What was the 2000 crash like in real time?

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virw
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What was the 2000 crash like in real time?

Post by virw » Sat Jan 23, 2016 1:13 pm

We have the topic What was the 2008 crash like in real time? (viewtopic.php?t=168261). I'd be interested to hear the same from investors who were there in the Tech Bubble crash. Can individual investors even index online back then?

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ERMD
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Re: What was the 2000 crash like in real time?

Post by ERMD » Sat Jan 23, 2016 1:53 pm

i was just graduating high school. the only tech bubble i knew about at the time involved a 14.4 baud modem.
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Re: What was the 2000 crash like in real time?

Post by Valuethinker » Sat Jan 23, 2016 2:04 pm

virw wrote:We have the topic What was the 2008 crash like in real time? (viewtopic.php?t=168261). I'd be interested to hear the same from investors who were there in the Tech Bubble crash. Can individual investors even index online back then?
Well I lost my job for one thing. "It's a recession if your neighbor loses his job, it's a depression when you do" ;-).

It all peaked with the IPO of LastMinute.com and the Barron's article 1st week of May.

Then it was a long grinding bear market which only bottomed in March 2003 from memory. Stocks would go down for a while, then they would rally back up, then they would go back down. Tech Media Telecoms just got slaughtered (hence my unemployment from a VC backed company).

So it was more typical of a bear market than the awful crash downwards that hit beginning in the summer of 2008 and bottomed in March-April 2009.

Generally I think bear markets are more like 2000-03 than they are like 2008-09. Ie there's no single event which makes you say "crash" and it takes months or years to go down, and then in turn the recovery is long-winded and erratic.

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Re: What was the 2000 crash like in real time?

Post by jebmke » Sat Jan 23, 2016 2:07 pm

Valuethinker wrote:Then it was a long grinding bear market which only bottomed in March 2003 from memory.
That is what I recall. Psychologically a longer grind than '08-09.
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Re: What was the 2000 crash like in real time?

Post by mickeyd » Sat Jan 23, 2016 2:11 pm

Can individual investors even index online back then?
Not sure what this means. Can you reword it?
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oncorhynchus
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Re: What was the 2000 crash like in real time?

Post by oncorhynchus » Sat Jan 23, 2016 2:15 pm

jebmke wrote:
Valuethinker wrote:Then it was a long grinding bear market which only bottomed in March 2003 from memory.
That is what I recall. Psychologically a longer grind than '08-09.
This. The slow nature of that bear market is what kept me in Lucent and Cisco longer than I should have, thinking they were solid, not-flash-in-the-pan tech companies that would withstand the trend & rebound.

o

ETA: At the time I was investing online with Schwab, and index funds (though not as many and as diverse as today) were available.
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Re: What was the 2000 crash like in real time?

Post by Sheepdog » Sat Jan 23, 2016 2:19 pm

It wasn't bad for me. I had retired in 1998 and I was living off of investments and SS. I was invested in the 50% stock range in the 2000-02 years. 2000 and 2001 were my 2nd and 3rd full years in retirement and returns and losses were virtually non-existent for me...+0.65% and -0.11% respectfully in those 2 years. 2002 was not much different, -1.57%. In 1999, just before the "crash" I had a +12.9% gain and in 2003 I was up again +8.28%.
However, at the end of 2002, after those fund returns, and taking out an average of about 4.0% per year, my investment values were down 9.8%. Not bad, considering it is considered a major downturn overall.
Last edited by Sheepdog on Sat Jan 23, 2016 2:20 pm, edited 1 time in total.
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Re: What was the 2000 crash like in real time?

Post by peppers » Sat Jan 23, 2016 2:20 pm

I would say it was like having dry skin and having sandpaper rubbed over it...again...and again...and again....
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Re: What was the 2000 crash like in real time?

Post by randomguy » Sat Jan 23, 2016 2:28 pm

jebmke wrote:
Valuethinker wrote:Then it was a long grinding bear market which only bottomed in March 2003 from memory.
That is what I recall. Psychologically a longer grind than '08-09.
The 2000-2002 frame is really multiple crashes. You have the tech bubble bursting (see the nasdaq going from 4000 to 1700 over 18 months). But the rest of the market wasn't a total disaster. Things like value, REITs, and mid caps were fine. The S&P 500 was off like 20-25%. And then there was Sept 11th we we lost another 15%. Then it rallied. And then it dropped another 25%. Then we had like 3 periods of 10% rallies followed by 10% drops. Until one time that 10% rally kept going.

Economy wise, the recession was nowhere near as bad at 2008. Unemployment peaked at like 6%. Now if you were in one of the hard hit sectors it felt a lot different.

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Re: What was the 2000 crash like in real time?

Post by Sammy_M » Sat Jan 23, 2016 2:32 pm

^And then Enron and WorldCom fiasos in 2002
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Re: What was the 2000 crash like in real time?

Post by Toons » Sat Jan 23, 2016 2:32 pm

It was the culmination of something similar to "Tulipmania".
The internet boom,technology,E-commerce craze,companies with very little or no earnings stratospheric stock prices.
I got caught up somewhat myself.
I sold a couple of diversified equity funds I had held for years to buy technology funds.
One of which was Janus Global Technology.
Purchased right before the crash began,March 2009.
I continued to hold and dollar cost averaged for 10 more years.
Eventually sold with a profit.
A couple of other tech funds I lost a rather substantial amount of money.
In hindsight, I wouldn't change a thing.Valuable learning lessons.
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Re: What was the 2000 crash like in real time?

Post by Tamales » Sat Jan 23, 2016 2:38 pm

Put yourself in the driver’s seat: July 16, 1999. The SP500 just hit a new all-time-high, climbing to these lofty levels after having a -19.3% correction that lasted about 6 weeks, the prior summer of 1998. Prior to that, it had been smooth sailing since the low reached in October 1990. The SP500 was up 380% from that low in 1990 to July 1999.

But things were about to change. Try to remind yourself that in each of the following wild swings, you had no way of knowing if the glory days were about to return, or whether the market was going to crash, or whether the latest swift drop was the end of it, or there was more to come.

About a month after the 7-16-99 high, the SP500 dropped nearly 10%.
The it rose 7.8% in the next couple weeks,
then it fell 12.1% by mid October 1999.
Then it rose 17.8% from there by New Years Eve.

Then it dropped 9.2% by Feb 2000,
then rose 14.6% by March (this turned out to be the highest high the market would see until 2007, but you had no way of knowing that at the time),
then dropped 11.2% by April,
then rose 12.1% from there by Sept 2000 (the bubble had burst by this point, but it still had a long way to drop).

