"Stay the course" vs Buying opportunity when market drops?

[goshenBogle]

"Stay the course" - a Bogleheads mantra that we have been living by for many years. Event the 2008 crash did not cause us to make portfolio changes.
But when the market drops significantly as it is doing now, do Bogleheads see this as a buying opportunity if there is spare cash laying around? If so what do you buy?

[Tamalak]

Depends on the drop. If it's dropping due to a shift in the time value of money (like it was in 2022 with rising fed rates), it's an opportunity. If it's dropping due to rampant destruction of value (as it is now), it's not an opportunity. Stocks are on sale because they are poorer-quality than they were. That's not a bargain.

[dogagility]

Keeping "spare" cash is timing the market. It is more likely to decrease returns over the long term since the market's historical trajectory is increasing, not decreasing.

If you have spare cash, the best time to buy is as soon as possible.

[Raybo]

If your AA has been set based on your need and willingness to take risk and the market moves enough to put you at rebalancing bands, then, I believe, an investor should rebalance, regardless if the move is up or down.

I did this in 2008-9 and tripled my money. I am much better positioned now (TIPS ladder) to ignore the stock market gyrations. But, I will rebalance if the market moves enough.

Keep in mind that these losses are from a market at an all-time high. A correction was inevitable. Will this end up being a full-blown bear market? Only time will tell.

[retiredjg]

When the market drops, if your portfolio moves away from your desired stock to bond allocation, you should buy whatever you have too little of (stocks in this case if the market drops enough). That is simple rebalancing and it part of staying the course (staying on target).

Little movements don't need rebalancing, but big movements do. When I have 6% too much or too little of something I sell and buy to get bakc into my 5% "bands". Some people use different size bands.

[goshenBogle]

Thank you for excellent answers!!!!!!!!!!!

[AloeVitE]

I "buy" automatically from my bi-weekly pay so that's a form of "staying the course". I guess?

[HMSVictory]

Keeping "spare" cash is timing the market. It is more likely to decrease returns over the long term since the market's historical trajectory is increasing, not decreasing.

If you have spare cash, the best time to buy is as soon as possible.

This. 100%

I also like to keep things as simple as possible and ignore valuations. If I have excess cash it goes right into my AA. I don't try to game it.

[carminered2019]

I change my AA to be more aggressive in a bear market.

[rockstar]

You can always increase your 401k contributions to front load your purchases earlier in the year. So you can in theory buy more of the correction and still contribute the same amount. But I suck at buying the bottoms of dips.

[thedaybeforetoday]

"Stay the course" - a Bogleheads mantra that we have been living by for many years. Event the 2008 crash did not cause us to make portfolio changes.
But when the market drops significantly as it is doing now, do Bogleheads see this as a buying opportunity if there is spare cash laying around? If so what do you buy?

The S and P 500 dropped 20% in 2008 and you didn't make any changes in your behavior.
The S and P 500 has dropped 4.55% year to date.
It seems 2008 you would really question 2025 you even asking.

[enad]

If you're buying to restore your asset allocation then you are staying the course; to not do so is straying from the course. One can use balance bands to minimize daily fluctuations in the market

[Dottie57]

You can always increase your 401k contributions to front load your purchases earlier in the year. So you can in theory buy more of the correction and still contribute the same amount. But I suck at buying the bottoms of dips.

I do too. I could not make myself buy more as the future seemed so unsure. I had hoped to never have this much fear again.

[gavinsiu]

If you have money for a buynig opportunity, this mean you have been sitting around in cash waiting for the stock market to drop. You would have made a ton more money in stock for the past decade. If you say "That's how Warren Buffet does it, I will say you are not Warren Buffert. You don't have his skills".

I feel that for most the stay the course is the best course, money comes in and you purchase the same assets. If the market falls, the same money buys more shares. You rebalance, which generates the buying opportunity.

[rockstar]

You can always increase your 401k contributions to front load your purchases earlier in the year. So you can in theory buy more of the correction and still contribute the same amount. But I suck at buying the bottoms of dips.

I do too. I could not make myself buy more as the future seemed so unsure. I had hoped to never have this much fear again.

What are you fearful of? Worse case is that steel becomes so expensive that we go back to the horse and buggy.

