
S&P 500 triggers 15-minute trading halt for the second time this week - rococode
https://www.bloomberg.com/news/articles/2020-03-11/asia-stocks-set-for-losses-dow-enters-bear-market-markets-wrap
======
petilon
I see only doom & gloom comments here. Did people miss this positive note:

"On Thursday, China said it had just 15 new coronavirus cases and 11 deaths
over the previous day." See:
[https://www.nytimes.com/2020/03/12/world/coronavirus-
news.ht...](https://www.nytimes.com/2020/03/12/world/coronavirus-news.html)

China has controlled the problem. By taking drastic measures the rest of the
world will too. In a couple of months the virus will be under control. The
stock market will not recover as quickly as it crashed, but it _will_ recover!
How do I know that? Because crashes have happened in the past, and the world
didn't collapse and disappear. A single company can collapse and disappear but
not the entire stock market.

The only question is, how long will it take to recover. I think it will take 2
to 3 years. People who sold during the financial crisis of 2008 did not get to
participate in the recovery that followed. There isn't an email or a
notification that goes out when the market starts to recover. Attempting to
time the market is futile. Staying out of the market will only mean that you
will miss out on the largest portion of the recovery.

~~~
saberience
China's numbers make no sense at all. A country with 1.4B people and they at
one point had 80k people with the coronavirus in the country which includes
many big cities, smaller cities, and towns. Somehow they only have 15 new
cases in the whole country?

How does that make any sense if you take a moment to really think about it?
It's clear they are either deliberately not testing or skewing/hiding their
numbers for political purposes. It's a bit similar to India's numbers. India
(population 1.3B) has fewer cases than Iceland (Isolated island of 300k
people), again, how does this make any sense? It only makes sense if they're
not testing people or hiding numbers.

~~~
discodave
They locked the fucking place down. No movement = no transmission.

But people not doing stuff basically means a recession, if not depression is
guaranteed.

~~~
odyssey7
I'm not sure that locking the place down for a little while per se will cause
a recession. Numbers will take a hit for a while because people are prevented
from spending and working, but the normal course of action after a snow day or
staying home with the flu is to get up and go back to work and resume spending
money. This is the path China could be on for its economy overall, if not for
its economic interdependence with the U.S., which is handling things
differently.

The U.S. is steering itself toward a year-or-more-long issue that has people
fearfully avoiding stores, deliveries, workplaces, and the consequences of
this will ricochet. A recession happens when people and businesses restrict
spending and hiring, and that's exactly what this scenario causes in a chronic
way.

But who knows? Maybe Gilead's experimental antiviral will be approved within a
month or two, and maybe that will be enough to make people not fearful and
regain economic confidence.

~~~
jsight
A common definition of recession is a decline in GDP lasting for 2 consecutive
quarters. It seems likely for this to cause a decline in GDP in Q1 and Q1 at a
minimum, so a recession seems inevitable.

I do think there will be a point when going out becomes less of a concern and
there will be a lot of pent up demand for travel. The recovery will likely be
sharp (V-shaped).

~~~
odyssey7
I was speaking to the strategies that could be employed vs what we’re actually
doing, and I am concerned that what we’re doing will cause a recession.

To relate the strategy to that formal definition of a recession, if everybody
stayed home for a month this quarter, we might lose 1/3 of the quarter’s GDP.
But if that break is structured so that it’s expected and we resume normal
activity afterward, then in the next quarter we would see the GDP “grow“ a
ton, if only back to normal because people are working and spending for the
full three months, and we would cleanly avoid this formal definition for a
recession.

~~~
jsight
Oh, I understand what you are saying now. I think the issue is that government
officials aren't comfortable defining an endpoint right now. There are a lot
of unknowns as to what could stop the spread at this point.

------
songzme
I have alot of unvested RSUs and my reasoning is that if 2008 repeats itself,
there is a real chance I may get laid off and lose my RSUs. I donate most of
my income and I have very little savings.