From Sept 2000 to Apr 2001, the SP500 fell 27.5%,
but then it rose 19% in the next couple weeks.
Many people thought the crash was over, but they were wrong.
From there it fell 26.4% by the end of September (and we all know what happened earlier in September 2001).
But then it rose 21.4% from there by Jan 2002. Again, some thought it was over. It wasn’t.

By July 2002, the SP500 fell 32% from the recent Jan 2002 high.
But then it rose 20.7% from there in the next month.
Was it over yet? Not quite.
From there it fell another 19.3% by October 2002 (this ultimately turned out to be the bottom).
Then it rose 20.9% by Nov 2002.
Then it fell 14.7% by Mar 2003. Many thought, here we go again.

But they were wrong, and the market had finally turned the corner.
Of course, you couldn’t know that for sure at the time, or for that matter, you couldn’t be fairly sure there wasn’t more to come for another couple years in hindsight.

From there the SP500 chugged along, finally making a new all-time-high in July 2007,
and another ATH in Oct 2007.
And we all know what happened shortly after that…
Last edited by Tamales on Sat Jan 23, 2016 2:46 pm, edited 4 times in total.

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Tycoon
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Re: What was the 2000 crash like in real time?

Post by Tycoon » Sat Jan 23, 2016 2:38 pm

It's not something I committed to memory. It was just another thing that happened that I had no control over so I didn't commit resources to it.

Now, raising my kids in 2000 is something I do remember fondly.
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Re: What was the 2000 crash like in real time?

Post by Call_Me_Op » Sat Jan 23, 2016 3:19 pm

It was very painful for most, but enriched a lucky few. I remember watching the TV in disbelief as equity prices were bludgeoned. Fortunately, I was conservative then as I am today. :)
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Re: What was the 2000 crash like in real time?

Post by Dirghatamas » Sat Jan 23, 2016 3:20 pm

virw wrote:We have the topic What was the 2008 crash like in real time? (viewtopic.php?t=168261). I'd be interested to hear the same from investors who were there in the Tech Bubble crash. Can individual investors even index online back then?
?? Yes I was invested back then, same as the 2008-2009 crash. Don't know why you think passive investing wasn't available then.

I am 45, so I am old but probably not the oldest here :wink: I started investing sometime in late 1992 (or it may have been early 1993 by the time contributions showed up). 401K definitely existed back then and I have put in maximum allowed every year since I started working,so no big changes. Passive indexing definitely existed back then. I don't know the exact history of when 401K became available but at least in my investing time frame, I haven't seen anything dramatic like what you may be describing (change in technology or investing products). I have done the exact same investing for 23 years every month (passive indexed mutual funds), so nothing changed in 2000 or 2008. Yes, there have been minor changes in indexing. Its too long ago for me to remember but I think the index I invested in back then didn't have emerging markets (international stock was probably just developed markets in the 1990s). Also don't remember if small cap was included in international index or not. Other than these minor issues, passive indexing wasn't really different for me in 1993 or 2000 or 2008 or now. US stock index available for me to invest back then was S&P 500 so it did exclude small cap. It is possible that "total US stock" as investible mutual fund existed but perhaps was just not available in our 401K accounts...

Now for your other question of how was it in real time, that was more nerve racking. I worked in the field and was at that time employed by one of the fastest growing companies in tech. Obviously, most of my friends were not indexers. I may have been the only person in my circle who invested passively in mutual funds and indexed by world cap, back then. None of my friends had any interest in "international stocks" or diversification. All my friends wanted to bet on "hot" companies: if we already worked in the "hottest sector", technology, why would we invest in old boring companies? It is remarkable, how arrogant most of us in "technology' were. Mostly, they were betting on the companies they worked for. I am much more cautious by nature, so was doing the math that these valuation numbers for companies in our fields couldn't possibly make sense. I distinctly remember talking to a close friend that if valuations were correct, most of our tech companies (more than a dozen) would be worth more than Exxon Mobil (then and still now, the world's largest oil company). To me this made no sense, but to most friends (optimist vs. pessimist), they felt there was no possible top to how big the companies could get. It was true "irrational exuberance".

Yes, the downside was quick in late 2000 through 2001. I lost a lot (100% world cap stock portfolio) but much less than friends who literally lost their entire savings and net worths went to zero. I still maximized 401K and invested every month same as before, same as in 2008, same as now.

The only regret I have (mathematically and rationally), is that I didn't understand bonds at that young age. I was rational enough to understand that collectively, all our tech companies were ridiculously valued. I realized that even as an indexer, I would lose (because the sum total of valuations was too high). Betting on individual companies was a fool's bet. So, all choices open to me looked bad. However, I didn't know what to do about it? I couldn't short my field (because it could be construed as shorting my company which is illegal). My own company was a "real" company so it wasn't a fake bubble. I had no interest in shorting my company but WAS interested in shorting the tech sector. I looked into it by shorting the tech fund but was worried this would indirectly short my company (because a fund holds stocks finally). I lost interest and didn't look further.

So, getting back, bonds would have been the best diversifier (given that shorting stocks was not possible). Unfortunately, I was not educated sufficiently about bonds back then. I hoped that being "globally diversified" in stocks would help me out. It didn't really all that much because the global stocks also tanked...just like again in 2008. Bonds have always been a better diversifier than just "globally diversified" stocks.

I obviously had a lot less money invested in 2000 than in 2008. Still, emotionally, 2000 felt much worse to me than 2008. Probably because I was much younger/emotional. Probably also because it was happening in my own field and as such I understood what was going on (rather than 2008 which was financials so I felt much more detached). Ignorance is bliss and that probably is why 2008 didn't bother me too much. The actual details of the financial crisis and how close the world came to market failure (in 2008) was not known to outsiders till much later. The only direct impact I remember from 2008 was when the Money Market fund in our 401K went belly up. So, 2000 was worse for me than 2008. Thankfully, I kept doing the same thing every month through both crisis: always maximize your contributions to 401K and taxable, invest every month, regardless of whatever is going on. I keep doing the same thing, all the time like a blind mole rat: worried all the time but basically never make changes.

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Re: What was the 2000 crash like in real time?

Post by derosa » Sat Jan 23, 2016 3:22 pm

Who knows? The same thing for 1987 or 2008 or 2016.

Life is too busy to watch paint dry. "In real time" makes it sound like a movie that you are watching a movie or something.

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Re: What was the 2000 crash like in real time?

