What was the 2008 crash like in real time?

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TomatoTomahto
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Re: What was the 2008 crash like in real time?

Post by TomatoTomahto »

Valuethinker wrote:I've never been that scared, or remember people who had been in markets a lot longer than me, looking that scared.
I remember Larry Kudlow, big promoter of de-regulation, on CNBC crying that his friends were being affected, and begging that someone do something. I'm trying to find a link to it.
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Re: What was the 2008 crash like in real time?

Post by DVMResident »

Graduated spring 2009.
"Where'd all the jobs go? Phew, glad I'm a resident." :confused
Popped head up for air in 2011, "Oh, still no jobs. Time to get a PhD."

That's how my 2008-2009 crash went.
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Re: What was the 2008 crash like in real time?

Post by Dandy »

Jim Cramer was "pounding the table" on his stock market television show claiming the Lehman was a "once in a lifetime buy."

A classic. Of course he was right - not often you can put your money into a brand name stock and lose it all in a flash.
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Re: What was the 2008 crash like in real time?

Post by Fallible »

Call_Me_Op wrote: The truth of the matter is not only did we not know WHEN the decline would end, we did not really know whether it would end at all. That is the true risk of risky assets. ...
It is the true risk of risky assets, although not knowing when a crash will end is true of all crashes. 2008, however, was the first time I feared a crash might not end, that there could be a total financial meltdown. I remember wondering what one would look like, how it would play out, and I think that was the scariest time. The only similarity to the tech crash that I remember was the growing uncertainty of financial experts about the bear market in early '02 and predictions by some of them of the Dow dropping to around 7000 (it was close). In both crashes, the experts were stymied and not denying the worst and, at least for me, that was new. (I did stay the course in '08, but did not rebalance.)
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Re: What was the 2008 crash like in real time?

Post by AllieTB1323 »

Great question. Before posting I went back and downloaded some of my Fidelity statements from Aug 2008 to the end of 2009. Thank God I generally avoided looking at them during the crash. I do remember my brokerage account balance slipping month after month. Near the end of 2008, we found some extra cash which my wife and I, after lots of research, invested in big blue chip companies. The value of those stocks rebounded in late 2009. For the most part we still own them and they make up a large part of our account.

Our next door neighbor, knowing we managed our own investments, asked if they should cash out their retirement accounts. I told him I didn't give advice but I was buying not selling.

Buffett's advice to "be greedy when others are fearful" was difficult to follow during 2008/2009.
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Re: What was the 2008 crash like in real time?

Post by nisiprius »

Call_Me_Op wrote:
jebmke wrote:
Call_Me_Op wrote:The truth of the matter is not only did we not know WHEN the decline would end, we did not really know whether it would end at all.
True with any decline, I suppose. That is one of the reasons why the 2000-03 one was so grueling -- it was stretched out over a longer period than 08-09.
Perhaps, but most other declines did not see the financial markets on the precipice of ceasing to exist.
I doubt that. I think the big ones always do. That is exactly why people kid themselves about their risk tolerance.

Before the fall, you think of it as a percentage drop, and you assume that there will be a recovery within a reasonable number of years.

During the fall, you think of it in terms of the probability that this is actually The Big One and that the markets are indeed close to the edge of "the precipice of ceasing to exist." During 2008-2009 it felt to me like about 10% and nothing I've read since has led me to believe that was crazy-pessimistic.

I wasn't paying attention in 1987, but by all accounts people did think in terms of "the precipice of ceasing to exist."
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Re: What was the 2008 crash like in real time?

Post by Crimsontide »

We were driving back to Texas from Flagstaff, AZ on 9/18/2008. When we got home that evening we discovered that the world had ended and the Dow had dropped over 4%. I'm glad I was spending that dark time enjoying the last of my vacation and not selling out like many of my coworkers did...
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Re: What was the 2008 crash like in real time?

Post by livesoft »

AllieTB1323 wrote:Great question. Before posting I went back and downloaded some of my Fidelity statements from Aug 2008 to the end of 2009.
I just went back and looked at my transaction records. I was buying and selling the same day or selling and buying the same day. Volatility was so high on some days, I guess I could not keep my fingers off the keyboard. Here is a bit of the Nov 2008 statement:
Image

And here is the December 2008 action in the same account:
Image

In my 401(k), I was definitely moving significant chunks from a bond fund into an S&P500 or international value fund about every 6 weeks after October 2008.
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Re: What was the 2008 crash like in real time?

Post by Barefootgirl »


Jim Cramer was "pounding the table" on his stock market television show claiming the Lehman was a "once in a lifetime buy."

