
Trading halted as U.S. stocks plummet - batmenace
https://www.axios.com/stocks-plunge-oil-coronavirus-a0c07880-f299-4829-87b0-81f5c5e93661.html
======
ttul
I notice that there are many commenters here offering opinions on the future
price of equities. Note that nobody has any idea where equity prices will be
in one day, never mind one year or ten years' time. As a retail investor (i.e.
not extremely rich), you can't gain any advantage over the market that
overcomes your transaction costs.

So relax. There's nothing to do here. If you're contributing to a retirement
fund, keep buying. As the market falls, you're getting a discount. If you need
to retire in the next five years, you should already have started moving out
of equities. It's too late to change that now.

~~~
Reedx
To help adopt a sober approach, it's worth watching this interview with Warren
Buffett who shares his thinking re: market and Coronavirus.

[https://www.youtube.com/watch?v=JvEas_zZ4fM&t=21s](https://www.youtube.com/watch?v=JvEas_zZ4fM&t=21s)

One of the points he makes is that you should think about stocks as
businesses. Instead of "I bought a stock" think "I bought a business". That
puts you in a better frame of mind and perspective for the long term. i.e.,
You don't buy or sell a farm based on today's headlines.

The real question is whether things have changed on a 5, 10 or 20 year time
frame for the businesses you hold.

~~~
coliveira
Two things make Warren different: (1) he is a professional money manager,
which means that he is investing other peoples money. (2) because of (1), he
never needed the money he is investing. It is much easier to have long time
frames when you're investing money that is not yours.

~~~
njarboe
Warren Buffet still owns 6% of Berkshire Hathaway. Maybe a more correct
statement would be "If you have money you don't immediately need to spend, it
is much easier to have a long time frame for investing". Hopefully the money
in people's retirement accounts is this type of money.

Most money managers have extremely short time frame investment horizons and
are just looking to get their 2 and 20.

------
vortico
Slightly unrelated, but why does the stock market close each night? If trading
was open 24/7, we wouldn't have large spikes like this every morning. We'd
only have them when certain news is announced.

~~~
pradn
So we can use garbage-collected languages in trading systems without turning
on the garbage collector - just collect it all at the end of the trading day.
I'm joking but this is a real technique.

~~~
magicsmoke
It is, there was this HFT firm I interned at once that rebooted all their
servers at the end of the trading day to make sure they would start clean and
fast the next day.

~~~
jacques_chester
It also ensures you can come back up after an unexpected shutdown.

~~~
bob1029
This is the best reason. Knowing your business systems will simply come back
with the power, and having that tested on a daily basis will quickly put
everyone at ease.

~~~
gberger
Is this what is called chaos engineering?

------
deugtniet
Just to clarify the title:

Trading was halted for 15 minutes.

~~~
pureagave
Correct. 7% decline is a pause.

If it drops 13% it will pause for another 15 minutes. If it drops 20% it will
end trading for the day.

~~~
Waterluvian
I'm going to say it. It can't possibly collapse 20% in one day... can it?

~~~
deugtniet
Based on the rules it cannot drop _more_ than 20% in a day :-)

There are examples of it happening in other countries though. Zimbabwe and
Argentina come to mind for some crazy inflation and stock numbers.

~~~
JumpCrisscross
> _Based on the rules it cannot drop _more_ than 20% in a day_

Asset pricing is not continuous. A single trade can take pricing from -18% to
-X%, with X having any value between infinity and -100.

The breaker triggers at -20%. If the market crosses at -18% and then trades
-25%, that trade will cross and _then_ trip the breaker.

------
pedalpete
It was not that long ago that the "experts" were saying the Boom-Bust Cycle
had ended.
[https://www.bloomberg.com/news/articles/2020-01-22/bridgewat...](https://www.bloomberg.com/news/articles/2020-01-22/bridgewater-
co-cio-bob-prince-says-boom-bust-cycle-is-over)

Buffett, Dalio and others have been preparing for this time for a while.

