
Stocks Off Sharply as Market Upheaval Grows - superfx
http://www.nytimes.com/2015/08/25/business/dealbook/stocks-in-asia-fall-as-china-and-emerging-economies-lose-favor.html?module=Notification&version=BreakingNews&region=FixedTop&action=Click&contentCollection=BreakingNews&contentID=45821187&pgtype=Homepage&_r=0
======
grellas
People's investment philosophy will vary and tolerance for risk will play a
major role in it all.

My own view is this, and it is based on a lifetime of having made all the
typical mistakes.

Steady is the best way to go for your investable funds. That means, go with
stocks for a decent segment of your investments but temper this with
investments that will help preserve capital when things get rocky. Keep a
ratio between the two that is age-appropriate. There is a rule of thumb
floating about among advisors that your stock percentage should be 110 minus
your age. This may or may not be a good ratio for you but some method that
helps discipline you in these decisions will help you and this is not a bad
one for many people. The other major factor is to avoid impulse buying or
selling and to keep transaction costs at a very low level - and this usually
means going with broad-based no-load index funds for much of the ride.

Doing the above will not make anyone rich. It will, however, ensure that you
have the best chances of getting decent, normal returns on average over time
while helping to preserve your capital as you go. If you want extraordinary
returns, get them through your startup or by doing extraordinary things in
your work. For your investments, the rule is different. You do not
"underperform" by hitting averages with your investments. You simply meet the
goal that should be the defining goal for most people in that area.

~~~
branchless
The FTSE is where it was 17 years ago. Since this time _everything_ has gotten
way more expensive.

Anyone in the UK following this advice from age 20 to 35 is staring down the
barrel of working forever.

The problem is they have a share in growth in the UK over the past 15 years
and that growth is next to nothing.

IMHO the old advice needs to be taken with caution. This is not your dad's
market.

~~~
patdennis
1) If you put all of your money in exactly 17 years ago, then, yes. You would
be at the same place.

2) It still would've been paying you dividends that entire time

3) If you, rather than investing an imaginary lump sum at the top of the
market 17 years ago, invested slowly as your savings accumulated over time,
you would be ahead.

The FTSE hasn't exactly been sitting still all those 17 years.

~~~
branchless
I'm not sure point 3 is correct. Buying regularly would have seen you buy
below today's price and above it.

~~~
markvdb
Dollar cost averaging lowers risk and increases returns. If you can afford it,
you may also want to have a look at value averaging.

~~~
branchless
It lowers risk making returns and/or losses less volatile. It does not
increase returns. Of those dumping a lump sum in some lose more some win more
and averaging them smooths it out. It's not a magic have your cake and eat it.

------
code4tee
Broadly speaking the US economy is quite healthy and people were expecting a
correction in the stock market for some time. Within tech, it will have some
negative impact on the plans of some companies as it will be harder to get
lofty valuations based on 'fluff'... during such times investors want to see
hard facts and real results to back-up value--but that's a broader trend thats
been slowly developing for some time.

Internationally, China is clearly having a hard time dealing with the
realities of 'the market.' People have long since suspected a lot of the
figures coming out of China were not accurate and everyone knows the place is
rampant with corruption and such. Things are going to get a lot uglier there
before it gets better.

~~~
dataker
Regardless of your ideological background, you cannot possibly assert the U.S
economy is healthy.

0% interest rate for several years is not healthy.

QE is not healthy.

100+ % debt:GDP ration is not healthy.

Inflating assets is not healthy.

A vanishing middle-class is not healthy.

~~~
jusben1369
> 0% interest rate for several years is not healthy

That's not healthy or unhealthy. It's just a thing.

> QE is not healthy

Ask Europe that didn't do quantitative easing (or did too little too late)
which economy they'd rather have right now. And it's no longer a thing -
because it ran its course and largely worked.

>Inflating assets is not healthy

Some classes of assets are inflating. Some are deflating. Again it's a little
vague.

> 100+ % debt:GDP ration is not healthy.

It was never higher than right before the boom of the 50's and 60's so...

Agree with you on the impact on the middle class.

But I think you can assert on the balance of things that the economy is
healthy vs not. You've obviously ignored a lot of positive stats around
employment growth and economic growth.

