How Bad was 2008, really?

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Wakefield1
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Re: How Bad was 2008, really?

Postby Wakefield1 » Tue Jan 10, 2017 8:50 am

Answering the question before looking at the thread: It seemed to me that the situation and danger (of allowing correction once the crisis got underway) was greatly exaggerated by certain people or authorities that had a huge profit motive and/or private stake in getting bailed out but perhaps I am wrong and the situation was really all that bad but the bailout didn't need to be so great for some of the culprits who had leveraged themselves to the hilt on betting that the crisis would play out as it did while behaving in ways that led up to or guaranteed that the crisis would come,also the way that the venerable and historically important banking house Lehman Brothers was mismanaged to its destruction by people who should have known better

Mij
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Re: How Bad was 2008, really?

Postby Mij » Tue Jan 10, 2017 8:55 am

What really hurt those of us that were retired was the fact that as our account values went down we still needed to draw living expenses out of those accounts. The percentage of withdrawal was unsustainable.

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Sheepdog
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Re: How Bad was 2008, really?

Postby Sheepdog » Tue Jan 10, 2017 9:00 am

How bad was 2008? Were you accumulating? Were you senior and living off of your savings? There have been some good and interesting comments in answering your question. I will submit the near panic thread which I started on October 9, 2008 at the height of the collapse as my answer: Read viewtopic.php?t=25126l, which has been updated over the years by me and others. It was tough for some of us.
However good or bad a situation is, it will change

lazydavid
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Re: How Bad was 2008, really?

Postby lazydavid » Tue Jan 10, 2017 9:02 am

To help visualize it a bit, print out a chart that includes the crash. Then take a blank piece of paper and lay it somewhere in the middle of the downslope, like say, January 10, 2009, so that the new sheet covers up the past 8 years.

Now look at the chart, and imagine that 2008 was actually 2016. Some of the worlds largest banks and investment houses have gone out of business or been taken over by the government. There's talk that the Big 3 US automakers may become the Little 0. Several of your friends have lost their jobs, and can't find new ones. You started 2016 with significant equity in your house, and now you're underwater on your mortgage.

Now draw what you think the 2017 market is going to look like. My graph would not show a rapid recovery, and I bet yours wouldn't, either.

FCM
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Re: How Bad was 2008, really?

Postby FCM » Tue Jan 10, 2017 9:06 am

During the 2008 - 2009 decline, I was 62, employed by a large Fortune 500 company, with an investment allocation of 50/50 stock-to-fixed income. The thing that I remember most during all the wild market gyrations during late 2008/early 2009 was that if I sold, I would at some point need to get back in, and I just couldn't believe that I could time that profitably. Thus, I "stayed the course" and rode it out. However, it wasn't pleasant seeing our net worth drop by $500K. At least our house was paid for, and I didn't lose my job. My only regret was that at the market low, I moved all my future 401k contributions into the stable value option rather than buying equities at rock-bottom prices. I do recall buying $3K of Vanguard Total Stock Market Fund during the first week of March 2009 just because I felt compelled to make a token effort to take advantage of extremely low prices. The markets recovered nicely, and I'm now retired with a modest pension and my wife's and my social security, sleeping well at night with a 40/60 allocation. We have enough in fixed income and cash to ride out another 50% drop in equities without having to sell anything. I at least now know what my risk tolerance is.

sls239
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Re: How Bad was 2008, really?

Postby sls239 » Tue Jan 10, 2017 9:06 am

We had our son in 2006. 2007 was when I was supposed to go back to work. Instead, my spouse was laid off. And not just any layoff, they shut down the whole facility and put a hiring freeze on most of the rest of their facilities so no transfers were offered except for those very high up - and this was a Fortune 500 company. The responsibilities of parenthood hit me full force.

My spouse had job offer in another state, so I had to turn down the offer I managed to get and move. Of course our house wouldn't sell, even though we were lucky that where we were values didn't go down much, selling was slow and everyone was expecting it to bounce back quickly. So we rented it out, and that turned out to be our worst mistake.

Right when my spouse got to his new job, they had a round of layoffs. The new job just became a temporary thing - just trying to hold a place together with no capital investment from the company. It was obvious that he was going to have to shift to another more stable part of his industry and rebuild his expertise.

Also in 2007, gas prices were still high. I'm active on a family finance board and I remember people figuring out that they were earning negative money because their jobs were far away or included multiple locations. They were so afraid of the stigma of being unemployed that they accepted the negative wages.

There were also people in areas whose homes had lost more than 50% of their value. Mortgage rates went way down, but they couldn't refinance even though many had put 20% down, they didn't have another 30%. People considered cashing out retirement savings to get them out of the situation, and I strongly suggested they not do that, but instead take advantage of the protection those accounts have in bankruptcy proceedings. It was so obvious on paper that they should walk away and start over. But easier said than done for most. The guilt laid at their feet was immense - people were blaming them for further declines in values.

Somewhere in there, the stock market crashed. But I couldn't even tell you when. I just kept on keeping on, I reached for every penny to continue our retirement contributions - I even used Christmas presents and didn't finish the IRAs until March.

I felt like we did (almost) everything right, went to college and got STEM majors, saved money, waited to have a kid, bought an affordable house, but it was still really hard. It was really hard, and we were still luckier than a lot of other people.

When we eventually sold the house in early 2009, I tossed some of the equity into the stock market. I cashed it out a couple years ago while we were still in the 0% capital gains bracket, it had more than doubled I think. That was nice, but it doesn't erase all the real suffering that people went through.
Last edited by sls239 on Tue Jan 10, 2017 9:15 am, edited 1 time in total.

nova1968
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Re: How Bad was 2008, really?

Postby nova1968 » Tue Jan 10, 2017 9:14 am

I was not too concerned at the time, I had survived the crash of 1987 and the Dot.com crash of 2000 and I just stayed the course, I had some funds with a Financial Advisor North Coast and was playing IBD Can Slim (don't use neither anymore) as well as earnings going into the TSP. As a result I lost only 22% in 2008 and gained 26% in 2009.
Had I been approaching retirement like I am now I would have been more concerned. Currently have 57% in equities and 43% in bonds and cash, I recall the bond indexes were up 5% in 2008, Therefore, a 60/40 ratio in 2008, assuming a 50% decline in TSM would have lost 28%. Not good but tolerable for a bear market.

why3not
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Re: How Bad was 2008, really?

Postby why3not » Tue Jan 10, 2017 9:19 am

SpartanBull wrote:but being young, why should I care if I go down 50% on paper? <snip> I'm really not trying to downplay the fear and anxiety of a brutal bear market, just trying to understand it.


