50
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Dow Jones drops 864 points, and Japanese stocks suffer worst crash since 1987 amid US economy worries
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- Title
- Japan's Nikkei 225 index plunges 8% as world markets tremble over risks to the US economy
- Published
- Aug 5 2024
- Word count
- 841 words
Reminder that panic selling is always bad and the market will either eventually grow or capitalism as we know it is dead. That has been true for a hundred years, and I don't see this blip being any different.
Ehhh. Not that I don't agree to some extent, but that depends a LOT on what country you're in. The US has been fairly lucky in that every crash has eventually recovered, but several other countries have "lost generations" who have watched their markets sidle along without significant growth for decades.
Even still, I would never recommend panic selling. These kinds of holdings, in general, should be held until needed. Don't try to day trade it.
I invest in total world index funds. It would definitely hurt if the US somehow permanently collapsed tomorrow, but I'm not too concerned. I'm simply betting the world economy will continue growing over time.
Problem is everything is shitting the bed right now, so even holding entirely VT would be pretty depressing now.
I guess the upside is that if holding statistically "smart" ETFs, the only real option is to baghold for however long it takes people to de-panic. That or buy puts...which I have been considering, but also know that as soon as the order is filled I will have made a lot of other people a lot of money with my luck. đ
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More power to you if you want to gamble in the stock market. I'm just holding till I retire. I'll ladder into bonds before retirement to limit my risk exposure near retirement.
The Great Depression cost the United States 12 years. That's a damn long time to expect people to Be Calm and Carry On.
For people undergoing major life transitions, be it getting into the job market, striking out in your own, major illness, retirement, etc., a stiff upper lip won't solve their problems.
The great depression is a pretty major anomaly and one that's unlikely to occur even with all the stupid shit we do today because of lots of changes that have been made, mostly because of the great depression. The odds this gets anywhere near that bad, both on total % loss and length of recovery, are insanely small.
No one's saying it won't? I literally said you should only pull money out in these cases when you need it. If you need it you need it. You're still likely better off than if you didn't put in if you've been able to follow a reasonable savings routine. Hell the market is STILL up YTD, so if you put in as early as january you're already ahead.
The only people who have lost money at this point are the people who have to pull out now, and even then they've only lost on purchases from Feb onward. This could get worse, but the number of people screwed by this, who weren't already screwed, is extremely small.
I only invest in ETFs and have not sold anything in years but (excluding my retirement fund) I actually just today fell into the red both YTD and YOY...at least Yahoo Finance says I did. It also gives me completely incorrect numbers when I look at the graph, and my brokerage account only shows a graph of all the money in all my accounts with them, so I'm not actually sure if my stock market investments are up, down, or inside out.
But I'm not going to pull out now just like how I didn't pull anything out when it seemed obvious that I should in 2022 and I lost a lot of money on paper. I'm in it for the long haul or until the economy collapsed and money is worthless.
But I also know I'm up 2x vs SPX/SPY all-time, so I'm content.
This is what I am trying to tell myself. If it really all does go completely to shit, odds are I'll have worse problems than massive losses. Skynet, climate change, famine, or WW3 for example.
The crazy thing is price predictions are still quite high, NVDA at about 160 last month, and QCOM at 210 just this week! Even though they are at about 100 and 157 respectively right now. None of it really makes sense.
What are you invested in to get 2x SPY? Trying to refocus on investing/retirement.
I have a heavy focus in triple-leveraged tech ETFs. It's considered a stupid play to hold them overnight for a variety of reasons, but none of those theoretical reasons have ever actually played out essentially ever in the history of the stock market and they've never underperformed SPY over more than about a one-year stretch in a single go. When I first started investing in them, I actually felt comfortable doing so when I discovered that their long-term risk-reward stats actually showed them to have been safer investments than SPY or their unleveraged equivalents.
BUT (and it's a big but, as you can see) it's not for the faint of heart and even I would think you're stupid for investing in them if you're anywhere near wanting to pull your money out of the stock market. You can lose large amounts in a single day and humbling amounts within a short period.
