What’s your plan for a market downturn?

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theplayer11
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Re: What’s your plan for a market downturn?

Post by theplayer11 » Sun Jul 01, 2018 1:32 pm

market drops 25%, then I'm selling half my bonds(33% of portfolio) and buying VTI. If it drops to 40%, i'm selling the other half of my bonds. I will re-balance when stocks get back to where they were before the drop.

edge
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Re: What’s your plan for a market downturn?

Post by edge » Sun Jul 01, 2018 1:38 pm

I would buy stocks.

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JoMoney
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Re: What’s your plan for a market downturn?

Post by JoMoney » Sun Jul 01, 2018 2:57 pm

Same thing I've been doing since the end of January.
If it was deep enough, I might consider converting some retirement accounts with after-tax basis.
"To achieve satisfactory investment results is easier than most people realize; to achieve superior results is harder than it looks." - Benjamin Graham

Silverado
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Re: What’s your plan for a market downturn?

Post by Silverado » Sun Jul 01, 2018 3:26 pm

MN-Investor wrote:
Sat Jun 30, 2018 9:39 pm
My husband and I have always been heavily into stocks, probably about 90% stocks in 2008. We kept buying stocks in 2009. At 12/31/2014 we were 80% stocks, 20% bonds and cash.

When my husband retired mid-2016, we shifted to 40% stocks, 60% bonds and cash. I'll probably stay with that percentage for a few years. It will stand me well if there is a stock market downturn. I figure 40% stocks is high enough for early retirement.
You must have really been piling money into bonds from '09 to end of '14 to have your stock percentage go down while stocks were on a pretty good run.

On the OP, we will do the same as we have before, nothing different. Except maybe shift from two active funds with about $60,000 in gains to much lower cost index funds like the rest of our money. They continue to be good performers so we don't want to take the tax hit right now.

2015
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Re: What’s your plan for a market downturn?

Post by 2015 » Sun Jul 01, 2018 7:41 pm

JBTX wrote:
Sat Jun 30, 2018 7:22 pm
Mostly enjoying the inevitable hysteria in the "stocks in freefall" thread.

...
This.
I'll stock up on popcorn and it'll be better than a movie any day. It's only when the tsunami comes in that you see which of the overconfident should never have been that deep in the water in the first place.

Personally, I'll be doing the same thing in a downturn as I do in a market upturn. Follow the conclusions reached in my IPS as a result of having thoroughly thought through my rationale and process in advance so I don't have to question these while the waves crash ashore.

inbox788
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Re: What’s your plan for a market downturn?

Post by inbox788 » Sun Jul 01, 2018 7:56 pm

Cunir wrote:
Sat Jun 30, 2018 6:25 pm
If you rebalance during a downturn, though, when everything is going down, (so you’re actually selling funds to buy other funds), doesn’t that just mean your locking in your losses?
If you mean rebalancing by adding new money though, then I see the benefit in that
BoggledHead2 wrote:
Sat Jun 30, 2018 6:47 pm
* rebalance with NEW money ideally
What new money? Where is everyone finding "new money"? I've got plans for all the old and new money I have. Upturn or downturn, I rebalance when I've reached my rebalance bands. Every other day, the market is in an upturn or a downturn, sometimes 0.2% other times more and rarely much more. It's just a question of degree. Does someone have a different plan whether the market is up 1% vs down 1% on a given day or week? +/- 3%? 5%?

Sometimes, acting triggers a positive momentum trend, while other times, you simply get whipped sawed. Since I don't know which is going to happen beforehand, I simply go with the punches.

Rethink the Momentum Strategy
https://www.linkedin.com/pulse/rethink- ... ng-cfa-mfe

WildBill
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Re: What’s your plan for a market downturn?

Post by WildBill » Sun Jul 01, 2018 8:01 pm

Howdy

As in the past, I will stock up on whatever is on sale.

W B
"Through chances various, through all vicissitudes, we make our way." Virgil, The Aeneid

JBTX
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Re: What’s your plan for a market downturn?

Post by JBTX » Mon Jul 02, 2018 10:33 am

2015 wrote:
Sun Jul 01, 2018 7:41 pm
JBTX wrote:
Sat Jun 30, 2018 7:22 pm
Mostly enjoying the inevitable hysteria in the "stocks in freefall" thread.

...
This.
I'll stock up on popcorn and it'll be better than a movie any day. It's only when the tsunami comes in that you see which of the overconfident should never have been that deep in the water in the first place.

Personally, I'll be doing the same thing in a downturn as I do in a market upturn. Follow the conclusions reached in my IPS as a result of having thoroughly thought through my rationale and process in advance so I don't have to question these while the waves crash ashore.
While many here will remain diligent I suspect even here there will be a significant fallout and disillusionment. Based on some of the posts here, many have experienced a mostly up market and even the drops have reversed fairly quickly. A 1970s style shake out, or God forbid a Japan-lite will test the convictions of many.

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Doom&Gloom
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Re: What’s your plan for a market downturn?

Post by Doom&Gloom » Mon Jul 02, 2018 10:57 am

JBTX wrote:
Mon Jul 02, 2018 10:33 am
2015 wrote:
Sun Jul 01, 2018 7:41 pm
JBTX wrote:
Sat Jun 30, 2018 7:22 pm
Mostly enjoying the inevitable hysteria in the "stocks in freefall" thread.

