Oil prices just fell 31% (and counting) with single biggest drop since Gulf War
How are we feeling about all this? There is going to be anxiety over the next few days (weeks..months....years?) so let's talk about it.
10yr Treasury Bonds are at their lowest ever, futures market are down ~10%, and cryptocurrencies have lost billions.
How are you feeling?
Nobody knows the future, but it reminds me of 2008. I don't normally time the market, but I made a couple good buys then, and somewhat regret chickening out about buying Ford at $2. (It seemed extremely cheap, but I talked myself out of it by saying, "What do I really know about the automobile industry anyway?")
I don't have as much money invested in index funds as I probably should. But I will wait some more for the sale to get going. The trick is not missing out on the recovery.
But maybe it will be different this time?
While buying during this downturn will probably do well in the future, historical analysis shows that if you had invested that money as early as possible, you'd do better.
The maxim time in the market > timing the market holds true pretty well.
More info : https://www.reddit.com/r/financialindependence/comments/ff6dah/dollar_cost_averaging_vs_10_drop_eg_coronaviral/
Yep, I agree with the conventional wisdom, and I've had lots of time in the market. But I also procrastinated after doing a same-day sale with some expiring employee stock options, and here we are.
One way to look at is that on Friday, we were at last October's price. All the prices before that were better for buying. This may be a chance to make up for a previous mistake, not getting in then.
I understand that I'm the exception to the rule here, but anecdotally, the earliest I could have invested heavily was back in October last year. Had I done that I'd already be down and who knows when the slide will stop now.
You're not the exception to the rule. That's just not nearly long enough of a time frame.
I was about to be skeptical but when doing a simulation using the 2008 financial crisis and using a best case timing (somehow knowing when the worst was behind us) you absolutely do not see a difference using DCA.
this reminds me right after 9/11. things were very chaotic. i was just about to graduate high school but still remember the pandemonium
I'm happy that petrol costs less!
I don't care about cryptocurrencies.
I care that bank interest rates are too low.
I care that the stock market is falling: my superannuation funds are mostly invested in the stock market. However, I'm aware that I don't retire for many years, so there's plenty of time for the market to bounce back (as it has done many times before), and take my superannuation up with it.
My job is fairly secure. I'm not expecting to end up unemployed. I know the financial circumstances of my employer, and they can ride this out. (Also, I'm their cheapest employee - sacking me isn't going to cut expenditure very much.)
There's going to be a lot of financial disruptions around me, but I think it'll mostly pass me by.
I'm more worried about my body getting sick than my finances getting sick. I'm much more worried about empty shelves in the supermarket. What's the point of having money if I can't use it to buy necessities like toilet paper?
Low gas prices are popular but they're bad for efforts to stop global warming. It would be a good time to start a carbon tax and have the windfall go to the government while keeping retail prices about where they were.
That's good thinking. It'll never happen here in Australia under our current government, but it's a good idea.
If things continue in the same fashion, you may be better off investing all that cash in basic materials and some books on crafting. :P
I'm not sure I want to start hand-crafting my own toilet paper!
If shit really does hit the fan, might as well prepare your own toilet paper.
Why do you care if bank interest rates are low?
I'm going to guess that its because you make less on bank deposits. The thing is, banks deposits are probably never profitable when inflation is taken into consideration.
I care because I might be able to refinance my mortgage at a lower rate and save myself a few hundred dollars a month!
I don't have much savings or investments in the bank. I'm not so rich that I have thousands of dollars sitting in bank accounts.
I'm worried about the threat of possible negative interest rates in the future. It's happening in other countries, and might possibly happen here (our cash rate is down to 0.5%).
That means my money will decrease in value if I leave it in the bank. That changes things. All my finances are arranged automatically through my bank: my salary gets deposited into my bank account and my bills get paid out of my bank account. Those arrangements currently don't cost me anything. If & when interest rates turn negative, I'll have to start doing a lot of manual work to juggle my incoming and outgoing money while minimising my losses.
Your money is probably already decreasing in value if deposit interest rate < inflation, which I think is the norm.
Why would a bank offer you a risk-free investment that pays more than inflation? Yes in the EU and I think USA, there is no risk in a deposit because it is covered by insurance.
Like I said, I don't have enough money that this decrease in value is significant for me. At most, this decrease might be worth about $10 per year for me.
I understood that. I was just pointing out that people forget inflation.
What are your predictions for how the Alberta UCP government is going to deal with this? Aren't they doubling down on the oil and gas industry and betting on solid prices to make up the budget? (IIRC you work in Alberta) Not that I expect the electorate to really lose support of them.
What's interesting to me this time around is how low interest rates are already, and how this will all combine with lower trade due to covid-19.
I'd guess that things are still going to go down because both the virus spread and the helplessness of governments in the face of this OPEC-Russia conflict haven't fully manifested.
This will surely be a defining issue in elections and politics for the next several months at the very least.
I'm worried about a deflationary spiral.
I'm in danger!
Them European clients look all the more appealing later, huh. :D
As someone who won't be retiring for decades, I'm having fun watching the chaos. Rich people freaking the fuck out like it's the end of the world never gets old.
I feel bad for anyone retiring soon though.
If a recession (somehow because of this, how does any of this work) actually happens soon then:
At least there will be a few years for the economy to rebound before I enter the job market. (Granted the 'job market' and general adult existence probably don't work like that.)
Maybe 'but the economy' becomes a weapon against instead of trump, although I have no idea what could change anyone's minds about anything.
More disstressingly for me though, my father is a mechanic so if this does happen, he will really be affected since stocks keep oil prices artifially low and oil companies artificially wealthy, so this presumably means high oil prices, meaning people will drive less and my father will have less business.
And because of this oil companies will make their oil more expensive to stay profitable, right? (Again, how does any of this work? They can do that, right?)
In some sense, they can raise or maintain oil prices, if they all agree to cut production enough to keep prices high, but that won't necessarily let them stay profitable, as they'll be selling less: it will help with per-unit costs, but not fixed costs.
But right now, they can't even agree to cut production. Some of them tried to get everyone to agree, but it didn't work, and so instead Arabia, which tried to craft an agreement, and Russia, which rejected it, have decided they are going to go into an economic battle by increasing production, flooding the market and crashing prices until one of them falters.
But this means that North American producers are doomed, as their per-unit costs are high enough that they can't sell at a profit at all in this market. The only reason they were viable at all was from high oil prices caused by producers with lower costs (but smaller overall reserves remaining) not producing as much.
Considering that you sound on the younger side I encourage you to not worry. This sort of thing happens, you probably don't remember 2008 but it was like this too and life kept on moving. I doubt mechanics will be affected by this - in the short term there might be an uptick if gas goes down in price, but more likely than not this will smooth out after Russia and Saudi Arabia come to agreements.
I'll admit my memory of 2008 is hazy - I was still young as well, but this is just one of those things that happens once in a while.
There is an argument that a recession should be good for mechanics and auto parts because people will be cautious and keep their old cars running longer.
It's probably not good for new car sales.
makes me glad im poor and almost never leave my apt