If you’re going to retire in the next ten years you shouldn’t have so much money in the stock market. If you’re young then this is a fire sale.
Big donors who wanted this own large private businesses and have very little market exposure.
Firesale?? And how are you suppose to partake, you just lost a huge bit of wealth??? The stuff you buy today will only grow as fast as the stuff you just lost.
You haven’t anything until you sell. Holding long-term is more profitable anyways.
It’s a fire sale for people who moved to more securities and cash earlier when trump signaled that he was going to crash the market. Also his billionaire buddies when he said he was going to do this, got a heads up.
They’re going to buy premium stocks for dirt cheap now and clean up if/when it recovers.
The issue this time around is, trump destroyed the fundamentals of trade between literally every other country on earth outside of the US.
There’s literally no way for the market to recover when it’s largely based on the same global trade that trump just destroyed for the next generation or two at least.
Allies will not trust the US anymore. We just pulled a Brexit and gave up our seat at the head of the table in world trade.
They may recover, but not to the pre-trump tariff’s level.
You aren’t. It’s for people that already have tons of resources.
Increase contributions to retirement and other savings accounts like HSA and college funds. You’re going to need it since social security is going away.
Bro calm the fuck down. Welcome to the stock market. This is really fucking bad but if you were to sell now you’d be an absolute fucking idiot. Fight the urge and BUY
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correct.
there’s also the maybe more important scientific literature ban that is forcing scientists like those who make sure crops grow correctly in the US out of their jobs because they aren’t able to talk about the gender of the seeds they are breeding.
or the physicists who can’t talk about the “status” of the material they’re using, because that word is banned.
countries don’t want to buy American military equipment anymore because they rightly cannot trust the US, which is a huge loss of revenue.
the disastrously policies already enacted are going to economically and socially hobble the country for decades.
the scientist who goes to another country rather than the US to practice physics, agriculture, anthropology, anything, that’s an entire career of innovation and scientific benefit lost to the US.
and those scientists are already avoiding the us, that’s already happening.
the market numbers are the tip of the iceberg here.
yes, generally it’s l/(1-l), where l is the loss (ranging from 0 to 1). Example: if you loose 10%, your portfolio needs to grow 11.11% to compensate just for the loss. go figure how long that is gonna take
Does this take into account the rate at the time off the hit?
Historically, what, 4 years or so?
If you pulled all your money out in 2009 you were fucked. But by 2013 things were fine again.
it kind of depends on what you did with that money. There is an opportunity cost there.
I used my 401k to start a company. so far that’s performing well above the market (and continuing to. It’s a second job so I’m reinvesting that with annual contribution caps, etc.)
The existence of exceptions does not invalidate a general rule.
I’m glad that’s worked well for you! For the overwhelming majority, keeping their money in the 401k and continuing to make regular contributions, regardless of market volatility, is the wisest course of action.
correct me if I’m wrong here, but that 11%, to roll with your example, would need to be recovered immediately for that math. Like every month it doesn’t go back up… that’s compounding the lost opportunity. And if 2008 is anything to go by… it’s not just going to go back up, it’s going to take time.
like, if you expect a certain amount of growth, it’s unlikely you’ll get the 11% plus that “normal” growth back.
Over 30 years with the ups and downs it averages 10-12% a year. So while this year will probably be bad, next year or the year after will probably be exceptionally good.
That’s the problem with averages.
That’s not how the markets necessarily work. A bad year this year doesn’t necessarily mean an extra special year next year.
I guess the problem I’m pointing out is that it’s unlikely to fully regain the lost value fast enough to make up for the compound value that would have existed.
For people just starting out, it puts a significant cramp on their ability to gain capital. There may not be any better options, but it hurts people and in ways that won’t necessarily be made whole.
It has “returned to the mean” as far back as we can look. It doesn’t mean a special year, but as best we can see, it will eventually return to that mean.
It actually matters less to people just starting. At that point it’s more about the number of stocks you buy than the value of them. The value matters later when you have a ton and your contributions are tiny compared to the actual swings.
