain. Tomorrow might be interesting.
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BBC now predicting a leave vote.
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anyone have any cash sitting on the sidelines buying stocks or forex right now?
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Japanese stock market is down
almost 7% over 8% already.
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Japanese stock market is down almost 7% already.
Geez...if I place a buy for Total Stock Market Index Admiral (VTSAX) now will I get tomorrow's end of day price?
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anyone have any cash sitting on the sidelines buying stocks or forex right now?
$4k, trying to buy Canada low tomorrow that I just contributed last week. Also $15k that I sold on Tuesday (@$25.04 for equivalent ETF I plan to buy) and transferred from my higher fee work plan to my self directed ETFs - both EAFE indexes. It's exciting to know I might be able to sell high, buy low for once - we'll see.
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Geez...if I place a buy for Total Stock Market Index Admiral (VTSAX) now will I get tomorrow's end of day price?
Yes.
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Geez...if I place a buy for Total Stock Market Index Admiral (VTSAX) now will I get tomorrow's end of day price?
Yes.
Thanks for the prompt response.
Actually, shouldn't I just wait until I see what the market actually does then put a buy in since I get the Close Price tomorrow anyway?
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I have $100k ready tomorrow to invest.
Bought $50k FSTVX last week and have been waiting for this?
If market tanks would you out the full $100k into total us stock (FSTVX) or mix in a total international?
How long do you think a drop will happen for? Few days?
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I just transferred cash to my brokerage account and will be buying on Tuesday
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Actually, shouldn't I just wait until I see what the market actually does then put a buy in since I get the Close Price tomorrow anyway?
That would be market timing, so my advice would be not to do that. Buy if you were going to buy anyway. Tomorrow's closing price tells us nothing about what Monday's might be. You might buy during a drop tomorrow, only to have the market drop 10% on Monday. Or it might rebound 5% on Monday. You have no way of knowing.
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I have a pretty decent-sized stock vesting event next week. If all the markets go down, great! Less taxable income for me this year! My only request is that my employer's stock goes down a little bit less than the rest of the market so that when I sell to reinvest I'll still come out ahead.
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Actually, shouldn't I just wait until I see what the market actually does then put a buy in since I get the Close Price tomorrow anyway?
That would be market timing, so my advice would be not to do that. Buy if you were going to buy anyway. Tomorrow's closing price tells us nothing about what Monday's might be. You might buy during a drop tomorrow, only to have the market drop 10% on Monday. Or it might rebound 5% on Monday. You have no way of knowing.
Gotcha, thanks. I planned to buy and re-balance on Friday the 1st of July so just a week early. I just don't want this to be the time that I should have bought something...like when Ford Motor Company was at like $1.50 in 2008
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Golden butterfly, save me!
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Sounds like there is a chance the EU in general will start breaking up. This would cause a lot more down days. We were due for a crash, 13k by end of summer?
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Sounds like there is a chance the EU in general will start breaking up. This would cause a lot more down days. We were due for a crash, 13k by end of summer?
The last crash was from US housing debt contagion. I'm not familiar with the EU international debt structure, but I'd be willing to bet that this is going to spark quite a debt contagion. The Central banks don't have any interest rates to drop this time to stimulate the economies. Not only that, what happens to the British pound when they have to re-negotiate every trade contract they have?
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The pound is getting murdered right now. The market was expecting remain. Tomorrow might be interesting.
So does anyone know if it's possible to do some FOREX investing in the Pound with Vanguard?
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ES futures are down 5%. It's going to be a rough opening.
Flight to bonds?
I may pick up some VTI and VXUS tomorrow.
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S&P 500 and Nasdaq futures plummeted by 5pc in the wee Friday hours on the east coast, hitting overnight limit thresholds and causing trading to be suspended.
I imagine right now people are overreacting to a result no one seemed to expect. Could be an interesting couple of hours/days/weeks until things settle back down though.
(https://i.imgur.com/0mz67.gif)
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There are so much that will need to be reviewed and renegotiated in all sectors and industries. Every company in the word with EU/UK business will need to rethink their EU/UK strategy, review and renegotiate (if needed) all their EU/UK agreements and arrangements. Legal dispute will spike for sometime and M&A activities will be down for at least a year or two. The cost of doing business for MNCs has just skyrocketed.
Forgot to add, companies with businesses in EU and UK will probably need to be restructured given the the rules may become very different for everything between EU and UK - that's a lot of companies...
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Haha... This is probably one of the only forums out there where people are licking their to buy. The rest of the world will be clamouring to sell tomorrow at lows maybe not seen since 2008 or before. (Who knows?) Think they'll show news coverage of people waiting in queues to sell their investments and buy gold? (Old stock footage they pull out during things like this, the "fiscal cliff", the Russia/Ukraine thing, and the Portugal debt crisis.) Who are these strange creatures that sell during downturns?
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Haha... This is probably one of the only forums out there where people are licking their to buy. The rest of the world will be clamouring to sell tomorrow at lows maybe not seen since 2008 or before. (Who knows?) Think they'll show news coverage of people waiting in queues to sell their investments and buy gold? (Old stock footage they pull out during things like this, the "fiscal cliff", the Russia/Ukraine thing, and the Portugal debt crisis.) Who are these strange creatures that sell during downturns?
Yes, and I'm betting it might be current footage: buy-gold-searches-soar-500pc-after-britain-votes-to-leave-eu (http://www.telegraph.co.uk/business/2016/06/24/buy-gold-searches-soar-500pc-after-britain-votes-to-leave-eu-her/)
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I made a move to sell South African Rand for US$ on Tuesday. The rate then was $1=R14.70, today it's $1=R15.60. Sadly I only had access to one 7th of what I wanted to move, so most of my money caught the express train into the gutter :(
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WOOHOO !!
The French stock index went 10% down, and gold went 5% up. Plus, it is payday for me. As you can imagine, this is a wonderful day for my stache. Crazy Mr. Market agreed to buy my gold over its fair price and to sell me stocks below their fair price. Come on, Mr. Market, aren't you supposed to be efficient ? Do you really think today is the end of the world ?
I know a lot of people on this forum loathe gold for psychological reasons, and I can understand that, but seeing days like today, I really don't get why so many people believe in almost-100% stocks and don't even have a substantial portion of bonds. Come on, guys! Today was free-money day!
GOD SAVE THE QUEEN !
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http://money.cnn.com/2016/06/24/investing/brexit-london-stocks-crashing/index.html?iid=hp-toplead-dom
Interesting times!
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Good on em. I mean seriously... what good has Brussels ever done for the ordinary European citizen?
About time democracy speaks for the average punter.... too much centralised power in unelected bureaucrats
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I think it was just confirmed, with 51% voting leave according to Google. How will this affect stocks in the short term? Are we going to see a several week/month slump?
Gold is up $100 too, and Bitcoin is down $100. Interesting times.
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Let the market react today. If anything today and next week will be great times to buy on the dip.
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I wish I weren't in the middle of a renovation project and paying medical bills so I had more cash to put in. Damn.
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Our US banks are down around 7% and the market isn't even open yet
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French banks (including Société Générale, a rather very big player) are down more than 20%. In a single day (half-day, actually). That didn't happen often. Maybe during Lehman's fall? I'm not even sure. I love it when markets overreact.
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I sold the last chunk of FSTVX in my 401(k) account yesterday and captured a few hundred bucks in gains. I had been meaning to anyway to free up cash, this just gives me a pretty clear buying opportunity.
Still going to wait for next week, though. Going by the futures today is going to be terrible and Monday probably won't be much better.
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I have a lot of VASGX, always thought I was over exposed on international. Was going to re balance soon too. Ugh.
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I've got $5k or so that had been earmarked for paying off a credit card when the 0% rate expires, but now I think I'll do a balance transfer and shove the $5K into the market instead.
(Yeah, I'm timing the market... but the Efficient Market Hypothesis clearly failed on this Really Bad Day, and I'm gonna take advantage of it!)
Anyway, what do y'all think will be the best fund to buy (VTIAX?), and when would be the best time to buy it? (I'm leaning towards today, but would it be better to wait until next week?)
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We don't know how deep and far this is going to go, I was initially going to place some limit buy orders (still may), but in the meantime, I'll just keep dollar cost averaging, and re balancing as appropriate.
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It's currently much ado about nothing really. If you look at how the markets reacted yesterday (closing up 1.29%) due to the speculation that the UK would remain in the EU against the current futures (down 2.73%), we're talking about a 1.44% spread. Hardly anything to get excited about.
Now if next week the panic selling continues then you *might* be in a position to take advantage of a true dip. For today assuming that the futures holds at < 3% down, I wouldn't bother putting in additional money than you ordinarily would have today.
In other words at current levels, it's still not a huge buying opportunity like the start of this year when panic over price of oil was pulling the markets down.
Just my 10 cents.
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I've got $5k or so that had been earmarked for paying off a credit card when the 0% rate expires, but now I think I'll do a balance transfer and shove the $5K into the market instead.
(Yeah, I'm timing the market... but the Efficient Market Hypothesis clearly failed on this Really Bad Day, and I'm gonna take advantage of it!)
Anyway, what do y'all think will be the best fund to buy (VTIAX?), and when would be the best time to buy it? (I'm leaning towards today, but would it be better to wait until next week?)
Pay off your cc debt.
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I've got $5k or so that had been earmarked for paying off a credit card when the 0% rate expires, but now I think I'll do a balance transfer and shove the $5K into the market instead.
(Yeah, I'm timing the market... but the Efficient Market Hypothesis clearly failed on this Really Bad Day, and I'm gonna take advantage of it!)
Anyway, what do y'all think will be the best fund to buy (VTIAX?), and when would be the best time to buy it? (I'm leaning towards today, but would it be better to wait until next week?)
Pay off your cc debt.
Agreed, pay off your debt imo.
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I am looking for buying VGK with spare cash, probably 5-10k$
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Anyway, what do y'all think will be the best fund to buy (VTIAX?), and when would be the best time to buy it? (I'm leaning towards today, but would it be better to wait until next week?)
Pay off your cc debt.
Agreed, pay off your debt imo.
+1 : pay off the debt.
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Anyway, what do y'all think will be the best fund to buy (VTIAX?), and when would be the best time to buy it? (I'm leaning towards today, but would it be better to wait until next week?)
Pay off your cc debt.
Agreed, pay off your debt imo.
+1 : pay off the debt.
I third that! Sure, if you had the extra $5K sitting around doing sweet fuck all you might want to buy a dip (note: timing is still bad bahavior), but with CC debt? Get rid of that mofo!
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Anyway, what do y'all think will be the best fund to buy (VTIAX?), and when would be the best time to buy it? (I'm leaning towards today, but would it be better to wait until next week?)
Pay off your cc debt.
Agreed, pay off your debt imo.
+1 : pay off the debt.
I third that! Sure, if you had the extra $5K sitting around doing sweet fuck all you might want to buy a dip (note: timing is still bad bahavior),
I always see this, but I don't know if I always agree. If you see a dip, why wouldn't you buy? Sure, trying to buy low and sell high isn't a good thing, but if you're in it for the long run why not try to "time" the market and buy more when it is in a dip?
I'm in a somewhat similar position--I have about $2k of CC Debt due to making a bunch of purchases I knew were coming up and taking advantage of the 0% interest. I was planning on paying them off this next paycheck, but now am planning on keeping it longer (still 0%) and funneling more into my IRA right now.
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Anyway, what do y'all think will be the best fund to buy (VTIAX?), and when would be the best time to buy it? (I'm leaning towards today, but would it be better to wait until next week?)
Pay off your cc debt.
Agreed, pay off your debt imo.
+1 : pay off the debt.
I third that! Sure, if you had the extra $5K sitting around doing sweet fuck all you might want to buy a dip (note: timing is still bad bahavior), but with CC debt? Get rid of that mofo!
Pay off the credit card. You'll incur ~3% charge to make the transfer, right? Assuming things land around -7% today, you're talking about a 4% net gain back to yesterday's close. Things could get a lot worse on an uncertain time frame before they get better. Not worth the risk.
After watching the results last night, this is the first place (after NY Times) I turned this morning. Thanks for the thoughtful and reasoned discussion. My task for the day is figure out if the sell-off will take me below my rebalancing band. If it does I can sell bonds to buy stocks and rationalize the timing as in accordance with my IPS. The equity portion of my portfolio is 50/50 US/Intnl with a slight overweight to Intl Value which is down 9%. My FIRE date is Aug 1 so these are some pretty big numbers. Strangely the sensation I'm experiencing is more excitement and interest than anxiety.
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I always see this, but I don't know if I always agree. If you see a dip, why wouldn't you buy? Sure, trying to buy low and sell high isn't a good thing, but if you're in it for the long run why not try to "time" the market and buy more when it is in a dip?
I'm in a somewhat similar position--I have about $2k of CC Debt due to making a bunch of purchases I knew were coming up and taking advantage of the 0% interest. I was planning on paying them off this next paycheck, but now am planning on keeping it longer (still 0%) and funneling more into my IRA right now.
The reason is this:
If you have $X lying around in wait of a dip to buy, the odds are you will never see that dip because the market tends to move higher, so in general you lose more waiting for a dip that may never occur. Then you have to decide how long with no dip are you willing to do? A day? A month? A year
Take this scenario. Let's say you had 10k last two months and were waiting for a dip. You decide that since the Brexit vote is in two months you'll wait.
If the Brits decided to say, you would have lost out on a lot of gains.
The Brits decided to leave - your clairvoyance skills worked, so you buy! Woohoo, you're a smart long term investing dip buyer, but not really. The market (S&P500) is still up over 1% since then. Also, most vanguard funds including VOO+VTI paid a dividend just last week which is another .5% or so. So you still lost out even though the scenario you envisioned happening occurred.
TL;DR - Junk the cash into the market when you have it.
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I always see this, but I don't know if I always agree. If you see a dip, why wouldn't you buy? Sure, trying to buy low and sell high isn't a good thing, but if you're in it for the long run why not try to "time" the market and buy more when it is in a dip?
I'm in a somewhat similar position--I have about $2k of CC Debt due to making a bunch of purchases I knew were coming up and taking advantage of the 0% interest. I was planning on paying them off this next paycheck, but now am planning on keeping it longer (still 0%) and funneling more into my IRA right now.
The reason is this:
If you have $X lying around in wait of a dip to buy, the odds are you will never see that dip because the market tends to move higher, so in general you lose more waiting for a dip that may never occur. Then you have to decide how long with no dip are you willing to do? A day? A month? A year
Take this scenario. Let's say you had 10k last two months and were waiting for a dip. You decide that since the Brexit vote is in two months you'll wait.
If the Brits decided to say, you would have lost out on a lot of gains.
The Brits decided to leave - your clairvoyance skills worked, so you buy! Woohoo, you're a smart long term investing dip buyer, but not really. The market (S&P500) is still up over 1% since then. Also, most vanguard funds including VOO+VTI paid a dividend just last week which is another .5% or so. So you still lost out even though the scenario you envisioned happening occurred.
