***Official*** 2015 Stock Market Thread

[Charmonium]

Shiller PE Ratio

Lot of room to drop if this is a real correction. Given the new low global growth I think 12-14 is in the cards, another ~50% drop from where we are now.

Yeah, but 16 still gives you a yield of over 6%. When you can get a mortgage for under 4%, 6% looks pretty good.

 

[Hugo Drax]

That's not exactly a realistic example though is it? First of all, the only stocks going to zero in a relatively short time frame are penny stocks and there isn't exactly a market in options for those. Second, ideally you want to sell options that are relatively liquid. So if the value of the underlying stock drops significantly, you can always buy the option back at a fraction of what you sold it for while keeping the stock.

It does limit your upside but that's sort of the point. You're betting that the stock is fairly valued and won't move dramatically to the upside. But you're right about it not locking in profit - assuming that the premium you earn is offset by a move to the downside.

IT has happened, and you can see a stock drop 20% in 1-3 months no problem. ie: apple.

 

[brianmanahan]

Lot of room to drop if this is a real correction. Given the new low global growth I think 12-14 is in the cards, another ~50% drop from where we are now.

wouldn't surprise me

if it goes much lower i'll cash out some of my i-bonds to rebalance

 

[JEDI]

sigh.. the -1000 drop at opening bell triggered my stop loss, which was near the low of the day.

at the end of the day, that stock climbed back alot higher than my stop loss.
at one point, it even went into positive territory.

to make me feel better, I hope tomorrow the stock drops 10% below my sell so I can buy again.

or should I wait since I hear China's going to KEEP devaluing their currency till they stabilize.
at least 2 more are expected

 

[Imp]

So PFF went down to $33 at open this morning then shot back up to $38 -- it was hovering in the $39 range for over a year.

Maybe I should put it all on black if it does it again tomorrow morning.

 

[Corporate Thug]

sigh.. the -1000 drop at opening bell triggered my stop loss, which was near the low of the day.

at the end of the day, that stock climbed back alot higher than my stop loss.
at one point, it even went into positive territory.

Stop losses are very dangerous in the midst of this volatility.

 

[Hugo Drax]

sigh.. the -1000 drop at opening bell triggered my stop loss, which was near the low of the day.

at the end of the day, that stock climbed back alot higher than my stop loss.
at one point, it even went into positive territory.

to make me feel better, I hope tomorrow the stock drops 10% below my sell so I can buy again.

or should I wait since I hear China's going to KEEP devaluing their currency till they stabilize.
at least 2 more are expected

next time learn to hedge your position with a put option not a stop loss.

 

[FelixDeCat]

buy low sell lower?

 

[njdevilsfan87]

Looking at the past drop, it's almost unbelievable that this move could take an entire year to play out given how fast prices have moved recently.

 

[Charmonium]

Looking at the past drop, it's almost unbelievable that this move could take an entire year to play out given how fast prices have moved recently.

I don't think it's going to take that long for prices to recover. We probably won't see new highs until next year but once some of the leverage gets squeezed out of the market we'll probably be back on a steady uptrend.

The economy is in great shape and getting better. The housing sector looks to be on fire and since historically that's been a major driver of every recovery, it's almost miraculous that we've gotten this far without huge amounts of construction. Plus there is a lot of pent up demand left over from the recession.

Personally, I'll be surprised if the fed doesn't do at least a nominal rate increase next month. The speculation for a Sept increase has fallen off a cliff since last week but I think the pundits are wrong on this one. A nominal increase won't have any practical effect and will stimulate the housing sector. There doesn't seem to be much point to waiting until Dec. or early next year. Although Yellin is about as dovish as they come so nothing is certain.

 

[jpiniero]

Real people aren't buying housing; it's mostly hedge funds and Chinese. The low rates have put some areas in a huge bubble like the stock market.

 

[Charmonium]

Real people aren't buying housing; it's mostly hedge funds and Chinese. The low rates have put some areas in a huge bubble like the stock market.

You're right but that's changing. Some markets such as NYC have gone to ridiculous levels in large part because of foreign investment and plain old speculation. But that doesn't describe the housing sector as a whole. Prices have recovered and in many instances exceeded their pre-recession highs. But there's still a lot of pent up demand. As unemployment continues to fall people are becoming more optimistic and confident enough to make that move. We've already seen a huge increase in multifamily dwellings but now I think the focus will shift to individual homes.

 

[FelixDeCat]

wouldn't surprise me

if it goes much lower i'll cash out some of my i-bonds to rebalance

I thought it would bounce, but I think it will fall flat and go lower by Friday, Friday, get'n down on Friday. Gotta make your mind up, should you buy or sell.

 

[Imp]

Real people aren't buying housing; it's mostly hedge funds and Chinese. The low rates have put some areas in a huge bubble like the stock market.

There are supposedly ~4 million Chinese millionaires, US of A has ~7 million. Obviously some are billionaires and they can buy multiple properties but many are lowly millionaires. Lowly millionaires who probably can't or don't want to deal with the logistics of owning a property (even with the help of a property manager) a 12+ hour flight away.