...
This.
I'll stock up on popcorn and it'll be better than a movie any day. It's only when the tsunami comes in that you see which of the overconfident should never have been that deep in the water in the first place.

Personally, I'll be doing the same thing in a downturn as I do in a market upturn. Follow the conclusions reached in my IPS as a result of having thoroughly thought through my rationale and process in advance so I don't have to question these while the waves crash ashore.
While many here will remain diligent I suspect even here there will be a significant fallout and disillusionment. Based on some of the posts here, many have experienced a mostly up market and even the drops have reversed fairly quickly. A 1970s style shake out, or God forbid a Japan-lite will test the convictions of many.
+1

I am certain that I will be following that thread closely as I anticipate the same.

I can only hope I am not whimpering and curled up in the fetal position while doing so. At least if I am, I will be unable to make any rash decisions.

WhiteMaxima
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Re: What’s your plan for a market downturn?

Post by WhiteMaxima » Mon Jul 02, 2018 11:00 am

Do nothing and rebalance.

grok87
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Re: What’s your plan for a market downturn?

Post by grok87 » Mon Jul 02, 2018 11:02 am

Cunir wrote:
Sat Jun 30, 2018 5:32 pm
Hello. First post, and I was just wondering if anyone has put any plans in place already for the long-predicted downturn. Do you know what you’re going to do when it happens?

I realise that it’s basically impossible to predict when a prolonged dowturn is going to happen — some clever economists are saying maybe next year, some are saying maybe the year after that, but no one really knows — I guess we’ll only know when it happens!
And I also appreciate that trying to guess where the bottom is, and the eventual turn, is also a mug’s game, so, given all of that, I guess my “plan” is thus: resist the temptation to sell any of my funds (I’m 100% in equity funds), even when their prices are in free-fall, and just keep topping them up with my wages every month as they go down. It will be painful to watch for a year or two, but topping them up all the way down will hopefully bear fruit in the long run.

The only other plan I’m possibly thinking about is selling some of the funds next year and keeping the cash ready to buy back near the bottom. But that seems to rely a lot on luck, guessing the best times to do it, and I’m not a very lucky guy! And I could end up missing a year or more of gains.

Just wondering what everyone’s thoughts are
Welcome to the forum,
My plan is here.
viewtopic.php?f=10&t=245377
3 legged stool approach.
Goal is 1/3 my retirement income from social security, 1/3 from employer pension/“tips ladder”, 1/3 from risk-portfolio.
So if the market crashes I will just rebalance my risk portfolio and not break a sweat.

“Keep calm and boglehead on” KCBO.

Cheers,
Grok
Keep calm and Boglehead on. KCBO.

grok87
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Re: What’s your plan for a market downturn?

Post by grok87 » Mon Jul 02, 2018 11:10 am

JBTX wrote:
Mon Jul 02, 2018 10:33 am
2015 wrote:
Sun Jul 01, 2018 7:41 pm
JBTX wrote:
Sat Jun 30, 2018 7:22 pm
Mostly enjoying the inevitable hysteria in the "stocks in freefall" thread.

...
This.
I'll stock up on popcorn and it'll be better than a movie any day. It's only when the tsunami comes in that you see which of the overconfident should never have been that deep in the water in the first place.

Personally, I'll be doing the same thing in a downturn as I do in a market upturn. Follow the conclusions reached in my IPS as a result of having thoroughly thought through my rationale and process in advance so I don't have to question these while the waves crash ashore.
While many here will remain diligent I suspect even here there will be a significant fallout and disillusionment. Based on some of the posts here, many have experienced a mostly up market and even the drops have reversed fairly quickly. A 1970s style shake out, or God forbid a Japan-lite will test the convictions of many.
Yep. My plan, 3 legged stool approach
viewtopic.php?f=10&t=245377
Is constructed for a Japan like scenario (stocks crash 50% and stay down for 10 years. What happened in Japan starting in 1990 was actually worse. I think stocks crashed by like 75% and stayed down for 20 years.
Keep calm and Boglehead on. KCBO.

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HomerJ
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Re: What’s your plan for a market downturn?

Post by HomerJ » Mon Jul 02, 2018 11:16 am

Cunir wrote:
Sat Jun 30, 2018 5:32 pm
Hello. First post, and I was just wondering if anyone has put any plans in place already for the long-predicted downturn. Do you know what you’re going to do when it happens?

I realise that it’s basically impossible to predict when a prolonged dowturn is going to happen — some clever economists are saying maybe next year, some are saying maybe the year after that, but no one really knows — I guess we’ll only know when it happens!
And I also appreciate that trying to guess where the bottom is, and the eventual turn, is also a mug’s game, so, given all of that, I guess my “plan” is thus: resist the temptation to sell any of my funds (I’m 100% in equity funds), even when their prices are in free-fall, and just keep topping them up with my wages every month as they go down. It will be painful to watch for a year or two, but topping them up all the way down will hopefully bear fruit in the long run.

The only other plan I’m possibly thinking about is selling some of the funds next year and keeping the cash ready to buy back near the bottom. But that seems to rely a lot on luck, guessing the best times to do it, and I’m not a very lucky guy! And I could end up missing a year or more of gains.