You can't understand as long as you think about it in terms only of a paper loss. You need to think about what happened to many folks (including disciplined investors) during that time. Ok, you have a paper loss of 50% in your retirement... no big deal. Unless you also happen to lose your job. Now imagine 2 years with no income coming in. How are you going to live? Does it matter much if you believe that stocks will recover if you not only can't buy them but have to sell them to survive?

Stop thinking that a "bear market" will only impact your investment accounts & start thinking about what happens when it impacts your life. The worst didn't happen to the economy as a whole but it did happen for many people. Over 90% of my co-workers were laid off during the period.

Most of the people I knew who were hit hardest would have been just find if stocks had dropped 50% & stayed that way even for decades. It wasn't the paper loss that hurt them, it was the income loss.

Dandy
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Re: How Bad was 2008, really?

Postby Dandy » Tue Jan 10, 2017 9:28 am

What is so scary about a 2 year blip


When you are in the crisis you don't know it is going to be a 2 year "blip" followed by an 8 year and ongoing bull market. I was an executive in a mutual fund company - how did a mortgage crisis mean I would lose my job at age 60? There were no jobs available - even flipping burgers. Store fronts were emptying out on main street, companies, large companies were failing and falling like dominos, the news was all bad, you would wait for weekends so the equity market would drop more, you would turn on the news before the market opened to hear nothing but bad things and it would show the stock futures were down 500 points. And you might actually be happy that at the end of the day it was "only" down 100 points. The unemployment stats were really scary. Hundreds of thousands each week.

Sen. Harry Reid said a large insurance company was getting ready to file for bankruptcy and I had almost all my investments in my insurance company former employer's 401k. I transferred it to Vanguard and was hoping the company didn't fail before the check would be issued and clear. (ok maybe that was a bit of too much fear -- but that was the type of things that were happening). You couldn't sell your house - there not only no buyers no banks were giving out mortgages. For sale signs and for lease signs were all over. People found out that AAA mortgage bonds were actually mostly junk. So, what they thought was safe investment ground was actually thin ice.

Trust me - very few people were talking about having 100% equities or that it was a great buying opportunity. Global diversification didn't help much since it was a global mess. I'm 60, my nest egg dropped about 25%, I can't get a job, can't sell my paid off house, I have a kid in college, a wedding to pay for in a few months, I have 2 older cars and I might have to fund retirement for -- 30 years? Oh it was pretty bad when you are in it.

Oh yeah my company stock was once at 120 ended up at 8!

avalpert
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Re: How Bad was 2008, really?

Postby avalpert » Tue Jan 10, 2017 9:30 am

I think this thread is a great example of why financial panics haven't and aren't going away. We aren't talking about the distant past, we are talking about just 8 years ago and people already uncertain about it trying to put a rosy look on it all- already forgetting how close our entire financial system was to collapse (the reflection of that in market losses was only a small piece of the overall crisis).

Yes, it really was that bad - and we were on the lucky side all things considered. Ireland's GDP still has gotten back to 2007 level, UK just did recently.

Bogel0048
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Re: How Bad was 2008, really?

Postby Bogel0048 » Tue Jan 10, 2017 9:32 am

Ahh youth! You really cannot feel the experience of 2008 unless you lived through it and were directly affected by it.

I retired in June, 2008, so I did experience the sensation of my retirement savings being greatly reduced just as I retired. I did not sell anything and, as the OP points out, I ultimately came out OK. Others, as many other posters have noted, were not so lucky. Many young people lost their first jobs or experienced an extended period of unemployment right out of college. Due to their slow start that group may experience lower pay over their entire careers.

Many older employees who lost their jobs found they were suddenly competing for replacement jobs with younger, more recently trained and tech savvy applicants who were more attractive to the few employers who were still hiring during that period. Some of those older employees never regained full time jobs and have been marginally employed ever since.

Many people in over-built and over-priced housing markets found they were trapped in homes they could not sell if they wanted to move to a new neighborhood or to a job in a different city. Others lost their homes because they were overextended and could not afford their mortgage payments when one or both members of a couple lost their jobs.

It is easy to say you will not sell any of your portfolio in a down market, and ideally you should not, but it is a very different thing to actually live through a major recession, especially if your job and income are directly affected by it.

Tamalak
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Re: How Bad was 2008, really?

Postby Tamalak » Tue Jan 10, 2017 9:33 am

Pill wrote:My accounts dropped 42%. No need to panic, stay the course.

You don't lose until your panic and sell.


Tell that to the confederate stock holders. Or those holding Russian stocks before Lenin took over. Or to the Japanese investing in 2000.

To say "hey look, the stock market is never worse than x y z" is survivorship bias. There is risk of FAILURE, not just temporary little bumps like 2008. And 2008 came within an hour of being one of those failures. http://zerohedge.blogspot.com/2009/02/h ... pm-on.html

On topic: I wasn't invested so I didn't care at first. Then I got laid off. Took me a couple years to get another (much better) job although that was in large part my own fault.
Last edited by Tamalak on Tue Jan 10, 2017 9:50 am, edited 1 time in total.

mrsytf
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Re: How Bad was 2008, really?

Postby mrsytf » Tue Jan 10, 2017 9:34 am

Like some of the replies ahead of me said. - a lot of your reaction was based on where you were in the investing cycle. I had lost my job and was looking for another with no real opportunities. But my husband was working and our expenses were super low so we didn't have to dip into savings or emergency fund. I was actually annoyed that without a job we didn't have MORE money to throw into the market. We also didn't own a home so we saw the drop in home prices as a good thing. And as I recall there was a generous home buyer tax credit being offered. I understood the impact of the devastation around me but felt secure in our own finances.

Flash forward to now. We have a size able nest egg. I am working part time and will likely quit/retire sometime this year to be a full time mom. If my investments fell by half that would severely impact our plans as we don't quite have 25x our annual spending. I would either have to continue working or my husband would have to work longer than the projected 5 years. Having said that I don't think I would touch my investments. I'm not savvy enough to know how best to hedge against a drop. Gold, muni bonds, reits, bitcoins or whatever - i just don't feel like I truly understand them to know how much to invest and when. So I just stick to the 3 fund couch potato plan and probably will never vary no matter what happens. The only thing I supposed I will have to change in the future is asset allocation.

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Peculiar_Investor
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Re: How Bad was 2008, really?

Postby Peculiar_Investor » Tue Jan 10, 2017 9:35 am

livesoft wrote:Someone will surely link the thread of fear from back then.

How about the 2015 version? What was the 2008 crash like in real time?
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mike_slc
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Re: How Bad was 2008, really?