To protect myself, when I see sharp dips in the markets like this, I usually
buy a put (option) just in case 2008 repeats itself. I bought a put last week
for 2k (CMG) and now its worth 18k. If the markets keep falling, I may end up
with around 30k, which is enough for me to pay my mortgage for a year and a
half.

Maybe someone finds this helpful, maybe not. Be safe, play responsibly.

~~~
bityard
Your employment situation is uncertain, you give away most of your income, you
have minimal savings _and_ you speculate in the stock market?

You, sir, are made of sterner stuff than I.

~~~
jovial_cavalier
If you expect volatility to increase, which I think is very reasonable, then
buying options is a very safe bet, and if you only put in a reasonable amount,
it merely serves as insurance against getting laid off.

If the market gets bad enough for him to have to be laid off, his presumption
is that the puts will be valuable enough to get him along for a little while.
If it doesn't, then he probably loses money on the puts, but he's still
employed, so it doesn't make much difference.

edit: I'm an engineer, not an economist, so this is probably wrong, but I
think it's the line of thinking that songzme is on too.

~~~
evanpw
> If you expect volatility to increase

If you have high confidence that volatility will increase more than the market
expects it to.

> buying options is a very safe bet

There is no world in which buying options in a volatile single stock is a very
safe bet

Unless OP actually works at CMG (in which case they're probably forbidden from
buying puts), this is gambling, not hedging.

~~~
jovial_cavalier
>There is no world in which buying options in a volatile single stock is a
very safe bet

I agree. I didn't pick up that CMG was Chipotle (that's what comes up when I
search CMG). Do you think if the underlying was something diversified, this
would be a safe strategy?

> this is gambling, not hedging.

My understanding of it is that in times of high volatility, options go up. If
OP expects ^VIX to go up in the future, which I think is very safe to assume
at this point, then won't the value of a diversified option go up?

Again, maybe I'm confused... I don't really trade anything, so I don't have
skin in the game. I just talk about the markets a lot with my friend who is
into Quant Finance.

~~~
nostrademons
> My understanding of it is that in times of high volatility, options go up.
> If OP expects ^VIX to go up in the future, which I think is very safe to
> assume at this point, then won't the value of a diversified option go up?

Only if it's not already priced in. The price of options should reflect the
market's _expectation_ of what the VIX will do in the future. If everybody
else thinks that things are going to get more volatile in the near future,
then prices for options go up _now_ , they don't wait for things to actually
get more volatile. So when you're deciding whether buying options is a good
deal, you not only have to decide whether or not you think that things will be
more volatile in the future, you also have to decide whether _other people
already know_ that things will be more volatile in the future.

It's pretty dangerous to do this unless you're a statistician with an
algorithm that can take all emotion out of the decision. As a (non-
sociopathic) human, your natural impulses will be subconsciously influenced by
the emotions of the people around you, so when you have a gut feeling that
things are gonna get rocky in the near future, it's probably because everyone
else already had a gut feeling that things are gonna get rocky in the near
future.

~~~
evanpw
More precisely, you can back out an implied forecast of future volatility from
options prices, and the VIX index is actually computed _from_ the prices of
options on the S&P 500 index; it's not just trailing realized volatility.

------
davidw
Deal with the pandemic. People won't invest again until they feel safe. That
doesn't mean tax cuts or propping up shale oil companies. It means getting the
deadly disease under some semblance of control.

~~~
foogazi
Yes WTF, this is not about interest rates, it’s about test kits for sick
people, sick leave and pandemic risk

------
seanhunter
For people who think that this is just automatically a buy because "prices
have to go back up again, right?", it's worth looking at the Nikkei[1]. Note
the peak in 1989 has still not been regained, and the market is about half
that level now. Now is the US economy fundamentally less messed-up than Japan?
Absolutely (in general). But every fall is not necessarily a buying
opportunity even if you have a very long-term horizon.

[1] [https://finance.yahoo.com/quote/%5EN225?p=^N225&.tsrc=fin-
sr...](https://finance.yahoo.com/quote/%5EN225?p=^N225&.tsrc=fin-srch)

~~~
whb07
They also have had massive deflation stemming from lack of making babies.
They've even have had to _gasp_ allow more foreigners to come in and do some
jobs.

~~~
metalliqaz
The US stopped making enough babies too, but growth continued due to
immigration. That is changing. Now I don't think the US market is headed
towards something that looks like Japan's, but its something to think about.

