Ok fellow bogleheads, was the correction scary or nothing?

Have a question about your personal investments? No matter how simple or complex, you can ask it here.
CnC
Posts: 527
Joined: Thu May 11, 2017 12:41 pm

Ok fellow bogleheads, was the correction scary or nothing?

Post by CnC » Wed Mar 07, 2018 2:53 pm

Hey guys, I know the mantra time in the market not timing, and don't react to the market fluctuations. I am not concerned about any of that.


I just an interested in how the market correction felt to fellow boggelheads here. I'm pretty young (32) and I while I have been investing for a while I got serious about it early last year.


This is the first time since I started paying attention that my accounts went down across the board. So I wanted to guage my feelings and if anything I felt relieved that the dropped a bit and seemed to level out without a major recession.

I realize that this was a correction, not a crash. But the media being what they are is acting like this was a big deal.


I guess my question is this, was this a negligible blip that no reasonable person had any reaction to? Or does the fact that I felt ok about the dip mean my asset allocation is on target with my risk tolerance?


As I said it's the first time that I have "lost" money since I started and I'm trying to get a feel for where this lies on the scale from yawn to white knuckle.
Last edited by CnC on Wed Mar 07, 2018 3:21 pm, edited 2 times in total.

3funder
Posts: 611
Joined: Sun Oct 15, 2017 9:35 pm

Re: Ok fellow boggelheads, was the correction earlier this year scary?

Post by 3funder » Wed Mar 07, 2018 2:54 pm

Nope; I'm annoyed that it was limited in magnitude. I'm young and wish to buy shares on the cheap.

lostdog
Posts: 979
Joined: Thu Feb 04, 2016 2:15 pm

Re: Ok fellow boggelheads, was the correction earlier this year scary?

Post by lostdog » Wed Mar 07, 2018 2:55 pm

no it wasn't
Vanguard Total World Equity Index. Simplicity 100% | | | https://m.youtube.com/watch?v=LwTHLtuToSY

fgtayl01
Posts: 5
Joined: Thu Jun 25, 2015 6:39 pm

Re: Ok fellow boggelheads, was the correction earlier this year scary?

Post by fgtayl01 » Wed Mar 07, 2018 3:00 pm

There wasn't an exhaustive selloff so it's hard to get excited either way this this one. But it was a chance to gauge your comfort with your risk tolerance and adjust your portfolio to feel comfortable.

You'll be more concerned when a downturn is sustained over time. Just remember your time horizon when it happens.

User avatar
ruralavalon
Posts: 13309
Joined: Sat Feb 02, 2008 10:29 am
Location: Illinois

Re: Ok fellow boggelheads, was the correction earlier this year scary?

Post by ruralavalon » Wed Mar 07, 2018 3:03 pm

No it wasn't scary. The correction was not even a little bit important to me.

It was a yawn.
"Everything should be as simple as it is, but not simpler." - Albert Einstein | Wiki article link:Getting Started

CnC
Posts: 527
Joined: Thu May 11, 2017 12:41 pm

Re: Ok fellow boggelheads, was the correction earlier this year scary?

Post by CnC » Wed Mar 07, 2018 3:05 pm

fgtayl01 wrote:
Wed Mar 07, 2018 3:00 pm
There wasn't an exhaustive selloff so it's hard to get excited either way this this one. But it was a chance to gauge your comfort with your risk tolerance and adjust your portfolio to feel comfortable.

You'll be more concerned when a downturn is sustained over time. Just remember your time horizon when it happens.

That's all I'm trying to figure out. I'm 32 with a good job a wife with a good job a house and kids I'm feeling pretty on top of the world so obviously I feel my risk tolerance is pretty high.

This correction really felt like nothing I was just trying to figure out if it was nothing, or if my risk tolerance matches my allocation.

:annoyed sounds like this wasn't enough to check that out.

livesoft
Posts: 61327
Joined: Thu Mar 01, 2007 8:00 pm

Re: Ok fellow boggelheads, was the correction earlier this year scary?

Post by livesoft » Wed Mar 07, 2018 3:06 pm

It was exhilarating and a superb opportunity to make some extra money. That's a far cry from "scary."
Wiki This signature message sponsored by sscritic: Learn to fish.

User avatar
galeno
Posts: 1187
Joined: Fri Dec 21, 2007 12:06 pm

Re: Ok fellow boggelheads, was the correction earlier this year scary?

Post by galeno » Wed Mar 07, 2018 3:07 pm

With a conservative 40/60 port I didn't even notice it.
AA = 40/55/5. Expected CAGR = 3.8%. GSD (5y) = 6.2%. USD inflation (10 y) = 1.8%. AWR = 3.0%. TER = 0.4%. Port Yield = 2.0%. Term = 35 yr. FI Duration = 6.2 yr. Portfolio survival probability = 100%.

Minderbinder
Posts: 19
Joined: Wed Feb 14, 2018 3:41 pm

Re: Ok fellow boggelheads, was the correction earlier this year scary?

Post by Minderbinder » Wed Mar 07, 2018 3:07 pm

CnC wrote:
Wed Mar 07, 2018 2:53 pm
As I said it's the first time that I have "lost" money since I started and I'm trying to get a feel for where this lies on the scale from yawn to white knuckle.
This is thus far a complete non-event, though it may or may not be over yet.

The worst test for your resolve will be when unemployment claims are skyrocketing, your friends and colleagues are packing their stuff into boxes because your employer is laying off 40% or going bankrupt entirely, your friends and neighbors are losing their homes and their homes being auctioned off, and the entire financial system feels like it is about to implode, all while your stock portfolio has fallen by 50%+. It's then that you truly get to know how much risk you can handle or should even possess in the first place.

Its one thing to observe your stock portfolio in isolation, something completely different when the shockwaves of a real economic cataclysm are reverberating and unavoidable through your daily life.

Jack FFR1846
Posts: 7166
Joined: Tue Dec 31, 2013 7:05 am

Re: Ok fellow boggelheads, was the correction earlier this year scary?

