# Has The Market Crash Finally Hit America? **URL:** \ **Category:** In My Humble Opinion\ **Created:** [August 21, 2015, 10:01pm UTC](https://boards.straightdope.com/t/has-the-market-crash-finally-hit-america/728480 "2015-08-21T22:01:15Z")\ **Posts on this page:** 20\ **Page:** 2
**Author:** ![ITR\_champion](https://avatars.discourse-cdn.com/v4/letter/i/c67d28/32.png) [@ITR\_champion](https://boards.straightdope.com/u/ITR_champion)\ **Post date:** [August 22, 2015, 6:24pm UTC](https://boards.straightdope.com/t/has-the-market-crash-finally-hit-america/728480/21 "2015-08-22T18:24:31Z")
> [@dracoi](#): > > The long-term appreciation of the stock market outweighs any short-term fluctuations, with an average return of about twice what bonds pay. Equities have to be the primary driver of your investment returns. Because you know that an occasional 50% drop is possible, you keep your portfolio diversified and you redistribute assets as needed to maintain the allocation that meets your risk targets. As you age, your risk targets should be increasingly conservative, but there’s never a time when you be entirely in bonds - or entirely in ANY single asset category. > > In fact, if we’re going to compare it to roulette… investing in the stock market is like being the casino. Yeah, you might lose $100,000 one night when a high-roller hits it big, but the odds are in your favor, and you’ll make it back over time. That line of argument has been true in the past, for the United States stock market. It is not true for all countries. It is not guaranteed to be true in the future. In 1990, Japan’s Nikkei index reached almost 40,000. Over the next couple years, it plunged, losing most of its value. Throughout the 1990’s, it hovered around 20,000. Today it is still below 20,000. So if you’d invested in Japanese stocks in 1990, you would have lost half of your money and never gotten it back. In the United States, we tend to think that we’re better than other countries. We’re larger, we have a more diversified economy, and we’re just plain smarter, so something like that couldn’t possibly happen to us. Maybe we’re right. On the other hand, maybe we’re wrong. I’ve decided not to gamble on it. This is simply my decision. I’m not critiquing anyone else’s decisions. ---
**Author:** ![ITR\_champion](https://avatars.discourse-cdn.com/v4/letter/i/c67d28/32.png) [@ITR\_champion](https://boards.straightdope.com/u/ITR_champion)\ **Post date:** [August 22, 2015, 6:48pm UTC](https://boards.straightdope.com/t/has-the-market-crash-finally-hit-america/728480/22 "2015-08-22T18:48:47Z")
> [@Jonathan\_Chance](#): > > That’s nonsense and you should know it. This year has been flat but the prior two years have been runaway growth. If you’ve been in bonds - you don’t say which type - then maybe you’ve been getting 4%. So let’s look at it: > > Say you start with $100,000 > Five years at 4% and you end up with: $121,665.29 > > Real world indices > Start with $100,000 > Five years at real growth you end up with: $201,135.71 > > The average return on the S&P500 over the last 5 years was 15.37%. > > Even if you were in some of those crazy corporate bonds - I think CITI is still paying 8% on some issues to try to control their cash flow - you’d be at $146,932.81 > > Index funds or buy and hold mutual funds (I can point to several that consistently outperform indexes) far outperform over pretty much anything but a very short term timeframe. My preferred bond fund, the [Vanguard Long-Term Bond Index Fund (VBLTX)](https://personal.vanguard.com/us/funds/snapshot?FundId=0522&FundIntExt=INT), has pulled in 7.5% annually since inception. How does that compare to stocks? Well, it depends on what period of time you pick. For the past 5 years, the stock market has done way better than that. For the past 10 years or the past 15 years, they’re about equal. Then consider expenses. If I’m constantly buying and selling stocks, it costs money to make those transactions. If I just park my money in a bond fun, expenses are negligible, running around 0.20% per year. Then consider tax advantages. And when adding it all together, a bond fund doesn’t look so bad after all. ---
**Author:** ![Habeed](https://avatars.discourse-cdn.com/v4/letter/h/a587f6/32.png) [@Habeed](https://boards.straightdope.com/u/Habeed)\ **Post date:** [August 22, 2015, 7:19pm UTC](https://boards.straightdope.com/t/has-the-market-crash-finally-hit-america/728480/23 "2015-08-22T19:19:13Z")
It’s ALL GOING DOWN MONDAY!!! Sell Sell Sell (…logs into investment accounts. Purchases 30 day shorts…) ---
