Author Topic: sp 500 closes at 2,637, what could it drop to?!  (Read 6688 times)

sol

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Re: sp 500 closes at 2,637, what could it drop to?!
« Reply #50 on: December 14, 2018, 01:03:22 PM »
25% is alot.  do you think 9% is possible over the next few years if we are nearing the end of the current cycle sol?

Possible?  Of course.

-25% and +25% are also possible.  Nobody really knows.  But the long term average is up, and I'm playing the long game.  I expect to investments to last at least another 50 years, and over those kinds of time frames the markets have never gone down.  What happens this year or next year is just noise.

DreamFIRE

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Re: sp 500 closes at 2,637, what could it drop to?!
« Reply #51 on: December 14, 2018, 01:16:37 PM »
25% is alot.  do you think 9% is possible over the next few years if we are nearing the end of the current cycle sol?

We could be in for another decade plus of negative real returns (dividends included and inflation adjusted), such as we experienced not all that long ago.

bthewalls

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Re: sp 500 closes at 2,637, what could it drop to?!
« Reply #52 on: December 14, 2018, 01:17:01 PM »
could you explain what you mean by just noise?.

obviously buy regular and through ups and downs, since it makes no difference over 10-15+ year period. 

but dont you expect there to be lesser growth over the next short while? Its not to be alarmed in anyway, all part of the cycle, but nice to understand it. 

sol

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Re: sp 500 closes at 2,637, what could it drop to?!
« Reply #53 on: December 14, 2018, 02:44:43 PM »
could you explain what you mean by just noise?

I mean that the exact percentage returns of the index in any given year are basically random.  They center around a positive 9% or so, but the deviations are huge in any given year.  Don't count on any single year's return, because it could be just about any random number from the hat.

Quote
but dont you expect there to be lesser growth over the next short while?

No.  Why do you?

The whole idea of "the business cycle" is mostly bogus.  There is no characteristic frequency with which the economy naturally oscillates.  It goes up and it goes down in response to geopolitical events, certainly, but those events don't regularly alternate between positive and negative impacts on a set time frame.  Some bull markets last 10 months and some last 10 years, and you won't know which one it is until long after it's over.

If anything, the only observable trend I've seen in the stock market seems to have a period measured in decades.  The 1930s and 40s were bad.  Then the 50s and 60s were good.  The 70s were bad, and then the 80s and 90s were good.  By this sort of long term cycle, we're only halfway through our current period of expansion and should probably expect ten+ more years of green numbers before the next major downturn.

Remember that the stock market has averaged 9% returns through all kinds of crazy shit, including pandemics and global wars.  An idiot president and a trade spat with China are just speed bumps, not the kind of thing that legitimately changes the course of the global economy.  Factories are still churning out cheap plastic crap, consumers are still blowing their entire paychecks at Applebee's every weekend, resources are still abundant and our quality of life is still rising. I see no reason why the next "short while" should realistically be expected to be worse than the recent past. 

You have to let go of the idea that stock market prices are the economy.  The economy does it's own thing, and then a bunch of noisy rich people argue over how to price their expectations of future profits.  If you're forecasting the short term stock market, you're just guessing about how they will argue and not about whether or not they are right. 

bthewalls

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Re: sp 500 closes at 2,637, what could it drop to?!
« Reply #54 on: December 14, 2018, 03:15:14 PM »
Good point actually.

Iím reading Dalio at moment on his estimate that the current global sceranio reflects similarities with the late 1930s situation. I find it fascinating.

Cabaka

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Re: sp 500 closes at 2,637, what could it drop to?!
« Reply #55 on: December 14, 2018, 03:21:59 PM »
could you explain what you mean by just noise?.

obviously buy regular and through ups and downs, since it makes no difference over 10-15+ year period. 

but dont you expect there to be lesser growth over the next short while? Its not to be alarmed in anyway, all part of the cycle, but nice to understand it.

"I mean that the exact percentage returns of the index in any given year are basically random"

these statements are why I try and stay away, but I made the mistake of lurking on a slow Friday.

yes, index returns in a year are random but you cannot ignore macro economics of slowing global growth, declining house and autosales, rising rates and world fed banks tightening.

you also cannot ignore that the 2009 mkt recovery was greatly enhanced by fed policy and debt and to expect that to be done again with the same results is not realistic.

you also cannot ignore that debtloads of people today are larger and wage growth is slower so that even if this is just a correction, expecting a economic recovery to spring back fast is not realistic.