Post by btenny » Sat Jan 23, 2016 3:36 pm

I worked in Internet Security Technology and was in my 50s in 1998. I worked for a Fortune 500 big corp. My company was hitting all time stock highs but was having new product release issues along with big future sales issues. I had lived thru two previous bad downturns with this company. The company culture was changing and becoming a bad place to work. I knew a lot of the other "internet technology" companies were doing poorly. I knew we were headed for a big crash. Many others felt the same way. Many of my co-workers "retired" when our company offered a parachute staff reduction at the end of 1998.

The bubble continued thru early 2000 before it burst completely. The technology economy fell like a rock. Everyone knew it was coming all thru 1999. Things were obviously too expensive versus incomes. When stocks started falling there was a stampede for the door from early 2000 until the summer of 2001. Real estate was still doing well and unemployment was not bad. Things were sort of bottoming out by late 2001 when 911 happened. Then everything including real estate fell apart for another year. Both downturns lasted about a year but were sequential. The first effected mostly technology companies and the second effected everything. Real estate started picking up again in late 2002 and so did the market.

Unemployment from the 2000-02 downturns was not that bad. People that lost jobs were not that deep in debt. They could sell their homes for more than their mortgages and move to new jobs. The 2008-9 recession was much deeper and more difficult. In that case people who lost jobs also lost there homes. They had to file bankruptcy or let their home go to foreclosure. The "underwater foreclosure tail" is still dragging out 7 years later.

And for you young guys. The 1974 recession seemed as bad as the 2008 recession but it was a long time ago so I don't remember the details. All the others in between did not seem near as bad.

Good Luck and hope we don't have another recession this year.

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Re: What was the 2000 crash like in real time?

Post by saltycaper » Sat Jan 23, 2016 3:47 pm

It was painful. Like a long but shallow cut that bleeds slowly, it was one prolonged drop after another, with a multitude of dead-cat bounces in between. Lots of attempts at knife catching. Lots of regrets for doing so.

It was spectacular. All the viewers CNBC and other financial media outlets pulled in during the go-go years of the 1990s, myself included, provided a ready audience for the fall, and the production teams did not let them down, as handcuffed perps in suits were walked through public streets.

There were so many different stories--Internet bubble bursting, speculation over the future of tech in general, the biotech stock collapse, bankruptcies, accounting scandals, the Tyco Roman Orgy, 9/11--that there wasn't a single defining moment I recall, except I do remember watching media reports in March 2000. It definitely felt like the party was over. The only question was how bad the hangover was going to be and how long it was going to last.

I didn't get the sense there was a lot of economic panic once the initial drops were through, because after 9/11, it was the war in Afghanistan and the build-up to the war in Iraq that seemed to dominate the national psyche more so than the behavior of the stock market, which people seemed to tire of after the disillusionment that DOW 36,000 was not in the cards.
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Re: What was the 2000 crash like in real time?

Post by jebmke » Sat Jan 23, 2016 3:52 pm

Dirghatamas wrote: Don't know why you think passive investing wasn't available then.
It was much harder way back then. Had to saddle up the horse, ride into town to see the broker, then ride all the way home.
When you discover that you are riding a dead horse, the best strategy is to dismount.

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Re: What was the 2000 crash like in real time?

Post by Peter Foley » Sat Jan 23, 2016 3:55 pm

Tamales wrote:
From Sept 2000 to Apr 2001, the SP500 fell 27.5%,
but then it rose 19% in the next couple weeks.
Many people thought the crash was over, but they were wrong.
From there it fell 26.4% by the end of September (and we all know what happened earlier in September 2001).
But then it rose 21.4% from there by Jan 2002. Again, some thought it was over. It wasn’t.

By July 2002, the SP500 fell 32% from the recent Jan 2002 high.
But then it rose 20.7% from there in the next month.
Was it over yet? Not quite.
From there it fell another 19.3% by October 2002 (this ultimately turned out to be the bottom).
Then it rose 20.9% by Nov 2002.
Then it fell 14.7% by Mar 2003. Many thought, here we go again.
Thanks for the details. I remember it was volatile and lasted a long time. While it did not affect our retirement funds, it did have an impact on our two daughters' college savings accounts. One daughter started college in 2000, the other in 2002. Pre crash there was enough of a balance to pay for everything. Unfortunately I had been lulled into thinking that the market recovered quickly and was holding too much in equities. We ending up supplementing the last year of college for daughter number two.

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Re: What was the 2000 crash like in real time?

Post by Dirghatamas » Sat Jan 23, 2016 3:59 pm

jebmke wrote:
Dirghatamas wrote: Don't know why you think passive investing wasn't available then.
It was much harder way back then. Had to saddle up the horse, ride into town to see the broker, then ride all the way home.
Definitely was hard. Not as bad though as when I went to school. Walking uphill 10 miles through thigh deep snow was character builder. After lunch the snow would melt though. Afternoon had to come back 10 miles AGAIN walking uphill in 110 degrees sweltering heat. We kids were tough back then. The young kids now, I just want them to get off my damn lawn.

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Re: What was the 2000 crash like in real time?

Post by Watty » Sat Jan 23, 2016 4:06 pm

The odd thing is that pretty much everyone knew it was a bubble but they thought that they could recognize the top and get out in time when it ended. There was also a lot of speculation as to what the next new thing would be after the internet.

In addition the the stock speculators there were a LOT of dot com paper millionaires who had options that they could not cash out before the stocks crashed. Some could cash them but held them too long because they didn't want to pay the taxes. After the dot com crash many tech worker not only had worthless options but were laid off with poor job prospects.

Back then many people were a lot less exposed to the stock market unless they chose to invest in a taxable account. IRA contribution limits were only $2,000 a year and until the mid 1990's the spousal contribution limit for a non-working spouse was only $250 a year. $401k were pretty uncommon before about then too. My company had only started one a year or two before when they froze the traditional pension plan.

I had a modest IRA from a discontinued profit sharing plan that only had about $14,000 in it. I used that as my stock picking play account but I was smart(or lucky) enough to keep most of my investments in index funds in traditional investments.

The crash actually turned out to be a good thing for me since it caused me to;

1) Increase my retirment contributions during the market low so I got a lot of benefit from dollar cost averaging. This was not a great market timing choice, I increased them because I saw that was behind in my retirment savings.

2) Put the college savings for my son into iBonds that get 3% above inflation. Back then you could buy them online with a credit card so I also got a cash rebate on the purchase. I paid for his college out of other funds so I still have those.

The internet was still pretty new then and lots of people were posting about investing on boards like The Motley Fool so a lot of the frenzy fed on itself and you can probably go back and read those if you want.
Last edited by Watty on Sat Jan 23, 2016 5:24 pm, edited 1 time in total.

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Re: What was the 2000 crash like in real time?