This is when money is made or lost. If you have the ability and the stomach
for it. I'm not suggesting you buy today, I personally don't believe the worst
is behind us. But an opportunity is coming.

~~~
joncrane
As recovery approaches full employment ... soothsayers will proclaim that the
business cycle has been banished [and] debts can be taken on ... But in truth
neither the boom, nor the debt deflation ... and certainly not a recovery can
go on forever.

Hyman Minsky

(From the wikipedia article posted last week "Minsky Moment:
[https://en.wikipedia.org/wiki/Minsky_moment"](https://en.wikipedia.org/wiki/Minsky_moment")

------
cletus
So, children of summer (there are many here who have only known the longest
bull market in the last century), let me give you some free advice.

If you're looking at this and wondering when to get in, to bargain hunt
essentially, and you're asking yourself questions like "today? next week?",
you need to step back and think again. Some points to consider:

\- If your time horizon is 10+ years out probably none of this matters

\- If your time horizon is less than 5 years out, you should really question
if you should be in the stock market at all

\- Be familiar with the term "dead cat bounce". This is a temporary period of
recovery followed by a steeper drop. You're going to see this kind of thing.

\- Large market drops often lead to or are because of a likely recession. This
can go on for months or years.

\- After the GFC the markets went down and then sideways for over a year. You
essentially missed nothing by waiting two years. This could easily happen
again.

\- Learn what "reversion to mean" means. It means that at times the markets
generally follow a long term upward trend. At times the market will go above
or below that. This can be a useful indicator of whether equities are cheap or
expensive. In a given cycle you have boom (above the mean when equities are
overbought) to bust (an overcorrection to below the mean when equities are
oversold).

Bear markets are paved with the blood of optimists.

~~~
neural_thing
The Nikkei is still ~50% below its 1989 high. Hasn't even approached that
level since. Downturns can go on for decades.

~~~
cletus
I didn't think this could still be true but apparently you are correct [1].
Wow.

That being said, there are factors to contribute to this:

\- Essentially zero population growth [2]

\- A government and a system that propped up an insolvent banking system that
likely extended the downturn significantly [3]

\- A massive asset bubble that we really haven't seen the likes of, not even
in the subprime era. [1]: [https://www.macrotrends.net/2593/nikkei-225-index-
historical...](https://www.macrotrends.net/2593/nikkei-225-index-historical-
chart-data)

[2]:
[https://en.wikipedia.org/wiki/Demographics_of_Japan#Current_...](https://en.wikipedia.org/wiki/Demographics_of_Japan#Current_natural_population_growth)

[3]: [https://qz.com/198458/zombies-once-destroyed-japans-
economy-...](https://qz.com/198458/zombies-once-destroyed-japans-economy-now-
theyre-infecting-chinas/)

~~~
mensetmanusman
Yep, over half of GDP growth is tied to population growth. If 2% of humanity
is about to die...

~~~
arcticbull
2% of humanity is absolutely, in no way, shape or form about to die. The
Korean numbers are approaching 0.5% case fatality rate, and those numbers
continue to fall. It's about the same as the flu, and no, the flu isn't
killing 2% of humanity either. Y'all need to settle down and get back to work.

~~~
tunesmith
South Korea's fatality rate will be somewhere between "deaths / confirmed
cases" (currently around 0.7%) and "deaths / (deaths + recoveries)" (currently
around 28.5%) - those numbers will eventually converge.

What really matters though is to keep the raw number of confirmed cases low
enough so that hospitals don't get overwhelmed. If hospitals get overwhelmed,
fatality rates go up. So containment is key.

~~~
FartyMcFarter
How about "deaths / actual cases"?

This number would be smaller than both of the ones you mentioned, unless you
think that somehow all actual cases are detected.

~~~
tunesmith
Yes, that's true - although I would expect that countries with widespread easy
testing would have their "confirmed cases" number get pretty close to the
"actual cases" number.

And "actual cases" would be the people that have the actual disease, not the
people that just carry the virus. For people who are carriers but are not
infected, they apparently don't want to mix those people into the numbers
because that's not how other illnesses are counted either.

------
facethrowaway
For reference, someone might want to post a chart of the gains the markets
have made in the past 5 years. I would hardly call this a crash.

~~~
tekkk
Hah not a crash? Well it kinda is, and if it keeps going further down it will
definitely cause a recession. The oil price drop was a huge punch in the gut,
and I wonder what happens to US oil production if it stays this low for
longer. Or well any oil production that can't compete with these prices.

~~~
bluGill
Almost nobody is drilling new oil wells, they stopped last year sometime.
Almost nobody because there are still investors keeping one skeleton crew
running just so they have expertise for when the oil price recovers.

