Thread: It’s your First recession (or not) and you’re staying the course

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Streptococcus
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Thread: It’s your First recession (or not) and you’re staying the course

Post by Streptococcus » Mon Mar 23, 2020 6:01 pm

This is my first recession and I have already lost over... well I’m not counting. Probably a lot more than 200K

I started investing at the beginning of the last bull and while I was reading the books by Ferri, Swedroe, Bogle, etc. I always had a feeling that I have what it takes to stomach the wrenching losses of a recession and sleep well at night.

And so far, I’m actually surprised to feel somehow “irresponsibly” calm and nonchalant, in spite of the fact that if our Covid-19 crisis persist for several months, no one will be safe.

If you feel calm like I do, please share the mental principles that make you stay the course in spite of all the drama and uncertainty that surround us.

Here is mine:
1. I invested in a well balanced 3 fund portfolio - so I own the global market. If the global market goes bankrupt there is no salvation anyway and we all going down. I find this reassuring :D
2. The money I invest is a 20 year deferred consumption so I dont really care if I lose 80% of it today, or for 5 or 10 years.
3. Everyone who went through a recession will tell you that it seemed like the apocalypse. Then it was not. This one is probably no different. I bet next year, I will spend time on a beach destination somewhere, sharing common places and in close contact with my fellow humans.
4. If I lose my job and find myself on the street (worse case scenario), I can always restart from the bottom without having to touch my portfolio

These 4 points above are the mental defenses that keep me calm and make me stay the course :beer
We always say “stay the course” “stay the course” in this forum, like its a doctrine.

What actually makes you stay the course?

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Re: Thread: It’s your First recession (or not) and you’re staying the course

Post by watchnerd » Mon Mar 23, 2020 6:10 pm

Streptococcus wrote:
Mon Mar 23, 2020 6:01 pm

What actually makes you stay the course?
Anti-fragility in personal finances.

FWIW, this is my 3rd or 4th recession / bear market, although the first one was when I was 22 and just out of college, so had no net worth to speak of.
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Re: Thread: It’s your First recession (or not) and you’re staying the course

Post by livesoft » Mon Mar 23, 2020 6:15 pm

I feel surprisingly calm as well. I am even buying equities when my rebalancing triggers are hit.

What has helped me is that markets went up big-time in 2019, so the million dollars that has gone poof just seems like I am a year younger and it's 2018 all over again.
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Re: Thread: It’s your First recession (or not) and you’re staying the course

Post by MrCastaway » Mon Mar 23, 2020 6:15 pm

1st recession 33/29, for us it’s my wife’s income is guaranteed in this environment and we have a lifestyle that we could live off just her income. Also have 1 year of Efund. Down about 400k as we are 100% US equities as well.

I’ll admit it has been gut wrenching to watch at times though...
Last edited by MrCastaway on Mon Mar 23, 2020 6:18 pm, edited 2 times in total.

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Re: Thread: It’s your First recession (or not) and you’re staying the course

Post by Sandtrap » Mon Mar 23, 2020 6:17 pm

Streptococcus wrote:
Mon Mar 23, 2020 6:01 pm
This is my first recession and I have already lost over... well I’m not counting. Probably a lot more than 200K

I started investing at the beginning of the last bull and while I was reading the books by Ferri, Swedroe, Bogle, etc. I always had a feeling that I have what it takes to stomach the wrenching losses of a recession and sleep well at night.

And so far, I’m actually surprised to feel somehow “irresponsibly” calm and nonchalant, in spite of the fact that if our Covid-19 crisis persist for several months, no one will be safe.

If you feel calm like I do, please share the mental principles that make you stay the course in spite of all the drama and uncertainty that surround us.

Here is mine:
1. I invested in a well balanced 3 fund portfolio - so I own the global market. If the global market goes bankrupt there is no salvation anyway and we all going down. I find this reassuring :D
2. The money I invest is a 20 year deferred consumption so I dont really care if I lose 80% of it today, or for 5 or 10 years.
3. Everyone who went through a recession will tell you that it seemed like the apocalypse. Then it was not. This one is probably no different. I bet next year, I will spend time on a beach destination somewhere, sharing common places and in close contact with my fellow humans.
4. If I lose my job and find myself on the street (worse case scenario), I can always restart from the bottom without having to touch my portfolio

These 4 points above are the mental defenses that keep me calm and make me stay the course :beer
We always say “stay the course” “stay the course” in this forum, like its a doctrine.

What actually makes you stay the course?
1. You are employed = income stream.
2. Investment money is in deferred pension. Present income not dependent on it.
3. You are informed, have a plan.
1+2+3 = calm

The retiree equiv. would be: IE: all expenses covered by SS, Pension, Annuity, etc. and the interest/dividend earned by a portfolio is not relied on.
= calm

j :D
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Re: Thread: It’s your First recession (or not) and you’re staying the course

Post by Chris001122 » Mon Mar 23, 2020 6:17 pm

My S&P 500 index funds are down about 18% since this time last year. My total bond market funds are up about 3% since this time last year. I'd say that is a 15% decline in the past year, since I am 50/50 in each for most of my retirement funds. Nothing to worry about for me.

