"Stay the Course" / "Invest for the long term"

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Sigz
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"Stay the Course" / "Invest for the long term"

Post by Sigz » Wed Feb 26, 2020 10:31 am

Good Morning Bogleheads!

I got super interested in investing about a year ago when I realized that my wife and I (two 30 year olds) had too much money stacked away in a high yields savings account making maybe 2% interest and not doing much for us other than looking like a nice big number. We were smart in a way that we had zero debt outside of our mortgage, two solid jobs with decent income, and no other huge obligations.

So we started our Roth IRA's for 2018/2019 and eventually more recently 2020 by maxing them out. We then turned our focus to our pretax accounts. My wife has had a 401k for a while, but was only contributing maybe 3% to get a 3% match. I didn't have a 401k, but a 401a where I automatically contributed 6.5% with an employer match of 6.5%.

So I started a 457 (in which I eventually am wanting to max), where I'm slowly increasing my contribution and am at 15% contribution today. My wife also increased her contribution to 12%.

Now, I know I've been only doing this for a year or so - but it was quite an awesome 2019 (very rare that is) for the type of returns the market gave us. It was cool to see wealth build like that. I knew that it was an oddity and that life wasn't always going to be green relating to the market.

I never experienced a market correction or huge crash so I don't deserve to be on my soap box here because I know there are many here who have experienced something more substantial.

But past market decline was my first "crash". I told myself I wasn't going to look at my accounts - but I did, and boy did my rate of returns drop.

I'm 30 and as a boglehead I know that it is irrelevant because I am thinking 20, 30 years down the line. I know that I'm going to stay the course, not sell, and CONTINUE to contribute and increase my contributions. I know I need to get over myself and stop complaining about short term losses.

But how do you mentally stay strong? I'm not on the verge of selling anything... but how do you tell yourself, my account will be a lot healthier when that's 20, 30 years down the line? How do you as a young and new investor tell yourself - this is fine.

The funny thing is: I'm the guy at work telling everyone "Don't panic", the market was due for this etc, etc. Think about your account when you're getting old!! It's fine!

But sometimes especially the past few days... I'm the one questioning myself, even though I know what the right answers are....

Anyways, thanks for letting me rant.

retired@50
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Re: "Stay the Course" / "Invest for the long term"

Post by retired@50 » Wed Feb 26, 2020 10:39 am

Sigz wrote:
Wed Feb 26, 2020 10:31 am
Good Morning Bogleheads!

But sometimes especially the past few days... I'm the one questioning myself, even though I know what the right answers are....

Anyways, thanks for letting me rant.
Nice rant. My advice is to find something else to do. When you think of turning on the TV to CNBC, don't do it. When you think of checking your phone to get a market update, don't do it. Take an app or two off of your phone. You don't need a phone app to add money to your accounts. You're already automatically buying with every paycheck. Keep that up, and learn to play chess, or ride a bike, or read a mystery novel. Whatever. Take your parents to lunch, visit an uncle...

Regards,
This is one person's opinion. Nothing more.

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watchnerd
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Re: "Stay the Course" / "Invest for the long term"

Post by watchnerd » Wed Feb 26, 2020 10:40 am

Sigz wrote:
Wed Feb 26, 2020 10:31 am
Good Morning Bogleheads!

I got super interested in investing about a year ago when I realized that my wife and I (two 30 year olds) had too much money stacked away in a high yields savings account making maybe 2% interest and not doing much for us other than looking like a nice big number. We were smart in a way that we had zero debt outside of our mortgage, two solid jobs with decent income, and no other huge obligations.

So we started our Roth IRA's for 2018/2019 and eventually more recently 2020 by maxing them out. We then turned our focus to our pretax accounts. My wife has had a 401k for a while, but was only contributing maybe 3% to get a 3% match. I didn't have a 401k, but a 401a where I automatically contributed 6.5% with an employer match of 6.5%.

So I started a 457 (in which I eventually am wanting to max), where I'm slowly increasing my contribution and am at 15% contribution today. My wife also increased her contribution to 12%.

Now, I know I've been only doing this for a year or so - but it was quite an awesome 2019 (very rare that is) for the type of returns the market gave us. It was cool to see wealth build like that. I knew that it was an oddity and that life wasn't always going to be green relating to the market.