A classic. Of course he was right - not often you can put your money into a brand name stock and lose it all in a flash.


My ex husband was, at the time, watching Cramer for tips and the next day, buying stock on margin. The end was near.

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Re: What was the 2008 crash like in real time?

Post by jebmke »

nisiprius wrote:I wasn't paying attention in 1987, but by all accounts people did think in terms of "the precipice of ceasing to exist."
My wife was in the business (buy side) in 1987. We used to joke (only part joke) about staying off the sidewalks in the financial district in Boston to make sure we didn't get hit by a falling portfolio manager. 22% in one day gets your attention. That would be a 4,000 point drop in the Dow today. Probably an RBD.
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Re: What was the 2008 crash like in real time?

Post by livesoft »

The 1987 crash was pre-circuit-breaker days, so if it happens again, there would be some trading stops along the way.
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Re: What was the 2008 crash like in real time?

Post by perries »

Even more than Lehman's collapse, the most unnerving market aspect to me was money market funds breaking the buck
http://www.nytimes.com/2015/04/12/busin ... .html?_r=0

But even more unnerving than that was my sudden realization of potentially bottomless political risk.
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Re: What was the 2008 crash like in real time?

Post by dratkinson »

I didn't listen to 2008/9 market news as it was just too emotional for me... I can't comfortably remain long at that fever-pitch. So the 2008 crash and the later ones I mostly missed. I only watched my rebalance bands and stayed within them.

I missed all of the crashes before 2005, because having proven conclusively that I couldn't pick stocks, I was 100% CDs. Retired (inflation-indexed pension) and bought a house in 2000. Found the lazy portfolio concept in 2005 and copied one (moved CDs), and began reading books.

In late 2007/early 2008, backed into a BH portfolio review that convinced me to get more bonds, so moved from 80/20 to 60/40. Used the early 2008 market downturn to rebalance without a tax gain. Used later lows to learn to tax loss harvest.

Didn't have that much invested so it was easy to keep rebalanced (TLH, new money, redirected distributions) as the market dropped. The higher bond allocation helped. Think I was ~20% down during 2008-2009. My banked TLH only lasted a few years.

As I'd lost more than 100% of my past non-CD investments (stock picking, repaid bank loans to bankroll worthless brother's failed schemes, un-repaid personal loans to friends,...), being down only 20% on paper was a refreshing change.

Toyed with the idea of buying GM stock during its bankruptcy, but the books caution against investing if you don't know all of the details (confirmed by my own past experience)... so I didn't.

Things would have been different if I had needed to find a new job.

I did lose one good neighbor. He was house flipping as a side business and lost is own. I miss him.

@livesoft, below. I did follow my plan. I did stay the course. It was easy to do with only a paper loss. In hindsight, I didn't then fully understand the advice to "...be greedy when others are fearful."



Edit.
Last edited by dratkinson on Wed Jun 24, 2015 2:02 pm, edited 1 time in total.
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Re: What was the 2008 crash like in real time?

Post by knowledge »

I recall being a jetblue flight when the first TARP bailout vote was underway, with CNBC having a split screen with the house vote roll call on one end and the dow jones ticker on the other. The Dow ended up down about 7% that day, and I remember telling my wife that this was crazy, I couldn't believe it didn't pass - it did, later (along with even more bailout money later).

It wasn't so much a thing until that fall of 2008. What had started with a few hedge funds going bust in the spring of that year ballooned so quickly and dominated the news headlines, and the pace was unimaginable. It was non-stop overnight, over weekends, holidays, and worldwide. In hindsight, I wish I had more to put in, but at this point, my 401k wasn't even 6 figures, and I had no taxable investments. I stayed the course (again, I didn't have much to sell), and watched as the returns of 2009/2010 (which for some reason seem to be forgotten by the media) and my new contributions brought my portfolio to new highs.

It's hard to say how I would react if you put those pressures on the 2015 me. Given my relatively long time horizon, I doubt I would react differently, but would I actually rebalance into stocks? I'd like to believe I would.
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Re: What was the 2008 crash like in real time?

Post by ClevrChico »

At the time, it was very very scary. I bought a house in 2007, worked in the banking field, and was thanking my lucky stars I still had a job.

I had little knowledge of asset allocation and held 100% bond index funds prior to the crash. (I was still spooked after the tech crash from 2001.) After the 2008 crash, I began rebalancing into index equity funds with a proper asset allocation, and it has paid off. That was just dumb luck.
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Re: What was the 2008 crash like in real time?

