6 ms·

If you think recession is guaranteed, why not sell?

deleted 7y ago
[deleted]
Ensorceled 7y ago
If this drop is related to a panic sell off, then it's deeper drop than it needs to be. If you sell now, you might be selling in a panic low and locking in your losses. If. Make your own decisions.
hitpointdrew 7y ago
That is opposite of what you should do. You would just be locking in losses (or greatly reduced profits). As long as you are reasonably sure you can hold your stocks for a few years then just hold on to them. Or better yet, go on buying spree and get cheap stocks.
- badfrog 7y ago
  My read of "I think a severe recession is all but guaranteed" was that OP thinks prices will continue to fall. Am I misinterpreting?
  - mgolawala 7y ago
    First, there is always the possibility that I could be wrong. The markets could hover around these levels and fall no further. Second, I may not know when to buy back in. Do I back in after they have fallen 10%? How about 20%? Should I wait till 25%? What if it goes down another 3% and then starts to head backup.. and then back down again above these levels before falling another 30%? What you are suggesting is market timing. I am not very good at it, and I don't think most people are. You not only have to know when to sell, but you have to know when to buy back in. You have to get it right twice.
    - hitpointdrew 7y ago
      > Do I back in after they have fallen 10%? How about 20%? Should I wait till 25%? You should not try to time the market. And hopefully you don't really mean "buy back in" (meaning your panicked and sold, you should just be adding/averaging down). Just look for general buying opportunities and don't kick yourself if the market falls a bit further before it rebounds.
  - usaar333 7y ago
    Perhaps. A 30% spy drop is already in predicting recession territory (https://www.investopedia.com/a-history-of-bear-markets-4582652 https://www.investopedia.com/a-history-of-bear-markets-45826...). Even if I was 100% confident there would be a recession, it's still not clear the markets are not undervalued at this point.
  - Kerrick 7y ago
    The textbook definition of a recession may mean that prices will continue to fall until the recession ends -- in fact, as soon as prices rise it ends the recession. But by that definition, the "great recession" ended in the USA in June 2009. I'm guessing the above poster meant something more like "period of society-wide economic hardship" by recession. By that more colloquial definition, you might say the great recession lasted through 2014. The stock price plummet, however, was largely finished for most of that period of hardship. I have no crystal ball; I can't tell you where we are going to be. But if the above poster meant "We're past the plummet, all that's left is the slow climb back to normalcy" then their comment makes more sense.
    - nicky0 7y ago
      I thought a recession was defined by GDP rather than stock prices.
    - projektfu 7y ago
      That’s the definition of a bear market.
- bobbylarrybobby 7y ago
  If you think prices will fall, sell now and then buy back in after they’ve fallen
  - SheinhardtWigCo 7y ago
    Or hold and hedge by buying UVXY et al
    - submeta 7y ago
      UVXY?
      - gruez 7y ago
        https://www.proshares.com/funds/uvxy.html https://www.proshares.com/funds/uvxy.html
      - deleted 7y ago
        [deleted]
    - deleted 7y ago
      [deleted]
    - trophycase 7y ago
      Do not buy and hold leveraged ETFs interday. Buy puts if you want.
