
Dow plunges 1000 points - coloneltcb
https://www.cnbc.com/2018/02/04/us-stocks-interest-rates-futures.html
======
longerthoughts
To put things in perspective:
[https://en.wikipedia.org/wiki/List_of_largest_daily_changes_...](https://en.wikipedia.org/wiki/List_of_largest_daily_changes_in_the_Dow_Jones_Industrial_Average)

Saying "Biggest Point Drop in History" is a deliberate attention-grabber and
incites more fear than it probably should. We should be more concerned with
percentage changes and at -4.6% this doesn't even make the top 20 daily
percentage drops, which cuts off at -6.98% for number 20 (see above link).

~~~
starpilot
It looks like it might be in the top 100 though. Considering these are changes
per _day_ , and the chart covers around 100 years or 25,000 trading days, this
puts it in the top 0.4% of largest percentage daily losses. So, it does appear
to be a significant losing day if 99.6% of such days are smaller in magnitude.

~~~
quickthrower2
About 0.3% of days are my birthday.

~~~
hamandcheese
Despite the downvotes, the point seems valid on its surface. We should expect
a losing day this bad or worse more frequently than once per year, which
doesn’t sound that scary.

On the other hand, I wouldn’t expect losing days to be evenly distributed (in
the short to medium term at least) but rather clumped together.

------
propman
Inflation finally is going up after years and we can get out of this
stagnating economy. Wage growth up 3% in new January report and so we can
finally expect interest rates to rise faster like they did in the past. Many
investors, especially institutional ones have for years thought the stock
market has been over priced but where else to park money because interest
rates are too low?

Overall the 3% wage growth is huge for the economy especially because
unemployment is so low. Other economic indicators also show a very healthy
economy so when the next recession hits we'll have the tools to stop it.
Inflation not rising has like stated baffled everyone so glad we are now
dealing with what we know rather than wading into the unknown. The normal
rules seem to apply again.

This is also why presidents shouldn't make their number one accomplishment the
market because often times market crashes don't correlate with recessions or a
poor economy. Trump did have a huge effect on the market, but not 10% which he
thinks he did. That said the market is still higher than it was 5 weeks ago.

Risk averse savers will finally be rewarded. My biggest fear is the huge
deficit, and the huge spending. I think the tax cut is great long term but
could have been made significantly better, and could have scored under $100B
deficit over 10 years under dynamic scoring (currently at 500B) if they
decreased the top rate but still made it significantly higher than what it is
today, and made the global min tax per individual countries but payable over
time rather than all combined.

~~~
state_less
I wasn't a big fan of the tax cuts, even though I'll see the proceeds from
them. Some think that the less you pay, the better, all the way to zero. In my
view, taxes are like porridge, you don't want it too hot or too cold. The best
amount is not too little or too much. I too worry about the deficit and think
we need to tax the biggest gainers a bit more and provide safety nets for the
economic losers so they can breath easy and participate in the economy a
little more than just sustenance levels. As we've written and read about here
in the past, it's expensive to to be poor (e.g. visiting the ER vs. early
prevention, overdraft fees, etc). That may not be what you like to hear, but I
also don't think we should tax the gainers too much either. There needs to be
an incentive to to do well and I'd be against cutting into that too deeply.

~~~
dahart
I quite like your reasonable, balanced approach. I've always been curious
about your last point though:

> There needs to be an incentive to to do well and I'd be against cutting into
> that too deeply.

I've never understood why any tax rate would be a disincentive to do well.
Even if the tax rate was 90%, doing well is doing well. If I make more money,
I get to keep more money, even if taxes are high.

If we have tax brackets, then yeah sure there could be an unlucky minority of
people who just barely land in a higher bracket than someone just under the
line, so they pay a higher percentage than someone else.

But if you're well above the threshold, the amount you keep is more the more
money you make before taxes. Isn't the _primary_ incentive at all times to
make more money, regardless of taxes? Or is the idea of paying a higher
percentage than someone else a strong enough motivator to actually keep people
from trying? Or am I missing something?

