Markets still falling like whoa

[bernorange 8367]

Ray Dalio might realize his paradigm shift sooner than he anticipated.

[Parliament 14357]

Still looking at trading S&P500 put options to hedge on downside risk. I've always wondered about the stated statistics for the number of option contract trades I see posted on websites like Barchart.com.  It will show infinitely small numbers traded in a day, such as 150 contracts. How can that be? Do they really mean 150,000 or 150,000,000 or something else? These S&P options can't possibly be trading at that low a volume. Can someone clarify?
Also, I've been comparing the option prices to options calculators that I assume are based upon Black Scholes, and for some reason I'm getting wildly different option values. For example an S&P500 put option at 2950 strike price and an expiration at 4/30/20 shows a value of 62.40 on one site and 228.55 on another site. Meanwhile the bid ask is 135.60 vs 142.30. What am I missing here?
 

Subscribed

[atomheartbevo 89895]

So now that we’ve got a death in the US and multiple cases popping up, another thousand point drop on Monday?

[UTGrad98 2288]

1 hour ago, atomheartbevo said:

So now that we’ve got a death in the US and multiple cases popping up, another thousand point drop on Monday?

If no one panics yes.

[Trey3216 15380]

5 hours ago, Dbeasy said:

Still looking at trading S&P500 put options to hedge on downside risk. I've always wondered about the stated statistics for the number of option contract trades I see posted on websites like Barchart.com.  It will show infinitely small numbers traded in a day, such as 150 contracts. How can that be? Do they really mean 150,000 or 150,000,000 or something else? These S&P options can't possibly be trading at that low a volume. Can someone clarify?

Also, I've been comparing the option prices to options calculators that I assume are based upon Black Scholes, and for some reason I'm getting wildly different option values. For example an S&P500 put option at 2950 strike price and an expiration at 4/30/20 shows a value of 62.40 on one site and 228.55 on another site. Meanwhile the bid ask is 135.60 vs 142.30. What am I missing here?

 

Implied volatility 

[Tailgate 3026]

I’m a big Bogle fan and have my major investments tied up at Vanguard in a balanced portfolio of 65/45 stocks to bonds.

I have a 401k “play” account that has the hammer down and is 100% U.S. individual stocks (Seven total stocks that about once or twice a year I move some things around in).

Times like this I like to visit bogleheads.org and read their forums. There are some old wise investors who post very good logical advice in those threads. For those panicking, I recommend going to the site for some sound logic. No, we don’t know what the hell is going to happen tomorrow, next month or the rest of the year. But trying to time when to get out and when to jump back in is personally not something I’m not interested in doing.

Here is an excerpt from a post on the board I saw today:

“Sure, it's possible that the market will crash 50% or more, and NEVER recover. That's possible... That's why I'm not 100% stocks... I've been 50/50 for years now (recently moved to 45/55 a few months ago because I was getting closer to retirement)

But novice investors seem to think that a 50% crash is like the Titanic sinking, and must be avoided at all costs.

The long-term average nominal return of 9%-10% from the stock market INCLUDES the crashes. Those average returns INCLUDE the 50% drops.

Just riding the roller-coaster down and back up, in the past, still made you rich. There was no need to avoid the 50% crashes while saving for retirement.

Sure, riding the roller-coaster is scary... But you know what's even more dangerous? Jumping off the roller-coaster mid-ride.”

 

I know some posters on here feel like people can time things and everyone has different beliefs on how to make money in the market. I just wanted to pass this information along for those who might benefit from this perspective. And I do recommend bogleheads.org for early investors who are trying to figure out what to do with their money/savings/investments.

 

Best of luck to everyone.

 

[Anastasis 23471]

Hard for me to justify being anything other than 100% cash or a small short position at the moment.  

Edited February 29, 2020 by Anastasis

[Harrison Stafford 3349]

Am in all cash other than speculative $$ in 3x leveraged bear ETF's and coronavirus vaccine stocks and I'm bracing for the worst.  The travel industry has already taken a huge hit due to travel restrictions and canceled trips for both business and pleasure, but that's just the beginning.  The coming drop in economic activity globally will be dramatic with the disruption of global supply chains for manufacturers and retailers and the drop in energy prices and production due to reduced consumption.  All those things could bring about a global recession.  That's a very real possibility and I'm handling my investments accordingly.  My kids are in their 30's and I've advised them to move their 401k money out of stocks and into a money market fund.  Nothing wrong with being in cash until we know where the hell we're going and, right now, no one knows.  I think the >best case< scenario is we have to live with anemic earnings for Q2 and Q3.  The next S&P 500 level to watch is around 2860.  If the market doesn't hold there, it's going to be brutal.  The market hates uncertainty and this situation is as uncertain as it gets.