~~~
ouid
somehow, I'm skeptical that the US's main mid term problem is going to be too
many old people.

------
overcast
This is going to turn out to be the great investment opportunity that I mostly
missed out on in 2008.

~~~
cwilkes
Everyday is a great investment opportunity given a long time horizon.

~~~
abarringer
On the contrary given a sufficiently broad timeline the value of every company
drops to 0.

~~~
derwiki
Buy an index fund, not individual stocks. All companies don’t go to zero at
the same time.

~~~
throwaway373438
They will all go to zero, given a sufficiently broad timeline. They're making
a joke.

------
manigandham
There is more bad news to come. Infections in US and EU, supply chain issues,
local business impacts and bankruptcies, repo markets, etc.

Buy-the-dip and dollar-cost-average work but you don't need to go in blind. I
advise waiting until there's actually repeat good news before you buy in.

~~~
czbond
Why would one buy the dip when momentum is heavy downside (long term)? April
will most likely be a short slaughter, sure, but after that very
unpredictable.

~~~
manigandham
That's what I'm saying. I see too many people get too mechanical about it when
they would be better off making adjustments on significant news.

If you don't see some sudden positive in the next quarter, there's no reason
to buy in now.

~~~
comicjk
The market reacts to expected news, not just current news. The fact that bad
news is coming might already be priced in. It's hard to say how bad a piece of
news would have to be to make expectations worse.

~~~
manigandham
The market hates uncertainty the most and nothing about this pandemic or the
economic impacts are certain. There is definitely no good news anytime soon
for there to be a serious uptrend.

------
ackbar03
Ecb is flooding market with money again. The dynamics of all this liquidity
sloshing around is really hard to grasp. Sure everything is crashing around us
but all that liquidity has to go somewhere, and since 08 it's basically just
ballooned up the stock market and real estate. Where's the money sloshing off
to next?

~~~
Analemma_
Right now? US treasuries. They’re paying below 0.5% for the first time ever.

------
deepGem
Here is my logic as a retail investor. The market has lost close to 20-30%
from the peak. Will it regain the peak, for sure. By when ? Hard to predict.
All I know is that the rate of climb need not be the same as the rate of the
fall.

This virus will bring about significant collateral damage to the global
economy. Already airlines, cruises are hurt. Soon, tourism and hospitality
industry will be hit. Transport and logistics will be next followed by retail.
So the cascading collateral damage is quite unpredictable at this time. Double
this with plunging oil prices.

So unless you are willing to wait for 10+ years from now, it's unwise to
invest a lump sum amount at once. If it were me, I will just invest small
amounts periodically. Like every couple of weeks or so.

~~~
CrackpotGonzo
The majority of individual investors should be dollar cost averaging
(investing the same amount of money at consistent intervals) over the long
haul. This pandemic isn't impacting my strategy and i'm staying the course.
I'm not aiming to retire for 20 years so this will (hopefully) just be a blip
in my long-term returns.

~~~
unlinked_dll
Meanwhile people about to retire are watching their retirement funds
evaporate.

~~~
vishnugupta
Isn’t it suggested to wean off equities as one nears retirement age? Isn’t it
done automatically by pension funds? I’m from India where the government owned
retirement fund (EPF) is only now testing equity waters and the recent fund
(NPS) isn’t big enough to cause damage so I’m not aware of how this works.

~~~
awb
I've heard the following advice: Hold a % of bonds equal to the % of life
you've lived and a % of stocks equal to the % of life you have left.

Ex. If you're 40 and think you'll live to 100, try to hold 40% bonds and 60%
stocks.