~~~
state_less
As the tax rate increases, the value you get for increasing your income goes
down proportionally.

I think if you take it to the limit, you can see the effect more clearly. As
the tax rate approaches 100%, say 99%, then even if I make $100,000 before
taxes, I'd only keep $1,000. If I push myself hard to earn $200,000, I'd get
to keep $2,000. Yes it is still double, and I am doing better, but not much of
interest changes in my life and I personally wouldn't say I'm doing well. I
can barely afford to take that second vacation, or see much value for my
efforts. My efforts are simply less rewarded, giving me less tangible reason
to make the extra effort. I think this would kill off the incentive to create
wealth in the economy.

Wealth is needed to take care of basic needs, so it would be self defeating if
you were trying to take care of everyones needs and make sure they had a
little spending money to participate in the economy.

Somewhat as an aside, I didn't consider what benefits I would receive for
paying a 99% tax rate, presumably it would be all the basic needs plus some
more, but this would start to feel like a planned economy where individuals,
with their small discretionary funds, would't have as much input into what is
created in the economy, rather it'd be a course political process which could
be slow to meet the needs of the citizens, or fraught with other unforeseen
difficulties.

~~~
dahart
Ah yes for the working class, I can see a 99% tax rate would very likely have
this effect. I'm still wondering if we stayed in more realistic ranges, is a
40% tax rate, or even a very high 60% tax rate by US standards, a real
disincentive to earning more money? I feel like it would take a pretty high
tax rate before I stopped caring about my income. Does it actually have that
effect in Norway, for example?

I realized I'm also mixing a few different thoughts in my head. I've heard the
high taxes being an economic disincentive idea applied to the rich and to
corporations and to investors, and I think my question applies more to them
than to the middle class. You weren't talking about only the rich, I think I'm
projecting a little bit.

Is the idea for businesses and investors that with higher taxes, in the
aggregate there are always alternative places for the money, and so behavior
changes statistically as tax rates increase? Maybe I'm interpreting
"incentive" too literally.

~~~
badpun
> Ah yes for the working class, I can see a 99% tax rate would very likely
> have this effect. I'm still wondering if we stayed in more realistic ranges,
> is a 40% tax rate, or even a very high 60% tax rate by US standards, a real
> disincentive to earning more money?

For me, and for people like me, it would be. I work high-paying shit jobs
precisely because they pay a lot. The amount of saving I'm able to do in these
jobs is life-changing (i.e. FU money after 5-8 years). If most of that money
went to taxes, there'd be little point in doing them and I might as well
induldge in doing something more satisfying instead.

------
valuearb
I hate to be nitpicking about good news, but the S&P 500 is down less than 7%
from it's peak, that's hardly a crash. Especially after gaining 26% over the
previous year. And, after increasing over 90% the last 5 years.

Obviously, either way a decline in the stock market indexes is good news for
almost everyone. I'm hoping for a real crash as I need to save lots more
money, not just for my retirement but also for my kids college.

~~~
JKCalhoun
Not a crash, but the gains of January have just been wiped out in the few days
of February trading.

~~~
exolymph
If you're a normal person, not a day-trader, the time horizon your investments
should be on the order of years, not months. If you're a day-trader, then this
is just one of the risks of that choice.

~~~
cinquemb
If you're a normal person, who had a decently sized/exposed market retirement
account in 2007, it took you about a decade to get back to the same level,
inflation adjusted.

That's a lot of risk for chasing inflation adjusted returns…

Not to mention, there are a couple short volitilty ETFs that will be
terminated soon, hope some long term ETF buyers won't be exposed to them or
any big names they are holding who were exposed, because we're not done yet…

~~~
refurb
_If you 're a normal person, who had a decently sized/exposed market
retirement account in 2007, it took you about a decade to get back to the same
level, inflation adjusted._

Jesus! What was this average person invested in? From the bottom of the market
to back to the prior peak was 3 years for me. And I was so heavy in equities I
lost 1/3 of my portfolio's value.

Where does this "decade" come from? The DJIA is nearly 90% higher than the
peak pre-2008.

