Which crash have you seen it before it is coming?

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TheHouse7
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Re: Which crash have you seen it before it is coming?

Post by TheHouse7 »

I see this next crash happening in about 10 years once I'm done accumulating. :twisted:
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DrGoogle2017
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Re: Which crash have you seen it before it is coming?

Post by DrGoogle2017 »

1987: I saw the advance/decline on TV, more declines than advances, called in my brokerage and bought put on the market Friday, market crashed Monday.

2000-2002: I missed the sign, market was exuberant, we had good jobs and life was good. Didn’t see crash coming. I lost big money.

2004-2007: housing crash. I almost bought a new house 3 times, each time I googled for housing bubble, there were all kinds of article out there. Something holding me back. Was accumulating cash, ready to pounce. I finally saw the housing bubble burst in 2008-2009.
Had I bought in 2005,2006,2007, I would have been hurt big time.

2008-2009: I’m not sure why I was in cash and individual bonds, my Roth account in CD to satisfy the 5 year holding. But the biggest mistake was my husband listened to Cramer and he said to wait for more drop. I should have slowly added some equities, but I didnt. I only finally added some equities when my husband got a job in Fall 2009. I remember transferring his money from his old 401k to his new 401k.

So I did see 3 out of 4 crashes.
Last edited by DrGoogle2017 on Wed Nov 29, 2017 10:27 pm, edited 3 times in total.
binvesting
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Re: Which crash have you seen it before it is coming?

Post by binvesting »

I didn't live in the US before 2007 and didnt know what stock market was in the early 2000's so didnt know about crashes as well :happy
During the summer of 2008 I was a software intern at one of the big companies that went bankrupt in Wall street :) I was there until Aug 2008, and then the company went bankrupt in sept.
I remember one meeting in late Aug when the VP called everybody for a meeting saying 'the stock has fallen to $4 but do not worry since we had survived times when the stock went to $1 and goldman sachs also fell pretty badly so we all are in it, and somehow we'll survive' or something like that (all of this from my memory).
And I still didnt know what was happening(naivety at its heights :D ). The funny thing is, a lot of other interns were like that.
The full timers would mention something like see you back as a full timer if we survive this or something like that :( So i knew something was not right but coudn't predict so much damage..
I came back to college and still didn't pay much attention as to what was happening until the company went bankrupt in a month :oops:
So, I was in the middle of it but couldn't see it :D
I have learnt much about investing in the last 3-4 years so I am not stupid anymore but my history tells me I wouldnt be able to predict anything even after a day of crash :mrgreen: But luckily I have the trusted forum where much more knowledgeable folks post things for me to read and learn :happy
weltschmerz
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Re: Which crash have you seen it before it is coming?

Post by weltschmerz »

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El Greco
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Re: Which crash have you seen it before it is coming?

Post by El Greco »

I was in a cigar bar one afternoon in 2000. The bar had several TV monitors all tuned to CNBC. I was looking up at one of them checking out the stock ticker, when a guy who I never would imagine as being someone who invested in stocks, suddenly scowled and cursed when he saw that one of his way-overvalued dot.com stocks had lost a couple of points. I remarked to him that he shouldn't be surprised as the stock was ridiculously overvalued and wouldn't keep going up forever. His response was to give me a dirty look and ignore me. At that moment, I knew that the market would imminently crash. Sort of like that story when Joseph Kennedy knew the market was going to crash in 1929 when the shoe shine boy started giving him stock tips.
Unfortunately, I didn't dump all my stocks like Kennedy purportedly did. The upside was that I wasn't too heavily invested at the time and piled into the market after the plummet. On the other hand, I never saw 2007 coming. I saw the real estate bubble for sure, but didn't connect it to a market crash.
Goal33
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Re: Which crash have you seen it before it is coming?

Post by Goal33 »

I knew when watching the Sopranos that Christopher Moltisanti was going to crash before it happened.
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EyeYield
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Re: Which crash have you seen it before it is coming?

Post by EyeYield »

I see the great crash of 2028, where the Dow loses 5000 points during that year and falls to a five year low of 36000.
You've been warned!
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ccieemeritus
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Re: Which crash have you seen it before it is coming?

Post by ccieemeritus »

I predicted the dot com crash in 1998, 1999, 2000, and 2001. Eventually I was right. I was heavily invested and took a hit. But I had enough cash for a down payment and bought a silicon valley house in August 2001.