Postby mike_slc » Tue Jan 10, 2017 9:39 am

There was serious talk that we were headed into another Great Depression. Please were very scared. I didn't have that much cash lying around at that time so I sold my car, an Audi A3, to buy stocks. Drove my camper van around instead. I could buy an R8 with that money now. :-)

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Re: How Bad was 2008, really?

Postby 2b2 » Tue Jan 10, 2017 9:44 am

Like Bogel0048, I retired in June of 2008.
As the meltdown accelerated, I would climb up on my roof each morning and shout:

"PEOPLE, PEOPLE, PEOPLE!!!! IF YOU WOULD ALL KINDLY STOP SELLING STOCKS, PRICES WILL STABILIZE!"

It finally worked.

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Da5id
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Re: How Bad was 2008, really?

Postby Da5id » Tue Jan 10, 2017 9:47 am

I think it depends on where you were in life and what happened to you in particular.

Barely a blip in the radar to me. I didn't lose my job and it didn't seem in jeopardy. I was maybe 70-80% stocks, but wasn't all that traumatized at the paper losses as I wasn't retiring any time soon. Our house was over half paid for, so wasn't underwater (and was in a very nice suburb, fairly resistant to the housing crash).

If I was newly retired, or lost my job (was sole earner, wife was home with kids), it would have been really really bad though. And in fact 2008 is partially why I have dialed down to 55% stock/45% bonds. I have rather more assets to lose now.

I recently watched The Big Short, it gives some of the flavor of the times...

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Watty
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Re: How Bad was 2008, really?

Postby Watty » Tue Jan 10, 2017 9:51 am

The silver lining to all the problems in 2008 was that I was about 10 or 15 years from retirement so after my investments dropped I greatly increased my retirement savings rate when the markets were low just to make up for the loss. I figured that if they dropped more then it was even more important to save as much as possible. I was not trying to time the market but that meant that I invested a lot more when the market was low. In retrospect that probably allowed me to retire a year or so earlier.


cherijoh wrote:I know quite a few people who had professional jobs (enabling a comfortable middle class life style) who were thankful to snag a job as a cashier at the local grocery store or as a Walmart greeter.


That reminded me that my son was just starting college then. Summer jobs for high school and college students were almost non-existent even at places like fast food restaurants. All those positions were filled by older people who had lost their normal jobs and wanted to work as many hours as they could get.

In addition to lots of layoffs the hiring at any company that was doing OK came to a standstill because companies did not know how things would turn out.

Graduating college students faced a bleak job market and many of them may not have ever gotten a job related to their degrees. This may have hurt them as much as someone that was retiring about then.

My son was just starting college so there was a lot of concern about what the job market would be in four years when he graduated. He was in Computer Science which is normally very employable but even in Computer Science the students that graduated then were facing a tough job market.

Companies knew that employees were unlikely to leave for better jobs so at some of them that is when they started expecting more employees to be available at all hours and to carry company cell phones so that they could always be contacted.

DetroitRick
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Re: How Bad was 2008, really?

Postby DetroitRick » Tue Jan 10, 2017 10:14 am

Depends on your own situation, but for many devastatingly bad. As others have mentioned, this was far worse than just the stock market. I saw lots of folks in my average middle-class neighborhood lose their homes because of job loss, concurrent with investment loss and other issues. I saw my neighbor two doors down, retired 4 years prior and worried about his finances among other issues, commit suicide. I watched, over the next few years, the industrial parks around my house clear out as our single-industry local economy reacted to the automotive downturn. Frankly, with all the stuff going on, the thing that sticks most in my head is noting sometime in late 2008 or early 2009 that the rush-hour gridlock in my area was totally gone. Yes, that was just a local thing, but THAT spooked me the most. Way more than the stock market. Yet today, it's almost like none of it ever happened.

The liquidity crisis in late 2008 was especially frightening. Now we have hindsight, then we didn't. Next time we won't either. There was a brief time where the bond market seized up.

I was newly retired, but luckily somewhat cash heavy. My own portfolio, which I left untouched throughout, dropped 49% from the high in Oct 2007 to a low on March 8, 2009. By March 2011 it had surpassed that 2007 high again. Yes, I simply quit looking at the mess for a time. I think I went several months without looking at my portfolio. That wasn't what bothered me, it was everything else. As we were all heading for that cliff, it was never certain that we wouldn't go over.

I'm frankly not sure of what new lessons I learned. The next crisis will not be the same anyway. I already knew not to panic sell and to hold cash reserves (but my own higher reserves were due more to luck and transitions than to my planning). It's easy to say, but I certainly don't keep decade- long cash reserves either. So had that crisis lasted a lot longer, I understand my outcome would have been far worse. I guess if I learned anything, it's what a ridiculous waste of time listening to expert predictions can be and how superficial our news media is. I found diversions (hobbies, entertainment, exercise) to be very helpful in keeping a head on my shoulders and maintaining perspective. So, on the brighter side, I started playing guitar again :sharebeer
Last edited by DetroitRick on Tue Jan 10, 2017 10:16 am, edited 1 time in total.

centrifuge41
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Re: How Bad was 2008, really?

Postby centrifuge41 » Tue Jan 10, 2017 10:15 am

jpsfranks wrote:I remember the particular point that really terrified me was after a major money market fund "broke the buck" and suddenly it seemed like nothing was safe anymore. The federal government stepped in and temporarily guaranteed money market funds and for deposit accounts increased the FDIC limit to $250k to avoid a catastrophic cascade of withdrawals, but even with these kinds of extraordinary steps it seemed like the Treasury and the Fed were running out of fingers to stick into the proverbial dike. For a short period it really did feel like the entire global financial system was going to unravel.

I didn't make any rash moves, but I'm not going to pretend it wasn't really scary.

Yeah, when a big money market fund broke the buck, it showed that even safe assets weren't necessarily safe! How could a money market fund ever get a haircut? If a money market fund is not safe, then, it gave a sense of further danger to holding bonds, let alone stocks and housing.

One bond fund, Schwab Yieldplus, lost 30%+. Prior to the great recession, it had performed fine. Who knew how much toxic mortgage-backed loans the fund contained. Who knew how bad those bonds were. Who knew if other bonds could get hit like this?

All the way through 2010 and 2011 at least, things still felt gloomy. The worst had passed in America, but not everyone felt that way, not was it obvious during day-to-day life. There was still news of contagion with European PIIGS countries and a risk of a double-dip recession. Job growth was still slow even after 2011. It really made the recession feel 4 years long, or longer, depending on who you asked.

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Re: How Bad was 2008, really?