Post by itstoomuch »

I measure the severity of the 2008 crash by DS inability to get a fulltime job. :(

DS just finished his MS-CS in Dec 2007. He got an 3 month internship with MS-Research in India. Afterwards he could not find a job so he asked to be dropped off in Europe where he toured and visited classmates. Got a phone call and took off for Redmond for another 3 month internship-Couldn't find a job. (MS-R did offer a position at survivor wages.) His MS-R researcher took pity and offered him another internship this time in Germany-and couldn't find a job. Son finally asked his undergrad professor for a recommendation, but the prof instead offered him a special position, personally funded @1/2 time, which he accepted. He had a grand time at the University 2009-2010. He took up skiing, hiking, climbing walls, made a x-box hack, did a preliminary iPhone app, some electro-mechanical art objects, got good with software, machining, and inkjet manufacture. He also funded a Roth, State's retirement, and taxable. In his internships he got wage scale and most living expenses were either provided or subsidized. He made some money, by chance, in 2008 in currency exchange. :annoyed
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Re: What was the 2008 crash like in real time?

Post by james22 »

nukewerker wrote:I guess its the cynic in me but most of the stories here imply things have significantly changed and we are in the clear. QE1, QE2, and QE3 have been applied over 7 years. Trillions added to the Fed balance sheet. Fed still can't raise interest rates. We are still in the 2008 crash. We have just been duped to go along as normal. If rates were 6 or 7% and things were going swimmingly, then fine. Its obviously very difficult to define what normal is, but I propose this is not a normal economy.
Yep.


And this'll give you a sense on the times: viewtopic.php?t=30085
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Re: What was the 2008 crash like in real time?

Post by Valuethinker »

There was a moment when we stopped worrying about stock prices, and started worrying whether our bank deposits were safe-- whether these seemingly solid financial institutions would disappear into vapor.

That was the real moment of true fear-- going from 'what am I worth?' to 'Am I worth anything'?

It was like leaning out over the edge from the top floor of a skyscraper, and realizing there is no guard rail.
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Re: What was the 2008 crash like in real time?

Post by David Jay »

I pretty much stayed the course, I knew I was 15 years from retirement and the market would come back.

One thing I did: I stopped opening my 401K and IRA statements. I collected a pile in my nightstand drawer and just let them sit there. I knew I was down, I didn't need to know how much. I didn't even update my annual financial statement in December of 2008, I let it ride a year.
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Re: What was the 2008 crash like in real time?

Post by stemikger »

ajacobs6 wrote:I'm in my 20's, so I was not investing in 2008. I have 20% in bonds because I'd like to have some money to buy low if the market crashes. Did everyone here stick to their strategies during the crash? Did some people here buy a ton of stocks when they were tumbling?
Interesting topic. I was 44 and truthfully watching my 401K fall like that was pretty gut wrenching but I don't remember what I did because they were letting so many people go in my firm, I was pretty sure I was going to lose my job so that is where my focus was. Every day I went to work, there was another one of my co-workers gone. Many of them were gone before I even got to the office. These were people I got to know very well and knew that they had mortgages, kids in school and other financial obligations.

No one was safe. They literally let 60% of the staff go. I did not lose my job, but it was very depressing in those days. I knew several people that had their homes foreclosed on and either rented or went to live with relatives.

Many big box retail chains near me were empty overnight and stayed that way for quite a while.

I hope to never see one that bad in my lifetime.
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Re: What was the 2008 crash like in real time?

Post by Call_Me_Op »

Valuethinker wrote:There was a moment when we stopped worrying about stock prices, and started worrying whether our bank deposits were safe-- whether these seemingly solid financial institutions would disappear into vapor.
True. I remember feeling comforted when the head of the FDIC at the time (Sheila Bair) had the guts to say "Nobody has ever lost a dime of an FDIC-insured deposit, AND NOBODY EVER WILL." She apparently felt that she needed to make such a bold statement to avoid a run on the banks. Whether she was authorized to make such a statement can be debated.

By the way, we came very close to a major run on money market funds. It would have happened had the Treasury not provided a guarantee. A lot of frantic stuff was happening behind the scenes.
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Re: What was the 2008 crash like in real time?

Post by obgyn65 »

I was 43 years old in 2008. I was 90% in CDs and municipal bonds and still was very concerned about what was going on. In fact I still have some fear about buying shares because of the 2008 financial crisis, which, in my opinion, is not totally over.
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Re: What was the 2008 crash like in real time?

Post by Call_Me_Op »

obgyn65 wrote:I was 43 years old in 2008. I was 90% in CDs and municipal bonds and still was very concerned about what was going on. In fact I still have some fear about buying shares because of the 2008 financial crisis, which, in my opinion, is not not totally over.
I agree that it is not totally over. Short-term interest rates still pinned at zero are a good indicator.
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Re: What was the 2008 crash like in real time?