I did not predict the 2008 crash, but we held our shares through it (proved our risk tolerance!). My wife is proud that she bought some extra shares of index funds on the lowest day.

I also predicted the bitcoin crash. In fact I've been predicting that for quite some time now. All that remains is to see if I'm (eventually) correct.

Eventually proton and neutron decay will cause the universe to entropy into nonexistence. At that point, bitcoin will be worthless. So there!
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Hawaiishrimp
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Re: Which crash have you seen it before it is coming?

Post by Hawaiishrimp »

1. I have called the 2008 recession & 25% housing price drop; I sold my condo & cash out anticipating it.
2. I purposely not to take a higher paying role in the same company since I knew the role will probably be taken over by another person.
3. I called Washington Mutual bankruptcy and asked my friends to take out all their money before it happened.

True stories above.
I save and invest my money, so money can make money for me, so I don't have to make money eventually.
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czeckers
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Re: Which crash have you seen it before it is coming?

Post by czeckers »

I totally see the next crash coming. It's coming for sure. I just don't know when or why or how bad. :twisted:

I predict a bitcoin crash. Bitcoin remind me of tulips. Pretty tulips.
The Espresso portfolio: | | 20% US TSM, 20% Small Value, 10% US REIT, 10% Dev Int'l, 10% EM, 10% Commodities, 20% Inter-term US Treas | | "A journey of a thousand miles begins with a single step."
Stormbringer
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Re: Which crash have you seen it before it is coming?

Post by Stormbringer »

BogleMelon wrote: Wed Nov 29, 2017 3:18 pm Another entertainment post here. Is there any wise bogle's who have seen or even felt any of the previous crashes coming? And if so, what makes you feel that "something is not right here", and have you done anything about it?
I sold six of my rental properties in 2006. It was incredibly obvious to me that property values had gotten way, way out of whack relative to rents. I started buying again in 2010.
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ROIGuy
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Re: Which crash have you seen it before it is coming?

Post by ROIGuy »

livesoft wrote: Wed Nov 29, 2017 3:20 pm Many people have seen 13 of the last 5 crashes before they happened.
+1 LOL
ROIGuy
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Re: Which crash have you seen it before it is coming?

Post by ROIGuy »

We just past the 10 year anniversary of the peak of the 2003-2007 market peak. I even went back to try to find market news from that day, suggesting that a crash was upon us and that day was the peak; couldn't find anything specific. Though I know most people recognize March 9th, 20009 as the bottom of the market. It also shows you the psychology of how people look at and remember market peaks and valleys.

I actually did recognize the bottom of the last bear market. (only 2 days past the absolute bottom) I was visiting a client (who are well to do), and she made a comment that if this market keeps going the way it was, they will be living in a cardboard house soon. I remember the saying about "blood in the streets" and slowly started buying back in. I didn't get the full value of buying back in at the bottom, but I did start going back into the market at the right time. But to really make big time money, you have to call the top and the bottom of the market cycle...which no one does.
exoilman
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Re: Which crash have you seen it before it is coming?

Post by exoilman »

I've been waiting for a 10% correction for two years now. My "dry powder" is getting dryer.

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msk
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Re: Which crash have you seen it before it is coming?

Post by msk »

I did not foresee the Japan crash, the mid 1980s crash, the dot.com crash, the RE crash, etc. I did make good money out of the recoveries that followed. Bought Call Options on margin. Looking forward to the next one. In the meantime I am 100% in stocks worldwide and enjoying the ludicrous 20+% gain this past year.

Nearest I came to see the credit crunch crash looming was when I found that 30-year-old kids had $30+k outstanding on credit cards. Remarked to a banker on how preposterous such a situation was and he responded that the banks are safe, all insured. Lo and behold! One early failure was the insurer AIG! Never understood why an absurd credit situation in the US drags the whole world down. Still, I feel a bit safer invested worldwide... IB has good margin rates for buying those Call Options following the next crash. Fear and Greed...
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Re: Which crash have you seen it before it is coming?

Post by Hawkeye_Saver »

I feel like we're due for a huge correction in farmland here in the Midwest. Prices have come down around 20% since their peak in 2013 but that's following a 400% increase in the decade leading up to it. A drought in 2011 and 2012 got things way out of line, and now farmers have struggled to turn a profit for the past 3 years and land values aren't in line with underlying fundamentals. I'd say they're still about 40% overpriced.
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Re: Which crash have you seen it before it is coming?

