Dow tumbles more than 800 points. How ugly will this get?

[MomentsofSanity]

I doubt the Feds may have much ability to move on interest rates. Over the past decade, we have had essentially "free" money and for whatever reason inflation has been surprisingly low for much of that time. With all this free money and people moving money out of stocks, I am thinking inflation may finally catch up with us. That or the rich have basically held on to all that cash keeping it "out of the system." However, I see quite a disconnect with the markets and money supply. I think borrowing money is going to get pretty expensive very quickly coming up.

Of course, I am the world's expert on the subject...... /s

The Fed needs to keep some arrows in the quiver in the event there is a recession. They fire them all now were fucked if shit hits the fan. They won’t have anything left they can do.

 

[vi edit]

The level of deflection in this administration is unlike anything I've ever seen.

 

[Bitek]

https://twitter.com/x/status/1161774775020195840

lololooolloololllolllllll

Isn't that like $900B in GDP? Lol

 

[snoopy7548]

Echoing fleshconsumed... don't time the market. It never works. If you feel you need to pull money out of stocks or stop contributing, then you have the wrong asset allocation.

The smart ones just keep putting money in and act as if nothing is happening. They may contribute a little more or a little less than more, but their contributions don't change from their baseline. If you're making your 401k, keep maxing it. If you're (also) maxing your IRA, keep maxing it. If you've been comfortable with 90/10 stocks/bonds for the past 10 years, you should still be comfortable with it unless you're retiring in five years.

 

[Jhhnn]

Echoing fleshconsumed... don't time the market. It never works. If you feel you need to pull money out of stocks or stop contributing, then you have the wrong asset allocation.

The smart ones just keep putting money in and act as if nothing is happening. They may contribute a little more or a little less than more, but their contributions don't change from their baseline. If you're making your 401k, keep maxing it. If you're (also) maxing your IRA, keep maxing it. If you've been comfortable with 90/10 stocks/bonds for the past 10 years, you should still be comfortable with it unless you're retiring in five years.

And what if you're retired & depend on your investments to maintain your lifestyle? You end up drawing down the principal further than it fell, weakening your ability to recover.

 

[bbhaag]

And what if you're retired & depend on your investments to maintain your lifestyle? You end up drawing down the principal further than it fell, weakening your ability to recover.

If you are retired and a large part of your retirement funds are still in high risk allocations like stocks then you are doing it wrong.

 

[Muse]

Maybe, but what does it say when he chooses to believe nonsense despite being told he's wrong over and over again? At what point is that just lying by another name?

The big problem with Trump that I feel is that he's apparently incapable of admitting that he's wrong. He'll stubbornly insist he's right rather than admit he's made a mistake.

 

[Muse]

And what if you're retired & depend on your investments to maintain your lifestyle? You end up drawing down the principal further than it fell, weakening your ability to recover.

Well, myself, I'm in that position. I am a genius at living frugally, so I can protect my capital better than 99+% of people, is my feeling (it's an attitude, not something I can prove!!!). But I would much prefer it (UNDERSTATEMENT!) if the market would take off and not look back, then I could loosen the reigns on myself and enjoy life more! PATIENCE! I know a lot about the stock market but I haven't been patient enough. Where we're going now, I don't know, but I have an iron clad rule set, so my emotions won't come into it AS LONG AS I FOLLOW MY RULES.

 

[Muse]

If you are retired and a large part of your retirement funds are still in high risk allocations like stocks then you are doing it wrong.

I think that depends on how you're invested. My money's in stocks but I have a system that's very likely to do well over time. Much better than if I had, say, 70% in bonds. Only time will tell, of course!

 

[obidamnkenobi]

Echoing fleshconsumed... don't time the market. It never works. If you feel you need to pull money out of stocks or stop contributing, then you have the wrong asset allocation.

The smart ones just keep putting money in and act as if nothing is happening. They may contribute a little more or a little less than more, but their contributions don't change from their baseline. If you're making your 401k, keep maxing it. If you're (also) maxing your IRA, keep maxing it. If you've been comfortable with 90/10 stocks/bonds for the past 10 years, you should still be comfortable with it unless you're retiring in five years.

Definitely this. I know of multiple people who went cash only "till volatility ends/stocks starts to rebound", in 2013! WIth accounts that are now half what they could have been. Heck, some have been saying the recovery is about to end , and crash again since 2011!

If there's a crash now I don't have anything more to pile in, since I'm already fully invested, with bare minimum emergency cash on hand. I'll continue to put in the max ~$700 every paycheck just like normal.

 

[hal2kilo]

And what if you're retired & depend on your investments to maintain your lifestyle? You end up drawing down the principal further than it fell, weakening your ability to recover.

Must of read my mind.

 

[fskimospy]

Definitely this. I know of multiple people who went cash only "till volatility ends/stocks starts to rebound", in 2013! WIth accounts that are now half what they could have been. Heck, some have been saying the recovery is about to end , and crash again since 2011!

If there's a crash now I don't have anything more to pile in, since I'm already fully invested, with bare minimum emergency cash on hand. I'll continue to put in the max ~$700 every paycheck just like normal.

Yup, if you are able to consistently time the market then you should quit whatever job you are doing currently and start managing a portfolio because you'll make a lot more money that way.

There are large numbers of people paid huge sums of money, leveraging almost unimaginable resources working 24 hours a day for the sole purpose of being able to consistently beat the market. It is unlikely that any person here will beat them consistently in their spare time.

 

[hal2kilo]

Yup, if you are able to consistently time the market then you should quit whatever job you are doing currently and start managing a portfolio because you'll make a lot more money that way.

There are large numbers of people paid huge sums of money, leveraging almost unimaginable resources working 24 hours a day for the sole purpose of being able to consistently beat the market. It is unlikely that any person here will beat them consistently in their spare time.

