only thing I will day trade is VXX

(08-25-2015 02:28 PM)UofMstateU Wrote:  

(08-25-2015 02:17 PM)VA49er Wrote:  

(08-24-2015 07:51 AM)blunderbuss Wrote:  How many day traders in here? Frankly, I don't worry about this right now but I'm 36. If I were in my 60's I might worry.

Even if one is in their 60s there is not much to worry about if one is properly diversified. I mean, if one is 100 percent stock at that age then one deserves to lose half their nest egg.

Yea, that reminds me of a woman who was older and at retirement age who worked for Enron who said that she lost her entire life savings of $200,000 when Enron collapsed, because she had all of her stock in Enron.

Having all of her stock in Enron was bad, but her claim that she lost $200,000 was a little inflated. Enron's stock went up 5x in value in about 2 years, which meant she only had $40K for retirement as she approached retirement age. So basically, she never saved enough for retirement, but then hit a golden BB when her retirement portfolio increased 5 times over in a matter of months.

And instead of pulling it out into safer investments for retirement, she let it ride...

Wasn't there an issue with employees not being allowed to sell the Enron stock though?

depends on a few things. If I sell stock that I buy through the employee purchase plan, I have to hold it 2 years or it counts as ordinary income. I sell Company stock in my 401k all the time.

(08-25-2015 03:02 PM)NIU007 Wrote:  

(08-25-2015 02:28 PM)UofMstateU Wrote:  

(08-25-2015 02:17 PM)VA49er Wrote:  

(08-24-2015 07:51 AM)blunderbuss Wrote:  How many day traders in here? Frankly, I don't worry about this right now but I'm 36. If I were in my 60's I might worry.

Even if one is in their 60s there is not much to worry about if one is properly diversified. I mean, if one is 100 percent stock at that age then one deserves to lose half their nest egg.

Yea, that reminds me of a woman who was older and at retirement age who worked for Enron who said that she lost her entire life savings of $200,000 when Enron collapsed, because she had all of her stock in Enron.

Having all of her stock in Enron was bad, but her claim that she lost $200,000 was a little inflated. Enron's stock went up 5x in value in about 2 years, which meant she only had $40K for retirement as she approached retirement age. So basically, she never saved enough for retirement, but then hit a golden BB when her retirement portfolio increased 5 times over in a matter of months.

And instead of pulling it out into safer investments for retirement, she let it ride...

Wasn't there an issue with employees not being allowed to sell the Enron stock though?

Enron matched 50 percent of employee contributions up to 6 percent of salary with Enron stock That matching stock evidently could not be sold until age 50. Any additional Enron stock an employee purchased could be sold at any time.

(08-25-2015 03:02 PM)NIU007 Wrote:  

(08-25-2015 02:28 PM)UofMstateU Wrote:  

(08-25-2015 02:17 PM)VA49er Wrote:  

(08-24-2015 07:51 AM)blunderbuss Wrote:  How many day traders in here? Frankly, I don't worry about this right now but I'm 36. If I were in my 60's I might worry.

Even if one is in their 60s there is not much to worry about if one is properly diversified. I mean, if one is 100 percent stock at that age then one deserves to lose half their nest egg.

Yea, that reminds me of a woman who was older and at retirement age who worked for Enron who said that she lost her entire life savings of $200,000 when Enron collapsed, because she had all of her stock in Enron.

Having all of her stock in Enron was bad, but her claim that she lost $200,000 was a little inflated. Enron's stock went up 5x in value in about 2 years, which meant she only had $40K for retirement as she approached retirement age. So basically, she never saved enough for retirement, but then hit a golden BB when her retirement portfolio increased 5 times over in a matter of months.

And instead of pulling it out into safer investments for retirement, she let it ride...

Wasn't there an issue with employees not being allowed to sell the Enron stock though?

There were two issues on this; one is that employees contributing to the Enron matching 401K could not sell the stock until age 50. The other issue was when they froze selling right when the sh*t was going to hit the fan.

That didnt affect those who were way into their 60's who kept their entire portfolio in Enron because is was riding high.