Post by rustymutt »

The feelings of a crash hang with anyone of much age, whose invested in stocks, and bonds. I set those emotions to the side, because while they are real threats, I don't have a clue as to when it happens, and most people don't. Prolonged periods of unexpected growth and happiness come with a price. Reversion to the mean does occur in all markets over time period that can't be figured out by me. Timing is the game, and it's impossible to beat the markets throughout history, we've be better off just buying and holding them.

:moneybag
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Top99%
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Re: Which crash have you seen it before it is coming?

Post by Top99% »

I was completely blind sided by the tech bubble popping (I was very naïve) but I did see the housing bubble popping before it came. But, I didn't think it would be as *bad* as it was and didn't take any action beyond rebalancing into stocks in 2009. I do see college tuition as a bubble that will pop at some point.
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workerbeeengineer
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Re: Which crash have you seen it before it is coming?

Post by workerbeeengineer »

Like some others here, I saw that something was completely out of whack with house prices/ home loans prior to the great recession. I could not believe the re-fi offers where one could re-fi and cash out at more than 100% total of appraised value (10 years later I vaguely recall ads on TV for 125% of appraised value!). However, I also did not in any way take advantage of my observations and also did nothing to reposition our portfolio. As we were 80% ish equities at the time, DW and I suffered 50% ish paper loss at the bottom. We did however completely stop looking at the portfolio as it was going down. At least 2 years of statements from Fido and Vanguard were left unopened. Fortunately...job was solid, 30 yr fixed rate loan on the house, and no need to try to sell it. Kept on contributing to retirement accounts, although did stop contributing to our child's 529 plan for a few years.

Maybe somewhat related comment as follows: more recently, we have all heard how Wells Fargo Senior Management set up performance metrics and incentives for their working level employees to cross-sell products. If the customer did not want the other products, the employees forged the customers name and opened fake accounts in order to make their quotas/ keep their jobs. I recall all the Financial talking heads, especially Jim Cramer, saying how wonderful Wells was, and how they had the retail bank industry secret sauce. At the time, I decided that I would never go into a Wells Fargo branch as I would fall under the spell of the secret sauce. It never entered my mind that large scale fraud/ identity theft was the real secret sauce. FWIW, Cramer has subsequently admitted he was fooled. What's actionable here is to use the old noggin and think hard! if it sounds too good to be true.... Maybe Bitcoin is today's secret sauce???
aristotelian
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Re: Which crash have you seen it before it is coming?

Post by aristotelian »

I wouldn't say I predicted 2008 in the way it played out so dramatically, but it was clear to me that housing was in a bubble and not sustainable. Alas, we did buy a house in early 2008 at the peak (although in a LCOL area). While I did not anticipate the near collapse of the financial system, I did expect a correction so I was not surprised when the market dropped, so I stayed invested and waited it out.

I also predicted a 10% correction in 2017. Maybe it will come in 2018, and it might be a little more than that. Who knows.
Andyrunner
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Re: Which crash have you seen it before it is coming?

Post by Andyrunner »

None. 2000 or earlier, I was too young to understand the market. I was right out of school in 2007 and lucky enough to have a job in 2008 when the market crashed, even luckier I didn't have any money in the market so most of my investing started at the low point.

My issue now is my whole investing life has been the 2008 crash then the next several years of little returns. Today since I have never personally seen a market this aggressive and now I have money, I'm a bit scared. I figure until I start seeing something I'll keep riding it out. My other issue is, as soon as a crash happens, my wife, who would keep it all in a savings account, will say 'I told you so'.
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BogleMelon
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Re: Which crash have you seen it before it is coming?

Post by BogleMelon »

Andyrunner wrote: Thu Nov 30, 2017 8:34 am My other issue is, as soon as a crash happens, my wife, who would keep it all in a savings account, will say 'I told you so'.
If I were you, I would tell her every time she goes shopping and prices are higher: "I told you, that inflation will eat your bank account" :twisted:
"One of the funny things about stock market, every time one is buying another is selling, and both think they are astute" - William Feather
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nisiprius
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Re: Which crash have you seen it before it is coming?

Post by nisiprius »

For a few years, I actually tried keeping a diary of my premonitions and predictions (positive and negative, mostly negative). It is well worth doing. I had no idea just how selective my memory really was until I tried keeping records. Try it! You forget just how often the phone rings and you feel a sudden certainty that you know what the call is... because you only remember the times you were right.