Also, this quote:

"You shouldn't own common stocks if a 50% decrease in their value in a short period of time would cause you acute distress."

-Warren Buffett
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Re: Thread: It’s your First recession (or not) and you’re staying the course

Post by Cyclesafe » Tue Mar 24, 2020 7:35 am

WCI articulated it well recently on this forum. If things don't come back, we'll have worse things to worry about. It simply won't matter what we do now. Equals calm. Only lost 20% total. Expect to lose more. Not buying equities in favor of maintaining my retirement cushion.
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Re: Thread: It’s your First recession (or not) and you’re staying the course

Post by MotoTrojan » Tue Mar 24, 2020 7:39 am

I’m buying as much as I can, as I always do. Staying the course.

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Re: Thread: It’s your First recession (or not) and you’re staying the course

Post by 1789 » Tue Mar 24, 2020 7:41 am

My net worth is small so that helps to stay the course easily. I continue on buying stocks on weekly basis, increasing mega backdoor contributions, starting taxable etc. I never felt anything about losing my small portfolio. I agree that reading helps a lot as well to stay the course.
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Re: Thread: It’s your First recession (or not) and you’re staying the course

Post by flaccidsteele » Tue Mar 24, 2020 7:45 am

I’ve been investing since the 90s

I invested during the tech crash, credit crisis and virus crisis

Downturns will always cause me to lose increasing amounts because my net worth increases so much from one bear to the next

If you don’t lose increasing amounts your net worth isn’t growing

To lose hundreds of thousands in a bear, an investor must first *have* hundreds of thousands

I want to lose millions
Last edited by flaccidsteele on Tue Mar 24, 2020 7:47 am, edited 1 time in total.
The US market always recovers. It’s never different this time. Retired in my 40s. Investing is a simple game of rinse and repeat

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Re: Thread: It’s your First recession (or not) and you’re staying the course

Post by fandridis » Tue Mar 24, 2020 7:47 am

This is the first recession for me too.
At 33 y.o, I have at least 2 decades before i even think of retiring, so I don't mind the temporary losses.

What is scary though is people losing their jobs and the possibility of this happening to me. At my company, an employee reduction of around 30% was announced and even though I am not one of them, you never know what will happen if things go on as they are.

Not being able to contribute in my accounts for the next 1-2 years is very scary, yet very probable for many people.

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Re: Thread: It’s your First recession (or not) and you’re staying the course

Post by Leesbro63 » Tue Mar 24, 2020 7:51 am

Cyclesafe wrote:
Tue Mar 24, 2020 7:35 am
WCI articulated it well recently on this forum. If things don't come back, we'll have worse things to worry about. It simply won't matter what we do now. Equals calm. Only lost 20% total. Expect to lose more. Not buying equities in favor of maintaining my retirement cushion.
I am similar. It's hard to do nothing, but I keep hearing Jack Bogle's voice saying "don't just do something....STAND THERE".

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Re: Thread: It’s your First recession (or not) and you’re staying the course

Post by bugleheadd » Tue Mar 24, 2020 7:56 am

im ok with my unrealized losses. i figure i have enough emergency fund for more than 2 years of living expenses and i will continue to buy more (57k/yr) in my 401k to offset the losses. my max loss i could have is about 3 years of salary so not too bad to recoop if it goes to zero, which is unlikely since i am in VTI/IVV/VTSAX

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Re: Thread: It’s your First recession (or not) and you’re staying the course

Post by Pikel » Tue Mar 24, 2020 8:22 am

I was just starting my career during the financial crisis. So I do know what it's like for it to be very difficult to find a job. This is the first test with a lot of skin in the game.

We have a historically normal AA, but for modern times very conservative. Glad for that.

If supply chains collapse and cannot be restarted like turning on a light switch, money isn't going to matter much anyway. Continuing to purchase once per month and all 401k contributions are 100% equity.

We are also extremely frugal, never had any debt, built house ourselves for cash etc. I believe at least some of that was reinforced by the financial crisis.

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Re: Thread: It’s your First recession (or not) and you’re staying the course

Post by welderwannabe » Tue Mar 24, 2020 8:24 am

Pikel wrote:
Tue Mar 24, 2020 8:22 am
I was just starting my career during the financial crisis. So I do know what it's like for it to be very difficult to find a job. This is the first test with a lot of skin in the game.

We have a historically normal AA, but for modern times very conservative. Glad for that.

If supply chains collapse and cannot be restarted like turning on a light switch, money isn't going to matter much anyway. Continuing to purchase once per month and all 401k contributions are 100% equity.

