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Man, you're not one of those hopeless souls that "don't know anything and can't risk timing the market" your folks do seem to have a clue

deleted 4y ago
[deleted]
ZoomerCretin 4y ago
Timing the market is almost always a bad idea. If he had sold in March 2020, he almost certainly would not have bought back in until the market picked up again, losing out on a lot of market gains.
- brad0 4y ago
  I think it's somewhat possible to time the markets given monetary policy. Monetary policy and stimulus during COVID caused a currency devaluation. If nothing else changes, the value of assets should increase, relative to a currency. The same thing happened with monetary policy in March 2022. Interest rates went up, stocks went down. I'm curious what others think.
  - ctchocula 4y ago
    It's not possible, because monetary policy tends to be a lagging indicator of recessions [1] whereas the stock market is a leading indicator of recessions [2]. Also, there's the problem that dropping the interest rate doesn't mean the Fed will continue to drop it to zero. Similarly increasing the interest rate doesn't mean the Fed will continue to increase it until we hit a recession. The predictive power provided by such a lagging indicator combined with an imperfect correlation means that monetary policy alone isn't enough to time the market. [1] https://fred.stlouisfed.org/series/INTDSRUSM193N https://fred.stlouisfed.org/series/INTDSRUSM193N [2] https://fred.stlouisfed.org/series/NASDAQCOM https://fred.stlouisfed.org/series/NASDAQCOM
  - karmakurtisaani 4y ago
    It's easy to time the market when you know exactly what happened and have an explanation why it happened :P
- BurningFrog 4y ago
  I think it's fine to try to "time the market" and/or do many other things. But don't do it with more than 5-10% of your savings on one assumption/prediction.
noahtallen 4y ago
Is that the case? Recessions are “normal” (in that it’s not a once in a life time experience), and I thought the best practice for long-term investments was to 1. Keep them invested permanently, at least until you’re close to needing them, and 2. Buy low, sell high. Under either of those, now is not a good time to sell. The only reason it would be a good time to sell is if the economy never recovers… now that would be a once in a lifetime experience. This all operating under the assumption you don’t actually need the cash in the near future if you have enough liquid to cover a few months of no income.
- Arete314159 4y ago
  While recessions are normal, I don't think this one will be. There are some major changes happening in the world that are permanent. For instance, the Brookings Institute estimates that Long Covid has already taken up to 4 million Americans out of the workforce. If we continue at that pace (~2M a year), then by 2025 we'll have 5% of our workforce too disabled to work, and many more workers impacted by reduced functionality, or by caretaking responsibilities. In this sense it will be much different from your average recession. Add to that the other demographic changes as Baby Boomers age out of the workforce, and we're going to have a labor shortage for the next several decades at least. Some people with Long Covid can still work, but their brain fog makes them unable to work in their former capacity. So any job that involves a very high-functioning brain -- from coding to surgery to piloting an aircraft -- may become extremely hard to fill as time goes on.
  - tmountain 4y ago
    Everyone is entitled to their own opinion, but there are a lot of assumptions baked into your analysis. Particularly, around long covid recovery times and that trend continuing. Also, what percentage of that cohort makes up “skilled labor”? I hate the term, but you get the idea…
    - Arete314159 4y ago
      You're right, I'm making a lot of assumptions. OP asked each person for their opinion, not a crystal ball with 100% accuracy, I gave mine. That said, I've been a reluctant member of the disability community for several decades, and I can also state that ME/CFS has a heckuva lot of overlap with Long Covid. The disabled community has called a lot of the things that have happened this entire pandemic, while 'experts' have gotten a lot of things wrong. I'm telling you what all the disabled people, who have been right this entire time, are saying: a lot of businesses are on the verge of collapse, because of long covid and other covid-related reasons (like, getting burned out from getting covid 3 times a year). Go to a subreddit for nurses and see how things really are. Go to a subreddit for teachers. Our hospitals are going to collapse, I predict in a few years, if we don't change course. Our schools are going to buckle under this strain. How functional is an economy with a 36 hour wait to get in the ER and terrible educational options? What happens when all the flight attendants, teachers, nurses, doctors, bus drivers, waiters, cooks, and so on either get too sick or too burnt out and quit en masse? That's why I'm saying it's not just "a recession," it's that plus...a whole lot of other huge economic issues. I understand if you think this makes me sound alarmist. But, FYI, when I lived in NYC and I warned that our laissez faire attitude to the air at Ground Zero was going to give thousands of people cancer, I was also called alarmist. As Sarah Kendzior says, it's a sin to be right too early.

