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    Tuesday, December 25, 2018

    For a sub that acts like it's level-headed and reasonable, it feels incredibly emotional. Investing

    For a sub that acts like it's level-headed and reasonable, it feels incredibly emotional. Investing


    For a sub that acts like it's level-headed and reasonable, it feels incredibly emotional.

    Posted: 24 Dec 2018 06:34 AM PST

    A few months ago, when the markets were going up, people mentioning that maybe after 10 years of bull market a bear market might become more likely, they were shut up and being told the usual stuff, time in the market beats timing the market, there is no reason to think there will be a downturn, etc. etc.

    Now that stocks are down 10-15% literally everybody seems to be convinced that there will be a 2008-like recession. Why? It could just be like in 2011 or 2016, when we went down around 15-20% max and then up. Why doesn't anyone seem to even consider this scenario that is at least as likely?

    In reality, the sub really reacts like a typical emotional investor. When the market is up, everybody's convinced it will go up, when it's down, everybody's convinced it will go down. It was the same thing in the smaller dips during the year, people were also being convinced we were heading towards a recession for a few days—except it was more short-lived.

    Honestly, we have no idea if the market will be 20% up or 20% down in a few months. Nobody can predict that. So why don't people try to consider all scenarios?

    submitted by /u/loulan
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    Just remember this.

    Posted: 25 Dec 2018 01:23 AM PST

    In the first stage of an upward market—one that has been down awhile and that nobody expects to rise again—people aren't talking about stocks. In fact, if they lumber up to ask me what I do for a living, and I answer, "I manage an equity mutual fund," they nod politely and wander away.

    If they don't wander away, then they quickly change the subject to the Celtics game, the upcoming elections, or the weather. Soon they are talking to a nearby dentist about plaque.

    When ten people would rather talk to a dentist about plaque than to the manager of an equity mutual fund about stocks, it's likely that the market is about to turn up.

    In stage two, after I've confessed what I do for a living, the new acquaintances linger a bit longer—perhaps long enough to tell me how risky the stock market is—before they move over to talk to the dentist. The cocktail party talk is still more about plaque than about stocks. The market's up 15 percent from stage one, but few are paying attention.

    In stage three, with the market up 30 percent from stage one, a crowd of interested parties ignores the dentist and circles around me all evening. A succession of enthusiastic individuals takes me aside to ask what stocks they should buy.

    Even the dentist is asking me what stocks he should buy.

    Everybody at the party has put money into one issue or another, and they're all discussing what's happened.

    In stage four, once again they're crowded around me—but this time it's to tell me what stocks I should buy. Even the dentist has three or four tips, and in the next few days I look up his recommendations in the newspaper and they've all gone up. When the neighbors tell me what to buy and then I wish I had taken their advice, it's a sure sign that the market has reached a top and is due for a tumble.

    Excerpt from One Up on Wall Street by Peter Lynch.

    submitted by /u/marcellpetras
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    The S&P 500 is in a bear market now.

    Posted: 24 Dec 2018 10:03 AM PST

    ATH is $2,940.91, minus 20% is $2,352.73. It closed at $2,351.25. Not exactly the Christmas spirit

    submitted by /u/uniqueguy263
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    Dow falls below 22,000 after Steven Mnuchin's odd statement fails to calm markets

    Posted: 24 Dec 2018 07:29 AM PST

    "This is the type of announcement that raises the question of whether Treasury sees problems that the rest of the market is missing," Cowen & Co. analyst Jaret Seiberg wrote in a note to clients. "Not only did he consult with the biggest banks, but he is talking to all of the financial regulators on Christmas Eve. We do not see this type of announcement as constructive."

    Mnuchin plans to convene a call on Monday with the President's Working Group on financial markets, which includes the chairman of the Federal Reserve and top market and business regulators.

    https://www.cnn.com/2018/12/24/investing/stock-market-today-dow/index.html

    submitted by /u/caliphornian
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    Officially a Bear Market - Time to Think About Buying

    Posted: 24 Dec 2018 10:53 AM PST

    We are in the first Bear Market in 10 years. Historically this is the time when long-term investors should be putting money to work. We most likely will have more pain to come, as Bear Markets usually drop about 25-30% off of peak. With that said another 5-10% drop is likely coming.

    Investors should not panic. By the word "investor," I mean someone with a time horizon of years not months. I for one will be putting money to work in 2019. I will calculate how much income I want to contribute to the market and make quarterly buys. Bear Markets should not be scary for long-term investors. We had a "Great Depression" and a "Great Recession" and the markets have always rebounded. Remember in 08-09 our whole Financial System almost collapsed. That is not happening right now. The fear is not a Financial System/Capitalist Form of Government collapse. The fear is a recession.

    There are other fears including the Fed raising rates too fast and our debt level reaching unsustainable levels (our debt level reaching unsustainable levels has been a fear since the arguments of Alexander Hamilton and Thomas Jefferson). Interest on our debt compare to GDP and Government Spending, including spending on entitlements, are legitimate fears of course, but our way of life and form of government is not going to collapse.