Postby jf89 » Tue Jan 10, 2017 10:20 am

A lot of doom and gloom about the drop here. Were ALL banks really in danger of going under? In my experience, many were hiring. I'll give a slightly different view:

I was fresh out of college, my industry was hiring (not banking, another industry), and the only unemployed people I knew were classmates that were underemployed for their degree. None of my parents, or my friends' parents, or friends, or family friends lost their jobs. Recruiters from outside the industry I wanted to be in told us to go to grad school or find a spot in the military rather than seeking jobs. I was obviously accumulating at that point, and my manager mentioned that I and the other new hire were lucky to be coming in to our 401k at a low point in the market.

I didn't watch or read any news then, so above is all I knew at the time. I had an almost naive confidence that people were over exaggerating how bad things were, and everything would be alright anyway, so I just decided to ignore all the peripheral stuff.

Maybe ignorance really is bliss. Maybe my geographic area wasn't hit that hard? I doubt that, my local economy is pretty tied in to the rest of the country... especially in banking. Knowing much, much more about markets and the world in general now, I still have that (probably naive) confidence that everything will be alright if things go to hell again. Added to it is a sort of twisted view that even if everything isn't alright, everyone is in the same boat, and I wouldn't have known what to do as it was happening anyway.
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rai
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Re: How Bad was 2008, really?

Postby rai » Tue Jan 10, 2017 10:22 am

Actually it was very bad IMO. at the time companies like Bear Stern and Lehman Bros went bankrupt overnight. Companies like GM or Citibank etc. We didn't know what was going to happen.

Here is Citibank stock going from $57 in 2006 down to $.97 (thats right 97 cents). I had bought Citi (not a lot) but some at $3 thinking it was low priced at that and seeing it got to under $1 was disconcerting. Not exactly to me as it was a small position but to the overall market. I think this was a gut check to me, and such. I really didn't sell anything so I am well back and then some, but it was very dark times.

Not just the US but the entire world market as well. I'm more of a cowboy than most people on this forum so I was trading options and had many individual stocks and I didn't have much in bonds. That was a bas mix but it didn't turn out as bad is it might since I never sold a darn thing and came out on the good side. But I do believe I was lucky in how it turned around. Since then, I have got more away from individual stocks (with my new purchases at least) and have tried to boost my bonds a bit.

I believe the record shows -37% return for the S&P500 for the year but that doesn't come close to telling the story of what was happening at the time.
Last edited by rai on Tue Jan 10, 2017 10:34 am, edited 4 times in total.
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Wakefield1
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Re: How Bad was 2008, really?

Postby Wakefield1 » Tue Jan 10, 2017 10:23 am

I believe the goings on that cumulated in the 2008 crisis did damage and harm working people and I believe to this day that there is still damage in that there is more real unemployment and the present economy is a bit weaker today than it would be had the run up to and then the crisis not been as it was. I was surprised that the tentacles of the bloated runaway real estate craze and profiteering manipulations had become so entwined with the total economy as to have been able to almost pull it down.
I am suspicious today of what I see as continued efforts to inflate real estate and to push higher house prices under the guise of easy money or "helping". But the easy money doesn't help when it simply drives the cost of buying (and continuing to own or even rental rates) a house higher. {Medical care/health insurance system?] [Higher education system and the enormous money poured in and via the Student Loan Debt system?] Possible bubbles subject to manipulation and profiteering similar to but smaller than Real Estate?

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Watty
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Re: How Bad was 2008, really?

Postby Watty » Tue Jan 10, 2017 10:32 am

DetroitRick wrote:Frankly, with all the stuff going on, the thing that sticks most in my head is noting sometime in late 2008 or early 2009 that the rush-hour gridlock in my area was totally gone.


I had forgotten that, but that was true in Atlanta too.

The price of gas also dropped like a rock, from over $4 a gallon to less than $2 in just a couple of months.

Getting the less expensive gas was nice but it was sort of scary too since it showed just how much things had changed and emphasized how bad the economy was.

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Re: How Bad was 2008, really?

Postby Artsdoctor » Tue Jan 10, 2017 10:33 am

Sheepdog wrote:How bad was 2008? Were you accumulating? Were you senior and living off of your savings? There have been some good and interesting comments in answering your question. I will submit the near panic thread which I started on October 9, 2008 at the height of the collapse as my answer: Read viewtopic.php?t=25126l, which has been updated over the years by me and others. It was tough for some of us.


This post is worth looking at. I remember reading it in real time.

It's very easy to look at a chart 7 years after the fact. It's a completely different experience going through it while it's happening.

I was very fortunate to have had this forum. It was a frightening time, and I jotted down my emotions while it was happening so that I would never forget the intensity of the fear. I was still in accumulation mode and seeing the balances plummet was overwhelming. I worked much, much more to save much, much more--in order to fool myself that the total portfolio balance wasn't dropping as fast as it really was.

Had it not been for this forum, I would have started selling off in March 2009 which, in retrospect, would have been an incredily stupid thing to do. But when you're looking into the abyss, you have no idea how far down it really is.

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Re: How Bad was 2008, really?

Postby avalpert » Tue Jan 10, 2017 10:37 am

jf89 wrote:A lot of doom and gloom about the drop here. Were ALL banks really in danger of going under?

Yes, they were. I was facilitating a meeting of large bank CFOs on September 13th, 2008 - it is impossible I think to understate the very real fear in that room. The entire modern financial system was under a type of stress that, while not quite completely unimagined, was completely untested. Extraordinary steps were taken by government, in the heat of an election at that by a President whose party was theoretically ideologically opposed to those types of steps, that were necessary but not guaranteed to work. We got lucky that the outcome fell on the positive side of the odds and not the negative - there is no guarantee it will work next time. There is no guarantee the political courage to act will be there.

In my experience, many were hiring.

This is a great example of why it is important to collect and analyze macro statistics rather than individual accounts. The data on the employment picture is more than clear, your personal experience not withstanding. It took over six years for the US to return to the level of employed people we had at the start of 2008 - and the distribution of employment shifted permanently in the process in a way that creates societal costs we are still paying.

All in all, it did not turn out to be like the 30's - though it very well could have - but the threat was real and the costs severe. Trying to act like it was all no big deal, even out of ignorance or naivete, is a recipe for watching it happen again and next time making it even more difficult for the political courage to rise to the occasion.

ResearchMed
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Re: How Bad was 2008, really?