~~~
ggambetta
An even simpler and mostly equivalent formulation is the "your age in bonds"
rule of thumb.

~~~
vishnugupta
The version I’ve heard is “equity share of your investments == life expectancy
- current age”

------
drcongo
As someone who has very little grasp of global markets, I'd kind of assumed
that bitcoin and other cryptos would rally if stock markets were falling under
a global pandemic, but the cryptos seem to be tanking along with them. Is this
down to reduced consumer confidence?

~~~
qubex
Yours was a widespread conviction born of the idea that bitcoin and other
crypto-assets would be seen as de-correlated safe-havens for funds drawn from
volatile traditional equity markets.

The simultaneous drop in value is the very textbook definition of correlation,
and therefore suggests that the same decision processes (perhaps even the same
decision-makers) are operating in both types of markets and that,
consequentially, bitcoin and crypto-assets are factually not alternatives at
all.

~~~
solotronics
Even more interesting is Bitcoin has been a leading indicator for tech stocks
for some time now. Bitcoin drops often led FANG drops by a few days.

~~~
qubex
One of the prevailing ideas in several theories of financial market agent
behaviour is that crashes occur when all or at least most participants’
horizons synchronise, leading to everybody acting on the same information
uniformly. This is likely what is occurring: probably most investors are
focussing on the here-and-now and thus on stopping their losses and/or
reducing their exposure to risk.

~~~
engineeringwoke
Makes sense. Good thought

------
nostromo
We’re tanking the world economy to try and stop the spread of a virus that
cannot be stopped, and has a median death rate older than the expected life
span. It’s so mild young people think they have the flu or a cold, and over
80% of people over 80 also recover.

The economic outcomes of the interventions could end up being worse than the
disease, as people will lose their jobs, houses, and healthcare.

~~~
whatshisface
You're missing a very important fact, which is that 15-20% of all ages need a
hospital. Get ready for warehouses full of sick people like China had: and
that was _with_ a total social lockdown.

------
tosser0001
People are panic buying toilet paper for crying out loud.

Unless you are planning on retiring in the next few years, you should be
looking at this as the buying opportunity of a life time. This is at least the
4th panic sell off I've seen.

~~~
greenshackle2
The toilet paper "panic buy" is overblown. People are stocking up extra on
necessities, sure, but what's different about toilet paper is how bulky it is.
I doubt most stores have large stocks to cover extra demand cause it takes up
too much space. Hence it doesn't take very much extra demand to deplete
shelves.

~~~
ajross
More charitably, a toilet paper run is a pleasing, simple, humorous and yet
correct metaphor for general preparedness. People are buying cans too, but
that's not as funny.

~~~
greenshackle2
It's not as dramatic to show a picture of a shelf of canned goods only half-
stocked instead of fully stocked, as opposed to a an empty shelf of toilet
paper.

That's what I've seen at my local Costco. TP is gone, canned goods are running
lower than usual but not actually out of stock.

------
Leary
If you want to be contrarian:

DO the opposite of whatever the top comment here says

~~~
misja111
There is some deep truth in your comment, however simple it may seem.

Joe Kennedy, a famous rich investor in the 1930's, exited the stock market in
timely fashion after a shoeshine boy gave him some stock tips. He figured that
when the shoeshine boys have tips, the market is too popular for its own good.

In general the public consensus seems to be always one step behind after the
developments on the stock market. It might actually make sense to do exactly
the opposite of what everybody is advising.

~~~
marktangotango
Ha, I had a co-worker make the asinine comment that "real estate only goes
up!" in about 2007. I sold my property a few months later. Great timing? Naw I
put the profit into the stock market just in time for 2008!

------
nimbius
Something ive wondered about these 'circuit breaker' halts...do they actually
work to prevent mass sell off or are they just prolonging the inevitable?

Apparently not only can the powers that be halt trading momentarily, they can
simply close the market altogether if trading is "bad" enough. How is that not
manipulating the market? Why shouldnt we all be able to sell?

disclosure: Im firmly in the blue collar worker category. I dont own stocks.

~~~
cthor
> How is that not manipulating the market?