We are also extremely frugal, never had any debt, built house ourselves for cash etc. I believe at least some of that was reinforced by the financial crisis.
+1 similar boat here. My AA is conservative for what has become common on this forum over the last few years. Im happy with my AA.
I am not an investment professional, but I did stay at a Holiday Inn Express last night.

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Re: Thread: It’s your First recession (or not) and you’re staying the course

Post by Quercus Palustris » Tue Mar 24, 2020 8:36 am

I just remind myself my life has been and is an advantageous mix of privilege and luck. Life in the US is looking a lot better than even some other developed countries. My job isn't heavily affected by this particular crisis. We live in an area with many grocery stores, and we have enough food in the house so we only have to venture to the store every few weeks.

I have 30 years to make up for any losses in retirement funds. Only thinking about the 401k plan because I'm in my quarterly rebalancing band. 80/20 and plan to stay there for a while.

My in laws have it harder - both retired, elderly, one smokes so probably weakened lungs. I have an uncle with COPD who is still stuck in Morocco.

I graduated college at the end of 2007, but didn't realize it was a recession due to being poor and in debt (but employed), renting and not financially savvy so I stumbled through it in basic ignorance.

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Re: Thread: It’s your First recession (or not) and you’re staying the course

Post by BV3273 » Tue Mar 24, 2020 8:38 am

I graduated in May 08’ started working in insurance at a firm near Wallstreet. Worked from May throughout the summer and into the fall. Then the crash hit. Basically lost my job, etc...

The whole experienced sucked, but I had no bills and was still living home at the time.

Fast forward to this point in time. It’s scary to say the least. Married, 2 kids, a house, decent retirement portfolio and taxable being built. Much more to lose.

I’m rethinking my EF. Might be a time to give it a boost with all incoming cash and invest the rest according to my investment plan.

My income can take a hit since I’m in non-essential med device sales and my wife is a pre-school teacher in a private school.

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Re: Thread: It’s your First recession (or not) and you’re staying the course

Post by dziuniek » Tue Mar 24, 2020 8:40 am

Cyclesafe wrote:
Tue Mar 24, 2020 7:35 am
WCI articulated it well recently on this forum. If things don't come back, we'll have worse things to worry about. It simply won't matter what we do now. Equals calm. Only lost 20% total. Expect to lose more. Not buying equities in favor of maintaining my retirement cushion.
I think it was JL Collins that said something along the lines of:

- It's either a good time to invest in stocks or we're all dead.

Makes sense.

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Re: Thread: It’s your First recession (or not) and you’re staying the course

Post by Doc7 » Tue Mar 24, 2020 8:55 am

I am down $106K. My first recession was 08 but I only had 20-25K in retirement accounts at that time, my first year out of college.

I just rebalanced this morning and bought $34K in equities and sold the same in Total Bond market.

To get back to my AA of 70/30 with Equities being 65 TSM, 20 INT and 15 REIT it was +$10K to REIT, +$7500 to INT, and rest (16K) to TSM.

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Re: Thread: It’s your First recession (or not) and you’re staying the course

Post by winterfan » Tue Mar 24, 2020 9:06 am

This is my third recession, although the first one doesn't really count since I barely had anything invested. I am staying the course. My DH is still employed and we are purchasing stocks in his 401k. We've lost quite a bit, with a 65/35 portfolio. Haven't rebalanced yet, but we only do it once in the summer.

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Re: Thread: It’s your First recession (or not) and you’re staying the course

Post by BV3273 » Tue Mar 24, 2020 9:17 am

dziuniek wrote:
Tue Mar 24, 2020 8:40 am
Cyclesafe wrote:
Tue Mar 24, 2020 7:35 am
WCI articulated it well recently on this forum. If things don't come back, we'll have worse things to worry about. It simply won't matter what we do now. Equals calm. Only lost 20% total. Expect to lose more. Not buying equities in favor of maintaining my retirement cushion.
I think it was JL Collins that said something along the lines of:

- It's either a good time to invest in stocks or we're all dead.

Makes sense.
Great quote!

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Re: Thread: It’s your First recession (or not) and you’re staying the course

Post by tainted-meat » Tue Mar 24, 2020 9:19 am

100% stock - staying the course. Waiting on my next paycheck so I can invest some more :happy

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Re: Thread: It’s your First recession (or not) and you’re staying the course

Post by nguy44 » Tue Mar 24, 2020 9:31 am

I started investing in the market in 1984 with my 401K. since then I have seen all of the downturns and recessions since that time. I am staying the course because:

- Past downturns taught me what my true risk tolerance was, so that my AA is in light of anticipated downturns like this one.
- I waited to consider retirement until I have a sizeable buffer beyond what the calculators and advisors told me I needed.
- I have enough years of cash so that I am not forced to sell equities for our daily living needs, and before that runs out I can take SS.
- With all the current anxiety going on, I have a home to live in that I could pay off tomorrow, I still have power and running water, I can heat or cool the house as desired, I have food, while the groceries stores maybe not have everything I want they still have plenty of food and household items, my TV and internet work, I am still in good health, I can still walk/jog/run without pain, the authorities are not taking my possessions, and (last but not least) my spouse and my family loves me. These times remind me to put things in their complete perspective.