If you believe in fantasies, just watch any business channel as they daily predict the future.

 

[zinfamous]

Fix it? The best time to be astoundingly rich is when everybody else is broke, busted & begging. When they've accomplished that they will have fixed it. The Capitalist dream of the shining city on the hill surrounded by favelas will be realized.

The torches, pitchforks, and guillotines come first, though. Such has been the predictable history of every major modern civilization that has gone down the very same path that the GOP is desperately trying to cram into the USA.

Illiterate conservatives fail to understand that Das Kapital really wasn't more than a warning and a prediction, based on actual, indisputable history.

 

[bbhaag]

I think that depends on how you're invested. My money's in stocks but I have a system that's very likely to do well over time. Much better than if I had, say, 70% in bonds. Only time will tell, of course!

I think it depends on how old you are. To me it sounds like you did not allocate enough of your income into retirement accounts when you were younger. Now that you are older you are trying to make up for lost time by keeping your money in higher risk allocations like stock.
Of course this assessment is all based on a few posts I've read so take this post with a grain of salt.

 

[Jhhnn]

If you are retired and a large part of your retirement funds are still in high risk allocations like stocks then you are doing it wrong.

Yeh, lots of seniors had lots of money in MBS in 2008, traditionally a very safe investment, until it suddenly wasn't.

 

[C1]

It is incredible how many people I know now report one or more millions of dollars worth in their accounts.

Locally here on the radio financial radio talk shows one often hears it stated that a million dollars is considered "chump change."

Back in the 70s I still recall seeing young kids pounding on the glass tops of pinball machines with $20 bills in their hands demanding change.

Inflation sored to an admitted 15%, antique prices went thru the roof, there were gas shortages and all before treasuries soared to near 20%, munies to 15% yeild and the DJIA fell to below $800.

It is well known that inflation is the classic/preferred vehicle for dealing with the unprecedented generation of a nations currencies.

Children playing with stacks of hyperinflated currency during the Weimar Republic, 1922

 

[Bitek]

I think it depends on how old you are. To me it sounds like you did not allocate enough of your income into retirement accounts when you were younger. Now that you are older you are trying to make up for lost time by keeping your money in higher risk allocations like stock.
Of course this assessment is all based on a few posts I've read so take this post with a grain of salt.

I always look at this "rule of thumb" suspiciously.

If you retire and live for 20-30 yrs after, it seems overly cautious to keep so much of the nest egg in bonds and barely beat out inflation.

Can you imagine missing out on all the returns since the mid 90s until now? It's crazy.

I haven't done a bunch of modeling on it, but I would imagine you would be better off having a better preforming portfolio continuing to compound and grow, but have enough stable assets to ride out any market dips. Say 5 yrs of expenses.

Why hold money in low return assets when you won't spend it for 10-15 yrs?

 

[zinfamous]

just dropped it to 1% from 10% till its over. I wont sell what I have but no more goes in.

and ill just buy buy buy when it drops to 2009 levels.

that's dumb.

just keep buying.

how old are you?

 

[zinfamous]

Pretty soon we'll all be wearing pickle barrels and suspenders and fighting with alley cats over fish skeletons, but at least José and María won't be stealing those plum poultry processing plant jobs that Americans are clamoring for.

I grew up with those cartoons for some reason. love them!

 

[zinfamous]

https://twitter.com/x/status/1161774775020195840

lololooolloololllolllllll

jesus fucking christ

 

[zinfamous]

I'm overgeneralizing, but you cannot back-contribute to your tax advantaged retirement accounts, certainly not in 401K.

This advice goes out to everybody - keep contributing to your 401K for the match and tax deductions. If you're convinced that large market drop is imminent keep contributing and simply direct your contributions into short term treasuries so that they won't lose value in a market crash. Then if you feel like the worst is over you can rebalance all the cash you've been collecting in your 401K accounts to stocks. I'm not actually advocating anybody trying to time the market, but whatever you do, just keep contributing into your 401Ks/IRAs/RothIRAs and do not take any money out in case of a crash.

I mean...if you're retired or close to it, yeah. But if you're 15+ years, minimum out from retirement, just go 100% stocks. full stop, who gives a fuck.

also, if you're highly leveraged into decent dividend-paying stocks, and those fucker provide enough income for you to live off of spam and macaroni for a year, vacation in Aruba and all that, then don't do a thing. Just buy more, as you can. pffffffffffffft

 

[esquared]

https://twitter.com/x/status/1161774775020195840

lololooolloololllolllllll

Wilbur Ross is another moron.
Can't wait to hear the pundits talk about this fool.

 

[bbhaag]

I always look at this "rule of thumb" suspiciously.

If you retire and live for 20-30 yrs after, it seems overly cautious to keep so much of the nest egg in bonds and barely beat out inflation.

Can you imagine missing out on all the returns since the mid 90s until now? It's crazy.

I haven't done a bunch of modeling on it, but I would imagine you would be better off having a better preforming portfolio continuing to compound and grow, but have enough stable assets to ride out any market dips. Say 5 yrs of expenses.

Why hold money in low return assets when you won't spend it for 10-15 yrs?

So lets take the average retirement age in the US which is between the ages of 63 to 65. If we add 20 to 30 years of post retirement age like you suggested that means we average 83 to 95 years of age. Now lets factor in the average lifespan of people in the US which is 73 to 75 years of age.
Now I'm not trying to come off as sounding mean or condescending but the numbers you proposed do not necessarily correlate.

 

[JSt0rm]

that's dumb.

just keep buying.

how old are you?

It’s all going into a 401k savings from here until the big drop. When it tanks I’ll switch it all into the stocks.