I dont know how to quantify it, but a lot of it was due to the short vol trade busting. It was the only way to consistently make money the past 2 years or so (being short vol). So everyone was short and it was a race to cover. I think that was the capitulation, but not 100% sure. Would think vol floats back down from here.
That being said, im thinking we sell off massively into the close. Just a gut feeling, lets see if im right.
I'm trying to decide what to do with my robotrader Roth IRA. My understanding is that there are no transaction fees and no taxes, so I'm having a hard time justifying keeping money in the robotrader when I could just exit to cash (in another Roth IRA) and lock in gainzz. Is my understanding incorrect? The only downside is missing out on potential appreciation. No? Edit: The robotrader is Schwab's Intelligent Portfolio
Looks like buying into the close is happening, currently up 250, but with the way today has been we’ll probably close down 150 at this point...
I'm out at 3:15pm. Looking like another dip coming into the close. Might as well get ready to buy again. Please tell me no on in here was on the $XIV train? Gonna be a wild ride here till close.
There was nothing fundamental driving the last two days on the scale that we saw, especially over the last 18 months we’ve grown accustomed to small steps back and (mostly) forward. The mere fear of inflation and moderate rate hikes that we’ve expected for months now shouldn’t have steered the market off 10% in 4 trading days. What I’m getting at is people jumping off a cliff yesterday like it was 2008 again were just panicking. That’s not to say we’re at the floor of this dip by any stretch, but I think the fundamentals of the market are relatively sound, even though we’ve been over due for a correction for months.
Yeah, just today and in my book, taking profits is never a mistake. In again around 3:35 and will ride it till another 'dip'. Edit: Not too shabby for a day. That ends my day.
That’s a game I can’t play, don’t have the stomach for it quite frankly, and I advocate against it for clients all the time haha
Am I to understand he invested all of the money he raised in XIV or other short VIX funds? Not to be an asshole but if that’s the case he deserved to lose all of his money, and his ‘clients’ deserved to lose theirs too.
Is tomorrow one of those days too? Timing the market is a silly thing people seem to love. It’s no more than gambling.
Yeah, I don’t get it, there doesn’t seem to be any logic to a 500 point drop in the last 45 minutes of a trading day with no major news aside from mostly great earnings reports. The 10 year treasury closing in on 3% might be a reason for some cash to exit the market but the volume of selling today again like earlier in the week looms reactionary to me, am I wrong?
Oh no, I get that, I’m just curious is anyone has any other underlying theories on what’s driving it, or if it’s just market idiocy.
False. There are metrics that you can use to give yourself an advantage. The “you can’t beat the market” doesn’t apply to professionals. It’s like anything else, if you want to put the time into it and make it your job, you can be good at it. I can count on my two hands the number of days I lost money last year. 252 trading days and less than 10 losing days. That’s not gambling. Sorry just irks me when people repeat the idea as if it’s impossible to do.
You can lie all you want on here, but you still don’t understand progressive taxation. You’re clearly a fucking moron
These short volatility funds had a ton of money in them. It was easy money for a lot of people for a few years now. They all thought they would have an opportunity to get out before it went bust, but the it was like a big balloon that popped. Now they have announced that one of the big funds is basically closing its doors and wont be a product anymore (XIV). Since that avenue is no longer there to short volatility (there are many other ways, but that was the least risky and most easily accessible way) I think that volatility has to continue for the near future. The Vix has a historical average range of around 20 or so, however, we spent the last few years around life time lows of 10. Additionally, you have a market that was up ~%42 in a year and a half. The long term average return of the market is around %11. From a psychological standpoint i think people are seeing the headlines of a selloff and realize that it might be time to lock in some of their gains. At the same time, with all the tax cuts, the market is looking for a new baseline on the upside. All of this is going to cause people to move money around and trade. I think the volatility (maybe not at this level, but it will be a long time before we see 10 Vix again) From my viewpoint this is a return to a more normal market as opposed to market idiocy.
