Author Topic: The Dow may drop another 2,000 points before the stock market selling is done  (Read 3007 times)

Monkey Uncle

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Gotta love these stock market prediction articles.  http://www.msn.com/en-us/money/markets/the-dow-may-drop-another-2000-points-before-the-stock-market-selling-is-done-cnbc-cfo-survey/ar-BBPUxPT?li=BBnbfcL

CNBC surveyed a bunch of CFOs, and the consensus is that the stock market is going to keep going down.  But back in the third quarter, they thought it would keep going up:

Quote
Just over 51 percent of CFOs taking the survey have come to this pessimistic view of stocks, which represents a high in the CNBC quarterly CFO survey for 2018. When stock market volatility first spiked in Q1, 42 percent of CFOs thought a drop to 23,000 was coming. But 31 percent of CFOs were still of the mindset that a new record above 27,000 was more likely, and the market optimism increased by the third quarter to 50 percent of CFOs believing 27,000 was possible.

So basically they think that whatever trend is in place is going to continue.  How does that make them any better at predicting the direction of the market than anyone else?

Maenad

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Magic 8-ball says...

:-D

2Birds1Stone

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The Santa rally is going straight into the coalmine.

AccidentialMustache

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10% discount? Yes please! I will find money to shovel into that hole!

Andy R

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10% discount? Yes please! I will find money to shovel into that hole!

How do you just "find" money?
So basically you were keeping it out of the market waiting for a drop, right?
And if no drop came, you would have just continued waiting and waiting while the market kept rising?
Or am I misunderstanding something?

nihilism122

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I'm sure the market will never go up again.  It will just drop forever and ever and ever.  We're all doomed. 

ScreamingHeadGuy

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JAYSLOL

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10% discount? Yes please! I will find money to shovel into that hole!

How do you just "find" money?
So basically you were keeping it out of the market waiting for a drop, right?
And if no drop came, you would have just continued waiting and waiting while the market kept rising?
Or am I misunderstanding something?

I see it as taking on extra work that you wouldn't normally go after if the market wasn't on sale.  Who doesn't love a 20% after-tax raise?  I would do extra work at that rate too :)
« Last Edit: November 23, 2018, 06:01:23 PM by JAYSLOL »

mrmoonymartian

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10% discount? Yes please! I will find money to shovel into that hole!

How do you just "find" money?
So basically you were keeping it out of the market waiting for a drop, right?
And if no drop came, you would have just continued waiting and waiting while the market kept rising?
Or am I misunderstanding something?
The best time to sell your body on the street is when the market is down. Hence the saying "more bang for your buck".

JAYSLOL

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10% discount? Yes please! I will find money to shovel into that hole!

How do you just "find" money?
So basically you were keeping it out of the market waiting for a drop, right?
And if no drop came, you would have just continued waiting and waiting while the market kept rising?
Or am I misunderstanding something?
The best time to sell your body on the street is when the market is down. Hence the saying "more bang for your buck".

Don't you mean more buck for your bang?  LOL

AccidentialMustache

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10% discount? Yes please! I will find money to shovel into that hole!

How do you just "find" money?
So basically you were keeping it out of the market waiting for a drop, right?
And if no drop came, you would have just continued waiting and waiting while the market kept rising?
Or am I misunderstanding something?

There's options. Plain old re-blanacing asset allocation is the obvious one -- also the one with the most $ to move around. Pile-of-stuff-to-get-rid-of-or-sell may get more aggressive marketing/pricing. Looking for places to tighten the old belt and squeeze a few more $ into savings (these things don't fix themselves in a day). Side gigs. Dumping downpayment funds for the next rental property into the market and building the funds back up over time.

pecunia

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I make the big mistake of trying to figure this stuff out.  The news guys say that the powers at be have become disenchanted with Tech stocks all of a sudden.  They have been overvalued aren't making enough money for them and so they are dumping them like hot potatoes.  So, I dumbly read it and thing OK.

Then I think about my life.  I spend my money on food and gasoline.  I don't buy computers or cell phones any where near as often.  I get on GOOGLE, but don't spend money.  How can Tech stocks so dominate the market?

https://www.cnbc.com/2018/02/28/technology-now-makes-up-a-quarter-of-the-stock-market.html

OK - They say it is about 25% of the stock market.

How much have they fallen?  Apple stock has fallen from 233 to 172. (26 percent decline from high)
Alphabet (GOOGLE) has fallen from 1291 to 1030. (20 percent decline from high)
Amazon stock has fallen from 2050 to 1502. (26 percent decline)

Let's call tech stock decline 25 percent  Per link Tech stocks make up 25 percent of the market.  So wouldn't you figure that the market would then have had a drop of 25 percent of 25 percent or 6 and a quarter percent?