Post by bayview »

I didn't rebalance existing savings, but I switched 100% of new contributions to equities, and then didn't look--not because I had nerves of steel, but because I didn't. Then oddly once the recovery seemed to actually be happening, and my cheap equities were climbing nicely, I sold most of them off and hunkered down in the G fund for quite a while. I can't remember my exact thinking at the time, but it was something along the lines of not being terribly convinced that we were getting back to normal, and that it was possible that there had been some sort of massive, fundamental change. I didn't want to have any significant skin in the game until the weirdness wore off.

So I actually made out OK in the end, although I wasn't bugs-in-your-teeth enough to keep going with it. Now that I'm much closer to retirement, I'm a lot more conservative in my AA (currently around 55/45.)
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Re: What was the 2008 crash like in real time?

Post by atfish »

During the 2008 sell off I quit reading my monthly statements and quit watching the TV financial shows. Its odd that some investors will camp out at Best Buy to get the sale items at Christmas, but will run to their brokers to sell their stocks when they go on sale. :confused
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Re: What was the 2008 crash like in real time?

Post by livesoft »

There seems to be a paucity of people who rebalanced into equities to get back to their stated asset allocation during this time. Recalling the chart I posted earlier in this thread, equities were down 20% in 2008 before the drop in October and they were down more than that in October and again from October to March. Somebody (everybody!) must have been hitting their rebalancing bands where even adding new contributions would not get them back to their AA plan. And they must've hit their bands more than once.

From most of the responses in this thread, it appears it was a rare bird that stayed the course.

Didn't anybody "stay-the-course"? Didn't anybody follow their plan?
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Re: What was the 2008 crash like in real time?

Post by Call_Me_Op »

livesoft wrote:There seems to be a paucity of people who rebalanced into equities to get back to their stated asset allocation during this time. Recalling the chart I posted earlier in this thread, equities were down 20% in 2008 before the drop in October and they were down more than that in October and again from October to March. Somebody (everybody!) must have been hitting their rebalancing bands where even adding new contributions would not get them back to their AA plan. And they must've hit their bands more than once.

From most of the responses in this thread, it appears it was a rare bird that stayed the course.

Didn't anybody "stay-the-course"? Didn't anybody follow their plan?
I will admit that I did not - not exactly. But net I did not sell equities. In taxable, I sold some in September 08 and bought them back in December 08. That is market timing but I don't regret it. In the 401k, I temporarily suspended rebalancing but did not sell any equities. And I kept buying each week with my paychecks.
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Re: What was the 2008 crash like in real time?

Post by rustymutt »

For the most part I was already on the sidelines, as I was gearing up for retirement in 2009. So we watched in horror as day after day the markets fell. I'd moved my money to a cash type account so as to be ready to rollover my 401K to Vanguard. Even so, the draw back was that in March of 09, the bottom, I couldn't reinvestment my money yet, as my retirement date was June of that year and the accounts were locked in cash. I got back in late, in July that year. I'm not sure what I'd have done if still fully invested during the sharp sell offs.

During the market corrections of the early 2000-03 years, I'd heeded the advise to not own individual stocks, like AT&T with was nearing $70 a share, and sold all I could out of my 401K. Over the years after that, I saw the stock fall to a low of something around $14 dollars a share. Again, considered myself fortunate to have listened to the good advise of Bogle, and other investment self help persons. Without that, I'd still be working for a living. Small details make huge differences in our financial outcomes. I was able to retire at age 53, and pursue other interest.
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Re: What was the 2008 crash like in real time?

Post by Barefootgirl »

After the 2008 crash, I began rebalancing into index equity funds with a proper asset allocation, and it has paid off. That was just dumb luck.
Sounds like advice from the BH Wiki.

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Re: What was the 2008 crash like in real time?

Post by asif408 »

I was 28 and had had a 401k for about 4 years in 2008. I think at the time it had about $20k in it and was around 80% stocks/20% bonds, but I didn't pay close attention to the news or investing at the time. I was just doing 401k contributions because my parents suggested it when I started working. It was on autopilot and I really didn't care much to know more about it.

I remember looking back at those 2008 statements a year or so ago and noticed that I lost about 45% during that time. Fortunately I was going through a personal crisis in 2008-2009 (was trying to figure out what I wanted to do with my life and eventually made a career change), so I was paying no attention to what was going on in the outside world or television and usually just filed away my statements without reading them.