~~~
wutbrodo
>> 0% interest rate for several years is not healthy > That's not healthy or
unhealthy. It's just a thing.

I agree with you generally, but this response is a little silly. What does
"it's just a thing" even mean? Given that there's no ironclad economic
consensus on this question yet, it's more comfortable to not spend too much
time sitting on the ZLB. Now that doesn't suggest anything specific about what
costs should be incurred to get away from the ZLB[1], but all else held equal,
it's not unreasonable to suggest that staying near zero for so long is a bit
more uncomfortable than having a bit of a buffer to lower rates.

[1]i.e., I'm not taking the oft-heard position that we need to do what it
takes to raise rates NOW before it's too late

~~~
jusben1369
There's this general sentiment that it should be between 1-3%. But it's just a
sentiment mostly based on historical experience. But the global economy is
constantly evolving; China wasn't really even a blip on the radar 15-20 years
ago. So whose to say what the right level is except the one that is attempting
to balance inflation and employment goals.

~~~
wutbrodo
The advantage is much more fundamental. Given the uncertainty that you're
describing, removing a constraint on our actions is ceterus paribus a good
thing. The same argument could have been made during the Bush years, when
rates were kept low "unnecessarily" (according to conventional thinking), and
the inability to lower rates after the crash tied our hands unnecessarily.

------
acjohnson55
A whole lot of aphorisms in this commentary about falling knives and dead
cats, but very little actual information.

If you're trying to time the bottom you may as well take your money to the
blackjack table. The quants are probably going to make a bunch of money, but
if you're just a regular person, you should probably just continue making your
regularly scheduled 401k contributions and diversified investments.
Historically speaking, all the movement is going to average out in the long
run to modest gains.

~~~
rsmckinney
"Historically speaking"

Historically speaking, when has the Fed kept interest rates at ZERO for 7
years? After pumping QE full throttle at $80B/mo? The economy has been in
continuous "recovery" mode since '08, but not much has actually recovered. The
market is going to collapse my friend because, historically speaking, we are
in dark, uncharted territory and have lost our way back.

~~~
acconrad
We were also in uncharted territory when the stock market collapsed in 1929.
The market had never crashed like that before.

The market had also never crashed like 2000 because the internet tech sector
had never existed like that before.

The market had also never crashed like in 2008 because home loans had never
been so lax in terms of lending such highly-leveraged loans to such low
quality lenders.

Every new crash lies within dark, uncharted territory because no one can
predict the future and a crash could only come about from a set of new
circumstances we couldn't have predicted before (or else it wouldn't have
crashed).

~~~
digikata
The crash (or correction) of 2015 might be because of student loans & labor
participation rates of recent graduates. The load is such that many of them
could not grow into the consumer role to the degree that the economy needed of
them in order to grow. And reducing growth/recovery even further, stagnant
wages further hold back consumption.

2008 and 2015 are economic events which feel to me like they're based in
inequality manifesting in different ways.

~~~
jahewson
New graduates are a relatively small slice off the overall workforce and they
have a long time to pay of their loans. I don't see any mechanism there which
would cause a crash. We've seen quite clearly that over-subsidising their debt
burden simply causes them to take on larger loans - it doesn't help.

The problem for those younger people entering the market is not that they
don't consume - in fact, they consume readily - but that they can't afford
property and don't receive adequate pensions or other benefits.

~~~
digikata
It's not that they don't consume, it's that that don't consume to the same
degree of past demographics (they simply can't). That consumption would have
worked its way through many hands (businesses & employees) causing a
multiplier effect vs going to pay back a loan. So larger scales of student
debt, aren't just larger numbers on the balance sheets, it pulls money out of
the active economy.

If they can't afford to buy a property, a whole cascade of secondary 'new
place' purchases don't happen.. it's a symptom of not enough circulating money
at the center of society to sustain the economy.

The crash part comes when investors look at falling activity in China, and
falling commodity prices as strong indicators that global demand is falling.

------
Cshelton
I think it's a bad sign when they can write an article and get it out in under
25 minutes...but by the time they release the article, the market has gone up
by half the amount it fell on opening. This market is severely flawed.

