Down goes the Dow

Ghost of Igloi wrote:

7/25/2018:

Ghost of Igloi wrote:

Sure, those that suck up Wall Street’s inventory have spoken.

“The dominance of FAANG stocks in the increasingly popular passive market (read: ETFs) makes the acronym (and market) risky as many of the ETFs are using the same “momentum” factor. Consider that just five stocks (FAANG) are a top 15 holding in 605 ETFs:

ETF Ownership of FAANG Equities

2018: 605

2017: 501

2016: 430

2015: 332

2014: 277

2013; 230

2012: 175

2011: 101

2010: 62

2009: 14

2008: 9”

I think this is misleading. The biggest stock by share count owned by ETFs is not a FAANG stock. Also, the most popular FAANG stock owned by ETFs — AAPL — is owned by fewer than half of all ETFs.

Enjoy the holiday! ??

Maserati wrote:

What a wonderful xmas present. Reason for celebration!

Side note, I have cnbc on in the background. Today alone they mentioned the ppt by name, and Santelli referenced a Zerohedge (!) article, a nice present for Igy.

“Conspiracy theory” (of which I have been accused on here) is now mainstream media-acknowledged fact. It has always been public fact, strange to me that there were deniers.

Gold creeping, miners finally have a pulse. WTI down.

Season’s greetings to all, hope you and your friends and family all stay safe and healthy.☃️

Have a nice Holiday Week all.

J. Hardy wrote:

Ghost of Igloi wrote:

7/25/2018:

I think this is misleading. The biggest stock by share count owned by ETFs is not a FAANG stock. Also, the most popular FAANG stock owned by ETFs — AAPL — is owned by fewer than half of all ETFs.

Enjoy the holiday! ??

Of course that is nonsense logic because the overvaluation is driven by market capitization.

You enjoy the Holidays as well.

I've been hoarding capital and waiting for a recession for the past 2 years. Can't wait until the bottom falls out. I hope it dips under 15k.

Ghost of Igloi wrote:

J. Hardy wrote:

I think this is misleading. The biggest stock by share count owned by ETFs is not a FAANG stock. Also, the most popular FAANG stock owned by ETFs — AAPL — is owned by fewer than half of all ETFs.

Enjoy the holiday! ??

Of course that is nonsense logic because the overvaluation is driven by market capitization.

You enjoy the Holidays as well.

I posted facts. How can that be ‘nonsense logic’?

Maserati wrote:

“Conspiracy theory” (of which I have been accused on here) is now mainstream media-acknowledged fact. It has always been public fact, strange to me that there were deniers.

Haha that was me. PPT is real by name, Reagan established it after 1987 crash. But lots of people think it's like the Fed buying up tons and tons of securities when really it's just a bunch of stooges all trying to do the same thing by calling each other on the phone and trying to get on the same page.

Also, Steve Mnuchin is an idiot lol. Why would he admit he's talking to banks about liquidity?

Racket wrote:

Maserati wrote:

“Conspiracy theory” (of which I have been accused on here) is now mainstream media-acknowledged fact. It has always been public fact, strange to me that there were deniers.

Haha that was me. PPT is real by name, Reagan established it after 1987 crash. But lots of people think it's like the Fed buying up tons and tons of securities when really it's just a bunch of stooges all trying to do the same thing by calling each other on the phone and trying to get on the same page.

Also, Steve Mnuchin is an idiot lol. Why would he admit he's talking to banks about liquidity?

Re PPT : Spot on

Washington Post 2/23/1997

As for Mnuchin ;

a) He's bailing the sinking ship and wants to drive down Bank stocks so he can score like he did with IndyMac

b) He thought it would be cool to let everyone know he was spending Xmas in Cabo San Lucas

c) Tin foil hat crowd ( paging Maserati ) will say he's part of the Deep State Conspiracy - see OneWest partner was George Soros .

Season's Greetings to all .

https://www.youtube.com/watch?v=U0x5x8lyON8

Nikkei down -5%

https://finance.yahoo.com/news/japanese-stock-rout-accelerates-worst-002035982.html

Meanwhile the Dow and S&P are still not in bear territory. Will that change before 2019?

Double Chalupa wrote:

Meanwhile the Dow and S&P are still not in bear territory. Will that change before 2019?

