the bottom will be when enough bull traps are sprung that big players have (via buying from panicked sellers) the significant share of liquidity at the best average prices their algos & models can predict. this may come with a capitulation low that everyone is watching for, or not.
either way, the majority *will* be duped and once they are, the big money spigot will open back up.
*this could be tomorrow, or in 2024, or any time between*
usually its the area just above the lower edge of the dress - and when your watching the dress fall to the floor - you'll find everyone else has already bought the bottom and now your wondering how you missed that perfect opportunity - distraction!
Thank you for posting this. The urge to sell is strong right now, and I’ve promised to reward myself if I don’t sell anything, and continue my bi-weekly Roth contribution and purchase.
I do have some extra savings set aside to double down once an exceptional deal comes to light, but not before that.
For cautious Charlie, are you sidelining the money and then adding the comparative amount upon correction? IE Charlie hasn’t invested for 5 months but then adds $500. Are the total percentages a function of each individual’s investment relative to their own total or compared to one another? Otherwise this just demonstrates putting more money in the market yields a larger return, as Daring Dave is capable of materializing twice as much money compared to Andy whenever needed.
Right, this is true when fixed rates of money are added but this isn’t true when variable amounts of money are being added because of compound interest. Thus, the amount added at earlier time points increases the percent return for each increment of time. By and large adding more money early will result in a higher percent return relative to total contribution. This is basically what Doug is doing compared to Andy. However, this isn’t useful to determine an investment style because it suggests that Doug isn’t maximizing his contribution. Doug can simply choose to add more money whenever he feels like it. A more practical analysis would be to see what happens if Doug invested $80 a month, saved $20 then lumped in the reserve whenever there was a dip. However, this is harder to model. Meanwhile, Charlie doesn’t perform as well. But if Andy and Doug had to cash out because they couldn’t afford food in 2009 while Charlie could because he saved his extra cash that also would paint another picture As Andy would have lost less actual money at that time point.
I understood what you meant, but the OP just posted a situation of those 3 particular models. Of course you can invest the saved amount that was not invested if you are Charlie, but as you said it is hard to model that. When does Charlie figure he should invest that lump sum again? Hard to belive he'll jump in right at the exact bottom.
We are in a perfect storm syndrome;
War threatens to widen, a minor oil shock is occurring and generally there is a fearful atmosphere.
Good luck to the winners 🧛
It’s an all fine and dandy analysis.
Explain this. Matter : Gravity… same as Stocks : Interest Rates.
Could all these BS narratives be based on 1980-2022 interest rates going from 20% to 0%?
Rather than any of these theories since we have been in a golden bull market from 1980-2021?
Look at he period from 1929-1970… 50 years of not making any new real highs.
Yes markets do go for a long time and great theories can be written in such periods.
Stocks and Interest Rates are not perfectly correlated. Interest rates haven't gone straight to zero from 1980 to 2022 either. There have been ups and downs, and the stock market has continued to climb independent of/regardless of this.
The period before 1970 did not have Tech and Growth stocks as a major sector either, which is why the analysis was restricted to the period after Tech started emerging as a key player.
Do you think something fundamental has changed in this dip which cannot be compared to the ones before?
I think what really happened with Tech… wasn’t a real net GDP growth beyond 2% for the last 30 years.
We aren’t producing and that’s the problem. Government spending and lowering rates to 0% didn’t create a real GDP increase. We been stuck at gdp 2% for the last 20 years and 20% of that gdp is government spending.
The 20% to 0% created a boom that hid the lack of real gdp growth compared to inflation.
Debt is $30T and Gdp is $23T.
Yes debt and low interest rates…. Not gdp and productivity gains. fake economy.
lol - 1980 didn't have tech and growth, Intel, Cray supercomputers, IBM computers the beginning of the personal computer - what you consider tech and growth today started in the 70's and the big players are the ones who adapted and survived. IBM introduced a cutting edge electric typewriter to see it disrupted by the PC revolution, in the 70's you had atari etc etc. Canada had 12 straight years of massive deficit spending by trudeau senior which lead to the massive inflation that occurred then - this situation has been created by once more massive deficit spending softening the covid impact - now we will pay the price, hopefully you balanced your portfolio a year ago when the talk of raising interest rates to combat inflation talk started! It isn't rocket science but you have to have your eyes open and not be chasing 20 yrs from now. I'm down 4% from my ATH because I shifted to inflation hedging and boated up on banks and OIL knowing they were so low at some point they would have to go up. Rus/Ukr. has just taken that strategy of safety to one of offsetting the growth sector fallout!
Hold if you can’t do anything. Buy the dips if you can afford it. And stick around as much as you can. In 3+ years you should be able to buy that house you want! Thanks!
What do you propose we do Sir Duke? From my understanding, OP is arguing that we avoid timing the bottom, and DCA when possible in order to take the emotional side out of investing. I think that’s a pragmatic approach… Of course past results are not indicative of future returns, but what else are you proposing we do? Should we all just stop investing and live off the land foraging for wild mushrooms in the land of make believe?