Post by Castanea_d. » Sat Jan 23, 2016 4:16 pm

Dirghatamas wrote: ... So, getting back, bonds would have been the best diversifier (given that shorting stocks was not possible). Unfortunately, I was not educated sufficiently about bonds back then. I hoped that being "globally diversified" in stocks would help me out. It didn't really all that much because the global stocks also tanked...just like again in 2008. Bonds have always been a better diversifier than just "globally diversified" stocks.
+1.
Bonds were un-loved. I was entirely oblivious about bond mutual funds; didn't know they existed or what the benefit of them would be.

I was buying EE and I bonds every month, typically $100 or so (and I wish I had done a lot more of the I's, which were fairly new and paying what now appears to be a very good real return, plus inflation. I remember people telling me not to waste my money on stodgy old "grandpa" investments and making fun of my savings bonds), and I had an emergency fund -- that was pretty much it, because we had moved and bought a house in the summer of 1999.

There was still a lot of inflation fear in the air, and all people talked about for investments in the late 90's was equities, especially techs. I sat through some "financial planning" [i.e., sales] sessions where they showed the wonders of compounding, with 10% annual returns (for equities) as far as the eye could see. And people really believed that. And they pushed tech funds with 5% front end loads and expenses up around 2%.

I was suspicious of the tech stocks, though I didn't know enough to know why, so I ended up with almost all of my stock investment in the Vanguard Equity Income, with initial investment in 1996, thinking it would be more stable. It was, but not by that much -- like others have said, everything dropped pretty hard, just like 2008. During that period, it just sat there; all of my "spare" cash was going into mortgage payments and those savings bonds. At least I didn't panic and sell out.

I found the Equity Income fund by way of Consumer Reports. In those days, they frequently rated mutual funds and talked about the importance of expense ratios. Anything under 1% was considered pretty good. There were a lot of Vanguard funds in their "recommended" lists. But if CR talked about bond funds in those days, I totally overlooked it.

As others have said, it was very different from 2008's plunge. Down, then up, then down further, for years. I suppose you could say it felt a little like the runup to the 2008 crash, when things were shaky and in decline from late 2007 into the early summer of 2008, with some ups and downs. But it went on for a long time.

I had a solid (if low-paying) job in a totally unrelated field (music), and mostly just went on with life. As some others have said, the late-70's recession "felt" worse, with the gasoline lines and high unemployment and high inflation.

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Re: What was the 2000 crash like in real time?

Post by quantAndHold » Sat Jan 23, 2016 4:32 pm

It lasted long enough that I managed to get laid off from two different jobs, once in 2000, and again in 2003. The second job was especially gory, since all of the execs ended up in handcuffs, and the company stock we all had went to zero. The execs are all just now being released from prison. Everyone I knew went from working at Internet startups to working for defense contractors.

Investingwise, all of my individual dotcom stocks blew up in 2000. I learned a lot about my abilities as a stock picker, and the danger of falling for story stocks. I then spent a dozen years in some combination of TSM and Target Retirement funds, which was a smart decision.

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Re: What was the 2000 crash like in real time?

Post by ClevrChico » Sat Jan 23, 2016 4:58 pm

It was crazy prior to the crash. 22 year old kids with luxury car leases. Weekly dinner parties paid for by day trading. People speculating on domain names. Employees using Napster at work would kill the internet connection.

It was bittersweet for me and the crash hit fly over country in 2001. I lost my tech job, only nine months after going full-time after college. Both parents lost their tech jobs. My net worth was around $18k, had an eleven year old temperamental car, an apartment lease, but no debt luckily.

On 9/11, I saw Air Force One and fighter escorts fly over on their way to/from Omaha. They were the only planes in the sky late afternoon. Weird times. It only made the job market worse. I contacted the careers office at my college, and they had few opportunities.

On the bright side, I had a lot of time on my hands to spend with friends, enjoy the outdoors, see how cut-throat business was, and find what I wanted in life.

Financially I lost 5% of my net worth that were in individual stocks and was unemployed for seven months. I simply held the active mutual funds I had at Strong and Janus, and later rolled them into Vanguard index funds. I had to move away from my hometown for work. It was much more life changing than 2008.
Last edited by ClevrChico on Sat Jan 23, 2016 5:39 pm, edited 1 time in total.

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Re: What was the 2000 crash like in real time?

Post by sambb » Sat Jan 23, 2016 5:21 pm

bought a house from someone who lost everything in the enron scandal. luckily i had invested in apple later and paid it off. Thanks goodness I wasn't into indexing at the time.

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Re: What was the 2000 crash like in real time?

Post by Rodc » Sat Jan 23, 2016 5:41 pm

I did not really experience the 2001 crash.

I had been investing for 9 years and had what felt like a fair amount of money. I had been investing 70/30, but because of the stock run up the portfolio was closer to 90/10. It was really scary so I put my monthly investment on auto-pilot into 100% S&P 500 index fund and closed my eyes for about two years.

I looked in 2003 and it was ok.

And learned to rebalance shortly after.

:)
We live a world with knowledge of the future markets has less than one significant figure. And people will still and always demand answers to three significant digits.

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FreeAtLast
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Re: What was the 2000 crash like in real time?

Post by FreeAtLast » Sat Jan 23, 2016 6:01 pm

What I remember best is me and my buddy waiting in 1999 for the crash that we were both positive was going to happen soon. He matriculated with a degree in finance and had his CPA for about 5 years. He and I didn't believe in "dot.com" companies at all: Where were the bricks and mortar? When were their promised earnings going to finally show up? So we met at the local pub on Friday nights, quaffing our brews (Guinness for me, Molson ale for him) and speculating on when the debacle was going to start. When the crash (actually,crashes) began, we celebrated; after all, we were young, conservative investors and in the markets for the long haul. This was a buying opportunity! Now I am retired and he will be soon. Wish I had a time machine so I could go back to those days. The beer was a much cheaper then and I had a lot more hair on my noggin.
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vitaflo
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Re: What was the 2000 crash like in real time?

Post by vitaflo » Sat Jan 23, 2016 6:18 pm

The market crash itself was fairly boring and took a few years to really decline down. What was ridiculous in real-time was the run up.

I worked at a dot.com company and had stock options that had a future "value" of half a million dollars at age 22. Of course this was only true if someone bought our company. Eventually they did, I cashed out for $6,000 and paid off my school loans with it. Taught me real quick about stock dilution and fake accounting practices.

Because I worked in the dot.com industry I got laid off when it all collapsed. 2 years prior my company was literally hiring people off the street to...well I guess play foosball most of the day, but now there were zero jobs available. Literally nobody was hiring any for any tech positions at all. This was much harder than losing any money in the crash of the market.

