Down goes the Dow

K5 must be rolling over in his bunker.

Chicken Little will be here soon to tell us this bump is only temporary and you should run for your life since the end is near.

Wait 4 it wrote:

Chicken Little will be here soon to tell us this bump is only temporary and you should run for your life since the end is near.

Of course it is.

These faux short lived rallies notwithstanding.

Is there still any real doubt that there will be a major drop in 2016?

Don't be in the clouds on this bump. The losses were too big to cash out profits on this Friday... had to go back in. Unfortunately, this is just a dead-cat bounce. There will continue to be some electrolysis to give the illusion of life, and pay off big shareholders, but you better believe, THE END IS NEAR!

[quote]agip wrote:

Interesting story - it tracks the correlation between the chinese and US stock markets.

it alternates between hot and cold - meaning for some time the US correlates tightly, then it goes to negative correlation.

Point being that in 3 months we could easily be back in negative correlation mode and this is just traders going nuts rather than any long term trend.

although since 2014 the correlation seems to have been longer lasting than usual.

Very helpful.

lol agip, after my admonishment to you to take care of yourself, I find myself losing sleep because of too much attention to money matters, taking time away from exercise, and enabling my anxieties to take hold.

Maybe it's an adaptive response, telling me that I need to do something serious, and do it quickly.

I'm going to take the day off, and find some manual labor to do while I think about it. I really don't feel well. Yes I'm perfectly healthy, but something is really starting to worry me.

Catch up with you guys tomorrow.

Just run, baby.

9% loss on DJIA ytd plus high point to low point this year 10%

I know this is not the whole story but it is not the best sign we could have either.

K5 defector wrote:

Wait 4 it wrote:

Chicken Little will be here soon to tell us this bump is only temporary and you should run for your life since the end is near.

Of course it is.

These faux short lived rallies notwithstanding.

Will this be like the last "faux short" rally that didn't even last 7 years?

So after all of the weeping and gnashing of teeth in recent days, it looks like the market will be up for the week.

My opinion remains that investors should examine their time horizon and risk tolerance to a severe (30-50%) market decline. If warranted use rallies to reduce equity risk. It is no longer a buy-on-the- dip market.

Igy

I've been buying on the dip recently and have a small amount of cash left to take advantage of the next dip. Sorry, Igy, but I'm sticking to tried and true strategies.

Big,

No problem from me on that strategy. My point is that for those that are near retirement, may need liquidity in the next five years, or will not stick to a hold strategy when times get tough, a different approach may be better.

Igy

Presumably those folks have already reallocated their investments to a less aggressive model.

POTO,

For those close to retirement, like myself, I hope they have considered that capital preservation should dominate asset allocation. The temptation is to ride the wave and squeeze out a little more performance.

Unfortunately that thought often dominates the allocation strategy. "I can be nimble enough to avoid a collapse." For example, many target date funds fall into the trap of chasing performance and have a fairly aggressive mix of investments. Take for example the JP Morgan 2020 Retirement Series fund listed below, the fund has a mix of 60% equity plus high yield and small amounts of short term bonds and cash. In my world this would be a moderately aggressive allocation.

https://www.jpmorganfunds.com/blobcontent/523/586/1323428668996_MFDP-SR2020-1.PDF

I would imagine most investors, even the more sophisticated who post here, will have a different opinion of reward versus risk if the market continues to go south. Many who profess to be buy and hold investors will cash in their chips if things get nasty. Of course if things never get nasty, you will win our bet and that event will be postponed for some time in the future.

Bear in mind that with the financial crisis still in the minds of many, a severe and protracted break will test the confidence and beliefs of even the most committed. As they say "patience is a virtue." In investing that is a given. But in today's investment world "equity like returns" is considered a right. That belief is misguided and proven wrong numerous times in the past.

Have a good weekend.

Igy

I think you underestimate the intelligence of the average investor. If they've been savvy enough to save and build equity, I think they are smart enough to adjust their allocations as they approach retirement.

POTO,

I certainly don't question anyone's intelligence. There is a concept called "sequence of return." It illustrates how devastating retirement can be into a poor equity market if the allocation is too aggressive. The negative side of this was seen in the last two market downturns.

Another issue is a large positions of company stock in 401k plans. After the bankruptcy of Enron, if you are over 50 years of age, as an employees you can dramatically reduce exposure to company stock received as matching contributions. My experience has been that many future retirees are unaware of this feature in their plans.

I believe their is a serious gap in pre-retirement education.

Igy

You may be right. I wasn't aware of that, but then I've never had a 401k.

Famed Swiss investor Felix Zulauf on the current investing environment:

http://tablet.fuw.ch/article/from-buy-the-dips-to-sell-the-rallies/