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What would it take to have a 1929-1932 Crash
#1
We're going through a minor market drop now, and 2007/2009 was a serious crash due to the financial crisis, but what do you think would cause a really bad crash and how would you react?

Here in Canada the drop in Oil prices, plus the China problems are causing the current situation.  If our Housing market crashed than we would really see a serious drop in the market.  Would it affect my portfolio, certainly but only as far as market value.  I doubt my dividend income would drop or not continue to grow (that's my best guess).  At worst one or two may cut their dividend and my income may drop slightly (worst case).

Here's an interesting analysis on Dividends:
http://awealthofcommonsense.com/getting-to-4/
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#2
(02-01-2016, 03:33 PM)cannew Wrote: We're going through a minor market drop now, and 2007/2009 was a serious crash due to the financial crisis, but what do you think would cause a really bad crash and how would you react?

Personally, I try not to look at the top-down level of the bigger market, but just look for what's undervalued on my shopping list of companies.  I just keep adding every month to whatever's the best opportunity at the time.  There's always so many world events that could impact the market in a major way, but you never know which one would be the straw that broke the camel's back, so to speak.  Disease, war, oil price volatility, political changes, environmental issues, etc.
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#3
Lemmings. I'd watch them jump then buy more.

BLTN
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#4
A prolonged slump in oil prices that leads to oil companies and some countries defaulting on their debt, which would lead to bank failures, deflation, and other associated problems.
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#5
(02-05-2016, 02:58 AM)EricL Wrote: A prolonged slump in oil prices that leads to oil companies and some countries defaulting on their debt, which would lead to bank failures, deflation, and other associated problems.

Yep, agreed.  Oil affects all industries.
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#6
A Citi analyst is calling it "Oilmageddon." Though that seems to be more of a prolonged recession scenario and not a doomsday / collapse scenario of the type cannew is asking about. 

Apart from pandemic, alien invasion (the outer space kind), or a major global war, for a real depression, I think we'd need the next shoe to fall from the 2008-2009 thing. On the one hand, it seems like it would be hard to revisit those types of scenarios so soon, but I also never fully understood the exit strategy from the huge increases in money supply used to address that situation. I don't see any obvious bubbles, or signs of inflation, and so I wonder if a ton of it is in the stock market (aside from the massive corporate cash hoards). 

I vacillate pretty frequently between optimism and pessimism. But I was comfortable buying stocks in the winter of 2008-2009, figuring that either I was buying incredibly undervalued shares or else the credit markets were going to seize completely, and all of my savings would evaporate anyway.
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#7
Hmmmmmmm....
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#8
Back in 2008/09 I was fighting for my life, battling cancer and the whole financial breakdown went right by me. I didn't sell one mutual fund; although, I did continue investing small weekly amounts throughout the whole situation. It was a good move!

Every downturn is never a repeat of a previous one...But a full blown Depression? I'd never say never but I think the governments would intervene and shut the markets down to prevent a complete breakdown of the economy. So, I'd say virtually impossible.

And with depressed oil prices??? If they remain low for an extended period of time businesses will adjust and the better ones will become stronger. This is very possible, with other countries now in the mix pumping out more oil we might see additional lows in the mid 20's before oil stabilizes at more reasonable price levels. There is more pain to come and I'm not 100% sure there is blood in the streets, so-to-speak. Maybe I feel this way because I'm older and more complacent then in the past, such as the Dot-Com Bubble way back when. But I believe we're going to be on a roller coaster for quite some time testing new lows on individual stocks, I keep hearing things will be better in 2017, IMHO, I believe 2018/19 is going to be much better years but if one waits until then to invest a lot of good gains are going to be missed.
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#9
Nice, yeah.

Couple things, first off there is a lot of money out there, a lot of liquidity. I think that will prevent things from falling too far. Banks and private equity have trillions of dollars between them.

Second, I've been doing some research especially in the Shiller excel spreadsheet. It looks to me like 1920-1924 were pretty normal but there was a huge runup from 1924ish to 1929. Dividends distributed via the S&P went up like crazy. Basically, as I recall, Shiller pE in '29 was something like in the early 30s.

It seemed to me when I was studying it that it would be like if nowadays, the Dow was 24-25k....And then it smooshed all the way down, a lot lower. So I think to answer the original question, the market would need to go a lot higher for it to crash like in '29.

Remember in the late 20s (roaring 20s) retail investors were leveraging 10:1, lots of scummy companies were being formed with the leverage...That why the investment acts of 1933 etc were passed.
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