Once a well is drilled the cost to drill the well is a sunk cost. You keep
pumping oil if the cost to run the pumps is less than the price you get. Most
people with oil are large enough to shut down some wells to keep the price up
a bit - they harm their own profit in the short term though and still need to
sell enough oil to break even.

~~~
foota
OPEC has failed to reduce output to prop prices up, and they've crashed as a
result.

~~~
bluGill
Nobody being willing to make large cuts is different from nobody making cuts.
The US is not a member of OPEC, nor are several other oil producing countries:
they don't follow OPEC but may still reduce output.

There is rumor OPEC isn't cutting production because they believe they can
undercut their competitors and put them out of business - I don't think that
is their motivation, but it is something that can't be ignored.

------
bilekas
Genuine question: They can just do that ? Issue a trading halt because they
don't like the direction it's going ?

> “There’s a reason why they have those circuit breakers -- it’s to give
> people time to come back from panicked feelings,”

Seems strange that the market is kinda able to be manipulated like that. I'm
not saying this is a bad move, just surprised that someone can do it.

~~~
_se
"They" don't do anything - this is called a circuit breaker, and is
automatically triggered. There are three breakers:

L1 - 7% down before 3:25pm - 15 minute halt

L2 - 13% down before 3:25pm - 15 minute halt

L3 - 20% down - halted for the remainder of the day

Only a single L1 and a single L2 breaker can occur in a single day, e.g. the
market falling below 7%, rising, then falling again will not trigger a second
L1 breaker, but falling to 7%, up to 5%, then down to 13% would trigger an L2.

FYI this is the kind of thing you have to know to become registered as a
securities representative.

~~~
jagged-chisel
> Only a single L1 or L2 breaker can occur in a single day.

I don't follow. You'd hit 7% before 13%, so how would L2 ever execute?

~~~
_se
Sorry - I meant that neither L1 nor L2 can trigger twice in a day, E.g. down
8%, up 2%, down 9% does not trigger a second L1 breaker.

~~~
rococode
Especially relevant today since after hovering around -5% for most of the
session after the first halt, right now we're at -6.9% and threatening to push
below 7% again.

------
neural_thing
Trade safe. Historic times. Wouldn't be surprised if all the volatility shorts
blow up and the S&P goes down 20% in a session.

~~~
cm2187
The volumes on Vix futures are a fraction of what they were two years ago. Vix
is shooting up but I assume it is following the stock market rather than the
other way round.

------
tempsy
Buy S&P puts as a hedge to save your account in times of extreme volatility.

I had 270 strike puts for April I bought on Friday for $6 that jumped to $15
today and got my account to break even even though the value of my stocks went
down.

~~~
ones_and_zeros
What is the end game with this strategy? If you sell the puts today to capture
the profits, do you also sell your equities? If you don't sell your equities
isn't there a chance the slide further? If you hold the puts to maturity why
buy them at all?

~~~
tempsy
The end game is to save the value of my account without having to sell
holdings I want to keep long term for tax reasons.

I'm up 8% for the year instead of down 15%.

~~~
the_gastropod
Maybe you really are more clever than the rest've us, and have beat the
market. Or maybe you got lucky. Or maybe we're only hearing about the winning
trades, and you've got some losers we're not hearing about... I suspect it's
option 2 or 3. Regardless, this is bad advice.

~~~
theincredulousk
It isn't bad advice to hedge your position with options, although doing it
short term as suggested here is an active trading strategy and inherently more
risky.

Contrary to popular belief that options = gambling, this is the #1 real
utility of them. If 90% of your investments are tied up in S&P 500, it makes
sense to hedge that with put options which provide a clearly defined max-loss
over the contract duration of the option.

So in a period like this when those put options become valuable due to price
drop and general IV, you can do as suggested and sell them to re-coup losses
and maintain capital. It doesn't change the lifetime performance of your money
placed in the corresponding security, but it most certainly improves the
performance of your portfolio as a whole and limits the damage that can be
done in any given downturn.

If you only hold securities, index or otherwise, your only recourse is time. I
certainly wouldn't recommend trying to time the market, just like I wouldn't
buy an insurance policy the day before a loss. That doesn't mean you avoid
insurance altogether because you can't predict when you'll need it.

------
songzme
The one takeaway I learned from 2007 is to buy puts when I feel like there is
going to be a recession. It may just give me enough money to last a year or
two if I lose my job.

Starting last week, I bought a put (just 1) in Chipotle (No particular reason,
I just picked a random one) for 2000.

Its the one bet I hope I lose money on, but so far my position (2k investment)
have grown to over 6k. (300% increase).

Its sad money because when the market goes down, my RSUs are dropping
significantly more. The put are there to make sure if I lose my job and my
RSUs, my put position will generate enough profits to last me 2 years without
work. I only need 24k to get by / year.

Just wanted to put this out there in case someone else out there has alot of
RSUs that are stuck and wanted to buy some positions to make some money in
case of a recession.

------
throwaway3157
For those unaware, this is common practice -- it a control that is working as
intended. The trading was halted for 15 minutes

