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Comment by EliRivers | Hacker News Reader

HODL, right!

I am, anyway. The standard advice ("Buy low-cost index funds with dividends reinvested, keep buying on a regular basis, let it ride and don't worry about the plunges and the peaks") told us this would happen, and here we are.

How to interpret it? I'd go so far as to ask should we interpret it? They get paid for coming up with reasons why things happened (after the fact, I note, although the Economist has hardened up and just said "nobody knows"). We [1] get paid for leaving our pennies in low-cost index funds with dividends reinvested for a decade.

[1] Apologies for the generalisation; I needed a bigger word than "I"

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Had to Google HODL and learned it means 'hold', in the context of crypto currencies losing value.

Can't comment on that, but for stocks, definitely yes. Historically, the market has always recovered from slumps. I know this does not mean it always will, but lots of people dropped out of the stock market after the crashes in 2001 or 2008 - for them, it would have been wiser to hodl.

FYI, the origin of HODL: https://bitcointalk.org/index.php?topic=375643.0

HODL is "hold", but it's also "Hold On for Dear Life".

As far as I know, “Hold On for Dear Life” is a backronym conceived to provide explanation for “HODL”.

The market as a whole recovers, but what proportion of [indexed] stock?

What's the expected recovery time? (Say average for a randomly selected 10 indexed stocks).

FWIW this is an academic enquiry, I'm too poor to gamble.

The stock market as repressed by big indexes like Dow Jones etc. Look at the historic data, then you can calculate for yourself... eg http://www.macrotrends.net/1319/dow-jones-100-year-historica...

The idea of an index fund is you're invested in the market as a whole, not a selection of a small number of stocks. So a good index fund will crash when the market as a whole crashes, and recover in line with the market. The entire point is you avoid tying your performance to any selection of say 10 stocks, and typically an index fund will outperform most professional stock pickers.

I like to think that it's being long on Capitalism.

That's exactly what it is, if not going long on human society itself. So far I've found, without fail, that everyone with a strong distrust of the stock market as something "rigged" or a belief that it's somehow an "expendable" part of investing that doesn't affect them has an objectively very poor to non-existent understanding of even basic facts of economic and business activity. Much poorer than I do, at any rate, and I don't really know that much.

In the USA probably Folk memories of the 29's crash are still having an effect

That makes me wonder; how on earth would you take a short position on Capitalism anyway?

You could borrow money to build a secret bunker full of non-perishable food

That's what everyone who makes a fortune on the markets does, they extract value from the system to create personal wealth. The individuals desire is to do just that; that's how the system "works".

Sell stocks. Buy shotgun shells and canned goods.

Funnily enough I was explaining that to someone else this morning ... But, you're not invested in the whole market.

I'd find it instructive to know the answers. I can't imagine no indexed stock has ever failed, nor that the indexes are a perfect insulation - you wouldn't need FTSE250 if the 100 was perfect, they do moderately different things.

Indexes are picked by "stock pickers" they're just picking conservative long, wide spreads AFAIK.

A lot of indices are something like "Top [N] stocks weighted by market cap in [industry/region/country]". You could call those stocks 'picked', but it's not as though someone is doing some deep analysis of the companies' fundamentals or trading history in order to decide which stocks make it into the index. I think that type of analysis is the kind of thing most people think of when they hear about 'stock picking'.

Yes, no index is perfect. But most of them provide more diversification than the average person would be able to achieve by manually managing a portfolio.

HODL — Hold On for Dear Life (pretty demented, largely speaking)

Regarding the very long run, people forget survivor bias. For instance, in the early 20th century, you would have had the choice to invest in three equally promising emerging markets: Argentina, Russia, and the USA. One of those went on to grow for over a century, the other two not so much.

> Historically, the market has always recovered from slumps.

Historically, this isn't even a slump (yet). The dow can drop another 3,000 points and still be up 1,000 points from what it was this time last year.

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