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Discussion Starter · #1 · (Edited)
I don't think there is any remaining doubt. The stock markets are crashing sufficient to be remembered and quoted in the future.

Any comments on how it will affect you in retirement, investing, spending, or life in general are welcome.

 

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It isn't a bear market unless you are in tech stocks. Personally I wouldn't use the word 'crash' until you are at -30%. The NASDAQ isn't there (yet) either. Today looked like market sentiment meltdown, not fundamental meltdown.

If you are looking to invest, it's not a bad time now. A lot of heat is off stocks. Lots of better valuations out there. A few months ago, there was not much value, just energy. Now, there are a few more sectors, including bonds that could even be considered.

If the S&P 500 just returns to its ATH of a few months ago, then you are looking at +20% - not bad. If that happens anytime in the next 2 years, that's a market return and likely with higher earnings.
 

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I would call it a timely reset, not a crash.
Lots of gasbags need to come back to earth and be valued on reasonable multiples based on present or plausible future earnings. Emphasize plausible.

If not big leak in gasbags, the stronger case down the road for the full fledged crash to come about when folks on main street realize the emperor ain't wearing no clothes and they wont be afraid to call out that truth.
 

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Discussion Starter · #5 ·
If a person is a cautious, conservative investor who buys the index, they would experience the more benign declines of the indexes, but I am thinking a lot of people must have been buying stocks like Netflix, Paypal, Moderna and the others to drive the prices to such lofty levels.

Those people may already be experiencing a "crash", so I guess it all depends on how people were invested.
 

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Crashes happen a lot faster that what we are experiencing now. Remember March 2020 or August 2008?
This current downturn is similar to the fall of 2018 from September to December in which the market dropped 20% then recovered starting Jan 2019.

So far from ATHs, the S&P is down 16%, the Dow by 12%, and TSX by 9%. Only the Nasdaq is definately bear at 27% down.
 

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This current downturn is similar to the fall of 2018 from September to December in which the market dropped 20% then recovered starting Jan 2019.
The 2018 "taper tantrum" was also during Fed tightening and the 2019 rally was when the Fed pivoted back to propping up the market. Just look at the rally a few days ago when the market misinterpreted the Fed as even slightly dovish

So far from ATHs, the S&P is down 16%, the Dow by 12%, and TSX by 9%. Only the Nasdaq is definately bear at 27% down.
I like to think in terms of trends over time rather than short lived ATHs. If you zoom out several years and draw the trend we haven't even fallen back to it yet. The market will probably "crash" through the trend and then settle back

With bonds down and inflation eating cash what else are ya gonna do
 

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If a person is a cautious, conservative investor who buys the index, they would experience the more benign declines of the indexes, but I am thinking a lot of people must have been buying stocks like Netflix, Paypal, Moderna and the others to drive the prices to such lofty levels.

Those people may already be experiencing a "crash", so I guess it all depends on how people were invested.
and those that didn't buy the index didn't ride the wave as high and as a result haven't seen as much downside either. Short term results are fun to talk about on a forum board but it's 5, 10 and 20 year returns that are important. I would say crash is an exaggeration. I could be lamenting the fact that I had spent the past 6 months buying as prices have come down in that time frame. If I had done so I would likely have been at 25% cash which would be way beyond my target allocation. There was just as much probability that the market could have gone up another 10% before the correction. The reality is nobody knows when markets will move. Right now sentiment is very negative. To me that usually means it's time to buy.

If one is uncomfortable with current market performance they are clearly not investing in a way that matches their risk tolerance.

As an aside I saw a clip indicating those got in at the start of the pandemic and rode the Gamestop wave and QE funded market are now experiencing their first market correction. For those investors I guess this could be a scary time. I had never paid much attention as I know markets go up, go down and go sideways. Longer term they eventually go up and to the right. Perhaps I should head over to Reddit to check the mood. The folks at FWF have just started putting together their buy lists and are quite calm compared to 2008. Perhaps after a few crashes one realizes this too shall pass.
 

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You may be right. I plan to place some orders this week I realized long ago that I can't time the bottom so I buy when I have the cash. I am glad that I am not in drawdown mode as recent weeks may have a different effect on my attitude towards market movements. Perhaps if one felt the markets were overheated at the end of 2021 the recent decline is already mentally accounted for.
 

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There are many possibilities, of course, but I tend to agree with this fellow and will continue to watch the Fed very closely (and it's the Fed's actions that matter, not any words of reassurance from Jerome Powell):


MarketWatch: What should investors be watching out for now so they’ll know when to turn bullish?

McCullough: Conditions are always different but behavior is always the same. The stock market and the credit market go down, and the Fed goes dovish. We’re in the very late innings of the jobs market being strong and interest rates being high. That’s why it’s so critical to pay attention to the Fed going dovish or not. If they remain hawkish through the slowdown, then the market decline is going to be more protracted. If they pull back, quite often that ends up being the bottom. If the Fed raises rates in May, sometime after that companies are going to be preannouncing Q2 earnings to the negative side. So the end of the second quarter, June, is the landing spot I’m looking for. But, if the Fed doesn’t provide the landing spot, then there’s no landing spot.

 

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This is my first downturn since being retired. I have about 3 years expenses set aside as cash to ride out market downturns. As a retirement newbie I need to remind myself that I'm in a different phase now and my old 'buy the dips' reflex is not helpful since I also need to be keep an eye on cash flow. It will be interesting to see what the next year or so brings.
 

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Discussion Starter · #17 · (Edited)
I observed some key developments that set the tone in past recessions, if the situation should continue to deteriorate to that level.

Some hints for me as to the severity of the slowdown would be if there are stories in the local media of people having difficulty renewing their mortgages at higher rates, banks demanding cash to offset the decline in the home price versus the outstanding mortgage, stories in the media of the banks freezing HELOC limits, stories of people having difficulty financing vehicles and other large purchases. Financing drives our economy in many ways.

At the end of the day, people can manage to wobble along using debt, but once that possibility is removed the scenario abruptly changes.

Cracks appear in the subprime lending markets first, and then move up the quality chain.

Access to money.......even if it is borrowed money, can smooth over a lot of financial distress in the short term.
 

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Discussion Starter · #18 ·
A recession is "official" when there are two consecutive quarters of declining GDP numbers. As Canada recently posted a positive GDP, a worse case scenario for declaration of an "official" declaration of a recession would be at least 3 months from now. By that time, most people will know we are in a recession.

At this point in time, it appears to be only air leaking out of bubbles that have been expaning for a long time.
 

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I don't think there is any remaining doubt. The stock markets are crashing sufficient to be remembered and quoted in the future.

Any comments on how it will affect you in retirement, investing, spending, or life in general are welcome.

?? crash? Typical expected volitility.
I see no evidence of a crash. Many companies are at high but arguably reasonable valuations.

I'm astounded at the number of companies trading at single digit P/E. We're in one of the best investing periods in recent history.
 
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