# Market Volatility



## mikermeals (Mar 7, 2020)

*Stay the course!*

I put more money to work on Friday…another scary day. Here is a good message from the CEO of Vanguard. I highly recommend Vanguard as they have many options and site is very easy to navigate. I have been using since the 1980’s.

Hi, I’m Tim Buckley, Vanguard’s CEO.

These are challenging times as the world prepares for, and responds to, the coronavirus outbreak.

Like you, we’ve watched the rising numbers of those infected by the virus with concern and wish a swift and full recovery for those who are ill. We applaud the worldwide efforts to prevent further infections and tragic deaths.

There is still much we don’t know about this epidemic. The health risk is real and the short-term business impact has been significant. The economic consequences, however, are unlikely to be long term. We’re seeing the markets plummet one day and bounce back the next, as investors process that uncertainty.
At Vanguard, we’re known for counseling investors to “stay the course” in good times and bad, which means keeping a long-term perspective and focusing on the parts of investing you can control, such as diversification, balance, and cost.

Now “stay the course” is an easy commitment when markets are calm and steadily moving upward, as they have for more than a decade.
It’s much harder to stay disciplined in today’s environment as markets fluctuate and the near-term future is uncertain. We preach diversification so you can weather these tough times and stay invested.

In my 30 years in the business, I’ve seen many market storms. Re-pricings are inevitable, sometimes violent, but never predictable. Panic and rash action aren’t your ally. Those who cash out find it impossible to know when to get back in. Indeed, investors that deviate from their long-term plans typically regret it later.
The coronavirus epidemic itself was not something we could predict, but we constantly prepare for unexpected bouts of volatility.

Our experienced investment teams know how to navigate difficult markets. Our active managers often find long-term growth opportunities as markets sell off. Our index managers ensure proper liquidity as many wise advice strategies rebalance into the downturn—selling bonds and buying equities.

Vanguard investors have proven time and again they know how to stay calm in a market downturn. But for those who are weathering their first bout of market volatility or could just use a friendly reminder, let me offer three quick points.

First, we stand by our mantra—“stay the course”

An investment plan established during calmer times should not be abandoned in the midst of a market downturn. Let the benefits of diversification play out.
I know how difficult it is to see hard-earned savings diminish, but don’t be tempted to time the markets. It’s a losing strategy. Our studies have shown that chasing returns has historically destroyed 1.5% a year versus staying the course.

Second, we are here to help. Whether you’re new to investing or a seasoned financial advisor, Vanguard is here to support you.

Our websites are constantly refreshed with our latest thinking on the markets and economy. And our experts offer practical advice on how to put this perspective to work in your portfolios. For more specific requests, our crew are ready to assist you.

Don’t feel like you need to go it alone. Our mission is to help you succeed, so reach out if we can be of help.

And, finally, thank you.

Thank you for entrusting us with your financial success. It’s a tremendous responsibility that we take very seriously.

Amidst the uncertain world around us, I am confident that these tough times will pass and we will emerge stronger than before. Valuations were high, the markets have repriced, but your long-term growth prospects remain sound.


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## mathjak107 (Mar 7, 2020)

actually if you look at morningstars  investor figures on their funds vs the funds returns , the investor returns show poor investor behavior as a group . so that contradicts his " vanguard investors know how to remain calm statement ........they exhibit the same poor investor behavior in  volatile times all the other fund families get .


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## fmdog44 (Mar 7, 2020)

Since it is said the virus issue is driving the market down and there will be no vaccine to address it for at least one year possibly 18 months what if anything will halt the fall. We are not yet feeling the long term ramifications of people changing their spending behavior. Regardless of your take on what is going on the economic future of the economies all over the world is going to suffer and how long will it be once they go in to recovery mode for the markets to respond?


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## oldmontana (Mar 7, 2020)

fmdog44 said:


> Since it is said the virus issue is driving the market down and there will be no vaccine to address it for at least one year possibly 18 months what if anything will halt the fall. We are not yet feeling the long term ramifications of people changing their spending behavior. Regardless of your take on what is going on the economic future of the economies all over the world is going to suffer and how long will it be once they go in to recovery mode for the markets to respond?


You nailed it.  I think it will be a year or so before the market gets back to were it was at the end of February.  

You have to feel for investors in stocks like the cruse lines and air lines to name two.  It is also hurting utility stocks which are not that much effected.


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## mathjak107 (Mar 7, 2020)

oldmontana said:


> You nailed it.  I think it will be a year or so before the market gets back to were it was at the end of February.
> 
> You have to feel for investors in stocks like the cruse lines and air lines to name two.  It is also hurting utility stocks which are not that much effected.


Wait and see what it does to insurers ,  manufacturers who need parts from China ,,, hotels , restaurants ....there are so many businesses linked to travel and tourism ....


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## OneEyedDiva (Mar 7, 2020)

This has been a roller coaster ride but not unexpected. I hated dealing with Vanguard. Their system for taking distributions was cumbersome, the way they separated accounts was cumbersome. I finally got tired of it (plus couldn't imagine my son having to deal with it after I pass) so I transferred my account to Schwab. I find Schwab's site is much more user friendly and offers several ways to view accounts and research potential investments. Schwab also offers fee free trades on several funds and ETFs, not just Schwab funds. I intend to ride out this storm like I have others in the past, especially since I don't need to take distributions (except my RMD).