My not looking and not paying attention worked out quite nicely. It was made easier by the fact that most of my money was in balanced funds so I assume (though I'm not 100% sure) that the funds were automatically rebalancing at the time for me. If you have a balanced fund or Target Retirement fund and are young the best thing you can do during a market downturn is probably not to look or pay much attention.
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Re: What was the 2008 crash like in real time?

Post by bpp »

livesoft wrote:There seems to be a paucity of people who rebalanced into equities to get back to their stated asset allocation during this time. Recalling the chart I posted earlier in this thread, equities were down 20% in 2008 before the drop in October and they were down more than that in October and again from October to March. Somebody (everybody!) must have been hitting their rebalancing bands where even adding new contributions would not get them back to their AA plan. And they must've hit their bands more than once.

From most of the responses in this thread, it appears it was a rare bird that stayed the course.

Didn't anybody "stay-the-course"? Didn't anybody follow their plan?
I think I did, as far as I can remember. I rebalanced with new contributions, and when that could not keep up, sold bonds to buy stocks. From my records I see monthly rebalancing activity up through March 2009, after which I guess I was able to keep up with new contributions again.

Don't remember it being fun, though.
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Re: What was the 2008 crash like in real time?

Post by White Coat Investor »

bpp wrote:
livesoft wrote:
Didn't anybody "stay-the-course"? Didn't anybody follow their plan?
I think I did, as far as I can remember....Don't remember it being fun, though.
Me too. Sold nothing except to rebalance. Bought throughout and have the statements to prove it. Did get nervous about those REITs though, but that was only 7.5% of the portfolio.
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Re: What was the 2008 crash like in real time?

Post by retiredjg »

livesoft wrote:Didn't anybody "stay-the-course"? Didn't anybody follow their plan?
I did as best I can remember. I had just retired and was still at Ameriprise and knew nothing about investing. My "plan" consisted of "don't sell in a crash" so in that sense, I followed my plan.

I remember there was a lot of discussion on the board about tax-loss harvesting. It took me a long time to figure out what it was (there was no Wiki then) and much longer to see the full benefit of it.
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Re: What was the 2008 crash like in real time?

Post by fishboat »

livesoft wrote:
From most of the responses in this thread, it appears it was a rare bird that stayed the course.

Didn't anybody "stay-the-course"? Didn't anybody follow their plan?
I did. No selling, no rebalancing, I continued to buy just as I am today & have for the last 30 years. I was at about 95% equities in 2008. I did do one tIRA to Roth conversion when things were around bottom (as it turned out).

(Admittedly) my knowledge base was less back then..so perhaps ignorance was bliss..or just ignorance..or just lucky..hard to say. I'm back now and then some (and my AA is closer to 65/35 equities/bonds).

Of course i did watch the entire event closely, watched my balances wither, listened to the radio shows I mentioned earlier, and wondered if the abyss was nigh. I did gather at the time there were many folks (that could influence how things would play out) were a fair bit more concerned then they would admit..in public.
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Re: What was the 2008 crash like in real time?

Post by midareff »

Slow, agonizing and hard to find a place to hide from it. I remember Kashen being interviewed on TV the day it bottomed and shot up 400 points saying the trading floor had gotten dead quiet and everyone who was going to sell had sold. It was capitulation to him. I remember where I was then for that, the Flash Crash, the day Kennedy was killed and maybe one or two others.
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Re: What was the 2008 crash like in real time?

Post by Coastal Dave »

Well, let me be the first on this thread to share that I sold my equities. Damn near at the bottom. :oops: I guess I did learn what my true risk tolerance is. And it didn't work out so well for me so next time I hope this life lesson means I'll stand firm.

I was in my mid 40s and was watching my retirement lose half of its value. My home was losing value quickly too. My kids were near the end of high school and their college investments were tanking - big time. Both my spouse and I were worried about our jobs and we work in totally different industries. Families around us DID lose their income and some lost their homes. These were professionals with college degrees and established careers. There wasn't a news channel or newspaper that wasn't blaring the headlines "worse financial crisis since the Great Depression". Think about that line - that is some scary stuff. I've lived through other downturns and never wavered in continuing a 70/30 investment approach. But this one was different. At least to me. Hysteria was setting in and the news just kept getting worse and worse. Total financial collapse seemed like a real possibility and was openly discussed on regular news channels - not just the talking heads on the financial news networks. And it seemed like our government was incapable of rising to the challenge. It was an election year. Congress barely functions in an off-election cycle, but throw in a presidential election and with seats up for grab in the House and Senate, well, the partisan politics seemed insurmountable. I visited my in-laws down in Florida during this time and remember very clearly driving through neighborhoods in Ft. Myers where there was either a For Sale or Foreclosure sign on countless properties. Nice suburban neighborhoods looked like they were decorated for an event - but it was just sign after sign of either For Sale (no hope of selling) or Foreclosure. In my own neighborhood there was a whole section of new homes that lost so much value I know the middle class homeowners were more than $200K underwater.