And I know you said inflation, but that has been 1-2% per year since then.

~~~
cinquemb
I had in mind the ^RUA, which only started to break out from the previous top
after 5 years, nominally, so you're right, not a decade, but not good for
someone trying to retire within that time frame (which doesn't seem like you
were).

Still, I worked for a fund that swing traded futures for better returns and
less risk than holding the market during this period…

------
Matt_Mickiewicz
I was just reading:

[https://static1.squarespace.com/static/5581f17ee4b01f59c2b15...](https://static1.squarespace.com/static/5581f17ee4b01f59c2b1513a/t/59ea16dbbe42d6ff1cae589f/1508513505640/Artemis_Volatility+and+the+Alchemy+of+Risk_2017.pdf)

tldr; * The Global Short Volatility trade now represents an estimated $2+
trillion in financial engineering strategies that simultaneously exert
influence over, and are influenced by, stock market volatility

* Since 2009 Global Central Banks have pumped in $15 trillion in stimulus creating an imbalance in the investment demand for and supply of quality assets

* Last month Austria issued a 100-year bond with a coupon of only 2.1%(6) that will lose close to half its value if interest rates rise 1% or more.

* Amid this mania for investment, the stock market has begun self-cannibalizing... literally. Since 2009, US companies have spent a record $3.8 trillion on share buy-backs financed by historic levels of debt issuance.

* Every decline in markets is aggressively bought by the market itself, further lowing volatility.

* Volatility is now at multi-generational lows... Volatility is now the only undervalued asset class in the world. Equity and fixed income volatility are now at the lowest levels in financial history.

~~~
quickthrower2
How is Volatility an asset, and how does one take advantage of this?

~~~
d--b
Banks sell derivatives indexed on vol, like vol swaps and var swaps.

VIX futures also reflect stock market volatility, and their prices are based
on S&P option prices.

~~~
quickthrower2
Ah VIX - I saw that
[https://news.ycombinator.com/item?id=16313832](https://news.ycombinator.com/item?id=16313832)

------
petercooper
Cripes, it's plunged to levels only last seen 2 whole months ago.

------
dmode
I would not have worried too much of a Dow correction, but I feel like a
trifecta of events are coming together that is a bit concerning. First, is the
explosion of US government deficit which could potentially lead to austerity
measures in the near future. Second is the threat of inflation and
overheating. And third is the plunging savings rate of individuals. It almost
appears that these three are moving to a confluence. Austerity + rise in
interest rates + depleted savings could lead to a consumer spending crash in
the near future.

~~~
refurb
Plunging saving rates? Saving rates jumped after the last crash. They are far
higher in the US than countries like Canada, for example.