Wordsworth wrote a very odd, but honest poem, "Strange Fits of Passion Have I Known," about a man riding on a horse at night to his sweetheart's cottage:

And now we reached the orchard-plot;
And, as we climbed the hill,
The sinking moon to Lucy's cot
Came near, and nearer still....

What fond and wayward thoughts will slide
Into a Lover's head!
"O mercy!" to myself I cried,
"If Lucy should be dead!"

I didn't retain my diary. And, sure enough, the only thing I actually remember writing down in it was my prediction that the OS/2 operating system would fail--in the days when Microsoft was still holding seminars at my workplace telling my bosses to marshal their resources behind OS/2 because they said was the real deal, and that Windows was just a quick, unimportant little one-off hack for home users. In other words... the only thing I remember was the time I was right.
Annual income twenty pounds, annual expenditure nineteen nineteen and six, result happiness; Annual income twenty pounds, annual expenditure twenty pounds ought and six, result misery.
Admiral
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Re: Which crash have you seen it before it is coming?

Post by Admiral »

I confidently predicted the Dow would crash as soon as it hit 20,000.

Glad I didn't act on my prescience. :sharebeer
diy60
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Re: Which crash have you seen it before it is coming?

Post by diy60 »

I liquidated all of my investments around Oct 2007 due to personal reasons and dumb luck, about 1M at the time. I could have been golden, however the problem was getting out was a lot easier than getting back in. Took a few years to get back in. It was probably a wash for me, or even few hundred thousand lost opportunity. What did I learn? . . . . stay the course with an AA you are comfortable with. I'm retired now and can make due with my fixed position as well as a 50% loss in my equity position.
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Portfolio7
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Re: Which crash have you seen it before it is coming?

Post by Portfolio7 »

Andyrunner wrote: Thu Nov 30, 2017 8:34 am None. 2000 or earlier, I was too young to understand the market. I was right out of school in 2007 and lucky enough to have a job in 2008 when the market crashed, even luckier I didn't have any money in the market so most of my investing started at the low point.

My issue now is my whole investing life has been the 2008 crash then the next several years of little returns. Today since I have never personally seen a market this aggressive and now I have money, I'm a bit scared. I figure until I start seeing something I'll keep riding it out. My other issue is, as soon as a crash happens, my wife, who would keep it all in a savings account, will say 'I told you so'.
Ben Carson at 'A wealth of common sense' has a blog post that shows what would happen if you invested only at market peaks, and simply never sold, even in the worst crashes. It's a good story, and it's why so many Bogleheads are relatively unconcerned about corrections.

A market crash is like getting knocked on your backside in a football game. You know it will happen sometime, so you take the hit, pop back up, and keep playing.

You can talk to your wife now, and confirm to her that there will be a crash (someday), and yet you'll still be way better off than if you'd left the money in cash.

http://awealthofcommonsense.com/2014/02 ... ket-timer/
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buccimane
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Re: Which crash have you seen it before it is coming?

Post by buccimane »

saltycaper wrote: Wed Nov 29, 2017 6:01 pm I was gliding through the intersection, and all of a sudden, I realized I wasn't going to make it. It was kind of strange, really, that moment before impact. I wasn't fearful. I was angry.
Same thing happened to me.. Crazy, I had 2-3 seconds to be pissed at myself for the mistake before impact
A man convinced against his will is of the same opinion still
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JoMoney
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Re: Which crash have you seen it before it is coming?

Post by JoMoney »

nisiprius wrote: Thu Nov 30, 2017 8:47 am...the only thing I actually remember writing down in it was my prediction that the OS/2 operating system would fail--in the days when Microsoft was still holding seminars at my workplace telling my bosses to marshal their resources behind OS/2 because they said was the real deal, and that Windows was just a quick, unimportant little one-off hack for home users. In other words... the only thing I remember was the time I was right.
If the prediction was during the time that Microsoft was actively involved with OS/2, you could write that story as either a hit or a miss, depending on how you wanted to spin it...
Yes, the OS/2 operating system as furthered by IBM failed, but Microsoft took their developments on OS/2 and re-branded it as Windows NT which turned into Windows 2000 then Windows XP (which ended the version of DOS/Windows home operating systems were running) and every version of Windows since.
https://en.wikipedia.org/wiki/OS/2#1990:_Breakup
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Re: Which crash have you seen it before it is coming?