**Author:** ![Jonathan\_Chance](https://sea3.discourse-cdn.com/straightdope/user_avatar/boards.straightdope.com/jonathan_chance/32/701_2.png) [@Jonathan\_Chance](https://boards.straightdope.com/u/Jonathan_Chance)\ **Post date:** [August 22, 2015, 7:36pm UTC](https://boards.straightdope.com/t/has-the-market-crash-finally-hit-america/728480/24 "2015-08-22T19:36:10Z")
Feh, it depends on what you want. I just did a breakdown on it - I’m at the office this afternoon returning calls - and indeed it averages 7.55% since inception (sometime in 1994). Since inception is a tricky thing, though. VBLTX Inception: 7.55% Trailing 10-year: 6.57% Trailing 5-year: 6.85% Trailing 3-year: 1.68% So for the last three years you’re beating inflation…but not by much and only if you calculate it right. Let’s look at some others… S&P Value Fund Inception (May 2000): 5.12% Trailing 10-year: 6.22% Trailing 5-year: 14.31% Trailing 3-year: 16.46% Specific Mutual Fund Three Pack Which I’m Not Allowed to Name\* Since Inception (Earliest Common) July 1987: 9.28% Trailing 10-year: 6.27% Trailing 5-year: 10.87% Trailing 3-year: 10.83% The above two illustrations are factored for maximum fees. No discounts, no breakpoints. Nothing. We can see where 2008 hammered the equities by the huge drop between the trailing 10-year and 5-year illustrations. The above three-pack is slightly more conservative than moderate. It runs mostly dividend payers and about 55% bonds. I’m not really criticizing your choice, ITR. What you do with your money is your problem. You ain’t my client and I ain’t your guy. Without knowing your age, risk tolerance and long-term retirement and spending plans no one here can make a case for or against. \*Literally not allowed by my employer on a message board. ---
**Author:** ![Jonathan\_Chance](https://sea3.discourse-cdn.com/straightdope/user_avatar/boards.straightdope.com/jonathan_chance/32/701_2.png) [@Jonathan\_Chance](https://boards.straightdope.com/u/Jonathan_Chance)\ **Post date:** [August 22, 2015, 7:43pm UTC](https://boards.straightdope.com/t/has-the-market-crash-finally-hit-america/728480/25 "2015-08-22T19:43:19Z")
> [@ITR\_champion](#): > > Then consider expenses. If I’m constantly buying and selling stocks, it costs money to make those transactions. If I just park my money in a bond fun, expenses are negligible, running around 0.20% per year. > > Then consider tax advantages. And when adding it all together, a bond fund doesn’t look so bad after all. Nyeh, the tax advantages aren’t really there in that fund when you consider that more than half, more than 60% compared to the prospectus, are in corporate taxable bonds. It doesn’t mention munis but does mention US Treasuries. Those won’t be state taxable but are federally taxable so again, if there’s an advantage it would likely be negligible. Your first paragraph though is dead on. Everyone who bring up index funds assumes that the investor competing with the index is buying and selling at a fast clip. That’s foolishness. Buy good investments with good management and a good track record and beating the indexes - even factoring in upfront commissions - is actually pretty straightforward. ---
**Author:** ![Mr.Nylock](https://avatars.discourse-cdn.com/v4/letter/m/77aa72/32.png) [@Mr.Nylock](https://boards.straightdope.com/u/Mr.Nylock)\ **Post date:** [August 22, 2015, 8:02pm UTC](https://boards.straightdope.com/t/has-the-market-crash-finally-hit-america/728480/26 "2015-08-22T20:02:59Z")
> [@Fear\_Itself](#): > > I don’t think the market insiders are any better at predicting this than I am. I think many market insiders worst fear is that many people stop believing that. ---
**Author:** ![Stringbean](https://avatars.discourse-cdn.com/v4/letter/s/d6d6ee/32.png) [@Stringbean](https://boards.straightdope.com/u/Stringbean)\ **Post date:** [August 22, 2015, 8:48pm UTC](https://boards.straightdope.com/t/has-the-market-crash-finally-hit-america/728480/27 "2015-08-22T20:48:22Z")
The American economy is doing well, bottomless-oil-prices notwishstanding. Predicting 40-50% is…BOLD, but quite off, imo. ---