~~~
jebblue
I'm not rich enough to be an investor but I agree, some kind of cool down
system should be required.

~~~
jebblue
Why was this down voted?

~~~
photosinensis
Because it's ignorant. There _are_ cool down systems in place if the stock
market swings too wildly in a short period of time.

~~~
bunderbunder
And downvoting instead of pointing out that there are cool down systems does
nothing to reduce the ignorance.

If you've really got a problem with ignorance, do the grown-up thing and
attack the ignorance rather than the person.

~~~
golergka
> And downvoting instead of pointing out that there are cool down systems does
> nothing to reduce the ignorance.

It reduces the ignorance in those who read the comments and draw conclusions
from what is upvoted and what is downvoted (even though most people won't
admit that they do it even to themselves).

------
plg
Unless you need to take your money out in the next couple of months (or unless
you are facing a margin call) why not consider this as a fire sale? Your
favourite stocks and mutual funds, ON SALE!

~~~
wutbrodo
Exactly, I feel like this hits a good balance of prudence and pragmatism. It's
kind of a double-edged sword for me since I happen to be heavily into liquid
cash at the moment...but I also have higher cash needs because I quit my job a
month ago and am planning on taking 6 mos to a year off.

Either way, beyond a bit of an "emergency fund" on steroids, this is actually
how I'm taking it: a good starting point for some conservative DCA.

------
kailuowang
The global panic might have a good reason, this is probably the first time
China goes through a true financial crisis. Their ability to deal with such
situation is by and large unknown to anyone.

~~~
valarauca1
China (as we know it) can't suffering economic down turn.

The Communists largely maintain power though the threat of _Its us or chaos_.
Which before and during the communist rise China was pretty bad off. This is
more or less the social contract _we make your life better_ , _you give up
your rights_.

If it becomes clear the central government _can 't_ control the economy. We'll
likely see a rise in anti-government protests.

~~~
th0waway
more like "obey or die"

~~~
valarauca1
That's more or less US anti-communist propaganda.

I've been to china once, lived with Chinese Nationals for several years, and
currently telecommute with partners in China. There is wide spread support for
the party. People do understand that the chinese system is unique, and not
necessarily the only government system. They simply believe it is better.

Which from a socio-economic outlook it kind of has been for the past ~30 years
in terms of industrialization and infrastructure construction. People have
lived their entire lives where the idea of questioning the party seemed stupid
simply because the party was, and has been right for their whole life. Not
because of life or death punishment. Simply looking around and seeing the
cities and lights were the only proof needed.

The party ties its sucess to the sucess of the nation. Which is really what
all political parties do, lest we forget Bill Clinton's, _Its the Economy
Stupid_. Economic downturn is a crack in that armor. Proof the Party isn't by
itself responsible for the economy, proof the party doesn't have absolute
control of the up turn. If the party is wrong on the economy, what else could
they be wrong on?

~~~
logicchains
Counterpoint: I lived in Eastern China from 2011-2013, and the majority of the
people I met around my age (early twenties) hated the party. They hated the
Great Firewall, hated the censorship and hated the Chengguan
([https://en.wikipedia.org/wiki/City_Urban_Administrative_and_...](https://en.wikipedia.org/wiki/City_Urban_Administrative_and_Law_Enforcement_Bureau)).
They just didn't linger on it much as they didn't feel there's anything they
could do to change it. Certainly none believed it was "better" than the
political systems in Taiwan, Singapore or pre-Chinese Hong Kong. Of course,
that could just be due to selection bias in the people I associate with.

~~~
valarauca1
I will agree largely. My corresponding age (same as yours) group has a lot of
negative attitudes (especially involving internet/entertainment).

Its the older generations (I assume who got more propaganda growing up) that
carry the parties line a bit more firmly.

------
ChuckMcM
I find it fascinating how this discussion goes, Do we differentiate between
"healthy" and "strong" ?

