## Global Selloff, an advice

The origins of the imperative, "know thyself", are lost in the sands of time, but the age-old examination of human consciousness continues here.

### Global Selloff, an advice

I do not have enough time nowadays to keep actively posting here seeing recent global asset class clash, i believe that i can offer some advice or help to those who are involved and to those also who are not involved, thus posting this.

Second point pertinent here is why i am posting this in P&M forum. There is a valid reason for that, at least in my opinion, though mods are free to overrule.

The first thing about stocks and all other asset classes is to understand is that their rates never ever reflect guanine levels. By guanine, i actually means at what levels they should be because of purely fundamental reasons. The rates are more driven by the short term psychology of market participants. Thus, if one wants to make money there, he/she should able to understand human psychology better that the fundamentals of asset classes. And, that is precisely the reason why i put this thread here.

Having said that, it does not mean that the rates ignores fundamental reasons. They also always follow fundamentals, but the actual problem is that they never stops where fundamental reasons suggest. Rates always shoots beyond that on both sides. They either go excessively high or low, depending on the psychology of market participants at any given time.

Another thing to always remember, which is perhaps the most important one especially for those who are actively/regularly
involved with markets, is that all these are artificially manipulated markets. The rates of all major asset classes all over the world are manipulated by a handful the large participants, who do not account more than the 5% of total number. They always manipulate and control the rates in their favor. And, that simply means that it is only those 5% who earns in the end, rest 95% are always bound to lose. What i am saying does not seem to be true but unfortunately it is always. Though, there may be some exceptions.

Just like all other events like elections, where crowd psychology has far more compelling effect than actual benefits or harms, the rates of all asset classes are determined by the greed or fear of market participants. In other words, we can say that there is a continuous election goes on in the markets and the rates are the results of those elections. If the greed is dominant, the results/rates will move higher. The the same way, if the fear is more in the crowd than greed, the rates will go down. This movement happens in the short term to both sides irrespective of fundamentals, though the medium and especially in long term, rates will always moves towards fundamentals levels. But again, the rates will never stops at fundamentals. The short term greed and fear present in the crowd mentality at that future time will again overrule the fundamentals. And, this process goes on and on. That is precisely why rates never remains at where fundamentals ask.

Now comes the million dollar question, what is the way out! Should one always keep away from markets! And, if not, how to deal with this situation! The answer is different for different people.

Those, who do not want to take risk at all or easily gets intimated by the ups and downs of the rates, should not involve at all, irrespective of whether the markets are going up or down. Just stay away.

Those, who want to build wealth in the long term but also ready to take some risk, there is no better option than this route. Actually, there is no risk in real terms. Yes, there can be some illusion of loss in short term but if one is ready to invest systematically in the long run, there will never be loss. But, some planning is certainly required for that.

The best route for these people to go through SIP route. SIP stands for systematic investment plan. SIP means that one puts a certain amount of money monthly in a mutual fund over a long period of time, irrespective of market is down or up. This regular investment method automatically averages out all ups and downs in the long run and the investor gets good returns. The rate of returns may vary for different geographies. As a thumb rule, the rate of return should be around three times of bank deposit rates, especially in developed countries like US. In developing markets, the return may be less, say double of bank deposit rates.

Most people do not understand or believe this but this SIP can create a huge wealth in the long run, far more than one can imagine, and without any hardships too. The only caveat here is that one should invest only surplus money, and one should be able to invest that same amount monthly regularly for years.

Now comes the third category of people, who are ready to take more risk and trade actively in the markets. Philosophically speaking, they should follow a very simple premise, by fear and sell greed. Means, one should buy when the markets are feared thus down and sell when markets are greedy thus up. But, the problem in this is that nobody knows how much greed or fear in the market and to which extant level they will go either way and when the tide will turn. Yes, there are some technical indicators like VIX and put/call ratio to assume that but one can never be sure.

But, history of markets and my personal experience also tell me that all these corrections turn out a decent time to buy over a period of time. People have very short memory. Remember Brexit day or when Trump got elected. Markets all over the world witnessed the same bloodbath and look where are they now. The same will happen this time too. Secondly, there is no such fundamental or major reason this time.

