Yeah, because the precious metals market isn't manipulated at all.

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I'm beginning to think that we are much more fucked than I thought.

A couple of things:

1) Ignore the noise
2) It was probably already priced into the market

Seriously, many are making too big a deal about this. As I write this, the Dow is at 17,480. Some perspective:

1) The Dow broke 17,480 for the first time back in Nov 2014
2) It peaked at 18,300 in May 2015
3) It dropped to 15,600 in August 2015
4) Went back up to 17,900+ in November 2015
5) Plunged back down to 15,600 in March 2016
6) Back up to 18,100 in April 2016
7) It was at 17,435 on May 19, 2016!!!

People are having a shit for no good reason. That said, I'll be buying some today just for a slight discount and because my time of horizon is 10+ years.

Part of the problem is that people hear "Dow drops 500 points" and think all hell has broken loose. In absolute magnitude that may sound bad (my god, 500 points!!!). But it's down ~3% compared to yesterday. It's also essentially up 0% since the start of the year.

High frequency trading probably has a bigger effect day to day than Brexit. A financial planner buddy of mine complains all the time about the volatility of the market and puts much of that squarely on HFT. People are too quick to react.

Market crash? What market crash?

We KNEW the vote was going to take place a LONG time in advance and every poll out there was saying it was going to be close. //

You are really missing the point myself and others are tying to make to you. Yes the vote was supposed to be close, but most all the bets were placed that they would stay. If they had stayed, it would have been a ho hum day in the markets, because that is what they expected, and bet on. You are under some illusion that no one bet on the outcome, and if that were the case, nothing would have happened in the markets.


Today and the next few weeks are just sorting out all the wrong bets on this outcome. You may think it was 50/50 going in( it was not, odds makers had it 9/2 to stay and 6/1 to leave, very far from 50/50), but all that money bet at the bookies and the market had the odds heavily tilted to a stay win. The money bet sets the odds, I think that is where you are getting confused. Does not matter what the polls say, or people, the money speaks. SO it spoke wrong in this case in the months leading up to this, and now those people have to pay off the winners on the other side..

The point was that you might be faced with two possible, equally likely outcomes, one of which is far more desirable and one far less, in terms of the economy and investing. It isn't simply a matter of something being known or unknown, or to what degree.

Let me put it this way. Let's say there is a known 50/50 chance of a certain outcome. In one scenario the market drops 50%, in the other the market goes up 50%. Why does one not position themselves so that they at very least break even no matter the outcome? Why would one put themselves in one or the other position?

If there is a 50/50 chance of Johnson getting in and the economy taking off or Sanders getting in and us heading into a depression...why not pull out entirely and wait for the outcome? If you're hell bent on attempting to make money then you only but on the table what you're willing to lose like any gambling.

I absolutely get what you're saying but the determining factor here is that there were no unknowns of any extent to attempt to make money on and people attempted to anyway. Either we have to assume they are dumb as shit or can't read a poll.

~Matt

Yes the vote was supposed to be close, but most all the bets were placed that they would stay.

Many of the polls showed a dead heat. Most leaned remain. Some showed leave. Oh and gee, polls are entirely always reliable. Betting so strongly one way under such conditions is to simply ignore reality of the situation. As I said, irrational...or just plane stupid.

You are under some illusion that no one bet on the outcome, and if that were the case, nothing would have happened in the markets.

No I'm under the belief that you don't "Bet" against the facts and the facts pretty clearly showed an unclear outcome. It wasn't like this was a done deal or anything. The polls were close and several disputed the consensus.

it was not, odds makers had it 9/2 to stay and 6/1 to leave, very far from 50/50

Call me crazy but if some people are claiming 6/1 or 9/2 in one direction and other people are claiming something else. I'm playing it a little closer to the vest. Again, not like polls have never been wrong.

~Matt

Let me put it this way. Let's say there is a known 50/50 chance of a certain outcome. In one scenario the market drops 50%, in the other the market goes up 50%. Why does one not position themselves so that they at very least break even no matter the outcome? Why would one put themselves in one or the other position?

