"The stock market is officially in a correction... here's what usually happens next"

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ImmigrantSaver
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Re: "The stock market is officially in a correction... here's what usually happens next"

Post by ImmigrantSaver » Fri Feb 09, 2018 2:57 pm

DanMahowny wrote:
Fri Feb 09, 2018 1:46 pm


When my FB friends were posting their 401k statements online, I went to 20/80.
:shock: :shock: :shock:

People do that ?!?

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pennstater2005
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Re: "The stock market is officially in a correction... here's what usually happens next"

Post by pennstater2005 » Fri Feb 09, 2018 3:02 pm

Folks around me are talking about the stock market decline and “what to do”. I don’t say a word anymore.

I do always think about that Bogle quote that Taylor posted.
“If you think nobody cares if you're alive, try missing a couple of car payments.” – Earl Wilson

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FIREchief
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Re: "The stock market is officially in a correction... here's what usually happens next"

Post by FIREchief » Fri Feb 09, 2018 3:10 pm

Taylor Larimore wrote:
Fri Feb 09, 2018 2:54 pm
DanMahowny wrote:
Fri Feb 09, 2018 1:46 pm
Okay, I'll admit it. I'm a market timer now.

It started in 2009 when I went from 70/30 to 100% equities because they were cheap IMO.

Stayed 100/0 until Oct 2017- went to 30/70 because equities are overpriced IMO.

When my FB friends were posting their 401k statements online, I went to 20/80.

I'll get back in after equities decline 40%.

DanMahnowny:

What will you do if equities don't decline 40%?

Best wishes.
Taylor
Or, if they go up 60% before the 40% decline??

(Thanks for the OP Taylor. Great post.)
I am not a lawyer, accountant or financial advisor. Any advice or suggestions that I may provide shall be considered for entertainment purposes only.

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220volt
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Re: "The stock market is officially in a correction... here's what usually happens next"

Post by 220volt » Fri Feb 09, 2018 3:13 pm

I like this one for people who are thinking about fiddling too much with their accounts. Myself included.
The greatest enemy of a good plan is the dream of a perfect plan.” Stick to the good plan.
― John C. Bogle, The Little Book of Common Sense Investing: The Only Way to Guarantee Your Fair Share of Stock Market Returns
"If I had only followed the advice of financial analysts in 2008, I'd have a million dollars today, provided I started with a hundred million dollars" - Jon Stewart

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FIREchief
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Re: "The stock market is officially in a correction... here's what usually happens next"

Post by FIREchief » Fri Feb 09, 2018 3:14 pm

When I first checked the market earlier today, we were officially OUT of the correction! woo hoo!
Then I checked again and we were clearly back into a correction. boo hoo
Then again, we were out again. Now we're back in and sinking.....

Oh well, still 50 minutes to go. :sharebeer

Maybe this is that rocky, bumpy bottom we've read about. We'll see.
I am not a lawyer, accountant or financial advisor. Any advice or suggestions that I may provide shall be considered for entertainment purposes only.

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DanMahowny
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Re: "The stock market is officially in a correction... here's what usually happens next"

Post by DanMahowny » Fri Feb 09, 2018 3:14 pm

Taylor Larimore wrote:
Fri Feb 09, 2018 2:54 pm
DanMahnowny:

What will you do if equities don't decline 40%?

Best wishes.
Taylor
Hi Taylor,

Indeed, if the market rockets higher, then I missed out on substantial gains. And that would suck for me. Also, I'm well aware of that possibility. I would not recommend my "strategy" to anyone. If members of forum are looking for advice, they would be wise to listen to YOU, not me. Stay the course IS the correct path.

I got lucky in 2009 and made lots of money during the last 9-10 years. I'm retired and didn't want to go risk major declines. Maybe I'll get lucky again, or maybe not.

Love your posts.
Funding secured

rad doc
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Re: "The stock market is officially in a correction... here's what usually happens next"

Post by rad doc » Fri Feb 09, 2018 3:23 pm

DanMahowny wrote:
Fri Feb 09, 2018 1:46 pm
Okay, I'll admit it. I'm a market timer now.

It started in 2009 when I went from 70/30 to 100% equities because they were cheap IMO.

Stayed 100/0 until Oct 2017- went to 30/70 because equities are overpriced IMO.

When my FB friends were posting their 401k statements online, I went to 20/80.

I'll get back in after equities decline 40%.