Just wondering what everyone’s thoughts are
Your original thought is correct.

Stay the course. Continue to invest with new money.

I assume you are many years from retirement. Do you have an emergency fund? Note that a stock crash/recession is accompanied by job losses. If you lose your job, will you be able to survive for 6 months or a year while you look for a new one?
The J stands for Jay

MnD
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Re: What’s your plan for a market downturn?

Post by MnD » Mon Jul 02, 2018 11:17 am

Rebalance if and only if re-balancing bands are breached.
Tax-loss harvest if opportunities arise.
I don't mess with reallocating new money because after 32 years in, it's not enough to move the meter and my IPS stipulates new money goes in fixed at my AA to avoid tinkering. Chuckle when my co-workers discuss "getting out" (after large declines) until things settle down.

montanagirl
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Location: Montana

Re: What’s your plan for a market downturn?

Post by montanagirl » Mon Jul 02, 2018 11:19 am

Stay the course. I'm 55/45 stocks bonds now and I'm 69.

I have enough in MMkt to get me through tight spots and my SS will begin in September.

Tamalak
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Re: What’s your plan for a market downturn?

Post by Tamalak » Mon Jul 02, 2018 11:19 am

In good times: buy and hold

In bad times: cry and hold

BoggledHead2
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Re: What’s your plan for a market downturn?

Post by BoggledHead2 » Mon Jul 02, 2018 2:58 pm

inbox788 wrote:
Sun Jul 01, 2018 7:56 pm
Cunir wrote:
Sat Jun 30, 2018 6:25 pm
If you rebalance during a downturn, though, when everything is going down, (so you’re actually selling funds to buy other funds), doesn’t that just mean your locking in your losses?
If you mean rebalancing by adding new money though, then I see the benefit in that
BoggledHead2 wrote:
Sat Jun 30, 2018 6:47 pm
* rebalance with NEW money ideally
What new money? Where is everyone finding "new money"? I've got plans for all the old and new money I have. Upturn or downturn, I rebalance when I've reached my rebalance bands. Every other day, the market is in an upturn or a downturn, sometimes 0.2% other times more and rarely much more. It's just a question of degree. Does someone have a different plan whether the market is up 1% vs down 1% on a given day or week? +/- 3%? 5%?

Sometimes, acting triggers a positive momentum trend, while other times, you simply get whipped sawed. Since I don't know which is going to happen beforehand, I simply go with the punches.

Rethink the Momentum Strategy
https://www.linkedin.com/pulse/rethink- ... ng-cfa-mfe
“New money” = my next paycheck ... I max 401k, max Roth, and then sweep remainder to high yield savings or index funds

When I get 3-5% off my target allocation - that “new money” goes where the market tells me it needs to

Also, by “new money” I mean my preference to rebalance by adding funds rather than selling X to buy/balance Y

BoggledHead2
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Re: What’s your plan for a market downturn?

Post by BoggledHead2 » Mon Jul 02, 2018 2:58 pm

inbox788 wrote:
Sun Jul 01, 2018 7:56 pm
Cunir wrote:
Sat Jun 30, 2018 6:25 pm
If you rebalance during a downturn, though, when everything is going down, (so you’re actually selling funds to buy other funds), doesn’t that just mean your locking in your losses?
If you mean rebalancing by adding new money though, then I see the benefit in that
BoggledHead2 wrote:
Sat Jun 30, 2018 6:47 pm
* rebalance with NEW money ideally
What new money? Where is everyone finding "new money"? I've got plans for all the old and new money I have. Upturn or downturn, I rebalance when I've reached my rebalance bands. Every other day, the market is in an upturn or a downturn, sometimes 0.2% other times more and rarely much more. It's just a question of degree. Does someone have a different plan whether the market is up 1% vs down 1% on a given day or week? +/- 3%? 5%?

Sometimes, acting triggers a positive momentum trend, while other times, you simply get whipped sawed. Since I don't know which is going to happen beforehand, I simply go with the punches.

Rethink the Momentum Strategy
https://www.linkedin.com/pulse/rethink- ... ng-cfa-mfe
“New money” = my next paycheck ... I max 401k, max Roth, and then sweep remainder to high yield savings or index funds

When I get 3-5% off my target allocation - that “new money” goes where the market tells me it needs to

Also, by “new money” I mean my preference to rebalance by adding funds rather than selling X to buy/balance Y

2015
Posts: 2181
Joined: Mon Feb 10, 2014 2:32 pm

Re: What’s your plan for a market downturn?

Post by 2015 » Mon Jul 02, 2018 3:00 pm

Doom&Gloom wrote:
Mon Jul 02, 2018 10:57 am
JBTX wrote:
Mon Jul 02, 2018 10:33 am
2015 wrote:
Sun Jul 01, 2018 7:41 pm
JBTX wrote:
Sat Jun 30, 2018 7:22 pm
Mostly enjoying the inevitable hysteria in the "stocks in freefall" thread.

...
This.
I'll stock up on popcorn and it'll be better than a movie any day. It's only when the tsunami comes in that you see which of the overconfident should never have been that deep in the water in the first place.