From CNBC: The Dow Jones Industrial Average dropped by 653 points Monday in volatile trading, falling below 22,000. The Dow sank more than 2 percent, then recovered nearly all of the day’s losses, before again falling more than 2 percent. The S&P 500 fell 2.7 percent, slipping into a bear market as it fell 20.06 percent from recent highs. Wall Street traditionally considers a drop of 20 percent or more from recent highs to be a bear market. The Nasdaq Composite Index slid 2.2 percent.

Ghost of Igloi wrote:

From CNBC: The Dow Jones Industrial Average dropped by 653 points Monday in volatile trading, falling below 22,000. The Dow sank more than 2 percent, then recovered nearly all of the day’s losses, before again falling more than 2 percent. The S&P 500 fell 2.7 percent, slipping into a bear market as it fell 20.06 percent from recent highs. Wall Street traditionally considers a drop of 20 percent or more from recent highs to be a bear market. The Nasdaq Composite Index slid 2.2 percent.

The math is simple. The NASDAQ and S&P are in bear territory. The Dow is not. You shouldn’t need CNBC to do your calculations for you.

Nittany Lion wrote:

Ghost of Igloi wrote:

From CNBC: The Dow Jones Industrial Average dropped by 653 points Monday in volatile trading, falling below 22,000. The Dow sank more than 2 percent, then recovered nearly all of the day’s losses, before again falling more than 2 percent. The S&P 500 fell 2.7 percent, slipping into a bear market as it fell 20.06 percent from recent highs. Wall Street traditionally considers a drop of 20 percent or more from recent highs to be a bear market. The Nasdaq Composite Index slid 2.2 percent.

The math is simple. The NASDAQ and S&P are in bear territory. The Dow is not. You shouldn’t need CNBC to do your calculations for you.

Thanks, I didn’t know that.

S&P 500 return adjusted to CPI from month ending 2/2015 through 12/24/2018 1.88% and with reinvested dividends 3.308%. This represents the approximate period when I first posted here. So much for a wonderful equity market and the wisdom of passive investments.

Ghost of Igloi wrote:

S&P 500 return adjusted to CPI from month ending 2/2015 through 12/24/2018 1.88% and with reinvested dividends 3.308%. This represents the approximate period when I first posted here. So much for a wonderful equity market and the wisdom of passive investments.

Dave Ramsey averages about 12%.

You are no Dave Ramaey wrote:

Ghost of Igloi wrote:

S&P 500 return adjusted to CPI from month ending 2/2015 through 12/24/2018 1.88% and with reinvested dividends 3.308%. This represents the approximate period when I first posted here. So much for a wonderful equity market and the wisdom of passive investments.

Dave Ramsey averages about 12%.

"We have companies, the greatest in the world, and they’re doing really well," Trump told reporters at the White House on Christmas Day. "They have record kinds of numbers. So I think it’s a tremendous opportunity to buy. Really a great opportunity to buy."

With the year end nearly here, I thought I would plot an update of market progress against my naïve "prediction" from a few months ago. Here is S&P 500 since 1982, plotted with my projected future bounds, and with orange S&P representing actual index values AFTER I first posted the "prediction":

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http://i66.tinypic.com/10omq36.jpg[/IMG

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Here is the same plot but with index value on a log scale, which makes the probability bounds a bit more intuitive:

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http://i63.tinypic.com/2yy8h6t.jpg[/IMG

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Here's a zoomed view since May 2016, index values on a natural scale:

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http://i64.tinypic.com/2q3au14.jpg[/IMG

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And same plot, but again with index values on a log scale:

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http://i64.tinypic.com/m3foz.jpg[/IMG

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Ignoring the fact that the extreme fluctuations decay as a power law, so my "lower bound" is sensitive to scale of observation (thus we can have a worse lower bound), Excel tells me the worst case drop is likely to go no lower than about 1270 over the next two years. Best case over the next two years is about 5000. While that may seem relatively unlikely, a naïve analysis suggests at the least that the index is currently *more likely* to trend upward, although if I were a betting man I'd expect it to continue downward, and I've massaged my own holdings on that basis.

I've recently read a great book called Fooled by Randomness by Nassim Taleb (author of The Black Swan, and also evidently a former options trader), and if I've understood him, everything we are looking at in that S&P plot could be the result of randomness (and I've shown before that such a plot can be easily produced by simple random arrangement of past index changes; long runs up and down are entirely plausible under entirely random conditions).

Happy Holidays everyone!