I will admit too. 2 months back, I got a large lump sum. Assessed and determined with valuations and everyone call for correction I would wait. Worked out as of now. Plan is to DCA in large chunks every 4 months, unless we see larger correction in which case it may be time to go all the way in to my 70/30 desired allocation. Bad?

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Re: "The stock market is officially in a correction... here's what usually happens next"

Post by RRAAYY3 » Fri Feb 09, 2018 3:30 pm

DanMahowny wrote:
Fri Feb 09, 2018 1:46 pm
Okay, I'll admit it. I'm a market timer now.

It started in 2009 when I went from 70/30 to 100% equities because they were cheap IMO.

Stayed 100/0 until Oct 2017- went to 30/70 because equities are overpriced IMO.

When my FB friends were posting their 401k statements online, I went to 20/80.

I'll get back in after equities decline 40%.
Kewl. And if that 40% decline never comes? Or comes after its risen 50%?

RRAAYY3
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Re: "The stock market is officially in a correction... here's what usually happens next"

Post by RRAAYY3 » Fri Feb 09, 2018 3:31 pm

DanMahowny wrote:
Fri Feb 09, 2018 3:14 pm
Taylor Larimore wrote:
Fri Feb 09, 2018 2:54 pm
DanMahnowny:

What will you do if equities don't decline 40%?

Best wishes.
Taylor
Hi Taylor,

Indeed, if the market rockets higher, then I missed out on substantial gains. And that would suck for me. Also, I'm well aware of that possibility. I would not recommend my "strategy" to anyone. If members of forum are looking for advice, they would be wise to listen to YOU, not me. Stay the course IS the correct path.

I got lucky in 2009 and made lots of money during the last 9-10 years. I'm retired and didn't want to go risk major declines. Maybe I'll get lucky again, or maybe not.

Love your posts.
Ah, retired. Smart ... once you “make it” no reason to take on the risk

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Re: "The stock market is officially in a correction... here's what usually happens next"

Post by The Wizard » Fri Feb 09, 2018 3:54 pm

DanMahowny wrote:
Fri Feb 09, 2018 1:46 pm
...I'll get back in after equities decline 40%.
So we're having a 40% drop this time?
Oh my!!
:shock: :shock:
Attempted new signature...

bhsince87
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Re: "The stock market is officially in a correction... here's what usually happens next"

Post by bhsince87 » Fri Feb 09, 2018 4:21 pm

bhsince87 wrote:
Fri Feb 09, 2018 12:48 pm
Interesting times!

I looked at my balance around 10:00 AM, and I was up $18,000 for the day.

Looked again at 12:30, down $18,000 for the day!

I have a hard time believing humans are doing this.

But whatevs. I'll be buying more on Monday.
Closed up $22k for the day! That's some crazy volatility But also why we should make no snap decisions.

I'll still be buying more on Monday.
Retirement: When you reach a point where you have enough. Or when you've had enough.

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Taylor Larimore
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Re: "The stock market is officially in a correction... here's what usually happens next"

Post by Taylor Larimore » Fri Feb 09, 2018 4:38 pm

DanMahowny wrote:
Fri Feb 09, 2018 3:14 pm
Taylor Larimore wrote:
Fri Feb 09, 2018 2:54 pm
DanMahnowny:



Best wishes.
Taylor
Hi Taylor,

Indeed, if the market rockets higher, then I missed out on substantial gains. And that would suck for me. Also, I'm well aware of that possibility. I would not recommend my "strategy" to anyone. If members of forum are looking for advice, they would be wise to listen to YOU, not me. Stay the course IS the correct path.

I got lucky in 2009 and made lots of money during the last 9-10 years. I'm retired and didn't want to go risk major declines. Maybe I'll get lucky again, or maybe not.

Love your posts.
Dan:

Thanks for the reply, but I am still curious: "What will you do if equities don't decline 40%?"

Thank you and best wishes.
Taylor
"Simplicity is the master key to financial success." -- Jack Bogle

heyyou
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Re: "The stock market is officially in a correction... here's what usually happens next"

Post by heyyou » Fri Feb 09, 2018 4:55 pm

With all this talk about a correction, I suppose I will check my account balances after the end of this month, same as always.

As mentioned by others, so far this is just a normal fluctuation.

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Re: "The stock market is officially in a correction... here's what usually happens next"

Post by bhluckyusaguy » Fri Feb 09, 2018 5:00 pm

Thanks Taylor for the "stay the course reminder".