It is even worse if you are at the withdraw stage of life (generally retirement) because liquidated shares cannot participate in any later market increase.
You shouldn’t be invested that heavily in stocks at that age though.
Lots of people paying for that mistake today.
Some people already sold off at the lower price before it gets lower.
Companies already had to make equipment orders and revenue predictions, which caused suppliers to fire extra people.
And confidence has already been shaken since this could happen again at any time.
Companies are now increasing plans to downsize to deal with the uncertainty.
And the ultra rich are ready to start buying at the lower price. So that if the prices returned to last week, the percentage of differences of wealth from the ultra wealthy to the regular will be even higher.
*Which market ? *
Most people don’t have much money on the stock market, and many of the one who do understand it comes with risks, and look at long-term trends rather than week to week fluctuation.
Sure it dropped a lot over one week, and some Bubble are finally collapsing (Seriously who the hell believe Tesla is worth so much ?). However, a part of the drop is coming back to the level it was 1-2 years ago (After the big dip of last week Eurostock 50 is back 3% under it’s level one year ago, so most of the dip is just cancelling the 10-15% raise over last year)
Moreover, while people rich enough to have large saving on the stock market won’t see their life change if they loose 5000 EUR due to politics it’s not money they need right now to pay a bill or go to holiday, it’s money they don’t need on the short term, it may have an imapct the day they want to buy a larger house/apartment or buy-back their mortgage, but that’it
Most people are losing more than 5000. In the US, stocks and bonds are a big part of most people’s retirement. So people in the 50-60 range average 400k+ in the market. Meaning this last week they have lost roughly 40k.
This is my opinion, but yeah. It’ll take some time.
The biggest issue is that money has moved to safer for investments. Those new investments may take time to mature and/or avoid tax penalties.
Another component is that hedge funds are likely the ones taking money out of the market in a huge way right now. Hedge funds normally specialize in short selling and there is no better time to close or massively reduce those short positions. (They have other strategies, but their main function is in their name.) They can’t close their positions rapidly, or it will trigger a faux rebound in stock prices. (Short sales are weird like that. It may be one of the reasons you see short bounces in price as a stock price is cratering.)
Unfortunately, the tarrifs are shifting investment policy against the US now from other countries. This will take years to recover from.
What will really suck is that I have always speculated that these tarrifs are just the worst kind of insider trading strategy you will ever see. If the intent was to temporarily dump stock prices for the benefit of a few, I really don’t think it’s going to work like it did during COVID. COVID didn’t force massive global policy changes against the US the same way. Even if orange man decides to reverse course and lift tarrifs tomorrow, the damage has been done and there is no reason to restore previous investments. The risk is too high.
Am I taking crazy pills? The charts I’m looking at are still showing the markets substantially above where they were 5 years ago.
They are, but what’s affecting people now is the concern.
Say you’ve been investing for the past 10 years. You put in 5k a year. 5 years ago you had 33k saved after interest. You kept contributing, and a few weeks ago you would have 105k. With the drops in the mark the last week, you suddenly have 95k. You lost 10 grand, which will take you two years to put back in. Not to mention we’re expecting a major drop today, you might lose another 10k in a few days. That is what gets people panicking and selling.
The reality is they haven’t lost anything unless they get out of the market. They still have the same number of stocks, and the value of those stocks only really matters when you sell them.
You’re looking at the wrong time frame. Try looking at the past year or year to date. Both are very bad.
Why would you look back 5 years?
Most people investing for retirement are looking at 30 year+ time frames. It’s typical to at least look at a 5 year period because that is the minimum amount of time you should be invested for unless you are a day trader.
The context is not about retirement. This thread is about the recovery from the current downtrend.
Why would you look back 5 years?
Because it takes 0.5 seconds to click a different time scale?
So why did you skip mentioning the other time scales? You only mentioned from one that was contradictory, not the ones that support the topic. I suspect you are commenting in bad faith.
That’s just factually incorrect. You should actually go look at it yourself.
Yes there is a gain from 5 years.
Currently we are very near 1 year lows. This is the issue at hand. Not whatever straw man y’all decide to attack next.