Many of those who got laid off went back to whatever they were doing before they jumped on the tech bandwagon. This was the real benefit of the crash, as it really reduced the supply of workers (and new kids coming in, nobody wanted to do tech work), and helped really raise demand for my skills once things started picking up years later.

The 2000 crash hit the tech industry hardest. It sucked for investors, but not like anyone working in tech. The housing crash in 2008 was much worse for the general population, though surprisingly I found it to be a boon for tech workers (when people got laid off in 08-09, companies attempted to replace them with software, which increased demand for tech workers).

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Re: What was the 2000 crash like in real time?

Post by basspond » Sat Jan 23, 2016 7:00 pm

What I remember is that all these .com companies PE ratios were infinity because they had never made a profit and people were just going bonkers over them. We just survived Y2K so I think most people thought they would be dead at the stroke of midnight on New Years Eve. It was extended because of 911, and several major corporation failures. It hurt but my time horizon was over 15 years so stayed the course and eventually came out ahead.

Note: After 911 invested in some airline stock to show my patriotism. It went down to almost nothing because of other circumstances but is now way up.

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Re: What was the 2000 crash like in real time?

Post by Ron » Sat Jan 23, 2016 7:06 pm

Financially, it was "the best of times" for my wife/me; however, we didn't realize it at the time.

We had our current home built in 1994, with a 30-year note/mortgage. We were both 46 at that time. Since both my wife/me are debt adverse, we took every extra dollar we made to retire the debt, paying extra on the principal each month. As it turned out, we paid off our home in the fall of 1999, 5.5 years after we started monthly payments.

At that time, we continued to make the monthly payment, but to ourselves by increasing the amount of contributions to our respective 401(k) plans, even to the point of me contributing "above the line" (e.g. taxable funds). We had already established and had been contributing the maximum to our respective IRA's every year since we were both eligible.

As 2000-02 unfolded, what happened is that we were able to buy funds cheaply. That advanced our retirement planning from age 66 (FRA) to age 59, both in 2007. While my wife continued to work (she was not emotionally ready to retire at age 59), I did so without regret (and enjoy every moment of it :happy ).

During the period leading up to 2000, a lot of the folks I worked with could not understand why I/wife chose to reduce our debt rather than invest in a "sure thing" market. Some even had taken out second mortgages on their homes to put into the market. Needless to say, they were still at work well after I retired. While my wife/me were concerned with the perceived paper loss of our retirement investments, we were lucky enough to keep our employment without fear of loss of our respective jobs. Quite different than what I/we were faced with in the early 80's (but that's another story).

Sometimes the future has more challenges than you can plan for. In my case, the company I retired from decided to move their US HQ and combine it with another subsidiary. This was announced a year after I retired. Two years to the day of my retirement, the section I was attached to was shut down. It's a good thing I was able to retire, since I would have been forced to consider relocation while my wife would have to give up her employment (assuming she relocated with me :twisted: ).

BTW, we not only were able to reap substantial gains in the market but we also were able to "save" around $125k by advancing our note/mortgage payments, thus reducing total interest paid.

- Ron
Last edited by Ron on Sat Jan 23, 2016 7:17 pm, edited 1 time in total.

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JoMoney
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Re: What was the 2000 crash like in real time?

Post by JoMoney » Sat Jan 23, 2016 7:16 pm

I didn't have enough invested in stocks at the time for it to really hit me. I remember the build up more than the crash. Throughout most the of the 1990's the stock market didn't "feel" right to me. Lucky for me, most of my money was going towards some real estate at the time.
I do remember having two friends who had made their full time jobs out of day trading their personal accounts, and seemed to be doing quite well
with commercials like this, it was hard to ignore the money people were making:
https://www.youtube.com/watch?v=oftjwYmlfoA
https://www.youtube.com/watch?v=e2LSyiYjbcg

It really didn't seem right that scores of tech companies without profits were valued so highly, that AOL was worth more than any of the old-economy industrial giants and could be buying out Time-Warner. But the hype was that everything was changing and the Internet would bring an economic revolution.
There was a bit of a sense that the Internet would changing things though, and maybe a bit of fear that if you didn't get on board, you could be left behind... passed by those who got on board with the "information super highway"
https://www.youtube.com/watch?v=S33DvoSjg9w

https://www.youtube.com/watch?v=nJhRPBJPoO0
But when they said "there would be no more there" , nobody thought it was talking about their investment account balance.
I remember my two day-trading friends losing just about everything they had, and having to get regular day jobs.
"To achieve satisfactory investment results is easier than most people realize; to achieve superior results is harder than it looks." - Benjamin Graham

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Re: What was the 2000 crash like in real time?

Post by stlutz » Sat Jan 23, 2016 7:21 pm

Investing-wise, it was really the best time ever to be a slice-n-dicer. While the overall market was going down, smallcap value stocks were going up in 2000 & 2001. So, for me at least, it was easier because I could look at my statement and see significant parts of my portfolio going up. Overall I was down those years, but not by much. So, 2002 was the only really difficult year when everything related to stocks went down.

I think many of the most diehard tilters (the "Swedroeheads") on the forum were tilting at that time and this bear market experience probably plays a role in the devotion to smallcap value. For a good number of years after that, I actually assumed this was normal bear market behavior. It wasn't until I studied more historical market data that I learned that this was a very unusual bear market in that regard--probably a once-in-a-lifetime scenario.

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Re: What was the 2000 crash like in real time?

Post by snowman » Sat Jan 23, 2016 7:34 pm

Ah, what a topic, and those fond memories...

Great learning experience for me. I was investing for about 5-6 years prior to crash, and also worked in tech, on the finance side of the house. I saw the margins (bad), the euphoria, carefully worded press releases (to get additional funding), the craziness to jump on the latest bandwagon, HS kids creating virtual .com companies getting instant funding, etc. Good times! I don’t think I will see it in my lifetime again. I, like many other people, knew this cannot last, it was insane, but, like many others, I wrongly believed I will be able to identify the top and exit just in time.

I was wrong, as were millions of other investors. It dropped and then went back up, many times, dragging on, giving hope for soft landing that never came... The carnage was pretty brutal in the industry – stock options gone, millions of jobs lost, nobody was hiring, and I mean nobody. Web developer became a dirty word, but people did what they had to do to survive – they went to different industries, or previous experiences, or started a business. I had 2 little kids and SAHM, mortgage, car loan and student loan – I could not afford to lose a job. It was the most stressful period of my life!

However, there was a silver lining that was very different in 2000-2003 vs. 2008-2009: HELOC. Most people I knew survived by tapping their home equity to pay the bills. In fact, within couple of years, people were employed again, and their homes had more equity than when they tapped it with HELOC. I honestly expected worse outcome, but home equity turned out to be great savior for many people. My wife and I went the other way – we paid off the loans, rebuilt EF, added extra payments to mortgage.