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## oldman (Mar 7, 2020)

If people would have stayed the course between 2008-2010, their IRA’s would have been hit hard. I belong to an investment club of 22 members, which about half of us are millionaires or multimillionaires. 

Two of them did not heed the warnings that were being given during that time and they had to go back to working for a living. It was a shame and I felt really terrible for the fellow because he was a close friend of mine. 

During that period of time, as I watched the price of oil rise and hitting nearly $200 a barrel, I knew there was no way the economy could sustain those prices, plus all the talk about investment bankers buying high risk bundled mortgages. I was worried. One of the gentleman in our group was a genius with investing, much like mathjak. He kept telling us to move our money into safety nets, so after listening to him for 6  straight months, I did. Thank the Lord, I did. 

With this flu thing, I decided to again pull my money out of the markets at 28,700. Larry Kudlow thinks investors should be buying on the dips. I was always taught never to buy any stocks on the way down. It only makes sense that if China cannot ship goods, prices will probably rise and as inventories are depleted, then what? I posted before that China stated that they expect utility of their factories to drop by -4%. 

I would like to see the markets rise 3% before I get back in. Right now, there is about 6-800 billion dollars sitting on the sidelines waiting to come back into the markets, according to CNBC, but we need some good news. My worry is will China start cashing in their bonds as their manufacturing declines? That would probably drive the bond markets down even lower than they are now. 

I am glad that my wife’s and my trust funds are managed by professionals. For the little that we pay per year, year over year, they have done very well for us. Well, all years except 2010. They missed the mark.


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## AnnieA (Mar 7, 2020)

I'm not even looking at my IRAs for awhile.  They're supposedly diversified and I'm not educated enough in investing to know what changes to make ...I'm not sure the experts do at this point.  When the stronger cruise and other travel stocks go really low, I may use some liquid assets to buy because people will travel again.


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## oldman (Mar 7, 2020)

oldmontana said:


> You nailed it.  I think it will be a year or so before the market gets back to were it was at the end of February.
> 
> You have to feel for investors in stocks like the cruse lines and air lines to name two.  It is also hurting utility stocks which are not that much effected.


I can’t talk for the cruise lines, but I keep or try to keep close contact with my former employer, United Airlines. They have decided to cut back on flights overseas, mostly Asia, but other countries as well. In doing that, they will be freezing hiring and maybe even do some laying off. This is all to save money. They have stated that total income will be down, but their profit margin will still be strong.


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## oldman (Mar 7, 2020)

BTW, I hold several shares of United (UAL). UAL 52-week high was $96, now it’s at $52. I told my wife that I would really like to buy a bunch of shares at this price, but the stock is still sinking. What do you think?


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## Gaer (Mar 7, 2020)

OneEyedDiva said:


> This has been a roller coaster ride but not unexpected. I hated dealing with Vanguard. Their system for taking distributions was cumbersome, the way they separated accounts was cumbersome. I finally got tired of it (plus couldn't imagine my son having to deal with it after I pass) so I transferred my account to Schwab. I find Schwab's site is much more user friendly and offers several ways to view accounts and research potential investments. Schwab also offers fee free trades on several funds and ETFs, not just Schwab funds. I intend to ride out this storm like I have others in the past, especially since I don't need to take distributions (except my RMD).


One eyed Diva:  Did you read that TIM BUCKLEY is the CEO of Vangard?  THE CEO!  How many times in a lifetime to you get to  be in audience with the CEO?  He is reading everything you are writing.  This is an INCREDIBLE  opportunity!


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## AnnieA (Mar 7, 2020)

Gaer said:


> One eyed Diva:  Did you read that TIM BUCKLEY is the CEO of Vangard?  THE CEO!  How many times in a lifetime to you get to  be in audience with the CEO?  He is reading everything you are writing.  This is an INCREDIBLE  opportunity!




The OP isn't Tom Buckley.   He just copied and pasted a letter from Tom Buckley.


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## Gaer (Mar 7, 2020)

Oh!  Sorry, I didn't know that!


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## bingo (Mar 7, 2020)

bada..bing...bada ...boom..it all will come out in the wash


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## oldmontana (Mar 7, 2020)

oldman said:


> BTW, I hold several shares of United (UAL). UAL 52-week high was $96, now it’s at $52. I told my wife that I would really like to buy a bunch of shares at this price, but the stock is still sinking. What do you think?


If you are in for the long run I would buy shares, but not all at once ...some now and some each month.  You know the company .

Good luck.


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## mikermeals (Mar 7, 2020)

mathjak107 said:


> actually if you look at morningstars  investor figures on their funds vs the funds returns , the investor returns show poor investor behavior as a group . so that contradicts his " vanguard investors know how to remain calm statement ........they exhibit the same poor investor behavior in  volatile times all the other fund families get .