The US economy is, as far as I can tell, tethered in a macroeconomic sense, to
the bill of the very expensive land wars it recently fought. The cost to the
economy both in terms of government spending and workforce depletion as
national guard troops were mobilized for duty in Iraq and Afghanistan.

American worker productivity has remained high, which has kept real wage
growth low, as employers leverage they "be thankful you even have a job" meme
over the heads of employees who perhaps just scraped by in the great recession
or spent months or even years unemployed.

America's largest trading partner, China, is running a partially managed
economy with a fiat currency that is priced more on government policy than
market realities. That pricing has lead to some unsustainable conditions in
the Chinese economy which are being "addressed" by some pretty big moves
(currency devaluation is not something you do lightly in the worlds second
largest economy).

So the interesting question is how does the world see it? And how will it play
out? Everyone has their bets, but and you can read about some of them in
Barron's or the Economist or the WSJ.

The current disaster is Chinese. By devaluing their currency they are
effectively "taking value" from people who were trading with them relative to
the partner's home currency. So lets say someone like Apple contracts to buy
10 million iPhone 6 baseboards, in Rmb at an exchange rate of $100 per board,
and now when it comes time to actually take delivery and buy the boards they
cost Apple the equivalent of $150 each. Apple needs to pony up an additional
half billion dollars for their phones. This then will hit their bottom line in
terms of revenue, which means their stock price will go down (they won't be as
profitable a company) and so funds holding Apple will lose their value in
proportion to their Apple stock. And China has done this by devaluing its
currency.

It doesn't change how strong Apple's market presence is, or that they can sell
a phone for a ton of money, but it changes the cost/value equation faster than
Apple can respond and so there is a disruption in their earnings. That will
ripple across a lot of companies.

But is that a 'health' issue for the American economy? Not really. Rather it
puts pressure to restructure the costs of the economy into a different place.
People still buy iPhones and will for the forseeable future. So the economy is
still strong, but if the price of those iPhones doubles their volume will
likely fall and so Apple's earnings might be 'weak'.

The stock market is responding to the adjustments in China, internalizing the
lack of fiscal oversight in that economy, and pricing it into the value of
companies that do a lot of business there. I expect a hell of a correction and
some interesting new markets opening up (like India, Vietnam or Thailand if
the Thai can get their governance under control) as the cost of doing business
in China begins to more accurately reflect the real costs of doing business
there.

EDIT: As folks have pointed out the currency hit is reversed, Apple would get
its parts for less if they priced them in RMB vs Dollars. Any RMB they were
holding in their cash pile would have lost value, so to the extent that their
sales in China have not been moved into Euros (we know they aren't repatriated
into Dollars for tax reasons) are going to buy less than they did before.

~~~
tome
> So lets say someone like Apple contracts to buy 10 million iPhone 6
> baseboards, in Rmb at an exchange rate of $100 per board, and now when it
> comes time to actually take delivery and buy the boards they cost Apple the
> equivalent of $150 each.

That sounds like it's the wrong way round.

~~~
ChuckMcM
You are absolutely correct, complete brain fart on my part. If their pricing
in RMB they take the currency hit.

------
kazinator
It's only 10:21 Eastern Time on a Monday as I read this at 7:21 a.m. in the
Pacific time zone. Like, wait for the trading to close, _then_ tally up the
damage.

~~~
jacobwcarlson
A 1000 point drop at the open is a newsworthy event.

------
piratebroadcast
I'm a Web Developer with a few years of experience on the East Coast. I do OK,
salary wise. I missed the first bubble and am not on the East Coast. What
should I expect from this? Layoffs mean more developer supply? Just trying to
be cautious and prepared for worst case.

~~~
forgetsusername
> _What should I expect from this?_

As of right now? Nothing. This is mostly paper being moved around. Economic
tides are shifting and there are always people caught with their pants down.

In the long run? Who knows? We just finished a massive bull-market run, now
there's been a commodity crash and global growth prospects look bad. It could
be business-as-usual or completely uncharted territory. Don't fret over what
you can't control.

