How to get over a $25K stock market loss?

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rickgrimes
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How to get over a $25K stock market loss?

Post by rickgrimes » Mon Mar 18, 2019 2:28 pm

I had put the money we had saved up over the past few years for the downpayment for a home purchase in a taxable account in Vanguard. It was sitting in the Money Market Fund earning 2% or so. But sometime in September last year when it looked like we will not be buying a home for another year at least, I got greedy and moved all of our downpayment money into two ETFs that had done great for a while - VGT and VTI. Talk about bad timing. Between Oct 2nd and the second week of Dec, the two investments lost a total of $25K and I panicked and pulled it all out when it seemed like most 'pundits' and 'experts' were pretty confident about a recession coming soon...thus locking in my losses. Fast forward to today, of course there is no recession (and both VGT and VTI are almost back up to their September prices). Had I stayed put, I'd have $25K more in savings for our home downpayment.

I'm a fairly conservative when it comes to money, and I rarely put all my eggs in one basket, but i don't know what got over me last year and I gambled and lost in the worst way possible. I am just unable to get over the $25K loss in a span of less than three months and it is affecting my personal life. I wake up every morning and the first thing I look up is prices of VGT and VTI and the day just goes downhill from there. I know I can use the $25K loss to offset other taxes from 2018, but still I can't get over the loss no matter what I try. Thankfully my wife and I are comfortable enough that the $25K loss will not be a deal breaker when I comes to the home purchase, but when I think about how much the $25K would be worth 30 years compounded, it makes me sick.

The experience has scarred me enough to swear off of equities, but I know that will be a wealth killer in the long run (we are still 25-30 years away from retirement). Any tips on how I can get over this feeling and go back to being a responsible/prudent investor?

Quirkz
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Re: How to get over a $25K stock market loss?

Post by Quirkz » Mon Mar 18, 2019 4:28 pm

We're all going to make mistakes, and the best thing we can do is learn from them. When it comes to a lifetime of investing, $25k can be a relatively cheap lesson, even if it stings now.

1) Definitely stop checking the VTI quotes every day. You're just poking yourself in the eye and dragging out the feeling.

2) Go back to basics and have a long, hard think about different investment modes and risk tolerance.

a) For instance, for under 5 years--and definitely less than one year!--equities are not recommended. Your house down payment should never have been in stocks in the first place. Wrong place for the funds.

b) For the long term, stocks are essential. If you don't use them at all, you're never going to outpace inflation, and you'll never be able to retire. But you sound conservative about it, so make sure it's a balance of stocks and bonds you can live with, even as the marked fluctuates.

3) Set it and forget it. If you've got 25-30 years, stop checking anything daily. Other than rebalancing now and then, you should barely check at all.

arsenalfan
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Re: How to get over a $25K stock market loss?

Post by arsenalfan » Mon Mar 18, 2019 4:34 pm

You are not alone.

Make an investing policy statement. https://www.bogleheads.org/wiki/Investm ... _statement
And stick to it.

It took me a month to make mine, and I talked it over with my partner extensively. Pulled the trigger on it.

Now I spend about 2 hours on my finances per year, rebalancing once a year.

A lot more time for the stuff that matters.

carol-brennan
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Re: How to get over a $25K stock market loss?

Post by carol-brennan » Mon Mar 18, 2019 4:36 pm

Quirkz wrote:
Mon Mar 18, 2019 4:28 pm
For the long term, stocks are essential. If you don't use them at all, you're never going to outpace inflation, and you'll never be able to retire.
Wrong. In my extended family, I can count the people who have ever owned stocks on three fingers. Yet everyone who was retirement age and wanted to retire actually did!

You don't need stocks to retire. You just need to save as much as you can and have a plan. Living below your means helps, too, as does being frugal. Everyone's situation is different. Everyone's risk tolerance is different.

Please, we should all be self-reflective enough to recognize the ways that our "wisdom" is just a tired repetition of things we've heard other people say.

delamer
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Re: How to get over a $25K stock market loss?

Post by delamer » Mon Mar 18, 2019 4:39 pm

Probably the most important things you can do are to use your experience

1) to confirm the truism that you shouldn’t put money you’ll need in the short term in stocks.
2) to recognize that your mistake with short term funds has no relevance to investing for long term needs.

Good luck going forward.

carmonkie
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Re: How to get over a $25K stock market loss?

Post by carmonkie » Mon Mar 18, 2019 4:40 pm

Quirkz wrote:
Mon Mar 18, 2019 4:28 pm
We're all going to make mistakes, and the best thing we can do is learn from them. When it comes to a lifetime of investing, $25k can be a relatively cheap lesson, even if it stings now.

1) Definitely stop checking the VTI quotes every day. You're just poking yourself in the eye and dragging out the feeling.

2) Go back to basics and have a long, hard think about different investment modes and risk tolerance.

a) For instance, for under 5 years--and definitely less than one year!--equities are not recommended. Your house down payment should never have been in stocks in the first place. Wrong place for the funds.

b) For the long term, stocks are essential. If you don't use them at all, you're never going to outpace inflation, and you'll never be able to retire. But you sound conservative about it, so make sure it's a balance of stocks and bonds you can live with, even as the marked fluctuates.