Personally, I'll be doing the same thing in a downturn as I do in a market upturn. Follow the conclusions reached in my IPS as a result of having thoroughly thought through my rationale and process in advance so I don't have to question these while the waves crash ashore.
While many here will remain diligent I suspect even here there will be a significant fallout and disillusionment. Based on some of the posts here, many have experienced a mostly up market and even the drops have reversed fairly quickly. A 1970s style shake out, or God forbid a Japan-lite will test the convictions of many.
+1

I am certain that I will be following that thread closely as I anticipate the same.

I can only hope I am not whimpering and curled up in the fetal position while doing so. At least if I am, I will be unable to make any rash decisions.
The problem with a market like we've had for the past ten years is the overconfident have waded farther and farther from the simplicity shore as it has appeared safer to go deeper into the waters of complexity. Remember those people in videos of the 2004 Indian Ocean earthquake standing frozen in the water as the tsunami roared towards them? There'll be plenty like that when the next Black Swan hits. Hint: it won't be like the last.

grok87
Posts: 8511
Joined: Tue Feb 27, 2007 9:00 pm

Re: What’s your plan for a market downturn?

Post by grok87 » Mon Jul 02, 2018 3:11 pm

2015 wrote:
Mon Jul 02, 2018 3:00 pm
Doom&Gloom wrote:
Mon Jul 02, 2018 10:57 am
JBTX wrote:
Mon Jul 02, 2018 10:33 am
2015 wrote:
Sun Jul 01, 2018 7:41 pm
JBTX wrote:
Sat Jun 30, 2018 7:22 pm
Mostly enjoying the inevitable hysteria in the "stocks in freefall" thread.

...
This.
I'll stock up on popcorn and it'll be better than a movie any day. It's only when the tsunami comes in that you see which of the overconfident should never have been that deep in the water in the first place.

Personally, I'll be doing the same thing in a downturn as I do in a market upturn. Follow the conclusions reached in my IPS as a result of having thoroughly thought through my rationale and process in advance so I don't have to question these while the waves crash ashore.
While many here will remain diligent I suspect even here there will be a significant fallout and disillusionment. Based on some of the posts here, many have experienced a mostly up market and even the drops have reversed fairly quickly. A 1970s style shake out, or God forbid a Japan-lite will test the convictions of many.
+1

I am certain that I will be following that thread closely as I anticipate the same.

I can only hope I am not whimpering and curled up in the fetal position while doing so. At least if I am, I will be unable to make any rash decisions.
The problem with a market like we've had for the past ten years is the overconfident have waded farther and farther from the simplicity shore as it has appeared safer to go deeper into the waters of complexity. Remember those people in videos of the 2004 Indian Ocean earthquake standing frozen in the water as the tsunami roared towards them? There'll be plenty like that when the next Black Swan hits. Hint: it won't be like the last.
Good analogy.
Keep calm and Boglehead on. KCBO.

Xrayman69
Posts: 46
Joined: Fri Jun 01, 2018 8:52 pm

Re: What’s your plan for a market downturn?

Post by Xrayman69 » Mon Jul 02, 2018 3:50 pm

1. Continue to invest on the regular timed basis every week (personal taxable account and 529 plan) and every month for work related tax advantage accounts.

2. Have a 20 year outlook before drawing from any accounts. High income earner and thus feel more comfortable keeping Emergnecy funds around 18 months as finding a new job would likely require relocation or riding out the storm locally if needed.

3. DONT PANIC. A bear market will occur. I don’t know when and neither does anyone else. Those talking heads on TV are not accountable to anyone when they get it wrong (late or early). Only one time in my life I’ve actually witnessed a person get it exactly right to the date (mark Haynes?sp? When retrospectively on the morning of the bottom in 2008-9 recession he said it was the bottom based upon the fact there was no more money fleeing as all the weak hands have been flushed out and now everyone is is either an observer or a buyer (to some extent).

stimulacra
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Re: What’s your plan for a market downturn?

Post by stimulacra » Mon Jul 02, 2018 3:54 pm

I plan to buy at the bottom.

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Doom&Gloom
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Re: What’s your plan for a market downturn?

Post by Doom&Gloom » Mon Jul 02, 2018 4:03 pm

grok87 wrote:
Mon Jul 02, 2018 3:11 pm
2015 wrote:
Mon Jul 02, 2018 3:00 pm
Doom&Gloom wrote:
Mon Jul 02, 2018 10:57 am
JBTX wrote:
Mon Jul 02, 2018 10:33 am
2015 wrote:
Sun Jul 01, 2018 7:41 pm


This.
I'll stock up on popcorn and it'll be better than a movie any day. It's only when the tsunami comes in that you see which of the overconfident should never have been that deep in the water in the first place.

Personally, I'll be doing the same thing in a downturn as I do in a market upturn. Follow the conclusions reached in my IPS as a result of having thoroughly thought through my rationale and process in advance so I don't have to question these while the waves crash ashore.
While many here will remain diligent I suspect even here there will be a significant fallout and disillusionment. Based on some of the posts here, many have experienced a mostly up market and even the drops have reversed fairly quickly. A 1970s style shake out, or God forbid a Japan-lite will test the convictions of many.
+1

I am certain that I will be following that thread closely as I anticipate the same.