[EuroHorn 3273]

2 hours ago, Tailgate said:

I’m a big Bogle fan and have my major investments tied up at Vanguard in a balanced portfolio of 65/45 stocks to bonds.

I have a 401k “play” account that has the hammer down and is 100% U.S. individual stocks (Seven total stocks that about once or twice a year I move some things around in).

Times like this I like to visit bogleheads.org and read their forums. There are some old wise investors who post very good logical advice in those threads. For those panicking, I recommend going to the site for some sound logic. No, we don’t know what the hell is going to happen tomorrow, next month or the rest of the year. But trying to time when to get out and when to jump back in is personally not something I’m not interested in doing.

Here is an excerpt from a post on the board I saw today:

“Sure, it's possible that the market will crash 50% or more, and NEVER recover. That's possible... That's why I'm not 100% stocks... I've been 50/50 for years now (recently moved to 45/55 a few months ago because I was getting closer to retirement)

But novice investors seem to think that a 50% crash is like the Titanic sinking, and must be avoided at all costs.

The long-term average nominal return of 9%-10% from the stock market INCLUDES the crashes. Those average returns INCLUDE the 50% drops.

Just riding the roller-coaster down and back up, in the past, still made you rich. There was no need to avoid the 50% crashes while saving for retirement.

Sure, riding the roller-coaster is scary... But you know what's even more dangerous? Jumping off the roller-coaster mid-ride.”

 

I know some posters on here feel like people can time things and everyone has different beliefs on how to make money in the market. I just wanted to pass this information along for those who might benefit from this perspective. And I do recommend bogleheads.org for early investors who are trying to figure out what to do with their money/savings/investments.

 

Best of luck to everyone.

 

I’m pretty impressed that your portfolio is a 65/45 mix!

[52-80 19275]

2 hours ago, Tailgate said:

The long-term average nominal return of 9%-10% from the stock market INCLUDES the crashes. Those average returns INCLUDE the 50% drops.
 

Now think what it would be if you didn't take the brunt of the 50% drops.

 

There's gigantic assymetry between getting back in too late, versus eating all the loss on the way down.

 

 

[Incredulity 11684]

12 minutes ago, EuroHorn said:

I’m pretty impressed that your portfolio is a 65/45 mix!

I guess you didn’t play high school football.

we always give 110%

[Hmmm 155]

14 minutes ago, 52-80 said:

Now think what it would be if you didn't take the brunt of the 50% drops.

 

There's gigantic assymetry between getting back in too late, versus eating all the loss on the way down.

 

 

i certainly don't doubt you but could you provide some evidence or more information.

here's how i look at it... in the event of a "catastrophe", chances are the market will drop significantly (and quickly). the number of days to correct itself will last longer than the plunge. if i thought shit may hit the fan, i'm gonna back out.  and even if I don't time it correctly to buy on the upswing, again, the number of days to correct itself is likely going to be longer than a significant plunge over a few days.  but don't take my word for it, i'm a noobie buy and hold type of fella.  maybe someone can explain this more eloquently.  

Edited March 1, 2020 by Hmmm

[jimmyjazz 46352]

Here's the deal:  buy and hold is "timing the market".  It's a strategy.  I am fully convinced one can do better, particularly in tax-free accounts, but the Bogle Bros always skewer me whenever I make the case, so what the fuck ever.

Sure, sit back and watch it dump.  It'll rebound someday.  Best strategy ever, nobody could possibly do better, if anyone says they can, they're lying.

[Incredulity 11684]

Are “Bogle Bros” buy and hold democratic socialists?

I guess that makes Bernie’s proposed financial transactions tax make even more sense.

[Hmmm 155]

32 minutes ago, jimmyjazz said:

Here's the deal:  buy and hold is "timing the market". 

i'm not sure i made myself clear.  i am a buy and hold long-term (bogle), and "timing the market" is nearly irrelevant.  i know i don't have to tell you this... was probably unclear to begin with.   

* i do occasionally sell off and try to time the market but that's rare   

[Colonel Sanders 1370]

I doubt anyone will really know when we hit bottom,  but this top seemed pretty easy to time.