[livesoft]

My IPS has some specific things about buying when the market drops, so that specific price drops trigger a "must buy" situations. If I do not buy then I am not "staying the course"that I have defined in my IPS. I don't have cash to make any equity buys, but I have plenty of bond fund shares which I sell to get the cash to buy equity fund shares.

Once again: "Stay the course" does not mean "Do nothing."

[jb9]

Curious to understand what you did yesterday if everything you sold ended lower...

[livesoft]

Curious to understand what you did yesterday if everything you sold ended lower...

I only sold shares of BND and my remaining shares of BND ended up lower at the close and are trading at a lower price today. BND is the Vanguard Total US Bond Market Index ETF.

[jb9]

Ah I see. You day traded the top of BND to get the funds for equity purchases.

[livesoft]

Ah I see. You day traded the top of BND to get the funds for equity purchases.

Yes, I rebalanced back to 60/40 asset allocation as per my IPS. How about you?

[jb9]

I wish I had the chops (trading platform) you have... I am trying to learn to fish without falling in with my waders on and drowning.

[Fallible]

"Stay the course" - a Bogleheads mantra that we have been living by for many years. Event the 2008 crash did not cause us to make portfolio changes.
But when the market drops significantly as it is doing now, do Bogleheads see this as a buying opportunity if there is spare cash laying around? If so what do you buy?

If your asset allocation is still the right course for you, then stay with it.

Also, why would you consider a change now because of the current drop when you didn't make changes during the 2008 crash?

[notjackbogle]

I don't attempt to time the market. Calling this an "opportunity" is market timing. Everything that's said about staying in the market when the price falls applies equally to your question. Timing doesn't work, plain and simple.

Make changes if your asset allocation is wrong or if you need to rebalance. Otherwise stay the course.

[edge]

1). I am not sure this drop is 'significant'. I did a quick and dirty look at things and I see S&P 500 down ~9%.
2). I suggest mechanical rebalancing bands to take emotion out of the equation. I have been a senior leader of many of thousands of people for many years now. Nearly every single person I speak to is driven as much (or more) by emotion than by anything else. Unless you can deeply inspect yourself and erase emotion out of your investing decision making process you need to make it cold and logical by having a system in-place.

[rockstar]

I don't attempt to time the market. Calling this an "opportunity" is market timing. Everything that's said about staying in the market when the price falls applies equally to your question. Timing doesn't work, plain and simple.

Make changes if your asset allocation is wrong or if you need to rebalance. Otherwise stay the course.

Timing does work. But you have to be very lucky to do it consistently.

[Dottie57]

I do too. I could not make myself buy more as the future seemed so unsure. I had hoped to never have this much fear again.

What are you fearful of? Worse case is that steel becomes so expensive that we go back to the horse and buggy.

Afraid of a depression. Lots of people out of work. Stocks fall 80%. War - economics has been a starter many times. Losing Allies.. lone wolf mentality.

P.S. allergy to horses.

[notjackbogle]

What are you fearful of? Worse case is that steel becomes so expensive that we go back to the horse and buggy.

Afraid of a depression. Lots of people out of work. Stocks fall 80%. War - economics has been a starter many times. Losing Allies.. lone wolf mentality.

P.S. allergy to horses.

In many of those cases I'd personally rather be holding stocks than other assets. I want be on the same side as the rich guys and biggest corporations.

[rockstar]

What are you fearful of? Worse case is that steel becomes so expensive that we go back to the horse and buggy.

Afraid of a depression. Lots of people out of work. Stocks fall 80%. War - economics has been a starter many times. Losing Allies.. lone wolf mentality.

P.S. allergy to horses.

Depression isn’t even on my radar. Honestly I’m thinking stagflation would likely be the worse case.

I really think the goal is to push down interest rates. And the only way to do that with inflation is cause a mild recession. Folks will sell equities and buy bonds.

[donaldfair71]

I will be doing both when my paycheck hits Friday, right into my 403b.

I will do so the 23rd, right into my kids 529s.

I will do again on the 31st in my 403b and IRA accounts.

Since the market is down in some of my holdings, I will be buying when the market drops. Others, not so much. But I have been buying up those as US flew to sky highs the last decade. Even then I was buying US companies that had dropped a lot as the index went up and up.