deleted 4y ago

[deleted]

ZoomerCretin 4y ago

Timing the market is almost always a bad idea. If he had sold in March 2020, he almost certainly would not have bought back in until the market picked up again, losing out on a lot of market gains.

brad0 4y ago
I think it's somewhat possible to time the markets given monetary policy. Monetary policy and stimulus during COVID caused a currency devaluation. If nothing else changes, the value of assets should increase, relative to a currency. The same thing happened with monetary policy in March 2022. Interest rates went up, stocks went down. I'm curious what others think.
- ctchocula 4y ago
  It's not possible, because monetary policy tends to be a lagging indicator of recessions [1] whereas the stock market is a leading indicator of recessions [2]. Also, there's the problem that dropping the interest rate doesn't mean the Fed will continue to drop it to zero. Similarly increasing the interest rate doesn't mean the Fed will continue to increase it until we hit a recession. The predictive power provided by such a lagging indicator combined with an imperfect correlation means that monetary policy alone isn't enough to time the market. [1] https://fred.stlouisfed.org/series/INTDSRUSM193N https://fred.stlouisfed.org/series/INTDSRUSM193N [2] https://fred.stlouisfed.org/series/NASDAQCOM https://fred.stlouisfed.org/series/NASDAQCOM
- karmakurtisaani 4y ago
  It's easy to time the market when you know exactly what happened and have an explanation why it happened :P
BurningFrog 4y ago
I think it's fine to try to "time the market" and/or do many other things. But don't do it with more than 5-10% of your savings on one assumption/prediction.

noahtallen 4y ago

Is that the case? Recessions are “normal” (in that it’s not a once in a life time experience), and I thought the best practice for long-term investments was to 1. Keep them invested permanently, at least until you’re close to needing them, and 2. Buy low, sell high. Under either of those, now is not a good time to sell. The only reason it would be a good time to sell is if the economy never recovers… now that would be a once in a lifetime experience. This all operating under the assumption you don’t actually need the cash in the near future if you have enough liquid to cover a few months of no income.

Arete314159 4y ago
While recessions are normal, I don't think this one will be. There are some major changes happening in the world that are permanent. For instance, the Brookings Institute estimates that Long Covid has already taken up to 4 million Americans out of the workforce. If we continue at that pace (~2M a year), then by 2025 we'll have 5% of our workforce too disabled to work, and many more workers impacted by reduced functionality, or by caretaking responsibilities. In this sense it will be much different from your average recession. Add to that the other demographic changes as Baby Boomers age out of the workforce, and we're going to have a labor shortage for the next several decades at least. Some people with Long Covid can still work, but their brain fog makes them unable to work in their former capacity. So any job that involves a very high-functioning brain -- from coding to surgery to piloting an aircraft -- may become extremely hard to fill as time goes on.
- tmountain 4y ago
  Everyone is entitled to their own opinion, but there are a lot of assumptions baked into your analysis. Particularly, around long covid recovery times and that trend continuing. Also, what percentage of that cohort makes up “skilled labor”? I hate the term, but you get the idea…
  - Arete314159 4y ago
    You're right, I'm making a lot of assumptions. OP asked each person for their opinion, not a crystal ball with 100% accuracy, I gave mine. That said, I've been a reluctant member of the disability community for several decades, and I can also state that ME/CFS has a heckuva lot of overlap with Long Covid. The disabled community has called a lot of the things that have happened this entire pandemic, while 'experts' have gotten a lot of things wrong. I'm telling you what all the disabled people, who have been right this entire time, are saying: a lot of businesses are on the verge of collapse, because of long covid and other covid-related reasons (like, getting burned out from getting covid 3 times a year). Go to a subreddit for nurses and see how things really are. Go to a subreddit for teachers. Our hospitals are going to collapse, I predict in a few years, if we don't change course. Our schools are going to buckle under this strain. How functional is an economy with a 36 hour wait to get in the ER and terrible educational options? What happens when all the flight attendants, teachers, nurses, doctors, bus drivers, waiters, cooks, and so on either get too sick or too burnt out and quit en masse? That's why I'm saying it's not just "a recession," it's that plus...a whole lot of other huge economic issues. I understand if you think this makes me sound alarmist. But, FYI, when I lived in NYC and I warned that our laissez faire attitude to the air at Ground Zero was going to give thousands of people cancer, I was also called alarmist. As Sarah Kendzior says, it's a sin to be right too early.