Post by Jack FFR1846 » Wed Mar 07, 2018 3:11 pm

Not scary.....it was great. I was about to make a buy anyways, so getting that extra discount was quite nice.
Bogle: Smart Beta is stupid

CnC
Posts: 527
Joined: Thu May 11, 2017 12:41 pm

Re: Ok fellow boggelheads, was the correction earlier this year scary?

Post by CnC » Wed Mar 07, 2018 3:13 pm

Minderbinder wrote:
Wed Mar 07, 2018 3:07 pm
CnC wrote:
Wed Mar 07, 2018 2:53 pm
As I said it's the first time that I have "lost" money since I started and I'm trying to get a feel for where this lies on the scale from yawn to white knuckle.
This is thus far a complete non-event, though it may or may not be over yet.

The worst test for your resolve will be when unemployment claims are skyrocketing, your friends and colleagues are packing their stuff into boxes because your employer is laying off 40% or going bankrupt entirely, your friends and neighbors are losing their homes and their homes being auctioned off, and the entire financial system feels like it is about to implode, all while your stock portfolio has fallen by 50%+. It's then that you truly get to know how much risk you can handle or should even possess in the first place.

Its one thing to observe your stock portfolio in isolation, something completely different when the shockwaves of a real economic cataclysm are reverberating and unavoidable through your daily life.
Perhaps, but has that happened in our lifetime? 1999 was nothing like that, 2008 was nothing like that. Do we really need a second great depression for us to get a grasp on how much risk we can handle? That seems a bit far fetched, because plain and simple everyone will have lost nearly everything.

LiterallyIronic
Posts: 707
Joined: Sat Dec 05, 2015 10:36 am

Re: Ok fellow boggelheads, was the correction earlier this year scary?

Post by LiterallyIronic » Wed Mar 07, 2018 3:15 pm

CnC wrote:
Wed Mar 07, 2018 2:53 pm
As I said it's the first time that I have "lost" money since I started and I'm trying to get a feel for where this lies on the scale from yawn to white knuckle.
It was also the first time that my account balances went down. Which I suppose should make me happy that I finally have enough money in my accounts that market fluctuations can make a bigger dent than my monthly contributions can.

CnC
Posts: 527
Joined: Thu May 11, 2017 12:41 pm

Re: Ok fellow boggelheads, was the correction earlier this year scary?

Post by CnC » Wed Mar 07, 2018 3:19 pm

LiterallyIronic wrote:
Wed Mar 07, 2018 3:15 pm
CnC wrote:
Wed Mar 07, 2018 2:53 pm
As I said it's the first time that I have "lost" money since I started and I'm trying to get a feel for where this lies on the scale from yawn to white knuckle.
It was also the first time that my account balances went down. Which I suppose should make me happy that I finally have enough money in my accounts that market fluctuations can make a bigger dent than my monthly contributions can.
:wink: same here it was an odd feeling seeing both of our combined maxed 401ks dumping money in there and having our balance still go down month to month.

It's just math, I get that but it is a different feeling.

Minderbinder
Posts: 19
Joined: Wed Feb 14, 2018 3:41 pm

Re: Ok fellow boggelheads, was the correction earlier this year scary?

Post by Minderbinder » Wed Mar 07, 2018 3:21 pm

CnC wrote:
Wed Mar 07, 2018 3:13 pm
Perhaps, but has that happened in our lifetime? 1999 was nothing like that, 2008 was nothing like that. Do we really need a second great depression for us to get a grasp on how much risk we can handle? That seems a bit far fetched, because plain and simple everyone will have lost nearly everything.
2008 was absolutely like that.

When you've got the head of the Fed and Treasury meeting with the biggest banks in the world trying to figure out how to stop the meltdown of the entire financial sector over the course of one weekend, it is a very scary feeling.

wolf359
Posts: 1268
Joined: Sun Mar 15, 2015 8:47 am

Re: Ok fellow boggelheads, was the correction earlier this year scary?

Post by wolf359 » Wed Mar 07, 2018 3:24 pm

CnC wrote:
Wed Mar 07, 2018 3:13 pm
Minderbinder wrote:
Wed Mar 07, 2018 3:07 pm
CnC wrote:
Wed Mar 07, 2018 2:53 pm
As I said it's the first time that I have "lost" money since I started and I'm trying to get a feel for where this lies on the scale from yawn to white knuckle.
This is thus far a complete non-event, though it may or may not be over yet.

The worst test for your resolve will be when unemployment claims are skyrocketing, your friends and colleagues are packing their stuff into boxes because your employer is laying off 40% or going bankrupt entirely, your friends and neighbors are losing their homes and their homes being auctioned off, and the entire financial system feels like it is about to implode, all while your stock portfolio has fallen by 50%+. It's then that you truly get to know how much risk you can handle or should even possess in the first place.

Its one thing to observe your stock portfolio in isolation, something completely different when the shockwaves of a real economic cataclysm are reverberating and unavoidable through your daily life.
Perhaps, but has that happened in our lifetime? 1999 was nothing like that, 2008 was nothing like that. Do we really need a second great depression for us to get a grasp on how much risk we can handle? That seems a bit far fetched, because plain and simple everyone will have lost nearly everything.
Actually, that WAS 2008.

A recession is when a lot of people are losing their jobs.
A depression is when you lost your job, too.

Even during a recession, many people are facing their own private depressions.

If you were working at a dot com in the late 1990's, that also described the tech crash. In 1998, a hedge fund (Long Term Capital) almost took down the financial system. The stock market in the 1970's was so bad that Businessweek declared "The Death of Equities."
Last edited by wolf359 on Wed Mar 07, 2018 3:27 pm, edited 1 time in total.

User avatar
cfs
Posts: 4137
Joined: Fri Feb 23, 2007 1:22 am
Location: ~ Mi Propio Camino ~

Re: Ok fellow bogelheads, was the correction scary or nothing?