~~~
dmode
US savings rate actually dropped to a 12 yr low recently
[https://www.marketwatch.com/story/why-the-savings-rate-
falli...](https://www.marketwatch.com/story/why-the-savings-rate-falling-
to-a-12-year-low-is-not-a-death-knell-for-the-us-
economy-2018-01-29?mg=prod/accounts-mw)

~~~
refurb
Thanks for sharing that.

Considering the noise in that chart (savings rate drops from 11% to 5% in one
month?!?), I would question whether it's really a trend and how accurate the
data is.

One of my pet peeves with economic data - some leading indicator plummets
after being high for years. Mass panic in news headlines, only for it to
return to normal the next month.

------
rmrm
part of my biggest sell indication was a visit to the site zerohedge. They are
a very bearish - gold centric site. I like to visit sites like these to
balance out the generally optimistic news one sees elsewhere. Recently, I have
noticed that the site has lost their commenters - they are all making fun of
the site and how it cost them so much money, missing out on all these gains. I
realized that completely aside from things like inflation upticking, the fed
removing some QE, market being incredibly highly valued - that if one of the
largest bear sites around had actually lost their crowd, that even that rank
and file thought it was stupid to doubt that the DOW would only go up...it
might be time to think about taking a step back. At least until post-Brexit
next year.

------
cs702
The specter of rising interest rates in the US (driven by higher inflation
expectations) appears to be a factor.[a]

Fast-growing companies that are investing aggressively today and whose profits
lie far in the future, in particular, are exposed to rising interest rates,
due to the higher _duration_ of such companies' cash flows.

Duration, for those here who don't know, is a measure of the sensitivity of
present value to interest rates.[b] Duration rises with the amount of time an
investor must wait for cash flows, and vice versa.

For example, the present value of $100 of cash flow in 10 years, if the
10-year rate is 2%, is equal to $100/(1.02^10) = $82; if the 10-year rate
rises, say, from 2% to 3%, the present value declines to $100/(1.03^10) = $74,
or a _-10% decline_. However, if the $100 in cash flow is in 30 years, and the
30-year rate rises from 2% to 3%, the present value declines from
$100/(1.02^30) = $55 to $100/(1.03^30) = $41, or a _-25% decline_.

In this example, an increase in duration from 10 to 30 years caused the
sensitivity of present value to a 1% rise in interest rates to change from a
-10% decline to a -25% decline. The longer an investor has to wait for cash
flows, the greater the sensitivity of present value to changes in interest
rates.

The same ruthless logic applies to companies. The present value of companies
whose profitability is in a distant future _declines much faster_ when
interest rates rise than the present value of companies certain to generate
cash flows in the near future.

Until recently, due to historically low interest rates and no prospects for
inflation, the stock market has been rewarding high-investment companies that
are sacrificing current profits for growth.

If interest rates continue to rise (along with expected inflation), I'd expect
this abruptly to change -- in which case, strap on your seat belts!

[a]
[https://www.ft.com/content/af1f8e4a-0a23-11e8-8eb7-42f857ea9...](https://www.ft.com/content/af1f8e4a-0a23-11e8-8eb7-42f857ea9f09)

[b]
[https://www.investopedia.com/terms/d/duration.asp](https://www.investopedia.com/terms/d/duration.asp)

------
meri_dian
A market is like a forest and a market crash is like a forest fire. In order
for the market to grow and be healthy in the long term, a purge every now and
then is necessary.

~~~
PoachedSausage
Last time round (2008) we deferred the purge, when you do that the next forest
fire is potentially even bigger.

------
arthurjj
For most HN readers this means you should be buying more stock.

~~~
jimmytucson
Right.

Better yet, wait for the end of this correction, _then_ buy more stock.

Better still, sell any stock you own, and at the end of this correction, buy
it all back and more at a cheaper price. Yeah, that’s the ticket!

Guys, all we need to do is find out when this correction is going to end. I
feel like we can narrow it down to between one day and one year from now.

~~~
arbuge
>> wait for the end of this correction

How exactly do you decide the end of it has been reached?

~~~
pvdebbe
Whatever money I'd put in right now, I'd diversify the time component. Instead
of buying 1x at once today, tomorrow, buy 0.2x every two/three days.

------
cmurf
The dollar has weakened over the past year, so knock off 1/4 point off any
quarterly GDP numbers proposed, and knock 10 points off the 23% the 401(k)
supposedly got in the past year, and consider any inflation comes with
assymetric timing risk where wages always lag by a lot. And now in real terms
the past year's stock increases look a lot more ordinary rather than
remarkable. It's not like the stock market is going to ignore a weakening
dollar, in particular when the Treasury Secretary publicly says it's a good
thing as if it's an actual policy to have a weak dollar.

And working people have to feel the sting of inflation before they demand wage
increases, they don't just automatically happen. Before that, interest rates
going up might increase housing sales as people want to get "in" before the
interest rates go up even more, and then housing will slowly taper off as
inflation and interest rates take hold, and people get priced out of buying,
since their wages will not keep up in the short term.

Inflation also helps pump up tax revenue, and monetize debts. So the numbers
will look better, but in real terms they won't be better for a while until the
markets fully correct for inflation and then things stabilize a bit.

------
patio11
"Fruits of capitalism available at a 3.5% discount to last month; limited time
offer" would sell less ads, sadly.

------
Avshalom
Biggest by absolute value or by percent?