3) Set it and forget it. If you've got 25-30 years, stop checking anything daily. Other than rebalancing now and then, you should barely check at all.
4) If you happen to have company compensation in the form of restricted stock or stock options or 401(k) match in stock, consider minimizing that added risk. A lot of people in my company lost their retirement or a big part of it when we filed Ch 11.

Quirkz
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Re: How to get over a $25K stock market loss?

Post by Quirkz » Mon Mar 18, 2019 4:52 pm

carol-brennan wrote:
Mon Mar 18, 2019 4:36 pm
Quirkz wrote:
Mon Mar 18, 2019 4:28 pm
For the long term, stocks are essential. If you don't use them at all, you're never going to outpace inflation, and you'll never be able to retire.
Wrong. In my extended family, I can count the people who have ever owned stocks on three fingers. Yet everyone who was retirement age and wanted to retire actually did!
Fair enough, I was hasty. There are definitely other angles, such as having a pension or owning a business, that can get you to retirement without investing at all. The really frugal might get by only on Social Security. But for those who are primarily investing for retirement, your best bet is to have some of the highest-earning investment type. That or you either have to shovel in a whole lot more to get there, or you have to cut way back to live off what you have later.

For most of us, stocks are the most efficient and reliable choice. Avoiding them for life because of a one-time mistake would be a shame, especially since the OP seems to be seeking a way to find the confidence to use them again.

Fallible
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Re: How to get over a $25K stock market loss?

Post by Fallible » Mon Mar 18, 2019 4:53 pm

Welcome to the forum and congratulations on taking this important step!

It seems the first thing to address and overcome is the regret itself and it's easy to see how wrenching the experience has been for you and still is. We have all made mistakes with our money and the regret that follows can keep us from correcting them and moving on. Here is an article on regret by Morgan Housel that may help you. (There are other good blogs by behavioral economist Daniel Kahneman):

https://www.fool.com/investing/general/ ... egret.aspx
"John Bogle has changed a basic industry in the optimal direction. Of very few can this be said." ~Paul A. Samuelson

WhiteMaxima
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Re: How to get over a $25K stock market loss?

Post by WhiteMaxima » Mon Mar 18, 2019 5:00 pm

Lesson learned. Don't risk short term cash in stock market. At least the soft housing might offset some of your loss.

-ryan-
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Re: How to get over a $25K stock market loss?

Post by -ryan- » Mon Mar 18, 2019 5:04 pm

If you lost $25k from making the big mistake during that little market downturn, that tells me that overall you are in good shape (aka: and I'm not going to bother doing the math here, but you must have had a good amount in those ETFs). It stings, but it could have been much worse. This is actually a cheap lesson for you, because I personally know several people who sold out of equities at the bottom of the market during our last recession and locked in enormous losses. Some of them gave up investing entirely because of it.

So if I were you, I would remind myself that it was a great way to learn why you don't sell when the market is going down, and why you don't expose short term savings to the whims of the market. With a large purchase coming within a year or two, you generally go with cash and cash equivalents only. For the sake of your sanity, stop watching the market for a while.

carol-brennan
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Re: How to get over a $25K stock market loss?

Post by carol-brennan » Mon Mar 18, 2019 5:11 pm

Quirkz wrote:
Mon Mar 18, 2019 4:52 pm
Fair enough, I was hasty. There are definitely other angles
The OP's regret is useful, for all of us, I think. My great concern is that practically no one investing today has experienced an extended bear market, one that lasted, say, 10 years or more. Depending upon how one was invested (and when), they have occurred. Ten years from now, it might be very easy to look back on the market today and say, "Wish I had sold then. It was so obvious that the market was overvalued!"

http://www.multpl.com/shiller-pe/

So today everyone walks around feeling like a sage when it comes to stocks. 2008 gave us a taste of a bad market, but it snapped back so quickly that it was almost cruel in that it gave everyone a false sense of security, a "things will always snap back" feeling.

Might not happen the next time, you know, especially given how tapped out the Fed is, how much of the industrialized world is already at 0 or negative interest rates, how high individual and corporate (and national) debt is, on and on. Unprecedented, unprecedented, unprecedented. We are in uncharted waters right now in so many ways. Very few see market-crashing bubbles when they exist; it's only after they've popped that everyone says, "of course!"

The kind of bear market that makes an entire generation swear off equities the way the OP has called them into question is what will put the lie to most people's happy talk about stock ownership.

Yes, stocks might eventually come back from an extended bear market. But we'll also eventually all be dead. The question is how well will the "recovery" sync up with the lifespan we have left, and were we prudent enough in the good times to prepare for the possibility of bad times, really bad times?

If you're counting on stock ownership to enable you to retire, my advice is this: think again. Look at stocks as a nice-to-have, not a need-to-have. Stocks don't care about you, and they might not be there when you need them.
Last edited by carol-brennan on Mon Mar 18, 2019 5:24 pm, edited 5 times in total.

