I am looking at a list of DJIA adjusted closing prices for every day in the last 35 years. The two biggest percentage gains (and 4 of the 6 biggest percentage gains) over that period all occurred in October or November of 2008. This may help confirm that dead cats do indeed bounce as they fall down the staircase. (The #3 and #8 gains were in October 1987; yesterday’s 5.1% gain was the #11 gain over the period.)
2008-08-28, Dow closed at 11715
…
2008-09-29, -7% Dow closed at 10365
2008-09-30, +5%
2008-10-01, 0
[COLOR=“Red”]2008-10-02, -3%
2008-10-03, -2%
2008-10-06, -4%
2008-10-07, -5%
2008-10-08, -2%
2008-10-09, -7%
2008-10-10, -1%
2008-10-13, +11% [#1]
2008-10-14, -1%
2008-10-15, -9%
2008-10-16, +5%
2008-10-17, -1%
2008-10-20, +5%
2008-10-21, -3%
2008-10-22, -7%
2008-10-23, +2%
2008-10-24, -4%
2008-10-27, -2%
2008-10-28, +11% [#2] Dow closed at 9065
…
2008-11-13 +7% [#5] Dow closed at 8835[/COLOR]
…
2008-11-20, Dow closed at 7552
2008-11-21, +7% [#6] Dow closed at 8046
2009-02-23, Dow closed at 7115
(I’ve rounded the percent changes to nearest integer. This is neither an offer to buy nor an offer to sell, nor it a solicitation of an offer to sell or to buy. Past Performance Is No Guarantee of Future Results. If you feel obligated to pay full value for advice in this post, please donate one penny to your favorite charity.)
Chortle. Our little Cephalopod made a fool of himself in the other stock market thread; shows up here and pretends he’s smarter than the “leftist hive”!
Sorry, Cephy. Albania and Russia want only the smartest squids for their troll farms. You’ll need to work harder before you apply for that $2/hour job.
Octopus is right. It’s not that hard, with a few 10s of hours of diligent study to obtain like a ~90% understanding of the explainability of how the stock market works (and more crucially, what parts can’t be explained about it). It’s also patently obvious that, despite this, the vast majority of people hold starkly inaccurate misconceptions about the functioning of the stock market and that there is persistent strain of leftist denial of basic expert consensus because it’s uncomfortably dissonant (in the same way that there are right wing talking points about climate change or UHC that are just plain wrong and yet keep on being repeated).
If you want book recommendations, “A Random Walk Down Wall St”, “The Intelligent Investor” and “Irrational Exuberance” are all good books. Once you read a lot of the basics, you start to understand not only why the stock market behaves the way it does but, in many ways, how it’s impossible to behave any other way.
In particular, one common misconception that most people hold (whether leftist or not) is that bad news means a stock goes down and good news means a stock goes up and they get persistently surprised when the opposite happens. Expectations are already priced into stocks, if bad news happens but it wasn’t as bad as the bad news people were expecting to happen, then the stock goes up because people’s expectations adjust upwards.
That largely explains both the dip and the bounce, the news of clusters spreading in Italy/SK/Iran were genuinely surprising and caused a real dip as people re-evaluated the probability distribution of likely scenarios. However, today, the news, while bad, wasn’t as bad as people were already pricing in and so there was a rally.
In addition, large parts of the stock market operate on what is called a Keynesian Beauty Pageant model (where you win if you predict the same winner as everyone else). Whenever that happens, you see wild swings in either direction as consensus ends up dictating reality. We’re seeing some of that now as reactions in the market are affecting how we react to the market. The market swinging down so much made it a news worthy event which prompted a lot of people to start preparing for the virus which will make the economic impact not as bad which means the market is now pricing in it’s own impact on the world.
This, pretty much. There’s that Benjamin Graham quote:
The issue here is that the “voters” dictating short-term market behavior are like the cows in this video. They’re skittish, they overreact to sudden loud noises, then overcompensate for their overreaction, and on and on, back and forth. You end up with wild swings in stock prices as people decide whether to get in/out of the market based on the very latest news, on whether they see (or think they see) other people getting in/out of the market, on how badly they got burned by the last market dip, or any of 100 other factors that have nothing to do with the actual state of the economy or its real future prospects. Eventually the skittishness subsides, and the market gets back to a reasonably objective reflection of the current economy and its real future prospects.