------
kchoudhu
Oh look, an opportunity to buy.

~~~
MCRed
Warren Buffett says "If you're buying hamburger your whole life, do you want
the price to be low or high?"

For me, the situation is such a mess that I don't think we're close yet to
what I would consider a buying opportunity.

One saying is "buy when there's blood in the streets"... but I don't think
we're there yet.

Downvoted and slow banned. Why do I even contribute to this site?

~~~
FilterSweep
When I saw the articles in my local newspaper over the weekend of this
happening, I figured its almost time for me, a fresh college graduate, to jump
into the markets.

But considering how profound the issues of Chinese Real Estate bubble are -
they were paying people to make it look like empty, recently-built, luxury
apartment complexes had people actually living in them - I think the worst is
yet to come and I'm still waiting.[0] [1]

[0] RE Homes: [http://www.wsj.com/articles/more-than-1-in-5-homes-in-
chines...](http://www.wsj.com/articles/more-than-1-in-5-homes-in-chinese-
cities-are-empty-survey-says-1402484499)

[1] RE Apartments: [http://www.economywatch.com/economy-business-and-finance-
new...](http://www.economywatch.com/economy-business-and-finance-
news/200-million-empty-apartments-chinas-complex-property-market-21-12.html)

~~~
distances
Just start monthly investments into index funds / ETFs. Start with small sums
if that makes it better, but do start with monthly (automated?) investments. I
kind of hope someone would have pointed me to the right direction years
earlier.

In case you're worrying of buying at the top: it's still a good idea. There's
a very nice article [0] of what would have happened to an imaginary investor
if he always bought at market peaks only, and held between the peaks.

[0] [http://awealthofcommonsense.com/worlds-worst-market-
timer/](http://awealthofcommonsense.com/worlds-worst-market-timer/)

------
geff82
Nothing to be surprised here.

Anyway, finally this might be the perfect time to consider a market entry
again after a lost year so far. Lost if you were refusing to buy at much too
high prices. Let it go down some more days and invest then.

~~~
ceejayoz
[https://en.wikipedia.org/wiki/Market_timing#Evidence_for_mar...](https://en.wikipedia.org/wiki/Market_timing#Evidence_for_market_timing)

> Studies find that the average investor's return in stocks is much less than
> the amount that would have been obtained by simply holding an index fund
> consisting of all stocks contained in the S&P 500 index.

~~~
code4tee
The biggest "secret" on Wall Street is that active money management is often
worthless. The ability of someone to 'beat the market' on a long term basis is
extremely limited. Most investors are better off just buying a few index ETFs
and letting it ride for 30 years.

Given that many banks have gotten out of prop trading and are now shifting
into "wealth management" shops (hey we lost all our money when we tried that
game... why don't we try it with your money!) there's clearly a lot of effort
to convince people otherwise... but the numbers don't lie.

~~~
mikeash
We see a lot of stories on HN about how so many medical studies are false
positives, because when you set up your analysis to yield 95% confidence, and
most of your studies are on things that have no effect, the 5% false positive
chance translates to a much higher false positive rate.

Active management is subject to the same thing. Everyone hammers on the idea
that "past results do not guarantee future returns" but that's all anyone ever
looks at, what with it being very difficult to observe the future. Some active
managers will be successful simply by luck. They'll tout their results and get
more customers from it. And then eventually their luck stops and they'll
revert to the mean, minus their fees. Because of the proportions involved,
lucky managers will heavily outnumber those who are actually good at it (if
there are any).

------
dataker
I'm assuming the Fed will not raise interest rates now.

~~~
roymurdock
I'm struggling to think of what the Fed can even do in this situation.

I guess they can either 1) dig themselves deeper into a hole and issue another
round of QE to inject liquidity into the markets or 2) do absolutely nothing.
Though they are probably loathe to do nothing as then it would seem like they
don't have a solution.

Whatever happens, it will be an interesting/exciting time in non-traditional
monetary policy that will generate a ton of academic papers going forward.