Partly because the point of investing isn't to break even, I suppose. There is risk involved, right?

Mostly, though, because you probably just can't position yourself to break even in that scenario. You have a 50% of a great outcome, and a 50% chance of a disastrous outcome. You hope like hell for the great outcome.



If there is a 50/50 chance of Johnson getting in and the economy taking off or Sanders getting in and us heading into a depression...why not pull out entirely and wait for the outcome?

That's the safer route, of course, but also comes with risks of its own. You "win" in that case if Sanders gets elected. If Johnson wins, you lose.

Would you, as a business owner, just shut down your business to wait and see who won the election? Of course not. You might think that Sanders would drive your business into the ground, but you're not going to just sit on the sidelines until election day. You're going to keep your business running and hope like hell Johnson wins.

Investors are just business owners who are more removed from the business than you are, right? In theory.

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"People think it must be fun to be a super genius, but they don't realize how hard it is to put up with all the idiots in the world."

I hope that whole post was supposed to be bolded in pink. Because it demonstrates exactly the kind of irrationality Matt is talking about.

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"People think it must be fun to be a super genius, but they don't realize how hard it is to put up with all the idiots in the world."

Vitus beat me up to it. I just wanted to point that your assumption on the market outcome was irrational too.

I just wanted to point that your assumption on the market outcome was irrational too.

You can't judge the outcome on a few hours. Let the dust settle and see how the markets adjust.

I meant Matt's assumption that the market should have reacted in a certain way since it was known (not specific market outcome).

This^^^

Portfolio goes down, but I see it as getting little discount on my next 401k deposit and the market will correct over the next few months...net-net we all lose some virtual dollars in the short term but ultimately regain them, and unless you're retired and stupidly still heavily invested in the market then it makes no difference. The ONLY thing that would ever change my opinion wrt buy-and-hold and a basic diversified portfolio is if the dollar goes bust, US starts defaulting on loans and the markets collapse. I mean, even in 2008 people lost a boatload of virtual dollars but recovered them over the last eight years...what does it matter, unless you're speculating and doing a shitty job of it?

Partly because the point of investing isn't to break even, I suppose. There is risk involved, right?

The risk is supposed to lean toward being able to make money. You have a really hard time making money on a 50/50 consistently so the risk is simply not worth it.

Mostly, though, because you probably just can't position yourself to break even in that scenario. You have a 50% of a great outcome, and a 50% chance of a disastrous outcome. You hope like hell for the great outcome.

Why not? Invest long and short. Whatever you lose on one end you gain on the other.

Would you, as a business owner, just shut down your business to wait and see who won the election? Of course not. You might think that Sanders would drive your business into the ground

On a 50/50 chance of A) Johnson wins and things get better and B) Sanders wins and my business is worthless. You bet I shut down. The best case scenario is to let someone else buy me out and walk away, I.E. "Get out entirely".

Reality is however that that isn't the case and that wasn't the case with Brexit. There was a risk that if they stayed things would go up a little and if they left things would go down a little. IT wasn't a win or lose all situation so why someone would bet on one or the other on a 50/50 is beyond me.

Same case. If Sanders gets in my business goes down 5%. If Johnson gets in my business goes up 5%. I do my best to not lose the 5% and be prepared to take advantage of the 5% increase. You balance the two out for the most up and least down. You don't bet the farm on one or the other...which appears to be what happened here.

~Matt

I just wanted to point that your assumption on the market outcome was irrational too.

Why is it irrational to expect people to not react to that which is foreseeable? Again irrational is dropping a deuce over the fact that the coin landed on heads. Rational is not reacting at all because you have a 50/50 chance of that happening in any given flip.

~Matt

You don't bet the farm on one or the other...which appears to be what happened here.

??

