Dow falls 1,191 points -- the most in history

[Catlady]

we had a 20% decline just about in 2018

According to this article in the Washington Post, only the Nasdaq was in bear market territory, the others were in correction. Not sure, but I think the definition of bear market is 20% correction for all THREE and for at least 3 months. I could be wrong. Dow was ''only'' down 18.7% and S&P 19.8%, so not officially a bear market at the end of 2018.
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https://www.washingtonpost.com/busi...df9dc8-0d32-11e9-8938-5898adc28fa2_story.html

The three-month slide included a dramatic drop in the FAANG stocks — Facebook, Amazon, Apple, Netflix and Google parent Alphabet — and culminated in the worst Christmas Eve market drop in history.
The Christmas Eve sell-off came on the heels of phone calls from Treasury Secretary Steven Mnuchin to major U.S. banks. Instead of calming markets, the unorthodox phone calls worried investors and the Dow dropped 653 points, or just under 3 percent.

When markets opened Dec. 26, the Nasdaq was deep in bear-market territory and the S&P was close behind. Bear markets are generally measured as a 20 percent retreat from recent highs. All three indexes had descended into a correction, which is a 10 percent decline.
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https://www.cbsnews.com/news/whats-a-bear-market-and-how-long-might-it-last/

All told, the Dow closed in holiday-shortened Christmas Eve trading at 21,792. That's 18.7 percent below its record close of 26,828.39 on Oct. 3. The S&P 500 index ended at 2,351. It's now down 19.8 percent from its high of 2,930.75 on Sept. 20. The Nasdaq has dropped to 6,193, or 23.6 percent below its peak of 8,109.69 on Aug. 29.

 

[fmdog44]

If memory serves me right previous virus scares pushed the markets down around 13-15%.

 

[oldmontana]

i have been reducing the equities over the last year after 11 years of a bull . however the supporting assets i bought are as volatile as stocks , TLT my long treasury bond fund is up 30% over the 1 year ... my gold is up over 20% over the one year .

so while i reduced equities i bought more of these other assets which soared instead .

now i will start to take profits in gold and long term treasuries and go back to my typical growth and income model pocketing multiple 6 figures in profit based on what i can buy it back for now.

typically i run 40-50% equities but i was not comfortable with a non defensive portfolio with china and the chaos in washington so i started to shift to an all weather model pre the drop .

the model was 25% in a total market fund

25% short term treasuries

25% long term treasuries TLT

25% GOLD SGOL OR GLD

plus i use a 25% equity model that is geared for income and is 67% less volatile then the s&p 500.

the two stood up very well and held the drop so far to a mere 3%

Good for you.

If you want to be safe you could buy CD's and Government treasure bonds and hold them to maturity..a safe and boring way to invest but you will not make the money that you do with good divided paying stocks over the years.

 

[mathjak107]

Good for you.

If you want to be safe you could buy CD's and Government treasure bonds and hold them to maturity..a safe and boring way to invest but you will not make the money that you do with good divided paying stocks over the years.

I never hold them until maturity, nor do I buy individual bonds .i trade bond funds like Tlt for big profits ... stop with your nonsense ...dividend stocks are stocks ,,when discussing the fixed income side of a balanced portfolio they have nothing in common .

you do understand the difference between the use of stocks and bonds in a diversified portfolio I hope. they don’t replace one another .

 

[Aunt Bea]

The drop in the market doesn't bother me as much as the increase in capital gains generated by the mutual fund managers selling to lock-in gains.

The gains get automatically reinvested in the fund but I have to reach into my pocket and pay taxes on them, it's like getting kicked twice.

 

[mathjak107]

The drop in the market doesn't bother me as much as the increase in capital gains generated by the mutual fund managers selling to lock-in gains.

The gains get automatically reinvested in the fund but I have to reach into my pocket and pay taxes on them, it's like getting kicked twice.

ETF’s don’t have that problem .....

but the flip side is these mutual funds will have plenty of losses to as theystill trade in and out of everything , not just winners ....we could assume they are doing tax loss harvesting as well

 

[OneEyedDiva]

The drop in the market doesn't bother me as much as the increase in capital gains generated by the mutual fund managers selling to lock-in gains.

The gains get automatically reinvested in the fund but I have to reach into my pocket and pay taxes on them, it's like getting kicked twice.

And this is why I'm glad that 62% of my portfolio is in a Roth. I remember that financial advisors used to recommend that Roths and Roth conversions were for people who made X amount of dollars (more than I made) or expected to have as much or more income in retirement. That never made sense to me. People who will have less income in retirement certainly need to have tax free distributions just as much or more than those with higher incomes.

 

[mathjak107]

And this is why I'm glad that 62% of my portfolio is in a Roth. I remember that financial advisors used to recommend that Roths and Roth conversions were for people who made X amount of dollars (more than I made) or expected to have as much or more income in retirement. That never made sense to me. People who will have less income in retirement certainly need to have tax free distributions just as much or more than those with higher incomes.

it can work both ways .....while Roth’s have other perks , from strictly a tax stand point they may not work as well in some cases .

for someone who writes off those traditional ira and traditional 401k deductions at high tax levels working while they have maybe two paychecks coming in , the tax gods give us all a big benefit ..