Staying the course can mean buying things at drops if you have a plan and execute.

[exodusing]

Depends on the drop. If it's dropping due to a shift in the time value of money (like it was in 2022 with rising fed rates), it's an opportunity. If it's dropping due to rampant destruction of value (as it is now), it's not an opportunity. Stocks are on sale because they are poorer-quality than they were. That's not a bargain.

It's a bit odd that few people realize prices might be lower because the market rationally expects lower future returns.

[exodusing]

I do too. I could not make myself buy more as the future seemed so unsure. I had hoped to never have this much fear again.

What are you fearful of? Worse case is that steel becomes so expensive that we go back to the horse and buggy.

That's far from the worst case at the moment, some of which are significantly more plausible than that.

Whether that realization should lead to a change in investment behavior is another question. It seems unlikely any of us are significantly better at judging the market's future than the market (absent luck).

[rockstar]

Depends on the drop. If it's dropping due to a shift in the time value of money (like it was in 2022 with rising fed rates), it's an opportunity. If it's dropping due to rampant destruction of value (as it is now), it's not an opportunity. Stocks are on sale because they are poorer-quality than they were. That's not a bargain.

It's a bit odd that few people realize prices might be lower because the market rationally expects lower future returns.

You’ll need consumer spending to slow down. I guess fear could cause that despite an otherwise strong economy. I’m not seeing any weakness in actual numbers. There are outliers like Tesla. But that’s more of a social reaction than a broad economic one.

[Dottie57]

Afraid of a depression. Lots of people out of work. Stocks fall 80%. War - economics has been a starter many times. Losing Allies.. lone wolf mentality.

P.S. allergy to horses.

Depression isn’t even on my radar. Honestly I’m thinking stagflation would likely be the worse case.

I really think the goal is to push down interest rates. And the only way to do that with inflation is cause a mild recession. Folks will sell equities and buy bonds.

I hope you are right. But not planning on it.

[rockstar]

Depression isn’t even on my radar. Honestly I’m thinking stagflation would likely be the worse case.

I really think the goal is to push down interest rates. And the only way to do that with inflation is cause a mild recession. Folks will sell equities and buy bonds.

I hope you are right. But not planning on it.

Gotta be optimistic. The news outlets would lead you to believe we’re heading towards the apocalypse.

My biggest fear today is stagflation. All that I can do to combat inflation is buy TIPS or I Bonds instead of nominal. But no reason to not keep buying this market on the way down.

[rogue_economist]

I don't view "stsy the course" as fundamentally incompatible with a buying opportunity, but its a dangerous zone.

A deal on stocks is no different than anything else I see a good sale or price on. I buy everything possible on sale, used, discounted, etc. If the thing of today that is cheap is stocks, ill buy more. If tomorrow stocks are back up and Harbor Freight is having a sale ill put the marginal dollars there.

But importantly the base level of investment is fixed and not changing here. This is just redirecting some disposable income away from consumption of other things when its a good deal to buy stocks.

[Taylor Larimore]

goshenBogle:

Jack Bogle's Words of Wisdom: "Stay the course. It is the most important piece of information I can give you."

Best wishes
Taylor

[Caduceus]

I'm curious what buying opportunities people are seeing out there. As a bottom-up value investor, I'm still not seeing a lot out there that's compelling. There's always been things that were screaming buys in every crash. This one doesn't feel like a crash.

A stock like Baidu is still way more undervalued than many U.S. stocks after the recent correction.

[rockstar]

I'm curious what buying opportunities people are seeing out there. As a bottom-up value investor, I'm still not seeing a lot out there that's compelling. There's always been things that were screaming buys in every crash. This one doesn't feel like a crash.

A stock like Baidu is still way more undervalued than many U.S. stocks after the recent correction.

CVNA is down 40%. Lots of individual stocks got hammered. Lots of bottom feeding options, but who knows if we’re at actually at the bottom.

[PersonalFinanceJam]

...do Bogleheads see this as a buying opportunity if there is spare cash laying around? If so what do you buy?

At this point I have spare cash every 2 weeks (pay day) for about 8 hours before the automated processes pick it up and move it into whatever fund is supposed to have it per my asset allocation. Life really is boring this way.