But with that risk can come great reward. I think I lost like 60% in a single year or so, but all-time I was still up some huge percent over SPY. I believe SPY is up ~2x since I discovered these ETFs, but, for example, SOXL is up 4x over the same time, and that's after losing >50% over less than a month.
It can be a wild ride.
But these days, I'm not investing much into those ETFs because I've been building my "safer" retirement investments.
So I am curious whether this is something where one could simply set a low limit buy, then when the trade is filled set a high limit sell at say 1.5 to 2x the buy price, and basically just ignore it until the sell order is filled. Then just repeat this until near retirement when one doesn't have time on their side/the risk is too high.
It seems like it would be hard to lose if one doesn't need the money, and doesn't care about massive fluctuations over a 10+ year period.
Looking at SOXL right now and it's around $28/share, but was previously at $70/share.
That might work well. I just decided there are decent odds I'd mess something up so I might as well just consider those enormous peaks to be imaginary. For example, I bought SOXL originally for ~$8-$9 so that $70 price was incredible, but $28 is also amazing given that SPY hasn't even doubled in that time.
Any particular ETFs? Iâm looking at FNGU, USD, and TQQQ. You can message me if you arenât comfortable discussing here.
TQQQ was the first one I found but I think I'm most heavily invested in SOXL and also hold TECL.
Thanks! Time to go look at my portfolioâŚ
Don't forget that the stock market isn't the economy. They're connected, sure, but very loosely.
Yeah. Goodness knows the stock market has been going crazy while everyday people are struggling to buy groceries.
I wonder if I should buy some stocks likely to improve when they hit a low point
The general rule on this is it's not a bad idea to do so, but at the same time, make sure you're maxing your safer investments first. If you're eligible for something like a 401k match, or aren't maxing your Roth contributions, or anything like that, you should probably do that first.
Just put it in a mutual fund and the fund managers will do the balancing for you.
Or put it in an index fund and youâll functionally be pegging your portfolio to the health of the market overall.
Itâs not really worth it to make investment decisions on your own like that unless you just enjoy doing it for its own sake.
It's a pretty low point right now, could be a good time to buy, assuming we're at the bottom already, which is something nobody can know.
Tangential Rant:
So, I come to this Tildes post less than 10 hours after it was initially posted, and the AP (of all people!) have gone and (AFAICT) completely rewrote and retitled this article.
The title is now "Japanâs share benchmark soars nearly 11% a day after massive sell-offs that shook Wall Street" ... which sounds like a next-day update to the previous day's news.
They never changed the link
They published a news article, then went back and rewrote it and retitled it the next day ... no acknowledgement, no comment ... there's one word ... "Updated" & the time/date ... but that really does not do justice to literally, completely changing the title and content of the article.
I'm honestly beginning to think the only way to truly "save" news is to go back to literal print newspapers.
This sucks, specially for historical reasons. Each news segment should be a separate unique link, but SEO ruins it for everyone
Yeah this has been interesting to watch. I know they're talking about doing an emergency rate cut, but I don't think they should. Everyone has been expecting a correction forever, but we'll see how much this sticks.
This largely was a result of a Bank of Japan margin call. Let the parts of the stock market that were pumped up on 0% loans from Japan deflate themselves. These big tech stocks (magnificent 7) were obviously overvalued to anyone who did even a modicum of due diligence. I don't see this translating to wider contagion because I don't think most of the economy is doing something so stupid as borrowing in JPY and converting to USD.
The markets have now opened in Japan and erased all the losses. I'm not even sure what to make of any of this. The takeaway as always is that the markets potential to be irrational is not to be underestimated.
At times like this I try to look at it as a sale - from a buyerâs perspective, we havenât seen prices this good in a few months. Not that Iâm going to buy anything today.
Also, I havenât bought or sold any stock this year, so itâs easier to ignore recent market prices.
Intel dropping $10 on Friday almost certainly caused a ripple affect across the rest of computing stocks.
I wonder about that. Intel's drop is 100% the bills coming due on their shitty behaviors and practices. Datacenters around the world are now feeling vindicated and probably buying AMD for the forseeable future, as are retail customers. Hell I can't imagine discussions with the DoD/Government are going smooth for them either.