[Hmmm 155]

yeah, normally hindsight is 20/20 but i think most of us saw this coming

[atomheartbevo 89895]

Hold on to your butts. 

 

[atomheartbevo 89895]

Quote

Due to the reduction in demand, American Airlines is suspending operations to and from Milan, Italy, and New York (JFK) and Miami (MIA). Flights to Milan are scheduled to resume April 25. Our teams are contacting affected customers directly to accommodate their needs. American continues to review the airline’s flight schedule to ensure that customers’ needs are accommodated and will make additional refinements as necessary.

Probably flights to all of Italy pretty soon.  CEO not getting a bonus this year?

[Nice Guy Eddie 13536]

This has to start impacting US employment numbers soon. Companies can’t keep people on the payroll to do nothing. 

[atomheartbevo 89895]

14 minutes ago, Nice Guy Eddie said:

This has to start impacting US employment numbers soon. Companies can’t keep people on the payroll to do nothing. 

Dock workers, warehouse workers, trucking and rail workers.   That’s just the beginning.   There’s companies who service the ships and the industry, there’s the local businesses (food, etc.) who support the docks and shipping industry.   

[0xdeadbeef 1653]

 

2 hours ago, Hmmm said:

i'm not sure i made myself clear.  i am a buy and hold long-term (bogle), and "timing the market" is nearly irrelevant.  i know i don't have to tell you this... was probably unclear to begin with.   

* i do occasionally sell off and try to time the market but that's rare   

Most people would agree that  long-term hold is a better, especially for people that have a job unrelated to the market. I can only spend so much time on this.   BUT, the next 3 to 6 months may be unlike anything that has been seen in more than a hundred years. (Spanish-flu of 1918). Probably not in terms of #of deaths, but in terms of panic, fear, and societal & economic impact. How is the stock market going to handle this?  It's probably not going (and staying) up much for a while.

I have never been more certain that the market was going to crash than I was last week.  It would have been a stupid for me to stay in the market and play the long-term game.  I got out on Monday and got partially back in on Friday; I may go all the way back in first thing Monday morning.    Even if the market tanks again after I get back in, by sitting out last week and avoiding the drop, I just just made a huge amount of money.    If/when it _does_ get back to the levels of 2 weeks ago, I'm going to have a shitload more shares of everything.

In a nutshell, I have no idea what the market is going to do this week, so I'm going to get in and hold, even though I think we are headed for something like a 6 month recession. But if everything lines up again for such a  clear sizable crash, I'll step out again.  

[Fudge Nuggets 19242]

4 hours ago, 52-80 said:

Now think what it would be if you didn't take the brunt of the 50% drops.

 

There's gigantic assymetry between getting back in too late, versus eating all the loss on the way down.

 

 

If you're making regular contributions you aren't "eating all the loss" as you're buying cheaper stock on the way down.  Brings your total average cost down at the same time.

[Hmmm 155]

1 hour ago, 0xdeadbeef said:

 

Most people would agree that  long-term hold is a better, especially for people that have a job unrelated to the market. I can only spend so much time on this.   BUT, the next 3 to 6 months may be unlike anything that has been seen in more than a hundred years. (Spanish-flu of 1918). Probably not in terms of #of deaths, but in terms of panic, fear, and societal & economic impact. How is the stock market going to handle this?  It's probably not going (and staying) up much for a while.

I have never been more certain that the market was going to crash than I was last week.  It would have been a stupid for me to stay in the market and play the long-term game.  I got out on Monday and got partially back in on Friday; I may go all the way back in first thing Monday morning.    Even if the market tanks again after I get back in, by sitting out last week and avoiding the drop, I just just made a huge amount of money.    If/when it _does_ get back to the levels of 2 weeks ago, I'm going to have a shitload more shares of everything.

In a nutshell, I have no idea what the market is going to do this week, so I'm going to get in and hold, even though I think we are headed for something like a 6 month recession. But if everything lines up again for such a  clear sizable crash, I'll step out again.  

yup, sounds aligned with my strategy.  i don't have the experience and/or knowledge to forecast futures and options. it's a shit show

then again, i should probably get into maths, medians, and averages again. BUT like ya said, "I can only spend so much time on this."

[Hmmm 155]

1 hour ago, Fudge Nuggets said:

If you're making regular contributions you aren't "eating all the loss" as you're buying cheaper stock on the way down.  Brings your total average cost down at the same time.

that's sound advice for a... not me... a friend.

