Freaked Out/Sold during Pandemic

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Blueskies60
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Freaked Out/Sold during Pandemic

Post by Blueskies60 » Sun Apr 19, 2020 10:06 pm

Hello Bogleheads. I'm not proud to say that I freaked during at the outset of the pandemic when the Dow was around 21,000 and sold almost all of my equities. I was convinced the market was going lower and wanted to mitigate my losses. I realize now that I was not emotionally prepared how gut wrenching losing approx 140K (albeit, on paper) would be to me.

I don't know exactly how to proceed at this point. I've gathered myself together again, and now want to get back into the market, but to a lesser degree. Now I understand why Bogleheads suggest to TLH, and to sell and purchase different stocks the SAME DAY! I realize it's because the markets may rise! Duh! An expensive lesson for me to learn.

Anyway, I've decided that I'd like to put 200K back into the market. I'm vacillating between
1. DCA during the months May-Oct (sell in May then go away...) under the notion that markets go down during these months.
Or 2. Just putting the entire 200K back and letting the chips fall where they may...
Or 3. Waiting for the Dow to go down to 21,000 and put the 200K in at that time, (where I wouldn't "lose" any $ as that is where the market was when I pulled the stocks out of the market.

I realize many of you wise Bogleheads will think I'm a numbskull for having freaked out and pulled my money out of stocks in the first place. Thank goodness I have a thick hide, in addition to my thick head, lol!!! The equities I owned were in VTI. Thanks in advance for your thoughts on the matter.

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Re: Freaked Out/Sold during Pandemic

Post by willthrill81 » Sun Apr 19, 2020 10:13 pm

You'll be told by most to (1) figure out what your AA going forward should be, presumably significantly less stock heavy, and (2) to immediately implement that AA. No DCAing, no waiting for what might never happen.
“It's a dangerous business, Frodo, going out your door. You step onto the road, and if you don't keep your feet, there's no knowing where you might be swept off to.” J.R.R. Tolkien,The Lord of the Rings

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Re: Freaked Out/Sold during Pandemic

Post by Blueskies60 » Sun Apr 19, 2020 10:15 pm

Thanks for your insight WillThrill. Appreciate it.

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Re: Freaked Out/Sold during Pandemic

Post by Blueskies60 » Sun Apr 19, 2020 10:20 pm

I read the article that Charlie Munger wrote recently in the WSJ. He said in the article, “Everybody’s just frozen. And the phone is not ringing off the hook. Everybody’s just frozen in the position they’re in.” This statement definitely gave me pause.

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Re: Freaked Out/Sold during Pandemic

Post by annu » Sun Apr 19, 2020 10:23 pm

Fed is taking extreme steps to prop the market, with that kind of support, will be tough to have a low like what you mentioned 2100 to happen again. I sold at 2300 and then rest friday at 2400.

I am more concerned about the way fed/govt are putting money in, but it is great for the market, with covid it was a valid concern to hit extended periods of low. While no one knows what will happen but this being election yearx there might be actions taken to ensure things look good , and deal with consequences later.

I am no rush to jump back in but if you feel you need to go in, better get in before there is a rally after a "cure" is announced. That in itself with push market even higher.

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Re: Freaked Out/Sold during Pandemic

Post by Cubicle » Sun Apr 19, 2020 10:26 pm

Your biggest issue with waiting for the DOW to go back to 21,000 is.... are you sure it will? You might be waiting for a long time... or not.

If nothing else, learn from your actions that the market is unpredictable. No one on the planet right now can actually figure out why the market has "almost recovered" since the lows. Honestly, my portfolio from my balance high to now looks no worse than a bad earnings season. You would never know the planet closed down.

I do know the market will fall from where it is. How much & when I have no clue. You have to play the game to reap the rewards. The market is a game. But you can hedge your bets by anticipating all the falls & losses & just accepting them as "cost of doing business".

Otherwise, lump sum it all in after truly discovering the asset allocation that will not drive you to panic sell again. Do not wait for any special number to get back in.
"Oh look another bajillion point declin-Ooooh!!! A coupon for pizza!!!!" <--- This is what everyone's IPS should be. ✓✓✓

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Re: Freaked Out/Sold during Pandemic

Post by windaar » Sun Apr 19, 2020 10:30 pm

If market drops again will you sell again? The concept of "stay the course" is clear. If you can't do it then all may be lost. I do wish you the best.
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Re: Freaked Out/Sold during Pandemic

Post by MotoTrojan » Sun Apr 19, 2020 10:30 pm

Blueskies60 wrote:
Sun Apr 19, 2020 10:20 pm
I read the article that Charlie Munger wrote recently in the WSJ. He said in the article, “Everybody’s just frozen. And the phone is not ringing off the hook. Everybody’s just frozen in the position they’re in.” This statement definitely gave me pause.
I would stop reading financial “news” until you can do it without reacting. Sell in May is BS clickbait. Pick an AA, develop strict rules based rebalancing and TLH plans, and then invest as much as you can as soon as you can.