Experts are saying that the markets are falling because the the wages in US are rising, which will ultimately lead to inflation and force Fed to raise interest rates before schedule. Both o this will impact the US growth and it is almost peaking thus the markets will not move higher from present levels. This is causing unwinding of all speculative future long positions across all asset classes thus this selloff. But, as i see it, it seems to be more like an excuse than a reason. Markets are overheated and ran too much ahead of time, especially in last two months. They were looking or excuse or correct. The world economy is expected to grow around 3% next year, thus the markets will also move upwards in the long run.

In my opinion, this is a time to start investing, if anybody is interested. Do not fear the fear but try to buy it.

The easiest and safest way to start SIP immediately, as immediate as today. You are getting things at 10% less price. If one wants to invest onetime, invest 25% of your surplus money. Please remember the word surplus. Do not ever invest that money which you may require after some months. There is a chance that market may see further 5-10% correction, and if not, time correction will come for sure. Time correction means that time will correct, not rates. In other words, the rates will remain same but earning will improve over a period of time and thus rates will once again become cheap relative to present levels. After investing 25% o your surplus money now, one can keep investing 20% more at every 5% fall. Market will not go beyond that. Even if goes, it will recover. And, even if not recover immediately, it slowly will. It may take time but ultimately one will end up handsome gains. That risk with the markets will be always there. If one does not want to take that risk, SIP route is there.

But, remember these opportunities do not come often for common people.

with love,
sanjay
Last edited by zinnat on Tue Feb 06, 2018 10:45 am, edited 1 time in total.

zinnat
Philosopher

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### Re: Global Selloff, an advice

Brilliant.
You see...a pimp's love is very different from that of a square.
Dating a stripper is like eating a noisy bag of chips in church. Everyone looks at you in disgust, but deep down they want some too.

What exactly is logic? -Magnus Anderson

Support the innocence project on AmazonSmile instead of Turd's African savior biker dude.
http://www.innocenceproject.org/

Mr Reasonable
resident contrarian

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Location: pimping a hole straight through the stratosphere itself

### Re: 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

zinnat
Philosopher

Posts: 3537
Joined: Sun Sep 09, 2012 7:27 pm

### Re: Global Selloff, an advice

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.
You see...a pimp's love is very different from that of a square.
Dating a stripper is like eating a noisy bag of chips in church. Everyone looks at you in disgust, but deep down they want some too.

What exactly is logic? -Magnus Anderson

Support the innocence project on AmazonSmile instead of Turd's African savior biker dude.
http://www.innocenceproject.org/

Mr Reasonable
resident contrarian

Posts: 25948
Joined: Sat Mar 17, 2007 8:54 am
Location: pimping a hole straight through the stratosphere itself

### Re: Global Selloff, an advice

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.
You see...a pimp's love is very different from that of a square.
Dating a stripper is like eating a noisy bag of chips in church. Everyone looks at you in disgust, but deep down they want some too.

What exactly is logic? -Magnus Anderson

Support the innocence project on AmazonSmile instead of Turd's African savior biker dude.
http://www.innocenceproject.org/

Mr Reasonable
resident contrarian

Posts: 25948
Joined: Sat Mar 17, 2007 8:54 am
Location: pimping a hole straight through the stratosphere itself