S&P max 2930 and now 2633 (10.1 percent decline)
Russell 2000 max 1740 to 1488 (14.5 percent decline)
VTSAX max 76.65 to 65.76 ( 14.2 percent decline)
FSTVX max 84.67 to 78.45 ( 7.3 percent)

These were taken from the tops of the charts to the last entry.  So what else is going on besides Tech stocks?  Are we hitting the point of irrationality where animal spirits are taking over?  This stuff has its own alternate reality.  Maybe, if I took drugs it would make more sense. 

This article says There's a good chance if I wait 14 weeks, I'll get my money back.

https://www.fool.com/knowledge-center/6-things-you-should-know-about-a-stock-market-corr.aspx

I guess I'll just wait it out.  I don't see people losing their houses yet.  Wish I had money like Accidental Mustache.




smoghat

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Iíve been following Apple for over 20 years. I thought itíd be a good pick then. It was. Still is, albeit less so. One thing that my friends who follow Apple and I (call us rabid fanboys if you want, although we can also be deeply skeptical) have observed is that pump and dump happens continually with this stock. Last year the story was that nobody wanted the iPhone 8 and shipments were down. Then it turned out everyone was buying the iPhone X and shipments were up. This will happen again and again and again and these stories about Appleís suppliers bleeding are constant. Apple products have become very expensive, which is not good for the consumer, but the new iPad Pros and new iPhones are incredibly slick and well made, much better than last yearís generation. Eventually the pendulum will swing the other way and new, stratospheric highs will be reached. 

Facebook Iím more concerned about. Itís not popular with kids, nothing it does to grow sticks. If there was an alternative, itíd be gone overnight. Remember MySpace? Or Friendster? Facebook is bigger, but itís enormously hated.

Netflix is at its limit. Who doesnít have Netflix now? I have no idea how it could grow, short of buying Hulu, which isnít really growth. If Amazon ramps Prime video up so that itís no longer second best, or if Hulu starts carrying a lot more movies, then Netflix could dwindle fast. For every Stranger Things, there are ten series nobody cares about.

Google, sadly, is unstoppable. We virtually live on it now. How much growth it has left is also unclear, although itís likely to be more than Facebook or Netflix. Hereís another company that could clean Netflixís clock if it turned Youtube Red into a serious Netflix competitor. They made a LOT of mistakes though (Google Wave, Google Plus, etc. etc.). E

AccidentialMustache

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I guess I'll just wait it out.  I don't see people losing their houses yet.  Wish I had money like Accidental Mustache.

No point wishing -- you want to have more money to invest you have to work for it. You can work to earn more or work to spend less. I took the earn more path -- I had a lot more upside available there than I did on the spend less side. Back in 2k8 we were dinks and spent ~50k/yr. Could we cut that? Sure. By how much? Let's say by MMM numbers. So we could cut it in half or a touch more (dinks) -- say a gain of 30k/yr. I switched jobs (public -> private) and added 40k the first year, without moving.

pecunia

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I guess I'll just wait it out.  I don't see people losing their houses yet.  Wish I had money like Accidental Mustache.

No point wishing -- you want to have more money to invest you have to work for it. You can work to earn more or work to spend less. I took the earn more path -- I had a lot more upside available there than I did on the spend less side. Back in 2k8 we were dinks and spent ~50k/yr. Could we cut that? Sure. By how much? Let's say by MMM numbers. So we could cut it in half or a touch more (dinks) -- say a gain of 30k/yr. I switched jobs (public -> private) and added 40k the first year, without moving.

Would robbing a bank count as working?  I guess if I did that I wouldn't have to wait the 14 weeks for the stock market to recover.  Yeh, it's time to discover my work ethic.

SwordGuy

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I guess I'll just wait it out.  I don't see people losing their houses yet.  Wish I had money like Accidental Mustache.

No point wishing -- you want to have more money to invest you have to work for it. You can work to earn more or work to spend less. I took the earn more path -- I had a lot more upside available there than I did on the spend less side. Back in 2k8 we were dinks and spent ~50k/yr. Could we cut that? Sure. By how much? Let's say by MMM numbers. So we could cut it in half or a touch more (dinks) -- say a gain of 30k/yr. I switched jobs (public -> private) and added 40k the first year, without moving.

Would robbing a bank count as working?  I guess if I did that I wouldn't have to wait the 14 weeks for the stock market to recover.  Yeh, it's time to discover my work ethic.

With the added benefit of watching your assets grow in the market whilst your living expenses drop to zero in prison!

shinn497

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Iíve been following Apple for over 20 years. I thought itíd be a good pick then. It was. Still is, albeit less so. One thing that my friends who follow Apple and I (call us rabid fanboys if you want, although we can also be deeply skeptical) have observed is that pump and dump happens continually with this stock. Last year the story was that nobody wanted the iPhone 8 and shipments were down. Then it turned out everyone was buying the iPhone X and shipments were up. This will happen again and again and again and these stories about Appleís suppliers bleeding are constant. Apple products have become very expensive, which is not good for the consumer, but the new iPad Pros and new iPhones are incredibly slick and well made, much better than last yearís generation. Eventually the pendulum will swing the other way and new, stratospheric highs will be reached. 