~~~
pacerwpg
When was the last time this happened?

~~~
marzell
Apparently in 1997, so it has been quite a while

[https://en.m.wikipedia.org/wiki/Trading_curb#Instances_of_us...](https://en.m.wikipedia.org/wiki/Trading_curb#Instances_of_use)

~~~
jacobush
Way before high frequency trading, to put some things in perspective.

------
bawana
How valid is it to look to the past when there is so much cash floating
around? With so much more demand for roi, I would think that in itself would
bias the markets up. Almost like an invisible Keynesian injection eager to
happen

------
sebastianconcpt
I wonder how different things would be if instead of those stepped halts, a
super high granular delay is injected into the system. Like instead of
halting, making it go on but in "slow-motion". And depending on the strength
of the drop, the slow-motion factor to inject in the system.

I say this because halting tries to "cool down" emotion but it still "feels
like" panic while making it all go slow would "feel kind of crappy yet normal"
hence "buying" time to cool things down while still working.

Wouldn't that reward going up and penalize/protect going down?

~~~
Seenso
> I say this because halting tries to "cool down" emotion but it still "feels
> like" panic while making it all go slow would "feel kind of crappy yet
> normal" hence "buying" time to cool things down while still working.

I don't think so. Halting would allow the traders to get a cup of coffee and
switch to another mental gear. A slowdown would probably just keep them in
gear and result in a lot of anxious refreshes and attempts to wrestle the
system.

~~~
sebastianconcpt
Immediately yes, it will keep them in gear, but it will have no consequence
because the output would come forcibly delayed, so the result will come not so
immediately. Hence being anxious has no payout and being cool does.

Wouldn't be that with time, the next generation of traders for example, they
will relax more when things feel bearish and put the "normal gear" when it
feels bullish?

~~~
Seenso
> so the result will come not so immediately. Hence being anxious has no
> payout and being cool does.

That's assuming people are way more rational and less emotional than they
really are.

~~~
sebastianconcpt
Actually no because the output (reward or penalty) is not selective on your
rationale. You can be bullish or bearish. The the input and the output are
both allowed, just working at asymmetrical speeds (slower for bearish).

Wouldn't overall cause a "sustentation effect" similar to the asymmetrical
speed in the airflow in the wings of a plane?

I'm not convinced myself of this, but the idea made me curious and maybe worth
of experimenting with in a limited context?

------
adreamingsoul
(I'm not a trader) if I wanted to watch the market with a near-real-time
dashboard, does that exist?

~~~
aguyfromnb
Koyfin:

[https://www.koyfin.com/home](https://www.koyfin.com/home)

~~~
robin_reala
Maybe not:

HEADS UP, YOU ARE USING A WEB BROWSER THAT IS NOT SUPPORTED BY KOYFIN This
means that some functionality may not work as intended. We recommend using
Google Chrome with our site.

~~~
aguyfromnb
I use Firefox and have no issues, though I only use it as a dashboard for the
markets. There may be functionality that breaks that I'm unaware of.

------
falcolas
The fact that these controls on the stock market have been triggered
reinforces my doubts that our current "profits and growth over sustainability"
view of how public companies should operate is in any way good.

Short of a huge change in COVID-19's mortality rate, few if any of these
businesses will go under in the next year naturally. The fire sale of stocks
due to short-term impacts to revenue, however, just might do what COVID-19
can't.

------
aazaa
This will be blamed on COVID-19, but the problems go much deeper. Last year
the Fed lost control of the repo market. the event was widely discounted at
the time as an end-of-tax-year fluke. It wasn't. Six month ago, the yield
curve inverted. People who should have known better said "this time is
different."

Speculators have been trained over the course of 10+ years to buy the dip. The
Fed has your back.

What we're seeing is the beginning of the end of that resolve.

The last time this happened was during the GFC. It's not normal, and it's
probably not a one-time event, either.