No it doesn't. It looks like people got what they think bad news, and dumped some stock. It's not like a ton of people heard that the odds makers said Brexit was going to fail, and smashed open their piggy banks to invest everything in the market, then lost. They had money in the market, some event occurred that they think is going to be unfavorable to the market, and they sold.

Whether or not they're right about the negative impact of Brexit, and whether or not they're overreacting hysterically is kind of a different issue. But it's not unreasonable in itself to make investing decisions- to buy or to sell- depending on what's going on in the world.

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"People think it must be fun to be a super genius, but they don't realize how hard it is to put up with all the idiots in the world."

So, I had a chuckle this morning when I went on the MarketWatch website. The headline read,

"Stocks slump as Brexit fears resurface after long weekend."

We were commenting on the market a few weeks ago and on June 24th I wrote the following,

"Back in 2011, I was in the market and on a daily basis would read headlines related to the "Euro Crisis", another one of the events that was going to end civilization as we know it. The markets would go down on a Monday with the headlines "Euro crisis has Investors worried". The following day, the markets would jump and you read "Fears of a Euro Crisis are over". This would repeat itself over and over."

Looks like history is repeating itself again. These headlines will continue for a while, particularly as other countries hold elections.

The writers have no clue as to why the stocks are going up and down, but the headlines sure get people's attention.

^This answer, along with "it depends". Ignore the posters on here that convey some prescient market-timing ability. Keeping your line in the water will catch you more fish over the long haul. "It depends" because based on your age and personal financial situation, you may want to move to a different "fishing hole", i.e. something with more safety, dividends, lower vol, etc. People like to throw out rental income which does move nicely with inflation but unless you have a few properties it is a bit of a pain as compared to investing in commercial or resi REITs.

One more thing - everything is correlated. When the pound dropped to multi-decade lows, the MX peso got crushed as well. That's one of many examples, and the geniuses at long term capital mgmt learned the hard way in the late 90s.

S&P 500 all-time record today. Just saying.

Meh, that was yesterday, have you seen today? Market is going to crash. It's just a matter of when and how much.

It's always a question of when and how much.

Just like the market rising is always a question of when and how much.

Exactly.

OK, so now that we've established that markets can go up or down, my point here is that it's at an all time high very shortly after MJuric was fretting over what Brexit had done to the market.

OK, so now that we've established that markets can go up or down, my point here is that it's at an all time high very shortly after MJuric was fretting over what Brexit had done to the market.

I sold all my stocks the week before Brexit and it had nothing to do with that. I think stocks are overpriced and U.S corporations have done very little in terms of how they utilize their cash. I think the markets will crash and am prepared to sit out for a few years because of the problems I see. I expect that within the few years I sit out, the market will hit all time highs and maybe go way down but until the problems I see are addressed it doesn't matter to me.

The last thing I will do is try to time the market and jump in or out based on headlines. The markets are high now and I think a lot of stocks are way over-priced. As for Brexit, that isn't settled yet and may not be for a few years. Other countries could do the same as the UK and leave or things might work out just fine.

Either way, it's a little early to point out that Matt was wrong given the Brexit is only a week old. He is wrong at this moment, but things could change in the next year.

Ugh! We went over this a few weeks ago. You are timing the market. Getting out completely is the first hint. Calling it 'the market" is the second hint. Not accepting that some stocks are still a bargain is the third hint. Please stop it!!!!!!!

Ugh! We went over this a few weeks ago. You are timing the market. Getting out completely is the first hint. Calling it 'the market" is the second hint. Not accepting that some stocks are still a bargain is the third hint. Please stop it!!!!!!!

I sold because I think the market is overvalued and had no plans to re-enter based on if the market goes up or down. I invested for the long-term 8 years ago to hold dividend paying stocks.

I sold them all because I felt the stocks I had were over valued and in general, the U.S corporations have done poorly in terms of spending their large cash reserves so I sold. I just bought into a CPA partnership so will not be re-investing in the markets again. If that meets the definition of timing, then I timed the market. I'm not really sure what difference it makes to be honest.