**Author:** ![Stringbean](https://avatars.discourse-cdn.com/v4/letter/s/d6d6ee/32.png) [@Stringbean](https://boards.straightdope.com/u/Stringbean)\ **Post date:** [August 22, 2015, 8:51pm UTC](https://boards.straightdope.com/t/has-the-market-crash-finally-hit-america/728480/28 "2015-08-22T20:51:13Z")
> [@Jonathan\_Chance](#): > > Anyone with a time frame longer than 5 years should be patient, throw extra cash into the market and be patient. > > Remember, there’s never been a correction we haven’t grown back out of. Even the great depression and 2008 were recovered from in reasonably short order. Now’s the time to buy big oil. In 5 years, they will be at 2-3X their current value. ---
**Author:** ![Ruken](https://avatars.discourse-cdn.com/v4/letter/r/f475e1/32.png) [@Ruken](https://boards.straightdope.com/u/Ruken)\ **Post date:** [August 22, 2015, 10:03pm UTC](https://boards.straightdope.com/t/has-the-market-crash-finally-hit-america/728480/29 "2015-08-22T22:03:57Z")
> [@Truman\_Burbank](#): > > If the Dow really goes below 5,000, it will be time to be greedy. One can only hope. Those sorts of discounts don’t happen often. ---
**Author:** ![John\_Mace](https://sea3.discourse-cdn.com/straightdope/user_avatar/boards.straightdope.com/john_mace/32/185_2.png) [@John\_Mace](https://boards.straightdope.com/u/John_Mace)\ **Post date:** [August 22, 2015, 10:07pm UTC](https://boards.straightdope.com/t/has-the-market-crash-finally-hit-america/728480/30 "2015-08-22T22:07:16Z")
> [@Fear\_Itself](#): > > No more than 10%. This is a correction, not a crash. > [@Fear\_Itself](#): > > Then we’re at the bottom. Buy some bargains and profit off the dead cat bounce on Monday. Do you know what a dead cat bounce is? If you think one is coming, then what we’re seeing is not just a correction. ---
**Author:** ![Fear\_Itself](https://sea3.discourse-cdn.com/straightdope/user_avatar/boards.straightdope.com/fear_itself/32/19637_2.png) [@Fear\_Itself](https://boards.straightdope.com/u/Fear_Itself)\ **Post date:** [August 23, 2015, 2:24am UTC](https://boards.straightdope.com/t/has-the-market-crash-finally-hit-america/728480/31 "2015-08-23T02:24:50Z")
> [@John\_Mace](#): > > Do you know what a dead cat bounce is? If you think one is coming, then what we’re seeing is not just a correction. Do you think a correction turns around in one weekend and heads ever upward after that? There can be a dead cat bounce and a recovery. They are not mutually exclusive. ---
**Author:** ![John\_Mace](https://sea3.discourse-cdn.com/straightdope/user_avatar/boards.straightdope.com/john_mace/32/185_2.png) [@John\_Mace](https://boards.straightdope.com/u/John_Mace)\ **Post date:** [August 23, 2015, 2:54am UTC](https://boards.straightdope.com/t/has-the-market-crash-finally-hit-america/728480/32 "2015-08-23T02:54:04Z")
> [@Fear\_Itself](#): > > Do you think a correction turns around in one weekend and heads ever upward after that? There can be a dead cat bounce and a recovery. They are not mutually exclusive. A dead cat bounce is a temporary upswing in a generally down market. Do you think the market going forward is best characterized as a “dead cat”? If not, then it’s not a dead cat bounce. ---
**Author:** ![Fear\_Itself](https://sea3.discourse-cdn.com/straightdope/user_avatar/boards.straightdope.com/fear_itself/32/19637_2.png) [@Fear\_Itself](https://boards.straightdope.com/u/Fear_Itself)\ **Post date:** [August 23, 2015, 8:20am UTC](https://boards.straightdope.com/t/has-the-market-crash-finally-hit-america/728480/33 "2015-08-23T08:20:38Z")
I believe the market will recover significantly on Monday. It may lose that again in the short run, but I stand by my prediction that this a correction, not a crash. In the months ahead it will recover, and set new a market high within one year. That is why I used the term dead cat bounce. I’m not sure why you pounced on this. What do you think going to happen? ---
**Author:** ![Dangerosa](https://avatars.discourse-cdn.com/v4/letter/d/22d042/32.png) [@Dangerosa](https://boards.straightdope.com/u/Dangerosa)\ **Post date:** [August 23, 2015, 12:30pm UTC](https://boards.straightdope.com/t/has-the-market-crash-finally-hit-america/728480/34 "2015-08-23T12:30:24Z")
> [@Fear\_Itself](#): > > I believe the market will recover significantly on Monday. It may lose that again in the short run, but I stand by my prediction that this a correction, not a crash. In the months ahead it will recover, and set new a market high within one year. That is why I used the term dead cat bounce. I’m not sure why you pounced on this. What do you think going to happen? He’s pouncing on the term dead cat. That implies you think that the market is going to bounce Monday, and keep going down for a significant time - i.e. not be back at a high within a year. By the way, I think we haven’t seen the bottom yet either - we are heading into Fall - often a pessimistic time for the Market - and there are a lot of long term global events that aren’t a perfect storm, but I think will create a tempest in a teapot - but I don’t think it will go on for months. On the other hand, I tend to do most of my stock investing the the Winter and Spring 🙂 when buyers tend to be more optimistic. ---