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Blueskies60
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Re: Freaked Out/Sold during Pandemic

Post by Blueskies60 » Sun Apr 19, 2020 10:33 pm

Thanks Cubicle. Yeah, the AA is huge, I've learned after my "freak out"! Gotta wrap my head around what it should be for my personal comfort level. It stinks that equites are almost the "only game in town" with regards as a place to put one's $.

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Re: Freaked Out/Sold during Pandemic

Post by Ambitious994 » Sun Apr 19, 2020 10:35 pm

Blueskies60 wrote:
Sun Apr 19, 2020 10:06 pm
Hello Bogleheads. I'm not proud to say that I freaked during at the outset of the pandemic when the Dow was around 21,000 and sold almost all of my equities. I was convinced the market was going lower and wanted to mitigate my losses. I realize now that I was not emotionally prepared how gut wrenching losing approx 140K (albeit, on paper) would be to me.

I don't know exactly how to proceed at this point. I've gathered myself together again, and now want to get back into the market, but to a lesser degree. Now I understand why Bogleheads suggest to TLH, and to sell and purchase different stocks the SAME DAY! I realize it's because the markets may rise! Duh! An expensive lesson for me to learn.

Anyway, I've decided that I'd like to put 200K back into the market. I'm vacillating between
1. DCA during the months May-Oct (sell in May then go away...) under the notion that markets go down during these months.
Or 2. Just putting the entire 200K back and letting the chips fall where they may...
Or 3. Waiting for the Dow to go down to 21,000 and put the 200K in at that time, (where I wouldn't "lose" any $ as that is where the market was when I pulled the stocks out of the market.

I realize many of you wise Bogleheads will think I'm a numbskull for having freaked out and pulled my money out of stocks in the first place. Thank goodness I have a thick hide, in addition to my thick head, lol!!! The equities I owned were in VTI. Thanks in advance for your thoughts on the matter.
Questions:

- What was your allocation to stocks and bonds?

- How old are you?

- About what age range do you plan on retiring?

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Re: Freaked Out/Sold during Pandemic

Post by theorist » Sun Apr 19, 2020 10:38 pm

Who cares if the market falls another 15% (or whatever) again? You are investing for 5+ years in the future (for many of us, hopefully longer) if you are putting a substantial fraction of your $ into equities. (Otherwise, don’t put it into equities.) The market may take extra long to recover — maybe effective treatments take 9 more months and a vaccine is 2 years off. But several years down the road, that is all ancient history.

The disease, what the Fed is doing, and who wins the election are all factors with implications well beyond your ability to compute. But you’re either convinced that long term the markets will go up, or you’re not. If you are, invest. If you aren’t, don’t. History suggests that you should be convinced. (But, this time may be different.)

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Re: Freaked Out/Sold during Pandemic

Post by phxjcc » Sun Apr 19, 2020 11:01 pm

It could go up, or down.

Long term, or short term.

BUTTERFLY STRADDLE!

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Re: Freaked Out/Sold during Pandemic

Post by tibbitts » Sun Apr 19, 2020 11:09 pm

#3 is my choice.

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Re: Freaked Out/Sold during Pandemic

Post by Blueskies60 » Sun Apr 19, 2020 11:10 pm

Ambitious, I'm definitely a conservative investor. I'm 60 and plan to retire at 67. I had homes where most of my $ was invested. Sold my property and now I'm in cash. In retrospect, I prefer money held in real estate, with the exception of the work/labor/maintenance required. Less stressful though, at least for me.

I had equities invested as 33% of my portfolio and bonds as 16%. However, now with the loss from the market downturn and selling my equities, if I repurchase equities with the cash I pulled out, I will be at 25% equities. I have additional funds in CDs.

You Bogleheads have stronger stomachs than me!!! And you're absolutely right. If I choose to get back into the market, I'll have to stay in it, even if the market goes down to zero. That will have to be my game plan.

One additional thing, I've seen a lot of Bogleheads slamming bonds recently. Any thoughts?

vipertom1970
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Re: Freaked Out/Sold during Pandemic

Post by vipertom1970 » Sun Apr 19, 2020 11:13 pm

do yo still have a mortgage ?