Hey Lipp let me let you in on a little secret Spoiler This fucking moron made $3mm so far this week. So why don't you stfu
Wouldn’t fight you that we’ve been due for a pull back of 10-15% for some time, I think the idiocy is more tied into the extremity of the volatility. Based on information available there’s virtually no reason for the market to run off 1100 points twice in a five day span, that’s the bit that reads panicky to me, an uptick in volatility is to be expected because we’ve been living in la la land for the past two years with no major volatility, but the magnitude of the volatility we’ve seen this week is silly to me and not fundamentally supported. I’ll be a buyer likely middle of next week pending what the next couple of days looks like.
Not taking sides here but I’m assuming a lot if not all of the money he’s made this week has been for clients and if that’s the case he won’t be posting confirms unless he’s looking for a new job.
You are seeing this volatility because volatility had been artificially tramped down by the likes of XIV. Once they blew out, there is a lot less money to step in and stamp down volatility. Not to mention many hedge funds etc are getting risk calls and forced to cover / trade. Plus, its a long over due correction combined. I would argue that the volatility makes perfect sense.
I have a partner and one employee. I,ll be glad to post a trade log from a couple days if you want me to. It will have to be after the close though.
Once again, how is that different than gambling? There are gambling experts as well who give themselves an advantage. The market is exceptionally more efficient than even gambling markets. Over a long period of time, most "experts" do not beat the index funds. Some do. Congrats if you're one of those people. The fact that I can invest in index funds and do nothing else and still beat a significant portion of "experts" pretty much sums it up nicely.
This is a misnomer, on an extremely elementary level we could look at a number of examples of funds that beat their index since their inception. I mean hell, one of the largest fund companies in the world (American funds) has beaten the index on 17 of their 18 equity focused funds over the lifetime of the fund. Passive investing has worked fine for the last two years because we’ve had so little volatility, volatile markets are where good money managers and active management generally prove their worth.
I think a lot of the volatility we’ve seen this week is from the unwinding of these VIX short positions, whether it’s because they’re selling s&p futures to cover or some other reason I think that’s driving quite a bit of this. Could be completely wrong though.
I took an investing course during my MBA and there was an entire section on how nobody beats the market (legally) over a working life. If it's for retirement, you're not beating the market. It's a fact that has been the case since the inception of the stock market.
I’m assuming you/they are advocating for investing in indexed ETF’s for the entirety of your working life? If it works out for you great but if you’re loaded in an ETF trailing the s&p right before your retirement and we have another 2008, then I guess
The research found that you're going to have the best return if you invest in an ETF that tracks the S&P during your working life at regular intervals. Do not sell or try to time the market because the biggest gains were had over like 10-15 trading days over the course of 15-20 years. If you're out for those days you've lost a good portion of your potential gains for the period. Invest in an ETF with the lowest expense ratio and then, as you mentioned, tailor your holdings to your risk tolerance as you move toward retirement.
On a quick Google search for actively managed mutual funds from 1970-2014, 3 out of 358 beat the benchmark by 2+% (a not unreasonable expense ratio for actively managed funds). Mutual fund universe in 1970 - 358 100.0% Number of funds that survived the entire period - 107 29.9% # of funds that outperformed benchmark 45 -12.6% # of funds that outperformed benchmark by 2%+ 3 0.84%
I will say if you’re trying to do it by yourself this is probably the way to do it, but if we’re being completely honest, most people don’t have the self control or stomach to follow a sound investment strategy their entire working life without someone helping them through it. Investors are irrational, always, they want to hop on something that looks hot only to buy too late or sell to slow (see the annual dalbar study on investor returns trailing the market.). Most people don’t trail the market because they’re actively managed, most people trail the market because they’re trying to time it, and do it poorly.
Fund performance is after costs though and with any benchmark youd have replication costs. For most ishares its about 50 bips or more
We’re also assuming that pure return is the only goal of active management when arguably the more important goal of actively managed money is risk mitigation/risk adjusted returns.