Rates are crashing and fuel to the moon!

Yesterday My 401k gained back almost what it lost in the last week.

 

Exactly. I don't know much about the market but our financial advisor does. He told me the same thing. After having him and his company handling our investments for over forty years and seeing the results of his advice and management I tend to listen when he speaks.

 

And how about compared to March 15? February 1? January 20th?

And what is it at right now?

Year to date the S&P is down 10%. Dow is down 7%. Trailing 12 months is up 1.2% and 2.4% respectively - but that's probably going to drop. A year's worth of gains wiped out in 30 days.

 

Well, what's the 10 or 20 year results?
If you're going to day trade, that's one thing. However, if you're investing in the long term, that's something else entirely.
I say, play the long game, and you'll be fine.

 

Having a plan and letting the "sauce simmer" is in general good advice, however it's a generally a good idea to watch the temperature and stir things every now and again. It's a bad idea to leave the stove unattended and go work in the shop.

Checking things daily is an exercise in madness, but knowing what you're invested in and paying attention to market trends is a necessity. If you think interest rates are going to rise, it's best to at least pause buying bonds and probably a good idea to start selling (or the opposite if you think interest rates are going down). It's not 'timing the market' - it's looking at trends. Panic selling (or buying) is never a good idea, but not freaking out over a 10% drop is burying your head in the sand.

Anyone who wanted to retire within 15 years is going to need to increase their savings rate or push back their retirement date.

 

Absolutely play the long game. No argument. Low cost index funds for the win.
https://images.app.goo.gl/vsK9p3A6aC96hThb7

Anybody selling at this point is either facing some tough life choices or suffering from a head wound.

However the comment "yesterday my 401k gained back almost what it lost last week" reads like "it's just a little airborne" to me.

 

Call it what you may, I was just saying this little hiccup over the last week hasn't hurt me a bit.

For the year? Yeah I'm down 6%. But I'm not worried yet

 

This "little hiccup" started a month ago and is continuing. I'm worried about how leveraged up the hedge funds are and how much corporate debt there is. If margin calls start happening, I'll be happy to end the year down 8%.

 

Markets seem to be saying, "You can't just hit the reset button."

Stocks are getting battered again today, while bonds are falling/yields are rising. In a normal market, when there is a rush out of stocks, for whatever reason, that money tends to move to US bonds, causing bonds to rise and yields to fall. Thats not what's happening. We’re seeing the consequences of our actions here. Right now it looks like money is fleeing stocks and moving… somewhere else. Where is the new safe haven? Europe? China? Under the mattress?

In addition, the US dollar, the world's reserve currency, is collapsing, down nearly 2% in one day. Gold, as an alternative to the dollar is screaming higher. All of these are worrisome on their own. Put together, they should set off alarm bells.



I'm not sure what it will take to stabilize the world’s markets. What I do know is that when things that don’t normally happen, begin to happen, things break. Overleveraged funds blow up overnight. Banks get into trouble and need bailing out. etc... None of this "sky is falling" stuff is guaranteed to happen, of course, but when things like this start going on it's foolishness to ignore the possibilities.

 

interesting perspective. And very mainstream.

With the caveat that my formal education is in economics, the first thing I must point out is that the market is down because of one reason, more than any others: uncertainty. Market participants ALWAYS want a premium to take risk, and the government policy of today has introduced an ENORMOUS amount of risk/uncertainty into the market. That the market is down as little as it is, is really quite surprising in the face of a complete upset of the global trading structure with the US.

Yes, there is a flight to gold (see uncertainty above), as well as a drop in the Greenback. The drop in the Greenback can be largely explained by the very large drop in interest rates over the last couple of weeks. Since gold is priced in US$, a drop in the greenback naturally increases the value of gold. Neither increases are inherently good, or bad. However, a dropping dollar makes our exports that much cheaper to foreign buyers, off-setting the effectiveness of retaliatory tariffs.

The US$ is at historically high levels. For example, twenty years ago the US dollar and the Canadian dollar were at near parity. Last month it took $1.45 Canadian to buy one US dollar. With that perspective, a 2% drop in the value of the dollar is less than 5% of the increase in value over the last 20 years. A strong dollar is often thought of as positive, because it makes imports and foreign vacations cheap, but it makes it very much more difficult for our exporters.

I’m not at all convinced worrying about TEOTWAWKI is warranted at this point.