~~~
matwood
It's a great question, because point drops are not a very useful metric.

~~~
fullshark
Yeah i expect this record to be shattered multiple times in my lifetime.

~~~
sokoloff
I _hope_ [this point record] is shattered many times.

Otherwise, I've died young or the market hasn't grown much over my remaining
~40 years of life...

------
mozumder
What's with the 600 pt 3pm sell-off and recovery within 5 minutes? Algorithms?
I thought massive swing effects are supposed to be under control now?

~~~
smallnamespace
> are supposed to be under control now

Why would you think that? Massive swing effects are often caused or
exacerbated by algorithms trading on momentum.

They do that because trading on momentum usually pays, and doing the hard work
of fundamental value investing is difficult and also hard to scale.

Momentum trading is fine if only a few people are doing it, but if enough of
the market transitions to having 'no opinion except following the crowd', then
you get instability just like this. And many factors since 2010 have made
flash crash-like events easier to cause, not harder.

~~~
fwdpropaganda
Unlikely. Momentum works terribly for equities, doubt there are many people
doing it.

------
myth_buster
Think this is relevant here...

[https://www.npr.org/sections/money/2017/01/04/508261371/epis...](https://www.npr.org/sections/money/2017/01/04/508261371/episode-443-dont-
believe-the-hype)

------
CodeSheikh
Just by looking at the continuously negative % drop over the historical data,
there's a pattern in 2008 (The Crash)

9/15/08 9/29/08 10/7/08 10/9/08 10/15/08 10/22/08 12/1/08 −4.42 −6.98 −5.11
−7.33 −7.87 −5.69 −7.70

8/4/11 8/8/11 8/10/11 −4.31 −5.55 −4.62

8/21/15 8/24/15 −3.12 −3.57

2/2/18 2/5/18 −2.54 −4.60

For 2018 to reach 2008 state, lets see if there are more significant (>-4%)
drops in 2018 for us to start freaking out.

Again this by all means is not a financial model, it is something that I put
together to tell myself "Keep Calm"

------
fallingfrog
Market crashes don't necessarily have to result in economic pain. But when
they did, both in 2008 and 1929, it was because the rise in stock prices was
financed by debt. I'm worried that that might be the case today in the form of
leveraged buybacks and the like, but I can't find any statistics on how much
of the current asset bubble was debt financed. I suppose we'll know soon
enough.

------
syphilis2
It's grim to see how unprepared websites are for sudden activity like this.
I'm having a tough time logging in to my accounts.

~~~
chatmasta
On the bright side, at least sysadmins are first in line for a bank run.

------
bhouston
I do worry that this is the end of the current bull market and we'll be
entered into a recession in the next half year or so.

~~~
matwood
Stock market corrections do not always lead to or cause a recession (or vice
versa). Many Americans do not even own stocks, so something like today will be
a passing news item barely noticed.

If you think a recession is coming, what will be the trigger(s)? Right now
companies are making money, wages are finally growing, and jobless claims are
near what some would say is full employment. The only real euphoria I see is
in crypto, and I just don't see a problem there being able to spread economy
wide like what happened in housing.

~~~
bduerst
>If you think a recession is coming, what will be the trigger(s)?

Not in the immediate timeframe, but there are some potential breakers looming
out there that have potential to hit in the next year or three.

The first is inflation, and the fact that we just pulled a massive tax cut.
This will probably lead to stock buybacks, throwing gasoline onto the already
booming economy. Usually it's best to save the cuts for busts, to stimulate
growth. Now it's like throwing that third fuel pack into the train engine on
_Back to the Future III_.

The second is the education bubble. The wealth gap is slowly but steadily
growing for the current generation, and student loans are a strong cause. This
is more insidious because you're turning out a generation with decreased
buying power that they won't recover from without intervention. Depending on
the method of the intervention, it could lead to debt disappearing which will
cause another recession.

Lastly is the housing bubble. It busted in some areas but is still booming in
others, thanks to no financial reform to prevent it from happening again. This
alone won't be a large enough factor to trigger another recession, but could
when combined with another smaller cause, like inflation. The fed has moved up
the interest rate increase schedule because it's becoming obvious that we're
looking at signals pointing to increases in inflation.