But most of the "I lost all of my $200,000 Enron 401K" was overblown by 5 times over. Their 401K's were worth 20% of that number just months earlier. While still a lot of money, most were afflicted by the fact that one day they realized they are approaching retirement with little in savings, a couple of months later they see their 401K grow by 5 times over, only to see it evaporate.

(08-25-2015 08:45 AM)UofMstateU Wrote:  

(08-25-2015 07:35 AM)QuestionSocratic Wrote:  Futures are up +500. This might be

Its a trap!

Be aware of the big boys and their games. It looked good today, and then there was a 400 point drop in the final hour.

(08-25-2015 03:59 PM)UofMstateU Wrote:  

(08-25-2015 03:02 PM)NIU007 Wrote:  

(08-25-2015 02:28 PM)UofMstateU Wrote:  

(08-25-2015 02:17 PM)VA49er Wrote:  

(08-24-2015 07:51 AM)blunderbuss Wrote:  How many day traders in here? Frankly, I don't worry about this right now but I'm 36. If I were in my 60's I might worry.

Even if one is in their 60s there is not much to worry about if one is properly diversified. I mean, if one is 100 percent stock at that age then one deserves to lose half their nest egg.

Yea, that reminds me of a woman who was older and at retirement age who worked for Enron who said that she lost her entire life savings of $200,000 when Enron collapsed, because she had all of her stock in Enron.

Having all of her stock in Enron was bad, but her claim that she lost $200,000 was a little inflated. Enron's stock went up 5x in value in about 2 years, which meant she only had $40K for retirement as she approached retirement age. So basically, she never saved enough for retirement, but then hit a golden BB when her retirement portfolio increased 5 times over in a matter of months.

And instead of pulling it out into safer investments for retirement, she let it ride...

Wasn't there an issue with employees not being allowed to sell the Enron stock though?

There were two issues on this; one is that employees contributing to the Enron matching 401K could not sell the stock until age 50. The other issue was when they froze selling right when the sh*t was going to hit the fan.

That didnt affect those who were way into their 60's who kept their entire portfolio in Enron because is was riding high.

But most of the "I lost all of my $200,000 Enron 401K" was overblown by 5 times over. Their 401K's were worth 20% of that number just months earlier. While still a lot of money, most were afflicted by the fact that one day they realized they are approaching retirement with little in savings, a couple of months later they see their 401K grow by 5 times over, only to see it evaporate.

Yep, they loved it on the way up but not so much on the way down. Hopefully if nothing else, Enron taught people not to buy compay stock in a 401k. If a company only matches in its stock by no means should an employee buy more of that stock with their own money.

This correction has been long overdue. It'll be interesting to see if it is just a smallcorrection or a major drop, i.e. a return to fair value.

Central planning never works, yet for some reason, the public has been duped into believing that central monetary planning somehow makes sense. Soon, the public will realize that the stock market is way overbought and solely on the basis of the central bank propping things up. It's a bubble waiting to burst.

I'm mostly on the sideline at the moment. I've done some bond laddering and I have some international dividend stocks that'll keep for 30 years, but other than those, not wasting my money in the current casino. If it returns to a normal P/E range, I expect we'd hit around 12,000. If we get there, I will buy in, but I see some of the posts on here and how irrationally exuberant some of you guys are, and I just smh. Has no one learned anything from the '09 financial crisis?

Nothing from the financial crisis was actually fixed! Instead, the FED just did QE (aka a reverse-robin hood) and enriched the banks. All QE does is blow up a bubble, it doesn't fix anything in the economy. By all standard measures, our economy is not good and does not justify these insane stock market valuations. When this bubble burst, it will be worse than the '09 crisis because now the FED has no ammo and we ran up the debt without fixing a god dang thing.

Is it 1929 again ?

(08-25-2015 05:52 PM)Curumim Wrote:  Is it 1929 again ?

Nope.

Nor is it 1987, 2000, 2007/2008.

It's more like 2011.

But of course, it could get worse.

I heard on a podcast today that we average three ~5% corrections per year, and haven't had even one since 2011.

