Global Selloff, an advice

After some mild recovery in previous days, markets saw a huge selloff yesterday once again. With this selling round, 10% correction in the US markets has been completed. It is right time to deploy next round of investment, which should be next 20% of the surplus. But, always keep in mind that markets still may correct 10% or even some more from here thus invest in installments.

The main problem with the markets is this extraordinary huge volatility. It needs to comes down significantly in order to move the markets upwards. Those who understand the markets, the indicators to look out for are VIX and put/call ratio. VIX needs to come down around at 10-15 levels. Markets will start making a bottom there. But, the issue with VIX is that market regulators have allowed trading in it, which should never be the case because then it never reflects the true picture.

with love,
sanjay

That’s what I was telling joker. Pro traders are going to make money on the options whether the underlying securities increase in value or decrease. The fear index is tied to those poor souls who are afraid they wont be able to make rent if they don’t get their short term capital back to liquid in time. Retail investors and small timers who are trying to make swing trades with their student loan money will be shaken out with other weak hands, and once the unpredictability that comes along with the irrational behavior of the amateurs settles down, the stability will come along and the big boys will have been buying shares at a discount.

The best thing, in my opinion that a person can do is to buy shares in a variety of companies across a number of sectors such that they stay diversified. Buy at regular intervals and at set amounts, reinvest dividends and never take the money out. Sometimes you’ll overpay, like with lockheed martin during wartime, but sometimes you’ll underpay like with rite aid right now. Overall you’ll end up getting the average price over time which is fair and doesn’t put you in danger of the perils of trying to time the market, and the dividend reinvestment will return capital to you in the form of shares which will effectively allow you to use compounding to your advantage. A few hundred bucks a month into trains, missiles, oil, etc is almost never a mistake and when you see these kinds of corrections you can actually celebrate that you’ll be getting more for your money while the prices are low.

US markets recovered all losses are at new highs again. It is very easy to conclude from this that the correction is over and markets will move again. But, that conclusion seems to be to simple to be true, at least to me. My guess is that the markets will see at least one more round of brutal selling again, if not more. Having said that, when that time will come, no one can predict that.

If anybody invested during that correction, it is high time to withdraw 50% from the table. These type of corrections will keep coming. Let rest 50% ride the run. SIP investors can continue.

with love,
sanjay

If I thought that I could invest money in the stock market and make a vast fortune I would of done so a long time ago however as I see it there is only a casino where the house or those with lots of money always win out while you acquire losses. Secondly, I don’t have a lot of money to throw around although I wish that I could.

I also see a big correction which I believe will wipe out the wealth of all nations across the globe. It’s something I’ve been anticipating for years. I honestly don’t understand how Mr. Reasonable is making a lot of money given 0% credit percentage on most bank saving accounts. There just seems to very little returns on investments these days.

Who’s trying to make money off a savings account? Savings accounts are not supposed to make you money. They just exist to teach children discipline about saving money.

Joker, you put cash into a brokerage account. Then, when you think the share price of a stock is going to go up, you buy that stock. Then once you have the shares, you set an order to sell them when it goes to a certain price. If it goes up to that price, then your order executes, and you get the money back in your account as a cash balance. Now you have more money than you started with. You owe a little capital gains tax, and you paid a trading fee. Probably 7.99 for the buy and 7.99 for the sell.

“In your view the market is a casino”. Well, thank god your view isn’t what dictates the way things actually are in this scenario. Big guys always win and little guys always lose?

Dude. Economics and moral theory are about as far apart as can be in this context. It’s not a game you play with other individuals where someone wins and someone loses. People buy and sell for different reasons, at different prices, at different times. Some people want to hold forever and don’t care the price and buy at regular intervals to build long term wealth because their short term needs are already met. Some people take bigger risks to make short term money to take care of their immediate needs.

Buying something for a price, and selling it for a higher price is just that. It’s not complicated. Markets aren’t casinos. Learn what it means for a company to profit. Learn how those profits are reported. Learn how to analyze a company’s financials. Then have a good base understanding of how not to get duped by a pump and dump and a hairbrained article written by god knows who, then start deciding what you want to buy and sell. Just do it man.

with love,
sanjay

Yeah, I’ll remember what you both said here when I read stories of poor floor sweepers in Beijing saving what little bit of money that they have in fifteen years time losing it all in one stock market correction. It takes lots of money to make any money or return off of the stock market.

But, but, but Zero, it’s so easy anybody can make money in the stock market… :sunglasses:

Uh-huh, sure it is. :laughing:

You are willfully poor and enjoy being a victim.

No, I am actually studying and bettering myself everyday through hard work which will eventually pay off one way or another.

I’m just not stupid enough to believe in the narrative that anybody can get rich quick playing the stock market.

That’s not the narrative that you’re being given here. We’re saying that if you don’t invest, then you’re not even going to get rich slowly, let alone be able to retire. People don’t retire off money shoved under mattresses. You’ve got to participate in the economy if you’re going to benefit from it, and one day when you’re too old to do any more work, you’re still going to need food, and insurance premiums will be more important to you than ever. Don’t buy into the ridiculous narrative that you can pick up degrees and study your way into financial security.

I’m all about trades man, you know trade schools and occupational trades.

Besides, if I’m right where the global economy does collapse there will be no shortage of suckers out there that I can build wealth off of where better yet everything will be at a premium discount.

Hey, the union trade guys don’t retire off their hourly wage. They retire off their pensions. The longer you wait, the less time you have for using compounding to your advantage. It’s your life man.

Yep, I know about all the pitfalls. I’m just rolling the dice here.

You’ll just have to trust that I know what I am doing. :wink:

I don’t trust shit. That’s your thing.

I don’t trust anything either, I just have a good poker face where I know when to gamble and when not to. Don’t mistake me for naivety, naive I am not.

Yesterday all US indices made new highs encouraged by the US job data. As i see it, there is nothing much to read into the data. Market use to take all these things merely as an excuse to move either ways. The real reason is that the market has crossed the fear cycle and now entering in greed mode, though nobody can predict to which extent this greed will push the market further.

In my opinion, it is right time to withdraw all money from the stocks market and invest in bonds or saving accounts, and keep waiting patiently for the next 5% kind of correction, which will eventually come sooner or later.

It is not a rocket science to earn in stock markets through trading. All one needs in a basic understanding of the market working, which is more about human psychology than anything else. That is precisely why i put this this thread in this section. The second essential ingredient required is patience, though not a little but tons of patience.

Having said that, SIP investors need not to worry, they can continue.

with love,
sanjay

All data in terms of statistics in the United States is purely fabricated revolving around magical thinking, good luck trading that. Also, many are starting to wonder if the bond market is becoming a bubble in which case at some point it will burst.

Stocks in the United States are highly overvalued and I suspect a melt up will occur eventually in a crushing correction.

Well since everyone who’s predicted that has only been right 2 times in the last 100 years, you think it might be wise to just take the risk and get a return like people have every other time except 1929 and 2009?

Sure if I had the capital to do so. (Which I don’t.)

Even if I had money to invest in the market I wouldn’t in this current environment as it is just asking or begging to have your face ripped off.