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Re: Thread: It’s your First recession (or not) and you’re staying the course

Post by Thought Is Free » Tue Mar 24, 2020 10:24 am

My first crash, staying the course. Extremely fortunate natural market timing has help me the most. I started contributing to my 401k in 2010 (first real job) and just paid off all household student loans, which were substantial, a few months ago. We now have a lot of spare monthly cash to throw at the taxable account. Hard to complain when its been nothing but gains from the start and when a crash finally comes I'm in the best position of my life to feast on lowered equity prices.

Also OP's, "if this portfolio goes to zero we are all screwed anyway analysis" gets me through any moment of weakness. 8-)

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Re: Thread: It’s your First recession (or not) and you’re staying the course

Post by Cubicle » Tue Mar 24, 2020 10:28 am

Reading for years that decades of data says staying the course provides the best chances for the best returns.

If I didn't have a real day job I'd study the markets all day & try my luck. But losing time from my well paying job won't make up for any extra returns I could squeeze out. And I'd probably still make all the wrong buy/sell choices.

And most importantly: If I try to make market moves & lose, I'll look stupid (er). If I do nothing & lose, I can just say I'm lazy & wasn't paying attention.
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Re: Thread: It’s your First recession (or not) and you’re staying the course

Post by vipertom1970 » Tue Mar 24, 2020 10:43 am

Streptococcus wrote:
Mon Mar 23, 2020 6:01 pm
What actually makes you stay the course?
I am down over 800K and still buying. But here are things I prepared to help me stay the course.

1. no mortgage
2. Zero debt
3. Low living expenses if needed(be flexible, my spending can go from 0>>>10 or 10>>>0 )
4. Time in the market. Survived Sep 11, 200 recession and 2008 recession(experience in the market)
5. 3 years of EF
Last edited by vipertom1970 on Tue Mar 24, 2020 10:58 am, edited 3 times in total.

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Re: Thread: It’s your First recession (or not) and you’re staying the course

Post by BV3273 » Tue Mar 24, 2020 10:45 am

vipertom1970 wrote:
Tue Mar 24, 2020 10:43 am
Streptococcus wrote:
Mon Mar 23, 2020 6:01 pm
What actually makes you stay the course?
I am down over 800K and still buying. But here are thing I prepared to help me stay the course.

1. no mortgage
2. Zero debt
3. Low living expenses if need( or be flexible )
4. Time in the market. Survived Sep 11, 200 recession and 2008 recession(experience in the market)
5. 3 years of EF
#goals

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Re: Thread: It’s your First recession (or not) and you’re staying the course

Post by HawkeyePierce » Tue Mar 24, 2020 10:51 am

This is my first recession. I graduated college in 2012 so I've only known the bull market. The following are keeping me calm:

- A fully-funded emergency fund in the form of 8-10 months living expenses in a CD
- My high savings rate (>60%)
- My job appears to be secure as my employer is cash-rich and I can work from home
- Education. I've read all of Jack Bogle's and the Boglehead's "greatest hits" plus numerous books about past financial crises, which has given me the perspective to say "I've seen this movie before and I know how it ends"
- Debt free

I am in a remarkably lucky position.


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Re: Thread: It’s your First recession (or not) and you’re staying the course

Post by ray.james » Tue Mar 24, 2020 10:54 am

BV3273 wrote:
Tue Mar 24, 2020 8:38 am
I graduated in May 08’ started working in insurance at a firm near Wallstreet. Worked from May throughout the summer and into the fall. Then the crash hit. Basically lost my job, etc...

The whole experienced sucked, but I had no bills and was still living home at the time.

Fast forward to this point in time. It’s scary to say the least. Married, 2 kids, a house, decent retirement portfolio and taxable being built. Much more to lose.

I’m rethinking my EF. Might be a time to give it a boost with all incoming cash and invest the rest according to my investment plan.

My income can take a hit since I’m in non-essential med device sales and my wife is a pre-school teacher in a private school.
Pikel wrote:
Tue Mar 24, 2020 8:22 am
I was just starting my career during the financial crisis. So I do know what it's like for it to be very difficult to find a job. This is the first test with a lot of skin in the game.

We have a historically normal AA, but for modern times very conservative. Glad for that.

If supply chains collapse and cannot be restarted like turning on a light switch, money isn't going to matter much anyway. Continuing to purchase once per month and all 401k contributions are 100% equity.