Post by cfs » Wed Mar 07, 2018 3:24 pm

Correction?
What correction?
Gracias por leer ~cfs~
~ Member of the Active Retired Force since 2014 ~

User avatar
White Coat Investor
Posts: 13320
Joined: Fri Mar 02, 2007 9:11 pm
Location: Greatest Snow On Earth

Re: Ok fellow bogelheads, was the correction scary or nothing?

Post by White Coat Investor » Wed Mar 07, 2018 3:24 pm

CnC wrote:
Wed Mar 07, 2018 2:53 pm
Hey guys, I know the mantra time in the market not timing, and don't react to the market fluctuations. I am not concerned about any of that.


I just an interested in how the market correction felt to fellow boggelheads here. I'm pretty young (32) and I while I have been investing for a while I got serious about it early last year.


This is the first time since I started paying attention that my accounts went down across the board. So I wanted to guage my feelings and if anything I felt relieved that the dropped a bit and seemed to level out without a major recession.

I realize that this was a correction, not a crash. But the media being what they are is acting like this was a big deal.


I guess my question is this, was this a negligible blip that no reasonable person had any reaction to? Or does the fact that I felt ok about the dip mean my asset allocation is on target with my risk tolerance?


As I said it's the first time that I have "lost" money since I started and I'm trying to get a feel for where this lies on the scale from yawn to white knuckle.
Very much yawn for those of us who invested through 2008-2009. I didn't even get a chance to TLH a purchase from January because it recovered so fast.
1) Invest you must 2) Time is your friend 3) Impulse is your enemy | 4) Basic arithmetic works 5) Stick to simplicity 6) Stay the course

User avatar
NYCPete
Posts: 700
Joined: Thu Apr 12, 2007 1:24 pm
Location: New York, NY (NY/NJ/CT Diehard Chapter)

Re: Ok fellow boggelheads, was the correction earlier this year scary?

Post by NYCPete » Wed Mar 07, 2018 3:26 pm

Minderbinder wrote:
Wed Mar 07, 2018 3:07 pm
CnC wrote:
Wed Mar 07, 2018 2:53 pm
As I said it's the first time that I have "lost" money since I started and I'm trying to get a feel for where this lies on the scale from yawn to white knuckle.
This is thus far a complete non-event, though it may or may not be over yet.

The worst test for your resolve will be when unemployment claims are skyrocketing, your friends and colleagues are packing their stuff into boxes because your employer is laying off 40% or going bankrupt entirely, your friends and neighbors are losing their homes and their homes being auctioned off, and the entire financial system feels like it is about to implode, all while your stock portfolio has fallen by 50%+. It's then that you truly get to know how much risk you can handle or should even possess in the first place.

Its one thing to observe your stock portfolio in isolation, something completely different when the shockwaves of a real economic cataclysm are reverberating and unavoidable through your daily life.
I'd like to highlight Mindbender's response because it really is instructive. Downturns in the stock market are pretty easy to stomach when you have a reasonable expectation that stocks will go back up eventually. It's different when all the news around you is saying that this is a recession that has no visible end in sight, and thus no visible recovery in the near future for stocks.

Best,
Peter
To the extent that a fool knows his foolishness, | He may be deemed wise | A fool who considers himself wise | Is indeed a fool. | | Buddha

runner3081
Posts: 1395
Joined: Mon Aug 22, 2016 3:22 pm

Re: Ok fellow boggelheads, was the correction earlier this year scary?

Post by runner3081 » Wed Mar 07, 2018 3:27 pm

3funder wrote:
Wed Mar 07, 2018 2:54 pm
Nope; I'm annoyed that it was limited in magnitude. I'm young and wish to buy shares on the cheap.
Came here to say this same thing. Upset it didn't tank more.

Minderbinder
Posts: 19
Joined: Wed Feb 14, 2018 3:41 pm

Re: Ok fellow boggelheads, was the correction earlier this year scary?

Post by Minderbinder » Wed Mar 07, 2018 3:28 pm

wolf359 wrote:
Wed Mar 07, 2018 3:24 pm
Actually, that WAS 2008.

A recession is when a lot of people are losing their jobs.
A depression is when you lost your job, too.

Even during a recession, many people are facing their own private depressions.

If you were working at a dot com in the late 1990's, that also described the tech crash.
I really hope to never see a situation like that again. I know recessions will happen but in September 2008 it really felt like the entire world was about to implode. It was absolutely terrifying to lose a huge part of your nest egg at the same time literally EVERYONE you knew was talking about losing jobs, homes, etc. It was completely unavoidable. It hung over everything.

It makes you appreciate you have A LOT more risk in terms of careers, housing, etc than a number in a spreadsheet indicates about your stock portfolio. In some ways you can stress test the latter but the reality is it doesn't come in a vacuum. That 60%+ loss comes at the same time your own job is at risk and there are a flood of people now competing against you for a new one.

On one hand I'm jealous of people who didn't have front row seats to that experience, on another I pity them.
Last edited by Minderbinder on Wed Mar 07, 2018 3:33 pm, edited 1 time in total.

MathWizard
Posts: 2877
Joined: Tue Jul 26, 2011 1:35 pm

Re: Ok fellow boggelheads, was the correction earlier this year scary?

Post by MathWizard » Wed Mar 07, 2018 3:29 pm

What correction?

I was expecting a 25% drop YTD.

Instead, the total stock market (VTSAX) is UP 5.32 % YTD.

On Mar 9, 2009, VTSAX was down 27% YTD, and that was after a 36% loss in 2008,
so over a 50% loss from 1/1/2008 to 3/9/2009

wolf359
Posts: 1268
Joined: Sun Mar 15, 2015 8:47 am

Re: Ok fellow bogelheads, was the correction scary or nothing?

Post by wolf359 » Wed Mar 07, 2018 3:31 pm

Having invested in individual stocks that went to zero during the tech crash, index fund investing is very easy to stomach. VTSAX will NOT be going to zero.

CnC
Posts: 527
Joined: Thu May 11, 2017 12:41 pm

Re: Ok fellow boggelheads, was the correction earlier this year scary?