Human nature is that most investors buy high and sell low


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## mathjak107 (Mar 8, 2020)

the most money is made by investors buying high and selling higher .

the trend is your friend .

there are lots of things we hear and learn about markets that while they look and sound true they play out false.

we all know the saying buy low sell high. great idea but rarely can anyone really do it consistently.

why?

there is another saying " objects in motion stay in motion , until they hit something .

falling prices tend to feed on themselves and go lower until they don't. know one knows what low is because we all thought low in 2008-2009 was when the market fell 1000 points.

well that momentum turned into 5000 and 6000 points. people lost their shirt trying to buy low.

a better saying is buy high and sell higher.  when that trend is already moving up that upward momentum may be the better time to buy .


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## terry123 (Mar 8, 2020)

My Edward Jones man called to say not to look at the February statement when I get it. January was great.  He said to hold on and ride it out which I will do.


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## mathjak107 (Mar 8, 2020)

ignorance can be bliss at times   ha ha .

there are times i say to my wife i am not going to watch the market for a few days .... but every damn tv station announces the big drops in the news   ....


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## mikermeals (Mar 8, 2020)

fmdog44 said:


> Since it is said the virus issue is driving the market down and there will be no vaccine to address it for at least one year possibly 18 months what if anything will halt the fall. We are not yet feeling the long term ramifications of people changing their spending behavior. Regardless of your take on what is going on the economic future of the economies all over the world is going to suffer and how long will it be once they go in to recovery mode for the markets to respond?





mathjak107 said:


> ignorance can be bliss at times   ha ha .
> 
> there are times i say to my wife i am not going to watch the market for a few days .... but every damn tv station announces the big drops in the news   ....


That is the best time to buy..."when there is blood in the streets"!


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## CatGuy (Mar 8, 2020)

Times like this are why it's best to have a year's worth of living expenses in cash...more if you can. If I did not have that cushion, I would be very concerned about retiring in a few months. But our debt load is low (one car loan at 0.9% which will be paid off in a year), and knowing I can live for 12-15 months without touching IRA's, mutual funds, etc. lets me sleep easy.


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## mathjak107 (Mar 8, 2020)

CatGuy said:


> Times like this are why it's best to have a year's worth of living expenses in cash...more if you can. If I did not have that cushion, I would be very concerned about retiring in a few months. But our debt load is low (one car loan at 0.9% which will be paid off in a year), and knowing I can live for 12-15 months without touching IRA's, mutual funds, etc. lets me sleep easy.


while mentally we think cash buffers add some mythical benefit , they really don't . they are only a mental thing .

in fact looking at the 119 30 year retirement cycles we had to date 50/50 and 100% equities had almost the same success rate .

the reason is without the weight of cash and bonds the up years are so much higher that even with the drops you still tend to have a higher balance .

mentally most of us don't want high equity positions in retirement , but financially there is no real down side ..

cash buffers are a mirage .

as famed researcher michael kitces  points out

*Executive Summary*
As baby boomers continue into their retirement transition, two portfolio-based strategies are increasingly popular to generate retirement income: the systematic withdrawal strategy, and the bucket strategy. While the former is still the most common approach, the latter has become increasingly popular lately, viewed in part as a strategy to help work around difficult and volatile market environments. Yet while the two strategies approach portfolio construction very differently, the reality is that bucket strategies actually produce asset allocations almost exactly the same as systematic withdrawal strategies; their often-purported differences amount to little more than a mirage! Nonetheless, bucket strategies might actually still be a superior strategy, not because of the differences in portfolio construction, but due to the ways that the client psychologically connects with and understands the strategy!


https://www.kitces.com/blog/are-retirement-bucket-strategies-an-asset-allocation-mirage/

*Executive Summary*
Cash reserve strategies that hold aside several years of spending to avoid liquidations during bear markets are a popular way to manage withdrawals for retirees. In theory, the strategy is presumed to enhance risk-adjusted returns by allowing retirees to spend down their cash during market declines and then replenish it after the recovery. Yet recent research in the Journal of Financial Planning reveals that the strategy actually results in more harm than good; while in some scenarios the cash reserves effectively allow the retiree to “time” the market by avoiding an untimely liquidation, more often the retiree simply ends out with less money due to the ongoing return drag of a significant portfolio position in cash. As a result, the superior strategy for those who want to alter their asset allocation through market volatility (the effective result of spending down cash in declines and replenishing it later) appears to be simply tactically altering asset allocation directly, without the adverse impact of a cash return drag. Nonetheless, this still fails to account for the psychological benefits the client enjoys by having a clearly identifiable cash reserve to manage spending through volatility – even though the reality is that it results in less retirement income, not more. Does that mean cash reserve strategies are still superior for their psychological benefits alone, even if they’re not an effective way to time the market? Or do total return strategies simply need to find a better way to communicate their benefits and value?

https://www.kitces.com/blog/researc...s-dont-work-unless-youre-a-good-market-timer/

FOR THE RECORD I DO USE A CASH BUFFER , it just feels more comfortable to me even though financially there is no real benefit


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## Don M. (Mar 8, 2020)

I lost a bunch during that Financial Crisis of 2008....when most of the Advisors were touting "Stay the Course".  It took at least a couple of years to recover those losses.  When this Corona Virus news started becoming the hot topic in the news, I got concerned about the global economy being impacted as this disease progresses.  When the markets began to tank in late February, I moved the bulk of my holdings into bonds and the money market....leaving just enough in the IRA to keep the monthly checks coming for the next 5 or 6 months.  I figure I lost about 6 or 7%, but there is the real possibility of the markets dropping 20%, or more if there isn't a solution found to this disease in the very near future.  I'd rather play "chicken" than have to go through that 2008 mess again...I'm too old to endure that stress again.  