I can only hope I am not whimpering and curled up in the fetal position while doing so. At least if I am, I will be unable to make any rash decisions.
The problem with a market like we've had for the past ten years is the overconfident have waded farther and farther from the simplicity shore as it has appeared safer to go deeper into the waters of complexity. Remember those people in videos of the 2004 Indian Ocean earthquake standing frozen in the water as the tsunami roared towards them? There'll be plenty like that when the next Black Swan hits. Hint: it won't be like the last.
Good analogy.
A graphic analogy, but I'm not sure it is quite on the mark. Extrapolating from my own experience (yeah, I know) I don't think that complexity will play as much of a role as discipline. In 1987 my investments were smaller but relatively complex. I barely blinked an eye, but it happened so quickly it was easy to do nothing. In 2000 my investments were greater but noticeably simpler. I barely noticed the drop in the market. In 2008 my investments were greater still and a tiny bit simpler yet. I almost threw in part of a towel at the very bottom but resisted.

YMMV, of course, but my contention is that it matters not much whether your finances or your plan is simple or complex if you don't have the resolve to implement your plan. I'm afraid that is what will be on display in the freefall thread.
Last edited by Doom&Gloom on Mon Jul 02, 2018 4:26 pm, edited 1 time in total.

david99
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Re: What’s your plan for a market downturn?

Post by david99 » Mon Jul 02, 2018 4:17 pm

Rebalance, stay the course, and have some fun.

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danielc
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Re: What’s your plan for a market downturn?

Post by danielc » Mon Jul 02, 2018 5:01 pm

Cunir wrote:
Sat Jun 30, 2018 5:32 pm
Hello. First post, and I was just wondering if anyone has put any plans in place already for the long-predicted downturn. Do you know what you’re going to do when it happens?
My plan is to continue buying stocks following my usual schedule (quarterly) and to maintain my chosen asset allocation. In the case of a market downturn, that means that I'll buy companies at a bargain price, and I'm happy with that idea.
Cunir wrote:
Sat Jun 30, 2018 5:32 pm
It will be painful to watch for a year or two, but topping them up all the way down will hopefully bear fruit in the long run.
Don't watch then. Most financial news is counter-productive anyway.
Cunir wrote:
Sat Jun 30, 2018 5:32 pm
The only other plan I’m possibly thinking about is selling some of the funds next year and keeping the cash ready to buy back near the bottom. But that seems to rely a lot on luck, guessing the best times to do it, and I’m not a very lucky guy! And I could end up missing a year or more of gains.

Just wondering what everyone’s thoughts are
I think your 100% equity is a bit extreme, even if you are young. Especially given your question here. I suggest that you put enough money in short-term bonds, cash, or CDs, that you can sleep well at night and not worry about what the market is doing.

grok87
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Re: What’s your plan for a market downturn?

Post by grok87 » Mon Jul 02, 2018 6:08 pm

Doom&Gloom wrote:
Mon Jul 02, 2018 4:03 pm
grok87 wrote:
Mon Jul 02, 2018 3:11 pm
2015 wrote:
Mon Jul 02, 2018 3:00 pm
Doom&Gloom wrote:
Mon Jul 02, 2018 10:57 am
JBTX wrote:
Mon Jul 02, 2018 10:33 am


While many here will remain diligent I suspect even here there will be a significant fallout and disillusionment. Based on some of the posts here, many have experienced a mostly up market and even the drops have reversed fairly quickly. A 1970s style shake out, or God forbid a Japan-lite will test the convictions of many.
+1

I am certain that I will be following that thread closely as I anticipate the same.

I can only hope I am not whimpering and curled up in the fetal position while doing so. At least if I am, I will be unable to make any rash decisions.
The problem with a market like we've had for the past ten years is the overconfident have waded farther and farther from the simplicity shore as it has appeared safer to go deeper into the waters of complexity. Remember those people in videos of the 2004 Indian Ocean earthquake standing frozen in the water as the tsunami roared towards them? There'll be plenty like that when the next Black Swan hits. Hint: it won't be like the last.
Good analogy.
A graphic analogy, but I'm not sure it is quite on the mark. Extrapolating from my own experience (yeah, I know) I don't think that complexity will play as much of a role as discipline. In 1987 my investments were smaller but relatively complex. I barely blinked an eye, but it happened so quickly it was easy to do nothing. In 2000 my investments were greater but noticeably simpler. I barely noticed the drop in the market. In 2008 my investments were greater still and a tiny bit simpler yet. I almost threw in part of a towel at the very bottom but resisted.

YMMV, of course, but my contention is that it matters not much whether your finances or your plan is simple or complex if you don't have the resolve to implement your plan. I'm afraid that is what will be on display in the freefall thread.
David swensen has a good recent comment here. It’s more on lack of transparity than complexity but the two often go hand in hand.
I’ll try and find the link later.
He says something like, the problem with lack of transparency (complexity) is that when your position goes down you can’t tell if the investment thesis is “out of favor” or broken. If it’s out of favor he wants to double down. If it’s broken he wants to sell.
Keep calm and Boglehead on. KCBO.

inbox788
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Re: What’s your plan for a market downturn?