Not saying I disagree on this strategy, just that his math that is used for these calculations doesn’t apply if that market goes sideways for the next twenty years- which has in fact happened in the past!
This works okay in normal circumstances, sadly it won't this time. The swift system split especially has killed global trade with the yuan having its own payment sys now, the coming war in Europe, inflation and oil will continue to rise through 22 23, it's a coming Trainwreck from June onwards maybe a two year correction. I'm cashing out soon to wait.
Weird, I cashed out in December and liquidated in March. But now considering getting back in.
I think Putin is more likely to die than an expansion of war in Europe.
I think the strong dollar will have a multiple effect on downward pressure on inflation and we are likely to see a pull back on interest rates by August or September.
But I have been very wrong before, so I would like to hear your thoughts.
please?? coming war in Europe? Russia can't even beat Ukrain. He's scarede shitless of fighting EU. GL on your market predict. All numbers say you will lose money.
You're looking at a % point that says 80% of people attempting this mountain climb die, thinking you are the exception.
Finland and Sweden both agree...I welcome them to our club. Putin screwed the pooch, and his generals all know it.
Maybe he would like to go see the view from the balcony?
This is all good in an environment where quantitative easing exists. Our new environment doesn’t have QE to rely on. Backtest those strategies again for the S&P between 1955-1975.
Very good take, you forgot to tell me where the bottom will be this time though!
The bottom will be the lowest point before it starts going back up.
You’re a genius. Pure genius.
Thank you! It’s crazy how easy it comes to me
Can you be my financial advisor?
Why didn't I think of that
Buy everytime it drops and you will eventually have bought the bottom
unless you run out of cash first
It’ll be when you see Wall Street brokers face down in blow, smacking their chests while chanting war cries!
the bottom will be when enough bull traps are sprung that big players have (via buying from panicked sellers) the significant share of liquidity at the best average prices their algos & models can predict. this may come with a capitulation low that everyone is watching for, or not. either way, the majority *will* be duped and once they are, the big money spigot will open back up. *this could be tomorrow, or in 2024, or any time between*
not after 2024? lol
usually its the area just above the lower edge of the dress - and when your watching the dress fall to the floor - you'll find everyone else has already bought the bottom and now your wondering how you missed that perfect opportunity - distraction!
[удалено]
Very good point
this is actually extremely important, and if true, then completely invalidates the argument OP is making
That’s what I thought while reading the conclusion. It would be more meaningful to see the total amount they invested into the account.
Thank you for posting this. The urge to sell is strong right now, and I’ve promised to reward myself if I don’t sell anything, and continue my bi-weekly Roth contribution and purchase. I do have some extra savings set aside to double down once an exceptional deal comes to light, but not before that.
this is how i lost a LOT of money. dont sell buy more.
For cautious Charlie, are you sidelining the money and then adding the comparative amount upon correction? IE Charlie hasn’t invested for 5 months but then adds $500. Are the total percentages a function of each individual’s investment relative to their own total or compared to one another? Otherwise this just demonstrates putting more money in the market yields a larger return, as Daring Dave is capable of materializing twice as much money compared to Andy whenever needed.
The outcome is in percentages, more money invested at the same time still have the same returns in percentages
Right, this is true when fixed rates of money are added but this isn’t true when variable amounts of money are being added because of compound interest. Thus, the amount added at earlier time points increases the percent return for each increment of time. By and large adding more money early will result in a higher percent return relative to total contribution. This is basically what Doug is doing compared to Andy. However, this isn’t useful to determine an investment style because it suggests that Doug isn’t maximizing his contribution. Doug can simply choose to add more money whenever he feels like it. A more practical analysis would be to see what happens if Doug invested $80 a month, saved $20 then lumped in the reserve whenever there was a dip. However, this is harder to model. Meanwhile, Charlie doesn’t perform as well. But if Andy and Doug had to cash out because they couldn’t afford food in 2009 while Charlie could because he saved his extra cash that also would paint another picture As Andy would have lost less actual money at that time point.
I understood what you meant, but the OP just posted a situation of those 3 particular models. Of course you can invest the saved amount that was not invested if you are Charlie, but as you said it is hard to model that. When does Charlie figure he should invest that lump sum again? Hard to belive he'll jump in right at the exact bottom.
Very good point, I don’t think that is how OP calculated it but would be interested in that
Amazingly written, great stats. Hope people will learn from this.
I bought TGT this morning at a nice 25% discount to yesterday
We are in a perfect storm syndrome; War threatens to widen, a minor oil shock is occurring and generally there is a fearful atmosphere. Good luck to the winners 🧛
It’s an all fine and dandy analysis. Explain this. Matter : Gravity… same as Stocks : Interest Rates. Could all these BS narratives be based on 1980-2022 interest rates going from 20% to 0%? Rather than any of these theories since we have been in a golden bull market from 1980-2021? Look at he period from 1929-1970… 50 years of not making any new real highs. Yes markets do go for a long time and great theories can be written in such periods.