With my "lucky touch", I decided to buy the FBALX (Fidelity Balanced Fund) last week with the 50% of funds in Cash Reserves in my HSA. While it would have been better to purchase this week, if I stay the course it should work out with my 5-6 year time horizon.

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Cycle
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Re: "The stock market is officially in a correction... here's what usually happens next"

Post by Cycle » Fri Feb 09, 2018 5:10 pm

DanMahowny wrote:
Fri Feb 09, 2018 3:14 pm

Hi Taylor,

Indeed, if the market rockets higher, then I missed out on substantial gains. And that would suck for me. Also, I'm well aware of that possibility. I would not recommend my "strategy" to anyone. If members of forum are looking for advice, they would be wise to listen to YOU, not me. Stay the course IS the correct path.

I got lucky in 2009 and made lots of money during the last 9-10 years. I'm retired and didn't want to go risk major declines. Maybe I'll get lucky again, or maybe not.

Love your posts.
You may be sitting on the sidelines for the next 40 years. With this strategy, is there a point where you redefine your AA... Like after 35 years waiting for a 40% drop do you finally go for a bit more than 20% equities.

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DanMahowny
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Re: "The stock market is officially in a correction... here's what usually happens next"

Post by DanMahowny » Fri Feb 09, 2018 5:31 pm

Taylor Larimore wrote:
Fri Feb 09, 2018 4:38 pm
Thanks for the reply, but I am still curious: "What will you do if equities don't decline 40%?"
If equities do not decline:
I will do nothing. I believe I have enough money now.
Funding secured

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Artsdoctor
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Re: "The stock market is officially in a correction... here's what usually happens next"

Post by Artsdoctor » Fri Feb 09, 2018 5:48 pm

Although I had a wonderful lunch with a 40-ish fellow Boglehead friend yesterday, it was also a sad experience. As I approached the table, he was checking the market. It was clear the he had been checking the market throughout the day on each of the past several days, and he had sold some of his equity funds as the market swooned. Furthermore, he also taught his 14-year-old son, who had amassed about $7,000 in savings in investments, to sell half of his profits. When I questioned what sort of message he was teaching his son, he replied that "nearly everyone knows that the current market is overvalued; I'm teaching him how to take profits off the table!"

It became clearer over the course of the lunch just how complacent many seemingly intelligent investors have become. Although he had invested through the 2008 downturn, he didn't really rebalance at that time--but he didn't sell either.

It was sobering because he has repeatedly agreed with a "stay the course" mantra. We obviously had a lot to discuss over lunch, and I agreed to be his "calming influence" for the foreseeable future.

Investor psychology is fascinating.

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Re: "The stock market is officially in a correction... here's what usually happens next"

Post by Grt2bOutdoors » Fri Feb 09, 2018 6:26 pm

^^^ That's too bad. The market is still up 20% from a year ago. You make money by letting your winners run and selling your losers. What changed from last week? Absolutely nothing.
"One should invest based on their need, ability and willingness to take risk - Larry Swedroe" Asking Portfolio Questions

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Taylor Larimore
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Re: "The stock market is officially in a correction... here's what usually happens next"

Post by Taylor Larimore » Fri Feb 09, 2018 6:57 pm

Grt2bOutdoors wrote:
Fri Feb 09, 2018 6:26 pm
^^^ That's too bad. The market is still up 20% from a year ago. You make money by letting your winners run and selling your losers. What changed from last week? Absolutely nothing.
Grt2bOutdoors:

Mr. Bogle (who knows more than both of us) would disagree. He would not sell "losers." He would "stay-the-course."

Best wishes.
Taylor
"Simplicity is the master key to financial success." -- Jack Bogle

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Re: "The stock market is officially in a correction... here's what usually happens next"

Post by rerod » Fri Feb 09, 2018 7:05 pm

Taylor Larimore wrote:
Thu Feb 08, 2018 10:27 pm
Bogleheads:

"Stay the course" is not the same as "Buy and hold." Corrections and bear markets can often be an opportunity to rebalance, sell an unwanted fund, tax-loss harvest or move to another company.

Best wishes.
Taylor
Thanks for that Taylor.

But when do you rebalance? After your 10% off target AA? Or a 10% correction?

