Is it time to bail? Or is it a day too late.

Challenging to have stability in equities. Perhaps give fixed income a closer look. Of course, if interest rates rise the existing bond market will go down a bit as newer bonds have higher coupons.

www.lendingclub.com

The truth is the Fed has robbed us all by keeping interest rates so low for so long. You should not have to play the casino to get a decent return on your money. The 10 year should be at 4-5%+. One could easily argue we are setting up the next crash. The American people are clueless!

Yep, starting with your state as being one of the first.

https://www.cnbc.com/2017/07/11/top-states-for-business-45-rhode-island.html

Short VIX today in 30s. Don't play if you can't stomach the pain.

So were you guys ready for what Happened on Friday? Just curious. If so how did you prepare? I am an enthusiast and would like to be involved in trading someday.

Friday?

What about today?

I'm a holder not a trader...so easy come easy go. It will bounce back eventually.

I'm always ready.

I love watching the panic set in.

I posted an interest rate article a few weeks ago.

When the 10 yr. jumps up to 2.85% like it did very quickly, the risk premium in stocks is gone and program trading kicks in on $$$ flowing to bonds.

The selling feeds on itself as stop losses are triggered.

That said, excellent corporate earnings and tax cuts that haven't kicked in to future earnings. Repatriation of $$$ will be huge too.

Panic? Ok. This selloff was long overdue. Don't succumb to the fear and greed trade!

Watch closely what the 10yr does along with the Fed.

Just remember, when you buy stocks you are buying shares of companies. And even if the value of those shares go up or down, you still own the same amount of shares. If the company fails, oh well, at least you were part of something.

Are you saying don't buy Tesla stock? Or Apple, because if it fails we got MUCH bigger problems in our country than worrying about stock prices.

Nah, I sold all those dusty old Apple shares I got in the 80s when the second I-phone came out to pay for my Lamborghini.

I’m buying at open. Not sure yet what I will get yet.

There’s a clear evidence that more risk is more reward which is why stocks have more gains than cash or bonds. If stocks never went down they would not be risky.

Anyway we were due for a correction.

Most people buy stocks in their 401k over the years dollar cost average into the stocks over their working life. If you are investing for retirement which can be 10, 20 or 30 years in the future it’s not going to matter if we have a 10-20% correction. Even in 1987 when the stock market lost like 30% in a week that was all forgotten in a few years and the stocks regained the loss and many times more in the past 30 years.

Corrections are both normal and healthy, Warren Buffett said he loves corrections because you can buy more shares off the same money stocks are on sale after a correction or bear market. Buffett said something like he’s buying stocks his whole life so he’d rather pay less. While we like to look at our gains, the gains just make it more expensive to buy stocks.

These corrections always freak people out but they are as normal as the sun rising in the east, it should not be a surprise to anyone.

Also if you are investing a near term event like a down payment for a house or college tuition you should not be investing too much or at all in the stock market instead be more in steady safe (less risky)investments.

QFT, you’ve read the Intelligent Investor.

500 Disney @ 102
5,000 HOV @ 2
1,000 First Solar @ 63

purchases for today

Mr. Market.

One quote, I like in the short term the stock market is a voting machine in the long term it’s a weighing machine.

For example Chipotle was once a stock darling, very popular and people liked to vote it up in price, but eventually people begin to see the profits and growth are only going to make so much money so *weighing* the future profits wasn’t as great it’s getting pushed down to where it should be.

Is anyone having trouble with their online broker?

I've been with ameritrade since 1998. Who has been problem free during the last 2 trading days? I'm ready to move my money to another broker.

Thank you

Thanks!

Fidelity had some sort of outage/delay so Ameritrade isn't the only one.
https://www.cnbc.com/2018/02/06/fidelitys-website-reports-temporary-outage-during-wild-trading-in-us-markets.html

I think it's funny how the market is currently sitting where it was late last year. News sources these days are useless. They ONLY exist these days to make money and capitalize on people's fears by enticing internet users with headlines that aren't even accurate. More clicks = more money.