[Hmmm 155]

how can one use volatility to hedge?  in lamien terms please.

[52-80 19275]

3 hours ago, Fudge Nuggets said:

If you're making regular contributions you aren't "eating all the loss" as you're buying cheaper stock on the way down.  Brings your total average cost down at the same time.

Do the math with 10 years of regular contributions and growth, and buying down 1 year of market losses

[mulletpelini 5216]

4 hours ago, atomheartbevo said:

Dock workers, warehouse workers, trucking and rail workers.   That’s just the beginning.   There’s companies who service the ships and the industry, there’s the local businesses (food, etc.) who support the docks and shipping industry.   

Our hotel numbers are already down.  25% increase in cancellations.  People are not travelling for business.

Just got a nice bonus from good last quarter numbers....was gonna spend it on hookers and blow.....jobs but maybe now would be the time to buy low.

Edited March 1, 2020 by mulletpelini

[Thetexashammer 1062]

4 hours ago, Hmmm said:

how can one use volatility to hedge?  in lamien terms please.

If you earn 20% on year 1, 0% year 2, you average 10% and have $1.20. If you earn 10% and then 10%, you have $1.21. So volatility has a real dollar cost.

Dollar cost averaging is the best strategy mathematically. You're buying more when stuff is cheap.

Better plan is to inherit money or marry it.

[Anastasis 23471]

https://www.fox5ny.com/news/nyse-could-close-trading-floor-in-coronavirus-contingency

NEW YORK - The New York Stock Exchange is preparing for the possible escalation of the novel coronavirus crisis that might include closing the trading floor in Lower Manhattan, according to Fox Business.

[Nice Guy Eddie 13536]

I fully understand that logic that it’s impossible to time the market. You can never buy at the bottom or sell at the top, but that doesn’t mean that some trends can’t be surmised. The market was already at all time highs and there were signs that it wouldn’t take much for a correction.

Add that the signs for a global recession are getting higher each day as the coronavirus spreads and more commerce halts.

Nothing wrong with partially selling some holdings to limit the downside. And upside. In a crisis, stability isn’t bad for passive investors.

[Okie State 3848]

So is it too late to move a 401k into money market funds?

[Nice Guy Eddie 13536]

27 minutes ago, Okie State said:

So is it too late to move a 401k into money market funds?

Never too late to make a decision. I guess it depends on whether you think the market could ultimately see a 25% drop of whether you think we will have forgotten about coronavirus by summer.

If you’re thinking of selling, I wouldn’t sell 100%. And you don’t have to sell in one day.

im just an anonymous person on the internet but you don’t want to let fear of missing out (stocks going up or down) drive your decisions. 

[babysdaddy 2730]

As soon as we get good news on the Virus the snap back will be as quick as the drop. Electronic and momentum trading along with indexing have speed characteristics that don’t allow for waiting for the all clear signal. That’s why you take positions during drops.

[Okie State 3848]

Yeah I've always been a hold and wait guy, but I'm also open to other ideas. The problem is I just know I'd sell and then we'd go right back up because that's how my luck works.

 

I do think we drop another 10%+ before this thing is over though.

 

 

 

 

[Okie State 3848]

As soon as we get good news on the Virus the snap back will be as quick as the drop. Electronic and momentum trading along with indexing have speed characteristics that don’t allow for waiting for the all clear signal. That’s why you take positions during drops.

I agree, but I also think it gets much worse before that good news comes.

[hornbri 1427]

41 minutes ago, Okie State said:

53 minutes ago, babysdaddy said:

As soon as we get good news on the Virus the snap back will be as quick as the drop. Electronic and momentum trading along with indexing have speed characteristics that don’t allow for waiting for the all clear signal. That’s why you take positions during drops.

I agree, but I also think it gets much worse before that good news comes.

The problem is there is no way to know, even if it gets worse before better if you just hold you won't miss the snap back. 

If you sell now and miss the bounce back up you lose. Selling now is just trying to time the market. And if most of your money is in taxable accounts it make no sense (on non-taxable accounts I the risk is a little less but still timing the market). 

The only way you lose if you hold is if it does not go back up before you retire. 

[Harrison Stafford 3349]

48 minutes ago, Okie State said:

59 minutes ago, babysdaddy said:

As soon as we get good news on the Virus the snap back will be as quick as the drop. Electronic and momentum trading along with indexing have speed characteristics that don’t allow for waiting for the all clear signal. That’s why you take positions during drops.

