Finding Bogleheads forum saved me hundreds of thousands of dollars

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manatee2005
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Finding Bogleheads forum saved me hundreds of thousands of dollars

Post by manatee2005 » Wed May 20, 2020 4:41 pm

In 2008 I was renting and was mad that the housing bubble made buying a house unaffordable for me. I was reading every doom and gloom website out there. I put my 401k into cash in June 2008 but still had some individual stocks left. I was giddy when Lehman fell and stocks were tanking and housing was dropping because I was renting and in cash. I convinced myself that the second depression was coming and I stayed in cash and renting until 2015, missing out on the low house prices and stock gains for 5-6 years.
I joined this board in December and I remember reading threads from 2009 about people capitulating and selling in 2009 and locking in the losses. I also remember reading how you have to be right twice, when to sell and when to buy back in. In 2008 I was right when to seell but since I was interested in stocks going even lower I wasn’t thinking with a clear head and bought back in way too late.

When the March 2020 crash happened, it would have been so easy in the short term to sell and have the pain go away. Every night the S&P500 futures would trigger circuit breakers and I felt like the biggest idiot ever for not selling. But I remembered two things from this board, you have to be right twice, and nobody can time the market because nobody knows anything.

I don’t know if it’s luck or what, but I am now very close to my Feb 2020 highs. I know it can still drop and I know it doesn’t matter, but if I sold in mid March I would have locked in close to half a mil dollars in loses. I even talked some friends out of selling, as they don’t read this board.

Since I realized after being at home with family for couple of months that I might want to retire sooner then I thought, I will go more into bonds because the 30% swing in less than a months is a little above my risk tolerance :-)

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ruralavalon
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Re: Finding Bogleheads forum saved me hundreds of thousands of dollars

Post by ruralavalon » Wed May 20, 2020 5:15 pm

manatee2005 wrote:
Wed May 20, 2020 4:41 pm
In 2008 I was renting and was mad that the housing bubble made buying a house unaffordable for me. I was reading every doom and gloom website out there. I put my 401k into cash in June 2008 but still had some individual stocks left. I was giddy when Lehman fell and stocks were tanking and housing was dropping because I was renting and in cash. I convinced myself that the second depression was coming and I stayed in cash and renting until 2015, missing out on the low house prices and stock gains for 5-6 years.
I joined this board in December and I remember reading threads from 2009 about people capitulating and selling in 2009 and locking in the losses. I also remember reading how you have to be right twice, when to sell and when to buy back in. In 2008 I was right when to seell but since I was interested in stocks going even lower I wasn’t thinking with a clear head and bought back in way too late.
Mistakes are inevitable.

When the March 2020 crash happened, it would have been so easy in the short term to sell and have the pain go away. Every night the S&P500 futures would trigger circuit breakers and I felt like the biggest idiot ever for not selling. But I remembered two things from this board, you have to be right twice, and nobody can time the market because nobody knows anything.
What counts most is learning from mistakes. You have learned.

I don’t know if it’s luck or what, but I am now very close to my Feb 2020 highs. I know it can still drop and I know it doesn’t matter, but if I sold in mid March I would have locked in close to half a mil dollars in loses. I even talked some friends out of selling, as they don’t read this board.

Congratulations on the rapid recovery :D .

Since I realized after being at home with family for couple of months that I might want to retire sooner then I thought, I will go more into bonds because the 30% swing in less than a months is a little above my risk tolerance :-)
A nice end to the story :) .
"Everything should be as simple as it is, but not simpler." - Albert Einstein | Wiki article link:Getting Started

Topic Author
manatee2005
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Joined: Wed Dec 18, 2019 9:17 pm