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Kenkat
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Re: How to get over a $25K stock market loss?

Post by Kenkat » Mon Mar 18, 2019 5:13 pm

It is a costly lesson, but it is over and done. There is nothing you can do about it now, let it go. Your health and well being are worth far more than $25k. Find some quotes about forgetting the past and use them next time you start thinking about this. Let the past bury it’s dead. The past is over and gone, there is nothing there for us. Rinse, repeat.

averagedude
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Re: How to get over a $25K stock market loss?

Post by averagedude » Mon Mar 18, 2019 5:14 pm

In investing, listening to all the smart people can make you dumber and broker. This happening could actually be a good thing. If you had been right with your timing, you would think that you are a genius, and it could cost you hundreds of thousands of dollars in the future. Having an investment policy statement can prevent this.

finagle
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Re: How to get over a $25K stock market loss?

Post by finagle » Mon Mar 18, 2019 5:25 pm

To answer the title, tell yourself that $25k ain't even 1 year's expenses for you. How much do you add to your nw, in predictable new monies, each year?

delamer
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Re: How to get over a $25K stock market loss?

Post by delamer » Mon Mar 18, 2019 5:37 pm

carol-brennan wrote:
Mon Mar 18, 2019 5:11 pm
Quirkz wrote:
Mon Mar 18, 2019 4:52 pm
Fair enough, I was hasty. There are definitely other angles
The OP's regret is useful, for all of us, I think. My great concern is that practically no one investing today has experienced an extended bear market, one that lasted, say, 10 years or more. Depending upon how one was invested (and when), they have occurred. Ten years from now, it might be very easy to look back on the market today and say, "Wish I had sold then. It was so obvious that the market was overvalued!"

http://www.multpl.com/shiller-pe/

So today everyone walks around feeling like a sage when it comes to stocks. 2008 gave us a taste of a bad market, but it snapped back so quickly that it was almost cruel in that it gave everyone a false sense of security, a "things will always snap back" feeling.

Might not happen the next time, you know, especially given how tapped out the Fed is, how much of the industrialized world is already at 0 or negative interest rates, how high individual and corporate (and national) debt is, on and on. Unprecedented, unprecedented, unprecedented. We are in uncharted waters right now in so many ways. Very few see market-crashing bubbles when they exist; it's only after they've popped that everyone says, "of course!"

The kind of bear market that makes an entire generation swear off equities the way the OP has called them into question is what will put the lie to most people's happy talk about stock ownership.

Yes, stocks might eventually come back from an extended bear market. But we'll also eventually all be dead. The question is how well will the "recovery" sync up with the lifespan we have left, and were we prudent enough in the good times to prepare for the possibility of bad times, really bad times?

If you're counting on stock ownership to enable you to retire, my advice is this: think again. Look at stocks as a nice-to-have, not a need-to-have. Stocks don't care about you, and they might not be there when you need them.
It took about 5 plus years for the S&P 500 to get back to its previous high after the Great Recession. So it isn’t correct to say it snapped back quickly.

The other issue is that if there is an extended recession of a decade or more, then there will be huge dislocations in terms of employment, wages, housing, etc. Our investments will only be one part of the problem.

Unless we can reach our goals keeping all our money in cash then — based on the slight (historically) probability of such an event — we are back to what John Bogle said, “Invest we must.”

theplayer11
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Re: How to get over a $25K stock market loss?

Post by theplayer11 » Mon Mar 18, 2019 5:40 pm

times your loss by 10 and that’s what I loss in the dot com bubble....on top of another $250k paper profits. Just take it as a learning experience and move on.

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2pedals
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Re: How to get over a $25K stock market loss?

Post by 2pedals » Mon Mar 18, 2019 5:41 pm

rickgrimes wrote:
Mon Mar 18, 2019 2:28 pm
The experience has scarred me enough to swear off of equities, but I know that will be a wealth killer in the long run (we are still 25-30 years away from retirement). Any tips on how I can get over this feeling and go back to being a responsible/prudent investor?
rickgrimes
Welcome to the Bogleheads.org forum.

No do not give up on equities, this is the worst thing you can do. The most important thing you need to do is determine what your asset allocation should be and how it should change as you get older. Even after you retire you may have 25-30 years to invest your money in equities. After you set your asset allocation of stock and bonds stay with it. Do not try to time the market. I have lost much more than 25k trying to time the market.

Education will enable you to move forward with your long term plan. Read some good books on asset allocation and investing.

Some good books are:
All About Asset Allocation - Rick Ferri
The Four Pillars of Investing: Lessons for Building a Winning Portfolio - William Bernstein
A Random Walk Down Wall Street - Burton Malkiel

For more see:
https://www.bogleheads.org/wiki/Books:_ ... nd_reviews
Last edited by 2pedals on Mon Mar 18, 2019 5:50 pm, edited 1 time in total.