### Re: Global Selloff, an advice

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

zinnat
Philosopher

Posts: 3537
Joined: Sun Sep 09, 2012 7:27 pm

### Re: Global Selloff, an advice

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.
"I'm sorry, but the lifestyle you've ordered that you've grown accustomed to is completely out of stock. Have a nice day! "-$$Zero_Sum Evil Neo-Nazi Extraordinaire. Posts: 2876 Joined: Thu Nov 30, 2017 7:05 pm Location: U.S.S.A- Newly lead Bolshevik Soviet block. Also known as Weimar America. ### Re: Global Selloff, an advice 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. You see...a pimp's love is very different from that of a square. Dating a stripper is like eating a noisy bag of chips in church. Everyone looks at you in disgust, but deep down they want some too. What exactly is logic? -Magnus Anderson Support the innocence project on AmazonSmile instead of Turd's African savior biker dude. http://www.innocenceproject.org/ Mr Reasonable resident contrarian Posts: 25948 Joined: Sat Mar 17, 2007 8:54 am Location: pimping a hole straight through the stratosphere itself ### Re: Global Selloff, an advice Zero_Sum wrote: 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. It is casino only or those who treat it as a casino, not for systematic long terms investors. I also see a big correction which I believe will wipe out the wealth of all nations across the globe. Nothing of that kind is going to happen. These are regular behavior of the markets, which should not bother long term investors at all. Expect the return from stock markets only to the tune of two times of bank interest rate, and you will always end up earning more than that, of course, in the long run. with love, sanjay zinnat Philosopher Posts: 3537 Joined: Sun Sep 09, 2012 7:27 pm ### Re: Global Selloff, an advice 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.... Uh-huh, sure it is. "I'm sorry, but the lifestyle you've ordered that you've grown accustomed to is completely out of stock. Have a nice day! "-$$$Zero_Sum Evil Neo-Nazi Extraordinaire. Posts: 2876 Joined: Thu Nov 30, 2017 7:05 pm Location: U.S.S.A- Newly lead Bolshevik Soviet block. Also known as Weimar America. ### Re: Global Selloff, an advice You are willfully poor and enjoy being a victim. You see...a pimp's love is very different from that of a square. Dating a stripper is like eating a noisy bag of chips in church. Everyone looks at you in disgust, but deep down they want some too. What exactly is logic? -Magnus Anderson Support the innocence project on AmazonSmile instead of Turd's African savior biker dude. http://www.innocenceproject.org/ Mr Reasonable resident contrarian Posts: 25948 Joined: Sat Mar 17, 2007 8:54 am Location: pimping a hole straight through the stratosphere itself ### Re: Global Selloff, an advice Mr Reasonable wrote: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. "I'm sorry, but the lifestyle you've ordered that you've grown accustomed to is completely out of stock. Have a nice day! "-$$Zero_Sum Evil Neo-Nazi Extraordinaire. Posts: 2876 Joined: Thu Nov 30, 2017 7:05 pm Location: U.S.S.A- Newly lead Bolshevik Soviet block. Also known as Weimar America. ### Re: Global Selloff, an advice 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. You see...a pimp's love is very different from that of a square. Dating a stripper is like eating a noisy bag of chips in church. Everyone looks at you in disgust, but deep down they want some too. What exactly is logic? -Magnus Anderson Support the innocence project on AmazonSmile instead of Turd's African savior biker dude. http://www.innocenceproject.org/ Mr Reasonable resident contrarian Posts: 25948 Joined: Sat Mar 17, 2007 8:54 am Location: pimping a hole straight through the stratosphere itself ### Re: Global Selloff, an advice Mr Reasonable wrote: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. "I'm sorry, but the lifestyle you've ordered that you've grown accustomed to is completely out of stock. Have a nice day! "-$$$

Zero_Sum
Evil Neo-Nazi Extraordinaire.

Posts: 2876
Joined: Thu Nov 30, 2017 7:05 pm
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### Re: Global Selloff, an advice

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.
You see...a pimp's love is very different from that of a square.
Dating a stripper is like eating a noisy bag of chips in church. Everyone looks at you in disgust, but deep down they want some too.

What exactly is logic? -Magnus Anderson

Support the innocence project on AmazonSmile instead of Turd's African savior biker dude.
http://www.innocenceproject.org/

Mr Reasonable
resident contrarian

Posts: 25948
Joined: Sat Mar 17, 2007 8:54 am
Location: pimping a hole straight through the stratosphere itself