TL;DR - Junk the cash into the market when you have it.
well put. If you unexpectedly came in to a lump to invest just yesterday, I suppose I could see waiting to see what Brexit does. But that's a pretty rare situation.
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I always see this, but I don't know if I always agree. If you see a dip, why wouldn't you buy? Sure, trying to buy low and sell high isn't a good thing, but if you're in it for the long run why not try to "time" the market and buy more when it is in a dip?
I'm in a somewhat similar position--I have about $2k of CC Debt due to making a bunch of purchases I knew were coming up and taking advantage of the 0% interest. I was planning on paying them off this next paycheck, but now am planning on keeping it longer (still 0%) and funneling more into my IRA right now.
The reason is this:
If you have $X lying around in wait of a dip to buy, the odds are you will never see that dip because the market tends to move higher, so in general you lose more waiting for a dip that may never occur. Then you have to decide how long with no dip are you willing to do? A day? A month? A year
Take this scenario. Let's say you had 10k last two months and were waiting for a dip. You decide that since the Brexit vote is in two months you'll wait.
If the Brits decided to say, you would have lost out on a lot of gains.
The Brits decided to leave - your clairvoyance skills worked, so you buy! Woohoo, you're a smart long term investing dip buyer, but not really. The market (S&P500) is still up over 1% since then. Also, most vanguard funds including VOO+VTI paid a dividend just last week which is another .5% or so. So you still lost out even though the scenario you envisioned happening occurred.
TL;DR - Junk the cash into the market when you have it.
well put. If you unexpectedly came in to a lump to invest just yesterday, I suppose I could see waiting to see what Brexit does. But that's a pretty rare situation.
I guess I think in shorter time spans--I come into a lump sum twice a month. I basically live paycheck to paycheck; between rent, debt, and investments I don't spend much money--and the debt can almost always be taken care of at a later date (Yay 0% credit cards and paying way more than the minimum on my wife's student loans!).
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I happen to have 300k cash on the side from a recent sale of a house. Time to buy?
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I happen to have 300k cash on the side from a recent sale of a house. Time to buy?
Every day you have the money to do so is the time to buy. What the market is doing is immaterial. Should you buy today? Yes. Should you have bought yesterday? Yes.
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I always see this, but I don't know if I always agree. If you see a dip, why wouldn't you buy? Sure, trying to buy low and sell high isn't a good thing, but if you're in it for the long run why not try to "time" the market and buy more when it is in a dip?
I'm in a somewhat similar position--I have about $2k of CC Debt due to making a bunch of purchases I knew were coming up and taking advantage of the 0% interest. I was planning on paying them off this next paycheck, but now am planning on keeping it longer (still 0%) and funneling more into my IRA right now.
The reason is this:
If you have $X lying around in wait of a dip to buy, the odds are you will never see that dip because the market tends to move higher, so in general you lose more waiting for a dip that may never occur. Then you have to decide how long with no dip are you willing to do? A day? A month? A year
Take this scenario. Let's say you had 10k last two months and were waiting for a dip. You decide that since the Brexit vote is in two months you'll wait.
If the Brits decided to say, you would have lost out on a lot of gains.
The Brits decided to leave - your clairvoyance skills worked, so you buy! Woohoo, you're a smart long term investing dip buyer, but not really. The market (S&P500) is still up over 1% since then. Also, most vanguard funds including VOO+VTI paid a dividend just last week which is another .5% or so. So you still lost out even though the scenario you envisioned happening occurred.
TL;DR - Junk the cash into the market when you have it.
well put. If you unexpectedly came in to a lump to invest just yesterday, I suppose I could see waiting to see what Brexit does. But that's a pretty rare situation.
I guess I think in shorter time spans--I come into a lump sum twice a month. I basically live paycheck to paycheck; between rent, debt, and investments I don't spend much money--and the debt can almost always be taken care of at a later date (Yay 0% credit cards and paying way more than the minimum on my wife's student loans!).
It sounds like you have extra cash you should be putting to work for you on a regular schedule! I lump sum my bonus at year's end, and throw 1K in Vanguard every two weeks (about to be upped because my 401(K) is maxed).
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I happen to have 300k cash on the side from a recent sale of a house. Time to buy?
This question is impossible to answer.
This is why everyone should have an investment policy statement (IPS). You should specify your ideal asset allocation. You should specify whether you dollar cost average or lump sum invest. Maybe you only lump sum invest when the market is down 20% from previous highs. Or maybe only when the sp500 pe ratio drops under 16. There are a number of reasonable methods to invest, but investing by feeling is pure market timing.
To answer your question how I would invest: if I had 300k in cash with no near term cash needs I would invest in the market asap. I would put 60% in VTSAX, 20% in Vanguard REIT, 20% in Vanguard Emerging Markets. If the Schiller PE is above 25 (like now) my IPS says I should DCA over 6 months-1 year.
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Hi everyone. I've been reading Money Mustache forums for a few months now, and they're great! Really changing my life, I hope. This is my first real post, so here goes. After reading these forums for a while I moved a good sum of money from a 401K managed by a previous employer over to a Vanguard IRA. There, I let it sit in a money market account for a month or so, mainly because I'm disorganized. Today, I put it back to work in the market, according to a diverse allocation. I'm feeling lucky to have missed the Brexit dive but also a little worried, because I hope the markets (and the world) can get their acts together. (I have another retirement account with my for-now employer that did take a big hit. Planning just not to look at that one for a while!)
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Pay off the credit card. You'll incur ~3% charge to make the transfer, right? Assuming things land around -7% today, you're talking about a 4% net gain back to yesterday's close. Things could get a lot worse on an uncertain time frame before they get better. Not worth the risk.
I couldn't care less about how long it takes markets to recover (since I have faith that they will, eventually); once I buy the money would stay in for at least a decade, and realistically much longer.
Also, more details about the situation: the CC rate doesn't expire until 8/23, and (given my wife's relatively-lucrative temporary job) we're currently cash-flow-positive by several thousand dollars a month, after subtracting out our normal periodic investing (maxing 401k and IRAs at $2416.67/month). In other words, it's entirely reasonable that I could drop the money I currently have saved into the market today, then save it up again starting from $0 in the two months before the payment is due. It'd be a little tight, but doable (in fact, that might be a good thing -- I've been getting a little lax in my spending recently, and that might help fix it!). If I didn't invest this $5K today, I'd almost certainly be investing that next $5K in a couple months anyway. Rolling over the entire $5K CC balance would represent either a worst-case scenario or a calculated decision based on an even more extreme drop in the markets.
So, thinking it through some more, it seems like the risk I'm taking is that (a) something would happen to force me to roll over the balance or (b) the markets would continue to drop over the next few months, making waiting to invest better, vs. the assumptions that (c) today is a "Really Bad Day" allowing an abnormal >4% "panic discount" and (d) on average, markets go up (meaning that by default I plan as if the price will be higher in a few months).
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I think of my emergency fund as a dry powder keg I can use either to avoid incurring debts or to take advantage of dips in the market. When I believe the dip is significant enough (and actually a dip) to compensate for the added liquidity risk, I carve out a portion of my emergency cash fund to take advantage of it. While the market recovers, I let my cash flow fill up my emergency fund rather than go to the market. The total amount I invest is the same, but the result is front loading and buying at a lower overall price.
Hi everyone. I've been reading Money Mustache forums for a few months now, and they're great! Really changing my life, I hope. This is my first real post, so here goes. After reading these forums for a while I moved a good sum of money from a 401K managed by a previous employer over to a Vanguard IRA. There, I let it sit in a money market account for a month or so, mainly because I'm disorganized. Today, I put it back to work in the market, according to a diverse allocation. I'm feeling lucky to have missed the Brexit dive but also a little worried, because I hope the markets (and the world) can get their acts together. (I have another retirement account with my for-now employer that did take a big hit. Planning just not to look at that one for a while!)
Why exactly are you worried? Even if the market dips further, it will ultimately recover and presumably from your post you won't need to be pulling the money out for anything in the near future. Plus, if you are still working and contributing regularly, you'll be buying the same piece of ownership of hundreds of companies at lower and lower prices as the market dips. Keep calm and stay the course (and welcome to the forums!)
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I think of my emergency fund as a dry powder keg I can use either to avoid incurring debts or to take advantage of dips in the market. When I believe the dip is significant enough (and actually a dip) to compensate for the added liquidity risk, I carve out a portion of my emergency cash fund to take advantage of it. While the market recovers, I let my cash flow fill up my emergency fund rather than go to the market. The total amount I invest is the same, but the result is front loading and buying at a lower overall price.
Hi everyone. I've been reading Money Mustache forums for a few months now, and they're great! Really changing my life, I hope. This is my first real post, so here goes. After reading these forums for a while I moved a good sum of money from a 401K managed by a previous employer over to a Vanguard IRA. There, I let it sit in a money market account for a month or so, mainly because I'm disorganized. Today, I put it back to work in the market, according to a diverse allocation. I'm feeling lucky to have missed the Brexit dive but also a little worried, because I hope the markets (and the world) can get their acts together. (I have another retirement account with my for-now employer that did take a big hit. Planning just not to look at that one for a while!)
Why exactly are you worried? Even if the market dips further, it will ultimately recover and presumably from your post you won't need to be pulling the money out for anything in the near future. Plus, if you are still working and contributing regularly, you'll be buying the same piece of ownership of hundreds of companies at lower and lower prices as the market dips. Keep calm and stay the course (and welcome to the forums!)
The result is definitely frontloading. Whether it will definitely be buying at a lower price is a bit of a gamble each time, no?
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I always see this, but I don't know if I always agree. If you see a dip, why wouldn't you buy? Sure, trying to buy low and sell high isn't a good thing, but if you're in it for the long run why not try to "time" the market and buy more when it is in a dip?
I'm in a somewhat similar position--I have about $2k of CC Debt due to making a bunch of purchases I knew were coming up and taking advantage of the 0% interest. I was planning on paying them off this next paycheck, but now am planning on keeping it longer (still 0%) and funneling more into my IRA right now.
The reason is this:
If you have $X lying around in wait of a dip to buy, the odds are you will never see that dip because the market tends to move higher, so in general you lose more waiting for a dip that may never occur. Then you have to decide how long with no dip are you willing to do? A day? A month? A year
Take this scenario. Let's say you had 10k last two months and were waiting for a dip. You decide that since the Brexit vote is in two months you'll wait.
If the Brits decided to say, you would have lost out on a lot of gains.
The Brits decided to leave - your clairvoyance skills worked, so you buy! Woohoo, you're a smart long term investing dip buyer, but not really. The market (S&P500) is still up over 1% since then. Also, most vanguard funds including VOO+VTI paid a dividend just last week which is another .5% or so. So you still lost out even though the scenario you envisioned happening occurred.
TL;DR - Junk the cash into the market when you have it.
well put. If you unexpectedly came in to a lump to invest just yesterday, I suppose I could see waiting to see what Brexit does. But that's a pretty rare situation.
I guess I think in shorter time spans--I come into a lump sum twice a month. I basically live paycheck to paycheck; between rent, debt, and investments I don't spend much money--and the debt can almost always be taken care of at a later date (Yay 0% credit cards and paying way more than the minimum on my wife's student loans!).
It sounds like you have extra cash you should be putting to work for you on a regular schedule!
Not really. Or I already am. I get my paycheck (and I'm not talking about what goes into either to my IRA or my 401k without me ever seeing it) and the whole paycheck is basically spoken for--rent, wife's student loan, groceries, or credit card debt (which was planned in advance). When the CC is paid off, I'll up my 401k until maxed, when that is maxed, we'll up the wife's IRA or 401k or student loans.
But the thing is that we can pay less into the student loans or the credit card if we think the market will dip. We just never try to sell.
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My travel reimbursement came back a few days ago. I was going to wait until the 1st when I do most of my stock buying, but I might just bump that up a few days since it was all going to my international allocation anyways.
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Hi everyone. I've been reading Money Mustache forums for a few months now, and they're great! Really changing my life, I hope. This is my first real post, so here goes. After reading these forums for a while I moved a good sum of money from a 401K managed by a previous employer over to a Vanguard IRA. There, I let it sit in a money market account for a month or so, mainly because I'm disorganized. Today, I put it back to work in the market, according to a diverse allocation. I'm feeling lucky to have missed the Brexit dive but also a little worried, because I hope the markets (and the world) can get their acts together. (I have another retirement account with my for-now employer that did take a big hit. Planning just not to look at that one for a while!)
Why exactly are you worried? Even if the market dips further, it will ultimately recover and presumably from your post you won't need to be pulling the money out for anything in the near future. Plus, if you are still working and contributing regularly, you'll be buying the same piece of ownership of hundreds of companies at lower and lower prices as the market dips. Keep calm and stay the course (and welcome to the forums!)
Yep! "Worried" never won at investing, logic and math usually does. Keep emotions the heck out of your portfolio--they got no business there.
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I have around 4x as much money to put into my Roth IRA this month as I have over the last couple of months. Usually I just add the money to my Vanguard account once I'm paid at the end of the month, but I'm debating on putting the money in now instead of when I'm paid next week. Good idea or no? Some of the other posts mention not changing up your usual investing schedule, so maybe I just need to wait another week and invest when I normally do...
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Great day today, I have my automatic investments planned for July 1st, but could not resist tapping into the emergency fund and buying some Vanguard developed Europe at the opening, down a neat 9% vs yesterday.
Gave me a very good feeling to buy at 24.9€ per share.
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I have around 4x as much money to put into my Roth IRA this month as I have over the last couple of months. Usually I just add the money to my Vanguard account once I'm paid at the end of the month, but I'm debating on putting the money in now instead of when I'm paid next week. Good idea or no? Some of the other posts mention not changing up your usual investing schedule, so maybe I just need to wait another week and invest when I normally do...
It might be down 20% by the first, and you'd be kicking yourself to have bought when its only down 3%. Likewise, it could be up 5% by then, and you would kick yourself for not buying now.
Ultimately, the money you buy now is probably a smaller portion of the total portfolio and it shouldn't matter too much...
Say you have 200k in VTSAX, and it goes down 5% today, and you buy 3k worth. You "Made" 5% on 3k or $150 once the price comes back. I don't market time for this reason....
Now if you were lump summing in your entire 203k above, the effects would be much larger.
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I think of my emergency fund as a dry powder keg I can use either to avoid incurring debts or to take advantage of dips in the market. When I believe the dip is significant enough (and actually a dip) to compensate for the added liquidity risk, I carve out a portion of my emergency cash fund to take advantage of it. While the market recovers, I let my cash flow fill up my emergency fund rather than go to the market. The total amount I invest is the same, but the result is front loading and buying at a lower overall price.
Hi everyone. I've been reading Money Mustache forums for a few months now, and they're great! Really changing my life, I hope. This is my first real post, so here goes. After reading these forums for a while I moved a good sum of money from a 401K managed by a previous employer over to a Vanguard IRA. There, I let it sit in a money market account for a month or so, mainly because I'm disorganized. Today, I put it back to work in the market, according to a diverse allocation. I'm feeling lucky to have missed the Brexit dive but also a little worried, because I hope the markets (and the world) can get their acts together. (I have another retirement account with my for-now employer that did take a big hit. Planning just not to look at that one for a while!)