[corn18]

Invest when you have money, withdraw when you need money. I never have spare cash lying around.

[index245]

Delete

[Dottie57]

I hope you are right. But not planning on it.

Gotta be optimistic. The news outlets would lead you to believe we’re heading towards the apocalypse.

My biggest fear today is stagflation. All that I can do to combat inflation is buy TIPS or I Bonds instead of nominal. But no reason to not keep buying this market on the way down.

I don’t work - retired. So no new money to invest. Not planning to do much.

[rossington]

Curious to understand what you did yesterday if everything you sold ended lower...

I only sold shares of BND and my remaining shares of BND ended up lower at the close and are trading at a lower price today. BND is the Vanguard Total US Bond Market Index ETF.

That’s odd… BND ended up 0.47% yesterday.

[rkhusky]

Have your rebalancing bands been breached? If not, there’s nothing to do.

And, there has not been anything significant happening with the market. I’m only down 0.5% from my stock/bond allocation.

[notjackbogle]

You’ll need consumer spending to slow down. I guess fear could cause that despite an otherwise strong economy. I’m not seeing any weakness in actual numbers. There are outliers like Tesla. But that’s more of a social reaction than a broad economic one.

Well, unfortunately, the Atlanta Fed does see weakness. Based on the most recent data releases, GDPNow is predicting real GDP to decline at an annual rate of 2.4% in the first quarter: https://www.atlantafed.org/cqer/research/gdpnow It's actually kind of ugly.

[rockstar]

You’ll need consumer spending to slow down. I guess fear could cause that despite an otherwise strong economy. I’m not seeing any weakness in actual numbers. There are outliers like Tesla. But that’s more of a social reaction than a broad economic one.

Well, unfortunately, the Atlanta Fed does see weakness. Based on the most recent data releases, GDPNow is predicting real GDP to decline at an annual rate of 2.4% in the first quarter: https://www.atlantafed.org/cqer/research/gdpnow It's actually kind of ugly.

It’s a prediction. It’s not actual results. All of the actual results I look at every month are doing good.

[PinotGris]

"Stay the course" - a Bogleheads mantra that we have been living by for many years. Event the 2008 crash did not cause us to make portfolio changes.
But when the market drops significantly as it is doing now, do Bogleheads see this as a buying opportunity if there is spare cash laying around? If so what do you buy?

Our AA got stock heavy, from 60 to 65% with the ascent in the economy. Now they are all, Bonds and Stock funds, bleeding value. I am buying Bond funds and also reinvesting dividends into them.

[PinotGris]

If you have money for a buynig opportunity, this mean you have been sitting around in cash waiting for the stock market to drop. You would have made a ton more money in stock for the past decade. If you say "That's how Warren Buffet does it, I will say you are not Warren Buffert. You don't have his skills".

I feel that for most the stay the course is the best course, money comes in and you purchase the same assets. If the market falls, the same money buys more shares. You rebalance, which generates the buying opportunity.

We have always stayed the course and fully invested. In the recent few months we increased our cash reserve with dividends. Our portfolio, E:B 60:40, has lost a ton in NAV, practically lost all that it had gained through 2024.

[notjackbogle]

Well, unfortunately, the Atlanta Fed does see weakness. Based on the most recent data releases, GDPNow is predicting real GDP to decline at an annual rate of 2.4% in the first quarter: https://www.atlantafed.org/cqer/research/gdpnow It's actually kind of ugly.

It’s a prediction. It’s not actual results. All of the actual results I look at every month are doing good.

It's a nowcast, not a prediction of where GDP is going in the future. As new data comes in, GDPNow tells us what we know about current GDP growth. The most recent release for GDP itself is for 2024Q4. That's not too helpful for someone wanting to know how the economy is doing in March 2025.

[rockstar]

It’s a prediction. It’s not actual results. All of the actual results I look at every month are doing good.

It's a nowcast, not a prediction of where GDP is going in the future. As new data comes in, GDPNow tells us what we know about current GDP growth. The most recent release for GDP itself is for 2024Q4. That's not too helpful for someone wanting to know how the economy is doing in March 2025.

Other than some airlines warnings and Federal layoffs, the economy looks intact. I’m not sure what you’re worried about. The data looks good overall. We didn’t fall off a cliff in Q1.