    Investors should not be putting money into the markets if they will need that money within a year or is part of their emergency fund. Only disposable income should be being put to work. If that is the case, investors should not worry about the market falling. Stress should easily be managed. Be smart with your money.

    A few indicators I am going to be watching are the Russell bottoming (I tend to agree this is a leading indicator), the Schiller P/E ratio, and the forward S&P P/E Ratio. The Schiller and S&P P/E ratios should tell investors it's okay to start putting money to work and the Russell bottoming would confirm.

    It is not worth it to panic. If you are panicking then either you have too much money in stocks, your time horizon is too short (you are more a trader than investor), or stock investing is not right for you (put money into bonds for guaranteed returns).

    Good luck everyone! 2019 is going to be a volatile year for the markets. Pick winners and watch company's debt levels and cash flow from operations. A healthy balance sheet will survive a down turn in the economy.

    submitted by /u/mshenocker
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    This is why Dividend Stocks are Good

    Posted: 24 Dec 2018 01:17 PM PST

    Alright guys I've had loads of egg nog, and am ready for the down votes, but here is my chance to cause all sorts of Christmas Eve fun:

    Dividend stocks are awesome.

    There. I said it. Now I know I'm going to get the whole "a company is worth $100. If it pays a dividend of $5, you now have $5 cash and a stock worth $95" etc. And that is true. Or the classic "if you need income, just sell some shares, and take the capital gains. You'll pay less taxes!" And that is true too.

    Except in scenarios where an investor needs to sell shares for income purposes in a shitty market. Like the one we are in now.

    Selling stocks at a loss hurts. Who cares about the "tax advantage" when your portfolio is down 30%. The best way to make money is to not lose your original capital, and selling into a down market is exactly that.

    This is where dividend stocks shine. You just sit and wait out the market, and your cash rolls in - it doesn't matter if your portfolio is up or down. And if you don't need the cash, you just reinvest your dividends and pick up "cheap" shares or your favourite companies. And in the long term you'll likely get your growth/capital gains too.

    I know this won't be a popular opinion, but I'm risking it anyway (blame the eggnog)Happy Christmas /r/investing.

    And please don't throw out GE's example of them cutting their dividend. We all know to do our due diligence and make sure that the companies we do invest in won't cut their dividend due to stupid business planning. Do your research, diversify, have a nice blend etc.

    Edit. I'm going to throw out that this post was to be a bit tongue-in-cheek.

    submitted by /u/yycyak
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    The 2-year Treasury has flash crashed and is now yielding lower than a 1-year

    Posted: 24 Dec 2018 12:00 PM PST

    This is the first time the 1/2yr treasury yield has inverted as when the Stock Markets closed at 1pm Eastern, the Bond market stayed open and investors FLOCKED to safe havens to lower the 2-yr yield at 2.56% and 1 yr at 2.58%

    Article

    submitted by /u/jcarmona24
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    Dow falls below 22,000

    Posted: 24 Dec 2018 07:57 AM PST

    So.... how much money did you lose?

    Posted: 24 Dec 2018 08:56 PM PST

    I had $400k in October. Now I have $240k. It is stressful but I WILL NOT SELL. My plan is to wait a couple years. Good stocks always recover.

    submitted by /u/cathutfive
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    Nikkei drops 5%

    Posted: 24 Dec 2018 06:49 PM PST

    Dow has worst Christmas Eve trading day in its history

    Posted: 24 Dec 2018 10:05 AM PST

    http://cnbc.com/id/105644710

    • Trump resumed his attack on the Fed on Monday, tweeting that the central bank is "the only problem" with the U.S. economy.

    • Treasury Secretary Steven Mnuchin held calls on Sunday with the heads of the six largest U.S. banks in order to reassure nervous investors.

    • The NYSE closes early on Monday at 1 p.m. ET. The exchange is closed on Tuesday for Christmas day.

    Two major stock indexes headed toward their worst Christmas Eve of trading ever on Monday, as the S&P 500 pushed to the cusp of a bear market.

    submitted by /u/pipsdontsqueak
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    Chinese state bank chief warns against buying property now ‘because there’s no money to be made’

    Posted: 24 Dec 2018 04:29 AM PST

    The chairman of a leading Chinese state bank on Sunday warned Chinese investors not to buy property now because "there's no money to be made" due to high prices and alarming vacancy rates.

    Tian Guoli, the chairman of China Construction Bank, which provides mortgage loans to millions of Chinese households, said that the room for further property price rises was limited and it was unwise to buy at current rates, according to the portal Sina.com.

    "There's no money to be made if you buy a flat nowadays. If you insist on buying a home, aren't you trapped at the high price level?" Tian told a forum organised by Peking University's Guanghua school of management.

    The warning by Tian, who is an alternate member of the Communist Party Central Committee, came at a time when the country is in heated debate about the role of the property market – whether it will lead to an bust or whether it can help shore up the economy.

    https://amp.scmp.com/economy/china-economy/article/2179289/chinese-state-bank-chief-warns-against-buying-property-now#click=https://t.co/ZRHbrPun3Y

    submitted by /u/NineteenEighty9
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    Snap, once seen as a viable competitor to Facebook, is struggling after the CEO Evan Spiegel ignored warnings about a redesign that proved unpopular.