I feel like neal boortz's book "somebody's gotta say it !"

sol

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Re: sp 500 closes at 2,637, what could it drop to?!
« Reply #56 on: December 14, 2018, 03:44:51 PM »
yes, index returns in a year are random but you cannot ignore macro economics of slowing global growth, declining house and autosales, rising rates and world fed banks tightening.

I'm not suggesting that these things are irrelevant to the economy, just that they are short term wiggles that don't really worry much.  So far, nobody has been able to use such indicators to correctly predict market downturns with any regularity.   Lots of folks have been calling the top every day for the past six years, over which the market has literally doubled in value.  At this point, we could see a 50% decline tomorrow and they'd still be wrong.

I agree that the stock market will temporarily decline in price at some point in the future.  But you don't know if it will go up 20% before it goes down 20%, and neither does anyone else.

dividendman

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Re: sp 500 closes at 2,637, what could it drop to?!
« Reply #57 on: December 14, 2018, 04:42:19 PM »
"I mean that the exact percentage returns of the index in any given year are basically random"

these statements are why I try and stay away, but I made the mistake of lurking on a slow Friday.

yes, index returns in a year are random but you cannot ignore macro economics of slowing global growth, declining house and autosales, rising rates and world fed banks tightening.

you also cannot ignore that the 2009 mkt recovery was greatly enhanced by fed policy and debt and to expect that to be done again with the same results is not realistic.

you also cannot ignore that debtloads of people today are larger and wage growth is slower so that even if this is just a correction, expecting a economic recovery to spring back fast is not realistic.

I feel like neal boortz's book "somebody's gotta say it !"

Who exactly? Maybe YOU (Cabaka) cannot ignore these things, but I certainly can ignore all of those things and have been... so far I continue to exist.

PDXTabs

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Re: sp 500 closes at 2,637, what could it drop to?!
« Reply #58 on: December 14, 2018, 05:46:49 PM »
@Cabaka

I shorted and lost in 2007/8. That adage that the market can remain irrational longer than you can remain solvent was still true then, it is probably still true today.

AdrianC

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Re: sp 500 closes at 2,637, what could it drop to?!
« Reply #59 on: December 14, 2018, 07:34:43 PM »
I started investing in 1998. Dec 1998 to Dec 2018 Annualized S&P500 real return with dividends reinvested: 3.7% (Nominal return 6.1%).

Between Ď98 and now thereís been a drawdown of >35% and a drawdown of >50%.

I see no reason why the next 20 years should be much different, though (incredibly) we are starting at a lower CAPE.

To answer the OP, it could drop to 1300. Why not? No way to tell when it might, though.

Iím staying the course, of course. FIREd. 85% stocks.

Radagast

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Re: sp 500 closes at 2,637, what could it drop to?!
« Reply #60 on: December 14, 2018, 08:29:54 PM »
I started investing in 1998. Dec 1998 to Dec 2018 Annualized S&P500 real return with dividends reinvested: 3.7% (Nominal return 6.1%).

Between Ď98 and now thereís been a drawdown of >35% and a drawdown of >50%.

I see no reason why the next 20 years should be much different, though (incredibly) we are starting at a lower CAPE.

To answer the OP, it could drop to 1300. Why not? No way to tell when it might, though.

Iím staying the course, of course. FIREd. 85% stocks.
And if you had put in $1000 (subsequently matched to inflation) every month over that period, your return on your money would have been 6.35% real, and 8.75% nominal! Yay for periodic investing.

Radagast

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Re: sp 500 closes at 2,637, what could it drop to?!
« Reply #61 on: December 14, 2018, 08:33:38 PM »
You have to let go of the idea that stock market prices are the economy.  The economy does it's own thing, and then a bunch of noisy rich people argue over how to price their expectations of future profits.
That's a pretty good quote there.

Kronsey

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Re: sp 500 closes at 2,637, what could it drop to?!
« Reply #62 on: December 14, 2018, 09:32:58 PM »
I started investing in 1998. Dec 1998 to Dec 2018 Annualized S&P500 real return with dividends reinvested: 3.7% (Nominal return 6.1%).