~~~
jayess
About all they have left is more QE. My guess is that the next step in this
bubble they've blown (along with the rest of the world's central banks) is
massive deflation.

~~~
meatysnapper
Honestly, I expected inflation for the last 6 years, but we haven't seen it.
However, prices are creeping up nicely, in all the desirable places. Is that
really that different?

------
rdudek
Stocks are rebounding. Someone made it off like a bandit this morning.

~~~
drcode
Disney stock was down almost 10% this morning. HOW POSSIBLY can it be rational
for Disney stock to drop 10% because of a single day of rough trading in the
Shanghai market, especially given how much Disney has dropped already in the
last few months? I considered that the buying opportunity of the year. (knock
on wood...)

~~~
czinck
If you're gonna look at crazy swings, I have an S&P smallcap 600 index
tracking ETF that was down 40% at open. The index itself was only down a few
percent, just buy that, wait for liquidity to return, and bam 30% ROI in a few
minutes. Just had to be quick enough to get in before the halt.

~~~
drited
Would you mind sharing the ticker of that ETF czinck? I'd be interested to see
that movement on a chart.

~~~
czinck
I was talking about SLY specifically, but lots of other ETFs had similar
moves.

~~~
drited
Interesting, thanks!

------
ceejayoz
Seesawing pretty heavily at this point. It was back up to -500ish a few
minutes ago, then back to -800ish.

------
joezydeco
How do oil prices factor into this? The price has already been diving in this
last quarter. Oil stocks also make up a huge portion of the Dow formula.

~~~
jonknee
All sectors are diving today. Energy, tech, healthcare, financials, telecom,
even utilities.

------
swalsh
Best time to buy is when there's blood in the streets :D

~~~
xur17
I just can't decide if there will be more blood, or if this is just the
start...

~~~
hwstar
There's old traders saying: Don't catch falling knives.

~~~
harmegido
That's because traders are generally flat at the end of the day. They don't
have 30 years to wait for that knife to land on a rocketship and end up at the
moon.

------
vasilipupkin
I just want to offer everyone a professional piece of advice. Large down moves
in equity markets is exactly when you should buy equities because that's when
expected returns are at their highest.

~~~
adt2bt
This got me thinking - is it possible to develop a profitable long-term
investment strategy that takes advantage of stock market dips?

For example, say I have $1000 to invest every month. I'll take that $1000 and
put $500 into an index fund and $500 into a savings account. Then, once the
market dips 10% from its previous high, all the accumulated money in the
savings accounts is invested over 4 weeks.

I made a simple google doc to back-test the strategy 5 years on the DJIA. It's
very rudimentary, but I'd love to see if anyone tries a different approach.

[https://docs.google.com/spreadsheets/d/18-2rBonJPPlg8n6YkpAj...](https://docs.google.com/spreadsheets/d/18-2rBonJPPlg8n6YkpAjAXBKX-
Arf5_bByO1ETZf8bY/edit?usp=sharing)

~~~
001sky
testing (a) trading strategy in a short window ... why?

~~~
adt2bt
It was a first stab in 15 minutes this morning between meetings. What would
you do differently? I'm all ears (trying to learn here, too)!

------
carsongross
_" There is no means of avoiding the final collapse of a boom brought about by
credit expansion. The alternative is only whether the crisis should come
sooner as the result of a voluntary abandonment of further credit expansion,
or later as a final and total catastrophe of the currency system involved."_

[https://mises.org/library/human-
action-0/html/pp/818](https://mises.org/library/human-action-0/html/pp/818)

~~~
duderific
There is absolutely zero political will for the voluntary abandonment of
credit expansion. So, only the final catastrophe, the collapse of the dollar
as the world's reserve currency, is the final outcome. It could be decades
away however; there is just too much invested (literally and figuratively) in
keeping the dollar afloat.

------
jayess
Maybe the failure of central banking bubble-blowing will finally be
realized... I'm guessing not though.

------
IceColdCoder
I'm just injecting some alternative thought here but I think one major
question that needs to be asked about the health of the economy is:

"How much of the weighted average person's day is that person spending on
survival".