Post by CnC » Wed Mar 07, 2018 3:34 pm

Minderbinder wrote:
Wed Mar 07, 2018 3:28 pm
wolf359 wrote:
Wed Mar 07, 2018 3:24 pm
Actually, that WAS 2008.

A recession is when a lot of people are losing their jobs.
A depression is when you lost your job, too.

Even during a recession, many people are facing their own private depressions.

If you were working at a dot com in the late 1990's, that also described the tech crash.
I really hope to never see a situation like that again. I know recessions will happen but in September 2008 it really felt like the entire world was about to implode. It was absolutely terrifying to lose a huge part of your nest egg at the same time literally EVERYONE you knew was talking about losing jobs, homes, etc. It was completely unavoidable. It hung over everything.

It makes you appreciate you have A LOT more risk in terms of careers, housing, etc than a number in a spreadsheet indicates about your stock portfolio.

On one hand I'm jealous of people who didn't have front row seats to that experience, on another I pity them.
I must be the exact person you are talking about. I graduated spring of 08 walked from the University to my current employer bought a house and other than hearing my coworkers complain about their 401k's I was not at all impacted. My wife graduated spring of 09 and walked into her current employer.


While I certainly could lose my job or my health or my life at any time 2008 just is not a boogyman to me. I certainly can fathom my portfolio crashing and that worries me, but the whole rest of it just didn't happen in my corner of the world. Blessing or curse, that's just what happened.

User avatar
steadyeddy
Posts: 710
Joined: Tue Mar 31, 2009 5:01 pm
Location: The Alps of the Midwest

Re: Ok fellow bogelheads, was the correction scary or nothing?

Post by steadyeddy » Wed Mar 07, 2018 3:36 pm

My emotional reaction was excitement that the market was finally doing something besides marching steadily upward. It was interesting. I guess I need some more drama in my life!

User avatar
ruralavalon
Posts: 13309
Joined: Sat Feb 02, 2008 10:29 am
Location: Illinois

Re: Ok fellow boggelheads, was the correction earlier this year scary?

Post by ruralavalon » Wed Mar 07, 2018 3:37 pm

Minderbinder wrote:
Wed Mar 07, 2018 3:21 pm
CnC wrote:
Wed Mar 07, 2018 3:13 pm
Perhaps, but has that happened in our lifetime? 1999 was nothing like that, 2008 was nothing like that. Do we really need a second great depression for us to get a grasp on how much risk we can handle? That seems a bit far fetched, because plain and simple everyone will have lost nearly everything. [emphasis added]
2008 was absolutely like that.

When you've got the head of the Fed and Treasury meeting with the biggest banks in the world trying to figure out how to stop the meltdown of the entire financial sector over the course of one weekend, it is a very scary feeling.
No, 2008 was not "everyone . . . lost nearly everything". 2008 was some people (a substantial minority) lost nearly everything (job, home, investments).

Nevertheless 2008 was surely scary for nearly everyone, and was bad enough to test actual risk tolerance.
Last edited by ruralavalon on Wed Mar 07, 2018 3:39 pm, edited 1 time in total.
"Everything should be as simple as it is, but not simpler." - Albert Einstein | Wiki article link:Getting Started

CnC
Posts: 527
Joined: Thu May 11, 2017 12:41 pm

Re: Ok fellow bogelheads, was the correction scary or nothing?

Post by CnC » Wed Mar 07, 2018 3:38 pm

Anyway not here to argue with anyone, I was just asking if it was anything, the overwelming opinion was no it's not.

Thanks for the response :thumbsup

Minderbinder
Posts: 19
Joined: Wed Feb 14, 2018 3:41 pm

Re: Ok fellow boggelheads, was the correction earlier this year scary?

Post by Minderbinder » Wed Mar 07, 2018 3:41 pm

ruralavalon wrote:
Wed Mar 07, 2018 3:37 pm
No, 2008 was not "everyone . . . lost nearly everything". 2008 was some people (a substantial minority) lost nearly everything (job, home, investments).

Nevertheless 2008 was surely scary for nearly everyone, and was bad enough to test actual risk tolerance.
Fair enough. I didn't read the underlined quote closely enough. I agree with your point.

Minderbinder
Posts: 19
Joined: Wed Feb 14, 2018 3:41 pm

Re: Ok fellow boggelheads, was the correction earlier this year scary?

Post by Minderbinder » Wed Mar 07, 2018 3:46 pm

CnC wrote:
Wed Mar 07, 2018 3:34 pm
I must be the exact person you are talking about. I graduated spring of 08 walked from the University to my current employer bought a house and other than hearing my coworkers complain about their 401k's I was not at all impacted. My wife graduated spring of 09 and walked into her current employer.


While I certainly could lose my job or my health or my life at any time 2008 just is not a boogyman to me. I certainly can fathom my portfolio crashing and that worries me, but the whole rest of it just didn't happen in my corner of the world. Blessing or curse, that's just what happened.
I had a similar experience with 2000-01. It just really didn't resonate in my consciousness because I had no assets worth worrying about anyways and entry-level positions were fine.

Much depends on your profession. If you have no business cycle risk in employment then that will allow you to sleep more comfortably when your stocks have been cut in half. If you do, then you start to worry about how you will pay for health insurance for your kids, the mortgage, etc.

MJW
Posts: 298
Joined: Sun Jul 03, 2016 7:40 pm
Location: Pacific Northwest

Re: Ok fellow bogelheads, was the correction scary or nothing?

Post by MJW » Wed Mar 07, 2018 3:47 pm

I was indifferent to it. I didn't view it as a gleeful buying opportunity nor a reason to worry. In my case, there was nothing to be done so I didn't care one way or another.

invst65
Posts: 585
Joined: Thu Nov 27, 2014 11:04 am

Re: Ok fellow bogelheads, was the correction scary or nothing?

Post by invst65 » Wed Mar 07, 2018 3:53 pm

If that one scared you then you need to prepare yourself because at age 32 I'm pretty sure the worse is yet to come.