Post by montanagirl »

I definitely saw it coming in 2007, but only because a link somewhere led me to a housing bubble blog that was just roiling with linked stories and first hand observations in comments, hundreds and hundreds per day. I didn't have that much, about 100k, and my job was shaky, so I moved everything to money market until 2011. I was 58 and knew I might need it as a bridge to social security. I knew I was missing a big opportunity because I'd been there before, but did not know when we were at or even near the bottom.

Later I found out that yeah, the CEO was on my boss's case to get rid of me. So it was just as well.
randomguy
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Re: Which crash have you seen it before it is coming?

Post by randomguy »

JoMoney wrote: Fri Dec 01, 2017 3:08 am
nisiprius wrote: Thu Nov 30, 2017 8:47 am...the only thing I actually remember writing down in it was my prediction that the OS/2 operating system would fail--in the days when Microsoft was still holding seminars at my workplace telling my bosses to marshal their resources behind OS/2 because they said was the real deal, and that Windows was just a quick, unimportant little one-off hack for home users. In other words... the only thing I remember was the time I was right.
If the prediction was during the time that Microsoft was actively involved with OS/2, you could write that story as either a hit or a miss, depending on how you wanted to spin it...
Yes, the OS/2 operating system as furthered by IBM failed, but Microsoft took their developments on OS/2 and re-branded it as Windows NT which turned into Windows 2000 then Windows XP (which ended the version of DOS/Windows home operating systems were running) and every version of Windows since.
https://en.wikipedia.org/wiki/OS/2#1990:_Breakup
Not really. NT was developed independently of OS/2 by Cutler. They wrote a bunch of compatibility code (like the way you could run windows apps on OS/2 2.0) and were going to call it OS/2 3.0 but the core of windows NT owes a lot more to VMS than OS/2.

For fun go back over the last 10 years of board posting about the coming crash. We have predictated every single one of them. And about 20 more:) And if you don't act on your predication, I find it hard to take it too seriously:)
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Re: Which crash have you seen it before it is coming?

Post by garlandwhizzer »

I did see the 2007-9 collapse coming in time to prepare for it by selling sufficient equity to provide for several years of living expenses. When people can borrow a half million dollars for a mortgage with nothing more than a signature, no documentation of income or employment whatsoever, it doesn't take a genius to realize that it won't end well. Ditto when average home prices in prime California real estate communities are selling for 15+ times the average household income in those communities. It wasn't a question of if, it was a question of when.

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nedsaid
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Re: Which crash have you seen it before it is coming?

Post by nedsaid »

When the shoe shine boys start giving out stock tips, that is the time to worry. I get uneasy feelings when I see stuff like that but I have no predictive abilities to foresee crashes. In 1999, I was getting alarmed when I so many people getting interested in day trading, including a family member. One of my co-workers was trying to trade her workplace savings plans. I knew something was wrong but didn't know the market would crash. Same thing with 2006-2007, I couldn't get over how hot real estate was getting and how relatively large mortgages were being offered to people with modest incomes. I knew something was amiss with subprime but had no idea how big of a problem it was. When you see exuberance that cannot be explained by economic fundamentals, it might be time to cut back your investments.
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Re: Which crash have you seen it before it is coming?

Post by asif408 »

I can't say I saw the 2007-2009 market crash, but the bubbliciousness that preceded it was overwhelming. I remember one guy who changed jobs every year was suddenly trying to flip homes and telling me how much money he was making. Then I remember family members pressuring me to purchase a home, because of how "great" an investment it was. And another friend who was a mortgage broker with almost no education and flashing all his wealth. Basically I saw a bunch of unstable people making lots of money essentially doing very little work. Didn't seem like a recipe for long-term sustainability.

I didn't make a home purchase during that crazy time and glad I didn't.
WhiteMaxima
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Re: Which crash have you seen it before it is coming?

Post by WhiteMaxima »

Bond crash because a sudden up of inflation. Now, the interest is still low at history level. Of course, equity price will crash once the borrowing cost is up.
Lynx310650
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Re: Which crash have you seen it before it is coming?

Post by Lynx310650 »

Housing crash of 2008. I was a student then with a negative net worth, so I wasn't in a position to profit from it (I wouldn't have known how anyways) nor was I exposed since I didn't own a home or have money in the stock market.