Why exactly are you worried? Even if the market dips further, it will ultimately recover and presumably from your post you won't need to be pulling the money out for anything in the near future. Plus, if you are still working and contributing regularly, you'll be buying the same piece of ownership of hundreds of companies at lower and lower prices as the market dips. Keep calm and stay the course (and welcome to the forums!)
The result is definitely frontloading. Whether it will definitely be buying at a lower price is a bit of a gamble each time, no?
I'll grant you that. I minimize the gambling risk by only really taking advantage if I feel the dip is large. For what I am invested in, the Brexit dip thus far hasn't been enough for me to care about. Since the money actually serves a purpose by sitting in cash, it allows me to be slightly more flexible, which I believe to be advantageous.
I have around 4x as much money to put into my Roth IRA this month as I have over the last couple of months. Usually I just add the money to my Vanguard account once I'm paid at the end of the month, but I'm debating on putting the money in now instead of when I'm paid next week. Good idea or no? Some of the other posts mention not changing up your usual investing schedule, so maybe I just need to wait another week and invest when I normally do...
If you're even slightly unsure of what you want to do, just stick to your regular investment plan. Changing up your plans on the fly based on market fluctuations is not a smart move unless you've thought through your reactions ahead of time.
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Thanks, I'll wait as I usually do. I knew in the back of my mind that's what I needed to do, but the temptation was still there. The 2% drop so far isn't that big of a deal yet anyways.
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If market goes down 10% and you say "yay, sales" and go buy 1% of your portfolio worth.. well, you just lost 9% of your money. I'd rather watch market go steadily up 0.03% /day than be happy about investing a tiny amount of your NW on a very bad day for market
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If market goes down 10% and you say "yay, sales" and go buy 1% of your portfolio worth.. well, you just lost 9% of your money. I'd rather watch market go steadily up 0.03% /day than be happy about investing a tiny amount of your NW on a very bad day for market
Well the assumption has to be that 20 years from now, the market is going to be at the same place regardless of whether it drops 10% today or not. If that's the case, you haven't actually lost anything. And you have 0.11% more total shares in 20 years ((1%/90%)-(1%/100%)) than you would have if it hadn't dropped.
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If market goes down 10% and you say "yay, sales" and go buy 1% of your portfolio worth.. well, you just lost 9% of your money. I'd rather watch market go steadily up 0.03% /day than be happy about investing a tiny amount of your NW on a very bad day for market
Well the assumption has to be that 20 years from now, the market is going to be at the same place regardless of whether it drops 10% today or not. If that's the case, you haven't actually lost anything. And you have 0.11% more total shares in 20 years ((1%/90%)-(1%/100%)) than you would have if it hadn't dropped.
OK, let's do math. You had 100k, market went down 10% - you have 90k NOW. You go buy 1% of initial 100k = 1k. Now you have 91k in market. In 20 years that would be 353140 at 7%. If market didn't go down, in 20 years you would have had (out of that 100k) 386k. Net loss is 33k + 1k that you spent today = 34k.
LOSS
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Golden butterfly, save me!
:)
Golden Butterfly or not, days like today are good times to gain some much-needed perspective on your own risk tolerance and the value of diversification.
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If market goes down 10% and you say "yay, sales" and go buy 1% of your portfolio worth.. well, you just lost 9% of your money. I'd rather watch market go steadily up 0.03% /day than be happy about investing a tiny amount of your NW on a very bad day for market
Well the assumption has to be that 20 years from now, the market is going to be at the same place regardless of whether it drops 10% today or not. If that's the case, you haven't actually lost anything. And you have 0.11% more total shares in 20 years ((1%/90%)-(1%/100%)) than you would have if it hadn't dropped.
OK, let's do math. You had 100k, market went down 10% - you have 90k NOW. You go buy 1% of initial 100k = 1k. Now you have 91k in market. In 20 years that would be 353K at 7%. If market didn't go down, in 20 years you would have had (out of that 100k) 386k. Net loss is 33k + 1k that you spent today = 34k.
LOSS
[I edited your formatting just a bit for consistency]
So you're arguing that adding in 1K after a market crash because stocks are on sale is worse than successfully predicting the market dip and pulling out 10K of your investments, then putting that 10K back in after the dip?
If so, then you're not wrong, but I don't see your point. Also you're double-counting the 1K you're putting in today, plus adding together money in today's dollars with money in today+20 years' dollars.
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If market goes down 10% and you say "yay, sales" and go buy 1% of your portfolio worth.. well, you just lost 9% of your money. I'd rather watch market go steadily up 0.03% /day than be happy about investing a tiny amount of your NW on a very bad day for market
Well the assumption has to be that 20 years from now, the market is going to be at the same place regardless of whether it drops 10% today or not. If that's the case, you haven't actually lost anything. And you have 0.11% more total shares in 20 years ((1%/90%)-(1%/100%)) than you would have if it hadn't dropped.
OK, let's do math. You had 100k, market went down 10% - you have 90k NOW. You go buy 1% of initial 100k = 1k. Now you have 91k in market. In 20 years that would be 353140 at 7%. If market didn't go down, in 20 years you would have had (out of that 100k) 386k. Net loss is 33k + 1k that you spent today = 34k.
LOSS
Yes, if you don't assume that the market is going to be in the same place in 20 years either way you've lost money. That's why I pointed out you had to have that assumption in order to be excited about stocks going on sale.
If shares were selling for $1/share yesterday and $4/share in 20 years, being able to buy shares at $0.90/share today is a great deal.
If shares were going to be worth $4/share in 20 years yesterday and today they're only going to be worth $3.60 in 20 years then being able to buy shares at $0.90/share today is incredibly depressing.
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@running - yes, double counted 1k.
My point is that math should work. I would rather have no 10% dips and run around with pants down "buy, buy, buy! so happy market went down 10%" than just sit and watch market do it's steady normal 7% grow at fractions of % up/down here and there. Show me how you will have MORE money in 20 years given 100k invested beginning of day today and assuming 10% market crash EOD and adding 1k today at EOD price.
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maizeman - do the math. If you assume market will be normal 7% up 1 year from hypothetical today given 10% loss, you are looking at 17% rally.
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If market goes down 10% and you say "yay, sales" and go buy 1% of your portfolio worth.. well, you just lost 9% of your money. I'd rather watch market go steadily up 0.03% /day than be happy about investing a tiny amount of your NW on a very bad day for market
Well the assumption has to be that 20 years from now, the market is going to be at the same place regardless of whether it drops 10% today or not. If that's the case, you haven't actually lost anything. And you have 0.11% more total shares in 20 years ((1%/90%)-(1%/100%)) than you would have if it hadn't dropped.
OK, let's do math. You had 100k, market went down 10% - you have 90k NOW. You go buy 1% of initial 100k = 1k. Now you have 91k in market. In 20 years that would be 353140 at 7%. If market didn't go down, in 20 years you would have had (out of that 100k) 386k. Net loss is 33k + 1k that you spent today = 34k.
LOSS
That's the wrong way to think about it.
Your choice is not whether the market goes down or not; your choice is whether to invest or not. If you don't buy the $1K today, then only $90K compounds for that 20 years at 7%, resulting (assuming continuous compounding) in a final balance of $364,968 vs. the $369,023.20 (again, assuming continuous compounding -- I have no idea how you came up with that 353140 figure) you'd get if you invested.
Saying "yay, sales" and investing the $1k instead of holding it in cash results in a long-term gain, not a loss, of about $4,000.
I mean, sure, you can whinge about "but think of how great it would have been if it didn't crash at all," but that's utterly pointless because it's not something you get to decide.
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Jack, correct. That was my main point - I'd really rather sit and watch market go slowly w/o big jumps/downs. But if it's not in our power to prevent a crash, - then yes, investing 1k is better than sitting on your ass. It's not the reason to go yell "yay, sale" because you will have less in 20 years given average mkt performance and today's 10% loss.
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Who knows the ultimate outcome of Brexit. on the surface a mixed bag that on the whole is bad economically for the UK.
Some minor impact to the US is likely, but really what is a 10% decline in a country we do less than 5% trade with? Investment wise, the silver lining here is the Fed is likely to hold off interest rate hikes for a while longer given the uncertainty and the drag a strong dollar creates.
It's also that uncertainty, specifically in the EU, that will lead to continued investment in the US over the intermediate term. We continue to be not as strong as we'd like but more attractive (and safe) than many other places in the world. Now if we could get some investment in infrastructure going...
The biggest risk here is this adds fuel to the fire of the far right, the Donald included. I am hopeful we are not so stupid to take that path.
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Jack, correct. That was my main point - I'd really rather sit and watch market go slowly w/o big jumps/downs. But if it's not in our power to prevent a crash, - then yes, investing 1k is better than sitting on your ass. It's not the reason to go yell "yay, sale" because you will have less in 20 years given average mkt performance and today's 10% loss.
And that's the whole point of being happy when market is down during accumulation phase. You cannot control market swings
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Jack, correct. That was my main point - I'd really rather sit and watch market go slowly w/o big jumps/downs. But if it's not in our power to prevent a crash, - then yes, investing 1k is better than sitting on your ass. It's not the reason to go yell "yay, sale" because you will have less in 20 years given average mkt performance and today's 10% loss.
And that's the whole point of being happy when market is down during accumulation phase. You cannot control market swings
Also, mathematically, if you just DCA (or monthly lump sum invest as some would say), you're much better off with volatility VS steady growth, assuming same cagr
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I will add that if you have funds you were thinking about investing, hold off for the day and don't watch the market, and think about buying some time next week. I like doing multiple days during times like this, something like 1/3 Monday, Tuesday and Wednesday. While I don't advocate holding long term trying to time the market, I have let my cash holding run up a bit over the past couple of years and purchased during correction events - August '15 and February '16 for me. I believe this is a prudent way to get a bit extra out of a flat market, and I'm comfortable with the risk that I might miss out a bit. (note 95% of our net worth is invested already)
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@running - yes, double counted 1k.
My point is that math should work. I would rather have no 10% dips and run around with pants down "buy, buy, buy! so happy market went down 10%" than just sit and watch market do it's steady normal 7% grow at fractions of % up/down here and there. Show me how you will have MORE money in 20 years given 100k invested beginning of day today and assuming 10% market crash EOD and adding 1k today at EOD price.
I think you're framing this differently than most other people here. The way you've set up your math problem, you're investing 100K vs investing 91K. Realistically, you already have 100K invested, and you're adding in more later. You've removed the price of the individual stocks (or ETF/funds) that were the root cause of the market dropping from your equation, which is distorting things.
Think of it this way, with two sequences of events:
Have 100K invested --> Markets fall 10% to 90K --> Markets recover back to 100K --> Invest 1K additionally (on your normal schedule) bringing your total investment to 101K --> Have ~390.8K after 20 years
Have 100K invested --> Markets fall 10% to 90K --> Think stocks are on sale and invest 1K early to take advantage (have 91K) --> Markets recover at the same ~11.1% as before, which means you now have ~101.1K invested --> Have ~391K after 20 years
You have a slight gain from making your investment ahead of your normal schedule when prices are lower. The arguement against this is that you don't know for sure that everything will go right back up after your make your investment, but might instead dip further down.
(I assumed only monthly compounding)
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I'm a UK investor and I have a 1 fund portfolio in Vanguard All World. Because it's unhedged it's up almost 4% today and my networth in pounds has had a very large jump.
Mustachian person problem - I was hoping for a crash because I was naughtily market timing with a chunk of money.
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Who knows the ultimate outcome of Brexit. on the surface a mixed bag that on the whole is bad economically for the UK.
Some minor impact to the US is likely, but really what is a 10% decline in a country we do less than 5% trade with? Investment wise, the silver lining here is the Fed is likely to hold off interest rate hikes for a while longer given the uncertainty and the drag a strong dollar creates.
It's also that uncertainty, specifically in the EU, that will lead to continued investment in the US over the intermediate term. We continue to be not as strong as we'd like but more attractive (and safe) than many other places in the world. Now if we could get some investment in infrastructure going...
The biggest risk here is this adds fuel to the fire of the far right, the Donald included. I am hopeful we are not so stupid to take that path.
I don't think the UK will end up that poorly after everything shakes out. They're a strong economy and while they shot themselves in the foot with this vote, they're recover. The part that has me worried is if this leads to a mass exodus of countries from the EU and essentially destroys the current Eurozone. France is ripe with anti-immigrant furor. So is Germany. If either of these countries decide to take their ball and go home, the whole EU collapses. Then what?
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Who knows the ultimate outcome of Brexit. on the surface a mixed bag that on the whole is bad economically for the UK.
Some minor impact to the US is likely, but really what is a 10% decline in a country we do less than 5% trade with? Investment wise, the silver lining here is the Fed is likely to hold off interest rate hikes for a while longer given the uncertainty and the drag a strong dollar creates.
It's also that uncertainty, specifically in the EU, that will lead to continued investment in the US over the intermediate term. We continue to be not as strong as we'd like but more attractive (and safe) than many other places in the world. Now if we could get some investment in infrastructure going...
The biggest risk here is this adds fuel to the fire of the far right, the Donald included. I am hopeful we are not so stupid to take that path.
I don't think the UK will end up that poorly after everything shakes out. They're a strong economy and while they shot themselves in the foot with this vote, they're recover. The part that has me worried is if this leads to a mass exodus of countries from the EU and essentially destroys the current Eurozone. France is ripe with anti-immigrant furor. So is Germany. If either of these countries decide to take their ball and go home, the whole EU collapses. Then what?
Then they trade with each other in basically the same way but control their own currencies.... I feel like not much would change either way. (Other than everyone freaking out in the short term)
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maizeman - do the math. If you assume market will be normal 7% up 1 year from hypothetical today given 10% loss, you are looking at 17% rally.
To be clear I said 20 years, not one year. But yes, it is quite clear you disagree with the assumption -- which I clearly stated in my original post on the subject to be an assumption not a fact -- that whatever happens today doesn't change what the stock market will be worth 20 years from now.
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*News Flash*
Starting Today! International Developed Nation ETFs (VSS, VEA, FNDF, etc) on sale. Everything Must Go! Sale probably to extend until the masses calm down!!!
#crackingmyselfup :-)
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Not from The Onion:
https://www.washingtonpost.com/news/the-switch/wp/2016/06/24/the-british-are-frantically-googling-what-the-eu-is-hours-after-voting-to-leave-it/
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Who knows the ultimate outcome of Brexit. on the surface a mixed bag that on the whole is bad economically for the UK.
Some minor impact to the US is likely, but really what is a 10% decline in a country we do less than 5% trade with? Investment wise, the silver lining here is the Fed is likely to hold off interest rate hikes for a while longer given the uncertainty and the drag a strong dollar creates.