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Blueskies60
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Re: Freaked Out/Sold during Pandemic

Post by Blueskies60 » Sun Apr 19, 2020 11:23 pm

No mortgage, but at this point looking for real estate. Less stressful than equities IMO

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F150HD
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Re: Freaked Out/Sold during Pandemic

Post by F150HD » Sun Apr 19, 2020 11:27 pm

wash sale territory?

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Re: Freaked Out/Sold during Pandemic

Post by Blueskies60 » Sun Apr 19, 2020 11:29 pm

Yes, that's what I'm planning on.

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Re: Freaked Out/Sold during Pandemic

Post by dru808 » Sun Apr 19, 2020 11:54 pm

Don’t plan on that.
60% US equity | 25% International equity | 15% US Treasury bonds

Ambitious994
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Re: Freaked Out/Sold during Pandemic

Post by Ambitious994 » Mon Apr 20, 2020 12:01 am

Blueskies60 wrote:
Sun Apr 19, 2020 11:10 pm
Ambitious, I'm definitely a conservative investor. I'm 60 and plan to retire at 67. I had homes where most of my $ was invested. Sold my property and now I'm in cash. In retrospect, I prefer money held in real estate, with the exception of the work/labor/maintenance required. Less stressful though, at least for me.

I had equities invested as 33% of my portfolio and bonds as 16%. However, now with the loss from the market downturn and selling my equities, if I repurchase equities with the cash I pulled out, I will be at 25% equities. I have additional funds in CDs.

You Bogleheads have stronger stomachs than me!!! And you're absolutely right. If I choose to get back into the market, I'll have to stay in it, even if the market goes down to zero. That will have to be my game plan.

One additional thing, I've seen a lot of Bogleheads slamming bonds recently. Any thoughts?
Lol, okay got it, so a couple of notes:

- Risk capacity and risk tolerance are key terms you must keep in mind. Risk capacity is based on a time horizon to ride the Stock Market Roller Coaster before you need the monies in retirement, whereas Risk tolerance is what you can "stomach" in terms of Stock Market volatility.

- Now, at 60 with a plan to retire at 67, in combination with a low risk tolerance for Stock Market volatility to the point you have completely moved out of Stocks, the honest truth here buddy is I don't think you need to keep much in Stocks going forward. Prior to this, you had 33% in Stocks, 16% in Bonds, and I assume the rest of your investable assets were Cash or CDs at 51%. Is that about right? If so, you were 67% in Bonds/Cash and 33% in Stocks before the crash.

- Going forward, I would stay heavily in Bonds and keep about 5% to 15% in Stocks. It will help you sleep at night.

- Now, with that being said, you are going to have to make sure you are educated on The Trinity Study and Withdrawal Rates: https://earlyretirementnow.com/2016/12/ ... t-1-intro/

- Due to your low allocation to Stocks, you are going to only want to withdraw about 2% on your investable assets portfolio of the Stocks, Bonds, CDs, and Cash. You can try a 3% withdrawal, but you run about a 90% success probability that the portfolio lasts 30 years. Again, this is only taking into account the balance of your investable assets which will include Stocks, Bonds, CDs, and Cash.

- The rest of your needed monies will need to come from your other income streams buddy, such as any Real Estate Rentals you have, Social Security, if you have a Pension, or even if you want to work a side job up to the limits determined by Social Security to generate additional income.

- In relation to The Bogleheads slamming Bonds, yeah, it's nothing new lol. A lot of guys in The Investing Community have a good Risk Tolerance, which means they have no issue riding the Roller Coaster in a high allocation to Stocks even well into their 60's and 70's. But that's them. Investing has to be a customized plan based on the Risk Capacity and Risk Tolerance of the Individual. So the benefit for you is that you won't have to worry much about that huge Volatility in your investable assets, but you will have to make adjustments in your life because again your withdrawal rate needs to be 2% or 3% worse case.
Last edited by Ambitious994 on Mon Apr 20, 2020 12:04 am, edited 1 time in total.

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Re: Freaked Out/Sold during Pandemic

Post by Blueskies60 » Mon Apr 20, 2020 12:04 am

I'm relatively new to all this but I thought "wash sale" and TLH are essentially the same thing. I've definitely taken a financial loss and will repurchase a different stock or wait the requisite 31 days before buying the same stock. Am I unaware of something that I need to know?