I never experienced a market correction or huge crash so I don't deserve to be on my soap box here because I know there are many here who have experienced something more substantial.

But past market decline was my first "crash". I told myself I wasn't going to look at my accounts - but I did, and boy did my rate of returns drop.

I'm 30 and as a boglehead I know that it is irrelevant because I am thinking 20, 30 years down the line. I know that I'm going to stay the course, not sell, and CONTINUE to contribute and increase my contributions. I know I need to get over myself and stop complaining about short term losses.

But how do you mentally stay strong? I'm not on the verge of selling anything... but how do you tell yourself, my account will be a lot healthier when that's 20, 30 years down the line? How do you as a young and new investor tell yourself - this is fine.

The funny thing is: I'm the guy at work telling everyone "Don't panic", the market was due for this etc, etc. Think about your account when you're getting old!! It's fine!

But sometimes especially the past few days... I'm the one questioning myself, even though I know what the right answers are....

Anyways, thanks for letting me rant.
What's your asset allocation?
70% Global Market Weight Equities | 15% Long Treasuries 15% short TIPS & cash || RSU + ESPP

Topic Author
Sigz
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Re: "Stay the Course" / "Invest for the long term"

Post by Sigz » Wed Feb 26, 2020 10:45 am

watchnerd wrote:
Wed Feb 26, 2020 10:40 am
Sigz wrote:
Wed Feb 26, 2020 10:31 am
Good Morning Bogleheads!

I got super interested in investing about a year ago when I realized that my wife and I (two 30 year olds) had too much money stacked away in a high yields savings account making maybe 2% interest and not doing much for us other than looking like a nice big number. We were smart in a way that we had zero debt outside of our mortgage, two solid jobs with decent income, and no other huge obligations.

So we started our Roth IRA's for 2018/2019 and eventually more recently 2020 by maxing them out. We then turned our focus to our pretax accounts. My wife has had a 401k for a while, but was only contributing maybe 3% to get a 3% match. I didn't have a 401k, but a 401a where I automatically contributed 6.5% with an employer match of 6.5%.

So I started a 457 (in which I eventually am wanting to max), where I'm slowly increasing my contribution and am at 15% contribution today. My wife also increased her contribution to 12%.

Now, I know I've been only doing this for a year or so - but it was quite an awesome 2019 (very rare that is) for the type of returns the market gave us. It was cool to see wealth build like that. I knew that it was an oddity and that life wasn't always going to be green relating to the market.

I never experienced a market correction or huge crash so I don't deserve to be on my soap box here because I know there are many here who have experienced something more substantial.

But past market decline was my first "crash". I told myself I wasn't going to look at my accounts - but I did, and boy did my rate of returns drop.

I'm 30 and as a boglehead I know that it is irrelevant because I am thinking 20, 30 years down the line. I know that I'm going to stay the course, not sell, and CONTINUE to contribute and increase my contributions. I know I need to get over myself and stop complaining about short term losses.

But how do you mentally stay strong? I'm not on the verge of selling anything... but how do you tell yourself, my account will be a lot healthier when that's 20, 30 years down the line? How do you as a young and new investor tell yourself - this is fine.

The funny thing is: I'm the guy at work telling everyone "Don't panic", the market was due for this etc, etc. Think about your account when you're getting old!! It's fine!

But sometimes especially the past few days... I'm the one questioning myself, even though I know what the right answers are....

Anyways, thanks for letting me rant.
What's your asset allocation?
We are currently now in target date funds for the 2050 - 2055 years, which we'll probably move to a more "lazy" three fund portfolio in the next year or so. 90/10 basically.

Topic Author
Sigz
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Re: "Stay the Course" / "Invest for the long term"

Post by Sigz » Wed Feb 26, 2020 10:46 am

retired@50 wrote:
Wed Feb 26, 2020 10:39 am
Sigz wrote:
Wed Feb 26, 2020 10:31 am
Good Morning Bogleheads!

But sometimes especially the past few days... I'm the one questioning myself, even though I know what the right answers are....

Anyways, thanks for letting me rant.
Nice rant. My advice is to find something else to do. When you think of turning on the TV to CNBC, don't do it. When you think of checking your phone to get a market update, don't do it. Take an app or two off of your phone. You don't need a phone app to add money to your accounts. You're already automatically buying with every paycheck. Keep that up, and learn to play chess, or ride a bike, or read a mystery novel. Whatever. Take your parents to lunch, visit an uncle...