For me, 2000 was much harder mentally than 2008. Not saying 2008 was a cakewalk, but if you worked in tech or telecom in the late 90s, you know exactly what I am talking about.

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Re: What was the 2000 crash like in real time?

Post by burt » Sat Jan 23, 2016 7:53 pm

In regards to investments, not bad. Didn't really phase me. (age 45 at that time) 75% S&P, 25% bonds.
Then 9/11 in 2001. Company freaked. Projects shutdown. Called to the conference room for separation.
15 minutes later, found myself standing in the parking lot wondering what just happened.
Those days really sucked.

burt

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Re: What was the 2000 crash like in real time?

Post by Phineas J. Whoopee » Sat Jan 23, 2016 8:19 pm

It was long and slow for me as a total-US-stock-market indexer, with some taxable S&P 500 fund shares I didn't want to sell at that time for capital gains tax reasons.

I was just concluding several lean years, and was about to encounter almost twice as many fat years, so in the end it was good for me. It set me up for 2007-20014 rather well.

I remember 1987 Black Monday, although I was so deep in school debt it made little difference to me other than that my employer's customers were in the financial services industry, but the bounce meant I wasn't laid off, and thereby lies a tale. I survived the early 1990s recession and bear market. I survived the mid-1990s bull market during lean years, even while remarking to myself how huge NASDAQ's upward moves were. In early 2000 I went from scraping by to having significant additional amounts to save, to add to what I'd saved before. I saved so much and was up so much that the dot.com problem, which unfolded slowly, with many companies including mine losing most of their value but not all at the same time, was nothing more than a buying opportunity. I was 100% stock at the time. I did well with all the extra shares I had bought come the mid-2000-noughts, and used most of my taxable profits to secure a dwelling. Around then I decided I had enough to include some fixed income. I lost neither my job nor my head during the financial crisis, kept investing from my paycheck, kept rebalancing according to my rule (when I'd not yet encountered vanguard diehards nor bogleheads), came away with many more stock index fund shares than I'd had before, so when the upturn occurred it was a steep slope for me, and I kept rebalancing according to my rule which squirreled away many of the gains in nice, low-volatility, inflation-protected fixed income.

In some disciplines "real time" means milliseconds at most to capture the data or the opportunity's gone for ever, then human beings die. Might we call it "at the time," or "as it unfolded," instead?

The 2000 crash was long and slow. I was in a real, physical crash not long before then, and just like people describe, my perception slowed down. 2000 was like that. Except without the physical injuries, and the fire department extricating me from the wreckage, and the trauma MD the cop requested they send with the ambulance. And the fear maybe the fuel tank was breached and I was about to be charred to a crisp.

Come to think of it, things in 2000-2003 could have been worse for me.

PJW
Last edited by Phineas J. Whoopee on Sat Jan 23, 2016 8:36 pm, edited 2 times in total.

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burt
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Re: What was the 2000 crash like in real time?

Post by burt » Sat Jan 23, 2016 8:34 pm

JoMoney wrote:I didn't have enough invested in stocks at the time for it to really hit me. I remember the build up more than the crash. Throughout most the of the 1990's the stock market didn't "feel" right to me. Lucky for me, most of my money was going towards some real estate at the time.
I do remember having two friends who had made their full time jobs out of day trading their personal accounts, and seemed to be doing quite well
with commercials like this, it was hard to ignore the money people were making:
https://www.youtube.com/watch?v=oftjwYmlfoA
https://www.youtube.com/watch?v=e2LSyiYjbcg

It really didn't seem right that scores of tech companies without profits were valued so highly, that AOL was worth more than any of the old-economy industrial giants and could be buying out Time-Warner. But the hype was that everything was changing and the Internet would bring an economic revolution.
There was a bit of a sense that the Internet would changing things though, and maybe a bit of fear that if you didn't get on board, you could be left behind... passed by those who got on board with the "information super highway"
https://www.youtube.com/watch?v=S33DvoSjg9w

https://www.youtube.com/watch?v=nJhRPBJPoO0
But when they said "there would be no more there" , nobody thought it was talking about their investment account balance.
I remember my two day-trading friends losing just about everything they had, and having to get regular day jobs.
Great Links ! Really enjoyed them.
Took me back to past times.

burt

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Re: What was the 2000 crash like in real time?

Post by rnitz » Sat Jan 23, 2016 9:32 pm

My take on the 2000 crash probably isn't popular, but my experience was "what the f* took so long for this crash to happen?"

I was in my early 40s and had been an indexer for about 8 years (Vanguard Index Trust 500!) and I had watched the valuations just go crazy. I'd stomp through the halls of our company trying to make sense of the ridiculous valuations. Finally, Alan Greenspan made the famous speech calling it Irrational Exuberance and this ridiculous bubble would end... but that was in 1996 and it would continue for another 3.5 years, growing even more absurd. When the crash started in early 2000 I wasn't happy to lose money, but I figured my accounts were up so much more than they deserved that things would even out (which they did).

On the business side, I had started a tech company in '96 with a buddy but it was self funded (no outside venture backing). Yes, we lost some business with our .com customers that crashed, but we always discounted them as their businesses just didn't make sense to us. Fundamentals matter. The 2000 crash was different than the 2008 crash due to ridiculous bubble in stock prices. When you have five years in a row with >20% returns you have to expect to give some of this back.

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Re: What was the 2000 crash like in real time?

Post by Dirghatamas » Sat Jan 23, 2016 11:55 pm

snowman wrote: For me, 2000 was much harder mentally than 2008. Not saying 2008 was a cakewalk, but if you worked in tech or telecom in the late 90s, you know exactly what I am talking about.
Like I noted above, same for me: 2000 was much harder mentally than 2008. This was obvious to those of us employed in tech, but I wonder though how it was for "normal" folks. I would imagine 2008 was harder for a larger % of people (because of housing collapse). I also wonder if those in financials industries felt about 2008 like we did in the late nineties about tech: meaning did they understand the subprime stuff and huge profit margins in financial industry as being unsustainable, just like those of us in tech in the late nineties obviously understood the tech valuations were ridiculous?

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Re: What was the 2000 crash like in real time?

Post by WhyNotUs » Sun Jan 24, 2016 12:50 am

Black Monday in October 1987 was the big one- 22% decline in a single day. There were seemingly no buyers only sellers. I was gambling in OEX options then and it was a wipeout. Unforgettable. Learned a valuable lesson though and became an investor after that.
I own the next hot stock- VTSAX

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Re: What was the 2000 crash like in real time?

