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Just noticing such tremendous VOLATILITY in the Markets, "that is all."
Honestly, a roller coaster ride like I can't remember, ever before. I only began investing in 2003. So maybe a bunch of you are more well versed in it all.
Honestly, a roller coaster ride like I can't remember, ever before. I only began investing in 2003. So maybe a bunch of you are more well versed in it all.
A few years from now you may look back and wonder why you didn’t take advantage of this volatility.
Well, since we don't know Crash's age and financial situation today as compared to the 2008 crash, we don't know if he can handle it. That was--hard to believe--15 years ago. It's a mistake to assume everyone should keep a stiff upper lip, keep calm and carry on during a difficult period. Circumstances and risk tolerances differ.
This is why, I should add, financial planners exist. A good one can assess your financial situation and risk tolerance and tell you, look your goals are X and you have this much cushion for losses, so you can afford to wait out this volatile market. Or, they can say, you're way overexposed to stocks, given your age and situation. You should dial back your exposure. I presume most people here are self-directed, though.
I’m confident @Crash can handle it. - But some sage advice.
What makes sense to me about the heightened volatility comes from Bloomberg media reports this evening: (1) There is a liquidity shortage, (2) As a consequence some hedge funds have had to limit or halt redemptions, (3) The ability to make large transactions is now concentrated in a limited number of hands - far fewer than in normal times. (While Bloomberg identified only one hedge fund that has halted redemptions, they seemed confident others have also halted or restricted them.)
I generally try not to allow macroeconomics to influence my investment decisions. But I think it would behoove everyone to pay attention to what’s going on in banking and to the words and actions of government officials here and abroad - in particular the central banks.
Banks Borrow $164.8 Billion from Fed in Rush to Backstop Liquidity ”All told, the emergency loans reversed around half of the balance-sheet shrinkage that the Fed has achieved since it began so-called quantitative tightening — allowing its portfolio of assets to run down — in June last year. And the central bank’s reserve balances jumped by some $440 billion in a week — which ‘basically reversed all the Fed’s QT efforts,’ according to Capital Economics.”
Bair on PBS Frontline - Sheila Bair served as the chair of the Federal Deposit Insurance Corporation (FDIC) from 2006 to 2011.
Tomorrow quadruple witching Expect volatile and market swings off the chart, especially last few hrs /every firm and real estate investors trying squeeze out the last Pennies before market closing
[snip] I generally try not to allow macroeconomics to influence my investment decisions. But I think it would behoove everyone to pay attention to what’s going on in banking and to the words and actions of government officials here and abroad - in particular the central banks. [snip]
@Crash - Thought I’d mention that what rocked markets today was the announcement that J.P. Morgan had put together a “rescue package” (loan) for First Republic funded by a number of banks. I was surprised they didn’t wait and release the information until after market. But the news broke about an hour before close and helped propel stocks higher into the end.
From CNBC: “Stocks rose Thursday as Wall Street grew increasingly optimistic after a group of banks said it would aid First Republic Bank amid the industry's crisis.” CNBC Link
Honestly, a roller coaster ride like I can't remember, ever before. I only began investing in 2003. So maybe a bunch of you are more well versed in it all.
I recall that the Global Financial Crisis of 2007/2008 was much worse. It felt (to me anyway) that the entire financial system might collapse. Many financial institutions became bankrupt (notably Lehman Brothers and Washington Mutual). GM and Chrysler also faced bankruptcy and were bailed out after cash was diverted from the Troubled Asset Relief Program (TARP). The S&P 500 had a weekly decline greater than 20% in October 2008. I hope to never experience another financial crisis of this magnitude again in my lifetime. Once is enough!
Appreciate the input, all. I am indeed riding it out. Somehow, I wasn't so affected by the Crash of '08-'09. Back then, I was stashing money in my 403b, into EM bonds. They did well in the aftermath. No more EM, now. @LewisBraham: 68, retired, wife works full-time. I'm just laying back in the tall cotton. 5 cash, 58 stocks, 33 bonds. Adding every month to PRTXX: Treasuries and repurchase agreements. A MM fund with TRP. (Sweep account.) Instant access, 4.31% yield, currently. Better than always running over to the Windward side, where our Credit Unions are. I do that often enough, already.