Regards,
Yes that is true. We are currently updating our house with new paint, trim, etc so you'd think that would keep me busy. But financial news anymore is like a bad drug to me! :D It's all about will power I guess. You're right. Just gotta stop looking...

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watchnerd
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Re: "Stay the Course" / "Invest for the long term"

Post by watchnerd » Wed Feb 26, 2020 10:53 am

Sigz wrote:
Wed Feb 26, 2020 10:45 am


We are currently now in target date funds for the 2050 - 2055 years, which we'll probably move to a more "lazy" three fund portfolio in the next year or so. 90/10 basically.
The answer to your angst is in your fund name.

You don't care about any of this until 2050.

Focus on your human capital, your career, and your health. Save a lot.

Put the screens down.

Go outside.

See nature.
70% Global Market Weight Equities | 15% Long Treasuries 15% short TIPS & cash || RSU + ESPP

lostdog
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Re: "Stay the Course" / "Invest for the long term"

Post by lostdog » Wed Feb 26, 2020 10:56 am

You can look but don't take action.

Come to bogleheads for some emotional support if you do feel like taking action.
Global Market Cap Equity/1 Year Cash/Bonds || 25x Expenses

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watchnerd
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Re: "Stay the Course" / "Invest for the long term"

Post by watchnerd » Wed Feb 26, 2020 10:58 am

lostdog wrote:
Wed Feb 26, 2020 10:56 am
You can look but don't take action.

Come to bogleheads for some emotional support if you do feel like taking action.
Or, better yet, stop hanging out with a bunch of people discussing investments, get away from the computer, and go have a real life.
70% Global Market Weight Equities | 15% Long Treasuries 15% short TIPS & cash || RSU + ESPP

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Quirkz
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Re: "Stay the Course" / "Invest for the long term"

Post by Quirkz » Wed Feb 26, 2020 11:00 am

For the next 30 years, you're not a seller, you're a buyer. You want to buy cheap. You don't want the prices high until you sell.

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Re: "Stay the Course" / "Invest for the long term"

Post by pkcrafter » Wed Feb 26, 2020 11:16 am

Sigz, yes, what is your asset allocation (AA)?

Investors have an internal risk tolerance which ranges from risk-seeking to severe risk aversion, but new untested investors most likely won't know their attitude toward risk until tested. The past few days was a minor test. A strong market run-up gets new investors excited about making money and that's when a lot of of them get in, but there is no thought or experience with the down side of investing.

When we experience a serious drop of 30+% many untested investors will get out. Investing fears are driven by hormonal make-up and can be very hard to ignore. It's better to begin investing with a moderate AA and hold than to start with an aggressive AA that you can't hold. Don't get overconfident or greedy because there are no guarantees that it will all come out fine in the end.

"The Market Can Remain Irrational Longer Than You Can Remain Solvent"

https://quoteinvestigator.com/2011/08/0 ... n-solvent/


Paul
When times are good, investors tend to forget about risk and focus on opportunity. When times are bad, investors tend to forget about opportunity and focus on risk.

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greg24
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Re: "Stay the Course" / "Invest for the long term"

Post by greg24 » Wed Feb 26, 2020 11:17 am

When the market is up, I'm happy that our portfolio is up.

When the market is down, I'm happy that our automated investments are buying at reduced prices.

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Re: "Stay the Course" / "Invest for the long term"

Post by whereskyle » Wed Feb 26, 2020 11:21 am

30 as well. The past few days were the first major market drops of my investing career. This is probably not the ideal way to react, but I felt compelled to do something. So I found a few bucks lying around and bought the dip. It isn't market timing if we buy when the market dips but never sell, right?
"I am better off than he is – for he knows nothing and thinks that he knows. I neither know nor think that I know." - Socrates. "Nobody knows nothing." - Jack Bogle

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Re: "Stay the Course" / "Invest for the long term"

Post by Grt2bOutdoors » Wed Feb 26, 2020 11:29 am

Dear you won't believe it! I just picked up another sale, it was 10% off can you believe it? I hope we continue to get these sale prices for the next 20-30 years, before the market wakes up and realizes that these sell offs are making everything undervalued!