Postby ResearchMed » Tue Jan 10, 2017 10:43 am

centrifuge41 wrote:
jpsfranks wrote:I remember the particular point that really terrified me was after a major money market fund "broke the buck" and suddenly it seemed like nothing was safe anymore. The federal government stepped in and temporarily guaranteed money market funds and for deposit accounts increased the FDIC limit to $250k to avoid a catastrophic cascade of withdrawals, but even with these kinds of extraordinary steps it seemed like the Treasury and the Fed were running out of fingers to stick into the proverbial dike. For a short period it really did feel like the entire global financial system was going to unravel.

I didn't make any rash moves, but I'm not going to pretend it wasn't really scary.

Yeah, when a big money market fund broke the buck, it showed that even safe assets weren't necessarily safe! How could a money market fund ever get a haircut? If a money market fund is not safe, then, it gave a sense of further danger to holding bonds, let alone stocks and housing.

One bond fund, Schwab Yieldplus, lost 30%+. Prior to the great recession, it had performed fine. Who knew how much toxic mortgage-backed loans the fund contained. Who knew how bad those bonds were. Who knew if other bonds could get hit like this?

All the way through 2010 and 2011 at least, things still felt gloomy. The worst had passed in America, but not everyone felt that way, not was it obvious during day-to-day life. There was still news of contagion with European PIIGS countries and a risk of a double-dip recession. Job growth was still slow even after 2011. It really made the recession feel 4 years long, or longer, depending on who you asked.

[emphasis added]

It was worse than that for some people:

Here is a post from another thread (from June, 2015)

Miriam2 wrote:We learned that parking our money in a safe investment - a money market fund at TD Ameritrade - was not safe.

In September 2008, I heard something about "the Reserve Fund" and I thought "oh no." I went into our TD Ameritrade accounts on line and immediately tried to sell our Reserve money market fund. It was frozen solid. The SEC froze it immediately when Lehman imploded and the Reserve Company's money markets - the Reserve Primary Fund and the Reserve Yield Plus Fund - "broke the buck" and were worth LESS than the $1 per share we had all assumed all money market funds would be worth.

Now, in June 2015, I am looking at my TD Ameritrade statement and it still says "Reserve Yield Plus Fund in Liquidation" - meaning about 5% of it is STILL frozen solid like an iceberg.

Slowly through distributions we have received most of our funds back, at a rate of about .98 cents on the dollar. Not too terrible, but the freezing of our funds for several years was really scary. Who would have thought that money market funds were not safe and our funds could be frozen?? And it was not some light-weight fund - it was the original and oldest US money market fund.

Of course, there is already a Wiki on it! www.bogleheads.org/wiki/the_2008_money_market_crisis

[emphasis added]

Some people would have been DELIGHTED to get their money with a 1% haircut, or 2%, but that wasn't the problem.
The money, for some, was FROZEN.

And this was the supposedly safe money.

(By comparison, if the choice was, say, losing one's home or not knowing where next week's food was coming from, that 30% haircut at Schwab might even have looked pretty good... at the time...)

People were genuinely worried about whether the FDIC insured bank accounts were going to remain safe.
They even increased the FDIC amount insured per account, from $100k to $250k.
(But was it really going to be *safe*? Who really knew, back then. Everything else was topsy turvey.)

RM
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Tamalak
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Re: How Bad was 2008, really?

Postby Tamalak » Tue Jan 10, 2017 10:43 am

Sheepdog wrote:How bad was 2008? Were you accumulating? Were you senior and living off of your savings? There have been some good and interesting comments in answering your question. I will submit the near panic thread which I started on October 9, 2008 at the height of the collapse as my answer: Read viewtopic.php?t=25126l, which has been updated over the years by me and others. It was tough for some of us.


I love that thread and I still find it a source of strength and inspiration. I kind of peg it in my mind as the "good" panic thread - panicking early (not at the bottom) and rationally, recognizing that what you're doing goes against buy and hold. As opposed to the "bad" panic thread where the single poster that most pushes buy and hold flips out and starts talking about capitulating as if it were part of the plan all along viewtopic.php?t=30085 . Every time Taylor comes out with his 100-quote spampile I look to see if he's added anything about plan B. Not yet :confused

brad.clarkston
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Re: How Bad was 2008, really?

Postby brad.clarkston » Tue Jan 10, 2017 10:48 am

MrNewEngland wrote:It was bad... really bad. And the current culture in this county has make it obvious that people have forgotten about it and how we got to such a bad place.


+1 but I'd add a few more "bad's" to it.

With that said while I was stupid and lost a lot more than 50% I've found that God does favor the stupid and I've recovered mostly to luck.

Granted for me retirement won't be in my 50's or 60's because of it.

rai
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Re: How Bad was 2008, really?

Postby rai » Tue Jan 10, 2017 10:50 am

it really does depend on how old you are (as well as how much you have to lose).

If someone had $100K and lost 50% that's no big deal especially if you are 30 years old.

If someone is 50 years old and had $4M and lose 50% that's $2,000,000. On some days you'd see a loss of $200K+ (for example) and those days were not fun.

I know (likely) we here on Boglehead forum are better informed and we know the history of the stock market. Have read several books myself so I know that fluctuations and drops are natural, necessary and in the long run a good thing.


I believe the one single largest drop on the DOW is 22% (Back Monday 1987) I know that's the DOW but if "Stocks" lost 22% in one day some with $4M could see $880,000 lost in a single day.

Thats why I said it's worse if you were a high nest egg person and if you were older overall. I don't mean to say losing $22K (if you have a $100K stock position) is fun but it's livable more so than $880K loss in one day.

I was around in 1987 but didn't have anything invested I was still in college. So I can't relate to that. The dot com bubble I was 35 years old just began investing in any large measure, so it really didn't effect me. But 2008-9 were real bad (to me) and I believe the breath and depth of the loss was felt in all corners of the stock market around the world. Not sure if Dot com bubble was really that bad as it probably didn't effect the Blue Chip non-tech stocks as much.
"Life is what happens to you while you're busy making other plans" - John Lennon. | | | | "You say that money, isn't everything | | But I'd like to see you live without it." - Silverchair

jf89
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Re: How Bad was 2008, really?

Postby jf89 » Tue Jan 10, 2017 11:00 am

avalpert wrote:
jf89 wrote:
In my experience, many were hiring.
This is a great example of why it is important to collect and analyze macro statistics rather than individual accounts.


[Note: My response sounds really contentious when I read it back, but I assure you it's not meant that way AT ALL. It's more a stream of conscious... thinking "out loud" in writing.]

I'm not sure why. So that I could have felt less comfortable in staying the course? Joined the echo chamber of people talking about how horrible the world is and uncertain the future is?