TomCat96
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Re: How to get over a $25K stock market loss?

Post by TomCat96 » Mon Mar 18, 2019 5:45 pm

rickgrimes wrote:
Mon Mar 18, 2019 2:28 pm
I had put the money we had saved up over the past few years for the downpayment for a home purchase in a taxable account in Vanguard. It was sitting in the Money Market Fund earning 2% or so. But sometime in September last year when it looked like we will not be buying a home for another year at least, I got greedy and moved all of our downpayment money into two ETFs that had done great for a while - VGT and VTI. Talk about bad timing. Between Oct 2nd and the second week of Dec, the two investments lost a total of $25K and I panicked and pulled it all out when it seemed like most 'pundits' and 'experts' were pretty confident about a recession coming soon...thus locking in my losses. Fast forward to today, of course there is no recession (and both VGT and VTI are almost back up to their September prices). Had I stayed put, I'd have $25K more in savings for our home downpayment.

I'm a fairly conservative when it comes to money, and I rarely put all my eggs in one basket, but i don't know what got over me last year and I gambled and lost in the worst way possible. I am just unable to get over the $25K loss in a span of less than three months and it is affecting my personal life. I wake up every morning and the first thing I look up is prices of VGT and VTI and the day just goes downhill from there. I know I can use the $25K loss to offset other taxes from 2018, but still I can't get over the loss no matter what I try. Thankfully my wife and I are comfortable enough that the $25K loss will not be a deal breaker when I comes to the home purchase, but when I think about how much the $25K would be worth 30 years compounded, it makes me sick.

The experience has scarred me enough to swear off of equities, but I know that will be a wealth killer in the long run (we are still 25-30 years away from retirement). Any tips on how I can get over this feeling and go back to being a responsible/prudent investor?

Those of us who have market timed have lost considerably more I'm sure. I'll be the first to put my name there.
Take the loss as a lesson learned. Also never listen to the experts. The experts are worse than noise in my opinion. Noise should be relatively neutral. Instead by listening to experts, I believe you are more likely to experience confirmation bias of your intentions.

I don't care who says what is happening, including the talking heads on CNBC, the doomsayers, the bulls, the bears, no one can accurately predict the market. However if you find yourself predisposed to listening to talking heads...if you MUST listen to talking heads, then don't listen to their conclusions, listen to their reasoning.

While I do not find the predictions of any expert useful, I do find their theoretical frameworks to be useful tools at times--but even then...only as food for thought.

Take a breath. 25k isn't the end of the world. Live your life and move on.

finagle
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Re: How to get over a $25K stock market loss?

Post by finagle » Mon Mar 18, 2019 5:53 pm

The second lesson to you and me is not to listen to bogleheads on this forum wailing "dump all your extra cash into vtsax/vti right NOW. Anything else is market timing!!!!!!1!!"

Such as on this other thread on the front page:

viewtopic.php?f=1&t=276014


Measure your own stomach for risks.

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corn18
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Re: How to get over a $25K stock market loss?

Post by corn18 » Mon Mar 18, 2019 6:01 pm

My Investment Policy Statement saves me almost every day from doing something stupid. Write one and live by it.
Don't do something, just stand there!

AtlBoglehead
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Re: How to get over a $25K stock market loss?

Post by AtlBoglehead » Mon Mar 18, 2019 6:03 pm

Great advice above. Everybody who invests,
including Warren Buffett, makes very costly mistakes from time to time. The market is like that. You win some; you lose some. Look at it this way. This "accidental" loss will be more than compensated for if you learn the lessons others have outlined above, and you will be repaid multiple times over by large and surprising gains if you follow Bogle's principles and "stay the course." 25k won't touch the "accidental" gains that will come to you by being frugal, systematic, and BEING IN THE MARKET on those unknown future days when the market explodes upward.

livesoft
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Re: How to get over a $25K stock market loss?

Post by livesoft » Mon Mar 18, 2019 6:10 pm

One way to get over it is pretty simple: You make the IRS (i.e. other taxpayers) help pay for you for your losses. This is called tax-loss harvesting which was all over the forum at the end of December, so almost EVERYBODY was doing it.

See the wiki on the subject: https://www.bogleheads.org/wiki/Tax_loss_harvesting
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sbaywriter
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Re: How to get over a $25K stock market loss?

Post by sbaywriter » Mon Mar 18, 2019 6:15 pm

Ok, you lost money from buying high and selling low – but I think you were right to sell – it was a rational response to recognizing that you had taken on an inappropriate risk with that money. So you should pat yourself on the back for being rational and recognizing that mistake.

As many mentioned above - consider creating a written investment policy statement (IPS):

From the wiki:
"Drawbacks of not using an IPS:
Someone who doesn't have a written policy often bases decisions on day-to-day events, which often leads to chasing short-term performance that may hinder them in reaching long-term goals. Having a policy encourages maintaining focus on the long-term nature of the investment process, especially during turbulent or exuberant times."

If you browse around the forum, you will find many varieties of policy – you have to work out for yourself what will work best for you.