It may get ugly for a while, but I sincerely doubt this is the apocalypse. If you have cash on the sidelines, this could be a hell of an opportunity. I'm keeping my eye on GE, T, DIS, NFLX, AAPL, UNH, WFC, and IBM, and hoping for a few more 1100 point flash crashes.

(08-25-2015 09:01 PM)Kronke Wrote:  I heard on a podcast today that we average three ~5% corrections per year, and haven't had even one since 2011.

It may get ugly for a while, but I sincerely doubt this is the apocalypse. If you have cash on the sidelines, this could be a hell of an opportunity. I'm keeping my eye on GE, T, DIS, NFLX, AAPL, UNH, WFC, and IBM, and hoping for a few more 1100 point flash crashes.

Thats why its called a bubble, and when bubbles burst, it can be nasty.

When the stock market is being propped up by monetary policy, corrections based on value dont happen when they should. Right now the fed cant clear their throat without causing the markets to freak out. Any hint in a change in monetary policy will do it.

But the good news is that there will be a sale in the market for a while. So we can buy at a discount a while longer. Nice to be able to get a breather in there once in a while.

(08-25-2015 03:59 PM)UofMstateU Wrote:  

(08-25-2015 03:02 PM)NIU007 Wrote:  

(08-25-2015 02:28 PM)UofMstateU Wrote:  

(08-25-2015 02:17 PM)VA49er Wrote:  

(08-24-2015 07:51 AM)blunderbuss Wrote:  How many day traders in here? Frankly, I don't worry about this right now but I'm 36. If I were in my 60's I might worry.

Even if one is in their 60s there is not much to worry about if one is properly diversified. I mean, if one is 100 percent stock at that age then one deserves to lose half their nest egg.

Yea, that reminds me of a woman who was older and at retirement age who worked for Enron who said that she lost her entire life savings of $200,000 when Enron collapsed, because she had all of her stock in Enron.

Having all of her stock in Enron was bad, but her claim that she lost $200,000 was a little inflated. Enron's stock went up 5x in value in about 2 years, which meant she only had $40K for retirement as she approached retirement age. So basically, she never saved enough for retirement, but then hit a golden BB when her retirement portfolio increased 5 times over in a matter of months.

And instead of pulling it out into safer investments for retirement, she let it ride...

Wasn't there an issue with employees not being allowed to sell the Enron stock though?

There were two issues on this; one is that employees contributing to the Enron matching 401K could not sell the stock until age 50. The other issue was when they froze selling right when the sh*t was going to hit the fan.

That didnt affect those who were way into their 60's who kept their entire portfolio in Enron because is was riding high.

But most of the "I lost all of my $200,000 Enron 401K" was overblown by 5 times over. Their 401K's were worth 20% of that number just months earlier. While still a lot of money, most were afflicted by the fact that one day they realized they are approaching retirement with little in savings, a couple of months later they see their 401K grow by 5 times over, only to see it evaporate.

There's definitely truth in what you're saying - the people who got rich (on paper) from Enron really got that way by benefiting from Lay/Skilling/Fastow's financial shenanigans, so certainly their losses are overstated.

But your description of the timing is inconsistent, and the numbers are a bit off. First you said "Enron's stock went up 5x in value in about 2 years", then "her retirement portfolio increased 5 times over in a matter of months" then "their 401K's were worth 20% of that number just months earlier". I have to assume you meant years in those last two quotes, not months.

As to the numbers:

Enron peaked at 90.75 on August 23, 2000. This was after a big two-ish year run; the prior local peak was on July 2, 1998 at 27.125 (split-adjusted; it split 2 for 1 in 1999). That's a factor of 3.4x over about 2 years, rather than the 5x you alluded to.

Looking back a little farther, the prior peak was 22.50 on January 13, 1997. So going from that point in time, we're talking a factor of 4x over 3.5 years.

(08-26-2015 07:51 PM)JOwl Wrote:  

(08-25-2015 03:59 PM)UofMstateU Wrote:  

(08-25-2015 03:02 PM)NIU007 Wrote:  

(08-25-2015 02:28 PM)UofMstateU Wrote:  

(08-25-2015 02:17 PM)VA49er Wrote:  Even if one is in their 60s there is not much to worry about if one is properly diversified. I mean, if one is 100 percent stock at that age then one deserves to lose half their nest egg.