Between Ď98 and now thereís been a drawdown of >35% and a drawdown of >50%.

I see no reason why the next 20 years should be much different, though (incredibly) we are starting at a lower CAPE.

To answer the OP, it could drop to 1300. Why not? No way to tell when it might, though.

Iím staying the course, of course. FIREd. 85% stocks.
And if you had put in $1000 (subsequently matched to inflation) every month over that period, your return on your money would have been 6.35% real, and 8.75% nominal! Yay for periodic investing.

And that small 20 year period included the 2000 dot-com bubble and the 2008 Great Recession!

2019 will be the first year I start socking away largish amounts of cash in retirement vehicles. I am (selfishly) hoping the market continues the downward trend for the next few years. Looking forward to buying index ETFs on sale!

TheHobbit

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Re: sp 500 closes at 2,637, what could it drop to?!
« Reply #63 on: December 14, 2018, 10:36:46 PM »
Including about market history in which case you'll learn that markets can, and have, gone to zero.

Name one.

That's not me being snide, that's an honest question.  I honestly can't think of a single economic system in history in which every investment became worthless.

ohhh I smell a Gold Bug!  How big is the hole in your backyard? :)

jimmyshutter

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Re: sp 500 closes at 2,637, what could it drop to?!
« Reply #64 on: December 15, 2018, 05:55:17 AM »
I'm going to say it will drop to at least 2,599.95.

sol

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Re: sp 500 closes at 2,637, what could it drop to?!
« Reply #65 on: December 15, 2018, 08:43:22 AM »
I'm going to say it will drop to at least 2,599.95.




AdrianC

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Re: sp 500 closes at 2,637, what could it drop to?!
« Reply #66 on: December 17, 2018, 05:25:03 AM »
And if you had put in $1000 (subsequently matched to inflation) every month over that period, your return on your money would have been 6.35% real, and 8.75% nominal! Yay for periodic investing.
Indeed. And you'd now have about $750K. In the 08/09 crisis you went from about $160k down to $80K.


Giff

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Re: sp 500 closes at 2,637, what could it drop to?!
« Reply #67 on: December 17, 2018, 02:45:35 PM »

As of today the index is down 2.7% for the year, unless you count dividends which case you're close to even.  Last year it was up 25%, and the year before that it was up 13%.  So I'm totally happy with a zero for this year.  It's about time to cool off a little, maybe come back down to earth a little and settle in around something closer to the long term average of 9%.  Last year we made almost three years worth of average profits, right? 


It hurts a little bit that I have started (heavily) investing in 2017 and I am now some 30K down, but I am in for the long ride and I actually find it hard to not take my emergency fund and buy some more stocks with it...

PDXTabs

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Re: sp 500 closes at 2,637, what could it drop to?!
« Reply #68 on: December 17, 2018, 02:59:45 PM »
It hurts a little bit that I have started (heavily) investing in 2017 and I am now some 30K down, but I am in for the long ride and I actually find it hard to not take my emergency fund and buy some more stocks with it...

Don't feel bad! I started in 2007. I bought all the way down and all the way back up. I only regret not buying more.

2Birds1Stone

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Re: sp 500 closes at 2,637, what could it drop to?!
« Reply #69 on: December 17, 2018, 03:06:37 PM »
At this rate we will see that 1999 soon!

markbike528CBX

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Re: sp 500 closes at 2,637, what could it drop to?!
« Reply #70 on: December 17, 2018, 04:36:27 PM »
At this rate we will see that 1999 soon!

Then we can party like it's 1999!

2Birds1Stone

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Re: sp 500 closes at 2,637, what could it drop to?!
« Reply #71 on: December 17, 2018, 04:55:54 PM »
We sure as hell will!

2Birds1Stone

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Re: sp 500 closes at 2,637, what could it drop to?!
« Reply #72 on: December 17, 2018, 04:57:14 PM »
Party like it's 1999 = S&P 1400

markbike528CBX

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Re: sp 500 closes at 2,637, what could it drop to?!
« Reply #73 on: December 17, 2018, 05:02:19 PM »
Party like it's 1999 = S&P 1400

snip.....[SP500].. -50% = 1318.5  ..Snip...