      - lowdest 7y ago
        Good advice, but the IV on most puts makes them incredibly expensive right now. I prefer shorting the 3x long etfs.
        kibibyte 7y ago
        I'm curious, why short the 3x long/bull etfs instead of going long on the 3x bear ETFs?
- coliveira 7y ago
  I don't think anyone should go to the market trying to "buy the dip" in this situation. If you have cash, keep it. In a market that is dropping, 0% gain (cash) is a fantastic investment.
- rolltiide 7y ago
  The whole debate is about being too married to stocks and ignoring the wide wide universe of markets and asset classes. To anyone else, recognize that the citizenry is not limited to being passively investing in stocks, yet many of them are when they shouldn't be. People in all the other markets say "buy the dip" arbitrarily too, and many of those markets are often inversely correlated to the stock market. So just repeating what your favorite investment guru once said does not give you any more insight than the next person.
  - zone411 7y ago
    That's true but what's also true is that we found out in 2008 that there is much more correlation between asset classes than you might think.
    - rolltiide 7y ago
      2008 was a liquidity crisis and credit crunch so everything got margin called across asset classes, what’s great about 2020 is that hasn’t happened, yet. Great meaning the fireworks have yet to go off.
      - zone411 7y ago
        Regardless of whether it happened or not, my point is still true. I made a chart for you with domestic stocks, emerging market stocks, gold, bonds, Bitcoin, treasuries and real estate: https://ibb.co/1LnG5Dv https://ibb.co/1LnG5Dv. They all fell.
- mschaef 7y ago
  > As long as you are reasonably sure you can hold your stocks for a few years then just hold on to them. What's 'a few years' mean to you? The Nikkei hit its high of 40K around 1989-89 and hasn't traded above 80% of that in the 30 years since.
  - prewett 7y ago
    You could take the absolute worst case scenario if you want, I guess, but every other peak in the history of world markets has come back faster than that... Besides, that's not even fair. Why are you assuming the parent is talking about holding stocks bought at the peak? The kind of people that hold their stocks for years tend to be the kind of people who don't buy at a peak. Long-termers tend to be more of the Buffett persuasion; he has said that he wouldn't care if the market completely closed for 10 years, because he buys businesses that grow in good times and bad, and he collects dividends in good times and bad. All the while the employees of the companies are spending their efforts in making his stock more valuable.
  - akhilcacharya 7y ago
    Isn’t that misleading given the price of the Yen?
  - pradn 7y ago
    That doesn't include dividends paid out by the companies in the NIKKEI.
    - minwcnt5 7y ago
      Even with dividends reinvested the Nikkei's return over the past 30 years is negative.
  - imcoconut 7y ago
    Their population demographics are different from ours. We will continue to provide workers and consumers over the coming decades - economy-wide demand will return once the crononavirus threat subsides.
  - 7y ago
- tomc1985 7y ago
  I did that with the first dip and now I'm like 10-20% underwater. Kinda pissed that I'm going to have to hold these for a while just to break even Sure loss harvesting is nice but those credits still represent money lost, and said loss far exceeds any taxes on gains I'll be making for a while