Maybe it would have gone better had people not watched the news all day and been told the world was coming to an end. It's a bit of a self-fulfilling prophecy that can cause spiraling. That also helped to push the Great Depression along as people THOUGHT something bad would happen, so they stopped spending and pulled their money out of banks... which amplified the other factors.

Yes, people should be informed. But I have no faith that I or 99% of the population knows what to do with that information, so I will largely continue to do nothing and stay the course regardless of the news. The vast majority of people would probably be better off if they did the same. If US history repeats, I'll have done the right thing. If Japanese history repeats or something truly unique happens, I and 98% of the population (some people might get it right just by dumb luck) will be working until we're 90... but at least we'll have company!
"Save as much as you can, diversify diversify diversify, and you can't go wrong with tech stocks" | -First investing advice I recall from my parents in the 90's (two outta three ain't bad)

avalpert
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Re: How Bad was 2008, really?

Postby avalpert » Tue Jan 10, 2017 11:10 am

jf89 wrote:
avalpert wrote:
jf89 wrote:
In my experience, many were hiring.
This is a great example of why it is important to collect and analyze macro statistics rather than individual accounts.


[Note: My response sounds really contentious when I read it back, but I assure you it's not meant that way AT ALL. It's more a stream of conscious... thinking "out loud" in writing.]

I'm not sure why. So that I could have felt less comfortable in staying the course? Joined the echo chamber of people talking about how horrible the world is and uncertain the future is?


The why has less to do with how you personally feel in that moment than what you do afterwards. It is important to see beyond your personal circumstances so that you have empathy for those who weren't as lucky and are there to support them. It is important to do so so that you are willing to take the steps to mitigate the risk of it happening to you the next time and not operate under the assumption that you are a protected class. It is important because none of us in the modern world are isolated islands and appreciating the broader environment helps us both as individuals and as a society to select viable courses of action.

And yes, it is important because if things had gone slightly differently over the course of 3 days in mid-September 2008 being comfortable staying the course would have been a terrible mistake. The future is uncertain, resilient people aren't the ones who ignore that uncertainty they are the ones who are open to adapting to it.

rai
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Re: How Bad was 2008, really?

Postby rai » Tue Jan 10, 2017 11:23 am

Without getting into political talk, I have to wonder how much of the recovery has been off the back of the US debt and (maybe other countries as well)? I don't understand the mechanism of how the US (and the rest of the world governments stepped in), but I see Trillions back in the Stock market (positive) yet Trillions in US Debt (negative) and I'm wondering if those are related or just two un-related bits of information.
"Life is what happens to you while you're busy making other plans" - John Lennon. | | | | "You say that money, isn't everything | | But I'd like to see you live without it." - Silverchair

MI_bogle
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Re: How Bad was 2008, really?

Postby MI_bogle » Tue Jan 10, 2017 11:29 am

This thread reminds me of the story of the shoeshine boy

It's amazing how an 8 year bull market has completely erased the sheer panic of the Great Recession for some people

As Buffett said, the rearview mirror is always clearer than the windshield.

I guess in this case we've driven so far that the recession is out of view.

As Graham said, Wall Street people learn nothing and forget everything

Engineer250
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Re: How Bad was 2008, really?

Postby Engineer250 » Tue Jan 10, 2017 11:41 am

I like to rewatch the PBS Frontline Documentary "Inside the Meltdown". It takes place early 2009 before Obama took office. After some of the initial things Bernanke and Paulson had done but with a huge fear for what was going to happen next, what the next shoe to drop would be and whether or not anything would be enough to stem the bleeding.

I agree with others that it wasn't just your 401k value. We didn't know if there was going to be a bottom. It was Great Depression all over again, so many people losing jobs and their homes with no hope of climbing back out again. I bet if you did a survey you'd see Bogleheads statistically kept their jobs during it more than the "average" person. Why? Because a person who hasn't held a full time job since 2008, might be living with their parents (and I don't just mean millenials, I mean boomers moving in with their elderly parents due to lack of options) and doesn't have a 401k or any real savings to speak of isn't going to care about index investing so they aren't here.

I worked in what turned out to be a "safe" industry, but that wasn't clear at the time. Many wondered how far the effects of the crash were going to go. We felt safe if things didn't get worse, but we couldn't be confident they wouldn't. It was absurd that a "financial" crisis would take down insurance companies...and auto makers. No one predicted that. I disagree it was only bad if you were close to retirement and no big deal if you were young. I know many young people who never recovered, mostly due to bad luck about where they had gotten their first jobs. I know many other 60-somethings who "retired early" with what was in their 401k after layoffs and are doing fine now.

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Re: How Bad was 2008, really?

Postby Grt2bOutdoors » Tue Jan 10, 2017 11:47 am

How bad was it? Let's see - we had two major financial companies collapse, one seemingly overnight (Lehman) another not too far behind (Bear Stearns) whose stock price had once seen a high of $170 per share only to be sold for $2 per share to JPM Chase. We had zero trust on Wall Street, reputable firms could not borrow money at ANY price, with the exception of Goldman Sachs, Morgan Stanley wound up selling a 20% equity stake to the Japanese. Banks were going out of business, Countrywide Mortgage imploded, Washington Mutual was taken over by JPM Chase at the behest of the government, Wells Fargo took over Wachovia - again at the behest of the government (well, not entirely true, they beat Citibank out to buy them). Tremendous mortgage foreclosure - people who bought were really "renting" their homes because they had little to no equity in their homes from the outset. When they lost their jobs, they could not keep up and to make matters worse, the prices of homes were dropping overnight by 20 and 30% because everyone and I mean EVERYONE was putting their home up for sale - want to get price discovery? well, you get it when there is more supply than demand. Remember that next time you hear someone say my house is worth X or my car is worth Y - it ain't worth diddly until the sale has closed and the cash is in your hand. Contracts to buy were being broken everyday because the banks were not providing credit. Why weren't the banks providing credit? because their regulators were telling them to reassess the risk, and when they reassessed they found that the real estate appraisals were not worth the paper they were written on. Tremendous job loss, supplemental nutrition assistance program utilization through the roof, food pantries were making a comeback and not in a good way either, unemployment insurance federally extended to 18 months. Little to no credit generation. You tell me, just how bad was it? The lifeblood of the country is "credit", when credit stops, the country stops. If the country stops, what do you think the value of your paper is worth, especially when major corporations like General Electric could not borrow money at ANY price? If it was not for saner minds at the Federal Reserve and albeit, somewhat in Washington D.C. you would be singing a much different tune today, as would much of the rest of the country. Read the book - The Great Depression by Benjamin Roth - it will give you an idea of just how bad things could have been today.

