Oops, Tesla stock is down over 4% today.
Trump may need to do another ad, with him driving a Tesla up the stairs into the White House bedroom.
We could get into debate of terms maybe, but yes there exists rational analysis of irrational behavior, and if one understands and can predict how other actors are going to behave then it is rational to behave with that in mind.
Ah, if one only could understand and predict irrational behaviour! I fear it is often chaotic and therefore unpredictable. It is too sensitive to the initial irrational conditions, but it is human to try. I know I do.
Things is that chaotic systems still can have patterns … I seriously expect that a variety of groups have AI systems let loose on trying to identify them.
Of course each completed buy or sell on an AI recommendation will itself perturb the market. The behavior of the market changed a lot when so-called algorithmic trading came in 20+ years ago. It changed again when very high speed trading came in a decade or so later. It changed again when the social media youtube promoters and meme-stock phenomena were added to the mix.
The AIs’ will soon be trading with each other as much as they’re trading with humanity.
I suspect we’re probably long past that point
Good bet. My point was that they’ll both confound one another, and confound the humans trying to outsmart their alien form of rational irrationality.
Exciting times.
I’m so sick of everyone calling this a “correction” as though it were a natural consequence of a bubble. Sure, if AI stocks all popped, maybe that would be a correction. But this isn’t a correction. This is self-inflicted damage. This is the market pricing in economic terrorism against the world.
And it could be a bit of an arms race between the most well funded firms to get the most up to date fed into their systems more completely to better out play the competitors’ AIs. With the money at play there is lots of cause to spend lots.
And the moves will be “rational” in the sense that they may recognize newly evolving patterns and play to exploit them well, but rational in terms of any understanding of companies actually having value or growth prospects that justify prices? We may be past that. It also confounds the hope to guard against the sort of catastrophe that algorithmic trading was part of triggering because no one even understands what the systems are responding to.
It makes me more and more convinced of the need to be broadly diversified, and more and more content to stay out of the more betting side of the markets.
Consumer sentiment takes a huge hit in March. This was one of my predictions around heading into a recession. Consumer spending is 68% of the economy, so if consumers stop spending it’s pretty much a fait accompli.
Preach it, bro!!
Pulled half of my money out of US index funds, and am moving about 66% of that into a money market, and the rest into international index funds. Once I got over the “sell it all” mentality, it was easy to decide to diversify a bit more.
New contributions used to be 75% US index, 25% bonds. Now they’re 25% US Index, 50% international index, 25% bonds.
I need to do some research on the TIAA guaranteed income options. They’re insurance annuities, and at the moment are paying a bit less than the money market, so no hurry. It probably isn’t a great option for everything, but maybe it’s worth putting 20% of my retirement into something with a guaranteed 4.5% return. Withdrawals have to be spread out over 7 years.
If I knew if any of this was a good idea I’d have retired years ago, because I’d have bought AAPL when it was $0.20 (including splits and stuff) in 1998.
Although to be fair I think the term actually simply means a drop of over 10 to 20%, with over 20% defined as a bear market. It is not definitionally a judgement on if the drop is a consequence of excessive valuations or presidential malpractice.
But yeah is a soft word for what is happening.
I actually had, but kept selling off portions as it became overweighted in my portfolio, pretty much every time it double 
and then the rest for the first’s college. Of course what I bought with the proceeds didn’t do as well.
Curious as to whether you’re purchasing bond funds, or treasuries, or agency bonds, or corporate bonds, or municipals?
They’re just bond index mutual funds. A couple of them are specialized to government and inflation protected government bonds, but mostly just an index of “high quality” bonds. Indexes have treated me really well (not 200,000% AAPL well), but beaten all of my sector and managed funds. That is really all of the thought that has gone into exactly which bonds to buy.
Can you share which ones you like? I’ve been looking at a couple, but cannot decide.
Thanks!
I’m also interested in folks’ choices in bond funds. I have FTBFX, which has a yield of about 5% and doesn’t “do” much NAV-wise, and I have SPHY which is a junk bond fund, but it pays 7.5% which is nice. It’s NAV is down a bit because (I think) the tariff talk has people worried about the low-quality companies’ ability to weather a coming recession, but the bond terms are mostly quite short (under 3 years) so that generally limits risk.
I buy indexes based on the expense ratio. I don’t know if that is a good practice, but I stopped trying to be too educated on this financial stuff after I got lucky selling a bunch of investments for a down payment just before the .com bubble burst.
In my retirement I have MWTSX, and in my brokerage account I have FGOVX, FIPDX, and FXNAX.
Like I said, pretty much all I did to choose them was search for bond indexes, and sort by expense ratio.
Thanks, people!