Yea, that reminds me of a woman who was older and at retirement age who worked for Enron who said that she lost her entire life savings of $200,000 when Enron collapsed, because she had all of her stock in Enron.

Having all of her stock in Enron was bad, but her claim that she lost $200,000 was a little inflated. Enron's stock went up 5x in value in about 2 years, which meant she only had $40K for retirement as she approached retirement age. So basically, she never saved enough for retirement, but then hit a golden BB when her retirement portfolio increased 5 times over in a matter of months.

And instead of pulling it out into safer investments for retirement, she let it ride...

Wasn't there an issue with employees not being allowed to sell the Enron stock though?

There were two issues on this; one is that employees contributing to the Enron matching 401K could not sell the stock until age 50. The other issue was when they froze selling right when the sh*t was going to hit the fan.

That didnt affect those who were way into their 60's who kept their entire portfolio in Enron because is was riding high.

But most of the "I lost all of my $200,000 Enron 401K" was overblown by 5 times over. Their 401K's were worth 20% of that number just months earlier. While still a lot of money, most were afflicted by the fact that one day they realized they are approaching retirement with little in savings, a couple of months later they see their 401K grow by 5 times over, only to see it evaporate.

There's definitely truth in what you're saying - the people who got rich (on paper) from Enron really got that way by benefiting from Lay/Skilling/Fastow's financial shenanigans, so certainly their losses are overstated.

But your description of the timing is inconsistent, and the numbers are a bit off. First you said "Enron's stock went up 5x in value in about 2 years", then "her retirement portfolio increased 5 times over in a matter of months" then "their 401K's were worth 20% of that number just months earlier". I have to assume you meant years in those last two quotes, not months.

As to the numbers:

Enron peaked at 90.75 on August 23, 2000. This was after a big two-ish year run; the prior local peak was on July 2, 1998 at 27.125 (split-adjusted; it split 2 for 1 in 1999). That's a factor of 3.4x over about 2 years, rather than the 5x you alluded to.

Looking back a little farther, the prior peak was 22.50 on January 13, 1997. So going from that point in time, we're talking a factor of 4x over 3.5 years.

Correct. When I said "months", I was referring to the time horizon one thinks of when an employee loses their entire life savings. The huge numbers made it sound like the employees had lost an enormous amount of money they had contributed over 30-40 years, when in actuality, they had contributed a really small fraction of that amount (They saw their tiny investment grow at a decent rate over the decades, and then due to Lay's shenanigans in the last two years, saw their tiny portfolios grow by about 5x over really quickly.

So I was put off by both the amount of losses they were claiming as their life savings, and the fact that many of them at retirement age had plenty of time to diversify and take a chunk of their money to safer investments, but they let it all ride. In actuality, they had invested very little of their income over the years. A really small amount. And then they hit a pot of gold and basically fell into a decent retirement portfolio, and instead of getting smart, they got greedy at the wrong time.

It doesnt mean it didnt suck. And they did lose their entire savings. But there's a big difference in losing $40K and losing $200K, especially when the additional amount was due to gaming the system.

QE isn't the only artificial force in the market. The 401k is as well. There is consistent regular influx of money month after month year after year that is for the most part blindly invested. When all the boomers quit buying the market is going to bust anyway. This may simply be accelerating the process.

(08-26-2015 08:42 PM)Claw Wrote:  QE isn't the only artificial force in the market. The 401k is as well. There is consistent regular influx of money month after month year after year that is for the most part blindly invested. When all the boomers quit buying the market is going to bust anyway. This may simply be accelerating the process.

Not sure the 401k is to blame. There were other ivestment vehicles before and the market, as usual, moved up and down. People thought the world was ending then and, as usual, the world did not end. I can see QE manipulating the market, but if there was no QE who knows what hades would have broken out. QE has been over for a little while now and the Fed has been signaling for a year that interest rates will rise soon. This recent market downturn is largely due to China and Chinas reaction, etc and how that impacts the entire world.