market crash Feb 2018

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StuBee
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Re: market crash Feb 2018

Post by StuBee »

Fake News!!! :lol:

There is nothing abnormal about recent market behaviour!

In the last two weeks the Dow has lost a little over 2000 points. I admit that this appears to be quite an astounding number. Why has no one mentioned that less than 2 years ago that same Dow was hovering around 16000, more than 10000 points less than its recent all-time high!!!

I am happy (as most of my fellow FWFers) with my (or most of my) equity investments as ongoing viable entities. Heck, some of them have been pleasing me with positive dividend announcements.

Also, as many others, all of my near term (and medium term) needs are quite comfortably provided for by FI and dividends. After all, that is one of the main reasons why we have FI.

Goodnight everyone.

StuBee
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Re: market crash Feb 2018

Post by hamor »

Thanks everyone for answering my bond and portfolio questions.
I am glad we're having a lively chat about the 'correction' :)
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Insomniac
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Re: market crash Feb 2018

Post by Insomniac »

Just added up all my accounts and compared them to the total at September 30, 2017. I'm $91 up at this point! :beer:

Interesting to see what happens to interest rates (ok, I know :roll: ). Will this market volatility cause them to hold off on the rate increases so many have predicted for this year? Or will they look at the employment numbers and other economic data and push them up anyway? A local news reporter interviewed a roofing guy on TV tonight; he said that he had so much work that he would hire almost anyone who wanted a job. Sounds like inflation on the way...
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ghariton
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Re: market crash Feb 2018

Post by ghariton »

Yes, indicators show the world economy in general and the U.S. economy in particular to be doing very well. Even Canada is doing well, despite today's disappointing jobs report. (Note that job losses were part-time jobs; full-time jobs went up at a healthy clip. Which all goes to show the folly of giving much weight to monthly numbers.)

Things can change, and change quickly. But for now, the outlook is quite positive. This leads me to think that the current blow-off in markets is temporary, and shouldn't last more than another couple of weeks. I suspect that, looking at a chart of stock indices in say 2020, the current events will be a barely noticeable blip.

But this forecast, like any other, is worth what you are paying for it. I'm certainly not acting on it.

I do believe that inflation will increase. Of course, I've been forecasting that for the past nine years, which goes to demonstrate my forecasting ability. But this time is different -- ahem! -- and wage pressures will drive prices up. Nominal interest rates should also rise, with a lag, while central bankers weigh the risks of acting. That is a reason that I do not hold any nominal bonds. I think that these could get hurt a lot worse than equities.

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Mordko
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Re: market crash Feb 2018

Post by Mordko »

I agree with all of the above. Which means that something entirely different is likely to happen.
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Wallace
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Re: market crash Feb 2018

Post by Wallace »

Mordko wrote: 10 Feb 2018 07:01 I agree with all of the above. Which means that something entirely different is likely to happen.
Yes but we are the exceptions. The majority of people are busy getting out of the market. When the market goes up again they'll get back in and it will never really dawn on them that they have lost money.
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Mordko
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Re: market crash Feb 2018

Post by Mordko »

Wallace wrote: 10 Feb 2018 07:40
Mordko wrote: 10 Feb 2018 07:01 I agree with all of the above. Which means that something entirely different is likely to happen.
Yes but we are the exceptions. The majority of people are busy getting out of the market. When the market goes up again they'll get back in and it will never really dawn on them that they have lost money.
True enough. We do know the future. We know that the markets will crash. And that they will rise. Just not when or in what order.
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Re: market crash Feb 2018

Post by gsp_ »

StuBee wrote: 09 Feb 2018 22:09 Fake News!!! :lol:
:rofl: :thumbsup:
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Re: market crash Feb 2018

Post by Taggart »

Canada has been one of the lucky countries when it comes to investing. In some countries out there, an investor would have had negative real returns in what equates to a whole investment lifetime.
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scomac
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Re: market crash Feb 2018

Post by scomac »

Taggart wrote: 10 Feb 2018 09:32 Canada has been one of the lucky countries when it comes to investing. In some countries out there, an investor would have had negative real returns in what equates to a whole investment lifetime.
Indeed! I have always maintained that we won the genetic lottery in terms of when we were born, where we were born and to whom we were born.

