Do you have adblock enabled?
 
If you can read this, either the style sheet didn't load or you have an older browser that doesn't support style sheets. Try clearing your browser cache and refreshing the page.

(Nautil.us)   Telling investors to sit tight and not freak out during market corrections is like abstinence-only sex education. It ignores what people actually do, and often leads to underperformance   ( nautil.us) divider line
    More: Interesting, Financial crisis of 2007-2010, efficient markets hypothesis, Fundamental analysis, Active management, Financial economics, financial markets, Efficient-market hypothesis, Economics  
•       •       •

584 clicks; posted to Business » on 19 May 2017 at 11:41 AM (26 weeks ago)   |   Favorite    |   share:  Share on Twitter share via Email Share on Facebook   more»



21 Comments     (+0 »)
 
View Voting Results: Smartest and Funniest
 
2017-05-19 08:03:15 AM  
The Rational Investor always seemed like a poor term.
 
2017-05-19 11:48:34 AM  
Trading Places (4/10) Movie CLIP - Pork Bellies Going Down (1983) HD
Youtube uI4fVgVVpiw
 
2017-05-19 11:50:34 AM  
I don't really tell people to sit tight. I tell them to make sure nothing has changed in the fundamentals of the companies they've invested in, if your portfolio is down because Trump flapped his snowball receptacle but the companies in it are still sound, it might be a time to buy, not sell.
 
2017-05-19 11:55:24 AM  
Telling investors to stay calm tends to come off a lot like this, whether they want it to or not:

reactiongifs.comView Full Size
 
2017-05-19 12:06:24 PM  
Except no one knows that it's a correction until it's over. Trying to time the market is like trying to catch a falling knife.

Sorry, Farkers, but you don't know more about market conditions than big investment banking firms.
 
2017-05-19 12:14:11 PM  
Telling people to behave based on the VIX is ridiculous. Any single indicator has anomalous behavior (for example the VIX being at 10 last week is not a particularly great time to think the market is normal and to put money in). Expecting high returns when P/E ratios are as high as they have been recently is absurd. On the other hand, its not like there are much in the way of safe, high paying assets(and market timing tends to fail). Which leads you back to the classic strategy of maintaining consistent investing behavior, while investing in a diversified manner(including things like international equities) and re-balancing on an pre-determined schedule.

If you have surplus cash on hand and see a decent buying opportunity then I see no issue with acting on it. However, your long term investment plan should continue with or without your daily emotions. That means slowing your purchases to stockpile cash isn't really a good idea.
 
2017-05-19 12:34:34 PM  
expecting rationality when it comes to money?  good luck with that
 
2017-05-19 12:46:57 PM  
What correction? When?  Pleeeaaaaase make it happen.
 
2017-05-19 01:57:45 PM  

Tr0mBoNe: The Rational Investor always seemed like a poor term.


I'm more of a rollercoaster investor. I buy for the long-term and ride the market up and down and up and down and up and down and up and down and back up. I can't even remember how many times the market collapsed since 1987, but it's always come back and gone higher.
 
2017-05-19 03:39:06 PM  

natazha: Tr0mBoNe: The Rational Investor always seemed like a poor term.

I'm more of a rollercoaster investor. I buy for the long-term and ride the market up and down and up and down and up and down and up and down and back up. I can't even remember how many times the market collapsed since 1987, but it's always come back and gone higher.


I've just been putting dividends and savings into cash and into bond etfs this year.
I'm sort of expecting a correction because stocks are so expensive by P/E
I would never sell though, too worried about being left behind which is what usually happens historically.
 
2017-05-19 03:49:36 PM  

machoprogrammer: Except no one knows that it's a correction until it's over. Trying to time the market is like trying to catch a falling knife.

Sorry, Farkers, but you don't know more about market conditions than big investment banking firms.


If something really bad is going down, it's pretty damn obvious. There was almost two weeks between the collapse of Lehman Brothers and the big drop on Sept 29th 2008 that really started the last big stock market drop in earnest. Even if you didn't see the blatant warning signs before the Lehman implosion, you still had plenty of time to pull your money out of stocks before things went fully to shiat.

You can't time the markets on a daily or even monthly basis, but something like the crash of 2008 was so obvious that you had people like the ones featured in The Big Short that were positioning themselves to profit greatly from the housing market blowing up. I know that myself I was following a lot of Housing Bubble blogs that were crunching the numbers and seeing that it wasn't sustainable.

I personally did very well because I was just starting my 401k when the crash happened so I was buying into the dip. It was a blue light special on blue chips for my new 401k
 
2017-05-19 03:56:34 PM  
Buy and hold still looks good to me (Here's a chart of the DOW since 1915):
img.fark.netView Full Size
 
2017-05-19 03:59:25 PM  

Mad_Radhu: machoprogrammer: Except no one knows that it's a correction until it's over. Trying to time the market is like trying to catch a falling knife.

Sorry, Farkers, but you don't know more about market conditions than big investment banking firms.