It's also that uncertainty, specifically in the EU, that will lead to continued investment in the US over the intermediate term. We continue to be not as strong as we'd like but more attractive (and safe) than many other places in the world. Now if we could get some investment in infrastructure going...
The biggest risk here is this adds fuel to the fire of the far right, the Donald included. I am hopeful we are not so stupid to take that path.
I don't think the UK will end up that poorly after everything shakes out. They're a strong economy and while they shot themselves in the foot with this vote, they're recover. The part that has me worried is if this leads to a mass exodus of countries from the EU and essentially destroys the current Eurozone. France is ripe with anti-immigrant furor. So is Germany. If either of these countries decide to take their ball and go home, the whole EU collapses. Then what?
Then they trade with each other in basically the same way but control their own currencies.... I feel like not much would change either way. (Other than everyone freaking out in the short term)
That's a very optimistic view. Have you considered the reverse? If the Eurozone collapses and take the Euro with it, then all countries would presumably revert back to their previous individual currencies. Except that Italy, Greece, Portugal, and possibly Spain would find themselves with currency worth somewhere between 50 and 100% less than it was previously. This would cause all of them to default on their debt payments almost immediately, and could easily cause the economies of these countries to collapse, plunging the world into a global recession. Considering that world banks are already at basically 0% interest rates, they would be fighting this recession with one hand tied behind their back. This would result in a prolonged recession and a rise of facist powers in many areas leading to WW3.
Now I'm not saying all that is going to happen, but there's basically little chance that things would just go on as normal if the Eurozone collapsed. It would cause a *major* shock to the system and the poorer countries with already high debt load would almost certainly default with a much weakened currency.
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In preparation for Brexit I picked up TVIX, sold GDX (gold) to buy more USLV (silver). I should have kept the GDX.
TVIX dove yesterday but recovered today and mine sold at par because I ran the trailing limit to tight. USLV also sold on a trail ing limit but with a good return. I also stopped out on RING with a profit.
I used the proceeds to double my positons in NHF and PEY. Looking at sale priced ETFs I picked up FAS and EURL, but only a small stake since who knows how much more the market will drop.
In a very speculative move I rode BRZU to a nice short term profit early this month but missed the second run from 70 to over 90. It's dropping back (around 80) I may buy back in.
Since I'm mostly limited to ETFs or mutual funds I try to pick ones that are increasing in the long term and have 2% to 10% dividends. The goal is to achieve 7% - 10% annual returns
50% of my 401k is in mutual funds (small cap, SP500 index, REIT, and aggressive bond). 25% is in cash and 25% are in the ETFs, some of which are described above.
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Who knows the ultimate outcome of Brexit. on the surface a mixed bag that on the whole is bad economically for the UK.
Some minor impact to the US is likely, but really what is a 10% decline in a country we do less than 5% trade with? Investment wise, the silver lining here is the Fed is likely to hold off interest rate hikes for a while longer given the uncertainty and the drag a strong dollar creates.
It's also that uncertainty, specifically in the EU, that will lead to continued investment in the US over the intermediate term. We continue to be not as strong as we'd like but more attractive (and safe) than many other places in the world. Now if we could get some investment in infrastructure going...
The biggest risk here is this adds fuel to the fire of the far right, the Donald included. I am hopeful we are not so stupid to take that path.
I don't think the UK will end up that poorly after everything shakes out. They're a strong economy and while they shot themselves in the foot with this vote, they're recover. The part that has me worried is if this leads to a mass exodus of countries from the EU and essentially destroys the current Eurozone. France is ripe with anti-immigrant furor. So is Germany. If either of these countries decide to take their ball and go home, the whole EU collapses. Then what?
Then they trade with each other in basically the same way but control their own currencies.... I feel like not much would change either way. (Other than everyone freaking out in the short term)
That's a very optimistic view. Have you considered the reverse? If the Eurozone collapses and take the Euro with it, then all countries would presumably revert back to their previous individual currencies. Except that Italy, Greece, Portugal, and possibly Spain would find themselves with currency worth somewhere between 50 and 100% less than it was previously. This would cause all of them to default on their debt payments almost immediately, and could easily cause the economies of these countries to collapse, plunging the world into a global recession. Considering that world banks are already at basically 0% interest rates, they would be fighting this recession with one hand tied behind their back. This would result in a prolonged recession and a rise of facist powers in many areas leading to WW3.
Now I'm not saying all that is going to happen, but there's basically little chance that things would just go on as normal if the Eurozone collapsed. It would cause a *major* shock to the system and the poorer countries with already high debt load would almost certainly default with a much weakened currency.
If the Eurozone collapses, the best financial option would be for the Germans to exit the Euro and go back to a (stronger than Euros) Mark, leaving southern Europe with a weak Euro and their debt still in the same currency. Sadly it would be politically impossible for the Germans to do this.
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If the Eurozone collapses, the best financial option would be for the Germans to exit the Euro and go back to a (stronger than Euros) Mark, leaving southern Europe with a weak Euro and their debt still in the same currency. Sadly it would be politically impossible for the Germans to do this.
I basically just thought that about the UK leaving the EU. I'm not sure you can rule anything out at this advanced stage.
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Worth a read if the Brexit interests you:
http://www.robfahey.co.uk/blog/brexit-stage-right-now/
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If the Eurozone collapses, the best financial option would be for the Germans to exit the Euro and go back to a (stronger than Euros) Mark, leaving southern Europe with a weak Euro and their debt still in the same currency. Sadly it would be politically impossible for the Germans to do this.
I basically just thought that about the UK leaving the EU. I'm not sure you can rule anything out at this advanced stage.
Including the possibility of a re-vote due to the appearance that many Britons had no idea what they were voting for.
https://www.washingtonpost.com/news/the-switch/wp/2016/06/24/the-british-are-frantically-googling-what-the-eu-is-hours-after-voting-to-leave-it/
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Yes I would say that the UK exiting the EU is not a done deal at all. It's just the start of the process that may lead there.
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Including the possibility of a re-vote due to the appearance that many Britons had no idea what they were voting for.
I think that'd spark some civil unrest in England like we haven't seen in a VERY long time.
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If the Eurozone collapses, the best financial option would be for the Germans to exit the Euro and go back to a (stronger than Euros) Mark, leaving southern Europe with a weak Euro and their debt still in the same currency. Sadly it would be politically impossible for the Germans to do this.
And would defeat the whole point of the Euro - which was to weaken the German currency so other countries could afford their exports.
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I just have to say what a breath of fresh air this forum is, what with everyone else in the financial world doing Chicken Little impressions. Even Vanguard has these article links prominently placed about how you shouldn't panic, it's going to be okay, just keep your head, don't react with emotion, etc.
Regarding market timing, I fall into the camp of keeping an eye out for sales. I'm not going to time the market in terms of selling investments -- once I'm in, I'm in -- but I absolutely saw yesterday as a big fire sale, and I treated it accordingly. Yeah, I know, DCA, etc., and it's not like I sit on piles of cash for months, waiting for that one advantageous moment. But when I have money ready to invest, I watch the trends, and I pounce when those green numbers turn red during a correction. And if that doesn't happen, I shrug and buy anyway eventually.
So I won't time the market to sell assets, but I will do a little timing to buy. For instance, I'm considering making my Roth contributions next week if the prices stay low. If they don't, I'll probably hold off or spread them out over time. So far, this strategy has done quite well for me.
And if I end up missing out on an even better sale, I don't sweat it. It's a long game, not worth getting fussed about.
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Agreed RedmondStash... I don't really consider taking advantage of dips in the market as "market timing". When equities go on sale, you're simply following one of the principles of value investing (Buy at a significant discount to intrinsic value to create a margin of safety).
The UK exported almost half a trillion dollars in products last year. McLaren, Land Rover, Rolls-Royce, and BP likely made just as many cars and pumped just as much oil yesterday as they did the day before. It's highly likely that they'll do the same for the foreseeable future.
It's important to always take a rational and objective look at what's happening and make your investing decisions from a informed decision vs. one of unfounded fear, uncertainty and doubt.
I see no reason why a sane investor would be upset about paying *less* for the opportunity to own companies representing their index of choice. VSS, VEA and other ETFs that track the developed international markets were down as much as 10% on Friday. So if you bought on Friday you got up to a 10% discount. If the price goes lower, who cares? Just buy more at an even deeper discount.
When you're buy and hold index investor, cheaper prices are never a bad thing.
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When you're buy and hold index investor, cheaper prices are never a bad thing.
Yeah, that's pretty much how I feel about it. It may not make a big difference in the long run, but every little bit helps -- and anything that accelerates FI, even a little, is worthwhile.
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When you're buy and hold index investor, cheaper prices are never a bad thing.
It depends greatly on where you are at in your journey as to what you want the prices of stocks to be. Many here are accumulating, where it matters more the shares per $ input. Market drops of 10% a year for a while might not be horrible for accumulators, especially those earlier in their journey. Much less desirable to see a sustained 50-60% drop if you RE'ed earlier this year.
Cheaper prices are never a bad thing, so long as the price reverts when you need to sell.
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ahhh... golden butterfly wraps me in a warm, golden blanket, with butterfly kisses, and pretty colors. I have limited risk tolerance and this is the first time I have seen it in action with my own money... LOVE IT, thank you Tyler!
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When you're buy and hold index investor, cheaper prices are never a bad thing.
It depends greatly on where you are at in your journey as to what you want the prices of stocks to be. Many here are accumulating, where it matters more the shares per $ input. Market drops of 10% a year for a while might not be horrible for accumulators, especially those earlier in their journey. Much less desirable to see a sustained 50-60% drop if you RE'ed earlier this year.
Cheaper prices are never a bad thing, so long as the price reverts when you need to sell.
First off, when was the last time there was a "sustained" 50 - 60% drop in the market?
Second, if you RE'ed earlier this year and you didn't factor market volatility into whether you would have enough to stay "retired" then you jumped ship too soon. While a 10 - 20 downturn would certainly be unpleasant at that stage in your investing life, it should not be threatening to you livelihood. Again, if it is, you retired earlier than you should have.
3rd, I'm not structuring my portfolio where I have to sell off portions of it to cover living expenses. The goal is for the dividend income to more than cover normal living expenses. Granted, some black swan event could emerge that could force me to sell some of it, but that's to be an anomaly; not a core aspect of the investment plan.
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ahhh... golden butterfly wraps me in a warm, golden blanket, with butterfly kisses, and pretty colors. I have limited risk tolerance and this is the first time I have seen it in action with my own money... LOVE IT, thank you Tyler!
LOL you better start your own thread.
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From one of the investment blogs I read:
"That's the critical question: Does Brexit represent a Lehman moment or LTCM moment for investors? In the former case, investors should de-risk portfolios and sell equities down to a minimum weighting in order to avoid severe losses. In the latter, investors have been handed a golden opportunity to buy stocks, Blink and the correction will be gone."
I'm thinking it's a blink of a week or two, with a return to upward momentum once everyone realizes things are still ok and the fed will hold off on rates in 2016. This is not Lehman.
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That's the nice thing about markets.
While half the country is thinking - we won, now what?
The other half is thinking - how could this have happened we're doomed!
And a bunch of politicians are thinking - how can I use this to get myself promoted
A lot of clever people in the markets are all thinking - how can we make money out of this?
As long as you are on their side - ie. you own index funds - you are going to come out ahead eventually.
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Worth a read if the Brexit interests you:
http://www.robfahey.co.uk/blog/brexit-stage-right-now/
Thank you for posting this. There was a ton of good information in there I didn't know about. I recommend everyone read this.
I'm not too worried about all of this. Britain has their own currency, their own central bank, and their own debt. They were always a quasi member of the UK. They participate in votes and they participate in the single market trade agreement. That trade agreement is great for trade, but it also requires free migration and may of the EU's regulations. Now Britain needs to negotiate new trade agreements.
The part I haven't seen anyone post I feel is very important... this isn't happening tomorrow. They potentially have 2 years to figure this out. That is plenty of time to negotiate new trade agreements.
My view: Treat this like the UK and EU are re-negotiating trade agreements. That is all we have 'right now.' The UK will probably end up having a relationship with the EU like Switzerland has. A worse case scenario would be if other countries leave. Some other countries can't really leave unless they want to collapse their economies, Greece, Portugal, Spain, and Italy come to mind. Now if Germany left... then I'll start to worry.
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I think this is the most likely outcome.
The UK government, civil-service and presumptive new leader are all fundamentally pro-europe, whatever their political rhetoric. Now that few right wing back benchers have been satisfied by "winning" the government don't have any incentive for a big battle with Europe.
80% of the UK's "trade" with europe is financial services - it is unlikely that the conservatives are going to risk that by introducing trade barriers to regenerate Britain's coal mines or ship building. It's also easy for financial services to side-step any change in regulations by simply opening a subsidiary in Dublin or Luxemburg so barriers are pretty much irrelevant.
There might be Eu governments that want to punish Britain, Pour Encourager Les Autres, but the damage that a panicked London financial center would cause to the Euro economies is a bigger consideration.
In American terms: Cameron and Boris hate each other personally about the same as Obama/Clinton. But politically they are as close.
This isn't like Trump negotiating with Mexico, it's more like a Clinton presidency finishing up a China trade deal from an Obama presidency.
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When you're buy and hold index investor, cheaper prices are never a bad thing.
Yeah, that's pretty much how I feel about it. It may not make a big difference in the long run, but every little bit helps -- and anything that accelerates FI, even a little, is worthwhile.
+1 -- I contribute fully to my IRA and 401k and when I have some spare change, I'll put in a Limit order on my favorite Vanguard ETFs when it is a red light, all-hands-on-deck sale (in other words, maybe once a year or longer). If it doesn't go through, I'll determine what the best alternatives are for my Little Green Employees. Other than this more than yearly event, my investments are very fire-and-forget.
EDIT: maybe once a year or *longer*
Can't imagine Germany will make a Gerxit (Deutchxit?) move as along as Merkel is in charge but the potential for anti-E.U. sentiment to manifest in votes in Spain, France and Ireland/Scotland are quite possible.
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Can't imagine Germany will make a Gerxit (Deutchxit?) move as along as Merkel is in charge
Germany probably needs the Eu least of all.
As long as it can set up a German free trade zone with Austria, Poland, bits of Eastern Europe and the baltic states it has all the cheap labour and local markets it needs. Ironically Britain would probably support this.
but the potential for anti-E.U. sentiment to manifest in votes in Spain, France and Ireland/Scotland are quite possible.
France has always been pro-Europe but anti pretty much all the other members. The ideal Eu is a France only Eu.
But since the French state, French industry and a bunch of pan-European companies (like Airbus) are basically indistinguishable it's hard for them to leave.
Scotland and Ireland, like most small countries with a powerful neighbor are pro-Eu. Their populations have pretty much decided that everything is fault of English politicians (in the case of Scotland) or Irish politicians (in the case of Ireland) rather than foreigners.