If they are delaying social security and have non taxable sources of retirement income for a few years like cash set a side , over funded life policies , the zero capital gains bracket in a taxable account ,some roth money , they can draw out up to 24k a year totally tax free as a couple using just the standard deduction as a couple ...

delaying to age 70 can see 8 years of tax free withdrawals of up to 24k a year tax free or up to 40k a year at less than 5% tax ....that is money written off at not only peak earning years but possibly two checks coming in .

that beats a Roth any day that has taxes paid and the use of the tax money paid up front gone forever and no longer generating gains for what could be decades .

so it is not a slam dunk with a Roth ..it varies case by case

most people don’t really know how to compare properly

 

[mathjak107]

Roth’s are a slam dunk when those with normal glide paths in their job or career start very early on .
Typically unless you have a non normal glide path in pay like a doctor,lawyer ,etc who come in at high levels of pay we typically ramp up over decades .

we start very low and go up over 30-40 years ....starting early on with a Roth will have your overall tax rate average lower than your final years pay ....

most people compare wrong ..they look at their highest levels of pay in the final years and go we will be in a lower tax bracket in retirement...the reality is for most of us our average tax bracket spanning decades will actually be lower than our retirement bracket more often than not .

Conversions bypass those decades of doing Roth’s early on and you lose the ability to have that lower career average tax bracket going in a Roth

to bad we did not have Roth’s early on in our careers ..most of us would have done very well with them .....now it is variable from situation to situation for us as to what will be better

 

[OneEyedDiva]

it can work both ways .....while Roth’s have other perks , from strictly a tax stand point they may not work as well in some cases .

for someone who writes off those traditional ira and traditional 401k deductions at high tax levels working while they have maybe two paychecks coming in , the tax gods give us all a big benefit ..

If they are delaying social security and have non taxable sources of retirement income for a few years like cash set a side , over funded life policies , the zero capital gains bracket in a taxable account ,some roth money , they can draw out up to 24k a year totally tax free as a couple using just the standard deduction as a couple ...

delaying to age 70 can see 8 years of tax free withdrawals of up to 24k a year tax free or up to 40k a year at less than 5% tax ....that is money written off at not only peak earning years but possibly two checks coming in .

that beats a Roth any day that has taxes paid and the use of the tax money paid up front gone forever and no longer generating gains for what could be decades .

so it is not a slam dunk with a Roth ..it varies case by case

most people don’t really know how to compare properly

And your second to last sentence can be said for so many things MJ. When I first started investing in a Roth, 401Ks weren't around and if they were, my job didn't offer them because we had pensions. I actually did both...I contributed to a traditional IRA for awhile. I did not delay, nor would I have delayed taking my SS until age 70. Truth be told, I didn't think I'd live this long (health issues, same as what killed my sister at age 63....and she was waiting until 66).

 

[oldmontana]

I never hold them until maturity, nor do I buy individual bonds .i trade bond funds like Tlt for big profits ... stop with your nonsense ...dividend stocks are stocks ,,when discussing the fixed income side of a balanced portfolio they have nothing in common .

you do understand the difference between the use of stocks and bonds in a diversified portfolio I hope. they don’t replace one another .

"... stop with your nonsense ...dividend stocks are stocks ,,when discussing the fixed income side of a balanced portfolio they have nothing in common "

nonsense? Only in your opinion which after reading your posts I question your ability to understand others.

FYI I stated...If you want to be safe you could buy CD's and Government treasure bonds and hold them to maturity..a safe and boring way to invest but you will not make the money that you do with good divided paying stocks over the years.

Yes, stocks are stocks you are correct on that.

I do know the difference between stocks and bonds

And you can have a fixed income portfolio with stocks.

 

[mathjak107]

And your second to last sentence can be said for so many things MJ. When I first started investing in a Roth, 401Ks weren't around and if they were, my job didn't offer them because we had pensions. I actually did both...I contributed to a traditional IRA for awhile. I did not delay, nor would I have delayed taking my SS until age 70. Truth be told, I used to never think I'd live that long (health issues, same as what killed my sister at age 63....and she was waiting until 66).

If you are going to do comparisons and compare apples to apples the individual what if’s have to be eliminated .... not everything will ever apply to every body .....each situation is unique to you ....but once you have a check list you can see what applies and what doesn’t.

none of us older folks even had 401ks until the late 1980’s if we had them at all.

but people today have a lot more choices than we did

 

[OneEyedDiva]

If you are going to do comparisons and compare apples to apples the individual what if’s have to be eliminated .... not everything will ever apply to every body .....each situation is unique to you ....but once you have a check list you can see what applies and what doesn’t.

none of us older folks even had 401ks until the late 1980’s if we had them at all.

but people today have a lot more choices than we did

Yes they do. Too bad many aren't taking full advantage. Re: "...each situation is unique to you" Well I know that!