Post by inbox788 » Mon Jul 02, 2018 7:42 pm

BoggledHead2 wrote:
Mon Jul 02, 2018 2:58 pm
“New money” = my next paycheck ... I max 401k, max Roth, and then sweep remainder to high yield savings or index funds

When I get 3-5% off my target allocation - that “new money” goes where the market tells me it needs to

Also, by “new money” I mean my preference to rebalance by adding funds rather than selling X to buy/balance Y
My point is that your paycheck isn't really "new money" because you've already planned out and mapped out what to do. Now if you won the lottery, that would be "new new money", and you might choose to do the same as you do with your paycheck or you might choose a different tact for a market downturn.

In any case, there's a limit to one's paycheck and such "new money" that limits what it can do in a downturn and recovery. For most folks, that "new money" will be a minority of their investments and it won't really matter that much what is done with that smaller fraction.

The strategy to use "new money" to rebalance is tax efficient in a taxable account, but doesn't matter in tax advantaged accounts, where you can rebalance to your hearts content.

OP, implicit in any buy and hold strategy or stand there and do nothing strategy is that you'll have sufficient resources to get you through the prolonged downturns. Implicit in any active strategy is that you've got some sort of prognosticative abilities. I have more faith in my preparation skills than prognostication skills.

Cruise
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Re: What’s your plan for a market downturn?

Post by Cruise » Tue Jul 03, 2018 1:34 am

My plan is to live within my means. And, to constantly evaluate what that means.

Unless there is hyperinflation, we can survive nicely on our SS and pension incomes.

If there is a significant market downturn, we will breathe deeply and probably limit our discretionary spending of RMD withdrawals, and reinvest to preserve our corpus.

OP: You have a long time horizon and significant potential to prosper. Just keep living below your means as a youth so you can live within your means as an elder.

rgs92
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Re: What’s your plan for a market downturn?

Post by rgs92 » Tue Jul 03, 2018 1:54 am

As Jack Bogle famously says: don't do something, stand there.

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WestUniversity
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Re: What’s your plan for a market downturn?

Post by WestUniversity » Tue Jul 03, 2018 5:38 am

BoggledHead2 wrote:
Sat Jun 30, 2018 6:32 pm
-Buy more shares accordingly
-Laugh at the hysteria
- Go on with life
Absolutely. Stick to your asset allocation and rebalance...

jalbert
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Re: What’s your plan for a market downturn?

Post by jalbert » Tue Jul 03, 2018 7:46 am

Hello. First post, and I was just wondering if anyone has put any plans in place already for the long-predicted downturn. Do you know what you’re going to do when it happens?

I realise that it’s basically impossible to predict when a prolonged dowturn is going to happen — some clever economists are saying maybe next year, some are saying maybe the year after that, 
If it has been long-predicted, what does that tell you about the ability of the predictors?
Risk is not a guarantor of return.

RobLyons
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Re: What’s your plan for a market downturn?

Post by RobLyons » Tue Jul 03, 2018 8:14 am

Become more aggressive with all retirement contributions
Buy more shares
Do not sell no matter what!

Rinse & repeat
"Great parenting sets the foundation for a better world"

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TheTimeLord
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Re: What’s your plan for a market downturn?

Post by TheTimeLord » Tue Jul 03, 2018 8:49 am

Do any BH have it in there IPS to increase (by up to 10%) their equity allocation if the market pulls back 30% or 40%? I seen Mr. Bogle discuss moving your allocations perhaps 10% because of markets (stock or bond) being at extremes.
IMHO, Investing should be about living the life you want, not avoiding the life you fear. | Run, You Clever Boy! [9085]

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TheTimeLord
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Re: What’s your plan for a market downturn?

Post by TheTimeLord » Tue Jul 03, 2018 8:49 am

jalbert wrote:
Tue Jul 03, 2018 7:46 am
Hello. First post, and I was just wondering if anyone has put any plans in place already for the long-predicted downturn. Do you know what you’re going to do when it happens?

I realise that it’s basically impossible to predict when a prolonged dowturn is going to happen — some clever economists are saying maybe next year, some are saying maybe the year after that, 
If it has been long-predicted, what does that tell you about the ability of the predictors?
That it is closer than it was when the original prediction was made?
IMHO, Investing should be about living the life you want, not avoiding the life you fear. | Run, You Clever Boy! [9085]

Socal77
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Re: What’s your plan for a market downturn?

Post by Socal77 » Tue Jul 03, 2018 8:51 am

Buy stocks

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goodenyou
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Re: What’s your plan for a market downturn?

Post by goodenyou » Tue Jul 03, 2018 8:55 am

If time is in your favor you ride out the storm. If time is not in your favor, you should have never put yourself in a position that you cannot ride out the storm. That’s the whole reason why you choose an asset allocation that will match your ability to take risk. It’s Taleb’s admonition of risk and ruin.
"Ignorance more frequently begets confidence than does knowledge" | "The best years you have left are the ones you have right now"

smitcat
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Re: What’s your plan for a market downturn?

Post by smitcat » Tue Jul 03, 2018 9:10 am

Doom&Gloom wrote:
Mon Jul 02, 2018 4:03 pm
grok87 wrote:
Mon Jul 02, 2018 3:11 pm
2015 wrote:
Mon Jul 02, 2018 3:00 pm
Doom&Gloom wrote:
Mon Jul 02, 2018 10:57 am
JBTX wrote:
Mon Jul 02, 2018 10:33 am


While many here will remain diligent I suspect even here there will be a significant fallout and disillusionment. Based on some of the posts here, many have experienced a mostly up market and even the drops have reversed fairly quickly. A 1970s style shake out, or God forbid a Japan-lite will test the convictions of many.
+1

I am certain that I will be following that thread closely as I anticipate the same.