For example, some people have a policy that any time they get a sudden urge to move money around, that they will only allow themselves to do that in very small amounts, or only over a period of some months.

So work out the types of financial situations that might arise and how you might respond to them so as to feel in more control.

delamer
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Re: How to get over a $25K stock market loss?

Post by delamer » Mon Mar 18, 2019 6:16 pm

finagle wrote:
Mon Mar 18, 2019 5:53 pm
The second lesson to you and me is not to listen to bogleheads on this forum wailing "dump all your extra cash into vtsax/vti right NOW. Anything else is market timing!!!!!!1!!"

Such as on this other thread on the front page:

viewtopic.php?f=1&t=276014


Measure your own stomach for risks.
Has anyone on this forum advocated dumping money that you’ll need to spend within a couple years into stocks?

That is what the OP did.

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Re: How to get over a $25K stock market loss?

Post by Strayshot » Mon Mar 18, 2019 6:28 pm

I gambled in several individual companies prior to 2008, lost ~65000 when they all went bankrupt or had shenanigans occur (syntax brillian, countrywide, bear stearns, thornburg mortgage, etc).

I felt horrible for a while, ruminating on the loss, but it didn’t end me and I recovered financially. Lesson learned was that I did have a risk tolerance and that I would never again gamble with money not specifically allocated to gambling.

Luckywon
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Re: How to get over a $25K stock market loss?

Post by Luckywon » Mon Mar 18, 2019 6:39 pm

rickgrimes wrote:
Mon Mar 18, 2019 2:28 pm
I gambled and lost in the worst way possible.
I've done much worse. So has the average person here, let alone outside of the bogleheads community, you just don't often hear those stories.

30 years from now, this wil be a small blip on the radar, probably notable mainly for being a learning experience that saved you from bigger mistakes in the future.

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Re: How to get over a $25K stock market loss?

Post by Doom&Gloom » Mon Mar 18, 2019 6:42 pm

Live and learn. We have all made mistakes; most are very survivable.

Your usage of "greedy" and "panicked" in the OP seems to indicate that you are already in the learning process which puts you ahead of many investors. You've come to the right place to keep learning. Good luck.

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Re: How to get over a $25K stock market loss?

Post by livesoft » Mon Mar 18, 2019 6:45 pm

delamer wrote:
Mon Mar 18, 2019 6:16 pm
Has anyone on this forum advocated dumping money that you’ll need to spend within a couple years into stocks?

That is what the OP did.
I often advocate that. I don't think I have ever advocated bailing out though. Indeed, I advocate buying more equities when they appear to be on sale. It seems the OP has many months to recover.
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hdas
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Re: How to get over a $25K stock market loss?

Post by hdas » Mon Mar 18, 2019 6:48 pm

rickgrimes wrote:
Mon Mar 18, 2019 2:28 pm

The experience has scarred me enough to swear off of equities, but I know that will be a wealth killer in the long run (we are still 25-30 years away from retirement).
Your temperament is the wealth killer.
You should outsource decision making to either an algorithm (IPS) or an advisor.

Cheers :greedy
"whenever there is a randomized way of doing something, then there is a nonrandomized way that delivers better performance but requires more thought" ET Jaynes

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aspirit
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Re: How to get over a $25K stock market loss?

Post by aspirit » Mon Mar 18, 2019 6:55 pm

C’mon now. Everyone knows equites are a crapshoot.

Where do you speculate SP500 will be in 25-30yrs?
Your call.
Good luck!
Time & tides wait for no one. A man has to know his limitations. | "Give me control of a nation's money and I care not who makes it's laws" | — Mayer Amschel Bauer Rothschild ~

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celia
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Re: How to get over a $25K stock market loss?

Post by celia » Mon Mar 18, 2019 7:14 pm

Don't just create an IPS. Discuss it with your spouse and accept her suggested modifications. (I assume the money and the house would be a joint purchase.) Then print it out with your original post with both of them dated and post them near your computer. Read it every time you are thinking of making a trade. Having second thoughts, then? Listen to yourself at the time you wrote it.

In the big scheme of things, $25K will likely end up being a small loss. Wait another 20 or 30 or 40 years, pull it out and think of the memories lesson you learned early in life. You could even add to a copy of your original post about your current feelings, if you think it will help. (Putting your feelings on paper is meant to replace having to feel bad about it each day.)
Last edited by celia on Mon Mar 18, 2019 7:17 pm, edited 1 time in total.

Morgan Dollar 1921
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Re: How to get over a $25K stock market loss?

Post by Morgan Dollar 1921 » Mon Mar 18, 2019 7:14 pm

I had two thoughts by the time I got to this part of your post, "experts' were pretty confident about a recession coming soon."

First,.... I looked to the right to see your join date, and wished you had arrived here a year earlier,

Second,.... I thought to myself "there are no experts", just an asset allocation & an investment plan.

later,... I thought well if they lost 25 K that was still probably only a 20 % loss so they still have a nice down payment. I know that still stings, but try to think in terms of percentages, at least it helps me.