I don't see how slow shift to a 60-hour instead of a 40-hour work week is
indicative of a healthy economy but I could be wrong. To me it seems that
survival is taking more and more time when it should be taking less and less
if the economy were actually growing. This is probably just a "correction" but
I think we will be seeing more and more of these here soon. I've been looking
at the robotics industry and I can see them going into full public view within
the next decade. The results will be interesting.

~~~
theseatoms
Weighted by what?

~~~
IceColdCoder
I was thinking of clustering. If you have a large group of people in a general
income sub-group then it would weigh more than fewer people in another income
subgroup. The point of weighing is that margin-based models depend heavily
upon a large consumer base and only certain consumer bases are of any
significant size.

~~~
sokoloff
So, in other words, just the average across the population?

------
randomname2
Markets are green again thanks in part to move in AAPL worth over 80B in
market cap.

This happened after Tim Cook's email to Jim Cramer, which may have violated
Fair Disclosure regulations:
[https://mobile.twitter.com/carlquintanilla/status/6357996299...](https://mobile.twitter.com/carlquintanilla/status/635799629947404288)

~~~
notNow
There's a share buyback program ongoing for Apple. So, I am not really
surprised that they are defending their stock in the market and bidding it up.
Note also that APPL's cash reserves are YUGE and they can play this game for
some time.

------
alistproducer2
It's easy to get out, hard to get back in. I moved 401k money out June 30th.
Planned to get back in at SP 1900. If we close down < 2% I'll call bottom and
get back in at close prices today. > 2% loss and it signals real fear that is
probably not over yet. Either way we'll get a bounce tomorrow.

------
tzm
From what I've heard from locals.. the recent chemical explosion triggered
general fear of wide-spread corruption and an impending economic coup d'état
from nationalists who want to disrupt the current power.

------
ultramancool
How about a more useful index than the Dow, which fails to account for basic
stuff like market cap? S&P 500 % drop or something would be more meaningful.

EDIT: The page in question lists it actually, S&P 500 down 4.1%.

~~~
Cshelton
The correlation between the indexes is pretty strong. Despite the DOW not
being a statistically great thing, it's very rare it's doing something
significantly different than the S&P 500.

------
sbt
I would recommend an article by George Magnus called "The Chinese model is
nearing its end", which was printed in the FT on Friday. You can bypass the
paywall if you Google for it.

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icedchai
In the grand scheme (meaning, 5+ years), this is a small blip. Buy more.

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williesleg
Usually happens before a big political shift. Buy the viix.

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meapix
yeah, scratch your head, that's the best you could do.

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ojbyrne
That graph has become significantly less panic-inducing.

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mylons
and now this headline isn't relevant. stocks are UNCH or ^. _white knuckling
it_

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jebblue
I wonder if any of this could be related to recent tensions in Korea?

[http://www.cnn.com/2015/08/21/asia/koreas-
tensions/](http://www.cnn.com/2015/08/21/asia/koreas-tensions/)

~~~
photosinensis
No. This is mostly about a bubble in China popping. Potemkin buildings have
been a thing there for a very long time due to a series of perverse effects of
policies by the Chinese government.

The Korea business is pretty much business as usual there.

The good news for the US is that we're a Chinese consumer, and they're not a
major customer for our goods. Additionally, they're a competing consumer for
resources. Basically, this means that the prices for American imports will
drop, making the USD stronger internationally and encouraging international
investment in the US economy.

The one thing to worry about is that the drop in import prices will likely
cause a drop in the prices of domestic goods.

------
cryoshon
It's hard for me to tell whether this is just a "correction" (massive
deflation after exuberance) or an actual meltdown. I had predicted the actual
meltdown for September of 2015, but I guess this is pretty close. I wonder how
this will affect my life, if at all.

"The New York Stock Exchange said it will halt trading for 15 minutes if the
Standard & Poor’s 500 Index drops 7 percent." [0]

How is it fair that the markets get put on pause if they're failing? I really
don't understand.