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So I want to dollar cost avg some investments over the next few days here and continue to purchase FSTVX. Now is there a disadvantage to placing limit order for a similar ETF over the mutual over the next few days? Never purchased an etf
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That's the nice thing about markets.
While half the country is thinking - we won, now what?
The other half is thinking - how could this have happened we're doomed!
And a bunch of politicians are thinking - how can I use this to get myself promoted
A lot of clever people in the markets are all thinking - how can we make money out of this?
As long as you are on their side - ie. you own index funds - you are going to come out ahead eventually.
And if you're a CNBC host/analyst you're thinking "How can I stretch the doom and gloom talk all the way through a 24-hour cycle? It was a fairly boring day for us at the office and we turned the tv to that channel for entertainment and light discussion. Eventually we just muted it since it was obvious the hosts ran out of things to say by lunchtime.
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And if you're a CNBC host/analyst you're thinking "How can I stretch the doom and gloom talk all the way through a 24-hour cycle? It was a fairly boring day for us at the office and we turned the tv to that channel for entertainment and light discussion. Eventually we just muted it since it was obvious the hosts ran out of things to say by lunchtime.
Holy crap, I'll say!! They're all having a field day. Even BBC has been "How can we keep the fear and outrage machine going as long as possible? How can we make the Leave people look more like stupid, racist peasants? How can we make the Remain group look like even bigger wealthy, elitist snobs?" They're pushing all the buttons they can in the news--desperately hoping for some sort of riots or civil war. :(
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I see RBS is down 40% or so, and a lot of other financial institutions, otherwise solid, are a steal right now. London will probably lose out to Frankfurt now as a center of finance, but British banks are not so dependent on Britain alone...or are they? It's a huge gamble to invest now, but one with a potentially interesting gain at the end of the tunnel.
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Euro bank stocks are killer value right now.
Between share price going down AND pound/euro taking a nose-dive. Double treat!
HSBC, biggest British bank, is yielding 8.3%.
SAN, biggest Spanish bank, is yielding 5.7%
DB, biggest German bank, cancelled dividend but trading at .28 price/book - incredible value. Buy a buck for 28cents! that's how it's done! Even assuming the assets are not marked properly, there is no way it's off so much to imply that kind of discount.
These guys have an implicit 'put' via their respective Central Banks and are (as close as comes to) risk-free.
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I see RBS is down 40% or so, and a lot of other financial institutions, otherwise solid, are a steal right now. London will probably lose out to Frankfurt now as a center of finance, but British banks are not so dependent on Britain alone...or are they? It's a huge gamble to invest now, but one with a potentially interesting gain at the end of the tunnel.
When you say financial institutions a steal, are you talking about certain funds?
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Euro bank stocks are killer value right now.
Between share price going down AND pound/euro taking a nose-dive. Double treat!
HSBC, biggest British bank, is yielding 8.3%.
SAN, biggest Spanish bank, is yielding 5.7%
DB, biggest German bank, cancelled dividend but trading at .28 price/book - incredible value. Buy a buck for 28cents! that's how it's done! Even assuming the assets are not marked properly, there is no way it's off so much to imply that kind of discount.
These guys have an implicit 'put' via their respective Central Banks and are (as close as comes to) risk-free.
If they are so cheap and have essentially an almost government guarantee, why hasn't the smart money already bid the prices back up by buying tons of amazingly cheap shares?
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I see RBS is down 40% or so, and a lot of other financial institutions, otherwise solid, are a steal right now.
http://www.independent.co.uk/news/business/news/barclays-rbs-halts-trading-eu-referendum-brexit-ftse-100-stock-market-a7105196.html (http://www.independent.co.uk/news/business/news/barclays-rbs-halts-trading-eu-referendum-brexit-ftse-100-stock-market-a7105196.html)
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Euro bank stocks are killer value right now.
Between share price going down AND pound/euro taking a nose-dive. Double treat!
HSBC, biggest British bank, is yielding 8.3%.
SAN, biggest Spanish bank, is yielding 5.7%
DB, biggest German bank, cancelled dividend but trading at .28 price/book - incredible value. Buy a buck for 28cents! that's how it's done! Even assuming the assets are not marked properly, there is no way it's off so much to imply that kind of discount.
These guys have an implicit 'put' via their respective Central Banks and are (as close as comes to) risk-free.
If they are so cheap and have essentially an almost government guarantee, why hasn't the smart money already bid the prices back up by buying tons of amazingly cheap shares?
Because they are worried about other factors. See this series on Deutsche Bank, for example. http://marketrealist.com/2016/02/investors-nervous-deutsche-banks-solvency/
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If they are so cheap and have essentially an almost government guarantee, why hasn't the smart money already bid the prices back up by buying tons of amazingly cheap shares?
I see this happening all the time (referring to the poster you were quoting), but it doesn't strike me as very intelligent to assume that just because something has gone down in price, that it's become a bargain. What does the market know? You either believe in EMT, and think that there's nothing that can be arbitraged, or you don't believe in EMT, in which case you should have your own estimate of intrinsic value, and shouldn't be guided by any signals in the movement of price anyways (unless, of course, it hits your intrinsic estimate). It really seems like a lot of the posters in this thread have swung a bit too far the other way from the normal hysteria in selling if prices drop. Just because prices drop doesn't mean you should sell, but it also doesn't mean you should mindlessly buy either, especially when it comes to individual securities. Mean reversion happens a lot of the time, but not all of the time
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I wish I had an infusion of cash coming right now to throw more into the market. I'm consoled by the fact that my target AA has me putting the weekly transfers into VTIAX.
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If they are so cheap and have essentially an almost government guarantee, why hasn't the smart money already bid the prices back up by buying tons of amazingly cheap shares?
I see this happening all the time (referring to the poster you were quoting), but it doesn't strike me as very intelligent to assume that just because something has gone down in price, that it's become a bargain. What does the market know? You either believe in EMT, and think that there's nothing that can be arbitraged, or you don't believe in EMT, in which case you should have your own estimate of intrinsic value, and shouldn't be guided by any signals in the movement of price anyways (unless, of course, it hits your intrinsic estimate). It really seems like a lot of the posters in this thread have swung a bit too far the other way from the normal hysteria in selling if prices drop. Just because prices drop doesn't mean you should sell, but it also doesn't mean you should mindlessly buy either, especially when it comes to individual securities. Mean reversion happens a lot of the time, but not all of the time
Yeah. I think markets are both rational and irrational. And they can be both at the same time. And that the smaller the company, the more likely the market is to be irrational. But if the market is irrational about a stock now, it's also likely that it will continue to be irrational about that stock later. You could be totally right about a stock, but not be able to make money off of your accurate analysis because the market continues to be wrong--and maybe even becomes more wrong and causes you to lose money.
I think any rational person should just keep shoveling money into globally diversified index funds every time they get their paycheck. Eventually you'll have enough to retire comfortably, regardless of whether stock A or stock B is under or over valued.
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Efficient markets have a timescale.
What is an efficient market price for a high frequency trading algorithm controlled by a trader who has a weekly trade target is different from a good price for a buy and hold investor looking for dividends in a 40year retirement.
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......... But if the market is irrational about a stock now, it's also likely that it will continue to be irrational about that stock later. You could be totally right about a stock, but not be able to make money off of your accurate analysis because the market continues to be wrong--and maybe even becomes more wrong and causes you to lose money.
I think any rational person should just keep shoveling money into globally diversified index funds every time they get their paycheck. Eventually you'll have enough to retire comfortably, regardless of whether stock A or stock B is under or over valued.
Bogle et al agrees with you
Benjamin Graham, Buffet, etc disagree
All the above are smarter than me....
"Yes Mr Market is irrational....But he can stay irrational longer than a wise investor can stay solvent"
Personally,
I shovel Bogle-style 75% of my investments
25% value-based Graham-style investments
Graham style has earned almost 2x as much, but is 100x as much work.
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Despite everybody telling me to pay off my 0%-interest loan, I couldn't resist and went ahead and bought $3K of VEURX. I did so in my wife's IRA, so she's maxed for the year ahead of schedule (instead of putting ~$100/week into VTSAX as she had been doing). I'll buy another $3k next week* to max my IRA if the markets keep dropping.
(* Actually I'd buy VTSAX or VTIAX in my IRA, then exchange an equal amount of VTSAX->VEURX in hers to get closer to the $10k for conversion to admiral shares, but that's just details.)
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I was en route to buy an old car as a hobby, but my mustache says use the money to make more money. What's the cheapest way into HSBC or DB stocks?
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Euro bank stocks are killer value right now.
Between share price going down AND pound/euro taking a nose-dive. Double treat!
HSBC, biggest British bank, is yielding 8.3%.
SAN, biggest Spanish bank, is yielding 5.7%
DB, biggest German bank, cancelled dividend but trading at .28 price/book - incredible value. Buy a buck for 28cents! that's how it's done! Even assuming the assets are not marked properly, there is no way it's off so much to imply that kind of discount.
These guys have an %'put' via their respective Central Banks and are (as close as comes to) risk-free.
haha obviously you weren't investing in the stock market crash of 2008. Many bank shares tanked 90% + They made it out alive. It's your money but don't fool yourself that it is risk free.
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I was en route to buy an old car as a hobby, but my mustache says use the money to make more money. What's the cheapest way into HSBC or DB stocks?
I'd really advise against buying stocks where the underlying earnings/cash flow have been decreasing year over year for the past decade
The car will be much more enjoyable, imo
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It's been difficult for me to filter all the information out there. There are so many competing theories. Is Brexit good or bad long-term? Will Britain come out stronger than before? Is globalization good/bad.
Thankfully I don't live in Britain, and I don't have to make that decision. Oddly enough my confusion on the subject hasn't made me anxious, but I'm also not looking to time my purchase into this dip. I had several coworkers on Friday decide they wanted to buy-in because there was for sure going to be a bounce back today (Monday). I told a younger guy who is just looking into investing for the first time that he shouldn't be trying to catch a falling knife. My peace of mind over the past couple of days has made me comfortable with current diversification, and I don't feel the need to be timing any specific purchase.
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The U.S. markets are down for the year as of today. I don't try to time the market, but I'm hoping they stay negative until I get paid later this week. It'll make my next transfer into my Vanguard account go a little further. :)
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I dropped another $45Kinto the S&P500 fund today. Thanks for spooking the nervous nellies, Brexit voters!
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I dropped another $45Kinto the S&P500 fund today. Thanks for spooking the nervous nellies, Brexit voters!
Good man.
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markets are both rational and irrational. And they can be both at the same time. And that the smaller the company, the more likely the market is to be irrational. But if the market is irrational about a stock now, it's also likely that it will continue to be irrational about that stock later. You could be totally right about a stock, but not be able to make money off of your accurate analysis because the market continues to be wrong--and maybe even becomes more wrong and causes you to lose money.
That's because you think "total return".
Value investing 101 : if a company provides me with 7% dividends each year, the market can be wrong as long as he wants. The wronger the better, actually, because that means, next time I invest, dividends will be around 8%. Oh, of course, you could be wrong, the company could cut its dividends. Now you lost your capital *and* your cash cow.
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ahhh... golden butterfly wraps me in a warm, golden blanket, with butterfly kisses, and pretty colors. I have limited risk tolerance and this is the first time I have seen it in action with my own money... LOVE IT, thank you Tyler!
Agreed. With 4 months to FIRE and knowing I have low tolerance for risk (thanks to '08), I have been progressively moving my funds towards the Golden Butterfly portfolio. So far it's been doing well to keep volatility down.
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I took out a $40k 401k loan a few weeks ago for a house downpayment so we would have 20%. I will be able to pay it back in a month or two when our current house sells. It's complete dumb luck if it actually benefits me but I'm hoping I can get the money back in while the market is still way down.
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Retire-Canada
Thanks for the link! The one thing that I think Rob Fahey failed to acknowledge was the extent to which technology is changing the employment landscape. People who long for the days when a person with little education could work on an assembly line and make a wage to support a family comfortably are going to continue to be disappointed.
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Yeah, probably. But people will figure out stuff to do like walking dogs, or picking up poop, or doggie daycare or working at a spa or cleaning people's windows, or becoming a chef or a nurse...you know; more services.
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ahhh... golden butterfly wraps me in a warm, golden blanket, with butterfly kisses, and pretty colors. I have limited risk tolerance and this is the first time I have seen it in action with my own money... LOVE IT, thank you Tyler!
Agreed. With 4 months to FIRE and knowing I have low tolerance for risk (thanks to '08), I have been progressively moving my funds towards the Golden Butterfly portfolio. So far it's been doing well to keep volatility down.
And what is a Golden Butterfly portfolio?
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I opened my first taxable account with Vanguard and invested the fund minimums into each of US, other developed markets, and emerging markets funds on Monday. So pretty good timing there. I decided to dollar cost average the rest of the initial investment in over the course of a week or two, remains to be seen if that was a dumb idea.
And what is a Golden Butterfly portfolio?
It is MMM-forum member Tyler's custom blend of 80% Permanent Portfolio, 20% US Small Cap Value.
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Euro bank stocks are killer value right now.
Between share price going down AND pound/euro taking a nose-dive. Double treat!
HSBC, biggest British bank, is yielding 8.3%.
SAN, biggest Spanish bank, is yielding 5.7%
DB, biggest German bank, cancelled dividend but trading at .28 price/book - incredible value. Buy a buck for 28cents! that's how it's done! Even assuming the assets are not marked properly, there is no way it's off so much to imply that kind of discount.
These guys have an implicit 'put' via their respective Central Banks and are (as close as comes to) risk-free.
Wow, that is pretty compelling. I added HSBC, SAN, and DB to my list of imaginary purchases (which thus far only had two entries in its two year life span).
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It is MMM-forum member Tyler's custom blend of 80% Permanent Portfolio, 20% US Small Cap Value.
I am a fan of PP, but what does adding in 20% small cap do for it?
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Hi Moonshadow.
To not derail the Brexit discussion, here are a few Golden Butterfly links:
http://forum.mrmoneymustache.com/investor-alley/portfolio-charts-the-golden-butterfly/
https://portfoliocharts.com/2016/04/18/the-theory-behind-the-golden-butterfly/
If you have any questions, feel free to PM me and I'm happy to help.
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Well, now I'm confused. I cancelled all my early retirement plans and gave up on ever having enough money after Brexit, but now the markets (at least the S&P 500) are almost completely recovered.
Is it possible that the ramifications of this on the market were overblown? If so, does that mean that we cannot trust everything we read in the paper or on the internet? Should we really just keep investing even though possibly the worst thing ever, ever may happen sometime soon(er or later)? What do I do about the fact that Mr. Percentage recommended going to cash?
Uggh, forget it. I'm going to keep indexing with every available dollar. But someday I'm really going to learn how to beat the market, because people keep telling me it only requires some work and careful thought. I'm not sure why those people are not already billionaires, but maybe you learn that answer at the same time you learn how to consistently beat the market.
In the meantime, I'm just going to keep calm and carry on!
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Well, now I'm confused. I cancelled all my early retirement plans and gave up on ever having enough money after Brexit, but now the markets (at least the S&P 500) are almost completely recovered.