We are also extremely frugal, never had any debt, built house ourselves for cash etc. I believe at least some of that was reinforced by the financial crisis.
+1. Same boat. A graduate of 2009 recession. Was very conservative in my AA when the year began. Helps staying course easy.
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Re: Thread: It’s your First recession (or not) and you’re staying the course

Post by RPW25 » Tue Mar 24, 2020 10:58 am

When this started I was at about 90/10. Now I'm 100% stocks.

This is my first recession.

Can't wait till Thursday because I get paid and I can put more in.

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Re: Thread: It’s your First recession (or not) and you’re staying the course

Post by deikel » Tue Mar 24, 2020 11:01 am

This is my third rodeo

I am not staying the course, I am following my investment plan and the plan asks for investing into a falling market at certain % off the top...so far I am at 200k losses, reinvested 200k and have one more barrel of dry powder to go...

Having a written plan that was cooked up when the sun was shining is nice, it takes emotions out of it (although the nagging questions remain).

Having done it before helps to understand that the loss of your job is the key aspect and breaking point for most/many - hence a very healthy emergency fund that covers 12 months at full spending and probably 24 if I had to clamp down hard, which I currently do since it seems all rather shaky.
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Re: Thread: It’s your First recession (or not) and you’re staying the course

Post by Onlineid3089 » Tue Mar 24, 2020 11:28 am

This is my first one with any real amount invested. It's easy for me to stay the course on this one for a few reasons.
1. I work at a county hospital that is in a very strong financial position - job is as secure as it can be during this downturn. My wife works at a different hospital/different health system so she's still getting full hours/pay as well.
2. My main retirement plan is my state's pension which in theory will more than meet our needs. We still save about 30% of gross salary to give us flexibility.
3. We hold what I view as too much cash, but it makes my wife happy.

Tax advantaged contributions have continued with each paycheck and I've moved a little cash into the taxable account along the way as the market has gone down.

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Re: Thread: It’s your First recession (or not) and you’re staying the course

Post by BH_RedRan » Tue Mar 24, 2020 11:35 am

Not my first dip in the road either. Started saving in mid 80s. I breezed my way through a couple of dips by being very focused on work and life. Because my wife and I are about to retire this year it has more of my attention. The first few days were exciting to say the least. I plugged in this dip and two more 20% dips later on into Flexible Retirement Planner and another planner and we're still apparently fine. So, maybe a re-balance, maybe not. I fully expect a recovery within a couple or at least a very few years. Longer term national debt? I don't want to think about it.

It appears now that my larger worry is staying safe from this virus for as long as possible. After all it is tough to spend whilst dead. We stay home and abide by the governor's recommendations plus our own margin of safety. We are filtering out the politically and economically motivated over confidence that this will be over in a week or so. We are in one of the states with lots of new cases and a fairly steep growth curve. We are in one of those states where nurses are having to make their own masks at home. One of them is a neighbor of ours. We are in one of those states where a soccer field is becoming a medical facility. We are in one of those states where there are not enough respirators.

My advice is to not be surprised if this lasts longer than we're told by certain leaders but also not to panic. Just be prudent about viral safety and the safety of others and this will pass. The economy and market will come back. We're staying the course.

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Re: Thread: It’s your First recession (or not) and you’re staying the course

Post by CobraKai » Tue Mar 24, 2020 1:08 pm

HawkeyePierce wrote:
Tue Mar 24, 2020 10:51 am
This is my first recession. I graduated college in 2012 so I've only known the bull market. The following are keeping me calm:

- A fully-funded emergency fund in the form of 8-10 months living expenses in a CD
- My high savings rate (>60%)
- My job appears to be secure as my employer is cash-rich and I can work from home
- Education. I've read all of Jack Bogle's and the Boglehead's "greatest hits" plus numerous books about past financial crises, which has given me the perspective to say "I've seen this movie before and I know how it ends"
- Debt free

I am in a remarkably lucky position.
Lucky or fortunate? Looks like you made some good decisions!

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Re: Thread: It’s your First recession (or not) and you’re staying the course

Post by windaar » Tue Mar 24, 2020 1:13 pm

Streptococcus wrote:
Mon Mar 23, 2020 6:01 pm
What actually makes you stay the course?
I stayed the course in 2008-09 and therefore ended up losing nothing. So it worked well for me.
Nobody knows nothing.

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arcticpineapplecorp.
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Re: Thread: It’s your First recession (or not) and you’re staying the course

Post by arcticpineapplecorp. » Tue Mar 24, 2020 1:24 pm

Been through three now (2000-2002, 2007-2009, 2020-?)
what helps me stay the course? A few things, mostly logical:

1. I didn't have enough saved before the recession to retire, so now I have even less! If I didn't have enough then and I therefore needed to continue socking it away, why would I do anything different now that I've got even less money??