Also to try and put a positive spin like some others consider it a tuition to the school of hard knocks and resolve to live and learn.

I have told the story before here, about two co-workers who retired late 50's one saved his wife's income and they lived off his, the other, when I asked how he could go at age 58, he said most folks in our country worry about the % of return on their investment, they thing we should worry about is the % of our income we save/invest. So if you need a low equity allocation to sleep at night, then do so. I would strongly suggest you do at least 28% in equities regardless. As we mature we learn that our health is our best asset. Enjoy life and Good Luck!

JoeRetire
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Re: How to get over a $25K stock market loss?

Post by JoeRetire » Mon Mar 18, 2019 7:19 pm

rickgrimes wrote:
Mon Mar 18, 2019 2:28 pm
The experience has scarred me enough to swear off of equities, but I know that will be a wealth killer in the long run (we are still 25-30 years away from retirement). Any tips on how I can get over this feeling and go back to being a responsible/prudent investor?
- Understand and adjust your asset allocation to your risk tolerance.
- Learn not to put short-term monies in equities
- Understand that it's not equities that should scare you, but market timing and poor reactions

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catdude
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Re: How to get over a $25K stock market loss?

Post by catdude » Mon Mar 18, 2019 7:23 pm

OP, I doubt if any of us here has had a mistake-free investing career. Stop beating yourself up over it, just live and learn.

Awhile back I started a thread on investing and financial mistakes. You can read it here:

viewtopic.php?t=228527

There are other threads on mistakes, the subject pops up fairly often...
catdude | | "Only in America." (Yogi Berra, after being told that the mayor of Catholic Dublin was Jewish)

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celia
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Re: How to get over a $25K stock market loss?

Post by celia » Mon Mar 18, 2019 7:24 pm

carol-brennan wrote:
Mon Mar 18, 2019 4:36 pm
In my extended family, I can count the people who have ever owned stocks on three fingers. Yet everyone who was retirement age and wanted to retire actually did!

You don't need stocks to retire. You just need to save as much as you can and have a plan. Living below your means helps, too, as does being frugal.
Carol, Did those three people have pensions? If so, the pension plan was investing in stocks and bonds on their behalf. Right?

pdavi21
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Re: How to get over a $25K stock market loss?

Post by pdavi21 » Mon Mar 18, 2019 7:34 pm

If you can afford a house with a down payment large enough to generate a 25k loss on a <20% drop, 25k shouldn't be a big deal to you.
"We spend a great deal of time studying history, which, let's face it, is mostly the history of stupidity." -Stephen Hawking

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Re: How to get over a $25K stock market loss?

Post by Jack FFR1846 » Mon Mar 18, 2019 7:46 pm

One of Bogle's quotes is "Don't do something, just stand there". Easy to say, hard to do. You have to develop the discipline to sit on your hands, turn off marketwatch and do something else.

I like to remind myself that Fidelity found that their 401k customers who did far, far better than any other group of customers were.....dead. Extreme way to do nothing, but that's my point.
Bogle: Smart Beta is stupid

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Re: How to get over a $25K stock market loss?

Post by nguy44 » Mon Mar 18, 2019 7:47 pm

At lot of good advice given here already.

All I can share is my experience. How you you feel losing close to that amount in one day? I experienced that on Black Monday in October 1987. Worse, in those ancient times I could not get all of my account information until the end of the month. You should have seen how many folks in my company office were swearing that they were done with investing in the market. And of course, many "pundits" were saying that The End is Near...

The only thing that kept me going was really looking at things for the long run - I was not yet 30 then, and I had to console myself with "well, I should not need this money for a while."

The fact is, you will always lose money sometimes in the market. You will also always gain money at times in the market. Historically, the gains will outweigh the losses over the long run, if you stay in the market. The lesson I learned in October 1987 kept me from panicking after the 1990-1991 recession, the 2000 dot-com bust and recession, the 2008-2009 great recession, and last years gyrations (up way early in the year, down suddenly, steadily up again, then fast slide down). Through the lesson I learned I kept saving and investing - being sure to set my asset allocation to a number that was appropriate for my financial stage and for my ability to sleep at night. For example, I look at my equities allocation and ask myself "how would I react if I lost half of it?", as one guide to how much I should allocate to that portion of the portfolio. Also, any money I plan to spend in the next 5 years I keep out of the market, as to not to be forced to sell equities during this time. Yes, it reduces my potential gains, but I am still very happy with the resulting gain, and it makes the losses much less painful. I view it as "no need to swing for the fences, I am happy hitting singles".

Eventually the lesson you have experienced will give you more perspective. In those 3 months that you lost $25K, I lost over $100K... and this happened just a few months after I retired. I was not happy about it, but I was still able to sleep at night, as I now expect these things to happen at times.

So... you cannot change your past actions, you can just learn from them and let them guide your future actions. I wish you the best!

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Wiggums
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Re: How to get over a $25K stock market loss?