~~~
whatshisface
> _Six month ago, the yield curve inverted. People who should have known
> better said "this time is different."_

How does your story jive with the fact that the yield curves went back to
normal? Either they are an indicator or they aren't.

~~~
SkyBelow
>Either they are an indicator or they aren't.

Third option is that it is an indicator as long as people aren't treating it
as one, but once people react to it then it ceases having the power to
indicate what is happening.

~~~
danans
For the curious, this is known as Goodhart's Law.

~~~
dpau
also applies to psychohistory in asimov's foundation

------
csomar
Despite all the blood, I see a bull case for Tech and the USA. In the last 5
years:

1- The Nasdaq has gained 99.77% until it's peak. It has corrected by 17.41%
since the peak. Total gains till today: 64.9%.

2- The Dow Jones has gained 65% till the peak. Corrected by 21.71% since then.
Total gains till today: 35.85%.

3- CAC 40 has gained 20% in the last 5 years till the peak. Corrected by
22.12% in this sell-off. Total returns are -6%.

My thoughts:

\- Tech used to go up more and down more. Now it went up more and down less.
This is likely to encourage and push traditional investors to invest more in
tech. They were afraid from tech because of the bloody downturns. Now tech
holds better in a downturn, so that argument is no longer there.

\- Europe is likely to be hit harder from this crisis since they rely a lot on
Tourism. That means a harder recession. Europe tech sector is weak and
unlikely to match its American counterpart growth in a EU slowdown.

\- China might be the biggest loser in this. The world might realize we are
depending too much on China. The US government might force company to build
locally or outsource to friendlier countries they want to boost. China is not
going to the dark ages but might face a slow down; though a social revolution
is definitely not out of the question.

\- The oil crisis, if prolonged, is going to change some countries. Look at
Venezuela. Russia, Middle East, Algeria, Canada, etc... These countries might
face budget challenges they have never been through before if oil goes below
$20 for an extended time.

\- The US tech sector being the only good-yield field and becoming a safe
haven for investment in a world of worry and chaos will boom into a bubble of
untold proportions.

Disclaimer: Not a professional advice. Might lose part of your money or all of
your capital. Might be a total hopium from someone is the tech sector seeing
lots of red today.

~~~
thefringthing
The practice of referring to increases in the price of an instrument as
"gains" but any decline as a "correction" is bizarre.

~~~
csomar
It's not. It's trading lingo. If the pricing was on a downturn "losses", then
an upward move is a correction.

~~~
anigbrowl
Except that in practice nobody says that. I've worked with both large
financial institutions and tiny hedge funds going back nearly 30 years,
traders are cognitive bias on legs. There's a reason Wall Street has a statue
of a giant bull but not of a bear.

------
jaequery
This is creating one of the best buy opportunity ever. It's just sad that only
the rich will benefit. The poor will just get poorer.

~~~
justinmeiners
It's still less than a year of growth. Were you urgently buying a year ago?

------
aazaa
> The cash equities market is subject to circuit breakers established by the
> New York Stock Exchange in the wake of the 1987 Black Monday crash. Trading
> will halt for 15 minutes if the S&P 500 falls 7% to 2,764.3 at any time
> before 3:25 p.m. in New York. ...

That's less than a 1% drop from here.

Right now, all eyes are on the Fed and the size of the bazooka they'll be
deploying.

Anything short of outright stock purchases is not going to be received well.
Despite the desperation that move smells like, the Fed would be merely
following ground already trodden by the Bank of Japan, which now owns around
80% of the Japanese ETF market.

Edit: only 5 points to go.

~~~
ipnon
The circuit breaker was already triggered when the market opened this morning
at 9:30 AM EST.

~~~
aazaa
You're right.

------
chrshawkes
I don't know if it was a good bet but I moved all my 401k into money market
accounts for the time being last Thursday. I feel like those who say I should
ride the wave down are probably not telling me the truth. All indicators seem
to suggest a 25% correction or more before the end of the year.

I've been buying stocks heavily on the latest dips and so far that is all down
around 20%. I diversified investments in cruises, airlines, real estate,
banks, tech and more. It feels like 2008 is happening all over again.