Surely, Jamie Dimon and the others that went to the aid of First Republic will want something in return. I believe we will see consolidations. CS is still in the toilet. No confidence in that bank's survival. Unless it becomes a zombie-front for the Swiss National Bank, which promised to prop it up.
And the Fed's discount window has already dispensed a record amount in a very short time. Are banks just looking for cheap loans at 3%???
Happy St. Patrick's Day. I'll join the local alumni chapter watching a double-header: Gonzaga men and women, both on tv. GU women vs. Ole Miss. Men vs. Grand Canyon Univ. No corned beef. Tacos, instead. Futures up, slightly.
Unless there are serious issues in the biggest banks ( ie top 100) I don't think this will rival 2008
In retrospect it seems that any idiot could have predicted what would happen when you sold mortgages to people with no income. Few of us, I assume, knew that was going on until the headlines. But people who should have known better still went ahead and loaded up on this junk. This was a solvency crisis as the investments were worthless.
This seems to be much more a liquidity crises, which the Fed can fix. However, it remains to be seen what that will do to inflation, given they have undone 50% of their QT so far. Does a recession become more likely?
Gut observation here, but this week things have not all completely marched in 100% lockstep like they did in '08. There are some pockets of green and/or counter-trending moves happening that kind of makes this more orderly.
Had the government not intervened last weekend, I think the odds of a systemic risk situation would've been significantly greater. But still ... on the whole, for the moment, things are 'dramatic' but not 'existential' like they were in '08. Back then, I was genuinely concerned about the very fabric of the global financial system. Not feeling anywhere that dreadful right now.
If you're invested in good stuff, just turn the TV off and don't look at your account for a few days. Or as I told someone yesterday, take some play money (if you have it) and actually BUY or ADD TO something good to engage in some reverse psychology and reassure yourself that things will get better.
(I've been buying/adding this week myself, as i still put idle cash to work for the long term)
People have withdrawn bank deposits and moved into money market funds and T Bills. Banks can’t compete on short term interest rates because they have made long term loans at lower rates. I agree that an idiot could have foreseen this. Of course the recent panic made things even worse as more people withdrew money from banks, There’s a great movie scene with Jimmy Stewart that helps explain the situation more and more banks face.
Agree with @Observant1 that 2008 was MUCH worse! Nevertheless, investors need to stay calm and stick to their plan (asset allocation) and not get influenced by the media/news. The worst is panic and make bad choices.
I have been deploying my cash this weeks to short-term bond funds, individual stocks, and CDs. As more T bills mature this year they will invest in intermediate-term bonds. If US dollar continues to fall, we will buy European stocks again. Our EM exposure has been reduced substantially in recent years given the heightened geopolitical conflicts.
The fallout from the SVB (Silicon Valley Bank) collapse has finally put fear into the hearts of investors, and especially options traders, pushing up the VIX from the low 20s to a close of 26.14 on March 15, 2023. That took the VIX Index up above the prices of all of its futures contracts, which creates a unique oversold sentiment situation that is the subject of this week’s chart.
I believe it is due to both the magnitude and pace of rate hike. It is the most aggressive hike since the 1970’s Volcker days. Right now there is lots of uncertainties of which shoe will drop next after SVB, Credit Sussie, First Republic Bank (other regional banks)….
And yet inflation is far from being contained and how high a the Fed raises the rate when something seems to be broken right now?
The bond market has exactly the opposite view on inflation. It is screaming that inflation is entirely in control and headed down. projected longer term inflation now in the bond market is about 2.1% I admire the confidence of bond traders. But folks tell me it might be that inflation is dead because banking crisis kills growth and inflation. I do not see that in my consumption basket generally speaking.