I tell my stepson who is the same age as you to only take a quick look at his 401k if he wants to when everyone is talking about how good the stock market is doing. If everyone is complaining about how bad it is, take heart because the figures might not look as pretty but you are buying stocks cheaper and in the grand scheme of things that is (probably) a (very) good thing.

Applies only to those who are still working and growing their portfolios, of course. For retirees like me, it's not as simple but I still only look when things are going well.
Last edited by invst65 on Wed Mar 07, 2018 3:58 pm, edited 6 times in total.

User avatar
Phineas J. Whoopee
Posts: 7185
Joined: Sun Dec 18, 2011 6:18 pm

Re: Ok fellow bogelheads, was the correction scary or nothing?

Post by Phineas J. Whoopee » Wed Mar 07, 2018 3:56 pm

It was normal market behavior, to be expected but with timing that is unpredictable. Much larger declines are also normal market behavior.

The financial media's job is not to help you invest. It's to encourage you to buy a Ford F-150. Realize that and what they say makes sense, from their point of view.

PJW

CnC
Posts: 527
Joined: Thu May 11, 2017 12:41 pm

Re: Ok fellow bogelheads, was the correction scary or nothing?

Post by CnC » Wed Mar 07, 2018 4:02 pm

invst65 wrote:
Wed Mar 07, 2018 3:53 pm
If that one scared you then you need to prepare yourself because at age 32 I'm pretty sure the worse is yet to come.

I tell my stepson who is the same age to only look take a quick look at his 401k when everyone is talking about how good the economy is doing. If everyone is complaining about how bad it is, take heart because the figures might not look as pretty but you are buying stocks cheaper and overall that is a really good thing.

Applies only to those who are still working and growing their portfolios, of course. For retirees like me, it's not as simple but I still only look when things are going well.
Well, what I wrote was that it did not scare me at all and I was asking if it was enough to even test a fear guage or not.


I'm sure I will see worse, I just would like to at least put a toe in the water of market drops to make sure I will have an idea how I will react when the next great recession sweeps in.


To be honest I'm kind of surprised and a bit disappointed with the responses. (Responses not the people responding, just cause I don't like an answer doesn't mean it's wrong)


I was hoping that there was some measurement of moderate drop that could help me guage my stomach for the rollercoaster that will eventually come.

But from the sounds of the majority here, nothing means anything until you are in the throes of a major recession and have lost your job. :confused it makes estimating your risk tolerance a bit tough doesn't it?

NotWhoYouThink
Posts: 1880
Joined: Fri Dec 26, 2014 4:19 pm

Re: Ok fellow bogelheads, was the correction scary or nothing?

Post by NotWhoYouThink » Wed Mar 07, 2018 4:04 pm

What is this past tense everyone on this thread is using? DJIA and SP500 are still below their January highs and are down again today. We don't know whether they are headed back up to new record highs, or will fall back to correction/bear territory.

Also, we can't do anything about it, but I'm not sure the drop is completely in the rear view mirror any more.

Fallible
Posts: 6384
Joined: Fri Nov 27, 2009 4:44 pm
Contact:

Re: Ok fellow boggelheads, was the correction earlier this year scary?

Post by Fallible » Wed Mar 07, 2018 4:11 pm

CnC wrote:
Wed Mar 07, 2018 3:19 pm
LiterallyIronic wrote:
Wed Mar 07, 2018 3:15 pm
CnC wrote:
Wed Mar 07, 2018 2:53 pm
As I said it's the first time that I have "lost" money since I started and I'm trying to get a feel for where this lies on the scale from yawn to white knuckle.
It was also the first time that my account balances went down. Which I suppose should make me happy that I finally have enough money in my accounts that market fluctuations can make a bigger dent than my monthly contributions can.
:wink: same here it was an odd feeling seeing both of our combined maxed 401ks dumping money in there and having our balance still go down month to month.

It's just math, I get that but it is a different feeling.
That "feeling" is your emotional risk tolerance and there's nothing like a market correction/crash to help you determine that tolerance. What is your current asset allocations? When you set it, did you ask yourself how much you could afford to lose before needing the money?
Bogleheads® wiki | Investing Advice Inspired by Jack Bogle

invst65
Posts: 585
Joined: Thu Nov 27, 2014 11:04 am

Re: Ok fellow bogelheads, was the correction scary or nothing?

Post by invst65 » Wed Mar 07, 2018 4:11 pm

CnC wrote:
Wed Mar 07, 2018 4:02 pm
invst65 wrote:
Wed Mar 07, 2018 3:53 pm
If that one scared you then you need to prepare yourself because at age 32 I'm pretty sure the worse is yet to come.

I tell my stepson who is the same age to only look take a quick look at his 401k when everyone is talking about how good the economy is doing. If everyone is complaining about how bad it is, take heart because the figures might not look as pretty but you are buying stocks cheaper and overall that is a really good thing.

Applies only to those who are still working and growing their portfolios, of course. For retirees like me, it's not as simple but I still only look when things are going well.
Well, what I wrote was that it did not scare me at all and I was asking if it was enough to even test a fear guage or not.


I'm sure I will see worse, I just would like to at least put a toe in the water of market drops to make sure I will have an idea how I will react when the next great recession sweeps in.


To be honest I'm kind of surprised and a bit disappointed with the responses. (Responses not the people responding, just cause I don't like an answer doesn't mean it's wrong)


I was hoping that there was some measurement of moderate drop that could help me guage my stomach for the rollercoaster that will eventually come.

But from the sounds of the majority here, nothing means anything until you are in the throes of a major recession and have lost your job. :confused it makes estimating your risk tolerance a bit tough doesn't it?
Well, I can assure you that no such fear gauge as you are thinking about exists unless someone has a crystal ball.

It is always possible that all hell will break loose and nothing will ever recover. That's just life on planet earth. There was even a recovery after the great depression even though it took a long time and some people did lose everything. As for the "great recession", as a mostly 401k investor looking back that is still a non-event as far as I'm concerned, probably even positive in the long run. Now as a home-buyer at the time, that's a different story.