2. I've seen markets recover when everyone else thought it was the end of the world. I see no reason to think this time will be any different (the length, breadth, unemployment numbers, nature/cause may be different, but not that the world will literally come to an end this time.)

3. This is the first bear market my brother has seen (if you don't count the 20% decline in 2018). He started investing around 2010 or 2011. I used the following example to explain to my brother recently that you (and all of us) need to get used to seeing larger dollar losses over time, even though the percentage losses might be less (depending on if you reduce risk over time). Here's the example I used:

Say you're in your 20s and last year you invested $5000 in a Roth IRA (consisting of 100% stocks).
Say the next year the stock market falls 50%.
You lost 50% because you had 100% invested in something that lost 50% (100% x 50% = 50%)
You lost $2500. (whether it's really "lost" is another discussion).

Say decades later (in retirement) your portfolio has grown to $500,000 due to returns and additional contributions.
But at that time you have a more conservative portfolio (30% stocks, 70% fixed income).
At that time the stock market falls 50%, like it did before.
However, your portfolio then would only fall by 15% (assuming fixed income remained unchanged).
Why only a 15% loss?
Because you had a 50% loss on just 30% of your portfolio (30% X 50% = 15%), the percentage of your portfolio allocated to stock. (The fixed income remained unchanged remember.)

You "only" lost 15% now in retirement, which clearly is better and less risky than a 50% loss (because you held 100% stock when you were younger).

But what's a 15% loss represent in dollar terms?

A $75,000 loss. Why? (.15 X $500,000 = $75,000). That's far more than the $2500 loss you experienced before.

So your dollar loss when you're older will be greater even though your portfolio will be less risky.

Smaller percentage losses, but greater dollar losses.

So all investors have got to deal with larger dollar losses as their portfolio grows, even as the percentage losses become smaller (if we take less risk later on).

Think of someone who might have $1 million invested at retirement (this is more common than you might imagine and can be achieved by just investing $300 a month in the stock market for 40 years if earning 8% CAGR). Even if this person only loses 10% of his/her portfolio, that's still a $100,000 loss. That's a smaller percentage loss than in the two examples above, but a far greater dollar loss...because it's based on a larger amount of money invested.

So, it will only get more difficult to face losses over time because losses generally increase, rather than decrease in dollar terms (not percentage terms). Best as you said to not look at your portfolio during down markets.
Last edited by arcticpineapplecorp. on Tue Mar 24, 2020 8:50 pm, edited 2 times in total.
"May you live as long as you want and never want as long as you live" -- Irish Blessing | "Invest we must" -- Jack Bogle

Chuck107
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Re: Thread: It’s your First recession (or not) and you’re staying the course

Post by Chuck107 » Tue Mar 24, 2020 1:29 pm

Been staying the course since 1993, although the course has changed too a two fund portfolio aprox in or around 2012.

For me, living frugally retired, everything paid off, I don't need my investments to make ends meet.
I have cash, CD's on the sidelines in case of emergency.
What the markets do, they do, I've come to a "let it ride" portfolio, making adjustments to maintain balance.

I of course hate to see this kind of drop, but I know it will recover eventually even without my "help", knee jerk reactions to market noise almost always proves to be wrong. So I don't. (anymore)
Last edited by Chuck107 on Tue Mar 24, 2020 3:27 pm, edited 1 time in total.

michoco911
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Re: Thread: It’s your First recession (or not) and you’re staying the course

Post by michoco911 » Tue Mar 24, 2020 1:59 pm

First crash for me, maintaining the course and rebalancing with fresh money when needed.

What helped:
1. Zero Debt
2. Convinced with my asset allocation based on a lot of reading
3. Clearly written IPS with clear details about how and when to rebalance when market is up or down removing any confusion or doubt due to emotions
4. Usually i am a disciplined person so this helps as well
30% VWRD 30% VUSD 40% AGGG until further notice

jw2s
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Re: Thread: It’s your First recession (or not) and you’re staying the course

Post by jw2s » Tue Mar 24, 2020 2:00 pm

I think I'm staying the course. I have fiddled, but don't really know if it 'counts' as market timing or deviating from the course.

I was 80/20. I rebalanced when I was 5% off a few days ago to get back to 80/20.

Today, I changed my automatic paycheck contributions to 100% VIIIX. I replay 'be greedy when other's are fearful, and fearful when other's are greedy'. I have a 20yr retirement horizon. I plan to start buying bonds again as I travel down the road towards retirement. I have a pension. I haven't sold anything, just rebalanced and put future contributions into equities only.

I feel like I'm staying the course since I haven't pulled any money out of the market. Is my thinking correct in this? That so long as you don't pull your money out, you are staying the course?

DesertMan
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Re: Thread: It’s your First recession (or not) and you’re staying the course

Post by DesertMan » Tue Mar 24, 2020 2:08 pm

It's my second recession. And now I have no choice but to stay the course, because I got out the first week of March, then incorrectly called the bottom the following week and got back in, only to find I had run head on into my employer's plan's frequent trading policy.