One thing @crash is correct in starting this thread. Bond market volatility is absolutely mind blowing these days.
Munis appear to have reversed course to the upside this week.
Wouldn't you know? https://www.cnbc.com/quotes/HYMU?qsearchterm=hymu My TIPs fund was up today, too. SCHP. ...And aluminum, green power: NHYDY was up by the tiniest of fractions. But down significantly, lately, along with almost everything else. ...Still too early to see the daily OEF mutual fund prices. Making way too much sense here: "The bond market has exactly the opposite view on inflation. It is screaming that inflation is entirely in control and headed down. projected longer term inflation now in the bond market is about 2.1% I admire the confidence of bond traders. But folks tell me it might be that inflation is dead because banking crisis kills growth and inflation. I do not see that in my consumption basket generally speaking."
The fallout from the SVB (Silicon Valley Bank) collapse has finally put fear into the hearts of investors, and especially options traders, pushing up the VIX from the low 20s to a close of 26.14 on March 15, 2023.
@Crash. In 2008 I was busy running a business and I was ten years from retirement. I didn’t have all day to follow the markets every move and digest a hundred other dudes fears. The future of democracy wasn’t in question and the crazy caucus wasn’t threatening default. And I don’t remember members of Congress calling for a civil war. But if the worst happened I had a decade for the market the climb back and short of that,,,, to save more money. Of course things look extra volatile now. If we live long enough, this too shall pass. Best regards to you Crash.
Was a lot easier at 60 to “bite the bullet” and buy down in 2008 than at 75 today. Nonetheless, I’ve added a bit of risk over past week, perhaps illustrating Franklin’s proverb - “Experience keeps a dear school …”
Diversification paid off Friday from what I can see. Bonds of almost every color held their own or gained. Precious metals surged. Some foreign markets fared far better than domestic. DODEX, for example, was unchanged.
@Crash It sounds like you can handle the vol, Crash, but still only you know for sure what your situation is. I think the thing to do is what Sven said, first have an asset allocation plan and then stick to it. Ask yourself how many months of an emergency fund you have to live off without touching your less liquid assets. How steady is your wife’s income? Do you have a pension paying you regularly, Social Security? How much of your monthly bills do they cover? If the income streams are reliable and cover all of your bills, you can afford to be more aggressive with your investments and have a smaller emergency fund. But these questions go way beyond how the market is currently doing.
Comments
Just hold on to the ride
Drink lots wine/ weekend relaxation
Keep buying when ItS strikingly low.
You will be very happy 10 yrs from now if no WW3 and global warming won't kill us
This is why, I should add, financial planners exist. A good one can assess your financial situation and risk tolerance and tell you, look your goals are X and you have this much cushion for losses, so you can afford to wait out this volatile market. Or, they can say, you're way overexposed to stocks, given your age and situation. You should dial back your exposure. I presume most people here are self-directed, though.
What makes sense to me about the heightened volatility comes from Bloomberg media reports this evening: (1) There is a liquidity shortage, (2) As a consequence some hedge funds have had to limit or halt redemptions, (3) The ability to make large transactions is now concentrated in a limited number of hands - far fewer than in normal times. (While Bloomberg identified only one hedge fund that has halted redemptions, they seemed confident others have also halted or restricted them.)
I generally try not to allow macroeconomics to influence my investment decisions. But I think it would behoove everyone to pay attention to what’s going on in banking and to the words and actions of government officials here and abroad - in particular the central banks.
Banks Borrow $164.8 Billion from Fed in Rush to Backstop Liquidity
”All told, the emergency loans reversed around half of the balance-sheet shrinkage that the Fed has achieved since it began so-called quantitative tightening — allowing its portfolio of assets to run down — in June last year. And the central bank’s reserve balances jumped by some $440 billion in a week — which ‘basically reversed all the Fed’s QT efforts,’ according to Capital Economics.”
Bair on PBS Frontline - Sheila Bair served as the chair of the Federal Deposit Insurance Corporation (FDIC) from 2006 to 2011.