If something really bad is going down, it's pretty damn obvious. There was almost two weeks between the collapse of Lehman Brothers and the big drop on Sept 29th 2008 that really started the last big stock market drop in earnest. Even if you didn't see the blatant warning signs before the Lehman implosion, you still had plenty of time to pull your money out of stocks before things went fully to shiat.

You can't time the markets on a daily or even monthly basis, but something like the crash of 2008 was so obvious that you had people like the ones featured in The Big Short that were positioning themselves to profit greatly from the housing market blowing up. I know that myself I was following a lot of Housing Bubble blogs that were crunching the numbers and seeing that it wasn't sustainable.

I personally did very well because I was just starting my 401k when the crash happened so I was buying into the dip. It was a blue light special on blue chips for my new 401k


It's usually not that obvious and even then it wasn't 100% obvious that it was going to happen (hindsight is always 20/20). Farkers the other day were screaming to sell stocks when the Dow went down 1.8%. Farkers were screaming to sell during Brexit, when stocks went down like 5%. Or when the China crash happened.

If it were that easy, everyone would be rich as hell. But your average person, who doesn't have inside info like Wall Street bankers do, isn't going to be able to do it. Just buy and hold index funds in an asset allocation that you are comfortable with.
 
2017-05-19 06:27:03 PM  
If you're investing for a horizon longer than 10 years and are even paying attention to daily market fluctuations you deserve to lose your money.
 
2017-05-19 06:48:13 PM  

Siberian Khatru: Buy and hold still looks good to me (Here's a chart of the DOW since 1915):
[img.fark.net image 850x536]


Especially considering the graph is almost misleading.  The left side shortens the number gaps---what's the term?  Exponential, like the Richter scale?

Otherwise the blue line would look like a rocket taking off.
 
2017-05-19 07:06:37 PM  

fickenchucker: Especially considering the graph is almost misleading.  The left side shortens the number gaps---what's the term?  Exponential, like the Richter scale?

Otherwise the blue line would look like a rocket taking off.


Logarithmic.
 
2017-05-19 11:45:31 PM  

BMFPitt: fickenchucker: Especially considering the graph is almost misleading.  The left side shortens the number gaps---what's the term?  Exponential, like the Richter scale?

Otherwise the blue line would look like a rocket taking off.

Logarithmic.


...and not misleading. Every time the market doubles on a logarithmic plot looks the same. On a linear plot, that would look absurd.
 
2017-05-20 09:43:34 AM  

Mad_Radhu: machoprogrammer: Except no one knows that it's a correction until it's over. Trying to time the market is like trying to catch a falling knife.

Sorry, Farkers, but you don't know more about market conditions than big investment banking firms.

If something really bad is going down, it's pretty damn obvious. There was almost two weeks between the collapse of Lehman Brothers and the big drop on Sept 29th 2008 that really started the last big stock market drop in earnest. Even if you didn't see the blatant warning signs before the Lehman implosion, you still had plenty of time to pull your money out of stocks before things went fully to shiat.

You can't time the markets on a daily or even monthly basis, but something like the crash of 2008 was so obvious that you had people like the ones featured in The Big Short that were positioning themselves to profit greatly from the housing market blowing up. I know that myself I was following a lot of Housing Bubble blogs that were crunching the numbers and seeing that it wasn't sustainable.

I personally did very well because I was just starting my 401k when the crash happened so I was buying into the dip. It was a blue light special on blue chips for my new 401k


Wasn't a large part of The Big Short that the guy mis-timed the market and had terrible losses for the first 20 to 24 months? That his investors lost confidence, and that he got constant phone calls and investors backing out? He was early by almost two years!
 
2017-05-20 10:15:30 AM  
Find a stock you believe in,  and cost-average in with monthly purchases.
Timing tops & bottoms will drive you crazy.....VERY difficult.
 
2017-05-20 04:14:19 PM  

thurstonxhowell: BMFPitt: fickenchucker: Especially considering the graph is almost misleading.  The left side shortens the number gaps---what's the term?  Exponential, like the Richter scale?

Otherwise the blue line would look like a rocket taking off.

Logarithmic.

...and not misleading. Every time the market doubles on a logarithmic plot looks the same. On a linear plot, that would look absurd.


Serious question--is the use of a logarithmic scale to try and balance out inflation/growth & reflect behavior by percentages, rather than absolute numbers?

Beyond the basics, math is a foreign language to me.
 
2017-05-20 04:42:27 PM  

fickenchucker: Serious question--is the use of a logarithmic scale to try and balance out inflation/growth & reflect behavior by percentages, rather than absolute numbers?

Beyond the basics, math is a foreign language to me.


Basically.  If you drew the graph in absolute numbers, it would look like a flat line that shoots up at the end.

Logarithmic graphs are good for showing proportional growth.
 
Displayed 21 of 21 comments

View Voting Results: Smartest and Funniest

This thread is archived, and closed to new comments.

Continue Farking

On Twitter





Top Commented
Javascript is required to view headlines in widget.
  1. Links are submitted by members of the Fark community.

  2. When community members submit a link, they also write a custom headline for the story.

  3. Other Farkers comment on the links. This is the number of comments. Click here to read them.

  4. Click here to submit a link.

Report