If you have to take away one thing from this, cash...cold hard cash is king. It may not yield anything, but it is 100% liquid. What happened in 2008? Securities became ILLIQUID overnight, some governmental debt, particularly those backed by mortgages were being discounted by 40-70% overnight. What did that mean? It meant that previously well-capitalized companies who held these securities valued at par or 100% were now in danger of going bankrupt because their liabilities exceeded their assets and not only that they could not convert the securities to cash! Remember, up above? - no credit creation is the downfall of a capitalistic society. No credit - no house, no car, no college education, no healthcare, etc. etc. etc. Always keep some dry powder on reserve, some folks say keep 6-9 months, in this regard, I disagree, better to keep enough to keep you afloat more than your neighbor - keep 2-3 years. Why? well if you need to ask that, then you need to read some more history.
Last edited by Grt2bOutdoors on Tue Jan 10, 2017 1:04 pm, edited 1 time in total.
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LiterallyIronic
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Re: How Bad was 2008, really?

Postby LiterallyIronic » Tue Jan 10, 2017 12:06 pm

I had just graduated from college in December 2008 with a BS in Business Management. Couldn't find a job, except working in a call center for $9.50/hour. I had previously been making $11.50/hour in a student tech support position. I didn't lose any money (on paper or otherwise) like most people on this forum, but I also was barely making ends meet and had nothing to invest so I missed the run-up that occurred over the next couple of years.

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Sheepdog
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Re: How Bad was 2008, really?

Postby Sheepdog » Tue Jan 10, 2017 12:07 pm

"Grt2bOutdoors" ------y.[-
Always keep some dry powder on reserve, some folks say keep 6-9 months, in this regard, I disagree, better to keep enough to keep you afloat more than your neighbor - keep 2-3 years. Why? well if you need to ask that, then you need to read some more history.

Good and valuable comment. Thank you.
However good or bad a situation is, it will change

random_walker_77
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Re: How Bad was 2008, really?

Postby random_walker_77 » Tue Jan 10, 2017 12:12 pm

It was craziness. Ancient firms that had weathered the great depression collapsed. The money market's implicit guarantee to not lose money ("break the buck") was broken. Hidden domino connections were threatening to bring down companies like AIG insurance and GMAC, with the sense that it could spiral out of control and wipe out a lot of companies.

Layoffs everywhere, and hiring freezes. If you lose your job, you know you're probably not getting another one, no matter how good you are.

The bay area house we'd just sold for 700K was estimated at 350K on zillow (tough luck for the new owner). Our investment account at vanguard was down over 1/3. The realization that rebalancing back into stocks might lose me even more money, since stocks had only dropped by half, but have been known to drop 90%. I ended up rebalancing a couple times, but it was very scary.

You're reevaluating risk tolerance and emergency funds. Even if I think/hope that this crash too will rebound in a few years, like '87 or 2000, the nagging risk that this one seems worse and maybe it'll be like Japan and not come back for decades. The scary realization that everyone is scared and not buying stuff, so my industry is seeing revenue plummet. That even if the market does rebound, if I lose my job, I won't have money to invest if I lose my job. That, omg, is my emergency fund big enough to weather 2-3 years of joblessness, b/c no one is hiring so if I get laid off... yikes. Double yikes if I have to move to get a job, as houses are underwater.

Take a look at this excellent by nisiprius, viewtopic.php?t=79939#p1139732, which was after a small decline in 2011. It captures the moment.

AlwaysAStudent
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Re: How Bad was 2008, really?

Postby AlwaysAStudent » Tue Jan 10, 2017 12:29 pm

I was just barely attempting the whole adult thing at that time. I graduated in 2006, I had started putting money into a 401k around 2004 but it was probably only 1-3%. We bought a house in April 2007. Work was slowing down and we were getting home sick in the beginning of 2008 so in Aug of 2008 I got a job closer to home and we moved. The house was on the market for a few months before we decided to rent it out for a couple years, until the market turned around. I have no clue what was going on with my 401k at the time, I continued to contribute somewhere between 6-10% through 2008-2009 but my balance was probably too small for me to have see a big change anyways. I do know that I enjoyed several really nice increases over the last 3-4 years but that is when I started peeking occasionally.

The biggest impact of 2008-2009 for us is that the house we bought, at probably the highest possible market, has never recovered and we still rent it out. The rent pays for itself at this point for at least a couple years we took a loss of around $200/month plus maintenance/vacancies.

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tadamsmar
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Re: How Bad was 2008, really?

Postby tadamsmar » Tue Jan 10, 2017 12:44 pm

For me, this was the most memorable thread from that period:

viewtopic.php?t=30085

There is a serious discussion about "having to take less risk" by some influential Bogleheads. I think that phrase is just a euphemism for capitulation. That aspect of Plan B seem to imply that the B stands for "Barn that the horse just left".

But other aspect of Plan B like working longer, spending less, and the more radical "moving to lower expenses" make sense.

Here's a quote from that thread"

I am not sure if the Titanic is analogous to the Bogleheads investment plan, but many people were led to believe that it is the safest way to invest for the future. Now that the Bogleheads' ship is listing 40 degrees, we are told that it might be time for some to abandon ship. If these poor souls had known from the beginning that the Bogleheads' ship was sinkable, they might not have got on it.


viewtopic.php?p=366633#p366633
Last edited by tadamsmar on Tue Jan 10, 2017 12:51 pm, edited 2 times in total.

Grt2bOutdoors
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Re: How Bad was 2008, really?

Postby Grt2bOutdoors » Tue Jan 10, 2017 12:49 pm

jf89 wrote:A lot of doom and gloom about the drop here. Were ALL banks really in danger of going under? In my experience, many were hiring. I'll give a slightly different view:

I was fresh out of college, my industry was hiring (not banking, another industry), and the only unemployed people I knew were classmates that were underemployed for their degree. None of my parents, or my friends' parents, or friends, or family friends lost their jobs. Recruiters from outside the industry I wanted to be in told us to go to grad school or find a spot in the military rather than seeking jobs. I was obviously accumulating at that point, and my manager mentioned that I and the other new hire were lucky to be coming in to our 401k at a low point in the market.

I didn't watch or read any news then, so above is all I knew at the time. I had an almost naive confidence that people were over exaggerating how bad things were, and everything would be alright anyway, so I just decided to ignore all the peripheral stuff.

Maybe ignorance really is bliss. Maybe my geographic area wasn't hit that hard? I doubt that, my local economy is pretty tied in to the rest of the country... especially in banking. Knowing much, much more about markets and the world in general now, I still have that (probably naive) confidence that everything will be alright if things go to hell again. Added to it is a sort of twisted view that even if everything isn't alright, everyone is in the same boat, and I wouldn't have known what to do as it was happening anyway.


