What’s your plan for a market downturn?

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Mr.BB
Posts: 586
Joined: Sun May 08, 2016 10:10 am

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

Post by Mr.BB » Tue Jul 03, 2018 5:45 pm

When the market (equity funds) drops, your allocation in bonds should rise. You can use your bond holdings and exchange them into your equity funds. It is the exact opposite of what people do when they want to take profit (re-allocate) from their equity funds in a bull market and put them in their bond funds.
"We are what we repeatedly do. Excellence, then, is not an act, but a habit."

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

Post by sergeant » Tue Jul 03, 2018 7:37 pm

My plan is to stay near my desired AA.
Lincoln 3 EOW!

furikake
Posts: 232
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Re: What’s your plan for a market downturn?

Post by furikake » Tue Jul 03, 2018 7:52 pm

Go to Hawaii and Disney World, prices will be low then.

smitcat
Posts: 1868
Joined: Mon Nov 07, 2016 10:51 am

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

Post by smitcat » Tue Jul 03, 2018 8:06 pm

furikake wrote:
Tue Jul 03, 2018 7:52 pm
Go to Hawaii and Disney World, prices will be low then.
I have no idea when the market will go up and down …..
But I know Disneyworld prices will never go lower only up.

inbox788
Posts: 5498
Joined: Thu Mar 15, 2012 5:24 pm

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

Post by inbox788 » Tue Jul 03, 2018 11:08 pm

smitcat wrote:
Tue Jul 03, 2018 8:06 pm
furikake wrote:
Tue Jul 03, 2018 7:52 pm
Go to Hawaii and Disney World, prices will be low then.
I have no idea when the market will go up and down …..
But I know Disneyworld prices will never go lower only up.
List prices only go up, but when the economy is down, sales and discounts and deals are plentiful. Right now, they're few and far between, reflecting a strong economy. Disney has lots of levers to pull, and they've gotten very good at pulling them.
THEME PARKS November 24th, 2017
Disneyland just discontinued one of its annual passes
http://www.foxnews.com/travel/2017/11/2 ... asses.html

Miriam2
Posts: 2288
Joined: Fri Nov 14, 2014 11:51 am

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

Post by Miriam2 » Tue Jul 03, 2018 11:40 pm

MJS wrote: Maybe it's market timing ... I'm retired with a pension. After 3 months of 10%+ stock downturn, I'll start Social Security early & invest it in Total Stock Market instead of rebalancing. After 11 months max, I'll stop SocSec & let it go back to earning 8%/year.
Are you sure you can do that, start then stop then restart Soc Sec down the road at its higher rate?

Cruise
Posts: 621
Joined: Mon Nov 21, 2016 7:17 pm

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

Post by Cruise » Wed Jul 04, 2018 2:51 am

Miriam2 wrote:
Tue Jul 03, 2018 11:40 pm
MJS wrote: Maybe it's market timing ... I'm retired with a pension. After 3 months of 10%+ stock downturn, I'll start Social Security early & invest it in Total Stock Market instead of rebalancing. After 11 months max, I'll stop SocSec & let it go back to earning 8%/year.
Are you sure you can do that, start then stop then restart Soc Sec down the road at its higher rate?
SS can be started/stopped and restarted one time, but the stop must occur within 12 months of the original start.

smitcat
Posts: 1868
Joined: Mon Nov 07, 2016 10:51 am

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

Post by smitcat » Wed Jul 04, 2018 6:18 am

inbox788 wrote:
Tue Jul 03, 2018 11:08 pm
smitcat wrote:
Tue Jul 03, 2018 8:06 pm
furikake wrote:
Tue Jul 03, 2018 7:52 pm
Go to Hawaii and Disney World, prices will be low then.
I have no idea when the market will go up and down …..
But I know Disneyworld prices will never go lower only up.
List prices only go up, but when the economy is down, sales and discounts and deals are plentiful. Right now, they're few and far between, reflecting a strong economy. Disney has lots of levers to pull, and they've gotten very good at pulling them.
THEME PARKS November 24th, 2017
Disneyland just discontinued one of its annual passes
http://www.foxnews.com/travel/2017/11/2 ... asses.html
We have been following Disneyworld prices for maybe 25 years and they never go down.
Best deal they had was for the 10 day non expiration passes which they discontinued years back.
Those passes as well as the USPS 'forever' stamps are likely some of the best investments we have made (lol).
Real deals for vistiing Disneyworld always include non disney hotels and meals - even the new 'off peak' pricing has limits that does not compare directly to years past.
Best deals as they are can be found at mousavers and undecovertourist.
https://www.mousesavers.com/
https://www.undercovertourist.com/hot-deals/

smitcat
Posts: 1868
Joined: Mon Nov 07, 2016 10:51 am

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

Post by smitcat » Wed Jul 04, 2018 6:20 am

Cruise wrote:
Wed Jul 04, 2018 2:51 am
Miriam2 wrote:
Tue Jul 03, 2018 11:40 pm
MJS wrote: Maybe it's market timing ... I'm retired with a pension. After 3 months of 10%+ stock downturn, I'll start Social Security early & invest it in Total Stock Market instead of rebalancing. After 11 months max, I'll stop SocSec & let it go back to earning 8%/year.
Are you sure you can do that, start then stop then restart Soc Sec down the road at its higher rate?
SS can be started/stopped and restarted one time, but the stop must occur within 12 months of the original start.
Would you please post a link to this SS rule? I though that if you started and stopped SS you had limited time and also had to pay back the entire SS received up to that date. Please confirm the entire rule...

