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Stock Market Crash starting 1st August

Discussions about the economic and financial ramifications of PEAK OIL

Re: Stock Market Crash starting 1st August

Unread postby evilgenius » Tue 30 Oct 2018, 01:54:07

EdwinSm wrote:When does a market correction turn into a crash? So far both the Dow and the Nasdaq are well down when looking at the three month charts, but both are still higher than they were 12 months ago, and a five year chart makes the current down turn only look like a blimp.

What makes this hard for me to read are the attempts at rallies over the last month of falls (5 up days since the falls started on 3rd October). While there has been a clear overall downward direction to stock prices there is always the question of if the rally will hold (or if a lot of money is being lost trying to prop up the prices).

[As I am not trading stocks, I don't need data up to the micro second, so find the charts BBC provides from its Business https://www.bbc.com/news/business page good enough. - scroll down to the market data in a box on the right and click on which index you want to get a pretty graph]

It's like watching a porn video where you can't determine what is going to happen next. You may want a certain thing to happen, but when it doesn't you can't back out of the frame. You're stuck with the lame thing that doesn't work for you. Then you begin to wonder, am I bent that I wanted so much more? Maybe you are. That's what math is like to those who don't want to consider it before they get that far. It may be that you can ignore math, but maybe you can't. Math isn't your stereotypical set of rules, mind you. It is a whole other thing that demands adherence to culture. It's voice is quiet and small, until you haven't listened for a while.
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Re: Stock Market Crash starting 1st August

Unread postby Outcast_Searcher » Wed 31 Oct 2018, 13:51:28

EdwinSm wrote:When does a market correction turn into a crash? So far both the Dow and the Nasdaq are well down when looking at the three month charts, but both are still higher than they werWhat makes this hard for me to read are the attempts at rallies over the last month of falls (5 up days since the falls started on 3rd October). While there has been a clear overall downwae 12 months ago, and a five year chart makes the current down turn only look like a blimp.

And, just checking, the Dow is up over 800 points in the last two days. Similar move for the S&P 500, percentage wise. Is that a crash? A dead cat bounce? The usual noise in an unpredictable market, short term?

Can anyone realistically expect to profit off of trading or worrying about it in the short term?

Looking back, the S&P 500 is up roughly 900 points over 5 years, or roughly 50%. Over 10 years, up roughly 1800, or roughly 200%. Over 20 years, up roughly 1600, or roughly 150%.
Over 30 years, up roughly 2100, or roughly 350%.

Oh, and let's not forget that this is only the share price appreciation. If one factors in cumulative dividends, those roughly double the returns.

The longer the time frame, the more confident one can be in expecting positive returns, generally. Some patience and perspective might be more helpful than short term predictions and gambling.

Source, S&P 500 charts, rounding the index to closest interval of 100 points, and the Windows Calc function for the percentages. One long term chart I used:

https://www.macrotrends.net/2324/sp-500 ... chart-data

Dollar cost averaging the same amount on a regular basis into such markets (say monthly or quarterly, which is easy to make automatic via fund managers like Vanguard) ensures your cost is below the average over time, since you'll buy more shares when the market is "low" and less when the market is "high".

Just another approach which historically works over time. And if the zombies really arrive one day, we'll all have more to worry about than the stock market anyway. Die hard Cassandras could diversify. They could even fund their doomstead in time, from dividends.

...

But I know, since the global economy is "SURE" to implode next week, month, or year,
no one should make prudent long term investments, much less engage in regular saving. :roll:

Oh, and if the stock markets are too volatile for you, well, they're too volatile for me too. I like sleeping at night. So I always kept roughly half in a diversified stock fund portfolio (by both type of business and geography), and roughly half in savings vehicles like money market funds, CD's, etc. And always slept at night just fine, even in the depths of the "great recession." My long term results are subpar compared to "braver" souls, but I like having things like an intact stomach lining.

One caveat -- you CAN'T panic and pull out in the middle of bear markets, or you just hurt yourself. Far easier to do if you have a nice cash cushion, IMO.
Given the track record of the perma-doomer blogs, I wouldn't bet a fast crash doomer's money on their predictions.
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Re: Stock Market Crash starting 1st August

Unread postby Cog » Wed 31 Oct 2018, 18:34:09

You are not playing the game correctly Outcast. Where are the scary phrases, such as brink of a precipice, this time is different, we are all doomed, and stock market crash is imminent?

I can't subscribe to your newsletter if you don't assure me that doom is imminent. Just doesn't work from a marketing standpoint. How can you inspire panic and dumping all your stocks at a loss without visions of destruction and cannibalism? I suggest you re-tune you message if you want to appeal to the masses of dystopians that lurk here.
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Re: Stock Market Crash starting 1st August

Unread postby Outcast_Searcher » Wed 31 Oct 2018, 23:10:22

Cog wrote: I suggest you re-tune you message if you want to appeal to the masses of dystopians that lurk here.