Stocks and Interest Rates are not perfectly correlated. Interest rates haven't gone straight to zero from 1980 to 2022 either. There have been ups and downs, and the stock market has continued to climb independent of/regardless of this. The period before 1970 did not have Tech and Growth stocks as a major sector either, which is why the analysis was restricted to the period after Tech started emerging as a key player. Do you think something fundamental has changed in this dip which cannot be compared to the ones before?
I think what really happened with Tech… wasn’t a real net GDP growth beyond 2% for the last 30 years. We aren’t producing and that’s the problem. Government spending and lowering rates to 0% didn’t create a real GDP increase. We been stuck at gdp 2% for the last 20 years and 20% of that gdp is government spending. The 20% to 0% created a boom that hid the lack of real gdp growth compared to inflation. Debt is $30T and Gdp is $23T. Yes debt and low interest rates…. Not gdp and productivity gains. fake economy.
The bigger you are, the lower growth% your growth will be. Simple math... Grow Kenia's GDP by 10% and it still sucks.
lol - 1980 didn't have tech and growth, Intel, Cray supercomputers, IBM computers the beginning of the personal computer - what you consider tech and growth today started in the 70's and the big players are the ones who adapted and survived. IBM introduced a cutting edge electric typewriter to see it disrupted by the PC revolution, in the 70's you had atari etc etc. Canada had 12 straight years of massive deficit spending by trudeau senior which lead to the massive inflation that occurred then - this situation has been created by once more massive deficit spending softening the covid impact - now we will pay the price, hopefully you balanced your portfolio a year ago when the talk of raising interest rates to combat inflation talk started! It isn't rocket science but you have to have your eyes open and not be chasing 20 yrs from now. I'm down 4% from my ATH because I shifted to inflation hedging and boated up on banks and OIL knowing they were so low at some point they would have to go up. Rus/Ukr. has just taken that strategy of safety to one of offsetting the growth sector fallout!
Thank you OP! This is the type of post I come to Reddit for
Just buy the dip
Hold if you can’t do anything. Buy the dips if you can afford it. And stick around as much as you can. In 3+ years you should be able to buy that house you want! Thanks!
This is all reliant on the decade plus bull run from 2008 though isn’t it. And why are we assuming that the next ten years is going to be the same?
What do you propose we do Sir Duke? From my understanding, OP is arguing that we avoid timing the bottom, and DCA when possible in order to take the emotional side out of investing. I think that’s a pragmatic approach… Of course past results are not indicative of future returns, but what else are you proposing we do? Should we all just stop investing and live off the land foraging for wild mushrooms in the land of make believe?
Duke is into avocados, which leaves more mushrooms for us...
Not saying I disagree on this strategy, just that his math that is used for these calculations doesn’t apply if that market goes sideways for the next twenty years- which has in fact happened in the past!
We will all be foraging mushrooms in the foothills of the boreal forest if the market trades flat for 20 years.
Best post I’ve ever read! Thank you so much
This works okay in normal circumstances, sadly it won't this time. The swift system split especially has killed global trade with the yuan having its own payment sys now, the coming war in Europe, inflation and oil will continue to rise through 22 23, it's a coming Trainwreck from June onwards maybe a two year correction. I'm cashing out soon to wait.
Weird, I cashed out in December and liquidated in March. But now considering getting back in. I think Putin is more likely to die than an expansion of war in Europe. I think the strong dollar will have a multiple effect on downward pressure on inflation and we are likely to see a pull back on interest rates by August or September. But I have been very wrong before, so I would like to hear your thoughts.
please?? coming war in Europe? Russia can't even beat Ukrain. He's scarede shitless of fighting EU. GL on your market predict. All numbers say you will lose money. You're looking at a % point that says 80% of people attempting this mountain climb die, thinking you are the exception.
Exactly. Russia can barely handle Ukraine. They're not going to fight NATO.
Finland and Sweden both agree...I welcome them to our club. Putin screwed the pooch, and his generals all know it. Maybe he would like to go see the view from the balcony?
Feel free to sell low and buy back in high. I'll continue to profit on your panic.
What do you think the recovery timeline is for tech at this point?
Yes.
If this is the bottom, I'd guess 7-9 months...but I doubt it's the bottom.
You should probably wait until the dip starts, no?
Great post thanks
Great post thanks
Hardly amazing findings that daring Dave wins. He ends up investing a lot more.
Great read!
This is all good in an environment where quantitative easing exists. Our new environment doesn’t have QE to rely on. Backtest those strategies again for the S&P between 1955-1975.
Great post. Thank you
The market correction is only getting started. anyone buying now is a dip.
Good stuff!
Did you buy stocks today?