MJS
Posts: 172
Joined: Sat Aug 05, 2017 10:55 pm

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

Post by MJS » Wed Jul 04, 2018 12:04 pm

smitcat wrote:
Wed Jul 04, 2018 6:20 am
Cruise wrote:
Wed Jul 04, 2018 2:51 am
Miriam2 wrote:
Tue Jul 03, 2018 11:40 pm
MJS wrote: Maybe it's market timing ... I'm retired with a pension. After 3 months of 10%+ stock downturn, I'll start Social Security early & invest it in Total Stock Market instead of rebalancing. After 11 months max, I'll stop SocSec & let it go back to earning 8%/year.
Are you sure you can do that, start then stop then restart Soc Sec down the road at its higher rate?
SS can be started/stopped and restarted one time, but the stop must occur within 12 months of the original start.
Would you please post a link to this SS rule? I though that if you started and stopped SS you had limited time and also had to pay back the entire SS received up to that date. Please confirm the entire rule...
There are two ways of pausing Social Security:
1. Suspend benefits. In this method you lose the 8% growth for the Suspended months. You _must_ be over FRA to suspend after starting benefits.
https://www.ssa.gov/planners/retire/suspend.html

2. Withdraw claim. This is the one where you get your 8% back, but have no more than 12 months & must repay everything (including Medicare deductions, taxes, payments to family, ... everything.) Basically, it's an interest free loan, with the risk of losing 1 year's 8% growth in Social Security if suspended instead of withdrawn. You don't have to have Taxes & Medicare deducted if you plan to withdraw.
https://www.ssa.gov/planners/retire/withdrawal.html
Last edited by MJS on Wed Jul 04, 2018 1:17 pm, edited 1 time in total.

Gretchen
Posts: 91
Joined: Mon Mar 19, 2007 5:48 am
Location: Southern CA

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

Post by Gretchen » Wed Jul 04, 2018 12:25 pm

Do a Roth conversion of $10K stock from my IRA while the price is depressed.

Why $10K? We're retired, so we can't fund a Roth from earned income. The tax on $10K is acceptable, and we'd probably get it back in tax-free appreciation at some point. It's big enough to be interesting, and small relative to total assets.

I did my last $10K conversion a couple of years ago. I missed the drop in February of this year.

bikechuck
Posts: 357
Joined: Sun Aug 16, 2015 9:22 pm

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

Post by bikechuck » Wed Jul 04, 2018 12:56 pm

Both my DW and I retired in 2017 so we are in de-accumulation mode. I turn 66 next June and my DW turns 65 next July. Our current plans are for her to file for SS in June of 2019 when I can file a restricted application for half of her benefit. That, plus a 3% withdrawal from the portfolio will meet our needs and give us extra spending money for travel etc.

We are sticking pretty close to a 50/50 portfolio composed of index funds though a portion of our fixed income is in TIAA traditional (not annuitized) paying approx 4.0% and a fixed annuity (not annuitized) that pays a guaranteed minimum 4.5%. I can add or withdraw money from my fixed annuity at any time without penalty as I have owned it for more than 20 years. I would need to liquidate my TIAA traditional over a ten year period if I decided to do that and I cannot add more money to it.

To answer the OP's question ... If things truly go to hell I will consider filing for SS benefits on my record before I reach 70. However I do not think that will be necessary because 2 % of our 3% withdrawal will mostly come from interest and dividends leaving a very small draw from principal.

One of the reasons that we have what we have is that we did not panic in 2008. We kept our allocation constant and invested all the way down and all the way back up.

Taylor's advice which he credits to Jack Bogle is right "Stay The Course".

furikake
Posts: 232
Joined: Tue Sep 08, 2015 10:13 am

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

Post by furikake » Wed Jul 04, 2018 8:04 pm

inbox788 wrote:
Tue Jul 03, 2018 11:08 pm
smitcat wrote:
Tue Jul 03, 2018 8:06 pm
furikake wrote:
Tue Jul 03, 2018 7:52 pm
Go to Hawaii and Disney World, prices will be low then.
I have no idea when the market will go up and down …..
But I know Disneyworld prices will never go lower only up.
List prices only go up, but when the economy is down, sales and discounts and deals are plentiful. Right now, they're few and far between, reflecting a strong economy. Disney has lots of levers to pull, and they've gotten very good at pulling them.
That's exactly right! More deals when the economy is not good. Air fares and hotels will be cheaper as well. So if you spend when the economy is down, you get good deals, you're also helping the economy. Win win. :-D

hightower
Posts: 510
Joined: Mon Dec 12, 2016 2:28 am

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

Post by hightower » Wed Jul 04, 2018 9:14 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?

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
My plan for the market downturn is to do exactly what Im doing now...buy, buy, buy. Maybe if there’s a sale on stocks I’ll work extra so I can make more money and buy even more.

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ruralavalon
Posts: 13955
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Location: Illinois

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

Post by ruralavalon » Thu Jul 05, 2018 11:03 am

Welcome to the forum :) .
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
When the stock market downturn occurs I plan to exchange some bond index fund shares to buy stock index fund shares in my rollover IRA.

I don't plan to accumulate cash to use later when the downturn occurs, but plan to stay fully invested. The predictions of "clever economists" are often wrong, and when right the timing is often wrong. You are right to say that it's basically impossible to predict the time of a downturn.

If the stock market downturn is severe and prolonged we may reduce our living expenses and take fewer trips.
"Everything should be as simple as it is, but not simpler." - Albert Einstein | Wiki article link:Getting Started

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