If schools start closing, store shelves start emptying, the travel and entertainment industries start seeing massive declines, companies start shutting down due to lack of supplies, etc.,.......and on, and on...this could become a brutal year for investors.


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## mathjak107 (Mar 8, 2020)

the advisers were right . if you did nothing , you would have had 3 to 4x the amount assuming you were in broad based funds and not individual stocks which may never come back  ...

poor investor behavior in down turns loses money for investors , not markets...

if  this is long term money and even at 65 you have money you wont eat with for 20 to 30 years , then temporary short term drops should be irrelevant . if you are worried about long term money then one should not be much in equities because poor behavior in down turns will hurt you every time.

getting out is easy ...getting back in is the hard part ....there really are very few market influencing up days .. most of the time the biggest are still when everyone thinks it is a suckers rally  and nothing changed yet as far as we see .

usually by the time you get back in , you gained nothing in the pocess or to add insult to injury you get in higher than you baled out .


University of Michigan Professor H. Nejat Seyhun analyzed 7,802 trading days for the 31 years from 1963 to 1993 and concluded that just 90 days generated 95% of all the years’ market gains — an average of just three days per year.

miss those days and you hurt your growth bad .   not missing them is easy , stay invested .

that does not mean you can't shift to a all weather portfolio in times like this ... heck something with 25% long term treasuries up 40% over the one year , 25% gold , up 30% over the one year , 25% total market fund up 7.80% over the one year , 25% short term treasuries , 6% over the one year , would still provide growth as things fall  .

you would have still been invested , still making money , and fully protected .


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## Uptosnuff (Mar 8, 2020)

Don M. said:


> If schools start closing, store shelves start emptying, the travel and entertainment industries start seeing massive declines, companies start shutting down due to lack of supplies, etc.,.......and on, and on...this could become a brutal year for investors.



These things are already starting to happen.  Stores are running out of toilet paper, paper towels, disinfectants, etc.  At work, I've had to cancel several of my co-worker's travel arrangements because of canceled meetings.  We went over our pandemic plan at all the different levels.  We are in for a rough ride, I'm afraid.

A couple of weeks ago when I first starting hearing about the market being affected by the corona virus concerns, I decided to pull out of the market in my 401k and put everything in a fund guaranteed not to go down.  I have worked hard to reach my investment goal, and I didn't want this epidemic to take half of it.  I'm glad I did and sleep better at night because of it.  We'll see when things start normalizing again.


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## Pecos (Mar 8, 2020)

I am moving a few thousand into actual cash from my checking account (which doesn't pay any meaningful interest anyway). My concern is that this new virus might force our area into a quarantine of some sort and impact purchasing normal goods if the stores banks start to get "squirrely." 
I may be wrong in doing this as a precaution, but actual cash can always be spent later when this virus plays out. We are also adding a few items to our pantry just in case of a quarantine or major disruption to the food supply. I don't see the power grid or the water system as being threatened so much of what people are stocking up on seems a bit strange to me.
For our IRA's, I am largely leaving them alone after having transferred a fairly large sum to CD's a couple of months ago when the market looked unsustainable. It is too late to do much now given the unpredictability of the market.


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## OneEyedDiva (Mar 8, 2020)

Gaer said:


> Oh!  Sorry, I didn't know that!


Gaer...even if the OP was Tim Buckley, that wouldn't phase me. I get to listen to podcasts featuring important financial folks, if I want, as a Schwab client. I once hobnobbed with the CEO of the Caterpillar company. They are all just humans and make mistakes like the rest of us. And I've had several incidences that proved to me that financial "experts" don't always get it right.


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## Don M. (Mar 8, 2020)

The thing I find strange about this recent market volatility is that gold and silver don't seem to be moving much....either up or down.  I think "metals" may be a sign of market bottoming if they start to spike upwards substantially.


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## Aunt Bea (Mar 8, 2020)

The short term changes in the market have no impact on my pension/SS and I do maintain a cash cushion so I plan on bumping along without making any changes. 

I agree with Pecos that it's comforting to keep a little stash of actual cash on hand for emergencies.

It will all work out. 

_"Cash combined with courage in a time of crisis is priceless."_ - Warren Buffet


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## mikermeals (Mar 8, 2020)

Uptosnuff said:


> These things are already starting to happen.  Stores are running out of toilet paper, paper towels, disinfectants, etc.  At work, I've had to cancel several of my co-worker's travel arrangements because of canceled meetings.  We went over our pandemic plan at all the different levels.  We are in for a rough ride, I'm afraid.
> 
> A couple of weeks ago when I first starting hearing about the market being affected by the corona virus concerns, I decided to pull out of the market in my 401k and put everything in a fund guaranteed not to go down.  I have worked hard to reach my investment goal, and I didn't want this epidemic to take half of it.  I'm glad I did and sleep better at night because of it.  We'll see when things start normalizing again.