Minderbinder
Posts: 19
Joined: Wed Feb 14, 2018 3:41 pm

Re: Ok fellow bogelheads, was the correction scary or nothing?

Post by Minderbinder » Wed Mar 07, 2018 4:20 pm

CnC wrote:
Wed Mar 07, 2018 4:02 pm
I was hoping that there was some measurement of moderate drop that could help me guage my stomach for the rollercoaster that will eventually come.

But from the sounds of the majority here, nothing means anything until you are in the throes of a major recession and have lost your job. :confused it makes estimating your risk tolerance a bit tough doesn't it?
As I know its difficult to convey tone over message board posts, I truly do not mean to sound condescending and am completely sincere, but to a significant extent you are exactly correct.

There is a huge step change of concern that occurs somewhere during a recession. You go from being cocky about staying the course and riding it out to realizing your life suddenly has a lot more at risk than just your portfolio.

So much of your future earning power (indeed your identity itself) is tied up in your employment and career. You spend probably about as much time with your co-workers as you do with your spouse. You can't try to forecast what it feels like when that way of life is jeopardized and you realize from your interactions with peers/colleagues that have been laid off that prospects are extremely bleak because every other company in your industry is putting new bodies on the street every single day. It is then that you truly learn how much risk you are comfortable with.

Again, its one thing to lose half of your worth. Its another entirely to lose half of your worth and your job and have very slim prospects of getting a comparable position.

If you are fortunate to work in a sector that is immune to recessions, then this is obviously quite a bit less of an issue. In that case, you can probably get a good sense for what it feels like by just pretending your house loses 20% and your stock portfolio 60%.
Last edited by Minderbinder on Wed Mar 07, 2018 4:31 pm, edited 2 times in total.

User avatar
Phineas J. Whoopee
Posts: 7185
Joined: Sun Dec 18, 2011 6:18 pm

Re: Ok fellow bogelheads, was the correction scary or nothing?

Post by Phineas J. Whoopee » Wed Mar 07, 2018 4:26 pm

invst65 wrote:
Wed Mar 07, 2018 4:11 pm
...
Well, I can assure you that no such fear gauge as you are thinking about exists unless someone has a crystal ball.
...
I have a crystal ball, but it's in the shop. They told me it would be fixed a couple of years ago, but they need an OEM part whose delivery has been delayed due to unforeseen circumstances.

PJW

User avatar
randomizer
Posts: 1319
Joined: Sun Jul 06, 2014 3:46 pm

Re: Ok fellow bogelheads, was the correction scary or nothing?

Post by randomizer » Wed Mar 07, 2018 4:38 pm

I wasn't scared by what happened. I'm scared about what could happen. The big gains of 2017 seem like irrational exuberance to me. Now the reality is settling in, or starting to. I expect markets to remain flat, or lose any near-term gains they make and perhaps more over the next year or two.
75:25 — HODL the course!

invst65
Posts: 585
Joined: Thu Nov 27, 2014 11:04 am

Re: Ok fellow bogelheads, was the correction scary or nothing?

Post by invst65 » Wed Mar 07, 2018 4:46 pm

randomizer wrote:
Wed Mar 07, 2018 4:38 pm
I wasn't scared by what happened. I'm scared about what could happen.
Look on the bright side. You could get cancer and die before any of your worse case scenarios in regards to the stock market come to pass.

User avatar
Phineas J. Whoopee
Posts: 7185
Joined: Sun Dec 18, 2011 6:18 pm

Re: Ok fellow bogelheads, was the correction scary or nothing?

Post by Phineas J. Whoopee » Wed Mar 07, 2018 4:49 pm

CnC wrote:
Wed Mar 07, 2018 4:02 pm
...
But from the sounds of the majority here, nothing means anything until you are in the throes of a major recession and have lost your job. :confused it makes estimating your risk tolerance a bit tough doesn't it?
Hi CnC.

That is what quite a lot of people say these days around here, but I agree it isn't helpful. If the only way to gauge one's fear of drowning is to drown, what good is that?

A better model, referred to upthread, is Larry Swedroe's concept of need, ability, and willingness to take risk. I suggest you read the linked wiki article, and Larry's book it cites, and research further, but I'll try to encapsulate it briefly.

Need is an estimate about how much risk you have to take in order to reach your financial goals. Ability is an estimate about how much risk you can afford to take without failing to meet your goals, and comes into play when you're nearly or all the way there. Willingness is about philosophy, social conditions, and emotional responses.

His suggestion is to use the lowest among those to choose an asset allocation.

We refer to willingness a lot recently, but need and ability feed into the question strongly too.

If you're still disappointed in the answers then that's fine, your reaction is your reaction, but maybe I've been able to help a little.

To give credit where it's due the concept is originally Swedroe's, not mine.

PJW

Fallible
Posts: 6384
Joined: Fri Nov 27, 2009 4:44 pm
Contact:

Re: Ok fellow bogelheads, was the correction scary or nothing?

Post by Fallible » Wed Mar 07, 2018 4:54 pm

CnC wrote:
Wed Mar 07, 2018 4:02 pm
...
I'm sure I will see worse, I just would like to at least put a toe in the water of market drops to make sure I will have an idea how I will react when the next great recession sweeps in.

To be honest I'm kind of surprised and a bit disappointed with the responses. (Responses not the people responding, just cause I don't like an answer doesn't mean it's wrong)

I was hoping that there was some measurement of moderate drop that could help me guage my stomach for the rollercoaster that will eventually come. ...
How much have you read about risk tolerance, how it's about knowing yourself, how it changes often, and how to determine it? Here are four sources to start:

-The Bogleheads' Guide to Investing, Chapter 19 on "Mastering Your Investments Means Mastering Your Emotions."