That's how you get over market declines - you can either buy your filet mignon at full price and only that, or you can pick it up at a bargain basement price leaving you with both the meat and leftover change for dessert! Which do you prefer?
"One should invest based on their need, ability and willingness to take risk - Larry Swedroe" Asking Portfolio Questions

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Re: "Stay the Course" / "Invest for the long term"

Post by pasadena » Wed Feb 26, 2020 11:29 am

You get used to it - the ups and down. After a while, you *know* it's going to go back up eventually, because you've seen it, not just because we told you.

I look at mine, mostly because I like to see numbers change, and I shrug - oh, ouch, *shrug*. I know it's going to go back up, and I know it doesn't matter in the long run. It's not discouraging anymore. I also think about that day in the (near?) future when it's all going to be forgotten, like last year's dip.

Mostly I see it as a good day to buy more, and my only "regret" is that I don't have free cash to send in my account. I'm at the point where I hope it keeps going down until Tuesday, so my 401(k) contribution can buy some more shares.

Topic Author
Sigz
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Re: "Stay the Course" / "Invest for the long term"

Post by Sigz » Wed Feb 26, 2020 1:05 pm

Thanks for the replies. Looking towards the future! Gonna keep plugging away and contributing each paycheck automatically towards the pretax accounts and keep on going..

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Re: "Stay the Course" / "Invest for the long term"

Post by Vanguard Fan 1367 » Wed Feb 26, 2020 1:17 pm

I like to read and listen to folks like Charles Ellis, John Bogle, and others. Some of them say that you should be happy when the market goes down because then when you invest you get more shares. Only when 2050 comes around do you want it to have whatever increase you are hoping for. Whenever the stock market goes down I tell my wife how happy I am. Unfortunately her sense of humor doesn't match mine so that annoys her. But she and I have worked things out for the last 43 years (long term) and hopefully in the long term the stock market will be up.
Upton Sinclair: "It is difficult to get a man to understand something when his salary depends on his not understanding it."

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Re: "Stay the Course" / "Invest for the long term"

Post by watchnerd » Wed Feb 26, 2020 5:14 pm

whereskyle wrote:
Wed Feb 26, 2020 11:21 am
30 as well. The past few days were the first major market drops of my investing career. This is probably not the ideal way to react, but I felt compelled to do something. So I found a few bucks lying around and bought the dip. It isn't market timing if we buy when the market dips but never sell, right?
Here's what I don't like about that:

Financially, it's fine.

Behaviorally, it's risky.

Because of how our brain chemistry reward system works:

a) If you buy on a dip and the market goes up, you'll think you're a genius and know how to time the market and will try to do more of it.
b) If you buy on a dip and the market goes down, you'll feel punished and become more averse to risk taking the more it happens.

It's better to just take the active human decision out of it entirely by never buying in a way that involves an active decision on your part.

Automated investing avoids the wetware bugs in our system.
70% Global Market Weight Equities | 15% Long Treasuries 15% short TIPS & cash || RSU + ESPP

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Re: "Stay the Course" / "Invest for the long term"

Post by watchnerd » Wed Feb 26, 2020 5:16 pm

pasadena wrote:
Wed Feb 26, 2020 11:29 am

Mostly I see it as a good day to buy more
Don't buy more.

Don't buy less.

Buy what you planned.
70% Global Market Weight Equities | 15% Long Treasuries 15% short TIPS & cash || RSU + ESPP

7eight9
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Re: "Stay the Course" / "Invest for the long term"

Post by 7eight9 » Wed Feb 26, 2020 5:18 pm

pasadena wrote:
Wed Feb 26, 2020 11:29 am
You get used to it - the ups and down. After a while, you *know* it's going to go back up eventually, because you've seen it, not just because we told you.

I look at mine, mostly because I like to see numbers change, and I shrug - oh, ouch, *shrug*. I know it's going to go back up, and I know it doesn't matter in the long run. It's not discouraging anymore. I also think about that day in the (near?) future when it's all going to be forgotten, like last year's dip.