Nobody said it isn't. In fact, that's the whole point: manipulate people to
chill out, take a few minutes to think, and then get back to it.

~~~
nimbius
so isnt it bad to manipulate a free market? I know China gets beaten up about
it all the time.

~~~
SpicyLemonZest
When knowledgeable people talk about "market manipulation", they're generally
talking about _secret_ market manipulation, fiddling with the market structure
in private to extract value from it. Wash trading is a good explanatory
example; you're tricking people into thinking market volume is higher than it
actually is, to get them to do things they wouldn't do if they knew the real
story. Setting clear rules known in advance is "manipulation" by some
definitions, but it's not really the same thing.

There are some people who beat up China for simply setting rules in the
market, and they're definitely wrong to do so, although you shouldn't confuse
this with people saying the specific rules China sets are bad.

------
cletus
I'm going to recycle advice I gave earlier this week [1] and say it's way too
premature to consider this a buying opportunity. Short term dips followed by
recoveries are the hallmarks of a bull market. We're now clearly in bear
market territory. In a bear market, you need to be wary of "dead cat bounces"
ie a short term rally followed by a steeper decline.

In 2008 this bear market lasted well over a year.

If you're already in the market, well you're kind of stuck now. Who knows how
much further it will fall or even if it will? If anyone knew that, they'd be
rich.

But this, as always, is a question of probabilities. In the short term there
seems to be way more downside than upside potential. As much as it may have
fallen in the last month, we're only now really getting back to the long term
mean. Typically, during a market correction, the market oversells so further
drops are entirely possible, even likely. Another 10-20% drop is (IMHO)
completely realistic.

[1]:
[https://news.ycombinator.com/item?id=22527631](https://news.ycombinator.com/item?id=22527631)

~~~
whatshisface
I don't think it makes sense for there to be such a thing as a bear market. If
everybody knows that it's going to go down, then they will sell until the
price drops to about the place where they expect it to eventually hit. That's
what a crash is. The final price after the crash is the price at which the
market is split between "it will go up" and "it will go down." If the bears
and the bulls had any other proportion than 50/50 then the price would go up
or down until the bears and bulls changed teams back to 50/50\. The only thing
that's guaranteed about stocks is that the average person is always uncertain.

~~~
empath75
People don't know how far it's going to go down.

We have no idea what kind of disruption is going to happen to global GDP. As
the situation clarifies itself, it may very easily become worse, which would
continue to drive it down.

~~~
positr0n
What OP is saying is that the current price reflects the average investors
best guess at how bad it's going to get. If some more people start thinking
it's going to get worse they will sell and that statement will (essentially
be) instantaneously true again.

------
wycy
Can anyone say why gold (GLD) is dropping so much too? I would've thought it
would be a rough inverse of the market. It's still up over the last month
(just barely), but down over the past several days.

~~~
pja
The impact of the Coronavirus epidemic means that many companies & individuals
can see that they’re going to have a short term cash squeeze this year - they
have interest payments due & the income to pay it isn’t going to be there.

So they’re selling anything that can be sold to raise the cash to make those
interest payments - in a strongly deflationary environment you’d expect $/£/€
to rise against everything, including gold and bitcoin, which is exactly
what’s happening.

------
totaldude87
officially into the bear market.. so far 8000 points down from its peak in a
month, Now this may be good for the option sellers or biggies, regular
investors should stay away (or use this to accumulate)

~~~
VBprogrammer
Average people should not try to time the market for good or for bad. It's a
fools errand.

Keep putting money into low cost mutual funds, preferably though some tax
efficient vehicle (e.g. a pension if possible).

------
s9w
When's the lowest point? I did some rough fits with some stupidly simply
logistic function:

[http://s9w.io/corona_2020-03-12.png](http://s9w.io/corona_2020-03-12.png)

US point of highest increase according to this is in "2.6" days with a
standard deviation of 0.76.

------
chrstphrhrt
Does this bode well for the private equity technology sector? Intuitively it
would seem that people will be looking for different investment vehicles, and
here we are in startup land already working remotely, ahead of the curve. Of
course the risk is higher and it could be wishful thinking.