Good point.

I figure the chronic dystopians (i.e. hard core Cassandras) won't generally accept logic or data (if it doesn't scream "doom"), so I don't try to appeal to them. Proclaiming doom is nigh many times a year, constantly being wrong, and then always pretending like THIS time is different just doesn't work for me.

I actually prefer my dystopias in novels. (And movies made based on the novels.) Great lessons, but couched in a more rational "what if?" package than "Oh my God! Run for the hills! Something bad MIGHT happen THIS time." newsletter, or whatever.

Each to their own.
Given the track record of the perma-doomer blogs, I wouldn't bet a fast crash doomer's money on their predictions.
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Re: Stock Market Crash starting 1st August

Unread postby Revi » Fri 02 Nov 2018, 09:58:29

The stock market may experience a major correction anyway. I think around 20%, or are we past that already?
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Re: Stock Market Crash starting 1st August

Unread postby evilgenius » Fri 02 Nov 2018, 10:59:19

It doesn't surprise me at all that the markets would both go up and down during a down cycle. In fact, with the valuations as high as they are, what once looked like big moves aren't so much anymore. I think the thing to watch out for is whether the money moving around can find a place to go if it doesn't like where it is. The bigger the players are, the more they take wealth preservation seriously. They'll try to get out of losers quickly. Even big names, like Apple, can experience very bad days if their news is bad. When there is more uncertainty those who would have stuck with them probably won't. They are more likely to let the dust settle first.

If this was the top of the rate rising cycle, I would expect US treasuries to do very well, but with rates rising it means the value of treasuries will be dropping over any extended time frame. Getting into those for any period of time greater than to park money there while waiting to see what else to get into would mean guaranteed losses. But they are a good instrument for the short term, when conditions warrant getting out of investments on a broadly bad day, because if the short term were to suddenly become the long term more money would be likely to come flooding into them, raising their value.

What to stay out of, as long as the Fed is raising rates, are growth stocks. Those will rally because they are the ones everybody knows, but if you don't get into them low enough, when you have to be brave, you probably won't be in a good enough position to absorb the next round of losses when the smart money bails on them after a good jobs number or when the Fed is about to make the next hike. You won't be able to sell when they fall again at a price that keeps you in the black.
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Re: Stock Market Crash starting 1st August

Unread postby Cog » Fri 02 Nov 2018, 14:05:54

The market also goes up and down during an up cycle. You can make money in the market regardless of the trend. Some luck doesn't hurt. ;)
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Re: Stock Market Crash starting 1st August

Unread postby Outcast_Searcher » Fri 02 Nov 2018, 23:08:48

Revi wrote:The stock market may experience a major correction anyway. I think around 20%, or are we past that already?

If you don't even know where we are or where we've been so that you have no idea how deep the correction is, how do you come up with your 20% correction? Random appeal to people rooting for economic bad news around here, perhaps?

Hint: people who write newsletters, run blogs, etc. and pretend to know what they're talking about re economic predictions, give REASONS (however misinformed they may be), and don't admit they have no real clue about where the market is -- while trying to look credible while making a prediction.

I don't believe in most of that crap, as it has never been proven effective at making money, after extra trading expenses are factored in. But seriously, what is your prediction based on? Charts? (Apparently not). Phases of the moon? Your mood?
Given the track record of the perma-doomer blogs, I wouldn't bet a fast crash doomer's money on their predictions.
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Re: Stock Market Crash starting 1st August

Unread postby Newfie » Sat 03 Nov 2018, 06:01:37

From what I’ve seen from “analysts” just a straight up SWAG as good as any. And it’s more honest to say: “It’s my gut feeling.”
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Re: Stock Market Crash starting 1st August

Unread postby Cog » Sat 03 Nov 2018, 06:03:48

Google djia marketwatch chart. Or any index you want to look at. There is really no excuse to guess if the market is up or down from the beginning of the year, or any time frame you are interested in.

Generally speaking, buy and hold good quality companies works as well as anything else I've tried. How do you know they are quality? Read their quarterly earnings reports. Collect the dividends and reinvest them. Diversify across several sectors that serve our economy. Banking, pharma, energy, retail.
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Re: Stock Market Crash starting 1st August

Unread postby Yoshua » Sat 03 Nov 2018, 07:35:35

BTFD?

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Re: Stock Market Crash starting 1st August

Unread postby Yoshua » Sat 03 Nov 2018, 07:39:59

The smart money flow index during the dotcom bubble, global financial crisis and today.

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Re: Stock Market Crash starting 1st August

Unread postby Newfie » Sat 03 Nov 2018, 08:43:14

Cog wrote:Google djia marketwatch chart. Or any index you want to look at. There is really no excuse to guess if the market is up or down from the beginning of the year, or any time frame you are interested in.