I mean maybe this is just hindsight is 20/20 or I hung out with a lot of prescient people or whatever, but most everyone I was with felt the same way, that housing prices would crash pretty hard. Seems like everyday I was reading some story about how prices were going up all the time, adjustable rate mortgages, people investing in 5 houses, whatever.

What I didn't see coming nor imagine was the spillover to the overall economy and how disastrous everything got. Maybe I was just ignorant. I just had no idea how these big banks were so exposed to the housing market and whatnot. I thought housing prices would crash and we'd be in for something like the early 2000s recession, not the depths we saw in the late 2000s.
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Re: Which crash have you seen it before it is coming?

Post by smectym »

As a matter of historical fact, there were numerous forums and websites in 2007 and previous, including one called the “Housing Bubble Blog,” that were devoted to screaming to high heaven about the dangers of the runup in housing prices and predicting an inevitable crash. Indeed, the current conventional view that only a handful of gifted prophets foresaw “The Big Short” is the next thing to an urban legend. Sure, not everyone who saw it coming “went short” in some scheme to emerge a billionaire from the flames of the Hindenberg; some just didn’t buy, or sold their house; others did nothing (and as it turned out in the long run did fine, as prices rebounded in a V-shaped recovery that still continues today.)
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Re: Which crash have you seen it before it is coming?

Post by smectym »

To my knowledge, there is no verified historical record of a shoe-shine boy (cab driver? barber?; the apocryphal service provider in such anecdotes varies [and that’s a red flag for veracity]) providing a stock tip to a Wall Street pro, causing the pro to intuitively surmise, “Oh boy, when the guy who cuts my hair is talking stocks, that’s a sell signal!”

Not saying no such credible record exists and perhaps someone can point me to it.

Usually what we see is vague statements attributed to supposed stock market savants like J.P. Morgan or [insert other savant] sharing their hard-won, street-wise nugget of market lore that “when my cabbie starts giving me stock tips, it’s time to sell”—something along those lines.

The common pattern in all such anecdotes is (1) the “lowly” and therefore implicitly comic status of the would-be stock-tipper, as contrasted with (2) the experienced Wall Street pro who, receiving the “tip,” reflects that when the underlings start getting interested in stocks it’s long past time for the “smart money” to take a breather and hang aloof from the sweaty mob.

His privileged clients will presumably act on his insight and preserve capital; the “little people,” including his cabbie, will take the fall and feel the pain.
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Re: Which crash have you seen it before it is coming?

Post by Dandy »

You can often sense a bubble but bubbles can last for years. I did sense the bubble in 2000 but did little about it. In 2007-8 I did sense a bubble and being close to retirement did retain more cash assets and sold my company stock.

There are signs -- but they can be misleading especially about -- when and it often requires quite massive changes to make a real difference e.g cutting back from 70% to 40% equity allocation. Who is up for that in the midst of a bull market?

Before 2000 my CD only mother in law was talking about buying some stock and selling it in 9 months to fund a wedding gift. That was a clear sign.

In 2007-08 houses were selling over the asking price the day they went on the market. My neighbor said he was going to tear down his house and build a bigger one and make $300k profit to fund his retirement. It was a "sure" thing.

I think the story goes that Rockefeller got out of the market when the shoe shine boy was giving out stock tips.

We are in a nice long bull market which makes people more open to equities and higher allocations. Seem to see a lot of posts where aggressive allocations seem the norm even close to or in retirement. People worrying if the cut back from 70 or 80% to 60% they will lose out on growth. (less concern about asset depletion, lower human capital, etc).

That is what a nice long bull market does -- it subtly changes your confidence and dulls your risk tolerance. You start seeing the size of your next egg as kind of stable vs knowing that the equity portion can drop dramatically and will do so once or twice in a long retirement. The US economy is doing well so the tail wind may last awhile. I see the bull market affecting my thinking and it is hard to fight it. I like seeing my assets going upward vs putting more money in lowly fixed income pay a few percent at best. :oops:
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Re: Which crash have you seen it before it is coming?

Post by technovelist »

smectym wrote: Sat Dec 02, 2017 12:58 am As a matter of historical fact, there were numerous forums and websites in 2007 and previous, including one called the “Housing Bubble Blog,” that were devoted to screaming to high heaven about the dangers of the runup in housing prices and predicting an inevitable crash. Indeed, the current conventional view that only a handful of gifted prophets foresaw “The Big Short” is the next thing to an urban legend. Sure, not everyone who saw it coming “went short” in some scheme to emerge a billionaire from the flames of the Hindenberg; some just didn’t buy, or sold their house; others did nothing (and as it turned out in the long run did fine, as prices rebounded in a V-shaped recovery that still continues today.)
Yes, I read thehousingbubbleblog.com back in the day. It is still there, and the signs of bubbledom seem even stronger now than they were before the last housing crash.