    Posted: 24 Dec 2018 11:36 AM PST

    Earlier this year, Snap Inc. chief Evan Spiegel was pressing his team to launch a redesign of the company's Snapchat app. The executives and designers repeatedly responded with an urgent message: We need more time... https://stockmarketnews.today/2018/12/24/snap-once-seen-as-a-viable-competitor-to-facebook-is-struggling-after-the-ceo-evan-spiegel-ignored-warnings-about-a-redesign-that-proved-unpopular/

    submitted by /u/AALERa
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    Things don't change

    Posted: 24 Dec 2018 02:20 PM PST

    2 hours into a bear market and everyone is already acting like a few different federal executive actions would have lead to sustained 15% YOY gains. No one referencing debt growth exceeding income growth, declining sentiment, or sky high valuations of meme stocks that retail investors piled into. Right on schedule with nothing learned.

    Mods where's my shitpost flair?

    submitted by /u/firstreminder
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    Front end of yield curve is more reactive than long end.. Why?

    Posted: 25 Dec 2018 12:50 AM PST

    Can someone please explain why front end of yield curve is more reactive than long end? I.e during easing, curve steepends but when raising rates, curve flattens?

    submitted by /u/NotBenGraham
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    The last time there was this level of interest in the term "Recession" on Google was Nov 09

    Posted: 24 Dec 2018 08:06 PM PST

    Japan’s Nikkei Enters Bear Market. The Nikkei 225 Stock Average plunged below the 20,000 level and entered bear market territory, as Japanese equities headed for their worst December on record.

    Posted: 25 Dec 2018 03:03 AM PST

    Japan's blue chip shares fell across the board, with Toyota Motor Corp falling 5.25 percent, Sony Corp shedding 5.55 percent, Nintendo down 4.3 percent and Mitsubishi UFJ Financial Group losing 4 percent. Defensive shares such as consumer staples, healthcare and utilities were unable to withstand the selling pressure. https://stockmarketnews.today/2018/12/25/japans-nikkei-enters-bear-market-the-nikkei-225-stock-average-plunged-below-the-20000-level-and-entered-bear-market-territory-as-japanese-equities-headed-for-their-worst-december-on-record/

    submitted by /u/AALERa
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    S&P 500 Enters Bear Market

    Posted: 24 Dec 2018 10:09 AM PST

    The generally accepted conditions for a bear market is a decline of 20% or more.

    The S&P 500 all time intraday high is 2,940.91. We closed today at 2,351.12, or down 20.05%.

    If you compare the drop to the all time closing high of 2,930.75, we are down 19.77%.

    submitted by /u/treake
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    I worry about my parents’ financial situation- and given the market, my father says he is shorting Index funds right now. I’ve been told from all my life that you should leave your investments as are during a recession. Could you help me understand / explain to him which is the right approach?

    Posted: 24 Dec 2018 11:53 PM PST

    I have about 70% of my assets in various index funds and bonds, and my father was trying to convince me to sell so I could "cut my losses and buy at a lower price". I couldn't articulate why I thought this - and his shorting of index fund stocks - was a bad idea, but I got the sense they were from various previous conversations I've had.

    Could you help a novice understand why both of the above financial actions would be bad financially?

    submitted by /u/jsesicasmith
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    A big picture perspective on bear and bull markets since 1926

    Posted: 24 Dec 2018 01:26 PM PST

    Found this nice little graphic recently.

    Hopefully this calms some jitters: https://i.imgur.com/xWg8mrD.png

    submitted by /u/nist7
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    "The singular feature of the great crash of 1929 was that the worst continued to worsen... The smart money... went back in to pick up bargains... The bargains then suffered a ruinous fall."

    Posted: 24 Dec 2018 01:58 PM PST

    From the opening of chapter 6 of JK Galbraith's "The Great Crash 1929."

    submitted by /u/Power80770M
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    Your portfolio now vs. in 1-2 years

    Posted: 24 Dec 2018 09:46 PM PST

    For investors who are holding and not selling, do you guys think it's a fun/good idea to upload a pic of your portfolio right now and then 1-2 years later come back, upload another pic of your portfolio to see how it has changed?

    submitted by /u/MakeHerUnderstand
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    How is Ray Dalio’s “All Weather” portfolio doing in the current market?

    Posted: 24 Dec 2018 02:49 PM PST

    I'm not very savvy so this may be a bit of a simplistic question; especially given how short of a time the markets have been going down. I'm just curious since this is billed as a simplistic way to stay safe.

    submitted by /u/byrans
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    Is now a good time to start a vfinx acct?

    Posted: 24 Dec 2018 08:27 PM PST

    TD

    Posted: 24 Dec 2018 09:42 PM PST

    Mutual funds for TD? S&P? Etc? Not sure what is standard with TD. Most seem to have Vanguard and Fidelity

    submitted by /u/adparri
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