I agree, but I also think it gets much worse before that good news comes.

For the foreseeable future, upside in this market is very limited and the downside risk is substantial.  Bank of America now sees a 50 basis point cut at the Fed’s meeting March 17-18.  However, the Fed could do an emergency rate cut at any time.  Whenever that rate cut does come, the market should bounce and you could sell your stocks into that strength. 

[Incredulity 11684]

14 minutes ago, hornbri said:

The problem is there is no way to know, even if it gets worse before better if you just hold you won't miss the snap back. 

If you sell now and miss the bounce back up you lose. Selling now is just trying to time the market. And if most of your money is in taxable accounts it make no sense (on non-taxable accounts I the risk is a little less but still timing the market). 

The only way you lose if you hold is if it does not go back up before you retire. 

The tax impacts haven’t gotten nearly enough discussion.  Again assuming a taxable account and a long term hold a 20% haircut on gains is substantial.

[hornbri 1427]

Just now, Incredulity said:

The tax impacts haven’t gotten nearly enough discussion.  Again assuming a taxable account and a long term hold a 20% haircut on gains is substantial.

Exactly, I think that is often missed. 

I did sell stuff that was at a loss last week but immediately bought back into the market in other funds (to avoid the wash rule).

I got to bank the loss against future gains and buy on the loss. 

[Not a cat 5728]

21 minutes ago, Incredulity said:

The tax impacts haven’t gotten nearly enough discussion.  Again assuming a taxable account and a long term hold a 20% haircut on gains is substantial.

I know on surly we're all 1%ers that only date models, but I think even here the vast majority of us are in the 15% long term cap gains bracket.  Your point still remains valid though.

[Celery Man 21022]

Finally looked, because I had to log into my Fidelity account to do some monthly housekeeping.  That stings.  The thing I'm most confident about is my ability to fuck it up.  Ridin the rollercoaster.

[Wally Fairway 5596]

1 hour ago, Harrison Stafford said:

For the foreseeable future, upside in this market is very limited and the downside risk is substantial.  Bank of America now sees a 50 basis point cut at the Fed’s meeting March 17-18.  However, the Fed could do an emergency rate cut at any time.  Whenever that rate cut does come, the market should bounce and you could sell your stocks into that strength. 

While I agree, a Fed cut won't do shit related to panic/coronavirus selling

[hornbri 1427]

27 minutes ago, Not a cat said:

I know on surly we're all 1%ers that only date models, but I think even here the vast majority of us are in the 15% long term cap gains bracket.  Your point still remains valid though.

Maybe, I actually thought if most people are maxing out tax deferred accounts first then most of shaggy with money in taxable accounts would be in the 20% bracket (at least they like to talk like it). 

[Celery Man 21022]

i keep a shiny shirt nearby to wear when reading this thread

[52-80 19275]

1 hour ago, hornbri said:

The problem is there is no way to know, even if it gets worse before better if you just hold you won't miss the snap back. 

If you sell now and miss the bounce back up you lose. Selling now is just trying to time the market. And if most of your money is in taxable accounts it make no sense (on non-taxable accounts I the risk is a little less but still timing the market). 

The only way you lose if you hold is if it does not go back up before you retire. 

buy high, sell low, and claim deductions on taxes is the way to go.  everybody knows that.

[Harrison Stafford 3349]

31 minutes ago, Wally Fairway said:

While I agree, a Fed cut won't do shit related to panic/coronavirus selling

You’re right.  The bounce will be short-lived before we resume the descent.

[Not a cat 5728]

34 minutes ago, hornbri said:

Maybe, I actually thought if most people are maxing out tax deferred accounts first then most of shaggy with money in taxable accounts would be in the 20% bracket (at least they like to talk like it). 

We all talk like big swinging dicks but 20% kicks in at 435k for single filers.  I'm sure some of us are there (not me) but certainly not most.

[Incredulity 11684]

28 minutes ago, Not a cat said:

We all talk like big swinging dicks but 20% kicks in at 435k for single filers.  I'm sure some of us are there (not me) but certainly not most.

Don’t forget  the extra 3.8% above $250k

[Not a cat 5728]

Just now, Incredulity said:

Don’t forget  the extra 3.8% above $250k

You humblebragging son of a bitch.  Well played.