-The wiki's "Risk tolerance" page with links to Larry Swedroe's three blogs on Need, Ability, and Willingness to take risk, willingness referring to risk tolerance. https://www.bogleheads.org/wiki/Risk_tolerance

-The risk tolerance sections in Rick Ferri's book, All About Asset Allocation, 2nd ed.

-The book by WSJ columnist Jason Zweig, Your Money & Your Brain, the chapter on "Risk."
Last edited by Fallible on Wed Mar 07, 2018 4:58 pm, edited 2 times in total.
Bogleheads® wiki | Investing Advice Inspired by Jack Bogle

MJW
Posts: 298
Joined: Sun Jul 03, 2016 7:40 pm
Location: Pacific Northwest

Re: Ok fellow bogelheads, was the correction scary or nothing?

Post by MJW » Wed Mar 07, 2018 4:55 pm

CnC wrote:
Wed Mar 07, 2018 4:02 pm
To be honest I'm kind of surprised and a bit disappointed with the responses. (Responses not the people responding, just cause I don't like an answer doesn't mean it's wrong)


I was hoping that there was some measurement of moderate drop that could help me guage my stomach for the rollercoaster that will eventually come.

But from the sounds of the majority here, nothing means anything until you are in the throes of a major recession and have lost your job. :confused it makes estimating your risk tolerance a bit tough doesn't it?
I think your conclusion here is a bit overstated. It sounds like what you were hoping to find was that the emotional responses of the forum members to market fluctuations would fit neatly into some sort of logarithmic scale. That is, a certain magnitude of market drop will result in a predictable level of emotional reaction. A minor blip means some minor distress; a moderate blip means moderate distress and so on. You aren't going to find uniformity here, but that doesn't mean the responses you received should be dismissed as unhelpful. Another way to look at it is, if there were a formula, you would be bound by whatever it is. It's much better (in my opinion) to have the opportunity to determine/discover this sort of thing for yourself.

You may not have experience with a dramatic drop in the market, but I'm sure you've had other experiences in your life that have tested or confirmed your appetite for taking risk. Think about other decisions you've made and the rationale for why you chose what you did. We really just have to do the best we can with what we already know about ourselves, our financial situation and the time horizon we're dealing with. For what it's worth, my personal decision was to risk the possibility of feeling very bad somewhere early to midstream rather than almost certainly sell myself short in the long term. Feeling bad is just that -- a feeling. The pot of gold at the end of the rainbow will be very real when I get there. :)

wolf359
Posts: 1268
Joined: Sun Mar 15, 2015 8:47 am

Re: Ok fellow bogelheads, was the correction scary or nothing?

Post by wolf359 » Wed Mar 07, 2018 4:56 pm

Risk tolerance is very individual. It can also change over time, depending upon your circumstances. The thing is, you don't know where your limits are, until you're at your limits.

If you find that when the market drops, you're trying to find additional money to throw it in, you're not there yet.

If you find that you're down a year's salary in a week, but you're still trying to throw money in, you're not there yet.

If you find that you're down five year's salary, the market has been down for a couple of years, you've thrown every spare penny into the market so you have no liquid reserves, you're worried about your job, but you still wish you could throw more in, you're not there yet.

It's when you can't sleep at night that you're there. Or if you find yourself wanting to increase your bond holdings while the market is down, in case it goes down further. Or you start thinking in terms of "cutting your losses," "throwing good money after bad," or the 0.1% return on a bank account would make you happy.

There isn't a point at the market where there's a good test. Just keep in mind that the market fluctuates, that 10% drops at least once a year are common (even during up years), and that 50% drops are going to occur at least twice in your investing lifetime (and perhaps more).

What happens when you discover that you have exceeded your risk tolerance, is that you come back here for support and to talk it through. The ideal situation is that you wait it out until the market recovers, then adjust your bond portfolio accordingly. Sometimes you'll find yourself turning off the tv and stop logging into your account until it's over.

If you have a high savings rate, then market drops during accumulation are easy. Your savings tends to overwhelm the drops, especially when your balances are low. By the time the balances are high, you get accustomed to larger swings. If you had $2 million invested this year, a 10% drop would have meant your account dropped by $200,000 in a month. Would that get your attention? By the time you actually attain $2 million, probably not.

CnC
Posts: 527
Joined: Thu May 11, 2017 12:41 pm

Re: Ok fellow bogleheads, was the correction scary or nothing?

Post by CnC » Wed Mar 07, 2018 5:18 pm

There are too many thought out responses to reply to all of them so let me give some general answers.


My family is financially sound my career is pretty recession-resistant I am already vested for a pension (I certainly could lose my job but it wouldn't be tied to the economy) we save/invest ±50% of our income and have no debt house or car loans ect we could cut +30% of our budget if we needed to. I have no intention of touching my investments until I retire.

Mathematically speaking if we can't make it I really don't know a single person who can.

But as the person who brought up drowning said, finding out after the fact doesn't do much good. Because by every metric i have looked at and my own feelings I have a rediculously high risk tolerance.

But, being relatively young I understand that it's easy to be over confident in your abilities.

If this all really is a crap shoot so be it, but why even talk about risk tolerance if there is no method of gauging it until after the fact?


And yes, I was hoping for some sort of formula where I could see ahh X% correction makes the typical person feel "_____" I could then judge my feelings against that point to see where my risk tolerance is. I still feel that is the case, since you can apply a similar formula to nearly every thing in life. (I'm an engineer by the way)

User avatar
Scott S
Posts: 1400
Joined: Mon Nov 24, 2008 3:28 am
Location: SW CR IA US NA PE

Re: Ok fellow bogelheads, was the correction scary or nothing?

Post by Scott S » Wed Mar 07, 2018 5:28 pm

randomizer wrote:
Wed Mar 07, 2018 4:38 pm
I wasn't scared by what happened. I'm scared about what could happen. The big gains of 2017 seem like irrational exuberance to me. Now the reality is settling in, or starting to. I expect markets to remain flat, or lose any near-term gains they make and perhaps more over the next year or two.
I think that sentiment is behind a lot of the jitters this year. The feeling that the market is at a top and vulnerable to perturbations caused by outrageous things in the news. That the market more or less comes back the day after each wild news event is seeming like a new pattern for 2018.

