Down goes the Dow

Maserati wrote:

...

Speaking of dividends, utilities bother me due to the high level of regulation.

You might be right to worry. However, I recently heard a discussion regarding BRK.A's utility holdings that I thought was interesting. They were saying that the future environment for businesses in general might be one of compression profit margins. Since utilities are monopolies, and can charge up to their regulated profit margins, they might look even more attractive & not as low margin as they historically have relative to other businesses.

I don't follow the VIX. Can you elaborate on your earlier comment about "lol at how they screwed with the VIX today...". Who is "they", and what did they do?

agip wrote:

In Point of Fact wrote:

jiminy cricket!

we could end UP today.

Well we didn't. An even bigger loss than Friday.

Dow now at 15,871. About 1,000 points higher than when I bailed two years ago. When I take into account all the stocks I also did not buy when the Dow was at 16k, 17k, and 18k, I am somewhere around break even. A little more of this correction and I will be ahead of the game.

US stocks are up 18.1% over the last two years, using the vanguard total market index and including dividends.

The Dow is a poor measure of the US stock market.[/quote]

So, using your cherry picked index, I see that the price at close today was $47.74 and 2 years ago it closed at $42.08. This represents an increase of a bit more than 13%. Which I am pretty sure is less than 18%.

But then again, I was a math major and work in a real job, not an econ major who is an investment advisor. Hence, real numbers and apples to apples matter to me

Down to 14,850 I believe.

What's the bottom?

I am betting sub 13,000

That the index you chose to pick to support your view has been trading at or over $53 all year. And it is now $47.74. Seems that any investment made in that index his year has lost @ 10%.

Dividends, my friend. Don't forget the dividends.

What you forgot wrote:

Dividends, my friend. Don't forget the dividends.

Yes. That is the mantra. Do index funds pay dividends?

Maserati wrote:

Well, it looks like thing will wrap up 3.5-4% down depending on the index.

DJIA closes around 15.9k

I don't really have any comment, except to observe that there is no buying frenzy at these levels.

My other comment is that there is now *almost* no way I can fail to have beaten the markets during this "out" period. I am so far ahead it is insane. I forget, I figured it out, the DJIA would need to be up to around 20k or something, to match.

It makes me really, really wary of getting back in this time. I will probably need to see serious momentum, or have put together what I think is a good dividend portfolio, to get back in in any real way.

Speaking of dividends, utilities bother me due to the high level of regulation.

Speaking of dividends; the US 10 Year is 2.00%, 268 of the stocks in the S&P 500 have dividend yields > or =, and 24 of the 30 stocks in the DJIA.

;

including AAPL !

True Dat wrote:

What you forgot wrote:

Dividends, my friend. Don't forget the dividends.

Yes. That is the mantra. Do index funds pay dividends?

of course index funds pay dividends

while to some degree any index you choose is cherry picked, there is some logic here - not all indices are created equally. The Dow is stupid. Look it up. It was designed decades ago and is absurd. Look up price weighting vs market cap weighting if you are curious.

The Vanguard Total Stock Market index isn't perfect because it weighs big stocks more than small stocks, but it has good logic behind it. I always use it. so I don't cherry pick.

agip wrote:

Go back further wrote:

Are you parroting that VIX information, or do you have handy access to the long-term VIX chart?

If you have a chart, I'd be curious to know what the VIX did between late 2007 and Oct 2008. When did it first spike over, say 30, during that time period, and how many times?

http://finance.yahoo.com/echarts?s=%5EVIX+Interactive#

{"showSma":true,"smaColors":"#cc0000","smaPeriods":"200","smaWidths":"1","smaGhosting":"0","range":"10y","allowChartStacking":true}

yahoo finance is not working well today, but from other sites I believe the VIx hit 50 today. Not sure where it is right now.

a caveat is that this is closing prices - the vix was likely far higher intraday than this chart shows.

agip, re VIX; check out this site.

la gente está muy loca wrote:

agip wrote:http://finance.yahoo.com/echarts?s=%5EVIX+Interactive#

{"showSma":true,"smaColors":"#cc0000","smaPeriods":"200","smaWidths":"1","smaGhosting":"0","range":"10y","allowChartStacking":true}

yahoo finance is not working well today, but from other sites I believe the VIx hit 50 today. Not sure where it is right now.

a caveat is that this is closing prices - the vix was likely far higher intraday than this chart shows.

agip, re VIX; check out this site.

http://vixandmore.blogspot.com/2015/08/last-two-days-are-5-and-6-one-day-vix.html

interesting - so we might expect a 5 day rally, then a decline or underperformance, until 100 days have passed.