Post by Wiggums » Mon Mar 18, 2019 7:55 pm

finagle wrote:
Mon Mar 18, 2019 5:53 pm
The second lesson to you and me is not to listen to bogleheads on this forum wailing "dump all your extra cash into vtsax/vti right NOW. Anything else is market timing!!!!!!1!!"

Such as on this other thread on the front page:

viewtopic.php?f=1&t=276014


Measure your own stomach for risks.
The question often asked is should I invest now or DCA. I did not read where the OP was told to “dump extra cash” into the market. Also, the OP ultimately makes the final decision. The advice here IMO is better than many, many other sources. If you don’t like the advice here, I’m wonder why you are still here (since Oct 30, 2016).
Last edited by Wiggums on Mon Mar 18, 2019 7:59 pm, edited 2 times in total.

AtlBoglehead
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Re: How to get over a $25K stock market loss?

Post by AtlBoglehead » Mon Mar 18, 2019 7:56 pm

Great advice above. Everybody who invests,
including Warren Buffett, makes very costly mistakes from time to time. The market is like that. You win some; you lose some. Look at it this way. This "accidental" loss will be more than compensated for if you learn the lessons others have outlined above, and you will be repaid multiple times over by large and surprising gains if you follow Bogle's principles and "stay the course." 25k won't touch the "accidental" gains that will come to you by being frugal, systematic, and BEING IN THE MARKET on those unknown future days when the market explodes upward.

J295
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Re: How to get over a $25K stock market loss?

Post by J295 » Mon Mar 18, 2019 7:59 pm

Generally, it helps to know you’re not alone.

I made my share of investing mistakes. Dollar wise they were more substantial than your error. Had enough good fortune to retire in my early 50s. Point being, a $25,000 mistake is not going to ruin you.

I took a substantial amount of time to come up with an investment policy statement after the last of those mistakes. It is only five sentences. It provides that the age based allocations cannot be altered unless we make a decision and then wait 90 days before implementing. The reason is to materially minimize acting on fear and greed, two enemies of a good plan.

Short answer: learn from your mistake by making an investment policy statement and stick with it.

Best of luck, and don’t sweat the $25,000.

printer86
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Re: How to get over a $25K stock market loss?

Post by printer86 » Mon Mar 18, 2019 8:03 pm

Been there. In early 2000, I invested my first real commission windfall ($20,000) with a relative who had a can't miss stock. It immediately went to virtually $0.00. Almost 20 years later, all is fine I never think about it. Except when my spouse reminds me not to trust money with relatives.

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Re: How to get over a $25K stock market loss?

Post by DanMahowny » Mon Mar 18, 2019 8:13 pm

Quirkz wrote:
Mon Mar 18, 2019 4:28 pm
We're all going to make mistakes, and the best thing we can do is learn from them. When it comes to a lifetime of investing, $25k can be a relatively cheap lesson, even if it stings now.
Quoting this because I think Quirkz pretty much nailed it.
Funding secured

printer86
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Re: How to get over a $25K stock market loss?

Post by printer86 » Mon Mar 18, 2019 8:27 pm

Just to add to what has been said earlier in this thread, the lesson here isn't that you panicked and sold low, it's that you invested short term funds in a long term investment. You're young and learned a valuable lesson, maybe worth much more than $25k, if you put in practice. Create an IPS and Invest wisely.

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Re: How to get over a $25K stock market loss?

Post by siriusblack » Mon Mar 18, 2019 8:37 pm

rickgrimes wrote:
Mon Mar 18, 2019 2:28 pm
The experience has scarred me enough to swear off of equities, but I know that will be a wealth killer in the long run (we are still 25-30 years away from retirement). Any tips on how I can get over this feeling and go back to being a responsible/prudent investor?
Thanks so much for the vulnerability of your post. I agree wholeheartedly with most of the other folks who have already weighed in. One day you're going to look back and be glad you are going through this difficult time, because from here on out you'll have an IPS and an ability to stay the course unlike most folks with 25-30 years to go before retirement. You are going to be way ahead of the game -- starting today.

The best way to get over it? A few thoughts:

1. For some encouragement in taking a future-oriented, long-term view, take a quick look at the "earnings" (NOT the price) of the S&P 500 over the last 100+ years: http://www.multpl.com/s-p-500-earnings/ You can be confident that over the next 25-30 years, those earnings numbers are only going up... and thus over a sufficiently long period of time the prices will follow. Prices may go down sometimes along the way, but there is an inexorable force at work in the stock market, and that force is the profitability of the underlying businesses.

2. Read Warren Buffett's latest letter to shareholders. The section toward the end ("The American Tailwind") is worth reading and re-reading.

3. Pick an asset allocation that fits your risk profile. Maybe right now (since you are a little shell-shocked from the recent loss) your risk profile is a bit lower than it will be over time. That's probably fine-- so, adjust your AA accordingly and rebuild your investing confidence. For example, instead of 80/20 stock, maybe you want to go 60/40 and move up from there. (Also, I agree with others that your short-term savings should stay in cash.)