It is entirely possible that the next housing crash will be worse than the last one, because they have almost no room to cut interest rates to goose the economy.
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Re: Which crash have you seen it before it is coming?

Post by F150HD »

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Last edited by F150HD on Sat Dec 02, 2017 10:56 am, edited 1 time in total.
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Re: Which crash have you seen it before it is coming?

Post by snowox »

I was in the transportation industry for 30 years so felt/survived a few meltdowns but both 2000 and 2008 I knew something was up the way tonnage was down and companies were further out on there receivables but not much I could do but sell equipment I wasn't using. 2008 was worse because not enough companies went out of business and everyone was trying to survive for so much longer it hurt that much more. Glad to be out of that crap business. But in both cases I didnt see what was coming the way it did. Though just a typical business cycle
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Re: Which crash have you seen it before it is coming?

Post by abuss368 »

I have not seen a crash coming per se or perhaps I would have profited from it big time!

Nonetheless, I have experienced the:

* S&L Loan Crisis
* Asian Financial Crisis
* Tech Bubble
* Real Estate & Financial Crisis
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Re: Which crash have you seen it before it is coming?

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You don't need to be able to correctly foretell a crash. I assume that train is always on the tracks heading my way and plan accordingly. We all take risks by being investors. Inevitably, risk shows up!
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Re: Which crash have you seen it before it is coming?

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Taylor has amazing stories to tell about the Great Depression and the impact on American life.
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Re: Which crash have you seen it before it is coming?

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It isn't hard to see a crash coming. Both the tech and housing crashes were the obvious result of clearly irrational financial activity. Are we at that point now?? I don't see the same craziness yet.

The problem is how do you turn this foresight into profitable action? I was able to take advantage of the tech crash somewhat be avoiding the tech sector when investing in the late 1990s. Likewise I was able to take some advantage of the housing crash over-weighting REITs after the crash. But trying to time the market by selling stocks prior to the crash and then buying back in afterwards really wasn't all that successful. To really make it work you have to be right TWICE - when you sell and when you buy back. It's very difficult to pull that off. The internet is full of people who sold out ok before the housing crash but could not pull the trigger to get back in because of fear. Or people who sold to early and then got back in too early. Or all sorts of other missteps.

I think the Boglehead approach of mechanical re balancing is the best method.
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Re: Which crash have you seen it before it is coming?

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Ged wrote: Sat Dec 02, 2017 10:29 am It isn't hard to see a crash coming. Both the tech and housing crashes were the obvious result of clearly irrational financial activity. Are we at that point now?? I don't see the same craziness yet.
I'm not sure about tech, but I believe the housing market is even more insane than it was in 2007. Apparently you can borrow 100% of the property value pretty easily. Also, prices were already back at all-time highs as of about 18 months ago (https://www.realtor.com/news/real-estat ... -may-2016/).
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Re: Which crash have you seen it before it is coming?

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I have a buddy who is a CPA and invests in the stock market. In the late nineties, we used to meet at a local tavern on Friday nights to discuss the world's problems over a couple of Guinness pints. The one thing we always talked about was the dot.com "craze" and how eventually it was going to crash soon like the Hindenburg. Of course, we did not predict the actual date, but there was no doubt for both of us that the valuations of dot.coms were ridiculous and could not be sustained. As for the Great Recession, while I was concerned at the time about the housing market and derivatives, I never thought in 2006 that a recession was imminent or that it would be so nasty. :shock:
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Re: Which crash have you seen it before it is coming?

Post by Valuethinker »

DrGoogle2017 wrote: Wed Nov 29, 2017 9:49 pm 1987: I saw the advance/decline on TV, more declines than advances, called in my brokerage and bought put on the market Friday, market crashed Monday.

2000-2002: I missed the sign, market was exuberant, we had good jobs and life was good. Didn’t see crash coming. I lost big money.

2004-2007: housing crash. I almost bought a new house 3 times, each time I googled for housing bubble, there were all kinds of article out there. Something holding me back. Was accumulating cash, ready to pounce. I finally saw the housing bubble burst in 2008-2009.
Had I bought in 2005,2006,2007, I would have been hurt big time.