~~~
segmondy
Good move, Dec I moved 33% to Bond, 2 weeks ago I moved another 33% to Bond.
I'm kicking myself for not moving the rest, but I can stand to be in the
market for a very long time. Most knowledge that say rid the wave is rubbish.
Get out if you know that things will be down so you can live to fight another
day. If you have $100 and market goes down 50%, you have to wait for it to
come back 100% to break even. Most folks don't understand that movement isn't
equal in either direction. Market goes down 10%, comes back up 10% most folks
think it has balanced, but it hasn't.

~~~
dbancajas
aren't you timing the market though? if it's down 10% today, you moved to
bonds, then it's up 20% due to recovery and you missed the upswing, then you
are in a worse spot compared to if you haven't done anything?

"but I can stand to be in the market for a very long time" -> isn't this the
reason to not do anything? So you can recover and buy more while everything is
on discount?

------
Lagogarda
first time since the 2016 U.S. presidential election after they fell more than
the daily limit of 5%

~~~
gzu
Those were futures the night of the election...

Futures have a hault at 5%

Normal trading hours have the 7% stop

~~~
cesarb
And from what I read, the futures did halt at 5% yesterday. So it was already
sort of expected that the 7% stop would be hit today.

------
alpineidyll3
I would recommend anyone looking for long term guidance about what comes next
read this article from Bloomberg's excellent John Authers.

[https://www.bloomberg.com/opinion/articles/2020-03-09/oil-
cr...](https://www.bloomberg.com/opinion/articles/2020-03-09/oil-crash-
coronavirus-is-just-the-start-of-market-
shocks?cmpid=BBD031020_AUT&utm_medium=email&utm_source=newsletter&utm_term=200310&utm_campaign=authers)

------
Freestyler_3
Considering most wealth is in old peoples hands, they are most affected by
this virus. They are most susceptible to fear-mongering too.

------
GrumbleGrumble
Like others have said, this was just a 15 minute halt when the Dow/S&P 500
dipped to -7%. This can happen again at -13% and trading will flat out stop at
-20% [1]

[1]
[https://www.investopedia.com/terms/c/circuitbreaker.asp](https://www.investopedia.com/terms/c/circuitbreaker.asp)

------
marcrosoft
US stock trade (artificial) limits might have existed before but I don’t
remember them. You see these in other countries and commodity markets. Limit
down. IMO they cause a faster drop in a down market because you don’t know
when you’ll be able to exit. The market can open limit down within seconds.
This can continue for weeks.

~~~
azernik
IIRC there were limits in 2008.

------
leptoniscool
The market was up over 30% last year, but GDP growth was certainly not 30%.

~~~
azhenley
GDP is not a perfect indicator.

~~~
ceejayoz
The point, though: Neither is the stock market.

------
marban
[https://www.wsj.com/articles/lessons-from-the-dot-com-
bust-1...](https://www.wsj.com/articles/lessons-from-the-dot-com-
bust-11583192099)

------
ronyfadel
A lot of comments are saying that a recession is probable.

Can anyone shed a light on why that is/could be the case?

~~~
aguyfromnb
A recession isn't probable, it's _inevitable_. It's just a matter of how much
sludge builds up in the economy before the over-leveraged have to unwind.
That's the business cycle.

Covid19 and the ensuing fall in global demand is simply another blob on the
pile.

------
walrus01
Serious question, is anyone watching this carefully and trying to determine
when things will bottom out (perhaps in a week or two), to buy stocks, ETFs,
and such at the bottom of the dip?

Hindsight is 20:20 of course, but there's a number of equities that one could
have purchased shortly after the 2008 financial crisis that proceeded to make
significant gains between 2009 and 2019.

~~~
allovernow
No one will be able to time this. We don't even know if this is the start of a
[global?] recession or depression.

If you haven't already, put your retirement into bonds and hold on. Honestly
it might be a good idea to grab some cash from the bank to keep at home - bank
runs are not outside the realm of possibility, although we have credit cards
and other internet based payment methods now so it's probably less of a
concern now.

Edit: let me just preface my advice by saying if you have extremely high risk
tolerance, now is a good time to buy, but be prepared to lose. If you are near
retirement, now is probably the time to pull all of your funds out of the
markets and into something safer. Based on the 100 year history of the DJIA,
and the fact that the virus is just starting to spread in the U.S., the floor
could be much lower.

~~~
wincent
> If you haven't already, put your retirement into bonds and hold on.

Are you advising to sell equities right after they've taken a beating? Sounds
awfully close to "buy high, sell low".