Is it possible that the ramifications of this on the market were overblown? If so, does that mean that we cannot trust everything we read in the paper or on the internet? Should we really just keep investing even though possibly the worst thing ever, ever may happen sometime soon(er or later)? What do I do about the fact that Mr. Percentage recommended going to cash?
Uggh, forget it. I'm going to keep indexing with every available dollar. But someday I'm really going to learn how to beat the market, because people keep telling me it only requires some work and careful thought. I'm not sure why those people are not already billionaires, but maybe you learn that answer at the same time you learn how to consistently beat the market.
In the meantime, I'm just going to keep calm and carry on!
As always, England prevails
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I think the markets will adjust and British companies and other multi-national companies invested in England will -- as usual -- find a way of arbitraging the situation to their advantage. They'll just take their investment elsewhere. I think the markets will continue to hiccup due to the uncertainty in the short term, but this isn't what I'd call a bubble.
But the British economy and British people themselves? Screwed, I think, unfortunately... until trade deals and stabilization plans can be worked out.
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I think the markets will adjust and British companies and other multi-national companies invested in England will -- as usual -- find a way of arbitraging the situation to their advantage. They'll just take their investment elsewhere. I think the markets will continue to hiccup due to the uncertainty in the short term, but this isn't what I'd call a bubble.
But the British economy and British people themselves? Screwed, I think, unfortunately... until trade deals and stabilization plans can be worked out.
I think there's a very, very high chance Britain will come out of this smelling like an English rose. Switzerland isn't in the EU and they're rocking the economy in that country hardcore. Would you (as South Korea, Japan, the USA) rather deal with Britain directly or have to go through all the EU bullshit rules? Trade agreements aren't even necessary in most cases. I believe the cost of imported goods will come down drastically there and there will be way more selling opportunities for the Isles. It may take 3-5 years, but cutting out the middle-man may prove to be a very wise decision.
Even on a personal level--I have no qualms about placing an eBay order to someone from England, but Romania, Portugal, or Latvia?! I raise an eyebrow and generally look for another seller. The UK has a trustworthy trade reputation not shared with with some of the countries on the continent.
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I think the markets will adjust and British companies and other multi-national companies invested in England will -- as usual -- find a way of arbitraging the situation to their advantage. They'll just take their investment elsewhere. I think the markets will continue to hiccup due to the uncertainty in the short term, but this isn't what I'd call a bubble.
But the British economy and British people themselves? Screwed, I think, unfortunately... until trade deals and stabilization plans can be worked out.
I think there's a very, very high chance Britain will come out of this smelling like an English rose. Switzerland isn't in the EU and they're rocking the economy in that country hardcore. Would you (as South Korea, Japan, the USA) rather deal with Britain directly or have to go through all the EU bullshit rules? Trade agreements aren't even necessary in most cases. I believe the cost of imported goods will come down drastically there and there will be way more selling opportunities for the Isles. It may take 3-5 years, but cutting out the middle-man may prove to be a very wise decision.
Accoeding to the Brexit movie, of the top 10 trade "partners" nations to Britian, only 2 ere in the EU.
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I think the markets will adjust and British companies and other multi-national companies invested in England will -- as usual -- find a way of arbitraging the situation to their advantage. They'll just take their investment elsewhere. I think the markets will continue to hiccup due to the uncertainty in the short term, but this isn't what I'd call a bubble.
But the British economy and British people themselves? Screwed, I think, unfortunately... until trade deals and stabilization plans can be worked out.
I think there's a very, very high chance Britain will come out of this smelling like an English rose. Switzerland isn't in the EU and they're rocking the economy in that country hardcore.
Switzerland has treaties in place and abides by many EU rules though. The question now is can Britain get as good a deal?
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I think there's a very, very high chance Britain will come out of this smelling like an English rose.
England may come out of it alone without Scotland and Ireland. I can't see how that's going to be good for them, but ultimately the world will keep turning and markets in general will be fine. Whether or not it turns out amazing for England remains to be seen.
Switzerland and England don't have a lot in common so trying to make a comparison there is pointless.
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Switzerland and England don't have a lot in common so trying to make a comparison there is pointless.
Given $1 million but told I had to invest in two of the following: Switzerland, UK, and/or EU, you can be damn certain I wouldn't put my money on the EU. (Even despite the London Whale thing.) This whole idea about multi-nationals and banks uprooting from the UK to move to Europe, I believe will happen in reverse. You'd have to be crazy to move your money from London to Brussels.
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I think there's a very, very high chance Britain will come out of this smelling like an English rose.
England may come out of it alone without Scotland and Ireland. I can't see how that's going to be good for them, but ultimately the world will keep turning and markets in general will be fine. Whether or not it turns out amazing for England remains to be seen.
Switzerland and England don't have a lot in common so trying to make a comparison there is pointless.
Switzerland (and Norway, another non-EU country) abide by most EU rules through the EEC to gain access to the single market. Wasn't that one of the main things the Leavers wanted to avoid, EU rules? I don't see how they could do that deal and basically giving up the whole reason the voted leave in the first place. And I believe Tusk and others said there will be no single market access without accepting free movement of people, the other main point for Leave.
The Switzerland deal looks to me very similar to what England already had (no Euro or Schengen etc). What they want now is unclear but it can't be that if they want to honor the promises of Leave.
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Given $1 million but told I had to invest in two of the following: Switzerland, UK, and/or EU, you can be damn certain I wouldn't put my money on the EU. (Even despite the London Whale thing.) This whole idea about multi-nationals and banks uprooting from the UK to move to Europe, I believe will happen in reverse. You'd have to be crazy to move your money from London to Brussels.
You response has nothing to do with the text you quoted from me. Comparing Switzerland to the UK makes no sense since they are not similar economies. That has nothing to do with whether or not I would invest in one or the other.
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Folks, consider today a gift....you can still get out of the stock markets and into gold before the next, much larger down leg of what is going to be the greatest recession we have ever seen.
*slaps self*
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I think the bounce back has been caused by people getting over the initial panic and realising that any actual change won't happen for more than two years. In the mean time, the UK stock market wasn't over-valued prior to the referendum at all and the weakened Pound helps exporters, so in the short term there is literally no bad news.
Prominent UK politicians have stated that they want to stay in the single market, but they want to control immigration. The EU have emphatically stated that there is no access to the single market without free movement of people, so basically UK politicians have to back down on one of their two demands.
If the UK turns its back on the single market, no one really knows what will happen. New deals could be better for the UK or could be worse, but several businesses have stated they would reduce UK operations if this happened so the bare minimum would be short term pain for investors into the UK.
If the UK settles on a Norway type deal, with access to the single market and unrestricted immigration, then this is literally business as usual for the UK and this whole painful, volatile process will not have changed a damn thing. If this happens, there will be a huge backlash from the public who voted for leave. I'm not thinking riots here, but civil unrest is possible.
My personal opinion is that the UK will end up in the EEA, which is the best outcome for businesses/investors. This will happen because UK politicians will be able to "save face" by blaming the EU for being "unwilling to negotiate" on immigration where as leaving the single market will mean that dismantling the UK (with Scotland and Northern Ireland going their own way) will always be the current crop of politicians legacy, with no one to blame but themselves.
The worst possible outcome, in my opinion, would be a second referendum where the public are asked to choose between the two options I listed above. This would be spineless of the politicians (who are getting paid large salaries to make the difficult decisions on our behalf) and I think the British public has already proven over the last week that they can't be trusted to make a decision in their own best interests.
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Accoeding to the Brexit movie, of the top 10 trade "partners" nations to Britian, only 2 ere in the EU.
Collectively the EU is the biggest trading partner of the UK, and this is how it should be considered because outside of the EU, the UK would have to negotiate a trade deal with the EU as a collective, rather than being able to deal with individual countries.
Also, I didn't know there was a Brexit movie?
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Also, I didn't know there was a Brexit movie?
It's a propaganda piece put together by the Leave campaign, but as long as you keep that in mind throughout, it has a few very good points. It's certainly not weighted fairly.
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Accoeding to the Brexit movie, of the top 10 trade "partners" nations to Britian, only 2 ere in the EU.
Collectively the EU is the biggest trading partner of the UK, and this is how it should be considered because outside of the EU, the UK would have to negotiate a trade deal with the EU as a collective, rather than being able to deal with individual countries.
Also, I didn't know there was a Brexit movie?
It's obviously a pro-leave propaganda piece, but it is well done. Sure, the UK will have to have a trade deal with the EU, but so what? The EU is a sinking ship economically, the UK just looks like the first lifeboat to launch to me. I'd wager Poland pushes the same direction in due course, since the recent announcement of the EU leadership's intention to accelerate towards an EU superstate.
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Given $1 million but told I had to invest in two of the following: Switzerland, UK, and/or EU, you can be damn certain I wouldn't put my money on the EU. (Even despite the London Whale thing.) This whole idea about multi-nationals and banks uprooting from the UK to move to Europe, I believe will happen in reverse. You'd have to be crazy to move your money from London to Brussels.
You response has nothing to do with the text you quoted from me. Comparing Switzerland to the UK makes no sense since they are not similar economies. That has nothing to do with whether or not I would invest in one or the other.
Seriously, are you trolling me today? Just because they have different economies (I never said they had identical economies, so WTF?) are you saying UK's won't succeed because the other is different? It's not a fair comparison? Switzerland's can easily succeed while the (London) financial sector, agriculture, and goods/serices won't? It's not fair to compare counties? For God's sakes you could say that about any two on earth. I really don't understand your argument here.
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Also, I didn't know there was a Brexit movie?
Are they going to do a sequel now ?
Starring Hugh Grant as Cameron, Daniel Craig as Farage ...... and Beeker from the muppets as Boris.
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Accoeding to the Brexit movie, of the top 10 trade "partners" nations to Britian, only 2 ere in the EU.
Collectively the EU is the biggest trading partner of the UK, and this is how it should be considered because outside of the EU, the UK would have to negotiate a trade deal with the EU as a collective, rather than being able to deal with individual countries.
Also, I didn't know there was a Brexit movie?
It's obviously a pro-leave propaganda piece, but it is well done. Sure, the UK will have to have a trade deal with the EU, but so what? The EU is a sinking ship economically, the UK just looks like the first lifeboat to launch to me. I'd wager Poland pushes the same direction in due course, since the recent announcement of the EU leadership's intention to accelerate towards an EU superstate.
I guess the "so what" would be that the EU countries who do no trade with the UK, who have nothing to gain from a trade friendly deal, would have a lot of say in the negotiations. Plus, the general feeling is that offering the UK too friendly trade terms would just give incentives to other countries to leave.
The EU is definitely a flawed organisation, but it's hard to argue that it hasn't benefited the UK. If the EU is a sinking ship, that's bad news for the UK (whether the UK is inside the EU or not).
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Given $1 million but told I had to invest in two of the following: Switzerland, UK, and/or EU, you can be damn certain I wouldn't put my money on the EU. (Even despite the London Whale thing.) This whole idea about multi-nationals and banks uprooting from the UK to move to Europe, I believe will happen in reverse. You'd have to be crazy to move your money from London to Brussels.
You response has nothing to do with the text you quoted from me. Comparing Switzerland to the UK makes no sense since they are not similar economies. That has nothing to do with whether or not I would invest in one or the other.
Seriously, are you trolling me today? Just because they have different economies (I never said they had identical economies, so WTF?) are you saying UK's won't succeed because the other is different? It's not a fair comparison? Switzerland's can easily succeed while the (London) financial sector, agriculture, and goods/serices won't? It's not fair to compare counties? For God's sakes you could say that about any two on earth. I really don't understand your argument here.
The difference between the UK and Switzerland is that Switzerland was willing to accept free movement of EU citizens, where as a key "promise" of the leave campaign was the ability to restrict immigration if the UK leaves the EU.
I agree with you that if the UK accepts free movement of EU citizens, like Switzerland does, then there's no reason it cannot be successful like Switzerland is, if for different reasons.
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if the UK accepts free movement of EU citizens, like Switzerland does, then there's no reason it cannot be successful like Switzerland is, if for different reasons.
Is Switzerland forced to dole out welfare payments to these free moving EU citizens?
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Accoeding to the Brexit movie, of the top 10 trade "partners" nations to Britian, only 2 ere in the EU.
Collectively the EU is the biggest trading partner of the UK, and this is how it should be considered because outside of the EU, the UK would have to negotiate a trade deal with the EU as a collective, rather than being able to deal with individual countries.
Also, I didn't know there was a Brexit movie?
It's obviously a pro-leave propaganda piece, but it is well done. Sure, the UK will have to have a trade deal with the EU, but so what? The EU is a sinking ship economically, the UK just looks like the first lifeboat to launch to me. I'd wager Poland pushes the same direction in due course, since the recent announcement of the EU leadership's intention to accelerate towards an EU superstate.
I was curious about this so did some googling. Not sure it's the same, but most end up with a made-up quote from an EU founder (Monnet) from 70 years go being circulated in anti-EU conspiracy circles. Unless you have other quotes I'll file this under bullshit.. Marie Le Pen is the EU parliament, is she part of this conspiracy/superstate plan?
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if the UK accepts free movement of EU citizens, like Switzerland does, then there's no reason it cannot be successful like Switzerland is, if for different reasons.
Is Switzerland forced to dole out welfare payments to these free moving EU citizens?
I think that's a pretty overblown concern that they've already backpedaled on: http://www.telegraph.co.uk/news/uknews/immigration/11255425/How-much-do-immigrants-really-claim-in-benefits.html 2.5% of claimants are non-British EU nationals. More than 90% are British.
But yes, Switzerland also gives working-age welfare benefits to EU citizens who are employed there. It looks like maybe 3.1% of EU workers in CH get benefits. http://www.swissinfo.ch/eng/free-movement-of-workers_eu-migrants-seen-as-social-system-freeloaders/37835956
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Accoeding to the Brexit movie, of the top 10 trade "partners" nations to Britian, only 2 ere in the EU.
Collectively the EU is the biggest trading partner of the UK, and this is how it should be considered because outside of the EU, the UK would have to negotiate a trade deal with the EU as a collective, rather than being able to deal with individual countries.
Also, I didn't know there was a Brexit movie?
It's obviously a pro-leave propaganda piece, but it is well done. Sure, the UK will have to have a trade deal with the EU, but so what? The EU is a sinking ship economically, the UK just looks like the first lifeboat to launch to me. I'd wager Poland pushes the same direction in due course, since the recent announcement of the EU leadership's intention to accelerate towards an EU superstate.
I was curious about this so did some googling. Not sure it's the same, but most end up with a made-up quote from an EU founder (Monnet) from 70 years go being circulated in anti-EU conspiracy circles. Unless you have other quotes I'll file this under bullshit.. Marie Le Pen is the EU parliament, is she part of this conspiracy/superstate plan?
I tried to post this already, but it vanished into the ether...
