Anybody buying on this downturn?

[Singuy]

Good luck. I have put some blue chips on my watch list - Chevron, Apple, Caterpillar, Disney, and a few others. I am still waiting for panic selling. The markets remain far too calm.

If we breach 20K on the Dow, that could be what sends everyone for the exits, with the Dow finally finding some support in the mid teens. A bear market can put the squeeze on even the most seasoned investor. The though process begins to look like "Yeah, I've lost 25%, but why should I lose another 25% when I know it's likely going down?" I mean sure, we all know that the markets will go on to new record highs at some point, but why should I suffer a 50 percent haircut in the process?

So you will have those that were OK with a 25% dip (but nervous), but are most certainly NOT ok with yet another 25% dip. Because that means you've got to score 100% just to get back to where you were.

This is not how stock works. Stock works on multiples given to a company. Panic selling without assigning an evaluation to a company will eventually lead to a company's stock being zero because it's like playing musical chairs.

The worst financial crisis we had(and that was a real crisis btw) had the stock drop by 40% but the bounce back was pretty hard too, and just after 2 years those who held or was breaking even.

And you have to realize that this current situation is just irrational selling(like what you are saying) because "we are due for a recession anyways". Maybe due for a correction, but there are no recession indicators.

The 2008 financial crisis had banks giving out high interest rates like candy because there was a RUN ON THE BANKs. I remember Washington mutual was giving out 4.5% interest on a typical SAVINGS ACCOUNT. So you had a situation where interest rate was high so you can park your money elsewhere(unlike today), banks were becoming very illiquid(unlike today), companies had difficult time borrowing money(unlike today), they were laying off people (not today either) which caused even more foreclosures(housing market is strong today). That was a negative feedback loop of pure turd and even then, the stock market only managed to drop 40% and didn't even hold that drop for that long.

I am very bullish on the economy because that last financial crisis changed the dynamics of a typical "heated market then recession" cycle IMO. Many companies were forced to work with what they have or die because the banks were not lending out money. This led to an explosion of automation and high productivity with lower operational cost. This has caused the longest money printing machine these companies have ever witnessed to the point that a new pollical party (call the democratic socialist) was born due to x, y and z not paying their fair wages even though productivity skyrocketed.

So yeah, companies are doing way more with the use of technology and globalization than before. With low productivity, you'll have scarcity of goods which leads to inflation therefore interest rate increases. As interest rate increases, people start parking their money out of equities which eventually cause a burst of the bubble. Now interest rates are stupid low while inflation doesn't exist even though unemployment rate is at an all time low. You can thank that fire from 2008 that was lite under these company's asses.

[TexasHusker]

I understand how prices in equities are generally - though not always - related to the fundamentals of a company. I am waiting for IRRATIONAL selling. Fire sale type stuff. Emotional selling. I don’t see that yet.

The underpinnings of our economy are quite strong. The equities market was quite frothy, however, and it was a bubble awaiting a needle. The needle for correction was CV19. The needle for bear market was an oil crash.

How much more downside we have from here will depend on fear and emotion and the manifestation of these in the psyche of investors.

Many in this bull market have never experienced a bear. Their behavior will be key. Everyone says “long and strong” in a bull.

[~bs]

It's possible we never truly see a bear market, and those waiting for it to hit rock bottom will miss the boat, who knows. You could use the 2008 recession as a gauge of how bad it can get. Say a 50%+ retraction from the highs would put the Dow at maybe 14-15k.

[rerod]

By the way the market reacted the last minutes, we will see more pain today.

I sold all 6 digits of the VBTLX Ive been holding for years yesterday and put in MM, because of the melt up and almost 0 yield. I did ok with a average of 3.5% a year and it gained value as the market tumbled. I wanted to do this in 09 and invest in to equities, but my uncle talked me out of it.. Never again.

Now I need to call a bottom to reinvest into the VTSAX I hold, and planned to start DCAing after -20%. And all in if we see -35

[Jluke]

By the way the market reacted the last minutes, we will see more pain today.

I sold all 6 digits of the VBTLX Ive been holding for years yesterday and put in MM, because of the melt up and almost 0 yield. I did ok with a average of 3.5% a year and it gained value as the market tumbled. I wanted to do this in 09 and invest in to equities, but my uncle talked me out of it.. Never again.

Now I need to call a bottom to reinvest into the VTSAX I hold, and planned to start DCAing after -20%. And all in if we see -35

Pre-market this morning things are up right now.

[disneysteve]

Pre-market this morning things are up right now.

That's because of Trump mentioning the idea of a payroll tax cut. That doesn't mean it will actually happen, of course, but it will at least give the market a temporary bump.

[Jluke]

That's because of Trump mentioning the idea of a payroll tax cut. That doesn't mean it will actually happen, of course, but it will at least give the market a temporary bump.

Yep. Rerod said he was expecting a drop today given yesterday’s end of day

was just noting that there was a bump up

volatile times are here. For now.

[TexasHusker]

That's because of Trump mentioning the idea of a payroll tax cut. That doesn't mean it will actually happen, of course, but it will at least give the market a temporary bump.

"Buy on rumor, sell on fact" ???

[disneysteve]

"Buy on rumor, sell on fact" ???

Of course. Rumor moves the market. Fact is already priced in.

[disneysteve]

I think the cruise lines are going to have a more protracted recovery than the airlines, but it's getting awfully tempting to jump in. Royal Caribbean is down from $117 last month to $43 currently.

[TexasHusker]

Of course. Rumor moves the market. Fact is already priced in.

I think back of all of the neat cliches that are said about the markets, regardless of the circumstance.

"don't fight the fed"
"don't stand in front of a falling night"
"long and strong"
"buy on rumor sell on fact"
"dead cat bounce"

If only investment strategy was as simple as a few handy cliches, we would all be rich.

[disneysteve]

"dead cat bounce"

That's the phrase of the day for sure.

[bjl584]

That's the phrase of the day for sure.

If you believe in the market as a long term wealth building strategy, then buy all the way to the bottom, all the way back to the top, and everywhere in between.
I didn't change my investing frequency or strategy one bit in 2008 - 2009. As a result 2010 started to look pretty good for me.

[disneysteve]

If you believe in the market as a long term wealth building strategy, then buy all the way to the bottom, all the way back to the top, and everywhere in between.
I didn't change my investing frequency or strategy one bit in 2008 - 2009. As a result 2010 started to look pretty good for me.

Totally. I'm continuing my normal monthly investing in my 401k and our taxable account. But I'm also making a rare departure and looking at some individual stocks.

[~bs]

"Buy on rumor, sell on fact" ???

that's the way it's always worked. rumor is priced in, so by the time it becomes fact, the market barely budges.