:!:
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Re: Feb 2018 is now a correction

Post by Peculiar_Investor »

hamor wrote: 09 Feb 2018 23:23 Thanks everyone for answering my bond and portfolio questions.
I am glad we're having a lively chat about the 'correction' :)
Irwin wrote: 09 Feb 2018 13:55 I had the same struggle, buying bond funds here there and everywhere, I ended up with a doggie bag of bonds.
If some of your questions about fixed income investing strategy and implementation remain unanswered or not clearly answered, why not start a new topic for them as they probably are outside the scope of the discussion whether this is a pullback, correction, bear market, ...
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deaddog
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Re: market crash Feb 2018

Post by deaddog »

Insomniac wrote: 09 Feb 2018 23:53 Just added up all my accounts and compared them to the total at September 30, 2017. I'm $91 up at this point! :beer:
That's really good if your accounts total is less than $1000. :wink:
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Spidey
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Re: Feb 2018 is now a correction

Post by Spidey »

A critical part of their presentation,
Vanguard wrote:Downturns aren’t rare events. You’ll likely endure many of them, in all markets, during your lifetime.
Image

<snip>

Timing the market is futile. The best and worst trading days happen close together.
Image
The information seems to be presented to discourage market timing but it seems to me that if one invested heavily in equities during 30% or greater corrections and perhaps re-balanced once the market had recovered that it would be a profitable strategy. Thoughts?
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Shakespeare
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Re: market crash Feb 2018

Post by Shakespeare »

That's market timing and emh proponents say that doesn't work.

Course, some of us contrary bastards do it anyway. 😀😀
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deaddog
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Re: Feb 2018 is now a correction

Post by deaddog »

Spidey wrote: 10 Feb 2018 11:34
The information seems to be presented to discourage market timing but it seems to me that if one invested heavily in equities during 30% or greater corrections and perhaps re-balanced once the market had recovered that it would be a profitable strategy. Thoughts?
All of the disaster stocks Nortel, RIM, VRX, to name a few, were great investments up to a point. All you had to do to lose money was to hold them as they fell.
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Spidey
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Re: Feb 2018 is now a correction

Post by Spidey »

deaddog wrote: 10 Feb 2018 11:49
Spidey wrote: 10 Feb 2018 11:34
The information seems to be presented to discourage market timing but it seems to me that if one invested heavily in equities during 30% or greater corrections and perhaps re-balanced once the market had recovered that it would be a profitable strategy. Thoughts?
All of the disaster stocks Nortel, RIM, VRX, to name a few, were great investments up to a point. All you had to do to lose money was to hold them as they fell.
What about buying the index?
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deaddog
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Re: Feb 2018 is now a correction

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Spidey wrote: 10 Feb 2018 12:15
deaddog wrote: 10 Feb 2018 11:49 All of the disaster stocks Nortel, RIM, VRX, to name a few, were great investments up to a point. All you had to do to lose money was to hold them as they fell.
What about buying the index?
You get the index returns.
Just hold on and hope you outlive any correction. :wink:
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Re: market crash Feb 2018

Post by CROCKD »

Another good article by John Heinzl G&M

A simple secret to laughing at market mayhem

I have been mainly ignoring the gyrations of the past couple of weeks. I usually only check prices once a week anyway. In light of others on this forum talking about losing cars etc (Disclosure: I don't own a car) I looked at my non reg portfolio. It is down about 6% from the peak of a couple of weeks ago and down about 2% from the value on Sept.30, 2017. In other words NOISE.
And as Heinzl points out in his article my good dividend stocks continue to crank them out.
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deaddog
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Re: market crash Feb 2018

Post by deaddog »

Shakespeare wrote: 10 Feb 2018 11:46 That's market timing and emh proponents say that doesn't work.

Course, some of us contrary bastards do it anyway. 😀😀
I use market timing to limit my losses;

Better to hold cash when the market is rising than to hold stocks when the market is falling.
"And the days that I keep my gratitude higher than my expectations, well, I have really good days" RW Hubbard
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Re: market crash Feb 2018

Post by queerasmoi »

I only really noticed because I was in the middle of a transaction.