~~~
jlei523
Private equity and public markets get money from the same source.

------
marketfalls
Precious metals like gold is also underperforming when it supposed to act as a
safe haven

~~~
ryanmercer
My suspicion is this is a very small number of entities going "sell our
bullion on paper so we can buy the dip", probably why bitcoin is down 25% and
change last time I looked too.

I've seen precious metals move a lot more than this for no apparent reason.

------
marvel_boy
Do not "buy the dip". It will go down more, like in 2008.

~~~
r0fl
It seems everyone is a financial guru these days. I wonder what these people
are doing on their keyboards. Why aren't they all on gold plated yachts?

~~~
Jorge1o1
I've pulled off some pretty great trades in my time, for example, I had the
conviction that the Sprint merger was going to get approved and I bought
Sprint stock in January, nearly doubled my money.

The only problem is that I've only got $5k to invest, especially if I'm
maintaining a healthy rainy day fund. And I'm not throwing all $5k into a
single stock. That's why I'm not on a gold plated yacht.

The truth is you could be a financial genius but if you grew up in a middle
class family and have basically zero inherited wealth, you're not going to
have the money to invest.

~~~
bluGill
If you are a financial genius you will soon have money to invest, it doesn't
take much to start, and every year there are a few doubling opportunities.
Most of us are not financial genius and so we only realize they existed in
hindsight. However there were always signs that could have been seen in
advance - and there are always ways to cut your losses. If you don't start
with might it might take 20 years but a real financial genius can be rich even
if their source of income during that 20 years is flipping burgers.

------
hashberry
The market has been overvalued and manipulated for years. Even Apple took out
billions in loans for stock buybacks.[0] Boeing took out $43 billion in loans
for stock buybacks[1] instead of investing in planes, QA and employees.
Everyone knew this was a stock bubble caused by record low interest rates.
COVID-19 is the pin that woke everyone up.

[0] [https://9to5mac.com/2019/09/05/apple-is-
borrowing/](https://9to5mac.com/2019/09/05/apple-is-borrowing/)

[1] [https://wolfstreet.com/2020/03/11/boeing-crashes-
as-43-billi...](https://wolfstreet.com/2020/03/11/boeing-crashes-
as-43-billion-in-past-share-buybacks-turn-into-existential-threat/)

~~~
xiphias2
Interest rates are still low. This is not yet the financial crash and
depression that will happen when the bond market pops.

Still, it was the first time when lowering interest rates didn't have a huge
effect on the market, so the signs are there.

~~~
jjoonathan
What is the proposed mechanism for the bond market popping here?

~~~
samvher
Disclaimer: not a specialist, this is what I gather from online research and
discussions on reddit (please correct me if I get anything wrong!).

The issue is with corporate debt. A lot of it is unsustainable in the event of
an economic downturn [1]. Already people are leaving the junk bond market [2].
There is a risk that BBB-rated bonds will get downgraded, which would mean
that pension funds can no longer keep them in their portfolio. If this
happens, these bonds will move into the junk bond market, increasing supply in
that market with already decreasing demand. That means that interest rates on
lower-rated bonds will go up, meaning that it will become harder for companies
that are not in a strong position to obtain credit, which they might need to
if times get harder.

Especially in a few sectors (tourism, shipping, oil) it's clear that companies
are going to get hit this year. Central banks are aware that this is an issue
and they are taking some steps to soften the blow.

[1] [https://www.theguardian.com/business/2019/oct/16/global-
econ...](https://www.theguardian.com/business/2019/oct/16/global-economy-
faces-19tn-corporate-debt-timebomb-warns-imf) [2]
[https://www.bloomberg.com/news/articles/2020-03-11/junk-
inve...](https://www.bloomberg.com/news/articles/2020-03-11/junk-investors-
seen-pulling-cash-again-setting-fund-exit-record?srnd=markets-vp)

------
jansan
German stock market suddenly fell another 3 percent within a few minutes. I
wonder if that was triggered by the circuit breaker in the US with traders
trying to sell on other market places.

------
76543210
I'm trying to refinance my mortgage. Is now a bad time to put 20% of my
savings into the market?

I've been waiting for this moment since 2018