Generally speaking, buy and hold good quality companies works as well as anything else I've tried. How do you know they are quality? Read their quarterly earnings reports. Collect the dividends and reinvest them. Diversify across several sectors that serve our economy. Banking, pharma, energy, retail.


Cog,
IF you were responding to me I don’t care if it’s up or down for the year. I want to know where it will be tomorrow, next week, next year. And more specifically which stocks will be where when. That’s the hard part.
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Re: Stock Market Crash starting 1st August

Unread postby Outcast_Searcher » Sat 03 Nov 2018, 10:48:43

Yoshua wrote:The smart money flow index during the dotcom bubble, global financial crisis and today.

Image

Well, if you're (as per usual) going to randomly predict near term financial doom, why not at least offer a credible CITATION? (I presume you're predicting that by implication, via a "scary chart" in terms of the supposedly smart money is selling recently).

Is this some random crisis blog, or a credible source? Where do they get their data? What is their track record like?

And here's a big general hint: during market pullbacks, there will be more selling than buying. That's WHY prices are falling. So without other information, you're really not telling us anything more meaningful than: when there is net selling, there is net selling. (OK. Got it. Thanks. :roll: )

The typical Cassandra act, for over a decade here, of "throw up random statement, chart, statistic X" with NO meaningful credibility, and then being wildly wrong in the prediction, admit no failure, and then throw up the NEXT random bit of nonsense from zerohedge or whatever is just SO much the "boy who cried wolf" that it's hardly worth even engaging with such behavior any more.

...

(Come on, Cassandras. Show us something meaningful, re specific predictions (well sourced, well thought out and explaimed, etc) now and then. Be RIGHT now and then. THAT would be worth discussion.)
Given the track record of the perma-doomer blogs, I wouldn't bet a fast crash doomer's money on their predictions.
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Re: Stock Market Crash starting 1st August

Unread postby evilgenius » Sat 03 Nov 2018, 10:56:51

It can be hard to find stocks of companies that are cash cows. Many of those operations are part of bigger conglomerates, or are privately held. People need certain things no matter what the economy is doing. The price of those may come down in very hard times, but what matters is that people are still spending on them and not that they have tremendous pricing power.

That's an important consideration when looking at cable companies. Would a recession cause cord cutting to increase, and thus mobile companies to get the traffic that cable once got, or would a cable company's price reductions cause consumers to stay? That's a hard call. A mobile company with a good dividend that you got on a dip might not be a bad compromise. They might not have as high a dividend payout, but you might not also have to ride them down, and worry about a dividend cut ruining your position.

Healthcare is another market where people have to spend money. They might cut back on certain electives, but they will need other services. Certain REIT's that deal in senior living are good places to get dividends. They are vulnerable to high rates cutting their asset values, but they have a steady stream of income to keep their dividends up. It depends if the Fed goes too far and absolutely hammers real estate. It could take years for those land values to come back.

Oil will fall, but pipelines can still be counted on to transport it from one place to another. Pipelines charge fees out of which you can get a dividend. You just don't want to buy that one pipeline stock that has too much debt, or that has to borrow at too high a rate when the rate structure is rising. These are only some of the alternatives to growth stocks. They have their own perils during a downturn, but they are better places to put money than stocks that need to burn money to perpetually prove their concept or that are valued against some yet far off idea of them hitting it big one day. Diversification is the key. I think it's better to get into several good sounding ideas for companies that will still pay well during bad times than just a few.
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Re: Stock Market Crash starting 1st August

Unread postby marmico » Sat 03 Nov 2018, 11:20:31

Diversification is the key


Bingo. Well at least the first bingo. The second bingo is passive management - buy the market with the lowest management fee.

When it comes to equities, bonds, REITs, etc., buy the passive structure and you will outperform in the long run (15+ years) 90% of asset managers. The problem is trying to identify those 10% alpha* asset managers 15 years in advance.

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http://www.aei.org/publication/more-evi ... ant-do-it/

*There is beta (adjusted Sharpe ratios) as well, but this is peakoil.com where the world was supposed to end 15 years ago.
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Re: Stock Market Crash starting 1st August

Unread postby Cog » Sat 03 Nov 2018, 13:10:54

Newfie wrote:
Cog wrote:Google djia marketwatch chart. Or any index you want to look at. There is really no excuse to guess if the market is up or down from the beginning of the year, or any time frame you are interested in.

Generally speaking, buy and hold good quality companies works as well as anything else I've tried. How do you know they are quality? Read their quarterly earnings reports. Collect the dividends and reinvest them. Diversify across several sectors that serve our economy. Banking, pharma, energy, retail.


Cog,
IF you were responding to me I don’t care if it’s up or down for the year. I want to know where it will be tomorrow, next week, next year. And more specifically which stocks will be where when. That’s the hard part.


