
This is your brain on a crashing stock market - yarapavan
https://www.wsj.com/articles/this-is-your-brain-on-a-crashing-stock-market-11584615601
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systemvoltage
Take it with a grain of salt but I am hearing (through finance podcasts) that
a lot of hedge fund managers and investment bankers are working alone from
home and without physical proximity with their teams, the panic levels are
setting in. I think it makes sense to me - when we are not physically banded
together, we have a lost sense of safety and security.

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starpilot
Apparently HFT funds are printing money with all this volatility.

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rmrfstar
Super confused that anyone would down-vote this. It is empirical reality [1].

[1]
[https://faculty.fuqua.duke.edu/~charvey/Teaching/BA453_2004/...](https://faculty.fuqua.duke.edu/~charvey/Teaching/BA453_2004/Muller_Proprietary_trading.pdf)

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aazaa
No access to article, but an entire generation of money managers have grown up
with the Everything Bubble starting in 2009, fueled by Fed largesse. They've
never even seen a bear market, let alone a financial panic. Most have
completely ignored the alarming rise in valuations and market distortions,
engaging in extremely risky behavior for years on end.

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Retric
Yea, looking at P/E ratios based before COVID most companies only fell to a
reasonable level. I’m looking at the market and thinking it’s still a little
high.

A rising or falling stock market is not inherently good or bad thing. It’s
only really relevant as a prediction of future trends.

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dwater
Yes, I heard a "market analyst" on the radio this morning talking about how
the market is probably near the bottom now that COVID19 has been priced in,
and it's time to start thinking about economic recovery. Meanwhile, a
reasonable analysis of the medical situation in the US leads one to expect
there's a lot more downside to be exposed. What will happen to the market when
people who thought they had good health coverage are turned away from
hospitals, not in Brooklyn but in Kansas City and Peoria? Some forecasts put
us 2-4 weeks from that.

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OJFord
> near the bottom now that COVID19 has been priced in, [...] Meanwhile, a
> reasonable analysis of the medical situation in the US leads one to expect
> there's a lot more downside to be exposed.

That's exactly what they mean that's been 'priced in'.

I don't happen to agree, but you can't say 'the situation hasn't been priced
in, because the situation is going to get worse', because the whole point of
'pricing in' is that it's taking into account whatever thing we're pricing in,
wherever we're going.

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spking
Lately I've been thinking about all of the "F.I.R.E." and "Boglehead" blogs
and forums that have proliferated over the past 5-10 years. What percentage of
those people are panicking over their plunging index funds vs. those who are
ignoring the day-to-day chaos?

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rubidium
I follow boglehead strategy. I’m riding this down and will ride it up. It’s an
interesting ride but I’m not going to try and time anything. Still investing
70/30 s&p and bonds every 2 weeks. I’ve got lots of time left though (age 35).
Time will tell if it was the right call!

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robodale
I'm right there with you (although I'm 46). I'm doing regular buys into S&P, a
little bonds, and even a few blue chip + high dividend individual stocks that
have been beat down by the crash. The money I already had in stocks and stock
market funds...I'm leaving that alone. Those will come back over time, and
I'll have all the extra that I bought during the crash and recovery at
discounted prices.

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majormajor
What would our political policy look like if the news ignored stock prices and
focused on wage percentiles and employment numbers?

We'd still need to do something ASAP, but why not focus on that side of the
numbers instead of this stock market fixation?

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neonate
[https://archive.md/Gluq8](https://archive.md/Gluq8)

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marban
Might wanna add the extreme volatility as another multipler when it comes to
short-term stress bursts.

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Der_Einzige
Buy puts and shorts and instead of fear and panic you'll have the opposite
problem: You'll watch shit burn and be "happy" about it.

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OJFord
As in a memorable scene from the film _The Big Short_ , (nsfw/expletives):

[https://www.youtube.com/watch?v=7eYcWpgCb7o](https://www.youtube.com/watch?v=7eYcWpgCb7o)

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vkou
And yet, if _every_ investment (including cash, because there is a near-
certainty of the government turning to inflation to solve all these problems)
is crashing, then isn't it the case that nothing is crashing?