2008-2009: I’m not sure why I was in cash and individual bonds, my Roth account in CD to satisfy the 5 year holding. But the biggest mistake was my husband listened to Cramer and he said to wait for more drop. I should have slowly added some equities, but I didnt. I only finally added some equities when my husband got a job in Fall 2009. I remember transferring his money from his old 401k to his new 401k.
That was rational if your spouse was unemployed and you had a need or potential need to dip into savings.

BTW if you got back in in Fall 2009, you've made a lot of money on stocks from there-- be thankful for that.

I have awful timing *but* I had to make a big pension contribution in January 2009. Fortunately I didn't pay too much attention, because that money has had a great run.
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Re: Which crash have you seen it before it is coming?

Post by Valuethinker »

technovelist wrote: Sat Dec 02, 2017 11:26 am
Ged wrote: Sat Dec 02, 2017 10:29 am It isn't hard to see a crash coming. Both the tech and housing crashes were the obvious result of clearly irrational financial activity. Are we at that point now?? I don't see the same craziness yet.
I'm not sure about tech, but I believe the housing market is even more insane than it was in 2007. Apparently you can borrow 100% of the property value pretty easily. Also, prices were already back at all-time highs as of about 18 months ago (https://www.realtor.com/news/real-estat ... -may-2016/).
The home lenders should be in a lot better financial position and the securitization has been a lot less rabid. There is not (to any great extent) so much apparent rapacious "create it and flog it" around Mortgage Backed Securities.

Whilst there have been spikes, I suspect most homeowners are not as leveraged. Inflation since 2008 means real housing prices are generally still lower than the 2006 peaks, I believe?

There is a sub prime car loan bubble, but its scale is much much smaller.

US Commercial RE markets are probably over valued, and there's a lot of debt which is distressed (or will be) around shopping malls in particular.

None of these markets is on the same scale of hurt that a US housing crash caused the last time.

If there is a crash out there, it's probably something that we don't see coming-- geopolitical disruption for example. We all seem to be fairly sanguine about the proxy war between Iran and Saudi Arabia which keeps escalating, for example.

Meanwhile, I am buying bitcoin as the perfect financial hedge ;-).
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Re: Which crash have you seen it before it is coming?

Post by Valuethinker »

Dandy wrote: Sat Dec 02, 2017 7:07 am You can often sense a bubble but bubbles can last for years. I did sense the bubble in 2000 but did little about it. In 2007-8 I did sense a bubble and being close to retirement did retain more cash assets and sold my company stock.

There are signs -- but they can be misleading especially about -- when and it often requires quite massive changes to make a real difference e.g cutting back from 70% to 40% equity allocation. Who is up for that in the midst of a bull market?
It's funny you should say that ... having always held cash + equities, I now find myself having bought quite a lot of bonds in the last few months.
Before 2000 my CD only mother in law was talking about buying some stock and selling it in 9 months to fund a wedding gift. That was a clear sign.

In 2007-08 houses were selling over the asking price the day they went on the market. My neighbor said he was going to tear down his house and build a bigger one and make $300k profit to fund his retirement. It was a "sure" thing.

I think the story goes that Rockefeller got out of the market when the shoe shine boy was giving out stock tips.
Bernard Baruch, and it was elevator operators. Try though I might, I have been unable to find elevator operators to give me similar stock tips in the last few years ;-).

(there's also historical evidence Baruch did not sell out, and took heavy losses in the Crash of 1929).
We are in a nice long bull market which makes people more open to equities and higher allocations. Seem to see a lot of posts where aggressive allocations seem the norm even close to or in retirement. People worrying if the cut back from 70 or 80% to 60% they will lose out on growth. (less concern about asset depletion, lower human capital, etc).

That is what a nice long bull market does -- it subtly changes your confidence and dulls your risk tolerance. You start seeing the size of your next egg as kind of stable vs knowing that the equity portion can drop dramatically and will do so once or twice in a long retirement. The US economy is doing well so the tail wind may last awhile. I see the bull market affecting my thinking and it is hard to fight it. I like seeing my assets going upward vs putting more money in lowly fixed income pay a few percent at best. :oops:
This should be printed & stuck on the wall of every investor.

Humans are not well equipped by evolution to note gradual changes in anything-- weather, risk tolerance, etc. In fact that's one of the ways that snipers and infiltrators have always worked.
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