A few years ago I thought that some news sources were still untainted. Given the last couple days, I no longer feel this way. So sad.

In 40 years when the market is @ 300K, a 2K swing will be less than 0.70%. But I'm certain the news sources will be scurrying to tout how it's the worst day in the history of the market.

The other thing I find crazy is people always forget to realize that they only have so much control over a 401K. Doesn't make sense to cash it out unless you know that the market is going to fall 60%. If that happens, a 401K will be the least of your worries.

This chart is something (I hate to talk about DJI because it’s a stock price weighted index not a market cap index also has changed member companies all the time). S&P500 is a much better index. Also note this chart is just the stock price composit not including dividend yields which should be around 2% a year give or take.

So looking at the worst week ever 1987 lost around 30% in a few trading days. The market is up 10x since then (may be more).

Whatever you have in your savings now, could be up 10x in thirty years time, I wouldn’t complain about that. Plus that’s not accounting for dividends and new contributions.

Going to Morningstar website, which includes reinvested dividends but doesn't take into account taxes, if you had $10K invested 30 years ago in S&P500 (this includes the time period in 1987 where it lost 30% in one week) you’d have today ~$167K.

I don’t have another 30 years of work, but my work + retirement could be another 40 years so look at the big picture tune out the noise and daily girations.

15CAE4A3-93DA-44BE-A1C2-328946145BFB (resized).png

Didn’t trade any last few days but might be a global issue such as circuit breaker to slow down sales and stop loss orders kicking in all at once.

When I was able to log on and went to place trades they would boot me off. Was very disappointed. Cost me quite a bit of money.
Just very frustrating.

I feel it's hard for the small investor to be heard or get any satisfaction in events like this.

I guess I should just be happy I have a little money to invest.

Good luck to everyone through the rollercoaster ride

More trades I made this morning

Sold 3 Amazon $1,280 April Puts $39.66

Sold 5 Google $1,020 April Puts $36.46

Sold 10 First Solar $70 April Calls $3.75

If you go by the thirty years between 1950 and 1980, it might not do squat. Or if it drops as fast as it has gone up in the last 30 years, you might be in for a rude awakening.

Thanks for posting, you are quite helpful. I have not done any of your trades but I’m getting ideas for similar trades.

You are fake news.

If you’d look at this table (link below) you’d returns are substantial. That graph above goes from very low number maybe one dollar to whatever it is in 1980.

Note: inflation was higher then but stock returns were robust if you look at the linked table.

https://seekingalpha.com/instablog/605212-robert-allan-schwartz/4831186-annual-returns-s-and-p-500-1928-2015

Or if it drops as fast as it has gone up in the last 30 years, you might be in for a rude awakening.

Has never had a 15 year period with a negative return (including inflation). Never ever. If you choose to believe otherwise that’s going against all data of the modern US stock market.

Plus what is your alternative? Keep in cash and make negative returns?

Not to mention dividends are currently 2% but were historically higher. Historically half of stock market gains come from dividends.

This article really sums it up. Buy and hold and ignore the dips.

http://awealthofcommonsense.com/2014/02/worlds-worst-market-timer/

Exactly...there aren't a lot good reasons not to be invested in the market unless you simply cannot afford to be.

Even if you're a real estate wiz and making bank...some of that cash should be getting plowed into the market long term.

Yeah I'm the guy that decided to sell all my stocks the day the Dow first hit 14000. Fake news indeed.

Carry on.....

Whatever

You know that your statement was false but you won’t admit you are wrong.

Yeah, if I hadn't cashed out those stocks would be worth much more now. Live and learn I guess.

And probably close to 2x what they would have been today in another 10 years or so.

Very true, but that doesn't mean I didn't buy more stocks when the market bottomed out after the panic. I'm in this for the long haul!

Don't ignore the MAJOR dips like we saw with the dot.com bubble in 2000 and the housing/financial crisis in 2008, especially if you are older, ignore the MINOR ones like we have just seen. Volatility presents opportunity long term via dollar cost averaging.