~~~
allovernow
If you look at the 100 year history of the DJIA, there's still a LOONG way for
it to potentially drop.

It's about minimizing risk. Those with high risk tolerance I would advise to
buy now, but be prepared to lose everything. If you're close to retirement you
lose nothing by pulling out now.

~~~
the_gastropod
> Those with high risk tolerance I would advise to buy now, but be prepared to
> lose everything. If you're close to retirement you lose nothing by pulling
> out now.

If your risk tolerance can't handle what's happening, your asset allocation
was already wrong. Trying to "fix" that now, as a response to this downturn,
would very likely be a mistake.

------
totaldude87
To be honest , the market was in dire need for correction, BUT wonder where we
will be when companies starts reporting their quarterly results and impact of
that.

So far this looked more like a correction than a precursor to the recession.
To make things worse, OPEC dropped bombs which spread the wildfire further..

~~~
sjg007
Why was or is the market in need of a correction? What is your evidence for
that statement?

~~~
bumby
Take this with a train of salt because I’m not an economist, but one of the
most often touted general points of the need for a correction is the
cyclically adjusted price to earnings ratio being elevated [1].

In other words, stocks are more “expensive” and thus ripe for a correction

[https://www.multpl.com/shiller-pe](https://www.multpl.com/shiller-pe)

~~~
jfengel
Note that that's the Shiller P/E ratio, which (even after today) is still at
26, which is quite high. The regular P/E is still only around 20, which is at
the upper limit of reasonable.

The whole point of the Shiller ratio is that it's supposed to do a better job
predicting overheated markets, and it may well be doing that here. The regular
ratio is based on recent earnings, which will be uncharacteristically high
during a bull economy.

That's not to say it's incorrect. I was just noting that your link indicated a
higher value than I was expecting, and that's why. (It implies that the market
could easily fall another 25% before reaching reasonable territory.)

~~~
bumby
Correct. I deliberately chose the longer CAPE terminology because I thought it
was more descriptive than the term Shiller PE. But thank you for adding a
better explanation

------
vearwhershuh
In a world with zero-to-negative interest rates, unlimited margin available
for the big players and a generation of boomers sold on the idea that stock
appreciation (not dividends) is going to fund their retirement, what's the
value of any company? Who knows?

Until dividends are tax advantaged vs. capital gains, the insanity will
continue. Leverage, huge risks and various shades of fraud, rather than
responsible business stewardship will continue to dominate the financial
system.

~~~
rytill
What is the best way I can contribute to making dividends tax-advantaged vs.
capital gains?

~~~
vearwhershuh
Well, my plan would be to treat dividends as tax deductible to the company and
then flow through to the owner, as with LLCs. Capital gains would be taxed at
a windfall rate (e.g. the highest marginal income tax + payroll tax rate +
10%).

The nice thing about this is that the progressive income tax system then makes
equity ownership very attractive to lower-income households, and less
attractive to rich people, thereby distributing ownership over a larger and
more economically diverse group.

I have no idea how to get people to buy in to this idea. I have had no success
convincing even my own family that this change needs to happen, and my parent
post is being downvoted. ¯\\_(ツ)_/¯

~~~
rytill
Are there any disadvantages you can think of?

~~~
vearwhershuh
Yes: it punishes reallocation of capital and makes moon-shot style companies
less viable. You would have a less dynamic economy with organic growth being
the norm. I would allow for in-kind exchanges within a given trading year to
make it easier to get out of bad positions (as well as tax free exchange with
gold at any time, so gold becomes the medium for non-productive savings.)

Now, let me tell you about my banking system proposal...

My family loves me at the dinner table, why do you ask?