How do you know when to get back in?


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## Uptosnuff (Mar 8, 2020)

@mikermeals Not sure at this point.  Might not be until after the election.


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## Don M. (Mar 8, 2020)

Premarket trading tonight indicates another Massive drop in the markets Monday morning.  This thing is going to get Nasty!

https://money.cnn.com/data/premarket/


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## mathjak107 (Mar 9, 2020)

Don M. said:


> The thing I find strange about this recent market volatility is that gold and silver don't seem to be moving much....either up or down.  I think "metals" may be a sign of market bottoming if they start to spike upwards substantially.


treasuries are soaring  and at this point  are the vehicle of choice . although gold is up 33% over the one year which aint bad ....TLT  the long treasury bond fund is up about 43%


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## CatGuy (Mar 9, 2020)

mathjak107 said:


> while mentally we think cash buffers add some mythical benefit , they really don't . they are only a mental thing .
> 
> in fact looking at the 119 30 year retirement cycles we had to date 50/50 and 100% equities had almost the same success rate .
> 
> ...


I'm aware of the "expert" opinions regarding cash reserves. And I should point out that our cash reserve was established not by selling securities, but by shifting investment strategies from buying and holding value stocks to investing in stocks that consistently pay dividends, preferably those with a history of increasing payouts.


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## CatGuy (Mar 9, 2020)

Also this is NOT the time to be getting out of the market! No matter what the current valuation of your investments is, you haven't lost anything *unless you sell*. IRA down $10K? That's a paper loss: it _will_ come back, though it may take some time. But if you sell, that loss becomes real.


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## oldmontana (Mar 9, 2020)

CatGuy said:


> I'm aware of the "expert" opinions regarding cash reserves. And I should point out that our cash reserve was established not by selling securities, but by shifting investment strategies from buying and holding value stocks to investing in stocks that consistently pay dividends, preferably those with a history of increasing payouts.


Good quality stocks that pay dividends will continue to do so.


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## mathjak107 (Mar 9, 2020)

oldmontana said:


> Good quality stocks that pay dividends will continue to do so.


it is only about total return -period ... not whether they give you a forced quarterly withdrawal or not . if the  total return is down your investment is down the same as any other stock  with the same total return .


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## Victor (Mar 9, 2020)

Panic only creates more panic. I agree with stay the course. But it also depends on your age
and how long until you need the invested money. Very old investors may not survive the
correction, or not fully recover their losses. The media is building this virus disease into a giant calamity.. Likelihood of most people getting the virus is a tiny fraction now.
   I have made mistakes with stocks, but my losses are low. The analysts on the internet that I read are only right 30-40% of the time by their own measures.
Anagram for Investor is STRIVE ON. Question is: why not buy now while prices are lower?


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## mathjak107 (Mar 9, 2020)

Victor said:


> Panic only creates more panic. I agree with stay the course. But it also depends on your age
> and how long until you need the invested money. Very old investors may not survive the
> correction, or not fully recover their losses. The media is building this virus disease into a giant calamity. To be cynical, this is good for the news business. Likelihood of a typical person getting the virus is a tiny fraction.
> I have made mistakes with stocks, but my losses are low. The analysts on the internet that I read are only right 30-40% of the time by their own measures.
> Anagram for Investor is STRIVE ON. Question is: why not buy now while prices are lower?


two reasons .... fear we may go lower so it causes analysis paralysis  and number 2 ,  just fear itself and investors are afraid to add more  and becime gun shy .

personally i have my line in the sand ... if we hit my figure down i will move some money from my conservative model to my more aggressive model ... i don't try to predict a bottom , i stick to the plan


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## Don M. (Mar 9, 2020)

Now, on top of this virus scare, it appears that Saudi Arabia and Russia have begun a "price war" that is driving crude oil prices down substantially.  This will probably prove to be good for consumers as gas prices at the pump drop....but may prove to be damaging to industries like Shale Oil, and Canadian Tar Sands.  
On top of the likelihood that travel and entertainment businesses will suffer in coming weeks and months, we may have to add substantial areas of the Energy industry to those that will spiral downwards.  
This morning, stocks were taking such a hit that Wall Street suspended trading for several minutes.   More to come?????


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## mathjak107 (Mar 9, 2020)

Don M. said:


> Now, on top of this virus scare, it appears that Saudi Arabia and Russia have begun a "price war" that is driving crude oil prices down substantially.  This will probably prove to be good for consumers as gas prices at the pump drop....but may prove to be damaging to industries like Shale Oil, and Canadian Tar Sands.
> On top of the likelihood that travel and entertainment businesses will suffer in coming weeks and months, we may have to add substantial areas of the Energy industry to those that will spiral downwards.
> This morning, stocks were taking such a hit that Wall Street suspended trading for several minutes.   More to come?????


the oil shock has much further reaching implications and none good .

the energy companies borrow tons of money . they issue bonds in the BBB . range.. in fact half the corporate debt today is BBB .

that is the last rung in investment grade . one small down grade in credit rating and these  bonds are no longer investment grade .

every insurer , pension fund , mutual fund and institution that can not hold anything but investment grade will have to dump them .

junk yields will soar causing many companies to default on billions .... this can credit shock our credit markets 2008 style .  this is bad .