We are in a tug of war with rising rates, potential inflation due to an overheated economy, massive debt, isolationism, rising wages and the federal reserve VERSUS great corporate earnings, tax cuts, worldwide economic recovery, deregulation and huge business and consumer positive sentiment.

The power of compounding is the 8th wonder of the world and a 7% compounded return over the past 20 years that followed the S&P 500 VERSUS the exact same 7% return earned on a more consistent basis without the MAJOR dips would yield MUCH MUCH MUCH more in your account as opposed to just riding the roller coaster. It's just bottom line spreadsheet numbers.

If i lose 10% this year on $100,000 and then make 10% next year I'm back to even right? Nope

$100,000 - $10,000= $90,000 x 10% = $9,000 or $99,000

Thus, don't ignore MAJOR shifts and/or recessions that will come down the road. Diversify and get out of the storm when it hits.

Pay close attention to the Federal Reserve, inflation, and rising interest rates.

Am I missing something or maybe I am clueless as I have no idea what you meant by your post?

Owning stocks = owning part of a company, it’s not like going to the casino.

US Stocks have returned ~7% after inflation for the last 100+ years.

Most people don’t see that return because of poor behavior such as selling out when stocks are low and buying in when stocks are hot.

I think people can learn a lot if they want to and if they listen, read up and don’t let their emotions dictate what they do with investing.

Average investor earns around half of what the market returns:

https://www.thebalance.com/why-average-investors-earn-below-average-market-returns-2388519

Sorry, stupid question incoming...

What is the exit strategy from 401k for someone hoping to stop working before 50yo?

I honestly have just always put in the max match and made sure I have had a sprinkling of various stuff for my 401k. I move stuff around every year or so if it has not had a good return and put more into what has done well consistently (plus low fees). After over a decade at my current company and a roll over from a previous company, it is becoming real money. I basically have just prescribed to the 'let it ride' mentality and it has done well.

I turn 40 this year and by the time I am 50 I plan to have enough other investments (real estate mainly), home paid off, monthly expenses decreased, and health care taken care of for life; to be able to have F you money for my normal gig.

What is the exit strategy for someone like this? I don't expect to live to 65 when I could normally pull out (just the genetic reality of men in my family).

What do I do to plan and make the right moves? avoid taxes? etc??? I have 10 years to adjust.

You’re asking the wrong forum, this is like me going to a pinball forum and asking how to fix a Aston Martin transmission.

Go to www.Bogleheads.org and ask this.

I would not count on dying at a certain age either, it’s better to die with money in the bank than live too long broke.

There are a lot of people here who have dealt with these things first hand. It is great that you are considering your options now because the reality is that most people wait too long to start this planning, or they never do it.

If you contribute to a company matched 401K, you options are limited before you turn 59.5 years old. If you retire, quit, or are let go from your employer at age 55, you can usually withdraw $ with little to no penalty.

If you have not already done so, you may want to see if a Roth IRA makes sense. However, withdraws from a Roth are ALSO only tax free after you turn 59.5 years old.

You will eventualy need to speak with someone who is a fiduciary and not a "financial planner" or other such nonsense. Familiarize yourself with the "Fiduciary Rule" before you do ANYTHING. It's so important and a lot of people don't realize that their investment advisors are NOT acting in their best interests, focusing on making money for themselves instead. There are big fines associated with professional investors stating they are acting in your best interest when they are not. Just so you know, MOST ARE NOT.

One other thing. One plan is not going to be right for everyone. Write down your goals and ask yourself how much $ you want each mo/yr when you retire. Once you know that number, a fiduciary can help tell you what you need to put away in order to reach that goal.

thanks, I will check it out.

If anyone here has insights (lots of smart guys here and I value opinions of my pinball brothers) then feel free to share.

As for the dying at 65... I am a biologist and also understand the family tree well. It is a harsh reality of my family. Granted, you never know...
Either way, I will have enough residuals via real estate that the 401k is merely because I wanted to take advantage of the match from the company.

If I live past 65 then I figure we will be able to sell off real estate as we age and need any larger expenditures.

I'm not an expert but I believe you have to wait until 59 1/2 to start drawing on your 401k without fees or penalties.