You were not sitting at the right table, in the right room and at the right time. You tuned yourself out - no news, no tv and you did not know anyone who was detrimentally impacted by these events. That's okay, you got to keep your sleep, hair, blood pressure and likely escaped with no ulcers. You have no idea how close we came to the foot of the abyss where you don't recover. In general, lots of ignorance back then, even today, most of the country has no idea of just how bad it really was.
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bradshaw1965
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Re: How Bad was 2008, really?

Postby bradshaw1965 » Tue Jan 10, 2017 12:54 pm

2008 has been the only time in my adult life where not only my financial capital but also career capital was at high risk. Lots of layoffs, furloughs and foreclosures for friends and family made the tuning of finances for maximum return without slack for unexpected outcomes a much clearer view of real risk. Eight years on and as my career capital starts to diminish I try navigate a glide path to retirement that keeps those lessons to heart.

J295
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Re: How Bad was 2008, really?

Postby J295 » Tue Jan 10, 2017 12:58 pm

It was quite bad.

Sure, if you knew for certain there was light at the end of the tunnel in two years, or three years, or five years, etc. that's a different story.
But, nobody knew when the end of the tunnel would arrive, or if or how it might arrive.

The equity markets overall recovered quite nicely and quickly. Next time it will be ?????

Take a good look at what was happening. The significant companies that simply ceased to exist. Money market funds losing value. Bank failures. Job losses. Bailouts. Etc.

This type of stuff is not comparable to typical "noise" and a 10% market drop. By far, overall, the worst I have experienced since I started investing in 1979.

itstoomuch
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Re: How Bad was 2008, really?

Postby itstoomuch » Tue Jan 10, 2017 1:03 pm

lostdog wrote:
Pill wrote:My accounts dropped 42%. No need to panic, stay the course.

You don't lose until your panic and sell.


+1

How old are you and how much did you have invested?0
4 buckets: SS+pension;dfr'd GLWB VA & FI anntys, by time & $$ laddered; Discretionary; Rental. Do OK any 2 bkts. LTCi. Own, not asset. Tax 25%. Early SS. FundingRatio (FR) >1.1 Age 67/70

rgs92
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Re: How Bad was 2008, really?

Postby rgs92 » Tue Jan 10, 2017 1:04 pm

What doesn't kill you makes you stronger.

Personally at the time I was at 55/45 stocks to bonds (as I generally always am by my habit of very frequent rebalancing because I'm paranoid).
So when stocks were down 56%, bonds were up like 10% or something, so my whole portfolio (about $1.1 million at the time) sunk to about $850,000 at the lowest point. Since this still seemed like a healthy nest egg, I actually felt pretty good about things.

I did have some contortions to go through to explain things to my wife though, but it forced me to get my own thoughts in order and have perspective. Now that I have close to $1.4 million, I feel that I can take this pain again if need be.

bigred77
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Re: How Bad was 2008, really?

Postby bigred77 » Tue Jan 10, 2017 1:05 pm

I graduated in 2008 and was lucky enough to have a job lined up in an industry that was booming (oil and gas) so I was able to sidestep the worst of the recession. My classmates who did not go into the same industry did not fare very well. And then when the recovery started they were competing with 08, 09, and 10 grads for the same entry level jobs. It was a tough time to enter the workforce.

My mom was laid off and I saw her peers struggle to keep their jobs. I can't imagine going through that kind of employment stress while also seeing your life savings drift away, especially for those who were hoping to retire within 10 years or so.

jf89
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Re: How Bad was 2008, really?

Postby jf89 » Tue Jan 10, 2017 1:05 pm

Grt2bOutdoors wrote:
jf89 wrote:A lot of doom and gloom about the drop here. Were ALL banks really in danger of going under? In my experience, many were hiring. I'll give a slightly different view:

I was fresh out of college, my industry was hiring (not banking, another industry), and the only unemployed people I knew were classmates that were underemployed for their degree. None of my parents, or my friends' parents, or friends, or family friends lost their jobs. Recruiters from outside the industry I wanted to be in told us to go to grad school or find a spot in the military rather than seeking jobs. I was obviously accumulating at that point, and my manager mentioned that I and the other new hire were lucky to be coming in to our 401k at a low point in the market.

I didn't watch or read any news then, so above is all I knew at the time. I had an almost naive confidence that people were over exaggerating how bad things were, and everything would be alright anyway, so I just decided to ignore all the peripheral stuff.

Maybe ignorance really is bliss. Maybe my geographic area wasn't hit that hard? I doubt that, my local economy is pretty tied in to the rest of the country... especially in banking. Knowing much, much more about markets and the world in general now, I still have that (probably naive) confidence that everything will be alright if things go to hell again. Added to it is a sort of twisted view that even if everything isn't alright, everyone is in the same boat, and I wouldn't have known what to do as it was happening anyway.


You were not sitting at the right table, in the right room and at the right time. You tuned yourself out - no news, no tv and you did not know anyone who was detrimentally impacted by these events. That's okay, you got to keep your sleep, hair, blood pressure and likely escaped with no ulcers. You have no idea how close we came to the foot of the abyss where you don't recover. In general, lots of ignorance back then, even today, most of the country has no idea of just how bad it really was.


But the questions is, what would I or others have done with that information? Probably filled the guest room mattress with cash then left it there to this day telling ourselves that we'd reinvest it during the next crash. I think there was too much ignorance in the other direction with too many panicking and filling mattresses when in reality the best course of action for most is to plan ahead (emergency funds, living below your means) and remain calm when everyone sitting at those other tables starts freaking out.

When it all comes down to it, if the economic system collapses I'll be standing in a bread line with 98% of the population whether I reacted (most likely incorrectly) or not. And those people that reacted correctly are still likely in a pretty bad spot, too.
"Save as much as you can, diversify diversify diversify, and you can't go wrong with tech stocks" | -First investing advice I recall from my parents in the 90's (two outta three ain't bad)

pinhead
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Re: How Bad was 2008, really?

Postby pinhead » Tue Jan 10, 2017 1:06 pm

If you bought stocks 30 years ago, it would have the same value in 2008. Thats how bad it was.

bigred77
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Re: How Bad was 2008, really?

Postby bigred77 » Tue Jan 10, 2017 1:12 pm

pinhead wrote:If you bought stocks 30 years ago, it would have the same value in 2008. Thats how bad it was.


I don't know about that. $1,000 invested in the S&P 500 in 1978 was worth like $20,000 in 2008.


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