[0]:[http://www.bloomberg.com/news/articles/2015-08-24/nyse-
will-...](http://www.bloomberg.com/news/articles/2015-08-24/nyse-will-suspend-
stock-trading-if-s-p-500-index-plunges-7-)

~~~
andrelaszlo
"I had predicted the actual meltdown for September of 2015, but I guess this
is pretty close. I wonder how this will affect my life, if at all."

If you predicted it, then it should at least make you rich? :)

~~~
ramblerman
Thank you.

This cognitive fallacy of "I knew" and "I was saying it long ago" etc...
really irks me.

Especially in something like stocks you are 100% right, put your money where
your mouth is and spare us the story of your grand predictive prowesses.

~~~
MCRed
I predicted the 2008 crisis in 2001. (Well an article on
[http://mises.org](http://mises.org) made it clear it would happen.) This was
before the housing bubble started to inflate, and was easy to expect due to
the changes in the CRA and the artificially low interest rates.

I profited from the bubble quite well, decided the top had been hit when
things got really wonky and got out of the market in 2007. I was a year early,
but I'm not complaining.

It's not a fallacy, you can do it, if you understand economics. The problem
is, most people involved in stocks are more interested in technical analysis
and tea reading than fundamentals of economics.

It's the fundamentals of economics that drive "black swan" events.

From 2001-2007 I constantly saw people claim there was no bubble, I constantly
saw people say things like the economy is good and healthy. I constantly saw
people pretend like the fed wasn't blowing up a balloon. Article after article
was published spinning tales to pretend like up was down and down was up.

And then in 2008 when it popped, I constantly saw people claim there was no
way to see it coming. I saw it blamed on Wall Street. And since then I've seen
article after article published to misdirect and mislead about what was going
on, saying up was down and down was up, to service the narrative.

The key indicator of a science is the ability to make predictions... yet the
"dismal science" of economics is portrayed by politicians as incapable of
saying anything, because they use it to pitch self serving narratives.

But the reality is, good economics has predicted every major crash, and its
reasons. You can't necessarily know the timing-- I was off by a year, and I
have no clue when the next one is coming.

\-------

I see I've been slow banned and am getting brigade downvoted across all of my
comments. This harassment is typical on hacker news when you think for
yourself and don't tow the party line. Jesus, what draconian filter bubble.
That's fine, my time here was largely wasted anyway.

Here's the comment I was going to make below, but now am not allowed to:

I've been slow banned so I expect a hell ban is coming, I don't know why, but
I guess its because I'm not on the praising obama bandwagon. So this may be my
last post, if I'm ever able to post it.

Yes, if I'd just stayed in with everything for 6 months or a year I would have
been worse off. I was pretty close to the top, in what I was investing in. I
did sense that the market got weird- the response was not what it should have
been based on the macro events. When things stopped making sense, I got out...

If I hadn't gotten out at all I would have lost a lot of money - whether you
measure to 2008, 2009, 2010, 2011, 2012, 2013, 2014, 2015.

Those investments were plays on the bubble... not investments that make sense
after the bubble.

It's difficult to do long horizon investing when the market is so manipulated-
by the government and by the messed up regulation-inhibited outdated
exchanges. But you can know the fundamentals.

The problem is, a lot of people emotionally don't want to face reality, and a
lot more people get rich selling them fantasy.

No, the US economy is not doing well. Hell, the US government can't even sell
bonds, it's selling them to itself with the Fed fabricating money to buy them.

~~~
forgetsusername
> _downvoted across all of my comments_

Maybe you're being down-voted because you're just a guy on the internet,
bragging about how you saw it coming (7 years in advance!), timed it
perfectly, made a bunch of money, and are now lecturing us on how it's
"easy"...without a shred of evidence?

~~~
mjevans
I think you're not thinking critically enough in interpreting what he had
said.

More or less, he had said 'I felt it was unhealthy 7 years in advance'. The
actual 'prediction' was only a year or two from the event in question; 'the
market didn't make sense' and reacting to that.

------
jsf666
Just fuck my shit up fam, jesus... and I was thinking about shorting it
friday. Oh well, gotta wait it out. Just hope it won't take 5 years not
counting inflation

