How Do You React After a Market Decline?

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khangaroo
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Re: How Do You React After a Market Decline?

Post by khangaroo »

I update my net worth at the beginning of every month and that's really the only time I look at how the market is doing.

When the market is going down I just remind myself of Dave Ramsay's saying, "The stock market is like a roller coaster, you only get hurt if you jump off."
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chris319
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Re: How Do You React After a Market Decline?

Post by chris319 »

In taxable I use leverage, so I have to at least look.
If you're on margin, you have to look.

I am 1.2x leveraged, very conservative. I actually own some (gasp!) individual stocks. I use a stock-picking method inspired by Jack Bogle, a slight variation on indexing. The picks are doing well. I'm not going to disclose my method, though, so don't ask :mrgreen:
The only person you have to please in life is yourself.
mikejuss
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Re: How Do You React After a Market Decline?

Post by mikejuss »

Three words: stay the course.
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JonnyDVM
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Re: How Do You React After a Market Decline?

Post by JonnyDVM »

mr_brightside wrote: Wed May 05, 2021 4:29 am BUY

----------------------------------
Me too. I usually get excited about buying.
I’d trade it all for a little more | -C Montgomery Burns
minesweep
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Re: How Do You React After a Market Decline?

Post by minesweep »

Since the mid 1980's I've stayed the course.
Time is your friend; impulse is your enemy - John Bogle | Learn every day, but especially from the experiences of others, it's cheaper! - John Bogle
averagedude
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Re: How Do You React After a Market Decline?

Post by averagedude »

I start foaming at the mouth and get a bid greedy. I bought on March 19 and March 23, 2020, while I had friends that were cashing out huge portions of their 401K. I am still kicking myself in the butt for not buying more. I was going to buy more if the price went below March 23rd levels, but it never happened. I don't remember much about 2008. I had my investing on autopilot and never really paid attention to what the stock market was doing, although I did know that it was going down. Although I was a much more educated investor in 2020, I probably was a better investor in 2008. Sometimes in investing, the more you know the broker you become.
dogagility
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Re: How Do You React After a Market Decline?

Post by dogagility »

I turn it to the Golf Channel.
The soothing voices; the quiet scenery.
The more flexibility you have the less you need to know what happens next. -- Morgan Housel
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Harry Livermore
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Re: How Do You React After a Market Decline?

Post by Harry Livermore »

climber2020 wrote: Wed May 05, 2021 6:08 am It depends.

If I'm still working and getting a paycheck, then no problem; I get to buy stocks on the cheap.

In March 2020, I unexpectedly found myself abruptly not working and unable to make any money despite being in a profession that historically has great job security. I'm fortunate that it was temporary, but it was quite disconcerting being forced to close the office while the stock market was imploding.
Me as well. Every other market decline that I have experienced prior to 2020 has had no effect on me; in fact, I have often "backed up the truck" as interesting buys appeared.
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dan7800
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Re: How Do You React After a Market Decline?

Post by dan7800 »

Have a drink to celebrate the fact that I can buy things cheaper now.

I won't need the money for 30 years, so I like declines.
260chrisb
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Re: How Do You React After a Market Decline?

Post by 260chrisb »

minimalistmarc wrote: Wed May 05, 2021 4:29 am I’m flawed. When the market dips a little I hope it dips a lot more and stays down for long enough (preferably around 10 years) while I complete my accumulation of shares. I’m always a bit disappointed when it rapidly rebounds.

That being said if there was another bull market from this point I can definitely retire at any stage, so I’m routing for both sides!
Now come on! Really? Of course none of us have had a 10 year down market to gauge our reactions but can you really say you'd like to see the market stay down for 10 years?
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Sandtrap
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Re: How Do You React After a Market Decline?

Post by Sandtrap »

chris319 wrote: Wed May 05, 2021 4:26 am How do you react emotionally to a substantial market decline?

I'd be lying if I said I didn't have some emotional response. "Mildly deflated" describes how I feel viscerally, and that lasts for about five minutes. It certainly doesn't ruin my day and in no way do I panic. No extremes of emotion. My rational self tells me that substantial declines come with the territory, not every day can be an up day and a big drop could be an opportunity to buy at cheaper prices, so I'm self healing in that respect.
It is a good personal policy, if not a precept, if not a commandment written in stone. .

to never react emotionally rather than respond appropriately with logic, sense, and care.