Not to you but to Revi. He thought the stock market was down 20%. Its a trivial exercise to find out it was not.

But you will never know what a stock price will be 5 minutes from now, much less next week or month. I go with the fundamentals of cash flow, profits, revenue and hope that no really bad news hits the company. Its not quite like playing the lottery. People do make money in the market. Be agile and be diversified is your best bet.
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Re: Stock Market Crash starting 1st August

Unread postby dohboi » Sat 10 Nov 2018, 13:08:11

Stock-market investors wrestle with a glut of bearish signs as oil prices plunge

...the decline in oil has been precipitated by a glut of supply that isn’t expected to be matched by demand, when the opposite had been expected just a few weeks ago.
...
Now, oil futures are unraveling, down at least 20% after putting in a 52-week high early last month. And it isn’t so much the descent into bear-market territory—as the recent slump for crude can be characterized—as it is the celerity of the selloff that has market participants unsettled.

About five weeks: That’s all it took for bulls to pivot from cavalierly pondering if $100-a-barrel oil was a genuine possibility before the end of 2018 on the back of Iranian oil export sanctions imposed by the U.S. on Nov. 4, to wondering how ugly the current implosion in black gold could get before finding a bottom.
...
Friday’s reading of U.S. wholesale inflation in October represented the biggest increase in six years and affirmed to some that the Federal Reserve would lift interest rates for a fourth time in 2018 next month and perhaps thrice more in 2019.

That fact, combined with a slowdown in China’s economy and the hand-wringing around the Beijing-Washington trade dispute, have led some strategists to believe that the market is heading for a bear-market slide.

“The sharp correction in equities in October has raised concerns about the prospects of the end of the cycle and the risks of a prolonged bear market,” write analysts at Goldman Sachs, including Peter Oppenheimer, in a research note dated Nov. 9. ...


https://www.marketwatch.com/story/stock ... 2018-11-10

Why These Top Oilfield Services Stocks Dropped More Than 14% in October

It's all about the price

As with many energy companies, the price of oil has an outsized influence on the performance of oilfield services stocks. When oil prices rise, it becomes more profitable to drill for oil, and oilfield services companies can charge more for the equipment and services they offer. When oil prices are down -- as they were during the oil price slump of 2014-2017 -- oilfield services companies feel the pinch. That's what led to General Electric (NYSE:GE) merging its oil and gas division with Baker Hughes to form Baker Hughes, a GE Company.

For much of the year, crude oil prices had been on an upward trajectory. In fact, both Brent crude (the benchmark that governs most international oil sales) and WTI crude (which governs most domestic oil sales) hit three-year highs at the beginning of the month. Brent crude was trading for $85 per barrel, and WTI crude topped $75 per barrel.

But in October, both those benchmark oil prices declined. The Brent crude spot price dropped 9.5% during the month, to $74.84 per barrel, while the spot price for WTI crude fell by 10.7% to end the month at $65.31 per barrel. That made October the worst month for oil prices this year. It's not surprising that the market reacted to punish oilfield services stocks.

Baker Hughes may have a GE problem

In addition to the declining oil price, Baker Hughes -- whose share price fell further than those of its main competitors Halliburton and Schlumberger -- may have been hurt by the ongoing woes at parent company General Electric. Although Baker Hughes is a stand-alone company, GE retains a 62.5% ownership stake, which GE has announced plans to sell as part of an ongoing streamlining effort.

It's been another rough year for General Electric. Continuing underperformance from its flagship power segment led the company to revise its 2018 guidance downward (again). An aggressive turnaround plan by then-CEO John Flannery did nothing to stop the stock's precipitous fall, and that got Flannery abruptly ousted by the board on Oct. 1. Flannery's plan included divesting GE's stake in Baker Hughes over the next two to three years, but new CEO Larry Culp hasn't addressed this issue directly. That uncertainty may be weighing on Baker Hughes' shares. ...


https://www.fool.com/investing/2018/11/ ... d-mor.aspx

(thanks to sig at asif for these)
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Re: Stock Market Crash starting 1st August

Unread postby onlooker » Sat 10 Nov 2018, 13:12:35

the decline in oil has been precipitated by a glut of supply that isn’t expected to be matched by demand, when the opposite had been expected just a few weeks ago.


Seems, the prolonged higher oil price dampened Demand
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Re: Stock Market Crash starting 1st August

Unread postby rockdoc123 » Sat 10 Nov 2018, 13:18:36

Seems, the prolonged higher oil price dampened Demand


demand has continued to increase. It will be at a slightly lower rate of increase next year but it is still increasing. What has happened is that supply has quickly outpaced demand as all the new production in the US added to high production from Russia, increased production from SA and less loss of supply from Iran than anticipated.
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