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## Don M. (Mar 9, 2020)

mathjak107 said:


> the oil shock has much further reaching implications and none good ..... this can credit shock our credit markets 2008 style .  this is bad .



I haven't been too worried about the market fluctuations for the past several years....the trend has been up nicely....perhaps Too Nicely.  However, in the past couple of weeks, my "Gut Feel" is telling me that all this is about to change....Big Time.  I think we are seeing the door open to a repeat of 2008.


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## mathjak107 (Mar 9, 2020)

Don M. said:


> I haven't been too worried about the market fluctuations for the past several years....the trend has been up nicely....perhaps Too Nicely.  However, in the past couple of weeks, my "Gut Feel" is telling me that all this is about to change....Big Time.  I think we are seeing the door open to a repeat of 2008.


no one knows ... the stage certainly seems set for it ...but as we all know . out of no where something  not even on the radar yet seems to alter what we all see and think , both up and down .

right now i took profits in my long term treasuries and gold .. so i have a portfolio with about 22% equities and the rest assorted bond funds ranging from ultra short to total bond and some floating rate high yield .

now the plan is to add the 100% growth model i mix in  at times to beef up the equity portion .

i bought about 50k worth today ....i will add more every 5% drop .... if we recover sooner , no problem , i can live with this  model for a long time if need be


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## fmdog44 (Mar 9, 2020)

We are not seeing a "dip" rather a collapse in confidence  pushed by the unknown virus and tumbling oil and bond prices. To buy now is crazy in my opinion. Stocks are falling all over the world. Banks are nervous and possibly we will slip in to a recession. There is no reason just or theoretical to buy in this chaos.


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## mathjak107 (Mar 9, 2020)

fmdog44 said:


> We are not seeing a "dip" rather a collapse in confidence  pushed by the unknown virus and tumbling oil and bond prices. To buy now is crazy in my opinion. Stocks are falling all over the world. Banks are nervous and possibly we will slip in to a recession. There is no reason just or theoretical to buy in this chaos.


Then don’t if you feel that way .... even at 65 we have money we won’t be eating with for 20 to 30 years ...any diversified funds bought now will be looking great by then ....if anyone thinks they are going to time a bottom they are setting themselves up for missing the biggest gains early on when the direction changes .
this is like free money in times like this .... I expect to pick up an extra 200k dollars in shares compared to what I had when I went more conservative last year before the drop and was running this model ..

where the bottom is I have no idea ....but in the long term ,who cares .... in fact if we didn’t talk about the old bear markets I wouldn’t remember they happened


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## fmdog44 (Mar 9, 2020)

Today 03/09/20 Dow Down 7.79% (The worst drop ever),  S&P  Down76.0, NAS Down 7.29%


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## Don M. (Mar 9, 2020)

fmdog44 said:


> Today 03/09/20 Dow Down 7.79% (The worst drop ever),  S&P  Down76.0, NAS Down 7.29%



Yup, another day like this, and the markets will "Officially" be into a Bear Market.  I've been reading a number of "expert" opinions, and none of them are sounding optimistic about the near term markets....some are even suggesting that the markets could go down as much as 40% from their recent highs.  I've even read a couple of "opinions", over the weekend, suggesting that the global economies may sink into a deep recession.


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## mathjak107 (Mar 9, 2020)

fmdog44 said:


> Today 03/09/20 Dow Down 7.79% (The worst drop ever),  S&P  Down76.0, NAS Down 7.29%


..it may be the most points , but  percentage wise  , which is far more meaningful ,...October 19 1987 made  this drop look like nothing ...down 22% in one day


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## oldmontana (Mar 9, 2020)

mathjak107 said:


> it is only about total return -period ... not whether they give you a forced quarterly withdrawal or not . if the  total return is down your investment is down the same as any other stock  with the same total return .



Again your post does not make sense. 

"forced quarterly withdrawal"  say what?  Its about the dividend and in almost all cases its not forced, it come our of profits.

The total return does not enter in until you sell a stock...basic stock market 101.


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## mathjak107 (Mar 9, 2020)

oldmontana said:


> Again your post does not make sense.
> 
> "forced quarterly withdrawal"  say what?  Its about the dividend and in almost all cases its not forced, it come our of profits.
> 
> The total return does not enter in until you sell a stock...basic stock market 101.


Bull .... dividends have nothing to do with profits ...it is an amount decided to be paid out by the board profits or not .....companies lose money and pay dividends right in to the blue chip graveyard .

Dividends are a withdrawal off your existing share price —end of story..

whatever they withdraw and give you back has the dollars subtracted off your investment before it can trade ...all market action is on the reduced value once it trades .

please stop posting nonsense without first learning about what you are posting..you obviously have no clue as to how dividends work or even what they represent .