Re: Finding Bogleheads forum saved me hundreds of thousands of dollars

Post by manatee2005 » Wed May 20, 2020 6:21 pm

ruralavalon wrote:
Wed May 20, 2020 5:15 pm
manatee2005 wrote:
Wed May 20, 2020 4:41 pm
In 2008 I was renting and was mad that the housing bubble made buying a house unaffordable for me. I was reading every doom and gloom website out there. I put my 401k into cash in June 2008 but still had some individual stocks left. I was giddy when Lehman fell and stocks were tanking and housing was dropping because I was renting and in cash. I convinced myself that the second depression was coming and I stayed in cash and renting until 2015, missing out on the low house prices and stock gains for 5-6 years.
I joined this board in December and I remember reading threads from 2009 about people capitulating and selling in 2009 and locking in the losses. I also remember reading how you have to be right twice, when to sell and when to buy back in. In 2008 I was right when to seell but since I was interested in stocks going even lower I wasn’t thinking with a clear head and bought back in way too late.
Mistakes are inevitable.

When the March 2020 crash happened, it would have been so easy in the short term to sell and have the pain go away. Every night the S&P500 futures would trigger circuit breakers and I felt like the biggest idiot ever for not selling. But I remembered two things from this board, you have to be right twice, and nobody can time the market because nobody knows anything.
What counts most is learning from mistakes. You have learned.

I don’t know if it’s luck or what, but I am now very close to my Feb 2020 highs. I know it can still drop and I know it doesn’t matter, but if I sold in mid March I would have locked in close to half a mil dollars in loses. I even talked some friends out of selling, as they don’t read this board.

Congratulations on the rapid recovery :D .

Since I realized after being at home with family for couple of months that I might want to retire sooner then I thought, I will go more into bonds because the 30% swing in less than a months is a little above my risk tolerance :-)
A nice end to the story :) .
I think everybody is very surprised by the recovery. I was fully prepared to wait 5 years to recover to Feb 2020 highs because that's how long it took to recover after 2009, but I guess the Fed printing 3 trillion dollars sped that up considerably :-)

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Re: Finding Bogleheads forum saved me hundreds of thousands of dollars

Post by Vanguard Fan 1367 » Wed May 20, 2020 8:06 pm

Nice story on saving significant cash!

My time reading Bogle’s books and this forum has paid off nicely.
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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Stinky
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Re: Finding Bogleheads forum saved me hundreds of thousands of dollars

Post by Stinky » Wed May 20, 2020 9:08 pm

Sorry that you missed out on the stock market gains from
2008 to 2015.

But very glad that you stayed the course during the turbulent times earlier this year.

Boglehead principles work. Thanks for sharing your story.
It's a GREAT day to be alive - Travis Tritt

Normchad
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Re: Finding Bogleheads forum saved me hundreds of thousands of dollars

Post by Normchad » Wed May 20, 2020 9:25 pm

Some of the best things in life are free. This forum and wonderful, thoughtful advice provided here, are amazing. It would be amazing to somehow quantify the gains we all experience from this forum.

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1789
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Re: Finding Bogleheads forum saved me hundreds of thousands of dollars

Post by 1789 » Wed May 20, 2020 9:51 pm

Nice story. If one stays the course with a “good strategy” of buying low cost index funds, he will be successful in long term. If one starts playing games with individual stocks, moves in and out of market, he is doomed to fail. But some people don’t believe it and they want to experiment same things that has been tried by someone else in the past but they expect different results. What can you tell to them... i am happy that this website’s investment philosophy has served you well.
"My conscience wants vegetarianism to win over the world. And my subconscious is yearning for a piece of juicy meat. But what do i want?" (Andrei Tarkovsky)

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Cubicle
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Re: Finding Bogleheads forum saved me hundreds of thousands of dollars

Post by Cubicle » Thu May 21, 2020 12:00 am

I almost panic sold some holding weeks ago. I literally had to only click the "submit order" button on the Vanguard site, I had picked holdings & specified quantities already. I literally stared at the webpage & slowly talked myself out of it.

That day was coincidentally the day my portfolio was at its lowest. It would have costed my hundreds of thousands of dollars up to today.