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Re: "The stock market is officially in a correction... here's what usually happens next"

Post by Grt2bOutdoors » Fri Feb 09, 2018 7:09 pm

Taylor Larimore wrote:
Fri Feb 09, 2018 6:57 pm
Grt2bOutdoors wrote:
Fri Feb 09, 2018 6:26 pm
^^^ That's too bad. The market is still up 20% from a year ago. You make money by letting your winners run and selling your losers. What changed from last week? Absolutely nothing.
Grt2bOutdoors:

Mr. Bogle (who knows more than both of us) would disagree. He would not sell "losers." He would "stay-the-course."

Best wishes.
Taylor
You are absolutely right Taylor. That's why I was following my IPS, didn't sell a thing, bought instead.
"One should invest based on their need, ability and willingness to take risk - Larry Swedroe" Asking Portfolio Questions

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Re: "The stock market is officially in a correction... here's what usually happens next"

Post by Grt2bOutdoors » Fri Feb 09, 2018 7:14 pm

rerod wrote:
Fri Feb 09, 2018 7:05 pm
Taylor Larimore wrote:
Thu Feb 08, 2018 10:27 pm
Bogleheads:

"Stay the course" is not the same as "Buy and hold." Corrections and bear markets can often be an opportunity to rebalance, sell an unwanted fund, tax-loss harvest or move to another company.

Best wishes.
Taylor
Thanks for that Taylor.

But when do you rebalance? After your 10% off target AA? Or a 10% correction?
Do you have an Investment Policy Statement? What does it say? Mine says when there is a 5% deviation up or down from my asset allocation to re-balance back into bonds by selling equities or vice versa. If you are 10% off target AA, my suggestion would be to rebalance back to your stated AA. If a 10% correction results in a substantial deviation from your equity/bond targets, then it's time to rebalance. You would only know that though by looking at your account, don't rely on CNBC or any other news source to decide when.
"One should invest based on their need, ability and willingness to take risk - Larry Swedroe" Asking Portfolio Questions

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Re: "The stock market is officially in a correction... here's what usually happens next"

Post by linenfort » Fri Feb 09, 2018 7:47 pm

The Wizard wrote:
Fri Feb 09, 2018 8:14 am
MrPotatoHead wrote:
Fri Feb 09, 2018 1:40 am

LOL, apparently there is a MrPotatoHead and a mrpotatoheadsays, two different user ids.
I don't wanna get between the two of you if you have a disagreement!
Yukon say that again.
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Re: "The stock market is officially in a correction... here's what usually happens next"

Post by fipt2030 » Fri Feb 09, 2018 7:55 pm

DanMahowny wrote:
Fri Feb 09, 2018 1:46 pm
Okay, I'll admit it. I'm a market timer now.

It started in 2009 when I went from 70/30 to 100% equities because they were cheap IMO.

Stayed 100/0 until Oct 2017- went to 30/70 because equities are overpriced IMO.

When my FB friends were posting their 401k statements online, I went to 20/80.

I'll get back in after equities decline 40%.

Perfect timing, not sure will work for everyone all the time

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HomerJ
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Re: "The stock market is officially in a correction... here's what usually happens next"

Post by HomerJ » Fri Feb 09, 2018 8:08 pm

linenfort wrote:
Fri Feb 09, 2018 7:47 pm
The Wizard wrote:
Fri Feb 09, 2018 8:14 am
MrPotatoHead wrote:
Fri Feb 09, 2018 1:40 am

LOL, apparently there is a MrPotatoHead and a mrpotatoheadsays, two different user ids.
I don't wanna get between the two of you if you have a disagreement!
Yukon say that again.
Idaho if that joke makes sense.

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Mel Lindauer
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Re: Victoria's Message

Post by Mel Lindauer » Fri Feb 09, 2018 8:11 pm

Taylor Larimore wrote:
Fri Feb 09, 2018 10:11 am
Victoria:

I appreciate your message more than you know.

Thank you and best wishes.
Taylor
I echo Taylor's comment, Victoria. It's comments like yours that make our labor of love worthwhile. Knowing that we had a positive impact of people's lives is very heady stuff, and it's all the reward we need to keep on keeping on.

See you in October.
Best Regards - Mel | | Semper Fi

make_a_better_world
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Re: "The stock market is officially in a correction... here's what usually happens next"

Post by make_a_better_world » Fri Feb 09, 2018 8:28 pm

I use dollar cost averaging with monthly automatic deposits into the core VG index funds. When the market drops like this, I increase the amounts of each automatic deposit. It is tough to predict where it will bottom out but I see it as American business on sale. I guess you could call this a veiled form of market timing.