Mostly I see it as a good day to buy more, and my only "regret" is that I don't have free cash to send in my account. I'm at the point where I hope it keeps going down until Tuesday, so my 401(k) contribution can buy some more shares.
A lot of investors in Japan are still waiting for their market to get back to where it was in 1989. :happy
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Re: "Stay the Course" / "Invest for the long term"

Post by Fallible » Wed Feb 26, 2020 6:01 pm

Sigz wrote:
Wed Feb 26, 2020 10:46 am
...We are currently updating our house with new paint, trim, etc so you'd think that would keep me busy. But financial news anymore is like a bad drug to me! :D It's all about will power I guess. You're right. Just gotta stop looking...
Unless you have fun painting a house, you need something else that gives you fun or pleasure or whatever it is that draws you to financial news but doesn't threaten your financial well-being.
The first principle is that you must not fool yourself – and you are the easiest person to fool. ~Richard Feynman

ososnilknarf
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Re: "Stay the Course" / "Invest for the long term"

Post by ososnilknarf » Wed Feb 26, 2020 6:21 pm

I understand the psychological impulse, but think about it: the market was at this same level just a couple of months ago and everyone thought the market was high.

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Re: "Stay the Course" / "Invest for the long term"

Post by tennisplyr » Thu Feb 27, 2020 8:15 am

At 30 time is your ally...relax
Those who move forward with a happy spirit will find that things always work out.

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Re: "Stay the Course" / "Invest for the long term"

Post by whereskyle » Thu Feb 27, 2020 8:41 am

watchnerd wrote:
Wed Feb 26, 2020 5:14 pm
whereskyle wrote:
Wed Feb 26, 2020 11:21 am
30 as well. The past few days were the first major market drops of my investing career. This is probably not the ideal way to react, but I felt compelled to do something. So I found a few bucks lying around and bought the dip. It isn't market timing if we buy when the market dips but never sell, right?
Here's what I don't like about that:

Financially, it's fine.

Behaviorally, it's risky.

Because of how our brain chemistry reward system works:

a) If you buy on a dip and the market goes up, you'll think you're a genius and know how to time the market and will try to do more of it.
b) If you buy on a dip and the market goes down, you'll feel punished and become more averse to risk taking the more it happens.

It's better to just take the active human decision out of it entirely by never buying in a way that involves an active decision on your part.

Automated investing avoids the wetware bugs in our system.
I agree. Thanks for weighing in. Chalk it up to my first big drop.
"I am better off than he is – for he knows nothing and thinks that he knows. I neither know nor think that I know." - Socrates. "Nobody knows nothing." - Jack Bogle

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JoMoney
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Re: "Stay the Course" / "Invest for the long term"

Post by JoMoney » Thu Feb 27, 2020 8:47 am

Sigz wrote:
Wed Feb 26, 2020 10:31 am
...
But how do you mentally stay strong? I'm not on the verge of selling anything... but how do you tell yourself, my account will be a lot healthier when that's 20, 30 years down the line? How do you as a young and new investor tell yourself - this is fine. ...
Not exactly sure, perhaps just wired differently, read too much pro-stock stuff maybe... but I've never really had an urge to sell, even in the depths of the 2008-2009 crisis.
I do know, that in the late 1990's early 2000's I was stricken with a bit of a frequent trader bug, trying to game the daily movements. So much so that I eventually got locked out of "trading" in my 401k and had to wait 30 days before I could purchase any of the equity funds in it. I eventually got over that, settled into "buy and hold" of a dividend income fund, and later into broad-market indexing.

I do like to look at long-term charts that show the persistent upward direction of the stock market over time.
I also like to look at quarterly earnings data and book value data which is much more stable. Sometimes those drop in value too, but most of the time they head up, and when prices are going down they make it look "on sale".
Even in a withdrawal stage, it's good to remember you have a long time period ahead of you, and the markets actions over a single year really isn't that impactful if you look at the performance over decades.
"To achieve satisfactory investment results is easier than most people realize; to achieve superior results is harder than it looks." - Benjamin Graham

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Re: "Stay the Course" / "Invest for the long term"

Post by Marjimmy » Thu Feb 27, 2020 10:53 am

+1 To all of the above.

I think the best piece I read was to hop off the financial blogs if it's constantly on your mind.

What works best for me is to step back from the screen... Anytime you "think" about selling or checking the market.... Do another action instead.