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Re: Freaked Out/Sold during Pandemic

Post by manatee2005 » Mon Apr 20, 2020 12:11 am

Blueskies60 wrote:
Sun Apr 19, 2020 11:10 pm
Ambitious, I'm definitely a conservative investor. I'm 60 and plan to retire at 67. I had homes where most of my $ was invested. Sold my property and now I'm in cash. In retrospect, I prefer money held in real estate, with the exception of the work/labor/maintenance required. Less stressful though, at least for me.

I had equities invested as 33% of my portfolio and bonds as 16%. However, now with the loss from the market downturn and selling my equities, if I repurchase equities with the cash I pulled out, I will be at 25% equities. I have additional funds in CDs.

You Bogleheads have stronger stomachs than me!!! And you're absolutely right. If I choose to get back into the market, I'll have to stay in it, even if the market goes down to zero. That will have to be my game plan.

One additional thing, I've seen a lot of Bogleheads slamming bonds recently. Any thoughts?
I didn’t look at my accounts from March 4 to March 30. If I looked I might have done what you did. It’s best not to look during those days.
Between when you sold 21k and low 18k you saved about 10% but you have to be right twice, when you sell and when you buy.

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Re: Freaked Out/Sold during Pandemic

Post by Blueskies60 » Mon Apr 20, 2020 12:13 am

Thanks for all the good info Ambitious. Personally, I'm hoping to take no $ out of my accounts in retirement, with the exception of the RMDs in my tax sheltered accounts/all Vanguard bond funds. I have a pension and will take SS ~ hope to wait til I'm 70 to start SS. I hoping/planning on leaving as many assets as I can to my children. Given that notion, I think I should "man up" and put keep at least 25-33% in equities for their sake.

During the 2008 subprime fiasco, I was happy to have the majority of my assets in real estate. Thought selling my real estate would be easier :oops:

Live and learn!!!!! So thankful I have this forum and all the "brains" here to give good advice :happy

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Re: Freaked Out/Sold during Pandemic

Post by Blueskies60 » Mon Apr 20, 2020 12:15 am

Good advice Manatee.......... looking at one's financial accounts during a crisis is akin to looking at Medusa!

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Re: Freaked Out/Sold during Pandemic

Post by Luckywon » Mon Apr 20, 2020 12:29 am

Blueskies60 wrote:
Sun Apr 19, 2020 10:06 pm

I realize many of you wise Bogleheads will think I'm a numbskull for having freaked out and pulled my money out of stocks in the first place.
There are a LOT of us out here who have done similar or worse, just not talking about it much. These forums tend to make one feel inadequate as there is a huge reporting bias for good outcomes

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Re: Freaked Out/Sold during Pandemic

Post by yaynick » Mon Apr 20, 2020 2:07 am

Blueskies60 wrote:
Mon Apr 20, 2020 12:04 am
I'm relatively new to all this but I thought "wash sale" and TLH are essentially the same thing. I've definitely taken a financial loss and will repurchase a different stock or wait the requisite 31 days before buying the same stock. Am I unaware of something that I need to know?
What you are describing is specifically not a wash sale. A wash sale would be repurchasing the “same” security within that time frame, which would disallow (or delay) writing off the loss. https://www.bogleheads.org/wiki/Wash_sale

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Re: Freaked Out/Sold during Pandemic

Post by arcticpineapplecorp. » Mon Apr 20, 2020 5:48 am

in addition to yaynick's post on reading more about wash sales, don't forget to read about tax loss harvesting:

https://www.bogleheads.org/wiki/Tax_loss_harvesting

Also, it sounds like you need an IPS and an understanding of what your asset allocation should be. Once you've determined your appropriate asset allocation (based on need, ability and willingness to take risk), the only thing to do is rebalance back to your predetermined AA as required. This takes all the emotions, guesswork, anxiety out of investing.

Please read more here:

https://www.bogleheads.org/wiki/Investm ... _statement

https://www.bogleheads.org/wiki/Asset_allocation
"May you live as long as you want and never want as long as you live" -- Irish Blessing | "Invest we must" -- Jack Bogle

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Re: Freaked Out/Sold during Pandemic

Post by RadAudit » Mon Apr 20, 2020 6:06 am

Blueskies60 wrote:
Sun Apr 19, 2020 10:06 pm
I'm not proud to say that I freaked during at the outset of the pandemic when the Dow was around 21,000 and sold almost all of my equities.
Well, if you don't want another chance to freak out, find an AA that matches your need, willingness and ability to take the risks necessary to meet your goals.
FI is the best revenge. LBYM. Invest the rest. Stay the course. - PS: The cavalry isn't coming, kids. You are on your own.