~~~
heurist
I recall hearing about a subprime auto loan bubble too.

------
jedberg
Let's say you're a smart investor, and you think a big crash is coming. Right
now everything you have is in stocks.

What do you move it to to hedge your risk?\\\

Edit: To clarify, I don't have everything in stocks. I'm just looking for good
advice on how to further diversify. I'm aware that timing the market is a
fool's errand. :)

~~~
outside1234
A smart investor will always have a set of numbers in mind - say 60% stocks
and 40% bonds - and every 6 months will rebalance the portfolio to that.

Over decades this will return better returns at dramatically less stress than
any other approach.

~~~
mcintyre1994
I'm sure there's some dimensions it's not optimal on, but Vanguard
LifeStrategy is a single low fee fund that does this for you. IIRC they have
20/40/60/80/100% equity options.

~~~
allenbrunson
Here’s my own anecdote ...

After hearing so many people say positive things about Vanguard for so long, I
set up an account there. They had pretty much all my disposable cash, in a
Roth IRA, for about two years. Rather than begin the predictable uptick in
wealth I expected, my results, having about $25K parked there, was that I lost
about 300 bucks. I sent several messages asking what I could do about it,
their responses were gobbledygook that I did not understand, so I took all my
money back out. Praying that I don’t wind up with a huge tax burden this year,
due to this mistake.

Here’s my message: regardless of the hype, Vanguard is not for unsophisticated
investors. I am looking for an actual human being who can help me invest, now.

~~~
north_east_dev
What did you invest in? If a 1.2% swing (over how long of a period?) spooked
you then you probably want a heavy bond to equity fund/balance.

~~~
allenbrunson
see, those are the exact sort of questions, and answers, that you are prepared
to provide. and you're probably pretty good at it! i am not. that's why
vanguard didn't work for me.

i am going to pay an actual human being to give me a list of options, with all
the pros and cons spelled out, so i can make limited decisions that wind up
with my pile of money growing, instead of shrinking. if that's too much to
ask, i'll just keep my money under a mattress, thanks.

~~~
north_east_dev
> see, those are the exact sort of questions, and answers, that you are
> prepared to provide. and you're probably pretty good at it!

Thank you, but it really has been a recent thing for me. It's only in the past
year that I actually worked out what this all means, passive versus active
investments, pensions etc.

> i am going to pay an actual human being to give me a list of options

I totally understand that but do me a favour. Before you pay anyone or start
down that route, watch this playlist -
[https://www.youtube.com/watch?v=_chiIIxMGl0&list=PLXy71rkGuC...](https://www.youtube.com/watch?v=_chiIIxMGl0&list=PLXy71rkGuCjXLg9N8zowwUpXCYfBcMJFK)

It was accidentally stumbling across that which led to me getting my stuff
together. At the very least it should give you a grounding in what to read up
so as not to be blindsighted by any financial advice you may get in the future
from a professional.

> instead of shrinking. if that's too much to ask, i'll just keep my money
> under a mattress, thanks.

Inflation is always eating away at your money there, no matter how thick your
mattress is ;)

~~~
allenbrunson
> Inflation is always eating away at your money there, no matter how thick
> your mattress is ;)

while that's true, if i'd kept my money under a mattress for the last two
years, i'd have 300 bucks more than i have now. and with a lot less hassle.

so, here's another story. i hate paperwork. hate, hate, _hate_. i hate it
enough that i pay a guy to do my taxes. i send him the forms as they trickle
in, sign what he tells me to sign. he answers my dumb questions about my
mortgage and my car loan and other financial stuff, when i ask them. i give
him a check for like 200 bucks a year, and i consider it money well spent.

i've been working with this guy for over ten years now. he's proven himself to
be absolutely trustworthy. i tried to give him even more money to manage my
portfolio, but he is not interested in having that job, so he turned me down.

is it really impossible to find somebody like him, to be my money manager?
while i hate paperwork, i am a really good judge of character. i dispensed
with half a dozen shysters before i landed on my current guy. i could do the
same thing with financial planners.

------
Mikeb85
It's also just coming off an all-time high. The worst performer this session
was the index's top performer in the run-up, which strongly suggests this drop
was fueled by profit taking. One thing to realize is that the market sometimes
just moves because of traders trading...

------
jonbarker
This is also the first downward correction after a 59 year record month over
month gain run of 10 consecutive up months. It's also been about 9 years since
the last true recession so I'd say the alarmism in the headlines is warranted.

------
an4rchy
Interesting to see the volatility in all these market these days.

I wonder how much the spread of information/social media plays a role in this.
it does seem like most of these swings seem to be from retail investors.