**Author:** ![Duckster](https://sea3.discourse-cdn.com/straightdope/user_avatar/boards.straightdope.com/duckster/32/1244_2.png) [@Duckster](https://boards.straightdope.com/u/Duckster)\ **Post date:** [August 23, 2015, 6:07pm UTC](https://boards.straightdope.com/t/has-the-market-crash-finally-hit-america/728480/35 "2015-08-23T18:07:58Z")
In an earlier post in this thread I said I watched the futures indexes all week long. They all said the markets were going up, and they didn’t. After the Friday close the futures index had a slight negative number. This morning the futures indexes are triple digit negative. If the markets do not recover with a dead cat bounce, we are in freefall that will not stop for a while. I stand by my prediction the DJIA will hit 10,000. ---
**Author:** ![John\_Mace](https://sea3.discourse-cdn.com/straightdope/user_avatar/boards.straightdope.com/john_mace/32/185_2.png) [@John\_Mace](https://boards.straightdope.com/u/John_Mace)\ **Post date:** [August 23, 2015, 6:31pm UTC](https://boards.straightdope.com/t/has-the-market-crash-finally-hit-america/728480/36 "2015-08-23T18:31:21Z")
> [@Fear\_Itself](#): > > I believe the market will recover significantly on Monday. It may lose that again in the short run, but I stand by my prediction that this a correction, not a crash. In the months ahead it will recover, and set new a market high within one year. That is why I used the term dead cat bounce. I’m not sure why you pounced on this. What do you think going to happen? It doesn’t matter what I think. You stated two contradictory things: That we’re “at the bottom” of the correction and that there will be a “dead cat bounce” shortly. A dead cat bounce does not happen at “the bottom”, so both of those things cannot be true. A dead cat bounce happens before you hit the bottom, and implies that the bottom is a ways off form where we are at present. I’m guessing that you actually think the first thing is true and are using the term “dead cat bounce” incorrectly. ---
**Author:** ![Fear\_Itself](https://sea3.discourse-cdn.com/straightdope/user_avatar/boards.straightdope.com/fear_itself/32/19637_2.png) [@Fear\_Itself](https://boards.straightdope.com/u/Fear_Itself)\ **Post date:** [August 23, 2015, 7:56pm UTC](https://boards.straightdope.com/t/has-the-market-crash-finally-hit-america/728480/37 "2015-08-23T19:56:23Z")
OK, I miss-spoke. Happy? ---
**Author:** ![Fleetwood](https://sea3.discourse-cdn.com/straightdope/user_avatar/boards.straightdope.com/fleetwood/32/271_2.png) [@Fleetwood](https://boards.straightdope.com/u/Fleetwood)\ **Post date:** [August 23, 2015, 8:16pm UTC](https://boards.straightdope.com/t/has-the-market-crash-finally-hit-america/728480/38 "2015-08-23T20:16:08Z")
Two words. Buying opportunity. ---
**Author:** ![Johnny\_L.A](https://sea3.discourse-cdn.com/straightdope/user_avatar/boards.straightdope.com/johnny_l.a/32/1084_2.png) [@Johnny\_L.A](https://boards.straightdope.com/u/Johnny_L.A)\ **Post date:** [August 23, 2015, 8:18pm UTC](https://boards.straightdope.com/t/has-the-market-crash-finally-hit-america/728480/39 "2015-08-23T20:18:04Z")
> [@Fleetwood](#): > > Two words. Buying opportunity. The good news is that my 401k contributions (and employer matching) will buy more now. 🙂 ---
**Author:** ![Fleetwood](https://sea3.discourse-cdn.com/straightdope/user_avatar/boards.straightdope.com/fleetwood/32/271_2.png) [@Fleetwood](https://boards.straightdope.com/u/Fleetwood)\ **Post date:** [August 23, 2015, 8:25pm UTC](https://boards.straightdope.com/t/has-the-market-crash-finally-hit-america/728480/40 "2015-08-23T20:25:13Z")
> [@Johnny\_L.A](#): > > The good news is that my 401k contributions (and employer matching) will buy more now. 🙂 Exactly. Ifyou don’t need the cash now, or soon, ride it out. If you need it short term (5 yrs or less), you should already have withdrawn those funds. Otherwise, keep contributing or buying. [Previous page](https://boards.straightdope.com/t/has-the-market-crash-finally-hit-america/728480.md?page=1) [Next page](https://boards.straightdope.com/t/has-the-market-crash-finally-hit-america/728480.md?page=3)