Example:
"I wonder what my stock is doing today.... let me check" - Me thinking

Action: Let me do 5 pushups.
Very little is needed to make a happy life; it is all within yourself, in your way of thinking. -Marcus Aurelius

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Re: "Stay the Course" / "Invest for the long term"

Post by rockstar » Thu Feb 27, 2020 11:15 am

It’s hard.

The problem is that as you get older, the long term slowly becomes the midterm and then the short term. And market valuations don’t always align with your age.

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Re: "Stay the Course" / "Invest for the long term"

Post by mrspock » Thu Feb 27, 2020 1:56 pm

Honestly, what’s become evident to me is that I’m clearly “wired” in a way which makes investing easier for me than others. I have absolutely 0 urge to sell even a dime (context: 70/30 target). Rather, I relish in the opportunity to make even more money by executing my plan to TLH (interest free loans.... thank-you Uncle Sam), rebalance at a 14.5% draw down... if anything I have to resist the urge to “push” if the market gets into a real bargain territory (say -40%).

This drawdown means my retirement is going to be more secure than I had previously planned. Nothing but good comes from this for me...

As you see... I see this a bit differently. The beauty of being a Boglehead IMO — especially in the accumulation phase is you win either way, it’s only a matter of by how much, how and when.

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Re: "Stay the Course" / "Invest for the long term"

Post by whereskyle » Thu Feb 27, 2020 2:10 pm

watchnerd wrote:
Wed Feb 26, 2020 5:14 pm
whereskyle wrote:
Wed Feb 26, 2020 11:21 am
30 as well. The past few days were the first major market drops of my investing career. This is probably not the ideal way to react, but I felt compelled to do something. So I found a few bucks lying around and bought the dip. It isn't market timing if we buy when the market dips but never sell, right?
Here's what I don't like about that:

Financially, it's fine.

Behaviorally, it's risky.

Because of how our brain chemistry reward system works:

a) If you buy on a dip and the market goes up, you'll think you're a genius and know how to time the market and will try to do more of it.
b) If you buy on a dip and the market goes down, you'll feel punished and become more averse to risk taking the more it happens.

It's better to just take the active human decision out of it entirely by never buying in a way that involves an active decision on your part.

Automated investing avoids the wetware bugs in our system.
Ha! I tried to do it again today and the market plunged another percent. Fooled twice and humbled. No more buys until payday as planned. I can do this!
"I am better off than he is – for he knows nothing and thinks that he knows. I neither know nor think that I know." - Socrates. "Nobody knows nothing." - Jack Bogle

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Re: "Stay the Course" / "Invest for the long term"

Post by cbs2002 » Thu Feb 27, 2020 2:43 pm

This seemed like a good time to make my first post here, if only to say "thank you". Have been lurking and following Bogle advice for years, even before I knew who Bogle was. The resources on this site are immensely valuable reference points.

I thought my stay the course story from the last recession might be helpful.

Spouse and I spent about eight years saving into 401Ks in the runup to 2008. Bought and sold a condo for a good but not ridiculous profit, bought another condo that we still live in. Were very lucky to both keep our jobs during the downturn.

Lost a bunch on paper in 08-09 but never stopped contributing, never sold and were always 100% in diverse stock funds. We were 35 and the retirement accounts looked and felt like monopoly money we could ignore. Being employed was critical to our ability to maintain this perspective, many others were not so fortunate and I know my story could have been quite different if we had lost our jobs.

Fast forward to 2019. Now that portfolio is much larger, owing especially to the shares that were purchased during the recession. The U.S. market keeps breaking a record, then falling, then breaking a record, etc. We were still nearly 100% in equities. I thought to myself that at 45 with children, this does not seem so smart. We had never owned bonds of any kind and just maintained the mindset that equities will always work themselves out for the long run. But 55 or 60 looks a lot closer now. So I made a six-figure move into bond funds and cashed out some brokerage equities to serve as an emergency fund that we now hold in a savings account. Just working myself up to doing this mentally took months.

As of today we are right around 75/25. I'm expecting the equity side of that to slide and stay down for a while, and am OK with that. Still feels a little too risky but I just checked Vanguard's 2035 target date fund allocation, and it's right around 75/25 so I took some comfort.

So if this is your first time: stay the course! Buying and holding diverse stock funds at regular intervals when you are younger works, especially if you can do so through a recession. Don't sell equities today. Next time the SP500 is at a new record, look at your AA and change it so you can sleep.

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