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Stock market enters the correction territory
- RyanShook 9y agoDo you think we will see a bottom tomorrow? Or could this be the beginning of a bear market?
- deleted 9y ago[deleted]
- eddd 9y agoSince there is no natural business cycle, no one knows what will happen. And If someone says he knows, it is because he sets the interests rates.
- AnimalMuppet 9y agoWhy do you say there is no natural business cycle?
- eddd 9y agoBecause arrogant people think they can steer entire global economy with a single parameter - money supply.
- dragonwriter 9y ago> Because arrogant people think they can steer entire global economy with a single parameter - money supply. Which arrogant people? Usually, central bankers I've heard seem to think that monetary policy is useful for smoothing around the edges, but more than that requires fiscal policy, and that monetary policy can't make up for next neglect of fiscal policy (or unwarranted active fiscal interventions.)
- eddd 9y agoFiscal policy depends mostly on monetary policy I think. The amount of money government can borrow is bound by central banks. But, central bankers don't respond to voters, so basically they can do whatever servers the financial system and it stability. Of course I am joking, they simply have no idea what they are doing, since it is virtually impossible. I grew up in post communism country and I have cold sweat when I hear about price control. And somehow price of the money is centrally managed.
- AnimalMuppet 9y ago> Fiscal policy depends mostly on monetary policy I think. The amount of money government can borrow is bound by central banks. I'm not sure that either of those statements is true. It could be, in some situations in some countries. As a general statement? No, because most government borrowing is not borrowing from the central bank. > And somehow price of the money is centrally managed. Empirically, that has worked out rather well - far better than "centrally managed" would lead you to expect. In particular, it has dramatically cut the number of severe downturns (which used to occur whenever the price of money became too high).
- eddd 9y ago> No, because most government borrowing is not borrowing from the central bank. To be precise, it almost always against the constitution. The problem is, the amount of money the government can borrow is tied to the money supply. If FED raised rates a couple percent, US would bankrupt in a few days after. > Empirically, that has worked out rather well . That's arguable, since we don't know what would happen if we didn't intervene with artificial interest rates.
- torstenvl 9y agoI'm reading your comment to mean that you think federal debt is unconstitutional. Is that your position? If so, do you have any support for that position?
- AnimalMuppet 9y agoIn addition to what dragonwriter said: Even if arrogant people think that, in what way does that mean that there is no natural business cycle?
- eddd 9y agoI could try answering to that in detail, but others (smarter than me) did that already. https://link.springer.com/article/10.1007/BF00843932 https://link.springer.com/article/10.1007/BF00843932
- AnimalMuppet 9y agoAs much as I could read of that without a login sure didn't say that there was no business cycle. And, for that matter, observation of the last century or two certainly leads on to think that there is a business cycle. Maybe, instead of a login-required paper, you could just state a position, and state what evidence you think makes that position reasonable?
- eddd 9y agoI don't deny, there is no business cycle. My point is, that a handful of people decide when the cycle should have it peeks and bottoms. To me it is like: "We don't like winter, so let's warm up the entire planet. And if there is a problem we can always cool it down a bit". There are 7 billions participants in the global economy and somehow FED pretends it has this magic ball that predicts what will happen in upcoming months. And even if it had, they have no proper tools to react on it properly.
- AnimalMuppet 9y agoSo there's a business cycle, but it's not "natural". Or at least the one we have now is not natural. I can agree with that, actually. The difference is, I think that what we have now is an improvement on the natural business cycle. That thing was vicious.
- deleted 9y ago
- daxorid 9y agoBuying at a Shiller P/E of 31.2 after nine years of risk asset appreciation in an environment of rising yields requires the firm conviction that the business cycle has suddenly been abolished.
- vasilipupkin 9y agoNo, it requires belief that 3% real return implied by Shiller PE of 31 is going to be hard to beat by investing in any other asset class.
- pcurve 9y agoIt may bounce tomorrow, but over the next few 12 month, it will be a rough grind down to 18,000. Good lord, what is it with HN downvoting. It's my opinion. I'm putting money where my mouth is based on my equity:cash position. https://finance.yahoo.com/quote/%5EDJI?p=%5EDJI https://finance.yahoo.com/quote/%5EDJI?p=%5EDJI It's easy to fall into the trap of short-term view. Go to the above chart and click 1 day, 5 day, month, YTD, 1 year, 5 year, Max in sequence. Lesson learned for me is, don't bet against the market, but when cycle turns, it can take months or years to play out.
- AnimalMuppet 9y agoWhy 18,000? Why 12 months?
- luckydude 9y agoThe double bounce that the stock market has just done, a high run up, then a dip, then a bounce up, then it goes down, is classic and it signals a bigger drop. I'm not a pro, that's what my guy at Morgan Stanley says. So I think pcurve may be right. I'm about 75% in cash right now. Click on the 6 month view to see the double bounce. WTF HN? A downvote for passing on information?
- luckydude 9y agohttp://www.mcvoy.com/lm/boom-bust.jpg http://www.mcvoy.com/lm/boom-bust.jpg Not sure we are there yet, nobody knows for sure because if they knew they'd own the market. But that was what I was talking about.
- soared 9y ago> Both are headed toward their average price for the past 200 days, a level that technical analysts say may act as a magnet and a floor.
- HumanDrivenDev 9y agoI only started investing at the end of last year too. Oh well, time in market and all that.
- pedrocr 9y agoIf you need something to convince you of the value of just betting on the long term trend and not caring about market timing: http://awealthofcommonsense.com/2014/02/worlds-worst-market-timer/ http://awealthofcommonsense.com/2014/02/worlds-worst-market-...
- kz85 9y agoCompletely agree with that. Anyone who invests into equities (stocks) and hopes to make money in less than a few years either has to be really lucky or have some insider information.
- HumanDrivenDev 9y agoMy brain knows this. I am unlikely to panic sell. Still - everyday I check how much my investments have made. I'm not used to having enough money to invest, and it goes against my instincts a little bit. It just takes some getting used to.
- pedrocr 9y agoThat's why I like this article. It helps train the non-rational part of the brain to relax and not panic sell even after the rational part is well settled on an investment process.
- havetocharge 9y agoYou should be very happy that the majority of your contributions (assuming you're planning to contribute on an ongoing basis) are going to be made on a discount.
- slg 9y agoTotally unrelated to the topic, but it is weird how news agencies have basically abandoned the idea of a finished and published article in favor of having an ever evolving page with whatever is the latest on the subject. For example, this page was first published on Wednesday and yet the lede says "The dread that gripped equity markets earlier in the week re-emerged Thursday..." I can't decide if this is a good or bad thing. There are certainly pluses and minuses.
- deleted 9y ago[deleted]
- jhanschoo 9y agoThere has always been demand for dailys, weeklies and quarterlies, and perhaps we’re seeing “hourlies” enter the realm of feasibility.
- DrScump 9y agoCNBC.com did such a switch for their Monday article predicting a 1000-point drop on Tuesday. They actually changed the title and contents to match Tuesday's actual result.
- wpasc 9y agoThis is likely a healthy correction. Equities have clearly been overvalued, and this may be a helpful correction during an otherwise healthy time in the economy in terms of unemployment, wages, etc. Better than an over-inflated equity market in addition to major overvaluations in other areas of the market.