That'll be a long time without profits - stocks are down for 52 weeks now.

Thanks a million!

la gente está muy loca wrote:

agip wrote:http://finance.yahoo.com/echarts?s=%5EVIX+Interactive#

{"showSma":true,"smaColors":"#cc0000","smaPeriods":"200","smaWidths":"1","smaGhosting":"0","range":"10y","allowChartStacking":true}

yahoo finance is not working well today, but from other sites I believe the VIx hit 50 today. Not sure where it is right now.

a caveat is that this is closing prices - the vix was likely far higher intraday than this chart shows.

agip, re VIX; check out this site.

http://vixandmore.blogspot.com/2015/08/last-two-days-are-5-and-6-one-day-vix.html

and more to the point, the current VIX spike is historically significant - not normal. Not sure what to conclude from that other than what the article itself says.

What it means is that the VIX is an excellent contrarian market indicator and like all contrarian indicators, has the most predictive value at extreme levels. You can evaluate that VIX on an absolute scale (where it has been during its entire life) or on a relative scale (its recent range.)

The VIX is an index based on SPX (S&P 500 Index) options that peaked at 53.29 today (highest level outside of the 2008-09 financial crisis) and closed at 40.74. Those values and other related volatility factors suggest a bottom that is at least short-term in nature, probably more durable.

VIX futures trade after hours. These are already falling and suggest that a lower VIX and higher stocks is likely for tomorrow -- at least until the Chinese markets manage to screw things up, if they do again tonight.

...and regarding screwing with the VIX, today's open was very unusual in that it was done under "Rule 48" which contributed to the fact that instead of all stocks opening at once, they opened in stages, without even any pre-market indications of bids and offers. Since the VIX is an index based on options values for the S&P 500 (SPX) with its 500 components stocks -- some of which opened at 9:30 ET and many of which did not -- there were strange readings in the index and even stranger readings in SPX options and therefore the VIX. For this reason, the CBOE, which owns the VIX, elected not to publish what they believed to be erratic and likely inaccurate VIX values.

As someone who trades all the VIX products on a regular basis, I fully understand their decision and believe they did the right thing, conspiracy theories notwithstanding.

That being said, VIX futures with expirations ranging from one week to nine months out were traded in the pre-market, at the open and during the full trading session, so anyone with an interest in volatility had access to that information if they wanted. Also, if you trade options, you invariably have a platform that calculates implied volatilities for you and since VIX is essentially the implied volatility of SPX (or SPY), you had those values available to you at any time too.

In other words, this is a non-story.

Ghost of lgloi wrote:

agip,

Enough with the VIX. It is the flavor of the month, but no more significant than some other prognosticators, perhaps less. It's just a number that weak minded people attach themselves to in lieu of critical analysis. Run the numbers and see the light.

Igy

eh? I've been looking at the VIX for 10 years - I didn't even know that it was in vogue. It's a useful indicator when at high levels - and gente points out that this was a historic spike - th 5th and 6th largest spikes of recent time. probably meaningful and bullish because it shows the sheer panic out there. Probably most of the selling is done. for the short term anyway.

Ghost of lgloi wrote:

agip,

Seems that everyone is talking about the VIX these days. Flavor of the month methinks.

Meanwhile China is down significantly over night. Is this a vicious circle: the US markets go down in response to China who then drops in response to the US?

Perhaps not since futures are up this morning. Could be another roller coaster ride, but I think the panic sellers are through and cooler heads will prevail.

Igy

today will be interesting - if the US doesn't hold on to gains, people will be sad and throw up their hands. And probably sell more.

On teh other hand, we always have to remember that crazy moves like these are caused by machines trading and hedge funds panicking - it's just paper, just trading - the US and Euro economies are fine. So the fundamental people will no doubt buy some bargains.

I know that made you throw up a little, ghost. But yes there are bullish fundamentalists.

Headfake...

Awesome, brother!

Ghost of lgloi wrote:

agip,

No worries. My gastrointestinal functions are under control.

This bounce was not unexpected. But the near long term outlook is still precarious. Buyer beware.

Igy

It's WAY cool how nothing is unexpected to you! Must be awesome to be you!