My money is on the 330+ million Americans, including hedge funds, having a larger influence on prices -- I'm not saying you won't find pockets with concentrated Asian populations. Many who probably own rental properties in a land where they're familiar with the laws and can speak the language.

 

[BrokenVisage]

Finally got around to checking my TSP.. no es bueno

 

[FelixDeCat]

....

 

[Charmonium]

There are supposedly ~4 million Chinese millionaires, US of A has ~7 million. Obviously some are billionaires and they can buy multiple properties but many are lowly millionaires. Lowly millionaires who probably can't or don't want to deal with the logistics of owning a property (even with the help of a property manager) a 12+ hour flight away.

My money is on the 330+ million Americans, including hedge funds, having a larger influence on prices -- I'm not saying you won't find pockets with concentrated Asian populations. Many who probably own rental properties in a land where they're familiar with the laws and can speak the language.

Chinese are huge investor in commercial real estate (only 4 pages) so it's not hard to imagine that they'd also buy residential properties. They don't need to do this directly either. Buying US real estate is a very good way to move some of your wealth out of China.

I don't think most Chinese trust their govt to respect their property rights so they cover their ass by moving as much as they can to safe havens.

 

[Imp]

Part of what do involves reviewing personal financial statements for accuracy. Millionaires are a dime a dozen these days, but minus real estate, that number drops considerably. Trust me, this is no exaggeration.

No way... Most people have 90% of their net worth tied to an illiquid asset, their primary residence?

Chinese are huge investor in commercial real estate (only 4 pages) so it's not hard to imagine that they'd also buy residential properties. They don't need to do this directly either. Buying US real estate is a very good way to move some of your wealth out of China.

I don't think most Chinese trust their govt to respect their property rights so they cover their ass by moving as much as they can to safe havens.

Yes, the Chinese do invest in companies and indirectly own property, both commercial and residential. And you're right, they are probably huge. But are they as huge 330 million Americans? I'm not saying Chinese don't invest in foreign properties, but 330 million who need a place to live and invest versus, let's say 50 million Chinese who invest internationally. One probably has more influence than the other, and the 2008 crash wasn't caused by foreign investors, last I checked -- nor saved by them.

Sorry, I just hear the exact same argument in Canada. We have one of the most frothiest housing markets on the planet and there are people who say it's all because of the Chinese... It's somehow not the <1% Bank of Canada prime rate, 40 year/0 down mortgages we once had, the 25 year/5% down government insured mortgages, the house culture where you're a loser if you rent, parents opening HELOCs and giving money to kids, etc. Debt-income ratio here is like 1.63 in Canada...

 

[brianmanahan]

I thought it would bounce, but I think it will fall flat and go lower by Friday, Friday, get'n down on Friday. Gotta make your mind up, should you buy or sell.

i just buy or sell to get back to my AA (75 stocks/25 bonds)

normally i just do it at the end of the year, but if there's a big enough drop i'll do it mid-year as well

 

[Imp]

Trading's well underway in China... Shanghai index is down almost 3%, Hong Kong up over 2.5%.

 

[Imp]

..............And Shanghai index closes a smidge under 8% down, Nikkei about 4% down, Hong Kong hasn't closed yet but is roughly flat in the down direction.

 

[holden j caufield]

quick question about margin trading. let's say I have x dollars in an account and buy x dollars of facebook on margin trade. I don't use any money from margin because I have this amount of cash in there but this way I'm not saddled with the 3 days it takes to settle.

I incur no interest from margin because I have that amount in cash in my account. But lets say facebook drops 50%, are my stocks triggered to sell because it was bought on margin and triggered some threshold.

 

[FelixDeCat]

"omg Dow +500, Nasdaq +175"

This crazy assed up down 3-5% moves remind me of the dot com bubble crash of 2000. You had moves like this but in the end you had one big flush of 50% and nothing but minor moves all the way down the low in 2003. It took 15 years to get back over the year 2000 levels on the QQQs.

 

[Charmonium]

quick question about margin trading. let's say I have x dollars in an account and buy x dollars of facebook on margin trade. I don't use any money from margin because I have this amount of cash in there but this way I'm not saddled with the 3 days it takes to settle.

I incur no interest from margin because I have that amount in cash in my account. But lets say facebook drops 50%, are my stocks triggered to sell because it was bought on margin and triggered some threshold.

For my account, as long as I have cash to trade, nothing will be bought on margin. And if the value of your account drops below margin requirements, you'll be given the opportunity to add capital and avoid having a forced sale.

There's a little bit of an explanation here.

 

[Jeffg010]

"omg Dow +500, Nasdaq +175"

This crazy assed up down 3-5% moves remind me of the dot com bubble crash of 2000. You had moves like this but in the end you had one big flush of 50% and nothing but minor moves all the way down the low in 2003. It took 15 years to get back over the year 2000 levels on the QQQs.

Today will be a dead cat bounce of +3%

This these wild swings are not good. I'm banking on it going down much more.