I had a quantity of money in non-registered TD eFunds (US Index, International Index). My plan was to get them converted to two US-domiciled ETFs all on one day in Questrade, and then get it into my RRSP. (Having the money already in my RRSP would have been difficult as Questrade can't do a one-day Norbert's Gambit without margin.)

So in advance of this I temp-moved some emergency fund cash into my Questrade margin account in the same quantity as the eFunds I was to sell. On the day I started the transaction, pre-crash, I did all of the following: 1) Ordered the redemption of the eFunds, 2) Shorted an interlisted stock in Questrade on the USD side, 3) Bought back the same immediately on the CAD side, 4) Bought the desired US ETFs, 5) Requested the journal to flatten. Then I waited for settlement and flattening before pushing to RRSP.

As it would happen, both funds dropped in value about 6% between purchase and contribution to RRSP. Which means I have a denied capital loss but still get taxed on the capital gain from when the eFunds had the same rise in value. The efforts I took to not be out of the market during the transaction backfired :P And I wasn't interested in playing games to try and squeeze out that capital loss as it would have just meant more commissions and ending up with an ETF other than what I wanted.

Plus side? It consumed less of my contribution room. Minus? I get less of a deduction for contributing it.
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Re: market crash Feb 2018

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I found the most difficult thing about buying during a severe downturn, next to overcoming one's own emotions, is what I will call the "spousal effect". For example, we might know that after a 30% drop the market will eventually recover and chances are historically pretty good that in 2 to 5 years you will be pretty happy. But we can't know the bottom or whether the market will not drop another 5 - 20%. When one's spouse see's ever declining financial statements and further sees that you have been buying into further losses it can cause a certain degree of trepidation.
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Re: market crash Feb 2018

Post by ig17 »

An anecdote from the recent correction:
Many of the hardest-hit investors were those who had used exchange-traded products to wager that low volatility would persist and stock prices would remain stable.

Harvey Hajiyan, a 35-year-old financial adviser who lives in Toronto and has been investing for more than a decade, assumed stocks would continue to grind higher this year, similar to the gains the Dow and the S&P 500 had posted for much of the past two years without a pullback.

“All of the strategists agreed the market would go up,” said Mr. Hajiyan.

At the end of January, he placed an ill-timed bet and used only margin to fund a large position in the ProShares Short VIX Short-Term Futures exchange-traded fund (SVXY), which rises as long as stock prices remain stable. When the S&P 500 fell into correction territory to erase one of its best starts in years, Mr. Hajiyan’s investment in the ProShares fund tracking expected market swings was nearly wiped out, forcing him to liquidate hundreds of thousands of dollars of securities to answer the margin call.

“I was in denial,” said Mr. Hajiyan after he realized he lost about 600,000 Canadian dollars (US$472,260) worth of his C$1.1 million investment portfolio.

<snip>

Despite losing a sizable portion of his wealth, Mr. Hajiyan says the experience hasn’t soured him on using margin debt. “If I wasn’t using margin, I wouldn’t be at this level,” Mr. Hajiyan said of his profits before the pullback. “As my money grows, I’ll limit the amount of margin I use.”
https://www.wsj.com/articles/investors- ... 1519560001
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snowback96
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Re: market crash Feb 2018

Post by snowback96 »

It says he's a "Financial Advisor". Good grief.
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Koogie
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Re: market crash Feb 2018

Post by Koogie »

I guess it serves to remind us who is on the other side of the market from us boring types... :roll:

Reminds me of a quote from The Big Short: "'I’m telling you, your bet is against dumb money. I think it’s time you meet that dumb money."
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Re: market crash Feb 2018

Post by Norbert Schlenker »

snowback96 wrote: 26 Feb 2018 00:55 It says he's a "Financial Advisor". Good grief.
Easy come, easy go. He's 35. Lots of time to recover.

OTOH, I wonder at the marketing value to a Sun Life mutual fund salesman in Vaughan of having your crash and burn written up in the Wall Street Journal. It seems a bit of a strange thing to use as a draw for new clients. Perhaps Vaughan is full of plungers who would admire a 35 year old who had a million dollar investment portfolio for at least a few days?
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