Facebook Iím more concerned about. Itís not popular with kids, nothing it does to grow sticks. If there was an alternative, itíd be gone overnight. Remember MySpace? Or Friendster? Facebook is bigger, but itís enormously hated.

Netflix is at its limit. Who doesnít have Netflix now? I have no idea how it could grow, short of buying Hulu, which isnít really growth. If Amazon ramps Prime video up so that itís no longer second best, or if Hulu starts carrying a lot more movies, then Netflix could dwindle fast. For every Stranger Things, there are ten series nobody cares about.

Google, sadly, is unstoppable. We virtually live on it now. How much growth it has left is also unclear, although itís likely to be more than Facebook or Netflix. Hereís another company that could clean Netflixís clock if it turned Youtube Red into a serious Netflix competitor. They made a LOT of mistakes though (Google Wave, Google Plus, etc. etc.). E

I think you are looking too much into the products and not enough into the companies. Netflix has a lot of productions it can do and ways it can expand. Apple is making a car. FB has insta, oculus, wechatt. Google has Waymo.

Just because one product might be saturated doesn't mean the company as a whole can't expand. I think all of these stocks have room to grow.

pecunia

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- - SNIP --

I think you are looking too much into the products and not enough into the companies. Netflix has a lot of productions it can do and ways it can expand. Apple is making a car. FB has insta, oculus, wechatt. Google has Waymo.

Just because one product might be saturated doesn't mean the company as a whole can't expand. I think all of these stocks have room to grow.

Is this an example of where the market thinks short term, i.e. maybe three months, and maybe we should be thinking longer?

shinn497

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Honestly, I do not know enough about stocks to really say this with any kind of certainty. I was just playing devil's advocate a bit.

You can never be too sure about stocks or what will happen. And it seems a bit shortsited to just look at one perspective on one product and decide that that will determine a company's outlook for years to come.

Blueberries

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I make the big mistake of trying to figure this stuff out.  The news guys say that the powers at be have become disenchanted with Tech stocks all of a sudden.  They have been overvalued aren't making enough money for them and so they are dumping them like hot potatoes.  So, I dumbly read it and thing OK.

Then I think about my life.  I spend my money on food and gasoline.  I don't buy computers or cell phones any where near as often.  I get on GOOGLE, but don't spend money.  How can Tech stocks so dominate the market?

https://www.cnbc.com/2018/02/28/technology-now-makes-up-a-quarter-of-the-stock-market.html

OK - They say it is about 25% of the stock market.

How much have they fallen?  Apple stock has fallen from 233 to 172. (26 percent decline from high)
Alphabet (GOOGLE) has fallen from 1291 to 1030. (20 percent decline from high)
Amazon stock has fallen from 2050 to 1502. (26 percent decline)

Let's call tech stock decline 25 percent  Per link Tech stocks make up 25 percent of the market.  So wouldn't you figure that the market would then have had a drop of 25 percent of 25 percent or 6 and a quarter percent?

S&P max 2930 and now 2633 (10.1 percent decline)
Russell 2000 max 1740 to 1488 (14.5 percent decline)
VTSAX max 76.65 to 65.76 ( 14.2 percent decline)
FSTVX max 84.67 to 78.45 ( 7.3 percent)

These were taken from the tops of the charts to the last entry.  So what else is going on besides Tech stocks?  Are we hitting the point of irrationality where animal spirits are taking over?  This stuff has its own alternate reality.  Maybe, if I took drugs it would make more sense. 

<edit>

I guess I'll just wait it out.  I don't see people losing their houses yet.  Wish I had money like Accidental Mustache.

You don't need to know or understand why; you need to know that what you see right now is more selling than buying.  Period.  That's all that is factual. 

Stocks that are still in their growth phase will typically lose twice as much (if not more) compared to its index; as of right now, this is normal corrective action. 

soccerluvof4

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IF i was understanding it right since the Trump Bump the market was overvalued so if it declines by 10-14% so far is it really just getting to be more of a fair market value? So is it really on sale? Beyond my knowledge which is why I am asking. Do p/e ratios and all that seem to matter anymore? The market from what I have read has gone down and ignored a great earnings season.

Blueberries

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IF i was understanding it right since the Trump Bump the market was overvalued so if it declines by 10-14% so far is it really just getting to be more of a fair market value? So is it really on sale? Beyond my knowledge which is why I am asking. Do p/e ratios and all that seem to matter anymore? The market from what I have read has gone down and ignored a great earnings season.

"Overvalued" and "fair market value" are subjective.  There isn't one reason; no one could possibly know all the reasons there are for why there are more sellers.   

The stock market is a psychological game of probabilities.  You will find people using different metrics to determine what will happen next, but it's all probability-based.