I congratulate the forum

[djohnflatfeecfp]

Some random bits of information:

• Had January’s trend carried through we were looking at roughly a 100% return in the market. Did anyone really think this trend would continue unabated?
• Even with Monday’s drop we are only down 0.4% this year.
• Monday’s drop was more than the entire Dow was worth in 1984.
• It was the 108th largest drop. Last drop this big was August…2011. The market was 10,700 then. It is still near 25,000 now.

[tremaine]

I'm just trying to talk myself into funding my kid's college accounts today instead of hoping that the market will drop a little more over the week. I keep thinking "Oooh, stocks on sale!"

[hightower]

Someone please tell me why people are talking about roth conversions during a market downturn? What does that have to do with anything?

[ENT Doc]

When the market declines your TIRA money shrinks, making converting it more palatable for any given tax rate. When the market then increases the money is in your Roth rather than in your TIRA.

Friday was nothing more than people taking out money to foolishly bet on the Pats. Today was taking money out to prepare for the greatest party the world has ever seen in the wake of their demise. That's my theory and I'm sticking to it.

[Antares]

ENT Doc wrote:

When the market declines your TIRA money shrinks, making converting it more palatable for any given tax rate. When the market then increases the money is in your Roth rather than in your TIRA.

Friday was nothing more than people taking out money to foolishly bet on the Pats. Today was taking money out to prepare for the greatest party the world has ever seen in the wake of their demise. That’s my theory and I’m sticking to it.

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You are so right, except that I took out 250K to bet on the Eagles!

[Dr.V. Investor]

thevaluedoc wrote:

I think we should take a moment of silence for those who shorted volatility on Fri and today. Especially those on margin, many will be working for the man for the rest of their lives.

Hopefully, this doesn’t extend much further. Pensions and other institutional funds have been shorting volatility to get returns. It could get pretty serious.

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I hear you, it's probably gone by tomorrow. Since it has been up for so long, people do reckless strategies. It's amazing how quick that happened.

[Zaphod]

thevaluedoc wrote:

I have referenced Chris Cole’s podcast on Macrovoices in some recent posts. For those who want to know what is happening, I would recommend finding that link and listening to it. Eerily similar. If this keeps up, some of those short volatility funds will not be here in a few days, I don’t even know if they will be here after tonight (but I am not an expert). And, its not like they liquidate when it goes to 0, those funds can shut down with at least 20% remaining to cover margin calls.

I think we should take a moment of silence for those who shorted volatility on Fri and today. Especially those on margin, many will be working for the man for the rest of their lives.

Hopefully, this doesn’t extend much further. Pensions and other institutional funds have been shorting volatility to get returns. It could get pretty serious.

P.S. Don’t look at the futures market.

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I thought it was a good podcast. Hes very intense, makes him sound a bit off, but is very smart.

Futures are looking insane. Problem with this is the fear contagion, now (sometimes, idk whats going to happen) asia/europe does poorly then it feeds back to us in the AM.

Again, what is really important and not really part of what we think of as the market are all these funds. Sure short vol, but pensions, notes, other countries with targeted vol strategies, risk parity, etc...and depending on their rules they start piling on the longer it goes on. Theres not a lot of instances of crashing so hard from an all time high, but this will get interesting.

[Zaphod]

Dr.V. Investor wrote:

thevaluedoc wrote:

I think we should take a moment of silence for those who shorted volatility on Fri and today. Especially those on margin, many will be working for the man for the rest of their lives.

Hopefully, this doesn’t extend much further. Pensions and other institutional funds have been shorting volatility to get returns. It could get pretty serious.

Click to expand…

I hear you, it’s probably gone by tomorrow. Since it has been up for so long, people do reckless strategies. It’s amazing how quick that happened.

Click to expand...

Those main funds are gone. No way they survived, too much risk for them to keep it. People kept buying it after hours just in case, NAV was down 96+%. I could not believe it. So many people that do understand it got crushed, and here all these folks were buying after hours into a likely terminated ETF (idk how thats possible). I hope it isnt for their sake, though who knows how long it would live given the chance, might just mean more losses.

One thing about shorting vol is that both sides have their day. You absolutely have to respect rising realized vol, and increasing implieds as well. Especially since the futures were so far below VIX, that gave them a bunch of room to go a lot higher. It was the exact same as 8/24/2015 as far as vol rising and indexes doing poorly before hand. If you've ever looked at every single day of futures traded and their ETPs calculated and traded values at those times, you notice some very painful F-->M blow outs. Most of the time it got better, but as a rule, getting out in the face of rising vol and especially over the weekend is a good idea.

[PhysicianOnFIRE]

Lithium wrote:

That was the most – 41k – I can recall losing in one day.

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According to Personal Capital, my portfolio dropped $100,603 today, the first time I saw my net worth drop six figures in one trading day. Crazy, but that's the price we pay for being invested in a stock-heavy portfolio. Over the long haul, we've been rewarded handsomely.

Now if I were all in on Bitcoin, which is down about 70% from its peak in December, I'd be seriously fretting.

[Dont_know_mind]

I was thinking about it today and I think I will buy the dip in a very modest way. But I think I will wait for more of a shakeout first.

Alternatively you can bypass all this obsessive second guessing and just dollar cost average. That would probably perform just as well and be a more efficient use of time.

[hightower]

I really wonder how much of an effect the media has on the severity of a market decline like this based on the fact that they all keep reporting that Monday was "the largest drop in market history." Of course, none of them explain that it was only the largest point drop in history, which as we know, is essentially a meaningless thing to say given that the scale is much different now than it was in the past. I haven't seen a single report stating that it was only a 4% decline, which of course is nothing to write home about if you know market history.
SO, I imagine that there are a whole bunch of uninformed people out there with money in the market today who are freaking out thinking this was the largest stock market decline of all time and guess what they're going to do....hit the sell button.

[Hatton]

The media certainly fuels these losses. I quit watching financial TV like CNBC after the dot.com frenzy. If you are jittery about your losses turn it off. I read the WSJ which really does not fear monger.

[jfoxcpacfp]

>>Someone please tell me why people are talking about roth conversions during a market downturn? What does that have to do with anything?<<

Roth IRA Conversions Part 2 of 2: When and How to Convert --> https://blog.foxwealthmgmt.com/2016/09/23/1266/

[hospitalist md]

I haven't done my back door roth yet this year. I just contributed to my vanguard ira and am waiting for the funds to be available for converting to roth . should I wait a few days after the funds are available to see how the market is doing . what would be a good investment in this downturn in roth for the 5500 I can put in? when would be a good time to buy?

[jfoxcpacfp]

The market drops, on average, 14.3% on an intra-year basis. We have not experienced a correction for several years now and we are overdue and many of the younger investors have become complacent. Bear markets have come along every 5.5 years since the end of WWII. Our last "real" bear was in 2008, overdue for that, too, but I don't think that's what this is. If it goes into a bear, so be it.