~~~
abakker
Interesting that VIX has been at an all time low for the last year or more. So
volatility has been at an all time low. These last few days have been rough,
though.

~~~
keebEz
VIX attempts to measure volatility but it is not volatility itself. The
lowness of VIX has been driven by the relative increase of the denominator
(total asset value, which has surged in the last few years) not by a decrease
of the numerator.

In general, it's usefulness as an indicator of volatility has decreased
lately.

~~~
marshray
VIX measures the risk premium on options on the S&P 500 index. I don't see how
total asset value ends up in the denominator?

Another explanation is that VIX is being actively dampened by the growing
popularity of the 'short volatility' trade. E.g., the SVXY ETF among others.
We're seeing today just how volatile volatility can be!

------
iknowicouldturn
Once again, Dow is an awful indicator even without the awful usage of absolute
numbers when numbers are obviously higher now.

Now the reason for my post. Where should I go for non-sensational finance
news?

------
dawhizkid
Surprised no one has made the cryptocurrency equivalent of VIX that moves in
the opposite direction of a basket of cryptocurrencies.

~~~
AznHisoka
Short Overstock. It moves very closely in align with crypto.

~~~
dlb_
Why is that? Do they have exposure to crypto?

~~~
wrigby
Yeah, they've made it a point to emphasize that they're working on crypto /
bitcoin related things[1].

1: [https://www.investopedia.com/news/overstock-goes-all-
bitcoin...](https://www.investopedia.com/news/overstock-goes-all-bitcoin-
stock-climbs-300-2017/)

------
m3kw9
Also, Programmed trading, excitement in the run up = more people buying, more
greed = more use of margins = more margin calls.

------
nodesocket
At one point down -1,600. I did a little buying today (BRK.B), this was margin
calls, algo trading, and fear.

~~~
cpncrunch
It's certainly a good idea to buy when stocks are undervalued. However at the
moment they are likely still overvalued, and it's also quite early days in
this current sell-off.

I just sold my entire portfolio (apart from retirement funds) earlier this
morning, as we want to buy a house later in the year and don't want to get
trapped if the stock market completely crashes.

~~~
psyc
I’ve been watching for a sell signal for about 6 months, and I also got
(mostly) out this morning.

~~~
refurb
The chance of you actually timing getting back into the market at the right
point is really low. Miss the best days of a run up and you're giving up 75%+
of your returns.

Far better to hold steady.

~~~
psyc
It’s been 10 years. Pretty epic bull run. I’ll cross the re-entry bridge at a
later date.

------
narrator
Yield curve isn't negative yet. I'd wait until that happens before calling it
a bear market.

------
jorblumesea
DOW != economy

A stock crash is not a recession. The stock market is not the economy. Stocks
falling is not a recession.

~~~
dragonwriter
OTOH, stock market crashes are not uncorrelated with recessions.

~~~
jorblumesea
There are actually a lot of examples where this is not true

1987 stock crash? No recession.

1980-82 recession? No stock crash.

1992 recession? Also no stock crash.

~~~
fallingfrog
A stock market crash only leads to recession if the preceding bubble was
financed with debt. Which, sadly, might be the case this time due to leveraged
buyouts and buybacks. In 2008, the housing bubble was financed with easy
credit. In 1929, the stocks were all bought on the margin. Then it's really
painful to unwind the bubble. If that is the case this time around, we'll know
when all those companies that bought their own shares back at inflated prices
go bankrupt at the same time.