This article suggests yesterday’s gains were because of traders anticipating the .5% Fed rate cut we saw today. So now that has come to pass, and it looks like people are celebrating by… selling.
You OBVIOUSLY don’t understand the stock market. You should read a book. Or listen to all the Warren Buffets and Daddy Warbucks in this thread about how to manage your imaginary stock portfolio. Which would be real if you weren’t so poor and dumb. It’s a lot like buying tomatoes at the market. Or something.
I read both. My toilet paper has no words at all printed on it, which is pretty good stock market advice all things considered. My last fortune cookie said I would change jobs soon, which was objectively terrifying given that my company just changed hands three months ago and is now owned by a larger company based in a different country. We’re told there will be no major changes, but…
Aside from the sage advice of the TP, I gathered my awareness of the stock market from a variety of sources over the past few decades. My conclusions, as a five step plan:
Don’t play the market.
The best way to invest is to get a 401k or IRA or something, and dump money in while the market is low, and dump money in while the market is high, and never ever look to see how it’s doing. You can’t control anything and it will only be stressful and depressing.
If you want to play something, play a video game. It can still be stressful and depressing, but you’ll have more control.
If you’re going to give stock market advice, don’t lead by being a complete asshole.
Don’t play the market.
It should probably be noted that I’m pretty risk averse. Persons more fond of risk should collect some of their money, set it on fire, and then follow the above plan.
A fool? I am not the hysterical fool thinking there is any analytical solution to short term valuations in the stock market. I am not the hysterical fool that starts threads hyperventilating because of innate volatility in markets. I am not the ignorant fool who thinks that people can outperform a monkey on average by short term active trading.
Everything I’ve said about the stock market has been factual and useful unlike the overly emotional and under educated hive on this board. No wonder you folks want the government to care for you and your family. You all are too darn dumb, blame your ancestors, to care for yourselves.
Reading you fools’ financial ‘analysis’ makes me rethink my commitment to free speech at times.
As I recall Trump got mad at the stock market as well. It obeyed him when he commanded it to recover.
Stuff goes up, stuff goes down. But anyone who says they “lost money” last week is either pouting because they only lost value until such time as the market recovers, or they’re stupid because they sold low. If you’ve got money in there and you sort of know what you’re about, then you know this wasn’t any big thing.
But I am curous to know if we’re any closer to negative interest rates. (as if!)
I probably should read a book. I certainly wouldn’t recommend anybody blindly follow my investment advice. Still, I am sentient enough to notice that GNP growth has been around 2% while stocks have gone up 35+%. I don’t think that can go on forever. So two Sundays ago, after I saw that the virus was seriously effing with China’s economy, I completed my 401k move away from stocks- it is 10% stocks now and the rest is bonds &etc. I sold most of my personal stocks to pay off debts a few months ago, when they were worth 25% more than they are today.
I have been enjoying a lot of nyucks these past few weeks. I really think going “nyuck, nyuck” is more fun when you’re a dummy like me, kind of like how blondes have more fun. Now, if the market takes off like a rocket next month, you can all point and laugh at me, but I think this thing is going to drag on for awhile
Subscribing to the thread, so I can find out the moment negative interest rates occur.
That’s when I’m going to the bank and taking out a three trillion-dollar loan (I’ll pay it back the following day, less the one day of negative interest).
Now I want to know why people have stopped posting here. Is all the weird sh¡t that has happened in the stock market since early spring not worth a bigger rant? I mean: the valuations seemed frothy before the pandemic, no wonder they fell with the bad news. Now the news is not substantially better, the outlook is worrisome and the stock market just broke another record high!
And don’t mention Tina, please. There is always an alternative, and be it a lousy one.
ETA: Have I suscribed to this thread now?
Volatility makes trading more profitable. Prior to the pandemic, I had about half of my portfolio in cash, primarily because I believed that valuations were too high. After the fall in late February and early March, I pushed almost all of my portfolio into equities. Most of the index growth since mid to late March has come from the FAANG technology stocks. My YTD return has been about 12.5%. I’m getting ready to pull about 40% of my portfolio back into cash, because I believe that valuations are again too high.
(The #3 and #8 gains were in October 1987; yesterday’s 5.1% gain was the #11 gain over the period.)
Chortle. Our little Cephalopod made a fool of himself in the other stock market thread; shows up here and pretends he’s smarter than the “leftist hive”!