~~~
thedance
What’s the indicator that this is the bottom? Stocks fell last night as soon
as Trump opened his mouth. Stock market has been Wile E Coyote running on air
for years, now the market is looking at the ground. America has a government
incapable of sensible action. There’s a real possibility that the republic
ceases to exist within the year, after Trump tries to delay or invalidate the
election (and if you think this is far-fetched, recall that’s what his pal
Giuliani tried to do after 9/11, so it’s in their playbook).

There’s non-zero volume and interest in S&P future puts striking at 1000.
There’s plenty of potential downside.

~~~
skrowl
Please keep this kind of stuff in /r/politics. It has no place on HN.

~~~
thedance
Government is not politics.

------
gringoDan
I wouldn't be surprised if we hit another circuit breaker by the end of the
day.

This will get worse before it gets better.

------
KaoruAoiShiho
Who got puts? I think a lot of people called this yesterday.

------
8bitsrule
That sudden slide to Biden looks like a big clue.

"Turn those machines back on! Turn those machines back on!"

~~~
shdh
Big clue for what?

------
generalpass
When financial bubbles burst the markets fall an average of something like 42%
in the first two months.

~~~
ahelwer
Market movements follow a power law, not a normal distribution, so average is
an utterly useless measure.

~~~
generalpass
> a normal distribution

Not really clear what you mean here. If you take the peak index value and its
value two months into the bubble burst, the average value of this will be ~42%
lower than the peak.

~~~
ahelwer
Right, but what is the purpose of statistics like this? The purpose is for
them to inform our understanding of what might happen in the future. As
mentioned above, since market movements follow a power law rather than normal
distribution, the average gives us absolutely no information about what might
happen. Thus this statistic fails at the goal of having a purpose; it is just
a meaningless number, like those meme baseball statistics about who is the
third-best thrower of fastballs on a rainy friday or whatever.

~~~
generalpass
> Right, but what is the purpose of statistics like this? The purpose is for
> them to inform our understanding of what might happen in the future. As
> mentioned above, since market movements follow a power law rather than
> normal distribution, the average gives us absolutely no information about
> what might happen. Thus this statistic fails at the goal of having a
> purpose; it is just a meaningless number, like those meme baseball
> statistics about who is the third-best thrower of fastballs on a rainy
> friday or whatever.

Thanks for restating using almost the same words and using an apparently non-
applicable analogy (i.e., the 42% covers all bursts effect on indexes, your
sports example covers individual performance). My experience is people who
provide such poor explanations usually don't actually know what they are
talking about.

Your claim on its usefulness makes assumptions about where to apply the
information. The perma-bears use these kinds of numbers to demonstrate why
being in stocks during a bubble is a bad idea.

~~~
ahelwer
I recommend you read Taleb. Much of his work focuses on the differences
between domains following normal distribution vs power law, and the folly of
mistaking one for the other.

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nojvek
I very much feel this could be another recession albeit a small one. It has
very cascading effects throughout the world. Making everyone stay at home is
effectively halting the world economy.

I still have a decent amount in my 401k and stocks, sold 70% of them incase
shit hits the wall (I quit my job earlier this year to be an indie hacker)

Plus the upcoming election usually slows things down. So my prediction is
until 2021 we’re deffo in for a ride.

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ansible
My goodness.

I transferred most of my retirement savings out of stocks in early March,
realizing a 9% loss. The market had a little upswing that day, so that worked
out as well as possible for me, considering.

I was hearing advice from an acquaintance to just "ride it out".... yeah, no.
After hearing about the inadequate testing and other half-measures taken by
the Administration, I was convinced it would get much worse before it got
better.

I had thought about cashing out on January 31st, because I figured Brexit
would trigger an Europe-wide recession, which would lead into a worldwide
recession. But I didn't get around to that (lazy).