Expect volatile and market swings off the chart, especially last few hrs /every firm and real estate investors trying squeeze out the last Pennies before market closing
From CNBC: “Stocks rose Thursday as Wall Street grew increasingly optimistic after a group of banks said it would aid First Republic Bank amid the industry's crisis.” CNBC Link
I recall that the Global Financial Crisis of 2007/2008 was much worse.
It felt (to me anyway) that the entire financial system might collapse.
Many financial institutions became bankrupt (notably Lehman Brothers and Washington Mutual).
GM and Chrysler also faced bankruptcy and were bailed out after cash
was diverted from the Troubled Asset Relief Program (TARP).
The S&P 500 had a weekly decline greater than 20% in October 2008.
I hope to never experience another financial crisis of this magnitude again in my lifetime.
Once is enough!
Surely, Jamie Dimon and the others that went to the aid of First Republic will want something in return. I believe we will see consolidations. CS is still in the toilet. No confidence in that bank's survival. Unless it becomes a zombie-front for the Swiss National Bank, which promised to prop it up.
And the Fed's discount window has already dispensed a record amount in a very short time. Are banks just looking for cheap loans at 3%???
Happy St. Patrick's Day. I'll join the local alumni chapter watching a double-header: Gonzaga men and women, both on tv. GU women vs. Ole Miss. Men vs. Grand Canyon Univ. No corned beef. Tacos, instead. Futures up, slightly.
In retrospect it seems that any idiot could have predicted what would happen when you sold mortgages to people with no income. Few of us, I assume, knew that was going on until the headlines. But people who should have known better still went ahead and loaded up on this junk. This was a solvency crisis as the investments were worthless.
This seems to be much more a liquidity crises, which the Fed can fix. However, it remains to be seen what that will do to inflation, given they have undone 50% of their QT so far. Does a recession become more likely?
https://fred.stlouisfed.org/graph/?g=11n4S
Had the government not intervened last weekend, I think the odds of a systemic risk situation would've been significantly greater. But still ... on the whole, for the moment, things are 'dramatic' but not 'existential' like they were in '08. Back then, I was genuinely concerned about the very fabric of the global financial system. Not feeling anywhere that dreadful right now.
If you're invested in good stuff, just turn the TV off and don't look at your account for a few days. Or as I told someone yesterday, take some play money (if you have it) and actually BUY or ADD TO something good to engage in some reverse psychology and reassure yourself that things will get better.
(I've been buying/adding this week myself, as i still put idle cash to work for the long term)
I have been deploying my cash this weeks to short-term bond funds, individual stocks, and CDs. As more T bills mature this year they will invest in intermediate-term bonds. If US dollar continues to fall, we will buy European stocks again. Our EM exposure has been reduced substantially in recent years given the heightened geopolitical conflicts.
weekly_chart/vix_index_above_all_of_its_futures
And yet inflation is far from being contained and how high a the Fed raises the rate when something seems to be broken right now?
https://www.cnbc.com/quotes/HYMU?qsearchterm=hymu
My TIPs fund was up today, too. SCHP.
...And aluminum, green power: NHYDY was up by the tiniest of fractions. But down significantly, lately, along with almost everything else.
...Still too early to see the daily OEF mutual fund prices.
Making way too much sense here:
"The bond market has exactly the opposite view on inflation. It is screaming that inflation is entirely in control and headed down. projected longer term inflation now in the bond market is about 2.1% I admire the confidence of bond traders. But folks tell me it might be that inflation is dead because banking crisis kills growth and inflation. I do not see that in my consumption basket generally speaking."
Was a lot easier at 60 to “bite the bullet” and buy down in 2008 than at 75 today. Nonetheless, I’ve added a bit of risk over past week, perhaps illustrating Franklin’s proverb - “Experience keeps a dear school …”
Diversification paid off Friday from what I can see. Bonds of almost every color held their own or gained. Precious metals surged. Some foreign markets fared far better than domestic. DODEX, for example, was unchanged.