Yes. I admit I sold at the bottom and didn't get back in until 2011. I wish I could have a redo. But there you have it. I panicked and sold.
SamB
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Re: What was the 2008 crash like in real time?

Post by SamB »

The 2008 crash was marked by very steep daily drops, and certainly was more impressive than what occurred in '87. I stayed the course, but I had to rationalize it, and if I had not had the experience of the preceding 30 years I would have reacted against my best interests.

I knew early on that I could not predict a bottom, and I also knew that I could not predict what the recovery would look like. However, I did predict that regardless of who got hurt one way or the other that the Fed would bail me out, and sacrifice just about everybody else before they allowed the demise of the capital markets. And fortunately that is what transpired. The people that got sacrificed are probably still eating dog food - the people in time savings accounts or the equivalent. I would have thought that there would some how be shared misery, but it did not happen.
livesoft
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Re: What was the 2008 crash like in real time?

Post by livesoft »

SamB wrote:The 2008 crash was marked by very steep daily drops, ….
And some very steep daily gains, too.
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whatusername?
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Re: What was the 2008 crash like in real time?

Post by whatusername? »

fishboat wrote:
livesoft wrote:
From most of the responses in this thread, it appears it was a rare bird that stayed the course.

Didn't anybody "stay-the-course"? Didn't anybody follow their plan?
I did. No selling, no rebalancing, I continued to buy just as I am today... I was at about 95% equities in 2008.

(Admittedly) my knowledge base was less back then..so perhaps ignorance was bliss..or just ignorance..or just lucky..hard to say.

Of course i ... wondered if the abyss was nigh. I did gather at the time there were many folks (that could influence how things would play out) were a fair bit more concerned then they would admit..in public.
This. There wasn't much to rebalance since I was so heavy in equities, but I kept buying even when it was nauseating to do so. Didn't sell a thing even though at times I wanted to badly and just sit in cash.
Puakinekine
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Re: What was the 2008 crash like in real time?

Post by Puakinekine »

livesoft wrote:

From most of the responses in this thread, it appears it was a rare bird that stayed the course.

Didn't anybody "stay-the-course"? Didn't anybody follow their plan?
Yes, I did. But, my portfolio was and is so conservative to begin with that it was not a great act of courage. We sat at 80% (mostly treasury ) bonds and 20% equity with our mortgage paid. I had adopted the Larry Swedroe philosophy years before of taking the least risk in bonds and a higher risk in equities. We also held a large number of 3% I-Bonds due to the advice of Mel. Still, my husband, who is not involved in our financial management asked every day "Should we do anything, should we do anything?" I was able with the help of all that I have read here over the years, to tell him no, and why. If we had lost all our equity holdings, we still would have been OK, if the financial system held. If not, well, that would be that. The world would have changed. We had skills that people would barter for.

I remember sitting at the kitchen table and shouting out the market declines throughout the day for days, like checking the barometer every few minutes before a hurricane It was phenomenal really. I also remember reading this group continuously and watching the human drama unfold. People with higher equity holding, with large mortgages, who were in fear for their jobs, who could not read the future, were contemplating complete financial ruin. People who I did not expect to panic, started to make those noises. The best thing about being here was that people helped each other other tremendously, with facts, with logic, with calming words, with just listening. But it was awful, and I don't really remember anyone saying that they were fine with being all in equities.
691175002
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Re: What was the 2008 crash like in real time?

Post by 691175002 »

Some investors saw it as an opportunity at first and tried to average down. It sounds great but after falling another 30% you eventually hit a limit.

We refer to selling at the bottom as "panic selling", but in many cases it feels rational and necessary. Even people who identified the market as being oversold could be forced out. If you lose your job or are in a weak financial position there is no choice.

A few people made off like bandits. A friend borrowed against his house near the bottom and put it in very safe large caps. He made the trade because dividends alone would cover the interest payments (with room to spare) even if the market never recovered.
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Re: What was the 2008 crash like in real time?

Post by UADM »

I invest in the stock market for a living. I have been doing it since college. I was 26 in 2008. Around July, something just didn't feel right. I was still up for the year(a pitiful amount). I decided to sell everything in all accounts and walk away. I saw until March of 2009 and then veeeery hesitantly started playing around again. I missed out on a lot of 2009 because of how nervous I had become, but at least I lost nothing in 2008 through march 2009. I started doing well in 2010+ again. Was an interesting experience. Learned a lot.
Fallible
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Re: What was the 2008 crash like in real time?