So then I had this wonderful (not) idea. Since I can't sell in the employer plan, I'll go buy inverse leveraged ETFs in my IRAs to hedge in case the market goes down. I was so happy when I saw the bear ETFs go up 22% and I was looking toward to selling them off this morning. Until the market went up 7% and the bear ETFs went from +22% to -20% in less than a minute. Oh well I had stop loss orders to prevent that, right? Ha ha. Yeah. I did. They didn't work because small fry retail investors like you and me are the last in the breakfast line when the market opens. Somehow enough bear got sold before the crash that I ended up $100. Whee. But then I missed the actual 7% rally that I would have gotten had I just stayed the course in the IRAs as well. (And no, I could not have sold the day before because you can't trade unsettled positions. Unless you're on margin and have a death wish.)

Never again.

Just reconsider your AA, stay the course, and go do something else until it's over.
Last edited by DesertMan on Tue Mar 24, 2020 2:10 pm, edited 2 times in total.

Thought Is Free
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Re: Thread: It’s your First recession (or not) and you’re staying the course

Post by Thought Is Free » Tue Mar 24, 2020 2:08 pm

BV3273 wrote:
Tue Mar 24, 2020 10:45 am
vipertom1970 wrote:
Tue Mar 24, 2020 10:43 am
Streptococcus wrote:
Mon Mar 23, 2020 6:01 pm
What actually makes you stay the course?
I am down over 800K and still buying. But here are thing I prepared to help me stay the course.

1. no mortgage
2. Zero debt
3. Low living expenses if need( or be flexible )
4. Time in the market. Survived Sep 11, 200 recession and 2008 recession(experience in the market)
5. 3 years of EF
#goals
+1 #goals

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GerryL
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Re: Thread: It’s your First recession (or not) and you’re staying the course

Post by GerryL » Tue Mar 24, 2020 2:12 pm

Streptococcus wrote:
Mon Mar 23, 2020 6:01 pm

What actually makes you stay the course?
Investing since early 1990s. Now in 6th year of retirement.
I survived 2008-09 by embracing my ignorance. I didn't know what I could do that would be any better than what I was already doing, so I just kept doing what I had been doing: Maxing out my 401k and Roth and leaving well-enough alone.

Looking at my portfolio balances these days is a little painful … but only when I compare them to what they were a few months ago.

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geerhardusvos
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Re: Thread: It’s your First recession (or not) and you’re staying the course

Post by geerhardusvos » Tue Mar 24, 2020 2:16 pm

Streptococcus wrote:
Mon Mar 23, 2020 6:01 pm
This is my first recession and I have already lost over... well I’m not counting. Probably a lot more than 200K

I started investing at the beginning of the last bull and while I was reading the books by Ferri, Swedroe, Bogle, etc. I always had a feeling that I have what it takes to stomach the wrenching losses of a recession and sleep well at night.

And so far, I’m actually surprised to feel somehow “irresponsibly” calm and nonchalant, in spite of the fact that if our Covid-19 crisis persist for several months, no one will be safe.

If you feel calm like I do, please share the mental principles that make you stay the course in spite of all the drama and uncertainty that surround us.

Here is mine:
1. I invested in a well balanced 3 fund portfolio - so I own the global market. If the global market goes bankrupt there is no salvation anyway and we all going down. I find this reassuring :D
2. The money I invest is a 20 year deferred consumption so I dont really care if I lose 80% of it today, or for 5 or 10 years.
3. Everyone who went through a recession will tell you that it seemed like the apocalypse. Then it was not. This one is probably no different. I bet next year, I will spend time on a beach destination somewhere, sharing common places and in close contact with my fellow humans.
4. If I lose my job and find myself on the street (worse case scenario), I can always restart from the bottom without having to touch my portfolio

These 4 points above are the mental defenses that keep me calm and make me stay the course :beer
We always say “stay the course” “stay the course” in this forum, like its a doctrine.

What actually makes you stay the course?
You haven’t lost anything. You only do that if you sell. If this is your first recession, then likely you are young enough to where wavering is highly detrimental. As long as you can stay employed, you are in very good waters for buying stocks. Things could go way down, even another 30%. But do not let anyone tell you that we won’t get through this. It could be hairy, and it could be a long recovery, but those who are buying now and over the next few years will be rewarded for taking that risk, or at least that’s what 120 years of data tells us.