It did tell me I was not prepared for my 100% equities allocation in a down turn. But it did show me that I cannot time the market. Very fortunately the recovery, though still not complete, has been insanely quick. So I did not have a recurrent bad idea.

I'm still 100% equities, now I just take my portfolio value & divide it in 2. That's how much I believe I am really worth in any market. Now if we have a >50% decline...
"Oh look another bajillion point declin-Ooooh!!! A coupon for pizza!!!!" <--- This is what everyone's IPS should be. ✓✓✓

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Stinky
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Re: Finding Bogleheads forum saved me hundreds of thousands of dollars

Post by Stinky » Thu May 21, 2020 4:43 am

Cubicle wrote:
Thu May 21, 2020 12:00 am
I almost panic sold some holding weeks ago. I literally had to only click the "submit order" button on the Vanguard site, I had picked holdings & specified quantities already. I literally stared at the webpage & slowly talked myself out of it.

That day was coincidentally the day my portfolio was at its lowest. It would have costed my hundreds of thousands of dollars up to today.

It did tell me I was not prepared for my 100% equities allocation in a down turn. But it did show me that I cannot time the market. Very fortunately the recovery, though still not complete, has been insanely quick. So I did not have a recurrent bad idea.

I'm still 100% equities, now I just take my portfolio value & divide it in 2. That's how much I believe I am really worth in any market. Now if we have a >50% decline...
Glad you didn’t sell.

Do you plan to stay 100% equities? If so, you really need to think hard about alternative scenarios. What if the market had drawn down 60% or more? What if the market had a significant decline, but then no recovery for a couple of years? What if the market had a sharp decline, and then trended slowly further down?

Would you have had the intestinal fortitude to “stay the course” in these alternative scenarios? If not, you might want to reconsider your asset allocation.

Only you know how you might react. It’s worth your time now to think it through.

Best of luck to you.
It's a GREAT day to be alive - Travis Tritt

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ruralavalon
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Re: Finding Bogleheads forum saved me hundreds of thousands of dollars

Post by ruralavalon » Thu May 21, 2020 9:53 am

Cubicle wrote:
Thu May 21, 2020 12:00 am
I almost panic sold some holding weeks ago. I literally had to only click the "submit order" button on the Vanguard site, I had picked holdings & specified quantities already. I literally stared at the webpage & slowly talked myself out of it.

That day was coincidentally the day my portfolio was at its lowest. It would have costed my hundreds of thousands of dollars up to today.

It did tell me I was not prepared for my 100% equities allocation in a down turn. But it did show me that I cannot time the market. Very fortunately the recovery, though still not complete, has been insanely quick. So I did not have a recurrent bad idea.

I'm still 100% equities, now I just take my portfolio value & divide it in 2. That's how much I believe I am really worth in any market. Now if we have a >50% decline...
Congratulations on dodging the bullet :)

Over the next few months you might want to rethink your asset allocation.
"Everything should be as simple as it is, but not simpler." - Albert Einstein | Wiki article link:Getting Started

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Cubicle
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Re: Finding Bogleheads forum saved me hundreds of thousands of dollars

Post by Cubicle » Thu May 21, 2020 10:57 pm

Stinky wrote:
Thu May 21, 2020 4:43 am
...you really need to think hard about alternative scenario
ruralavalon wrote:
Thu May 21, 2020 9:53 am
Over the next few months you might want to rethink your asset allocation.
I have been thinking about it a lot. Though I know I wasn't prepared for a magnitude & speed of the decline, I remember telling myself that day the markets have always recovered, & I don't need any money anytime soon. I think in more years I will have to dial down my equity allocation. But as long as I have income >3x my annual spend & a healthy emergency fund, I want to keep at 100% equities for now. I do plan on scribbling some reminders about not panic selling in some key locations.

I almost feel like an investing buddy system would be a good business to start... Hmmm... (well besides coming here & being promptly put back into place)
"Oh look another bajillion point declin-Ooooh!!! A coupon for pizza!!!!" <--- This is what everyone's IPS should be. ✓✓✓

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