### Re: Global Selloff, an advice

Mr Reasonable wrote: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.
"I'm sorry, but the lifestyle you've ordered that you've grown accustomed to is completely out of stock. Have a nice day! "-$$Zero_Sum Evil Neo-Nazi Extraordinaire. Posts: 2876 Joined: Thu Nov 30, 2017 7:05 pm Location: U.S.S.A- Newly lead Bolshevik Soviet block. Also known as Weimar America. ### Re: Global Selloff, an advice I don't trust shit. That's your thing. You see...a pimp's love is very different from that of a square. Dating a stripper is like eating a noisy bag of chips in church. Everyone looks at you in disgust, but deep down they want some too. What exactly is logic? -Magnus Anderson Support the innocence project on AmazonSmile instead of Turd's African savior biker dude. http://www.innocenceproject.org/ Mr Reasonable resident contrarian Posts: 25948 Joined: Sat Mar 17, 2007 8:54 am Location: pimping a hole straight through the stratosphere itself ### Re: Global Selloff, an advice Mr Reasonable wrote:I don't trust shit. That's your thing. I don't trust anything either, I just have a good poker face where I know when to gamble and when not to. Don't mistake me for naivety, naive I am not. "I'm sorry, but the lifestyle you've ordered that you've grown accustomed to is completely out of stock. Have a nice day! "-$$$Zero_Sum Evil Neo-Nazi Extraordinaire. Posts: 2876 Joined: Thu Nov 30, 2017 7:05 pm Location: U.S.S.A- Newly lead Bolshevik Soviet block. Also known as Weimar America. ### Re: Global Selloff, an advice 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 zinnat Philosopher Posts: 3537 Joined: Sun Sep 09, 2012 7:27 pm ### Re: Global Selloff, an advice 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. "I'm sorry, but the lifestyle you've ordered that you've grown accustomed to is completely out of stock. Have a nice day! "-$$Zero_Sum Evil Neo-Nazi Extraordinaire. Posts: 2876 Joined: Thu Nov 30, 2017 7:05 pm Location: U.S.S.A- Newly lead Bolshevik Soviet block. Also known as Weimar America. ### Re: Global Selloff, an advice Well since everyone who's predicted that has only been right 2 times in the last 100 years, you think it might be wise to just take the risk and get a return like people have every other time except 1929 and 2009? You see...a pimp's love is very different from that of a square. Dating a stripper is like eating a noisy bag of chips in church. Everyone looks at you in disgust, but deep down they want some too. What exactly is logic? -Magnus Anderson Support the innocence project on AmazonSmile instead of Turd's African savior biker dude. http://www.innocenceproject.org/ Mr Reasonable resident contrarian Posts: 25948 Joined: Sat Mar 17, 2007 8:54 am Location: pimping a hole straight through the stratosphere itself ### Re: Global Selloff, an advice Mr Reasonable wrote:Well since everyone who's predicted that has only been right 2 times in the last 100 years, you think it might be wise to just take the risk and get a return like people have every other time except 1929 and 2009? Sure if I had the capital to do so. (Which I don't.) Even if I had money to invest in the market I wouldn't in this current environment as it is just asking or begging to have your face ripped off. "I'm sorry, but the lifestyle you've ordered that you've grown accustomed to is completely out of stock. Have a nice day! "-$$$

Zero_Sum
Evil Neo-Nazi Extraordinaire.

Posts: 2876
Joined: Thu Nov 30, 2017 7:05 pm
Location: U.S.S.A- Newly lead Bolshevik Soviet block. Also known as Weimar America.

### Re: Global Selloff, an advice

So the rich aren't getting richer?
You see...a pimp's love is very different from that of a square.
Dating a stripper is like eating a noisy bag of chips in church. Everyone looks at you in disgust, but deep down they want some too.

What exactly is logic? -Magnus Anderson

Support the innocence project on AmazonSmile instead of Turd's African savior biker dude.
http://www.innocenceproject.org/

Mr Reasonable
resident contrarian

Posts: 25948
Joined: Sat Mar 17, 2007 8:54 am
Location: pimping a hole straight through the stratosphere itself

### Re: Global Selloff, an advice

Just as i were expecting, the greed mode of markets did not last much and fear again has taken over. The time of investing is coming again, perhaps as soon as today. If markets fall 2/3% more today or during next week, it would be right time to start investing again. If markets complete a fall around 5% from the peak, 25% of the capital should be deployed. But, this should be kept in the mind that the markets may not bounce again in a hurry or even go down further. To cope up with that situation, rest of the capital should be divided into four parts and deployed at every 5% of further fall.

This should be kept in the mind that this 20-25% kind of fall may happen and markets may not recover immediately from there. It may take months to recover from there. But, this is the risk that market participants have to take, otherwise they should not be in the market.

Less rewarding but much safer way is to start or increase SIP.

with love,
sanjay

zinnat
Philosopher

Posts: 3537
Joined: Sun Sep 09, 2012 7:27 pm

### Re: Global Selloff, an advice

If Zero were drafting 200 bucks a month into oil, trains and missiles, he'd be getting more for his money right now as Trump continues to push the market down.
You see...a pimp's love is very different from that of a square.
Dating a stripper is like eating a noisy bag of chips in church. Everyone looks at you in disgust, but deep down they want some too.

What exactly is logic? -Magnus Anderson

Support the innocence project on AmazonSmile instead of Turd's African savior biker dude.
http://www.innocenceproject.org/

Mr Reasonable
resident contrarian

Posts: 25948
Joined: Sat Mar 17, 2007 8:54 am
Location: pimping a hole straight through the stratosphere itself

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