Post by Valuethinker » Sun Jan 24, 2016 6:05 am

Dirghatamas wrote:
jebmke wrote:
Dirghatamas wrote: Don't know why you think passive investing wasn't available then.
It was much harder way back then. Had to saddle up the horse, ride into town to see the broker, then ride all the way home.
Definitely was hard. Not as bad though as when I went to school. Walking uphill 10 miles through thigh deep snow was character builder. After lunch the snow would melt though. Afternoon had to come back 10 miles AGAIN walking uphill in 110 degrees sweltering heat. We kids were tough back then. The young kids now, I just want them to get off my damn lawn.

https://www.youtube.com/watch?v=Xe1a1wHxTyo (4 Yorkshiremen discuss their tough childhoods).

you have to appreciate English humour to an extent (the Yorkshire accents-- Yorkshiremen have a reputation for being tough, gruff and tight with their money) but this reminded me of this ;-).

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Re: What was the 2000 crash like in real time?

Post by Valuethinker » Sun Jan 24, 2016 6:06 am

Dirghatamas wrote:
snowman wrote: For me, 2000 was much harder mentally than 2008. Not saying 2008 was a cakewalk, but if you worked in tech or telecom in the late 90s, you know exactly what I am talking about.
Like I noted above, same for me: 2000 was much harder mentally than 2008. This was obvious to those of us employed in tech, but I wonder though how it was for "normal" folks. I would imagine 2008 was harder for a larger % of people (because of housing collapse). I also wonder if those in financials industries felt about 2008 like we did in the late nineties about tech: meaning did they understand the subprime stuff and huge profit margins in financial industry as being unsustainable, just like those of us in tech in the late nineties obviously understood the tech valuations were ridiculous?
They knew it was overcooked. Morgan Stanley and that were making 50%+ of their profits from FICC (FIxed Income Commodities and Currencies) divisions. But most people were not directly involved with the mania.

But other parts of financial services were doing well, but not that well.

FS is a very silo-d industry. Somebody in another department can be getting 200% bonuses, but you are fearful for your job.

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Re: What was the 2000 crash like in real time?

Post by carolinaman » Sun Jan 24, 2016 7:45 am

randomguy wrote:
jebmke wrote:
Valuethinker wrote:Then it was a long grinding bear market which only bottomed in March 2003 from memory.
That is what I recall. Psychologically a longer grind than '08-09.
The 2000-2002 frame is really multiple crashes. You have the tech bubble bursting (see the nasdaq going from 4000 to 1700 over 18 months). But the rest of the market wasn't a total disaster. Things like value, REITs, and mid caps were fine. The S&P 500 was off like 20-25%. And then there was Sept 11th we we lost another 15%. Then it rallied. And then it dropped another 25%. Then we had like 3 periods of 10% rallies followed by 10% drops. Until one time that 10% rally kept going.

Economy wise, the recession was nowhere near as bad at 2008. Unemployment peaked at like 6%. Now if you were in one of the hard hit sectors it felt a lot different.
This was my recollection as well. Some parts of the market lost little if anything but tech and tech heavy indicies were really decimated. Bonds held up pretty well. This was unlike 2008 where everything except treasuries tanked. I was an IT Director and saw the craziness in tech of startups, IPOs and hyper valuations of tech companies. It did not take a genius to know this would end badly. Therefore, I avoided tech and related market sectors and avoided most of the carnage. I was not so lucky in 2008 as I had no idea about the house of cards we had at that time with mortgages. I am 71 and have seen a lot of market ups and downs, but 2008 was a really scary time for our economy. I have seen nothing comparable to it in my lifetime.

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Re: What was the 2000 crash like in real time?

Post by MEA » Sun Jan 24, 2016 9:54 am

The year was 1996. I was 32 years old. I had just finished fixing my fixer-upper money pit house. For the first time in my life I had some money to invest.
Both my grandfather, and father had Vanguard funds. They were bogleheads before the word bogleheads had rolled off anyone's tongue. They were investing with Vanguard before there was a internet and the word dot-com. I still remember the Vanguard logo on the envelops when getting the mail for my grandfather. I didn't really know what the company was, I just liked the ship.

I had some money now to invest so naturally I went to my grandpa for advice. The S&P 500, that’s all you need he said, “that will do the job”. Dad had some Vanguard funds too, but he also had some Janus and PBHG funds, and they were doubling every two years or so.

I ignored my grandfather, and my father too, to some existent. I chose a new fund. The PBHG technology & communications fund. I doubled my money in a very short time. I think one year, or so. I sold it after that and bought Janus Mercury. PBHG Tech kept going up (like everything tech) and returned 300% in 1999 alone. Janus was the hot fund company of the 90’s. Mercury did very well too.

My grandfather would say “you’re gambling not investing
. I think your nuts to play with your money like this”. I thought he was nuts for owning the market, and not beating it like everyone else was.

The feeling at the time was that we had a new economy (dot-com) and the old one. “Things will be different this time”. “It can just keep going up”. You heard that a lot back then. You were making money and you wanted to believe it, at least I did.

Alan Greenspan was worried about the tech bubble. He called it “irrational exuberance”. They started to raise rates to cool it off. They were going to give us what they called a “soft landing”. They did quarter point rate hikes, and every time they did investors pulled money out of “old economy companies” and put it in the new economy dot-com companies. The thought was that the new economy companies could withstand the rate hikes. The old ones could not. When the fed started the rate hikes the Nasdaq didn't stop going up, It went up faster than ever. Unintended consequences is what they got, and what they always get. After the soft landing crash they dropped the rate down low and created a demand for mortgage backed securities, and the financial crisis was born. More unintended consequences. Now we have low rates and QE. We might get some QE unintended consequences? Maybe? Or is this time different?

For three long years after the soft landing, investors would just keep selling the rallies. It could not go up. They just kept selling the rallies. By the time it started up again I had all my money in the S&P 500, and that’s still where I keep it today. My grandfathers voice is tattooed on my brain. I don’t fool around with small cap, biotech, emerging markets, or foreign markets. The S&P will do the job. IMO.

Looking back on it all, it was a good thing. I made more money from the stock I purchased in those three years than any of the other years. I have always bought when the money was available and have never tried to time it. So it was a good thing in the end. I learned more in those three years than at any other time, except for 08. I learned a lot in 08 too. I never learned anything in a bull market.

PS
It is a real privilege to be able to join a group with the knowledge and recourses you provide here. We never stop learning. What will be next?
“Stay the course is the most important piece of advice I can give you.”-Bogle

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Re: What was the 2000 crash like in real time?