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commandlinefan
I wonder - it seems like a hyperinflation spiral would actually benefit people
who had, say, 30-year mortgages (not that I want that to happen).

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vkou
Unless we print quadrillions and quintillions of dollars, we are not going to
see hyperinflation.

Nobody is actually planning on printing quadrillions and quintillions of
dollars, so hyperinflation is a moot point.

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beckingz
Time to make it rain.

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throwaway_Bees
Clearly not the brains of those certain congressmen and women that sold off
before the crash...not to mention their constituents they likely gave the tip
to while maintaining a different political posture publicly. Curious what
kinds of bucket loads of cash they made and continue to make shorting with
continued access to inside info including classified intelligence.

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ruste
Okay, really though, what information did they have access to that wasn't
publicly available already? It's one thing to trade on the knowledge of a bill
or piece of legislation that you're voting on, especially if you're a deciding
vote, but unless I'm misunderstanding that didn't happen here. It doesn't seem
like they had any information that wasn't public knowledge at that point. The
whole economy was just slow to react to this. I've been paying attention to
coronavirus news and honestly would have sold around the time they did had I
had any exposure at the time. I get that it's easy to be mad about and makes a
good headline, but I just don't see it. Maybe I'm just out of the loop though.

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throwaway_Bees
>what information did they have access to that wasn't publicly available
already?

Both classified and top secret information.

For example, changes to China's production, mobilization, expenditure (sale of
stocks, debts, etc...), changes to net imports/decreases in net exports,
satellite imagery, State Dept/CIA field officers analysis/reports, etc...

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ruste
Fair point if true, but without a source it sounds like speculation

I'd still say that by the end of january, there was absolutely plenty of
reason to sell off stock. A reasonable person absolutely would have made that
decision based on information that was already public.

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throwaway_Bees
>A reasonable person absolutely would have made that decision based on
information that was already public.

The stock was sold immediately after a coronavirus briefing, not just some
stock, his entire net worth.

Maybe it is reasonable to have sold your entire net worth based solely on the
available public news, but then why not well before or well after the briefing
and instead right after the briefing? Why tip of your wealth constituents at a
$10,000/plate fundraiser while simultaneously maintaining a different
political position publicly?

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davidw
I'm a lot more concerned about people's health and well-being. Once the health
crisis passes, the rest will probably take care of itself.

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thephyber
Health includes some component of hope and perception of security. It’s not
clear to me that a person living check-to-check in a rented property with no
stable income can remain healthy without economic stability. For better or
worse, Wall Street news pervades our perception of whether times are good or
bad.

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munk-a
I really strongly disagree.

This narrative is aggressively pushed and everyone from the president to folks
on Wall Street think that market health is everything to everyone, but people
with no skin in the game really don't care. A lot of Americans have no idea
what a DOW even is and only know the stock market as "that place where folks
gamble". Additionally those folks with mutual funds are mostly ignorant to the
market as well - only those really close to end of life and suffering a
financial crisis really need to evaluate how much money they may be able to
draw out quickly.

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admiral33
You are underestimating the massive amounts of layoffs that have been
happening in the past week and a half. That's the market dying. It's not just
stocks.

If valuation goes down, that usually means less revenue coming in, which means
less money to pay employees, which leads to them getting fired, which leads to
less spending, which leads to less revenue going in...

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munk-a
Oh, the layoffs are terrible and a lot of people are in a really bad place -
please don't read my statement above as implying the everything is honky dory
for everyone. It's just, these two things aren't connected - the market can
tail spin or be in a huge surge and things don't really change for most folks
on the ground - a few more or a few less yachts are built.

Valuation going down doesn't cause less revenue to come in - less revenue
coming in will cause valuation is going down, but a lot of other things
(including paniced sell offs, speculation, and everyone and their brother
learning what "shorting" is) cause the valuation to go down as well.

The economy is in trouble, but the stock market is only an indicator of the
economy, not a vital component of it - so America cares that layoffs are
happening, America doesn't give a hoot that the DOW is bearish or bullish.