Maybe you should go look yourself.
… sorry, friend, there’s just no convenient way to tell you this. Your stupidity, it’s terminal.
Give it a week.
Depends if they sold, where they sold, and a bunch of other factors.
Imagine someone were able to just pull the money and put it somewhere safe. Even if you jump back in with growth at the same rate, you will have lost the gains you would have made had there been no tarrifs.
That’s called “timing the market” and it’s impossible without insider knowledge.
Well, impossible to do with certainty.
But people are paid to try and do it at investment banks, and with enough outsider knowledge they can often get it right
Of course that’s practically just gambling at a much greater scale
they can often get it right
They fail to outperform a broad market index like 85% of the time, and they charge fees for it lol
Yeah, you’re completely right, I was more going for not impossible, but it’s even more luck than I realised
I’m not an expert but this is my understanding and it has made me money during this time.
Imagine Bob sells 100 shares of SPY at $600. He now has $60,000. If Bob did nothing else and waited 2 months he would now be able to buy 118 shares of SPY.
Alice held the 100 shares of SPY the entire time.
For Alice her ownership remained the same but her value decreased. Bob, on the other hand, keeps the same value and increased his total ownership.
If SPY increases in value back to $600 then Alice is a wash and Bob has an increase equal to the value of the additional shares purchased while the price was low. So 18 extra shares would net a profit of $10,800.
A 7-10% annual return can be expected during normal market conditions. It has been 4 months since normal markets. So the value of SPY should have trended upwards a bit less than 1% per month. Let’s give it a generous estimate that it would have gone up 5% since Trump 2. In this case Bob would have lost money and Alice would have increased her value $3000.
So Bob made more money in the same amount of time by selling.
Trying to time the market is a fools errand, unless you’re VERY good at day trading, or incredibly lucky. Advising people to try to time the market is terrible advice. Better advice is to hold steady and put more money in when there are huge dips. Trying to guess when the market is at its high and selling all your positions, then trying to time the bottom to put all your money back in is incredibly risky. Just average cost buy in. That’s all you can reasonably do. DON’T TRY TO TIME THE MARKET.
I agree with you about not timing the market.
I did not give advice. I answered a hypothetical question. I even prefaced my response to show I wasn’t knowledgeable. Did you miss that part? It was right there at the beginning of the text that you have a problem with.
Let’s break down your comment. You start off by saying you’re not an expert. Okay. Fine. But then you say the method that has personally made you money. Nowhere in your response so you say the risk level you are comfortable with or that timing the market is incredibly difficult. So someone new to investing who reads this may interpret this as advice. I replied by saying that you shouldn’t time the market because it’s risky, in order to add clarity things for new investers. So I don’t see why you are upset here. I wasn’t personally attacking you so please don’t get offended.
I’m not offended. I was a bit of an asshole though and I apologize for that but I wasn’t offended. Your point about timing the market was valid.
I know it wasn’t personal but you did ‘attack’ my comment. Not the right word but I hope you get my meaning.
Advising people to try to time the market is terrible advice.
This is why I replied the way I did. I was not giving advice, but we know that already.
As for you advising new investors, good on you. I was not trying to do that. I was trying to answer a hypothetical question with knowledge from personal experience.
I actually considered writing “This is not financial advice” in the original comment but thought my preface was enough.
Ah yea man I get it. I meant that statement in general. Not like you personally gave bad advice. I’m sorry. I wasn’t clear with my reply. And my other comment was rude. So I apologize.
The money grew just as fast no matter when you bought it… it never had to sink…
To be clear, I didn’t want it to sink and agree that it didn’t have to. That’s beside the point.
I don’t understand how the money would have grown just as fast. I suspect I’m not understanding your point properly.
In this example, the math shows ~$3000 gains from holding if the market never went down. That is less than the potential of ~$10,800 from selling high and rebuying.
I get what you’re saying but that’s not really my question. They both lost/missed out on earning potential because the market crashed. Now the market would have to preform better for them to recoup the loss.
Okay. Now I understand. Thanks for taking the time to clear that up for me.