(Not that it affects what I do outside of rebalancing, though.)
My Plan: (Age-10)% in bonds until I reach age 60, 50/50 thereafter. Equity split: 50/50 US/Int'l, Bond split: 50/50 TBM/TIPS.

dogagility
Posts: 107
Joined: Fri Feb 24, 2017 6:41 am

Re: Ok fellow bogleheads, was the correction scary or nothing?

Post by dogagility » Wed Mar 07, 2018 5:42 pm

The latest correction? That was a yawner. I mostly enjoyed how the talking heads thought the world was ending and getting a good chuckle!

I was 25 years from retirement in 2008. That was also a non-event for me because I trusted the economy would rebound before I retired... given its history.

My only regret in 2008 was being invested 100% in stocks and not having any invested money to purchase more stock. It was a SUPERB opportunity for those having money invested in bonds. Oh well... :sharebeer

MJW
Posts: 298
Joined: Sun Jul 03, 2016 7:40 pm
Location: Pacific Northwest

Re: Ok fellow bogleheads, was the correction scary or nothing?

Post by MJW » Wed Mar 07, 2018 5:52 pm

CnC wrote:
Wed Mar 07, 2018 5:18 pm
If this all really is a crap shoot so be it, but why even talk about risk tolerance if there is no method of gauging it until after the fact?

And yes, I was hoping for some sort of formula where I could see ahh X% correction makes the typical person feel "_____" I could then judge my feelings against that point to see where my risk tolerance is. I still feel that is the case, since you can apply a similar formula to nearly every thing in life. (I'm an engineer by the way)
Read through forum threads from 2008-09 then; on this forum and others. You can see how people responded in real time while a significant event was happening. I believe there is a legendary one on this very forum. That may be more helpful to you than asking how the forum members dealt with what essentially equates to a fart in the wind.

And again, while you may not be able to predict your risk tolerance with precision, you can make a reasonable guess from how you approached or responded to other events in your life. It sounds like your financial situation is solid and your risk tolerance is considerably high. So, go with that. If you're worried you might be "wrong" about this, well that is, ahem, the risk you take by taking risk. :wink:

At this point it probably will not be helpful for you to analyze it to death. I'm a high analyzer myself, so I understand the inclination to noodle over something like this until you feel you have it "right." In fact, that kept me from investing at all for a while until I threw up my hands and just went for it. I gave myself permission to change my approach later if I felt at some point that I had a better idea of what I do. I haven't done so yet, and I'm glad I got in the game rather than continue to wait on the sidelines.

dknightd
Posts: 519
Joined: Wed Mar 07, 2018 11:57 am

Re: Ok fellow bogleheads, was the correction scary or nothing?

Post by dknightd » Wed Mar 07, 2018 5:54 pm

This little correction was nothing. I would not be surprised if we had a bigger correction in the next 1-10 years.
In fact, I would be surprised if we did not.
You are 32, probably dollar cost averaging as you save for retirement, so a dip could actually be good for you.
Keep enough money in the bank to cover your living expenses should you lose your job. Depending on what
you do for a living that could be 1 month, or 1 year.
I'm heavy in cash like products right now because I would not be surprised to see a stock market drop in the next few years,
and I'd like to retire in the next few years. When I do retire I want 1-3 years of money in cash like products, so I don't have to worry right away.
Everybody deals with risk differently. Or more particularly, people deal with actual losses in different ways. My mantra is to sell when things are going up, and buy when things are going down.

ShabonScribe
Posts: 10
Joined: Sun Feb 11, 2018 4:04 pm

Re: Ok fellow bogleheads, was the correction scary or nothing?

Post by ShabonScribe » Wed Mar 07, 2018 5:56 pm

I had just finished grad school and started my first post-doctoral job in the fall of 2008. I'd done a fair amount of reading into how the markets do and don't work - I cut my undergraduate teeth on Malkiel - and by spring,2009, finally cut through the media-driven hype and recognized the buying opportunity for what it was. Unfortunately, I wasn't able to scrape together the $3K minimum to open a Roth IRA with Vanguard until that summer.

The market's been very good to me since.

Like many of the posters here, I don't see anything "scary" about this. The scary part was the unrelenting climb in equities prices and hoping things would cool off so I could buy more. We're finally seeing that now.

My only attempt at anything resembling market timing was moving my kids' 529 money from 100% equities to a much more bond-heavy portfolio back in mid-January. They won't need to tap that money for a while but I wanted to lock in the gains, just in case. My horizon is sufficiently long that I can sleep well if I miss the next rise.

Our retirement money stays right where it is. Dollar-cost averaging is and will remain our friend.
Last edited by ShabonScribe on Wed Mar 07, 2018 5:57 pm, edited 1 time in total.

PFInterest
Posts: 1446
Joined: Sun Jan 08, 2017 12:25 pm

Re: Ok fellow bogleheads, was the correction scary or nothing?

Post by PFInterest » Wed Mar 07, 2018 5:57 pm

CnC wrote:
Wed Mar 07, 2018 2:53 pm
Hey guys, I know the mantra time in the market not timing, and don't react to the market fluctuations. I am not concerned about any of that.


I just an interested in how the market correction felt to fellow boggelheads here. I'm pretty young (32) and I while I have been investing for a while I got serious about it early last year.


This is the first time since I started paying attention that my accounts went down across the board. So I wanted to guage my feelings and if anything I felt relieved that the dropped a bit and seemed to level out without a major recession.

I realize that this was a correction, not a crash. But the media being what they are is acting like this was a big deal.


I guess my question is this, was this a negligible blip that no reasonable person had any reaction to? Or does the fact that I felt ok about the dip mean my asset allocation is on target with my risk tolerance?


As I said it's the first time that I have "lost" money since I started and I'm trying to get a feel for where this lies on the scale from yawn to white knuckle.
i rebalanced....which is business as usual.

Post Reply