In nearly all matters.

One can change a situation or change oneself or one's self, or exit a situation, or do nothing.
j :D
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Grt2bOutdoors
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Re: How Do You React After a Market Decline?

Post by Grt2bOutdoors »

First reaction- Gulp! Then: Have they thrown the baby out with the bath water? Do I have money to buy? Yes, I hold individual stock as well as index funds. Is it time to rebalance my funds?
"One should invest based on their need, ability and willingness to take risk - Larry Swedroe" Asking Portfolio Questions
mikejuss
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Re: How Do You React After a Market Decline?

Post by mikejuss »

It does seem like those approaching retirement here want to have their cake and eat it too: to fully benefit from the latest bull run and yet to protect themselves from market crashes. You cannot do both--and, ideally, should not need to do the former. Market crashes should not be a concern if you hold a substantial amount of bonds.
deltaneutral83
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Re: How Do You React After a Market Decline?

Post by deltaneutral83 »

IMO, It depends on what "market decline" means to the individual, and where you are in your journey. 20% is different than 30%, than 40%, than 50%, and being 35 is different than 65 (typically). I doubt anyone felt good in March 2009 with the entire financial system on the brink and the S&P shedding over 50% with calls for another 50% (so 75% total from the Oct 2007 high which would be depression like). People look back at the 52% decline and quick reversal but there was no end in sight. And then there was the unemployment situation. I think it's a good idea for people to define (which is hard to do) the amount you're willing to be down and keep enough fixed income to to stay above water. I'd absolutely count on another 50% decline in equities if you've got another 30 years left to live, and if you can't stand the pain of more than say 30% of your portfolio, get your AA in line with that, i.e. 60/40.

For me personally, the 52% decline is much more of a head game than 15 years of no positive real return or whatever it was 1966-1982. There's something about that big sharp decline that gets the fear going rather than the slower drip. I guess you can shear a sheep many times but skin him only once but in reality I think lower returns over a long period of time is obviously the bigger problem but short term volatility feels like a tidal wave. Something about that 50% and "being down half" number just hits psychologically harder.
JD2775
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Re: How Do You React After a Market Decline?

Post by JD2775 »

260chrisb wrote: Fri May 07, 2021 7:17 am
minimalistmarc wrote: Wed May 05, 2021 4:29 am I’m flawed. When the market dips a little I hope it dips a lot more and stays down for long enough (preferably around 10 years) while I complete my accumulation of shares. I’m always a bit disappointed when it rapidly rebounds.

That being said if there was another bull market from this point I can definitely retire at any stage, so I’m routing for both sides!
Now come on! Really? Of course none of us have had a 10 year down market to gauge our reactions but can you really say you'd like to see the market stay down for 10 years?
If you are a young person, why not? If I am in my 20's and I know I don't need this money for 20-30+ years a 10-year downturn would do wonders for my portfolio, assuming you continue to invest regularly.

However at 46 years old a 10-year downturn doesn't seem quite as appealing to me :)
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firebirdparts
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Re: How Do You React After a Market Decline?

Post by firebirdparts »

Anybody young with a reasonable grasp of investing would be fine, I think, with a down market for 10 years. Sure, why not? For one thing, what's the alternative?

In the brief down markets I've lived through, there were lots of great things to invest in. Maybe less so now.
A fool and your money are soon partners
minimalistmarc
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Re: How Do You React After a Market Decline?

Post by minimalistmarc »

260chrisb wrote: Fri May 07, 2021 7:17 am
minimalistmarc wrote: Wed May 05, 2021 4:29 am I’m flawed. When the market dips a little I hope it dips a lot more and stays down for long enough (preferably around 10 years) while I complete my accumulation of shares. I’m always a bit disappointed when it rapidly rebounds.

That being said if there was another bull market from this point I can definitely retire at any stage, so I’m routing for both sides!
Now come on! Really? Of course none of us have had a 10 year down market to gauge our reactions but can you really say you'd like to see the market stay down for 10 years?
It would be very good for me personally, as I’m in a recession proof career with a DB pension. However, I wouldn’t want to inflict the poor economic conditions that would likely go alongside it on the rest of the population.
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