If we get there we can party on the way down AND the way up!

FIRE47

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Re: sp 500 closes at 2,637, what could it drop to?!
« Reply #74 on: December 19, 2018, 01:06:14 PM »

2Birds1Stone

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Re: sp 500 closes at 2,637, what could it drop to?!
« Reply #75 on: December 19, 2018, 01:55:26 PM »
Getting closer every day =)

Stachless

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Re: sp 500 closes at 2,637, what could it drop to?!
« Reply #76 on: December 19, 2018, 02:58:30 PM »
You'll be a smarter (and more successful) investor once you realize that the answer to your question is that the S&P could go to zero.
This is wrong, per my earlier post in this thread.  Owing the assets of the largest 500 public U.S. companies is worth far more than $0, just by selling off the assets of those companies.


I realize this isn't a real-time response, but did want to point out that this is simply not true.  The actual assets of the largest 500 public U.S. companies would go to their creditors (many assets are already encumbered as collateral for certain types of debt) / bond holders.  Equity holders are typically unsecured, meaning we stockholders would get only whatever is left over after all creditors have been satisfied.  This often amounts to a nice round figure of $0.

nihilism122

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Re: sp 500 closes at 2,637, what could it drop to?!
« Reply #77 on: December 19, 2018, 03:39:42 PM »
Keep dropping.  Let's buy more at 2016 prices. 

clifp

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Re: sp 500 closes at 2,637, what could it drop to?!
« Reply #78 on: December 19, 2018, 03:53:22 PM »
I'm calling the bottom at 2119, next year. 
My prediction is worth exactly what you paid for it.

sol

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Re: sp 500 closes at 2,637, what could it drop to?!
« Reply #79 on: December 19, 2018, 04:00:55 PM »
Did not pay off....

I think you missed the joke.  He said it would drop to at least the price it had already dropped to.  He was guaranteed to be correct the moment he posted it.

Brother Esau

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Re: sp 500 closes at 2,637, what could it drop to?!
« Reply #80 on: December 19, 2018, 05:26:13 PM »
You'll be a smarter (and more successful) investor once you realize that the answer to your question is that the S&P could go to zero.
This is wrong, per my earlier post in this thread.  Owing the assets of the largest 500 public U.S. companies is worth far more than $0, just by selling off the assets of those companies.


I realize this isn't a real-time response, but did want to point out that this is simply not true.  The actual assets of the largest 500 public U.S. companies would go to their creditors (many assets are already encumbered as collateral for certain types of debt) / bond holders.  Equity holders are typically unsecured, meaning we stockholders would get only whatever is left over after all creditors have been satisfied.  This often amounts to a nice round figure of $0.

Yep, I once owned stock in United Airlines (technically still do) until they went through bankruptcy. Shares are now worth $0.

sol

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Re: sp 500 closes at 2,637, what could it drop to?!
« Reply #81 on: December 19, 2018, 05:47:52 PM »
Yep, I once owned stock in United Airlines (technically still do) until they went through bankruptcy. Shares are now worth $0.

One company going bankrupt is not the same as every company going bankrupt.  In a bankruptcy, your assets get sold off to other companies, and those companies cannot all also go bankrupt at the same time.  As long as we still have an economy of some sort, companies will still be producing value and the 500 biggest ones of them will still be in the index and that index will not be worth zero.

Brother Esau

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Re: sp 500 closes at 2,637, what could it drop to?!
« Reply #82 on: December 19, 2018, 06:07:55 PM »
Yep, I once owned stock in United Airlines (technically still do) until they went through bankruptcy. Shares are now worth $0.

One company going bankrupt is not the same as every company going bankrupt.  In a bankruptcy, your assets get sold off to other companies, and those companies cannot all also go bankrupt at the same time.  As long as we still have an economy of some sort, companies will still be producing value and the 500 biggest ones of them will still be in the index and that index will not be worth zero.

word!

FIRE47

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Re: sp 500 closes at 2,637, what could it drop to?!
« Reply #83 on: December 19, 2018, 06:46:17 PM »
Did not pay off....

I think you missed the joke.  He said it would drop to at least the price it had already dropped to.  He was guaranteed to be correct the moment he posted it.

Realized while I was typing but felt like bumping the thread anyways