Post by Fallible »

Valuethinker wrote:There was a moment when we stopped worrying about stock prices, and started worrying whether our bank deposits were safe-- whether these seemingly solid financial institutions would disappear into vapor.

That was the real moment of true fear-- going from 'what am I worth?' to 'Am I worth anything'?

It was like leaning out over the edge from the top floor of a skyscraper, and realizing there is no guard rail.
This well describes the growing fears of '08, that anything could happen - anything.
"Yes, investing is simple. But it is not easy, for it requires discipline, patience, steadfastness, and that most uncommon of all gifts, common sense." ~Jack Bogle
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Re: What was the 2008 crash like in real time?

Post by truenorth418 »

Call_Me_Op wrote: Were it not for extreme Government intervention, I don't think any of us can say how bad things could have gotten.
Maybe. Another train of thought is that extreme government intervention actually contributed to the crisis or made things worse. Many years of massive subsidies in housing, banking and mortgages. Fed move to bail out Bear Sterns in March 2008 but not Lehman in Sept 2008. The sense during the crisis that policy makers and government officials, including the President and Congress, didn't know what to do and were making it up as they went along. TARP money was authorized to purchase troubled banking assets but most of it was instead used for non-authorized purposes such as buying bank and other company equity shares. (This is as far as I will take this train of thought since it is getting into the political realm and I don't want to cause this interesting thread to get shut down.)

The 2011 HBO film "Too Big to Fail", based on the Sorkin book, chronicles the crisis period in case anyone is interested in revisiting that time.
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Re: What was the 2008 crash like in real time?

Post by Goldfinger »

We were age-10 in bonds beginning around 2006 after carrying a 90/10 portfolio throughout the 90's and beyond. From that perspective, things were easier than they would've been. I do remember what it was like to see our balances dropping like a rock; however, it was at this time that we really began focusing more on our bond portfolio. I recall some posts by LANDY and a few others about maintaining a bond floor and really identified with what he and a few others were posting. Bill Bernstein crystallized this concept in one of his books, although I don't think it had happened until post-correction, if memory serves.

Rebalancing-wise, we incrementally purchased equity positions in chunks of 2-3%.

It was also obvious that we didn't need to take on more risk than age in bonds (AIB). Just because we could didn't necessarily mean we should. Our goals would one day be met anyway given our 1) early start and 2) contribution levels.

We did, however, narrowly escape having to carry 2 concurrent mortgages. Although the housing market in Houston was fairly robust relative to the rest of the country, we weren't getting many "bites" on our previous house which was richly priced, but the last interested buyer came through in 10/07. We "bought up" to a very big house that we live in to this day.

I still find myself overly focusing on building our bond portfolio so big that it won't matter what happens with equities. I call it our "giant life preserver".

For those not accustomed to huge market downturns, read all you can and try to stay as balanced as you can. Think about ranges and percentages and forget about dollar amounts.
"At cocktail parties lovely ladies would corner me and ask my opinion of the market, but alas, when they learned I was a bond man, they would quietly drift away." -- Sidney Homer/Salomon Bros
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Re: What was the 2008 crash like in real time?

Post by truenorth418 »

I was still working in 2008, building my nest egg with financial independence right over the horizon. It was before my Boglehead days, and looking back I have to say my portfolio and asset allocation didn't make a whole lot of sense, but I think I had about 60% of my investable assets in stocks prior to the crisis.

I remember tracking my net worth on Quicken that summer and wondering why the value had remained flat for so many months after a nice run up in the 2004-07 period.

I remember reading articles on Yahoo news and other random websites about how real estate values were reaching unprecedented highs and that many were making big money flipping properties.

I remember the weekend of Sept 13 2008 when newspapers and websites were filled with stories on the impending collapse of Lehman Bros. I casually wondered how it might impact me, if at all.

I remember the drama as the next few weeks unfolded. Every day there was news of another major company or firm going down. The stock market was going crazy.

I remember at least one of my direct reports coming into my office crying, though when I asked her how much money she had in stocks, she said "none." Yet she thought her world was coming to an end.

I remember many emergency meetings of policy makers and Congress adding to the drama. There was an election campaign in full swing. None of the candidates seemed to have a handle on what it all meant or what to do about it.