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Re: Freaked Out/Sold during Pandemic

Post by 260chrisb » Mon Apr 20, 2020 7:12 am

RadAudit wrote:
Mon Apr 20, 2020 6:06 am
Blueskies60 wrote:
Sun Apr 19, 2020 10:06 pm
I'm not proud to say that I freaked during at the outset of the pandemic when the Dow was around 21,000 and sold almost all of my equities.
Well, if you don't want another chance to freak out, find an AA that matches your need, willingness and ability to take the risks necessary to meet your goals.
Yes, this!

Ya won't likely find a lot of folks here calling you a numbskull nor will you find many helping you determine the best time to get back in. You have to figure that out based on your adjusted rick tolerance. Truth is there are lots of folks who may have done what you did. I didn't, but watching the news, being locked down, and freaking out over what's going on made me think about it a lot. I don't know if I'm right, wrong, or indifferent. Time will tell. look forward, not back.

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Re: Freaked Out/Sold during Pandemic

Post by Tamarind » Mon Apr 20, 2020 7:29 am

The right time to get back in is always now, in full, because as you have determined you don't know what the market will do next.

From the numbers and description you've given: 1) $140k loss on a portfolio with 33% equity, 2) not expecting to withdraw from retirement accounts other than RMD possibly ever due to pension, there are two sensible choices IMO.

A) Drop to 20-25% equities. It's important to have some equities in a portfolio but at this level even a Great Depression would not seriously dent your portfolio. A portfolio w some stocks is both better performing and LESS risky than a 100% bond portfolio.

B) Increase to 75-80% equities. You don't need the money, it's legacy, right? So who cares what it does this year or even this decade - you should be interesting with your children's lifespans in mind.

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Re: Freaked Out/Sold during Pandemic

Post by Call_Me_Op » Mon Apr 20, 2020 7:40 am

willthrill81 wrote:
Sun Apr 19, 2020 10:13 pm
You'll be told by most to (1) figure out what your AA going forward should be, presumably significantly less stock heavy, and (2) to immediately implement that AA. No DCAing, no waiting for what might never happen.
I for one will modify that advice. Determine how much you really can live with in stocks. Put half in immediately and cost-average the rest over the next 6 months or so. I see no reason to be extreme or dogmatic about it. The goal is to be able to sleep at night and avoid major regrets.
Best regards, -Op | | "In the middle of difficulty lies opportunity." Einstein

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Re: Freaked Out/Sold during Pandemic

Post by eldinerocheapo » Mon Apr 20, 2020 7:43 am

I was down $380k and have recovered all but $140k of it. Never sold or rebalanced. Get back in with an AA and dollar amount you can live with and allows for a good night's sleep.
"Do, or do not." Yoda

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Re: Freaked Out/Sold during Pandemic

Post by willthrill81 » Mon Apr 20, 2020 9:43 am

Call_Me_Op wrote:
Mon Apr 20, 2020 7:40 am
willthrill81 wrote:
Sun Apr 19, 2020 10:13 pm
You'll be told by most to (1) figure out what your AA going forward should be, presumably significantly less stock heavy, and (2) to immediately implement that AA. No DCAing, no waiting for what might never happen.
I for one will modify that advice. Determine how much you really can live with in stocks. Put half in immediately and cost-average the rest over the next 6 months or so. I see no reason to be extreme or dogmatic about it. The goal is to be able to sleep at night and avoid major regrets.
I would be fine with that as well. But dogmatism is the order of the day on this forum.
“It's a dangerous business, Frodo, going out your door. You step onto the road, and if you don't keep your feet, there's no knowing where you might be swept off to.” J.R.R. Tolkien,The Lord of the Rings

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Re: Freaked Out/Sold during Pandemic

Post by carolinaman » Mon Apr 20, 2020 10:54 am

Blueskies60 wrote:
Sun Apr 19, 2020 10:20 pm
I read the article that Charlie Munger wrote recently in the WSJ. He said in the article, “Everybody’s just frozen. And the phone is not ringing off the hook. Everybody’s just frozen in the position they’re in.” This statement definitely gave me pause.
Yes, Munger also said that he and Buffett were buying during the mortgage meltdown in 2008. Not so this time. We are in uncharted territory and dependent upon getting the pandemic under control within predicted time frame based upon models that are, well they are models and not always reliable. No one really knows how the market is going to go over the next year, but if the virus goes badly, the market can get ugly in spite of what the Fed is doing.

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