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## oldmontana (Mar 9, 2020)

mathjak107 said:


> Bull .... dividends have nothing to do with profits ...it is an amount decided to be paid out by the board profits or not .....companies lose money and pay dividends right in to the blue chip graveyard .
> 
> Dividends are a withdrawal off your existing share price —end of story..
> 
> ...


"Dividends are a withdrawal off your existing share price —end of story.."

Another statement that is not true.  How can you keep posing your non sense about dividends?  

I will try to help you out, if you care which I question.  A company has profits..say 1 million for a quarter ..they can pay part of that out in dividends, invest it in equipment, buy their stock, bank it, invest it, etc.  ...  it DOES NOT reduce the value of the company.  If it did stock prices would keep going down..they do not!

I


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## mathjak107 (Mar 9, 2020)

you really don't have a clue .

stocks are no different then a mutual fund dividend ...

you got to sleep with 100k invested , they go ex div and you wake up with 10k in cash and 90k left invested ... if markets  go up 10
  it is on 90k so you have 99k .

if you reinvest the 10k you have the same 100k back . if it goes up 10% you have 110k .

as far as a payout not reducing the stock price , i assume you can read english .

please , learn , learn learn befor commenting .


FINRA MANUAL :

5330. Adjustment of Orders

(a) A member holding an open order from a customer or another broker-dealer shall, prior to executing or permitting the order to be executed, reduce, increase, or adjust the price and/or number of shares of such order by an amount equal to the dividend, payment, or distribution on the day that the security is quoted ex-dividend, ex-rights, ex-distribution, or ex-interest, except where a cash dividend or distribution is less than one cent ($0.01)


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## mathjak107 (Mar 9, 2020)

Anytime money is paid out it has to effect the share price , the company handed out millions ...that is the only reason a stock can be sold after the record date ....

So FINRA  requires an automated roll back in price .

A new buyer does not get the payout so he gets the adjusted price after the payout is subtracted and market action works on the lower price


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## oldmontana (Mar 9, 2020)

oldmontana said:


> "Dividends are a withdrawal off your existing share price —end of story.."
> 
> Another statement that is not true.  How can you keep posing your non sense about dividends?
> 
> ...


I will try to help you out, if you care which I question.  A company has profits..say 1 million for a quarter ..they can pay part of that out in dividends, invest it in equipment, buy their stock, bank it, invest it, etc.  ...  it DOES NOT reduce the value of the company.  If it did stock prices would keep going down..they do not!

Dividends  DO NOT reduce the value of the company.  If it did stock prices would keep going down..they do not!

That is a fact that *mathjak107 for some reason does not understand.  I tried.*


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## fmdog44 (Mar 9, 2020)

Dividends: There are differences between mutual funds and individual stocks in the forms of taxes, fees, risks/rewards and yields.


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## mathjak107 (Mar 9, 2020)

oldmontana said:


> I will try to help you out, if you care which I question.  A company has profits..say 1 million for a quarter ..they can pay part of that out in dividends, invest it in equipment, buy their stock, bank it, invest it, etc.  ...  it DOES NOT reduce the value of the company.  If it did stock prices would keep going down..they do not!
> 
> Dividends  DO NOT reduce the value of the company.  If it did stock prices would keep going down..they do not!
> 
> That is a fact that *mathjak107 for some reason does not understand.  I tried.*


I am done with trying to explain it to you ..obviously you have a reading comprehension problem ...I posted the exchange rules which tell you  very clearly prices must be reduced before the stock can trade


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## mathjak107 (Mar 9, 2020)

fmdog44 said:


> Dividends: There are differences between mutual funds and individual stocks in the forms of taxes, fees, risks/rewards and yields.


THEY WORK THE SAME MECHANICALLY .....THERE IS NO DIFFERENCE WHEN A STOCK GOES EX DIV OR A FUND IN THE PROCESS ,,...DO YOURSELF A FAVOR LOOK UP WHAT IT MEANS  WHEN A STOCK GOES EX DIV..

Here I will do it for you ..

Ex-dividend date: The first day a stock trades without its dividend included in the share price.

https://www.fool.com/knowledge-center/what-is-a-stocks-ex-dividend-date.aspx


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## oldman (Mar 9, 2020)

oldmontana said:


> I will try to help you out, if you care which I question.  A company has profits..say 1 million for a quarter ..they can pay part of that out in dividends, invest it in equipment, buy their stock, bank it, invest it, etc.  ...  it DOES NOT reduce the value of the company.  If it did stock prices would keep going down..they do not!
> 
> Dividends  DO NOT reduce the value of the company.  If it did stock prices would keep going down..they do not!
> 
> That is a fact that *mathjak107 for some reason does not understand.  I tried.*


This is contrary to what I have learned. I was taught that when a company pays out a dividend, the stock price temporarily goes down. Normally, stocks that are paying dividends will have the price rebound back to where it was prior to the dividend payout.


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## mathjak107 (Mar 9, 2020)

oldman said:


> This is contrary to what I have learned. I was taught that when a company pays out a dividend, the stock price temporarily goes down. Normally, stocks that are paying dividends will have the price rebound back to where it was prior to the dividend payout.