~~~
rytill
If you actually have a banking system proposal, I'm still curious.

~~~
vearwhershuh
lol fine:

Banking shouldn't have a reserve ratio. Rather, banks should have to show that
they have a claim to each dollar they have loaned out for the period they have
loaned it. This means they have to lend short and borrow long.

The insight here is that the problem with banking since time immemorial is
rooted in a lie: multiple people have claims of ownership on the same dollar
at the same point in time. Rather than using a reserve ratio to paper over
this lie, we should simply ban lying. Banks offer CD like products that lock
up money for a certain amount of time, and that money can be loaned out for a
period less than or equal to that amount of time.

Practically this would imply a balance curve for a bank at time T, B(T) and
their loan curve L(T) would need <= B(T) for all T. You would be able to see
if a bank was in trouble way out in advance.

Again, this would mean that banks would not need a reserve ratio. A dollar
could theoretically be lended out an infinite number of times, so long as the
dollar was put back into the bank at a term longer than the next demanded
loan.

Finally, I would make banks a special entity partnership, where partners were
held liable for losses up to a certain % of revenues.

Yes, I am this much fun at parties.

------
losvedir
It seems to me that _falling_ 7% is qualitatively different from _opening_
down 7%. Oil fell 30% over the weekend because of OPEC issues, and it seems
like this could just be a response to that. "Plunge" implies a sort of
velocity (as opposed to falling 7% over several days) which wasn't really the
case here.

------
leptoniscool
Is there any evidence that a temporary trading halt will help to stabilize the
market?

------
frgtpsswrdlame
Currently only 6% down, perhaps (anecdotal) evidence that halts work?

~~~
endorphone
Days with a large pre-market drops often follow this pattern. As the end of
the day approaches the selling often becomes panicked again.

~~~
hogFeast
Yep, that is due to order flow from retail investors. They always put their
orders in at the open (that is why Mondays can be risky) or at the close.

You can see this by looking at the difference between the return on stocks in
the first/last hour against the return over the rest of the day. I have no
idea if this effect still exists today but you used to be able to print money
from this (and I am sure it still works in places like China with lots of
retail investors).

------
ptah
how is this "circuit breaker" meant to help? surely it will just fuel emotions
and make things worse if people can't get rid of stock they don't want?

~~~
dbcurtis
I thought it was more about kicking automated trading bots to the curb for a
while. Stop an algorithm-driven flash-crash.

------
jfacoustic
And if the media would stop writing alarmist articles, there would be far less
panic. We're in the golden age of yellow journalism. I've learned, in general,
panicking creates more problems than there were to begin with.

------
grioghar
My first thought was the dead cat bounce from last week.

Hang onto your butts...

------
robodale
_Looks like stock 's back on menu boys!_

------
ShorsHammer
Bloomberg has view limits now?
[https://outline.com/7grdK6](https://outline.com/7grdK6)

~~~
zelly
disable JavaScript

------
dannylandau
Already blow past 7% on downside.

------
findjashua
vix is approaching GFC levels - good time to sell some delta neutral condors

------
JohnJamesRambo
It seems Mr. Market doesn't get to visit as freely or stay as long as he likes
sometimes.

------
76543210
It did the trick. Everyone is talking about it and my friends are buying.

~~~
newfangle
I dont think its time to buy yet. If we have a multiple month disaster that
requires quarantining most of the population the market will fall further.

~~~
sgc
Don't buy after the first big city is quarantined. Maybe after the second or
third... But know you are taking an incredible risk unless you are using funds
you can hold in that position for years.

~~~
tasuki
> But know you are taking an incredible risk unless you are using funds you
> can hold in that position for years.

Isn't that the case whenever one buys equities? Why is now special? It's
definitely less risky to buy now than it was in January.

~~~
sgc
Yes, but I don't want to be the source of somebody doing something stupid.

------
marcrosoft
TLT,GLD buy buy buy

~~~
silexia
TLT is screwed long-term by the fed causing massive inflation. I have a ton of
money in puts on this right now.

~~~
marcrosoft
TLT has gone up +11% in three trading days. It does really well when the Fed
cuts rates and the S&P goes down. Inflation is a problem that GLD fixes.

Edit: It sucks you have a bunch of puts. You are most likely going to lose
them.

------
LatteLazy
Asia sneezes and America gets a cold...

------
tracker1
#hodl

------
hsnewman
Let's call it what it is, the start of the Trump recession. Move your money to
FDIC insured if you value it.

------
tonetheman
Free market - until it is not

------
gigatexal
But buy buy. All long term investors should be buying here imo. I’m not a big
player but I’m picking up some shares at these lows.

------
forkexec
Well, according to a Harvard epidemiologist, 40-70% of humans will contract
this virus, which implies 120-168 million people will die. That's going to
impact economic activity and so will a Saudi / Russian oil price war. It's
going to lead to the dreaded "R"-word and usually sinks whomever happens to be
the current POTUS and their chances for re-election.

~~~
AnimalMuppet
Hmm. It might also boost Sanders with respect to Biden...