First two results from "eu calls for eu superstate"
http://www.dailymail.co.uk/news/article-3662827/Has-Britain-avoided-European-superstate-France-Germany-draw-plans-morph-EU-countries-one-control-members-armies-economies.html
http://www.express.co.uk/news/politics/683739/EU-referendum-German-French-European-superstate-Brexit
Under the radical proposals EU countries will lose the right to have their own army, criminal law, taxation system or central bank, with all those powers being transferred to Brussels.
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Accoeding to the Brexit movie, of the top 10 trade "partners" nations to Britian, only 2 ere in the EU.
Collectively the EU is the biggest trading partner of the UK, and this is how it should be considered because outside of the EU, the UK would have to negotiate a trade deal with the EU as a collective, rather than being able to deal with individual countries.
Also, I didn't know there was a Brexit movie?
It's obviously a pro-leave propaganda piece, but it is well done. Sure, the UK will have to have a trade deal with the EU, but so what? The EU is a sinking ship economically, the UK just looks like the first lifeboat to launch to me. I'd wager Poland pushes the same direction in due course, since the recent announcement of the EU leadership's intention to accelerate towards an EU superstate.
I was curious about this so did some googling. Not sure it's the same, but most end up with a made-up quote from an EU founder (Monnet) from 70 years go being circulated in anti-EU conspiracy circles. Unless you have other quotes I'll file this under bullshit.. Marie Le Pen is the EU parliament, is she part of this conspiracy/superstate plan?
I tried to post this already, but it vanished into the ether...
First two results from "eu calls for eu superstate"
http://www.dailymail.co.uk/news/article-3662827/Has-Britain-avoided-European-superstate-France-Germany-draw-plans-morph-EU-countries-one-control-members-armies-economies.html
http://www.express.co.uk/news/politics/683739/EU-referendum-German-French-European-superstate-Brexit
Under the radical proposals EU countries will lose the right to have their own army, criminal law, taxation system or central bank, with all those powers being transferred to Brussels.
Those articles were basically the same.. And from highly dubious rags (and know anti-EU). I didn't see any reference or link to this proposal from DE/FR ministers. Has it been revealed yet? It said it was imminent.. Please link to it once it's out.
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if the UK accepts free movement of EU citizens, like Switzerland does, then there's no reason it cannot be successful like Switzerland is, if for different reasons.
Is Switzerland forced to dole out welfare payments to these free moving EU citizens?
As EU migrants are a net financial benefit to the UK isn't' this a bit of a moot point?
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Those articles were basically the same.. And from highly dubious rags (and know anti-EU).
I woudn't know, nor care, how biased these sources may be. That said, this is what came up. Your google-fu appears lacking.
I didn't see any reference or link to this proposal from DE/FR ministers. Has it been revealed yet? It said it was imminent.. Please link to it once it's out.
I have no idea. And no, I won't bother to link to it, ever. Try harder.
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if the UK accepts free movement of EU citizens, like Switzerland does, then there's no reason it cannot be successful like Switzerland is, if for different reasons.
Is Switzerland forced to dole out welfare payments to these free moving EU citizens?
Onlykelsey has already responded very well to this, but I want to add that numerous credible studies have shown that immigrants in the UK are net contributors to society (they pay more in taxes than they take back out by using public services). There's also no credible argument that immigration is somehow muscling UK citizens out of jobs, when unemployment is at 20+ year lows.
I mean no offense Trevor, but this is exactly why EU membership should not have been put to a public vote. There's a lot of misinformation out there and it's not the public's job to sort fact from fiction and make the best decision for the UK, that's what UK politicians are paid 3 times the average UK salary per year to do.
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if the UK accepts free movement of EU citizens, like Switzerland does, then there's no reason it cannot be successful like Switzerland is, if for different reasons.
Is Switzerland forced to dole out welfare payments to these free moving EU citizens?
Onlykelsey has already responded very well to this, but I want to add that numerous credible studies have shown that immigrants in the UK are net contributors to society (they pay more in taxes than they take back out by using public services). There's also no credible argument that immigration is somehow muscling UK citizens out of jobs, when unemployment is at 20+ year lows.
I mean no offense Trevor, but this is exactly why EU membership should not have been put to a public vote. There's a lot of misinformation out there and it's not the public's job to sort fact from fiction and make the best decision for the UK, that's what UK politicians are paid 3 times the average UK salary per year to do.
Um, you don't believe in democracy, then? There is no evidence that the brexit voting results were primarily due to concerns about immigration, either. Democracy is dependent upon the idea that the majority of the public is fairly well educated in the issues of the times, and that they will weight the many concerns before coming to a decision. I'd say this is more likely to have been the real outcome of a referendum that was projected very far in advance, was the product of so much public discussion, and the only issue on the ballot at the time (I think). The idea that the elderly voters in Britain are just racists sounds like nonsense to me. I would be more inclined to assume that the youth were naive and ignorant, and that the elderly were voting based upon experience.
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Calm people! You can still have immigration without free movement of people. Here in Australia there is no free movement of people, but we have plenty of immigration. But it's immigration that we can control, we get to decide who comes here and who gets turned away at the gates. I can't imagine living in a country like Germany where tens of thousands are rolling in and rapidly changing the demographics in quick time, that kind of social upheaval is dangerous for all, reference mass rapes and other crimes.
I think the older folk in Britain who voted to Brexit saw what is happening in Europe and decided they didn't want a part of it anymore. The fact that unfettered immigration may be good for GDP or Net National Income or whatever other figure is not what they were worried about, they are worried about feeling safe in their homes and on their streets.
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Calm people! You can still have immigration without free movement of people. Here in Australia there is no free movement of people, but we have plenty of immigration. But it's immigration that we can control, we get to decide who comes here and who gets turned away at the gates. I can't imagine living in a country like Germany where tens of thousands are rolling in and rapidly changing the demographics in quick time, that kind of social upheaval is dangerous for all, reference mass rapes and other crimes.
I think the older folk in Britain who voted to Brexit saw what is happening in Europe and decided they didn't want a part of it anymore. The fact that unfettered immigration may be good for GDP or Net National Income or whatever other figure is not what they were worried about, they are worried about feeling safe in their homes and on their streets.
I don't disagree with your analysis in the second paragraph necessarily, but all exiting the EU did was allow them to keep EU citizens out (a small subset of immigrants in the UK, and I think not the group that generally makes people uncomfortable). I imagine making it harder for EU citizens will also make international employers of EU citizens, Australians, Canadians, etc slightly less interested in the UK, so you might also cut down on the number of white-collar internationals. The UK was already not a member of Schengen, and I can't imagine they will now want to be.
I'm also not sure if the fear of unfettered immigration and its effects is a good explanation. When you superimpose a map of where there are heavy immigrant populations with a map of support among Brits for Brexit, it's almost an inverse relationship (although Birmingham seems to be an exception).
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I think the markets will adjust and British companies and other multi-national companies invested in England will -- as usual -- find a way of arbitraging the situation to their advantage. They'll just take their investment elsewhere. I think the markets will continue to hiccup due to the uncertainty in the short term, but this isn't what I'd call a bubble.
But the British economy and British people themselves? Screwed, I think, unfortunately... until trade deals and stabilization plans can be worked out.
I think there's a very, very high chance Britain will come out of this smelling like an English rose. Switzerland isn't in the EU and they're rocking the economy in that country hardcore. Would you (as South Korea, Japan, the USA) rather deal with Britain directly or have to go through all the EU bullshit rules? Trade agreements aren't even necessary in most cases. I believe the cost of imported goods will come down drastically there and there will be way more selling opportunities for the Isles. It may take 3-5 years, but cutting out the middle-man may prove to be a very wise decision.
Even on a personal level--I have no qualms about placing an eBay order to someone from England, but Romania, Portugal, or Latvia?! I raise an eyebrow and generally look for another seller. The UK has a trustworthy trade reputation not shared with with some of the countries on the continent.
I agree 100%. The UK will benefit, the EU will suffer. My guess is that other EU member countries will follow the UK's lead out the door.
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Um, you don't believe in democracy, then?
Having seen congress and the republican primeries?
Should the Fed reserve rate be subject to congress voting? Or should it be set by a direct referendum?
Now we have the technology to make online twitter/web voting cheap and easy we could make the change in the interest rate the result of a national vote every month
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if the UK accepts free movement of EU citizens, like Switzerland does, then there's no reason it cannot be successful like Switzerland is, if for different reasons.
Is Switzerland forced to dole out welfare payments to these free moving EU citizens?
Onlykelsey has already responded very well to this, but I want to add that numerous credible studies have shown that immigrants in the UK are net contributors to society (they pay more in taxes than they take back out by using public services). There's also no credible argument that immigration is somehow muscling UK citizens out of jobs, when unemployment is at 20+ year lows.
I mean no offense Trevor, but this is exactly why EU membership should not have been put to a public vote. There's a lot of misinformation out there and it's not the public's job to sort fact from fiction and make the best decision for the UK, that's what UK politicians are paid 3 times the average UK salary per year to do.
Um, you don't believe in democracy, then? There is no evidence that the brexit voting results were primarily due to concerns about immigration, either. Democracy is dependent upon the idea that the majority of the public is fairly well educated in the issues of the times, and that they will weight the many concerns before coming to a decision. I'd say this is more likely to have been the real outcome of a referendum that was projected very far in advance, was the product of so much public discussion, and the only issue on the ballot at the time (I think). The idea that the elderly voters in Britain are just racists sounds like nonsense to me. I would be more inclined to assume that the youth were naive and ignorant, and that the elderly were voting based upon experience.
You're missing my point, I didn't mention racism at all. If people believe that immigrants are a cost to society, they believe they are voting on an economic reason. It's perfectly reasonable to vote based on an economic reason, it just so happens they were voting on bad information.
People who voted for leave primarily did so for three reasons: Immigration reasons, Economic reasons and Sovereignty reasons. The sad fact is that the leave campaigners clearly over promised what they could deliver on probably all of these issues, which is why its so interesting to see what happens now.
And to answer your question, yes I believe in democracy. The system of democratically elected officials making decisions on behalf of those who elected them is somehow undemocratic?
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And to answer your question, yes I believe in democracy. The system of democratically elected officials making decisions on behalf of those who elected them is somehow undemocratic?
In the EU the people who make the decisions are not democratically elected. The EU is the complete opposite of democracy.
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And to answer your question, yes I believe in democracy. The system of democratically elected officials making decisions on behalf of those who elected them is somehow undemocratic?
No, not undemocratic, per se. But everything is relative, isn't it? My understanding is that the Swiss vote directly on just about everything, while the actual leadership in the EU isn't voted upon by any of the members' populations at all. There might be plenty of voting occurring, but that isn't what I'd call a representative democracy. Perhaps the brexit wasn't about economic arguments at all, but simply that many voters saw that they didn't vote for their own representation in the EU anymore, and didn't like where that trend was taking them. So far, we are all speculating on the reasons, but the reasons matter little.
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Um, you don't believe in democracy, then?
Having seen congress and the republican primeries?
Should the Fed reserve rate be subject to congress voting? Or should it be set by a direct referendum?
Now we have the technology to make online twitter/web voting cheap and easy we could make the change in the interest rate the result of a national vote every month
I think there is a good reason we don't have direct democracy. Hell, direct democracy in my 12-unit building is an absolute shitshow.
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Um, you don't believe in democracy, then?
Having seen congress and the republican primeries?
Should the Fed reserve rate be subject to congress voting? Or should it be set by a direct referendum?
Now we have the technology to make online twitter/web voting cheap and easy we could make the change in the interest rate the result of a national vote every month
I think there is a good reason we don't have direct democracy. Hell, direct democracy in my 12-unit building is an absolute shitshow.
Ah, but I didn't say that I was in favor of democracy. I'm a libertarian, or to be precise, I'm a volunteerist. I favor decentralization of political power as a general rule, but democracy isn't a worthy end goal unto itself. Direct democracy works well, so long as the voting members have a common culture and interests. I would say this describes the Swiss rather well, but that they are the exception rather than the rule.
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It's interesting that the market dropped something like 5% over this over 2 days.
Now, 3 days later we are back to where we were the day before the "pre-brexit-rally" and only a measly 1.5% away from being on top of the rally.
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It's interesting that the market dropped something like 5% over this over 2 days.
Now, 3 days later we are back to where we were the day before the "pre-brexit-rally" and only a measly 1.5% away from being on top of the rally.
Yep. I bought VEURX on Monday because it was so depressed; now it's already rebounded so much I'm thinking of just taking my profits and swapping it out for my normal VTSAX or VTIAX. (I haven't bothered to check yet if Vanguard has any trading restrictions that would prevent me from doing that.)
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Folks, consider today a gift....you can still get out of the stock markets and into gold before the next, much larger down leg of what is going to be the greatest recession we have ever seen.
*slaps self*
Sarcastically quoting Peter Schiff? Never a bad day to buy gold for a gold bug.
I think what everyone figured out is impact on US stocks is very limited, however it will likely have an impact on fed thinking about interest rates...that angle of return to "normal" rates just got shallower.
Someday there will be a bigger downturn that will have Schiff and Rodgers and all the other bears on TV, best to ignore all the roaring.
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Folks, consider today a gift....you can still get out of the stock markets and into gold before the next, much larger down leg of what is going to be the greatest recession we have ever seen.
*slaps self*
Sarcastically quoting Peter Schiff? Never a bad day to buy gold for a good bug.
I think what everyone figured out is impact on US stocks is very limited, however it will likely have an impact on fed thinking about interest rates...that angle of return to "normal" rates just got shallower.
Someday there will be a bigger downturn that will have Schiff and Rodgers and all the other bears on TV, best to ignore all the roaring.
Yeah, I'm realizing my window for refinancing may have just been extended, which is nice.
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Interesting how all the talk here is about the UK or Britain when it may end up being more about England and Wales.
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And to answer your question, yes I believe in democracy. The system of democratically elected officials making decisions on behalf of those who elected them is somehow undemocratic?
In the EU the people who make the decisions are not democratically elected. The EU is the complete opposite of democracy.
This is also an often referenced reason for the Leave campaign. But isn't it also true that while unelected admins may propose and craft rules - they are voted on by the democratically elected EU parliament and any big changes have to be ratified by the parliaments of member nations?
Of course claiming that some overpaid career administrator in Brussels decides on my behalf is a lot more unnerving.
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Interesting how all the talk here is about the UK or Britain when it may end up being more about England and Wales.
This whole thing may end up being more about Europe, if this prompts other countries to consider leaving the EU.
And to answer your question, yes I believe in democracy. The system of democratically elected officials making decisions on behalf of those who elected them is somehow undemocratic?
In the EU the people who make the decisions are not democratically elected. The EU is the complete opposite of democracy.
This is also an often referenced reason for the Leave campaign. But isn't it also true that while unelected admins may propose and craft rules - they are voted on by the democratically elected EU parliament and any big changes have to be ratified by the parliaments of member nations?
Of course claiming that some overpaid career administrator in Brussels decides on my behalf is a lot more unnerving.