4. Do some reading on behavioral biases. (For example, here: https://www.cnr.com/en/insights/article ... -2018.html) Right now you are facing a big one: "regret aversion" -- be wary of that one in particular because it can cost you way more than 25K in the future! You've already made one mental/behavioral mistake (which in the grand scheme will not turn out to be a big deal)-- don't add another (bigger) mistake. Your brain is telling you, "Well, you've already lost 25K-- if you now invest and the market drops another 25K, you'll experience major regret and feel like a fool." Don't listen to that cognitive distortion! Instead, pick your AA, invest it, and if the market drops, just stay the course, and even try to invest more.

5. Always ignore both the extreme optimism and the extreme pessimism of the media (maybe even including the BH forum although I do think this is a pretty amazing and exceptionally level-headed group of people). The stock market will be just fine over the long run, and that's your time horizon, so just stay the course.

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Re: How to get over a $25K stock market loss?

Post by Oakwood42 » Mon Mar 18, 2019 8:40 pm

carol-brennan wrote:
Mon Mar 18, 2019 5:11 pm
Quirkz wrote:
Mon Mar 18, 2019 4:52 pm
Fair enough, I was hasty. There are definitely other angles
The OP's regret is useful, for all of us, I think. My great concern is that practically no one investing today has experienced an extended bear market, one that lasted, say, 10 years or more. Depending upon how one was invested (and when), they have occurred. Ten years from now, it might be very easy to look back on the market today and say, "Wish I had sold then. It was so obvious that the market was overvalued!"

http://www.multpl.com/shiller-pe/

So today everyone walks around feeling like a sage when it comes to stocks. 2008 gave us a taste of a bad market, but it snapped back so quickly that it was almost cruel in that it gave everyone a false sense of security, a "things will always snap back" feeling.

Might not happen the next time, you know, especially given how tapped out the Fed is, how much of the industrialized world is already at 0 or negative interest rates, how high individual and corporate (and national) debt is, on and on. Unprecedented, unprecedented, unprecedented. We are in uncharted waters right now in so many ways. Very few see market-crashing bubbles when they exist; it's only after they've popped that everyone says, "of course!"

The kind of bear market that makes an entire generation swear off equities the way the OP has called them into question is what will put the lie to most people's happy talk about stock ownership.

Yes, stocks might eventually come back from an extended bear market. But we'll also eventually all be dead. The question is how well will the "recovery" sync up with the lifespan we have left, and were we prudent enough in the good times to prepare for the possibility of bad times, really bad times?

If you're counting on stock ownership to enable you to retire, my advice is this: think again. Look at stocks as a nice-to-have, not a need-to-have. Stocks don't care about you, and they might not be there when you need them.

https://www.fool.com/investing/2017/07/ ... erica.aspx

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Re: How to get over a $25K stock market loss?

Post by stoptothink » Mon Mar 18, 2019 8:47 pm

theplayer11 wrote:
Mon Mar 18, 2019 5:40 pm
times your loss by 10 and that’s what I loss in the dot com bubble....on top of another $250k paper profits. Just take it as a learning experience and move on.
Similar story, except it was the real estate crash. I might be FIRE today, at 37, if it weren't for that experience, but nothing I can do about it now. I learned a valuable lesson about investing in things I knew little about; I won't be making that mistake again.

clown
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Re: How to get over a $25K stock market loss?

Post by clown » Mon Mar 18, 2019 10:56 pm

@ OP

FACT - every single investor makes mistakes from time to time. So we have all been in your shoes. Most just don't admit it, sometimes not even to themselves. Decide on an asset allocation that makes YOU comfortable considering YOUR own unique situation. And then stick to it no matter what the "experts" say. You have a long time ahead, Time is your friend. Time IN the market is much more important than timING the market. When the market goes down, remember that you owned 100 shares of XYZ yesterday and you still own 100 shares of XYZ today. In the long run, daily fluctuations are meaningless. Ignore them.

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Re: How to get over a $25K stock market loss?

Post by dcop » Mon Mar 18, 2019 11:04 pm

I was down 27K when the internet bubble burst back neat 2000 and sold. It hurt since my NW was only 160K back then. I swallowed my pride, wrote off the 3000 per year loss for for about 9 years and maxed out all my IRAs and 401K since. I have a NW many times that 160K now. Also my taxable stock portfolio is 9X what it was at its low back then. I didn't make the same mistake in 2008 and rode it out.

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Re: How to get over a $25K stock market loss?

Post by drk » Mon Mar 18, 2019 11:16 pm

carol-brennan wrote:
Mon Mar 18, 2019 5:11 pm
2008 gave us a taste of a bad market, but it snapped back so quickly that it was almost cruel in that it gave everyone a false sense of security, a "things will always snap back" feeling.
[...]
The kind of bear market that makes an entire generation swear off equities the way the OP has called them into question is what will put the lie to most people's happy talk about stock ownership.
This bear market already happened. It is the effect that 2008 had on Millennials.

Please do make actual concrete predictions for your dark, dark claims, though.

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