I can only hope I am not whimpering and curled up in the fetal position while doing so. At least if I am, I will be unable to make any rash decisions.
The problem with a market like we've had for the past ten years is the overconfident have waded farther and farther from the simplicity shore as it has appeared safer to go deeper into the waters of complexity. Remember those people in videos of the 2004 Indian Ocean earthquake standing frozen in the water as the tsunami roared towards them? There'll be plenty like that when the next Black Swan hits. Hint: it won't be like the last.
Good analogy.
A graphic analogy, but I'm not sure it is quite on the mark. Extrapolating from my own experience (yeah, I know) I don't think that complexity will play as much of a role as discipline. In 1987 my investments were smaller but relatively complex. I barely blinked an eye, but it happened so quickly it was easy to do nothing. In 2000 my investments were greater but noticeably simpler. I barely noticed the drop in the market. In 2008 my investments were greater still and a tiny bit simpler yet. I almost threw in part of a towel at the very bottom but resisted.

YMMV, of course, but my contention is that it matters not much whether your finances or your plan is simple or complex if you don't have the resolve to implement your plan. I'm afraid that is what will be on display in the freefall thread.
Interesting....
- in 1987 small investments , barely blinked
- in 2000 , greater investments , barely noticed
- in 2008 , greate invetsments , almost threw in the towel
Perhaps adjust the AA now to avoid a future event that will initiate throwing in the towel.

vested1
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Re: What’s your plan for a market downturn?

Post by vested1 » Tue Jul 03, 2018 9:53 am

It's likely a different answer depending on your status as a worker or a retiree. If I was still working I would increase my contributions in a downturn periodically until maxed out based on my predetermined AA. Since my wife and I are retired we will just keep doing what we're doing; rebalancing when our AA exceeds our rebalancing bands of 6%. Our AA is 60/40. Of course the 40% is not all in bonds.

The other process that keeps things on an even keel in retirement is to practice VPW (Variable Percentage Withdrawal), so that when the markets exceed expectations you are allowed to withdraw a portion of the over-performing asset while not consuming all of the excess gain. When markets don't meet expectations your withdrawals drop to a pre-determined floor which still meet your base and discretionary expenses. That's why a budget is a vital ingredient of any plan.

We're delaying SS at 65/66, yet have devised an unusual plan of paying off the mortgage during the next 4 years. This entails a single extra withdrawal every January for the next 5 Januaries. Without implementing the plan our projected withdrawals are 3.1% until my RMD age, based on current balances. With the plan the withdrawal rate for the next 3 years in 6.9%, then dropping to about 4.5% until RMD's in 2023. If the markets beat 6.9% or even get reasonably close to that our plan can proceed on a yearly basis. If the markets under-perform the plan is delayed temporarily until past results from the previous year surpass or near 6.9%. These percentages float based on portfolio balance. In this manner we only need 4 years of average gains to pay off the mortgage.

VPW uses past gains, not a prediction of future gains or loses, which is a lot better than guessing. While budgeting I estimate average gains but plan for the worst case scenario. If markets perform better than expected it's a welcome bonus.

It helps me, at least, to keep things in perspective when judging the long term performance of the portfolio. What were my expectations of portfolio balance 5 years ago, 4 years ago, etc. If I was sure we could succeed with a prediction far lower than current levels then the chances of success at higher levels are even greater.

Back to the original question by the OP; if I had any wisdom to impart it would be to plunge ahead while time is on your side. Time heals all wounds, especially when it come to investing.

lostdog
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Re: What’s your plan for a market downturn?

Post by lostdog » Tue Jul 03, 2018 10:08 am

Tamalak wrote:
Mon Jul 02, 2018 11:19 am
In good times: buy and hold

In bad times: cry and hold
Or in bad times cry, buy and hold. :sharebeer
Last edited by lostdog on Tue Jul 03, 2018 10:16 am, edited 1 time in total.

youngpleb
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Re: What’s your plan for a market downturn?

Post by youngpleb » Tue Jul 03, 2018 10:14 am

1) Delete Vanguard app from my phone. Limit checking my investment accounts to once every 3 months.

2) Continue dumping in 100% stocks to take advantage of reduced prices. Make sure I am in "long-term focus" mindset.

3) Laugh maniacally as I do some extreme Excel spreadsheeting to figure out how I can further reduce my living expenses and contribute the excess into investments.

4) Finally if things do get really bad, I might even develop a desktop app that shows me a daily updated 30-year return for the U.S./international markets daily to lift my spirits and make it so I don't feel like I'm dumping money down a black hole.
27. Always learning.

lostdog
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Re: What’s your plan for a market downturn?

Post by lostdog » Tue Jul 03, 2018 10:18 am

youngpleb wrote:
Tue Jul 03, 2018 10:14 am
1) Delete Vanguard app from my phone. Limit checking my investment accounts to once every 3 months.

2) Continue dumping in 100% stocks to take advantage of reduced prices. Make sure I am in "long-term focus" mindset.