deleted 7y ago

[deleted]

If this drop is related to a panic sell off, then it's deeper drop than it needs to be. If you sell now, you might be selling in a panic low and locking in your losses. If. Make your own decisions.

hitpointdrew 7y ago

That is opposite of what you should do. You would just be locking in losses (or greatly reduced profits). As long as you are reasonably sure you can hold your stocks for a few years then just hold on to them. Or better yet, go on buying spree and get cheap stocks.

badfrog 7y ago
My read of "I think a severe recession is all but guaranteed" was that OP thinks prices will continue to fall. Am I misinterpreting?
- mgolawala 7y ago
  First, there is always the possibility that I could be wrong. The markets could hover around these levels and fall no further. Second, I may not know when to buy back in. Do I back in after they have fallen 10%? How about 20%? Should I wait till 25%? What if it goes down another 3% and then starts to head backup.. and then back down again above these levels before falling another 30%? What you are suggesting is market timing. I am not very good at it, and I don't think most people are. You not only have to know when to sell, but you have to know when to buy back in. You have to get it right twice.
  - hitpointdrew 7y ago
    > Do I back in after they have fallen 10%? How about 20%? Should I wait till 25%? You should not try to time the market. And hopefully you don't really mean "buy back in" (meaning your panicked and sold, you should just be adding/averaging down). Just look for general buying opportunities and don't kick yourself if the market falls a bit further before it rebounds.
- usaar333 7y ago
  Perhaps. A 30% spy drop is already in predicting recession territory (https://www.investopedia.com/a-history-of-bear-markets-4582652 https://www.investopedia.com/a-history-of-bear-markets-45826...). Even if I was 100% confident there would be a recession, it's still not clear the markets are not undervalued at this point.
- Kerrick 7y ago
  The textbook definition of a recession may mean that prices will continue to fall until the recession ends -- in fact, as soon as prices rise it ends the recession. But by that definition, the "great recession" ended in the USA in June 2009. I'm guessing the above poster meant something more like "period of society-wide economic hardship" by recession. By that more colloquial definition, you might say the great recession lasted through 2014. The stock price plummet, however, was largely finished for most of that period of hardship. I have no crystal ball; I can't tell you where we are going to be. But if the above poster meant "We're past the plummet, all that's left is the slow climb back to normalcy" then their comment makes more sense.
  - nicky0 7y ago
    I thought a recession was defined by GDP rather than stock prices.
  - projektfu 7y ago
    That’s the definition of a bear market.
bobbylarrybobby 7y ago
If you think prices will fall, sell now and then buy back in after they’ve fallen
- SheinhardtWigCo 7y ago
  Or hold and hedge by buying UVXY et al
  - submeta 7y ago
    UVXY?
    - gruez 7y ago
      https://www.proshares.com/funds/uvxy.html https://www.proshares.com/funds/uvxy.html
    - deleted 7y ago
      [deleted]
  - deleted 7y ago
    [deleted]
  - trophycase 7y ago
    Do not buy and hold leveraged ETFs interday. Buy puts if you want.
    - lowdest 7y ago
      Good advice, but the IV on most puts makes them incredibly expensive right now. I prefer shorting the 3x long etfs.
      - kibibyte 7y ago
        I'm curious, why short the 3x long/bull etfs instead of going long on the 3x bear ETFs?
coliveira 7y ago
I don't think anyone should go to the market trying to "buy the dip" in this situation. If you have cash, keep it. In a market that is dropping, 0% gain (cash) is a fantastic investment.
rolltiide 7y ago
The whole debate is about being too married to stocks and ignoring the wide wide universe of markets and asset classes. To anyone else, recognize that the citizenry is not limited to being passively investing in stocks, yet many of them are when they shouldn't be. People in all the other markets say "buy the dip" arbitrarily too, and many of those markets are often inversely correlated to the stock market. So just repeating what your favorite investment guru once said does not give you any more insight than the next person.
- zone411 7y ago
  That's true but what's also true is that we found out in 2008 that there is much more correlation between asset classes than you might think.
  - rolltiide 7y ago
    2008 was a liquidity crisis and credit crunch so everything got margin called across asset classes, what’s great about 2020 is that hasn’t happened, yet. Great meaning the fireworks have yet to go off.
    - zone411 7y ago
      Regardless of whether it happened or not, my point is still true. I made a chart for you with domestic stocks, emerging market stocks, gold, bonds, Bitcoin, treasuries and real estate: https://ibb.co/1LnG5Dv https://ibb.co/1LnG5Dv. They all fell.
mschaef 7y ago
> As long as you are reasonably sure you can hold your stocks for a few years then just hold on to them. What's 'a few years' mean to you? The Nikkei hit its high of 40K around 1989-89 and hasn't traded above 80% of that in the 30 years since.
- prewett 7y ago
  You could take the absolute worst case scenario if you want, I guess, but every other peak in the history of world markets has come back faster than that... Besides, that's not even fair. Why are you assuming the parent is talking about holding stocks bought at the peak? The kind of people that hold their stocks for years tend to be the kind of people who don't buy at a peak. Long-termers tend to be more of the Buffett persuasion; he has said that he wouldn't care if the market completely closed for 10 years, because he buys businesses that grow in good times and bad, and he collects dividends in good times and bad. All the while the employees of the companies are spending their efforts in making his stock more valuable.
- akhilcacharya 7y ago
  Isn’t that misleading given the price of the Yen?
- pradn 7y ago
  That doesn't include dividends paid out by the companies in the NIKKEI.
  - minwcnt5 7y ago
    Even with dividends reinvested the Nikkei's return over the past 30 years is negative.
- imcoconut 7y ago
  Their population demographics are different from ours. We will continue to provide workers and consumers over the coming decades - economy-wide demand will return once the crononavirus threat subsides.
- 7y ago
tomc1985 7y ago
I did that with the first dip and now I'm like 10-20% underwater. Kinda pissed that I'm going to have to hold these for a while just to break even Sure loss harvesting is nice but those credits still represent money lost, and said loss far exceeds any taxes on gains I'll be making for a while