You are correct, MEP's are democratically elected and the UK has something like 70 MEP's representing their interests in European Parliament. Yet another case of misinformation bandied about in the lead up to the referendum.
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So much for the world coming to an end after Brexit. :-) The sale only lasted 2 days.
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Interesting how all the talk here is about the UK or Britain when it may end up being more about England and Wales.
This whole thing may end up being more about Europe, if this prompts other countries to consider leaving the EU.
What happens to the rest of the EU will probably depend on how things go in the UK. If Scotland and Northern Ireland show unwavering support for the EU and the English economy tanks, it may make the rest of the EU even more cohesive. If the UK stays intact and does well (or at least less bad than the rest of Europe), I think it's much more likely the EU could disintegrate.
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What I dont get is all the bullish sentiments today and the last few days. Brit is still leaving EU and our economy didnt get a whole lot better since last week. I am seeing nothing but downside from here.
Oh, Puerto Rico just said they're going to default on their debt, but nobody seem to care.
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Interesting how all the talk here is about the UK or Britain when it may end up being more about England and Wales.
If you look at some of the other threads, there is discussion of Scotland and NI, as well. Agree that even if UK benefits from this exit, it may cease to be the UK (unless england and wales counts?)
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What I dont get is all the bullish sentiments today and the last few days. Brit is still leaving EU and our economy didnt get a whole lot better since last week. I am seeing nothing but downside from here.
Oh, Puerto Rico just said they're going to default on their debt, but nobody seem to care.
The point is that the UK leaving the EU simply doesn't matter from an economic standpoint. The UK exported almost half a trillion dollars worth of products in 2015. They're the world's 8 or 9th largest economy based on exports which means that unlike most of the countries making up the EU, they're actually productive. Being on their own is going to be good for them longterm.
Will there possibly be short term issues associated with exporting to the EU (2 years from now) because of the tariffs that will undoubtedly be imposed? Sure. But ultimately capitalism will win out. Last I checked, Rolls-Royce is still making cars and jet engines, BP is still pumping and refining oil products, and RBS, Barclays and HSBC are still among the largest financial giants in the world. Most of the world happens to like the products that come out of the UK so again, capitalism will ultimately win out.
The big sell off on Friday and Monday was simply panic by the masses. "Things are changing and we don't like change so let's do something completely irrational". There was/is no economic reason to reduce ownership in British companies that are both profitable and have a competitive advantage in the marketplace.
If you took advantage of the 2 day sale, great. If not, just wait a month or 2 and there'll be some new media induced panic causing people to behave irrationally. Thanks to human psychology there will always be new opportunities out there.
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Brexwhat?
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Brexwhat?
Case and point. :-) The market isn't on a huge bull run. It's simply returning to where it was before the masses lost their minds on Friday and Monday.
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Brexwhat?
Case and point. :-) The market isn't on a huge bull run. It's simply returning to where it was before the masses lost their minds on Friday and Monday.
Yea, the market has been more or less flat for 2-3 years and is returning to it's... flatness
We are only 2-3 percent from a record high, but we have been just barely missing that spot for over a year now.
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The temporary volatility bumped the portfolio about 10k extra with the Golden Butterfly setup. Re-balanced twice in a week and captured some gains. I know you should wait for an asset class to get to 35%, but that is boring.
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What I dont get is all the bullish sentiments today and the last few days. Brit is still leaving EU and our economy didnt get a whole lot better since last week. I am seeing nothing but downside from here.
Oh, Puerto Rico just said they're going to default on their debt, but nobody seem to care.
PR is $2B. Does that really matter in an economy of our size? No.
Sentiment in 2016, my read, has been climbing the wall of worry. More bears get flushed out every time the media comes up with the next disaster. It isn't great in the USA, but it's not bad. 2-3% growth is more muddling along. Brexit was a surprise outcome, but the facts are things are ok, both here and there. It may create more positive movement in the EU politically as Germany/France realize they don't want everyone leaving for the exits, it will certainly create more dovish Fed behavior.
To get things really moving again in the medium term (say 2-5 years), IMHO, is infrastructure spending post-election. With interest rates so low and the need so high, this is such a no brainer that I cannot believe our congress would go against Obama on this one just because they didn't want him to be successful. Vote Democratic if this the outcome you want to see.
In the EU, it's all about removing some (all) of the austerity and for Germany to step up to make the European project sucessful, versus all the morality play BS that has been their go-to response since 2009.
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$2B is what they'd default on tomorrow. The bill is to restructure some of the $72B debt. Yes, not a big number by any mean, but if you were one of the States that is also facing large deficit, what's stopping you from doing the same? Govt is stepping in to help PR, wouldnt they help their very own states?
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Regarding fluctuations, I am sad I did not have my 80USD I put monthly on individual stocks to buy more Nokia when they dipped 10% this month...
EDIT: I already have some Nokia shares, buying 12 more when they dipped would get me out from losing with them :).
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$2B is what they'd default on tomorrow. The bill is to restructure some of the $72B debt. Yes, not a big number by any mean, but if you were one of the States that is also facing large deficit, what's stopping you from doing the same? Govt is stepping in to help PR, wouldnt they help their very own states?
Most states, I live in CA, require balanced budgets in their constitutions. Yes, the feds would step in to help any state, just like states step in to help local city/counties, the federal government is after all just the world's largest insurance company with an army.
Since we are talking about EU on this thread, I think it's important to point out that US states are very different from EU nations. The level of fiscal integration is not comparible. All this talk about CA or PR or fill in the blank is the next Greece is just balony. PR is a US territory, and does not have the same protections as for example CA or TX do, so it an issue for them for sure. But to compare PR to CA or TX, it's apples and oranges or maybe more apples and cows.
At the end of the day, while debt should be managed, USA cannot go bankrupt on debt denominated in dollars and so the risk of a default is extremely low. More chance we get hit by lightening on the golf course.... so worry more about that. :)
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Regarding fluctuations, I am sad I did not have my 80USD I put monthly on individual stocks to buy more Nokia when they dipped 10% this month...
EDIT: I already have some Nokia shares, buying 12 more when they dipped would get me out from losing with them :).
You buy $80 of individual stocks every month? Do you pay the regular ~$8 commission too? For a 10% ER!!?
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I don't understand how markets have rebounded. In fact they are now stronger than before the brexit
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I don't understand how markets have rebounded. In fact they are now stronger than before the brexit
And if you hold global assets in british pounds, you have made a killing, happy days (unless we get hit with high inflation)
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Regarding fluctuations, I am sad I did not have my 80USD I put monthly on individual stocks to buy more Nokia when they dipped 10% this month...
EDIT: I already have some Nokia shares, buying 12 more when they dipped would get me out from losing with them :).
You buy $80 of individual stocks every month? Do you pay the regular ~$8 commission too? For a 10% ER!!?
Even if it was free I'm not sure what the point is.
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I don't understand how markets have rebounded. In fact they are now stronger than before the brexit
Because everything in the world looked exactly the same the day after the vote as it did the day before the vote. The actual financial impact won't be felt for quite some time. It was fear selling plain and simple. After two days people realized that and bought right back to where we were. It's pretty much what I expected. Nice buying opportunity though for someone with cash to play.
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I'm disappointed. I was hoping Brexit would deflate the market at least a little. I didn't even make it to pay day without the market getting close to record highs again.
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Nice buying opportunity though for someone with cash to play.
Yep. I made $250 for buying $3300 worth of VEURX on Monday and then exchanging it for VTSAX on Thursday. The only real difference from my normal behavior was that I front-loaded the remainder of my IRA instead of DCA-ing it at $127/week for the rest of the year.
(I had been planning to hold the VEURX for a while, but it rebounded so quickly I thought "why not just take my profit and get back to my normal AA?" Of course, VGK is up by a larger margin than VTI so far today too, so maybe I got out too soon. Whatever.)
Incidentally, I don't plan to make speculating like this a habit.
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I don't understand how markets have rebounded. In fact they are now stronger than before the brexit
I think the markets are only above their pre-Brexit level due to rumour that the Bank of England will cut interest rates down from 0.5% to 0.25%. Also, 70% of FTSE 100 income is from overseas, so the weakened Pound is actually pretty good for the FTSE 100 in isolation. The European indexes like the CAC and the DAX are still down, as is the FTSE 350, which is much more reliant on the UK for revenue than the FTSE 100 is.
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Well, I dropped $45K into a S&P500 fund Monday afternoon, and finished today with just over $2K in gains from that move alone. Thanks Brexit voters!
The markets rebounded because it was an irrational panic anyway. The Article 50 exit process takes 2 years from the point that parliament votes to exercise the clause.
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Yeah, I'm realizing my window for refinancing may have just been extended, which is nice.
I asked during our closing the other day what rates would be and they'd dropped 0.25% from what our mortgage was (we closed last week, so too late to get a lower rate without delaying closing).
Was a bit sad :'(
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I don't understand how markets have rebounded. In fact they are now stronger than before the brexit
Look at what happened:
- UK making no radical move to actually leave anytime soon
- EU saying if you want access to the EU market you are going to take the good with the bad
- Leave leaders walking back from all their most incendiary comments/promises on immigration and trade
- Scotland stating they want to stay in the EU regardless
That ^^^ looks a lot like the UK in the EU whether it's called "full membership" or they have some new term to cover the situation. The markets just realized they were panicking about nothing and went back to the business of making money.
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For those who enjoy a little humor with their updated Brexit info:
https://www.buzzfeed.com/lukebailey/the-crisis-explained-maybe?utm_term=.kew2jQPzE#.lr51y7NY4
Since the beginning, I've had the feeling that Great Britain would not actually leave the UK. I could of course be wrong. Time will tell.
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By the way Switzerland voted and accepted in 2014 the proposal of the right wing party to control immigration (limiting the number of working visa per year from EU). This is a bit of a problem since nobody here wants to leave the free trade access with EU, which is a condition bound to the free movement of people. So we are in the same pickle, but our politician are bound to find a solution up to February 2017, but with Brexit going on nobody of the EU has time for our representative to discuss it.
Interesting times.
Sent from my YD201 using Tapatalk
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For those who enjoy a little humor with their updated Brexit info:
https://www.buzzfeed.com/lukebailey/the-crisis-explained-maybe?utm_term=.kew2jQPzE#.lr51y7NY4
Since the beginning, I've had the feeling that Great Britain would not actually leave the UK. I could of course be wrong. Time will tell.
Interesting, now that the economy freak out is over and everything is swimming along. Not sure what will happen either, but we can probably agree they're a hell of a lot closer to leaving than anyone thought they would be two weeks ago.
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For those who enjoy a little humor with their updated Brexit info:
https://www.buzzfeed.com/lukebailey/the-crisis-explained-maybe?utm_term=.kew2jQPzE#.lr51y7NY4
Since the beginning, I've had the feeling that Great Britain would not actually leave the UK. I could of course be wrong. Time will tell.
Interesting, now that the economy freak out is over and everything is swimming along. Not sure what will happen either, but we can probably agree they're a hell of a lot closer to leaving than anyone thought they would be two weeks ago.
Very true. I was sure the Brexit vote would lose.
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Interesting, now that the economy freak out is over and everything is swimming along.
Uh, maybe not so much...yet...
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Interesting side note about Brexit. The bond yield dropped like a rock and so I was able to get a home loan for 3.250% (to buy, not a refi). That's insane!
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Thanks again, Brexit voters!
http://reason.com/archives/2016/07/05/brexit-continues-to-reverberate-around-t
No, seriously. Thank you. You have done more for the world than any of us may ever know.
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The temporary volatility bumped the portfolio about 10k extra with the Golden Butterfly setup. Re-balanced twice in a week and captured some gains. I know you should wait for an asset class to get to 35%, but that is boring.
So, is this an effective strategy? My US holdings (in CAD) are at all time high due to low exchange rate. If I sell US now, I could rebalance to CAD bonds, but then tomorrow when the exchange goes back up, I'd then be lower on US holdings, snd earning less US dividends. Am I better off to buy and hold, but just buy bonds because I'm under allocated?
IPS says to balance through contribtions and once per year in March if off by more than 5%. I plan to buy and hold, not trade. However "capturing gains" seems like a good idea.
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The temporary volatility bumped the portfolio about 10k extra with the Golden Butterfly setup. Re-balanced twice in a week and captured some gains. I know you should wait for an asset class to get to 35%, but that is boring.
So, is this an effective strategy? My US holdings (in CAD) are at all time high due to low exchange rate. If I sell US now, I could rebalance to CAD bonds, but then tomorrow when the exchange goes back up, I'd then be lower on US holdings, snd earning less US dividends. Am I better off to buy and hold, but just buy bonds because I'm under allocated?
IPS says to balance through contribtions and once per year in March if off by more than 5%
A rules based portfolio like the GB (& the Permanent Portfolio that it is based upon) gets part of it's outsized gains by taking advantage of volatility like happened following Brexit. The idea is that the different parts of the portfolio are either not correlated with the others, or are sometimes counter correlated. (Gold is mildly counter correlated to large cap stock indexes, historically, as a 'flight to safety' kind of asset) The way it works, as designed by Harry Browne, is there is a trigger rule that results in a rebalance. Harry Browne recommended either if a single asset class varies by more than 10% of the total portfolio or if any two assets are more than 10% out of wack with each other. In the case of Brexit, major stock indexes dropped rather suddenly, and gold rose; so with a target percentage of 20% for each of 5 asset classes; once Large Cap Stocks dropped to 10% or Gold rose to 30% individually, or they reached more than a 10% span between them (which is what actually happened) the rule would require a rebalance, thus selling gold while it's high & buying Large Cap while it's low (also a bit of Small Cap). As the markets regained their senses last week, and investors realized how silly they were, the price of gold pulled back a little, but the Large Cap stock asset class rose to higher than where it started, and (if it got to 30% of the overall portfolio, I'm not sure that it did, because it hasn't made it there yet for me) then another rebalance would be called for. Thus, selling Large Caps while high to buy Gold back while low. If these rules are followed without emotion, the theory goes, that no matter what condition the market is in, you are only buying an asset class when it's out of season & selling high. The original Permanent Portfolio only had 4 equal classes, so each target would be 25% with a range of 15% to 35%. Harry Browne didn't know if the rule should be 10% or something else, but he believed that such a rule was required to keep the emotion of the moment out of the decision making process. Another rule was, if the markets were low volatility, then the portfolio should be rebalanced at least once each year anyway.
EDIT: To fully answer your question, yes, a rules based rebalancing portfolio is, historically better than a buy & hold strategy of comparable asset classes.
You can also keep a PP or GB in balance by using contributions to buy the lowest percentage asset class, and it still works out that you are usually buying the asset class that is least in favor at the time. But why March, per se?
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The temporary volatility bumped the portfolio about 10k extra with the Golden Butterfly setup. Re-balanced twice in a week and captured some gains. I know you should wait for an asset class to get to 35%, but that is boring.
Wouldn't the Golden Butterfly be 30% for the high mark, not 35%? Or did you start with a modified asset balance?