------
ry4n413
it's simple...

Higher than Expected Inflation = Faster than expected Rising Interest Rates =
Cuts in Growth Outlook = Stocks go Down

------
matte_black
Don’t stress about this correction. No matter what happens, when it’s over
we’ll get right back to making _real money_.

------
purplezooey
But why hasn't it happened already?

------
koolba
Call me old fashioned but it's a nice change of pace to see news about
traditional market indexes crashing rather just crypto currencies.

~~~
ganeshkrishnan
Different reasons. I suspect this is due to traders taking their yearly
profits and then stampede set in.

The volatility index has a very sudden spike at the end of the market

[https://finance.yahoo.com/chart/%5EVIX/](https://finance.yahoo.com/chart/%5EVIX/)

~~~
JKCalhoun
> I suspect this is due to traders taking their yearly profits

Thought that happened in December, not February. A short year for traders this
year, I guess.

(unintentional pun)

~~~
antishatter
Nope, Nov through January are historically great months for stocks with
February usually being one of the worst. One cause of this may be fiscal tax
years not necessarily aligning with calendar tax years.

Edit: One of the more interesting and notable causes is that many fund
managers and investment advisors will actually rebalance portfolios so that at
years end it appears they were holding the biggest winner stocks/assets.
Basically a marketing trick.

------
fujipadam
Unprecedented growth leads to unprecedented correction. This is profit booking
but huge players. The market will stabilize and start rising again. The
fundamentals are still strong

~~~
adventured
Have you looked at the extreme bubble valuations that are essentially
everywhere in the market? The fundamentals are horrific.

2.x% GDP growth stacked against peak PE ratios like ~40 by Coca Cola (KO),
with zero (or negative) growth for years.

Who are the crazy investors paying that? The US and global economy can't
expand fast enough to pull down these multiples in a reasonable amount of
time.

50 times earnings for PayPal, for astounding 15% style growth. And similar for
Netflix, except at 200 times earnings. Or Activision up at 50x for similarly
uninspiring growth. Could always buy Amazon on the moon at 150-200 times
earnings, and wait a decade until their earnings catch up. There's always the
exciting Microsoft, almost zero inflation adjusted growth for a decade ($17.6b
in net income for 2008), in exchange I get to pay 30x earnings.

I guess there's always Walmart. I can pay 23-26 times earnings, for a company
that has had falling earnings for years. Or 28-30 times for 3M, where I can
get years of zero growth for that nice fat multiple.

And so on and so forth it goes, across the entire spectrum.

Investors were begging to get crushed up at Dow 26k. The recent surge into the
market by retail investors is one of the more classic indicators that a bull
run is done. They universally arrive late to the party.

~~~
jcomis
But where do you put your money in a time like this?

------
throwaway30yo
They are likely related, but it sure would have been interesting if the market
went down 2000+ points at the same time Bitcoin was surging upwards.

~~~
fullshark
But that didn't happen. BTC failed today's test that it's a "store of value /
gold alternative"

------
Firebrand
Must be investors pulling all their money out of stocks to put in crypto!

~~~
fwdpropaganda
Please tell me you're being sarcastic.

------
sabujp
anyone watching daily technicals would have seen the RSI and MACD dropping
last week, this should not be a surprise to anyone but noobs

~~~
BoiledCabbage
And how many times have RSI and MACD droped and market not collapsed?

You get zero credit for predicting a drop after it happened. And also little
credit for "predicting" something based on any indicator with frequent false
positives.

Saying "I knew it" because one of 50 indicators showed something the day
before is no different than what's happening in non-reproducability of
research. State claims and indicators before and shows a track record of prior
claims. But please don't after the fact claim "you knew it", everyone is a
"newb". It subtracts from the conversation.

~~~
quickthrower2
To be fair, he said "not a surprise" rather than "predictable with 100%
certainty". However you can't trade on not being surprised, you have to take a
position.

