Apparently the sky is falling
- Thread starter kmiklas
- Start date
If OP were to trade his beloved Apple here, he would never return. 
.
Amazon flaming red papaya hard to find elsewhere.
. Amazon flaming red papaya hard to find elsewhere.
@Stockolio "1000% chance the global economy crashes in 2019"
I'm going to quote you on that for better or worse.
I'm going to quote you on that for better or worse.
DCA seems a good strategy, but is only beneficial in the early years when the amounts purchased are significant to the total purse... and especially when the market has been going down (accumulating larger number of cheaper shares).
In the long run, however, it's just "buy and hold". Hardly the "no-brainer" it seems in the early years. And there is always the possibility of losing really big. I know of one anecdote after the tech bubble burst ~2000 where a financial advisor had put all of his clients into a leveraged nasdaq mutual mutual and "averaged down". Long story short... the fund bottomed at -97.5% down from the top (the cost of leverage made the play much, much worse), and he lost EVERYTHING... his money, house, car, marriage, business, place in the community.
Not that this is a typical example, but there's a risk in having blind faith in the markets.
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Morning kmiklas,
Thank you for sharing this with me sir and educating me. I have never short the market before, just buy the SP500 index in my 401k. I just intraday trade. And swing trade SPY every now and then when the opportunity looks like a win for me.
I guess we will have just have to wait to see. what happen.
For me, I don't know what to do, so I will just do nothing, and keep on buying the market. It's just too easy this way.
Main problem for the bear case (on a macro/funda level) is the same as it was last fall: what's the catalyst for a financial panic, where are the leveraged bombs about to go off, which assets are set to go to zero and wipe everyone out? The nearest thing I can see to a hidden bomb are the Teslas, WeWorks and Ubers, unprofitable hyper-valued unicorns focused on growth at any cost, backed by dumb money whales like the Vision Fund. But most of that action isn't in the public markets.
Since we are back just a few percent from the highs, it seems that the late 2018 selling was driven by technical and positioning factors as much as it was fundamentally based, i.e. long-term investors rotating out of stocks. Until pension funds and FOs decide en masse to de-allocate from equities somewhat, it will be hard for a bear market to get any legs. Ironically, the Fed capitulation might be a catalyst for just that - it's an open invitation to sell stock, buy bonds, and sell to Powell when he starts gunning the markets for the 2020 election.
Since we are back just a few percent from the highs, it seems that the late 2018 selling was driven by technical and positioning factors as much as it was fundamentally based, i.e. long-term investors rotating out of stocks. Until pension funds and FOs decide en masse to de-allocate from equities somewhat, it will be hard for a bear market to get any legs. Ironically, the Fed capitulation might be a catalyst for just that - it's an open invitation to sell stock, buy bonds, and sell to Powell when he starts gunning the markets for the 2020 election.
You brought up a good point...pension funds. My understanding is pension funds are underfunded by about $4.4 trillion in the U.S....similar to Germany's economy. If one of these situations blows up, panic will kick in...another crisis born imho.
Sell something short, for the experience. It’s nice to have this tool in your bag when you see something about to take a nose dive.
Maybe short 100 shares of Ford, currently trading at $8.69, to get a feel for it. You might lose $50, but this is a small price to pay for the lesson you’ll give yourself.
Generally, imo, it’s best to get in and get dirty with these different instruments. You’ll get some cuts, bumps, and bruises; but, as Livermore says, “A man needs an education, and a man has to pay for it.”
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@DollarCostAveraging is a good idea if you have time on your side. When i was young i had a habit each year of putting $2k in a different IRA mutual fund. Most of that was in the years 1987 to 1991. It was more aptly described as a buy and hold strategy.
One of those funds was a tech fund that got caught in the dot com bust and it never has quite regained to the original $2k all these years later.
About the same time frame i did $2k with tRowePrice New Asia Fund / eventually switched to tRowePrice Healthcare and it grew to $40k last year.
Dollar Cost Averaging and buy and hold is a 2 edged sword. Depends upon time factor and what you pick and when you pick.
One of those funds was a tech fund that got caught in the dot com bust and it never has quite regained to the original $2k all these years later.
About the same time frame i did $2k with tRowePrice New Asia Fund / eventually switched to tRowePrice Healthcare and it grew to $40k last year.
Dollar Cost Averaging and buy and hold is a 2 edged sword. Depends upon time factor and what you pick and when you pick.