So maybe it triggered some panic sell thing, but it strikes me as a really odd kickoff point given anyone who's been following intel has been expecting this, and worse. Granted sometimes all it takes for the whole bubble to pop is someone moving negatively even if it's justified.
Stock market hasn't been fundementals-based as long as I can remember. None of this is new news, and this quarter really hasn't been any different than the last several. It dropped because of the mass announcement and probably a few large investors popping off.
You almost certainly already know thus, but for the benefit of lurkers:
Stocks are a Keyensean beauty contest. Their prices have little (but not nothing) to do with fundamentals. Instead, the price is the average of what the sellers think buyers will pay.
A round of bad news can cause panic selling despite the fundamentals remaining unchanged from last year. Iâd bet most stock panics could be trivially stopped (even if justified by market fundamentals) with some illegal collusion between the big players. Imagine the HODL meme but with Ohioâs Police Pensions acting in solidarity with the Texan Teacherâs Fund.
I donât understand why you would say the fundamentals are unchanged though. The simplest theory for this drop (and granted, economic theories are hard) is that the unemployment rate rose in the last US jobs report. Thatâs a fundamental change.
We can of course say that we knew eventually it would go up given the feds strategy of raising interest rates, but nobody knew when it would happen. Thus, we couldnât expect investors to price in this raise any more than they could price in a meteor hitting New York City.
There are some big asterisks on the numbers in the most recent jobs report. Jerome Powell was alluding to this when he made the statement that the Fed won't adjust interest rate numbers based a single month's data.
There are real signals of trouble (all the FIRE employers frantically laying off staff), Middle East war fears, Japanese currency turmoil (really good explanation), Chinese market doldrums, etc., but today's stock dive has other technical factors behind it.
Apple was working on laptop chips for years prior to 2020 due to frustration at Intelâs lack of progress in mobile-oriented chips.
These plans were also likely given a kick-boost when as a result of 2016-2019 MBPs being hot, loud, and power hungry as a side effect of Intel not being able to deliver on the efficiency promises they made about the Core i generations for those years. The thinner chassises of those machines were clearly designed for considerably more efficient chips which understandably struggled with the juiced-up old 14nm CPU designs they got saddled with. The butterfly keyboards on those models weren't great but the heat and bad efficiency did a lot more to ding Apple's laptop cred.
And it's funny that starting with the M3 Apple is facing those exact same problems. It's almost like you can't outrun physics. :)
Intel was definitely resting on their laurels a bit with AMD basically being non-viable until then though.
Well, at least theyâve got some more chassis space to work with this time around (for now). They also havenât tried some of the things that have been seen in e.g. high end gaming laptops like vapor chambers or liquid metal TIM.
Important to note that beyond the overhyped doom and gloom pushed by headlines, the US stock market is still up 13.6% this year even after this decline.
Thatâs better than the 9-10% average historical yearly return.
We havenât seen âlowsâ like this since May 2024 (3 months ago)
But on completely selfish note, as someone who has been sitting on the sidelines for mortgage rates to drop. Hopefully this pushes the Fed to finally cut rates. So Iâll support this bit of dooming for my sake lol.
For Japan, bad US metrics definitely is part of the play, since Japan exports heavily to the US market. But itâs also because the bank of japan suddenly announced a rate hike from 0.1% to 0.25%. This caused the yen to spike, which is going to hurt Japanese companies (which a lot of people donât seem to understand; high currency != good, itâs complicated). Not only that, but Japan is fairly high leverage in general, they have a very high GDP:debt ratio for a developed country, which means that rate hikes will really slow things down.
Japan's GDP:debt ratio is a weird one, because almost half of that is owned by the Bank of Japan itself. Don't get me wrong, with the BoJ scaling back their purchases of JGBs and the hike in interest rates, the Japanese government is definitely going to be more constrained, but any profit the Bank of Japan makes goes back to the Japanese government itself, and the Japanese government is expecting a primary budget surplus for 2025.
This is a good time to share that I hope people read about the simple and logical investing methods proposed by Bogleheads.
Buy the market. Make it simple. Donât gamble. For me, I just do total world stock market. In the USA, itâs a simple ETF: âVT.â
https://www.bogleheads.org/wiki/Main_Page