Post by snowman » Sun Jan 24, 2016 11:07 am

Dirghatamas wrote:
snowman wrote: For me, 2000 was much harder mentally than 2008. Not saying 2008 was a cakewalk, but if you worked in tech or telecom in the late 90s, you know exactly what I am talking about.
Like I noted above, same for me: 2000 was much harder mentally than 2008. This was obvious to those of us employed in tech, but I wonder though how it was for "normal" folks. I would imagine 2008 was harder for a larger % of people (because of housing collapse). I also wonder if those in financials industries felt about 2008 like we did in the late nineties about tech: meaning did they understand the subprime stuff and huge profit margins in financial industry as being unsustainable, just like those of us in tech in the late nineties obviously understood the tech valuations were ridiculous?
Interesting, I had many of the same thoughts over the years, especially right after 08-09. My recollection is that 2000-2003 was really not that bad for people outside of tech/telecom. Unemployment numbers prove that point also. Plus, like I said, housing was doing really well, people were refinancing their mortgages to lower rates while valuations just kept going up, so HELOCs and cash-out-refinancing kept people buying and economy going. Logically, some of my friends went from tech/telecom to real estate. I also remember some co-workers going from day trading tech stocks straight to flipping houses. What an era that was...

My lesson learned was that even as an "insider", you don't know what might happen next, and what the consequences of that are going to be. It's best to be prepared for anything that might come your way - try not to have any debt if possible (outside of mortgage), and have EF (and don't dip into it for unnecessary purchases). It's what I drilled into my kids as well. It really does not matter what you invest in or where you live or what kind of expert you are or what your income is - when the recession hits, it's people with huge debt and zero savings that go under first!

As far as people employed in financial industry feeling the same in 2008 as we did in 2000 - I thought about it many times, but my perception is no, it was not the same. FI is much more regulated and compartmentalized, you could be working at the same company, in the same building, sometimes even on the same floor, and you had no idea what that other department was doing. Neither did most of your coworkers or regular people. For them it was completely unexpected (and unfair), whereas we knew it was only a matter of time.

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Re: What was the 2000 crash like in real time?

Post by goodenyou » Sun Jan 24, 2016 11:28 am

I lumped summed into an IRA in early 2000. It took years to recover. I could not add to it since I had other retirement accounts since. My average return over 16 years is now about 4% in that account. I am thankful that debt reduction, not investing, was a priority back then. It saved me from disaster. I would recommend debt reduction as a priority today.
"Ignorance more frequently begets confidence than does knowledge" | Do you know how to make a rain dance work? Dance until it rains.

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Re: What was the 2000 crash like in real time?

Post by Sheepdog » Sun Jan 24, 2016 12:24 pm

MEA wrote:
XXXXXXXXXXXXXXXXXXXX
Looking back on it all, it was a good thing. I made more money from the stock I purchased in those three years than any of the other years. I have always bought when the money was available and have never tried to time it. So it was a good thing in the end. I learned more in those three years than at any other time, except for 08. I learned a lot in 08 too. I never learned anything in a bull market.

PS
It is a real privilege to be able to join a group with the knowledge and recourses you provide here. We never stop learning. What will be next?
MEA,
Welcome to the Bogleheads. That was a very good writeup. Thank you.
Just because it isn't your fault doesn't mean it isn't your responsibility....Josh Reid Jones

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Re: What was the 2000 crash like in real time?

Post by jhfenton » Sun Jan 24, 2016 12:49 pm

stlutz wrote:Investing-wise, it was really the best time ever to be a slice-n-dicer. While the overall market was going down, smallcap value stocks were going up in 2000 & 2001. So, for me at least, it was easier because I could look at my statement and see significant parts of my portfolio going up. Overall I was down those years, but not by much. So, 2002 was the only really difficult year when everything related to stocks went down.

I think many of the most diehard tilters (the "Swedroeheads") on the forum were tilting at that time and this bear market experience probably plays a role in the devotion to smallcap value. For a good number of years after that, I actually assumed this was normal bear market behavior. It wasn't until I studied more historical market data that I learned that this was a very unusual bear market in that regard--probably a once-in-a-lifetime scenario.
+1 I was not a Boglehead at the time, but I was young and a 100% value, heavy small-cap tilter. I remember shaking my head at the valuations during the tech run-up as I made far less money than the headline indices. But I didn't have a negative portfolio return until 2002. I made money in 2000 and 2001. Small cap value was up more than 20% in 2000 and up more than 10% in 2001. There was a big drop after 9/11, but it had already more than recovered by year-end. It was only from spring 2002 through spring 2003 that SCV tanked along with everything else. And then the ride up resumed. I was too busy gloating over my "foresight" to worry about the 2002 dip. And our portfolio was modest.

2008 was a different story. I was laid off in December 2008 and everything tanked. Everything. And the doom and gloom was much more intense, with lots of talk about another Great Depression. We also had a much larger portfolio. Fortunately, I was distracted enough by being unemployed that I didn't lose any sleep over our portfolio. And even if it had stressed me out, I would never have considered selling while the market was down. Being forced to sell while it was down would stress me out.

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Electron
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Re: What was the 2000 crash like in real time?

Post by Electron » Sun Jan 24, 2016 2:24 pm

The period 1998 through March 2003 was quite unusual. Value stocks really struggled in the late 1990s and even famous value managers were losing clients. Technology and growth stocks experienced a strong rise and peaked at very high valuations. Everything changed after the NASDAQ peak in March 2000. Growth stocks went into a steep decline while Value stocks, REITs, and Bonds performed quite well at least on a relative basis. The NASDAQ Composite Index fell roughly 80% from its March 2000 peak to the October 2002 low.

The 2000-2002 Bear Market was not that severe for properly diversified investors. The typical diversified investor lost a modest percentage in 2001 and 2002. That was followed by large gains in 2003.

If you look at the Weekly Advance-Decline Line, it actually declined from 1998 through March 2000. The AD Line then rose through most of the Bear Market. Small Cap Value performed surprisingly well in that period along with REITs and Bonds. It looks as though investors were rotating to stocks with more attractive valuations.
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DonCamillo
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Re: What was the 2000 crash like in real time?

Post by DonCamillo » Sun Jan 24, 2016 2:36 pm

Three years of watching the value of my retirement funds shrink by $10,000 a month, while my new job paid half as much in gross pay. It was very painful. I was mostly in equities and had a lot of stock in AT&T, from which I had just retired.

Index funds and a strong allocation to bonds are much less painful.
Les vieillards aiment à donner de bons préceptes, pour se consoler de n'être plus en état de donner de mauvais exemples. | (François, duc de La Rochefoucauld, maxim 93)

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