I stay the course because I understand how businesses and market cycles work, and there are overwhelming reasons to believe that 5 to 15 years from now the S&P 500 will be at 5000
VTSAX and chill

YoungSisyphus
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Re: Thread: It’s your First recession (or not) and you’re staying the course

Post by YoungSisyphus » Tue Mar 24, 2020 2:22 pm

First recession at age 30. Lots of sleepless nights being 100% in US equities, amazing watching it all burn up. However, staying the course has been easier as time goes on a) I tune out the noise. I don't watch the media frenzy anymore. Helps a ton. I stop checking my accounts every day. b) Healthy safety net / good job (for now). Very lucky here. I have enough saved to live two years, and knowing that the short term is cared for is the best insurance.

Other than that, I keep contributing on a fixed frequency and leave it alone.

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Streptococcus
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Re: Thread: It’s your First recession (or not) and you’re staying the course

Post by Streptococcus » Tue Mar 24, 2020 2:23 pm

flaccidsteele wrote:
Tue Mar 24, 2020 7:45 am
I’ve been investing since the 90s

I invested during the tech crash, credit crisis and virus crisis

Downturns will always cause me to lose increasing amounts because my net worth increases so much from one bear to the next

If you don’t lose increasing amounts your net worth isn’t growing

To lose hundreds of thousands in a bear, an investor must first *have* hundreds of thousands

I want to lose millions
:D
Interesting comment

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Clever_Username
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Re: Thread: It’s your First recession (or not) and you’re staying the course

Post by Clever_Username » Tue Mar 24, 2020 2:26 pm

I had barely begun investing in 2008 (got my first 401(k) that summer, and only for that summer). I wish I knew what's keeping me calm. Maybe that I have a long time to go? Maybe it's my conservative asset allocation (age in bonds, I'm mid-30s).

I haven't checked if I hit rebalance bands. I used to notice them on the way up and appropriately reallocate. Kinda hard because in December, my account balanced very well, but it was that all tax-advantaged was stock, all taxable was bonds (just how it came out). Maybe I should be buying stocks in taxable? I should find out which funds. I'm not in a hurry, but not because of market conditions. It's an oversight in my plan that I need to fix.

The good news is I have a lot of cap space for 2020 in tax advantaged, including a mega backdoor Roth, so I believe that in the near future I'll have a mix in tax advantaged and can more easily rebalance as needed.

And again, I haven't checked if I hit my bands, but I'll bet I did.
"What was true then is true now. Have a plan. Stick to it." -- XXXX, _Layer Cake_ | | I survived my first downturn and all I got was this signature line.

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Streptococcus
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Re: Thread: It’s your First recession (or not) and you’re staying the course

Post by Streptococcus » Tue Mar 24, 2020 2:32 pm

DesertMan wrote:
Tue Mar 24, 2020 2:08 pm
It's my second recession. And now I have no choice but to stay the course, because I got out the first week of March, then incorrectly called the bottom the following week and got back in, only to find I had run head on into my employer's plan's frequent trading policy.

So then I had this wonderful (not) idea. Since I can't sell in the employer plan, I'll go buy inverse leveraged ETFs in my IRAs to hedge in case the market goes down. I was so happy when I saw the bear ETFs go up 22% and I was looking toward to selling them off this morning. Until the market went up 7% and the bear ETFs went from +22% to -20% in less than a minute. Oh well I had stop loss orders to prevent that, right? Ha ha. Yeah. I did. They didn't work because small fry retail investors like you and me are the last in the breakfast line when the market opens. Somehow enough bear got sold before the crash that I ended up $100. Whee. But then I missed the actual 7% rally that I would have gotten had I just stayed the course in the IRAs as well. (And no, I could not have sold the day before because you can't trade unsettled positions. Unless you're on margin and have a death wish.)

Never again.

Just reconsider your AA, stay the course, and go do something else until it's over.
I love your comment. These are the comments that I have often read around here and thought me to just leave my portfolio alone. Especially at times like these when volatility reigns. I even hesitate to TLH because I may miss out on a 6-10% rally the next day.
My stocks are up 8% as I write now but had you asked me this morning, I would have predicted them to be down 8%.

Rudedog
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Re: Thread: It’s your First recession (or not) and you’re staying the course

Post by Rudedog » Tue Mar 24, 2020 3:43 pm

First recession (no pension, we'll have to live on our portfolio) and I'm staying the course, I bought a small amount of stock Monday.

Alex GR
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Re: Thread: It’s your First recession (or not) and you’re staying the course

Post by Alex GR » Tue Mar 24, 2020 3:55 pm

3rd recession I guess but first big loss(drawdown) experience:
in 2001/2002 didn't have any money.
in 2008/2009 amazingly got out early, sold some old Janus Funds to buy a house
in 2020: Watched $150k disappear in a 30-day period
Staying the course because:
1) It's too late to get out. Time to do this was 1st week of March at the latest.
2) For all we know, yesterday(Mar 23rd) could have been the lowest point of this crash.
3) Don't have much alternatives in a way of investments.
4) Long investment horizon.
5) Last and most controversial reason: All these people, including famous people, that say 'stay the course' can't be wrong.

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