Yes and no .

Let’s say you have 100k invested  and have 1000 shares at 100 each .

you get a 10% dividend ....the stock goes ex div and you get 10k in pocket and the exchange rolls back the share price to 90 a share so it can trade .

well next day is a great up day and markets go up 10% ......that 10% is on only 90k .. so yes the share price recovers but all compounding was on a 90k starting value made up of 100 shares at 90 a share not 100k .your new balance is 99k.

had you reinvested the 10k back in ,well then you would have the same 100k you had before they gave you 10k and you gave it back ..so now the 10% gain is on the 100k and your balance is 200k


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## oldmontana (Mar 9, 2020)

oldman said:


> This is contrary to what I have learned. I was taught that when a company pays out a dividend, the stock price temporarily goes down. Normally, stocks that are paying dividends will have the price rebound back to where it was prior to the dividend payout.


That is true..the thing is the stock price temporarily goes down.  but Dividends DO NOT reduce the value of the company. If it did stock prices would keep going down..they do not! Why does that poster not understand that?  

 My post was not about x-dividend.


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## oldman (Mar 9, 2020)

Well, maybe I’m wrong, but if dividends are paid out of profit, then I wouldn’t think that the company’s value would be reduced, unless the company “borrowed” the money to pay the dividends hoping that by paying a dividend, it would attract investors. Yes or No?


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## mathjak107 (Mar 9, 2020)

oldman said:


> Well, maybe I’m wrong, but if dividends are paid out of profit, then I wouldn’t think that the company’s value would be reduced, unless the company “borrowed” the money to pay the dividends hoping that by paying a dividend, it would attract investors. Yes or No?


Anytime you pull millions out of a company and give it away , profit or not that stock can’t start trading to the next person at that same price since millions are gone .....

also companies don’t have profits every year but they still pay ,some right up to the grave .

so the exchanges are automated to subtract out any  dollars paid from the share price ....that offsets the fact those millions are no longer held by the company for the next buyer .

I posted the exchange rules above when it comes to dividends and price resets


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## oldman (Mar 9, 2020)

mathjak107 said:


> Anytime you pull millions out of a company and give it away , profit or not that stock can’t start trading to the next person at that same price since millions are gone .....
> 
> also companies don’t have profits every year but they still pay ,some right up to the grave .
> 
> so the exchanges are automated to subtract out any  dollars paid from the share price ....that offsets the fact those millions are no longer held by the company for the next buyer .


I can understand the reasoning.


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## mathjak107 (Mar 9, 2020)

oldman said:


> I can understand the reasoning.


Great ... see learning can be interesting.....yet so many fight learning and they just go on believing their own bull sh#t.

what confuses people is they lose track of the fact that all compounding is on your opening balance ....of course if the stock price goes up  after it paid a dividend , it recovers what was paid out , but compounding as you saw in my example is on a reduced starting amount.

An investment with 100k invested  paying a 4% dividend gives you 4K in hand and 96k at the ring of the bell . that stock having market action gaining   10% is going to recover what was paid out but it only   has 96k left for markets to compound that 10%. on . that gives you  balance of 105,600 .... had the dividend not been paid and market action took the full 100k up 10% you would have 110k .

so the "withdrawal" of 4K as  that dividend always is reflected in your balance with each payment .



just think of it as a forced withdrawal off your already existing share price that already reflects all gains or losses in the stock


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## oldman (Mar 9, 2020)

OK, so here’s another issue. I will ask the question, but will not be able to read the answer until tomorrow.

If I understand short-selling, the investors that use this strategy of investing are probably gearing up to make a lot of money, correct? If they bought shares say 10-14 sessions ago, they should be home counting their money, correct?


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## mathjak107 (Mar 9, 2020)

oldman said:


> OK, so here’s another issue. I will ask the question, but will not be able to read the answer until tomorrow.
> 
> If I understand short-selling, the investors that use this strategy of investing are probably gearing up to make a lot of money, correct? If they bought shares say 10-14 sessions ago, they should be home counting their money, correct?


Only if they replaced the borrowed shares .

a short seller typically sells a stock they don’t own ..... the broker loans it to them and charges margin interest until they get the shares back .

So the short seller can buy in a drop and replace it to the broker or they can wait for an even lower price and pay interest waiting ......but if it moves up the short seller has to pay the higher price to replace it ...losses can have no limit since as high as it goes while you wait  is what it can cost you if it does not go lower.

short sellers that borrowed these shares over the last month got a great opportunity to pay them back today


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## oldman (Mar 10, 2020)

mathjak107 said:


> Only if they replaced the borrowed shares .
> 
> a short seller typically sells a stock they don’t own ..... the broker loans it to them and charges margin interest until they get the shares back .
> 
> ...


That’s the way I used to trade as a day trader. For example; if I would have shorted Apple on Friday and sold those shares and then yesterday bought the shares to replace the shares I had borrowed, I would have made money. I don’t do shorts anymore due to so much market volatility.
But, I have a friend that trades options and he is very good at it. He just has a nose for it. Some people are like that.


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