3) Laugh maniacally as I do some extreme Excel spreadsheeting to figure out how I can further reduce my living expenses and contribute the excess into investments.

4) Finally if things do get really bad, I might even develop a desktop app that shows me a daily updated 30-year return for the U.S./international markets daily to lift my spirits and make it so I don't feel like I'm dumping money down a black hole.
Do you manually contribute to your Vanguard account or do automatic? If you manually contribute to your Vanguard account, you'll still see your balances. I thought of your plan too of deleting the app but I manually add to my vanguard Roth and taxable.

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greg24
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Re: What’s your plan for a market downturn?

Post by greg24 » Tue Jul 03, 2018 10:25 am

Most importantly, I plan to keep my job. Everything else works out when that happens.

youngpleb
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Re: What’s your plan for a market downturn?

Post by youngpleb » Tue Jul 03, 2018 10:27 am

lostdog wrote:
Tue Jul 03, 2018 10:18 am
Do you manually contribute to your Vanguard account or do automatic? If you manually contribute to your Vanguard account, you'll still see your balances. I thought of your plan too of deleting the app but I manually add to my vanguard Roth and taxable.
Automatic all the way. :sharebeer
27. Always learning.

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Sheepdog
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Re: What’s your plan for a market downturn?

Post by Sheepdog » Tue Jul 03, 2018 10:32 am

MIretired wrote:
Sat Jun 30, 2018 7:17 pm
My plan in case of a downturn, is I have 4-5 yrs. of needed withdrawals in CDs, money markets, short bonds, and some intermediate. I'll watch unneccessary spending in a downturn, too.
same here. 2008-09, living off of investments and not having that protection, taught me.
It's not what you gather, but what you scatter which tells what kind of life you have lived---Helen Walton

Skyccord
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Re: What’s your plan for a market downturn?

Post by Skyccord » Tue Jul 03, 2018 10:44 am

"Buy when there's blood in the streets, even if the blood is your own." -Baron Rothschild

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Re: What’s your plan for a market downturn?

Post by MotoTrojan » Tue Jul 03, 2018 11:49 am

Cunir wrote:
Sat Jun 30, 2018 6:25 pm
If you rebalance during a downturn, though, when everything is going down, (so you’re actually selling funds to buy other funds), doesn’t that just mean your locking in your losses?
If you mean rebalancing by adding new money though, then I see the benefit in that
If stocks are down 50% and bonds are down 5% and I know for fact they’ll both rebound in 3 years (of course nobody can say that’s a fact), you bet I’ll sell ALL my bonds and lock in a loss so I can get a much bigger gain in stocks. Avoid mental accounting.

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StormShadow
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Re: What’s your plan for a market downturn?

Post by StormShadow » Tue Jul 03, 2018 11:58 am

What I hope to do?
- Rebalance aggressively into stocks.

What I probably will do?
- Turn off the news.
- Focus on work and contribute to my retirement plan as before.
- Pay down debts.
- Check into Bogleheads more frequently.

inbox788
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Re: What’s your plan for a market downturn?

Post by inbox788 » Tue Jul 03, 2018 12:28 pm

TheTimeLord wrote:
Tue Jul 03, 2018 8:49 am
jalbert wrote:
Tue Jul 03, 2018 7:46 am
Hello. First post, and I was just wondering if anyone has put any plans in place already for the long-predicted downturn. Do you know what you’re going to do when it happens?

I realise that it’s basically impossible to predict when a prolonged dowturn is going to happen — some clever economists are saying maybe next year, some are saying maybe the year after that, 
If it has been long-predicted, what does that tell you about the ability of the predictors?
That it is closer than it was when the original prediction was made?
With all the people making predictions, someone will be correct in effects or timing, but many fewer will get both correct.

It's been long-predicted that Amazon will dominate the cell phone business and pharmacy business. Wrong predictions are easily and often selectively forgotten. A form of information survival bias.

This $300 Billion Amazon Rumor Just Won't Die 9/28/2017
https://www.investors.com/news/300-bill ... continues/

Pharmacies surge on report that Amazon is backing away from prescription drugs April 16, 2018: 4:38 PM ET
http://money.cnn.com/2018/04/16/news/co ... index.html

Amazon wiped out $17.5 billion from eight companies in one day Published 5:12 PM ET Thu, 28 June 2018 Updated 8:29 AM ET Fri, 29 June 2018
https://www.cnbc.com/2018/06/28/amazon- ... riers.html

https://www.thestreet.com/story/1336410 ... lures.html

Broken Man 1999
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Re: What’s your plan for a market downturn?

Post by Broken Man 1999 » Tue Jul 03, 2018 2:04 pm

Given our portfolio is about half bonds (via funds, not individual bonds), a market downturn would be duly noted, but wouldn't really change anything. We would sell from bond funds to prevent the need for selling depressed/lower-valued equity funds.

It is possible, if the situation warrants, perhaps I would rebalance back to a 50/50 mix of equity and bonds by selling more bond fund shares than needed for expenses.

Broken Man 1999
“If I cannot drink Bourbon and smoke cigars in Heaven than I shall not go. " -Mark Twain

jeffh19
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Re: What’s your plan for a market downturn?

Post by jeffh19 » Tue Jul 03, 2018 5:28 pm

Put money in the market aggressively as possible.

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