Historic stock plung ahead?... or Chicken Little?

[olhorseman]

Buy, buy, buy!

Too soon for me. I sold all stocks and funds a couple of weeks ago. I see the DJI at 20k around the end of the year. I'll buy back in then.

 

[Kutnupe14]

Buy, buy, buy!

Yep

 

[Slapstick]

As a stockbroker friend once told me a long time ago, "You don't lose money until you sell." By that he meant that the market will have ups and downs, some of them large, but over the long haul it historically finishes up and you'll make a decent return if you dan't panic and sell. That was good advice then and it's good advice today. Of course it's a given that applies to decent company's that have been around for the long haul, not the start ups and penny stock varieties, too much volatility with those.

 

[hoosierdoc]

When you climb Everest it's not a steady climb. Gotta go up for a while, crest a peak, come back down, go back up again.

Maybe everyone is selling to put money into crypto

 

[BehindBlueI's]

Buy, buy, buy!

Pretty much where I'm at. Sale on dividend stocks? Yes, please.

 

[Tombs]

As a stockbroker friend once told me a long time ago, "You don't lose money until you sell." By that he meant that the market will have ups and downs, some of them large, but over the long haul it historically finishes up and you'll make a decent return if you dan't panic and sell. That was good advice then and it's good advice today. Of course it's a given that applies to decent company's that have been around for the long haul, not the start ups and penny stock varieties, too much volatility with those.

I wonder if someone will ever be able to explain the logic of people who buy high and sell low...

Never in my life have I understand people who sell in a crash. I've seen the market go to its knees many times in my life, and never once did it fail to recover and surpass its previous high.

I guess you could sell on the decline and buy at the bottom but it'd start getting dodgy fast.

 

[BehindBlueI's]

I wonder if someone will ever be able to explain the logic of people who buy high and sell low...

Yeah, behavioral economics figured it out a long time ago. It's a combination of two factors.

1) Humans are wired to hate losing more than they love winning. It's a survival trait that stems from the fact you can bypass the chance a win and survive to try again later, but a loss may kill or cripple you.

2) Humans suck at instinctively understanding statistics and probabilities for abstract events. The forebrain knows that stocks bounce up and down. The more primal parts are really convinced when its going up, its going up forever and vice versa.

So, a portion of your brain is causing you stress and pain because it thinks you are going to lose the whole investment as the downturn is eternal. Another portion of your brain knows that's unlikely, but also knows you are unhappy. Then the mind juggles what level of financial loss is worth dumping the stress and pain, would you accept a $X loss to feel relieved and happy again? Your mind is a committee, and at some point of stress/pain, the committee votes to take the loss but be happier. The result is a sale in a downturn.

 

[BugI02]

I wonder if someone will ever be able to explain the logic of people who buy high and sell low...

Never in my life have I understand people who sell in a crash. I've seen the market go to its knees many times in my life, and never once did it fail to recover and surpass its previous high.

I guess you could sell on the decline and buy at the bottom but it'd start getting dodgy fast.

Yeah, behavioral economics figured it out a long time ago. It's a combination of two factors.

1) Humans are wired to hate losing more than they love winning. It's a survival trait that stems from the fact you can bypass the chance a win and survive to try again later, but a loss may kill or cripple you.

2) Humans suck at instinctively understanding statistics and probabilities for abstract events. The forebrain knows that stocks bounce up and down. The more primal parts are really convinced when its going up, its going up forever and vice versa.

So, a portion of your brain is causing you stress and pain because it thinks you are going to lose the whole investment as the downturn is eternal. Another portion of your brain knows that's unlikely, but also knows you are unhappy. Then the mind juggles what level of financial loss is worth dumping the stress and pain, would you accept a $X loss to feel relieved and happy again? Your mind is a committee, and at some point of stress/pain, the committee votes to take the loss but be happier. The result is a sale in a downturn.

Or six months ago you bought Boeing at $240. You've watched it run up to $350+ but you know all good things come to an end. You have a stop loss order set at $300, a tidy 25% gain. You expect an orderly correction when one comes, but you don't get that. When the drop begins accelerating, the market sheds 3% in a matter of hours and then another 7% in a matter of minutes. It blows through your stop loss setting so fast that the automation can't catch your desired selling price, but keeps trying to sell once triggered. Since you're a small investor, your order is processed after larger orders. Your automated broker system is only able to complete the sale as the market starts to bottom and the sink rate slows down. Boom, you sell Boeing at loss before you even know it

Then multiply that by tens of thousands of investors

 

[Kirk Freeman]

Pretty much where I'm at. Sale on dividend stocks? Yes, please.

Outside my SEPs, that has been my focus. Replace current income with dividends, slowly, until time to close down office. Focus has to be maxing my SEP to reduce my AGI.

Plan is dividends as income then start drawing down from SEPs when I have to.

In my position I want to do gradual fade rather than slam shut.

 

[Sailor]

If you are a technical trader you don't care. The answer is in the charts.

Short on Silver atm.

 

[BugI02]

Outside my SEPs, that has been my focus. Replace current income with dividends, slowly, until time to close down office. Focus has to be maxing my SEP to reduce my AGI.

Plan is dividends as income then start drawing down from SEPs when I have to.

In my position I want to do gradual fade rather than slam shut.

Indeed, quality dividend stocks play the role that quality bonds used to for retirement. When you enable sufficient dividend income to live on comfortably, you don't care about the underlying stock price. P&G down 10% - meh.

They also often recover value faster due to flight to quality