I remember generally keeping my cool throughout those weeks of Sept-Oct 2008. Although there was one night, as I prepared to drive home from work, I decided to check my account from my smart phone. I remember screaming expletives at the top of my lungs in my car when I saw my account was down over $50,000 in one day. I had never seen anything like that.

I remember my company laying off 30% of its marketing department (almost 100 of my colleagues) in Oct 2008. Who would have thought a large food/beverage company could be hit so hard by a crisis in the finance industry?

I remember reflecting on the crisis as it continued to unfold over the following months, proud of myself that I had not sold any of my positions, but also too dumbstruck to commit any new money to the market. I sat on hoards of cash for months and months following the crisis, missing out on the buying opportunity of my lifetime. I did not fully commit myself to investing again until early 2011. And then the market plunged again in Aug 2011. If some ways, that break in the market was even more frightening for me than 2008 since I had just given notice at work and had committed to early retirement.

All's well that ends well.
dc81584
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Re: What was the 2008 crash like in real time?

Post by dc81584 »

I didn't care.
Last edited by dc81584 on Wed Jun 24, 2015 2:02 pm, edited 1 time in total.
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Sandi_k
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Re: What was the 2008 crash like in real time?

Post by Sandi_k »

I was a BH long before I joined this group, or even before I knew that there were BH principles.

I had started investing in 1991 with $50 per month, and just incrementally increased my contributions every time I freed up money in my budget, or I got a raise. By October 2007 (age 42), I was contributing $1000 per month, and had $100k in my 403(b). My AA was:

- 73% US equity index fund
- 10% Emerging Markets Index fund
- 13% Blended target date funds
- 4% bonds

In looking back at my investing from October 2007-March 2009, I am with others when I say that I decided to stop participating. I didn't play with my AA, I did not rebalance. I just kept contributing my monthly contribution, and stopped looking. For about 18 months. During that time, my sister lost her job, a friend was diagnosed with terminal cancer, I had a major surgery that included 4 months off of work, my brother was canned and had to re-locate across-country, and my husband's best friend lost his job, and then his house. It was bad news all around, and a lot of it was PERSONAL.

By June 2009, I was at $80k in my 403(b), and that INCLUDED another $17k in contributions. So instead of $117k (holding steady + contributions) I had $37k less. So essentially a loss of 35% or so in that time period.

I rebalanced in June 2009, into a 4 Fund portfiolio:

- 55% Spartan Total Market Index
- 22% Spartan International Index
- 10% Fidelity Emerging Markets Index
- 10% into Fidelity Inflation Protected Bonds Index

So now, 6 years later, I've stayed that course. I've added 10% REIT Index funds, and reduced Total Market to 45% of my AA, but that's the only major change. I've continued contributions at about that same monthly dollar amount. And my 403(b) account is now at $294k. From $80k to $294k in 6 years, and keeping my head on straight. I'll take it. :D
Last edited by Sandi_k on Wed Jun 24, 2015 3:09 pm, edited 1 time in total.
Bacchus01
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Re: What was the 2008 crash like in real time?

Post by Bacchus01 »

From an investing standpoint, I really didn't do anything different. Kept maxing my 401K. My options went from being worth about $500K to being worth aboug $5k, which really stung, but it was paper money. We didn't change our lifestyle, didn't really curb our spending, didn't change our investment strategy. Even had another baby in 2008. Wife still stayed at home. Still carried an ARM and even refinanced in 2009.

I did not put extra into the market, however, outside our 401k. We began accumulating a lot of cash in after-tax accounts. More than $525K at one point. It wasn't until 2012 that we really sunk that back into the market and have since done very well. We just didn't have any after-tax investments until I finally sat down in late 2012 and said "what are going to do with this?" That's when I became a boglehead. Note the date I joined, Dec 24, 2012. That's the starting point for us. The day before Xmas in 2012.

What was very hard, and still keeps me up at night to this day, is laying off all those people. I really was very, very safe in my role, but had to cut a lot of headcount. And I watched people around me losing their jobs. And losing their houses. That was very, very tough and still bothers me. While the risk of me getting cut from the role was as close to zero as any (I even had a huge retention package put in), it still made me very insecure. And I still feel insecure about my job, despite taking some pretty significant promotions over the last 5 years. That will plague me until I retire.

Since Dec 2012 when we became a Boglehead:

Total investments up 62%
Real Estate equity is up 40%
Taxable Investments up 33%
Pre-tax investments up 72%
Roth account up from $0 to $85K
529 accounts up from $0 to $78K

It's been a good run
user5027
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Re: What was the 2008 crash like in real time?

Post by user5027 »

I got nervous opening the statements from Vanguard. I did not bother with online access then. The joke at work was the 401k was now a 201k.
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