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Re: "The stock market is officially in a correction... here's what usually happens next"

Post by Miriam2 » Fri Feb 09, 2018 9:38 pm

VictoriaF wrote: Hi Taylor,

I want to thank you again for the guidance I received from you, Mel, and Bob Stowe in October 2001, when I came to Morningstar Vanguard Diehards. The dot-com bubble had just popped, I was out of work and my 401(k) was depleted due to high Lucent stock holdings. I asked a specific question, but instead of answering it, you, Mel, and Bob have guided me through the principles of developing a strategy and staying the course.

You frequently say that you live in a house that Jack has built. Similarly, I am now enjoying retirement that you, Mel, and Bob have masterminded for me.

Declines, corrections, recessions, and other market declines tend to focus our attention on the investing essentials. Let this decline bring attention of numerous readers of this site to your ageless advice and serve them well in the long run.

Thank you, Taylor!

Victoria
Victoria, a beautiful post :happy

PS - At the close of the market today, you were #8 in Taylor's Highly Esteemed S&P 500 contest, so you apparently also learned how to predict the markets quite well :wink: 8-)

https://www.lostoak.com/ls/diehards/con ... fault.aspx

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TD2626
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Re: "The stock market is officially in a correction... here's what usually happens next"

Post by TD2626 » Fri Feb 09, 2018 9:56 pm

Taylor Larimore wrote:
Thu Feb 08, 2018 10:27 pm
"Stay the course" is not the same as "Buy and hold." Corrections and bear markets can often be an opportunity to rebalance, sell an unwanted fund, tax-loss harvest or move to another company.
These seem like good points. One question:

By "sell an unwanted fund" would you be referring to a situation like this:

An investor has large accumulated capital gains in diversified but overly complex or high expense ratio stock fund(s) and wants to consolidate into a smaller number of stock funds, like "total market" index funds, while not having to realize large amounts of taxable gains. Should they consider using the opportunity of a bear market or correction to accomplish this while tax loss harvesting and keeping overall stock/bond ratio constant through rebalancing?

Case59
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Re: "The stock market is officially in a correction... here's what usually happens next"

Post by Case59 » Fri Feb 09, 2018 10:04 pm

Taylor: Thanks as always for your time, commitment, and steadying words.
"Most quotations on the internet are incorrect."-Mark Twain

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Re: "The stock market is officially in a correction... here's what usually happens next"

Post by Pigeye Brewster » Fri Feb 09, 2018 10:49 pm

Strayshot wrote:
Fri Feb 09, 2018 7:55 am
VictoriaF wrote:
Fri Feb 09, 2018 7:52 am
Taylor Larimore wrote:
Thu Feb 08, 2018 10:27 pm
"Stay the course" is not the same as "Buy and hold." Corrections and bear markets can often be an opportunity to rebalance, sell an unwanted fund, tax-loss harvest or move to another company.

Best wishes.
Taylor
Hi Taylor,

I want to thank you again for the guidance I received from you, Mel, and Bob Stowe in October 2001, when I came to Morningstar Vanguard Diehards. The dot-com bubble had just popped, I was out of work and my 401(k) was depleted due to high Lucent stock holdings. I asked a specific question, but instead of answering it, you, Mel, and Bob have guided me through the principles of developing a strategy and staying the course.

You frequently say that you live in a house that Jack has built. Similarly, I am now enjoying retirement that you, Mel, and Bob have masterminded for me.

Declines, corrections, recessions, and other market declines tend to focus our attention on the investing essentials. Let this decline bring attention of numerous readers of this site to your ageless advice and serve them well in the long run.

Thank you, Taylor!

Victoria
This is awesome. :sharebeer
No surprise. I always enjoy posts by Victoria from Black Swan Lake. :beer

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Re: "The stock market is officially in a correction... here's what usually happens next"

Post by nedsaid » Fri Feb 09, 2018 11:00 pm

VictoriaF wrote:
Fri Feb 09, 2018 7:52 am
Taylor Larimore wrote:
Thu Feb 08, 2018 10:27 pm
"Stay the course" is not the same as "Buy and hold." Corrections and bear markets can often be an opportunity to rebalance, sell an unwanted fund, tax-loss harvest or move to another company.

Best wishes.
Taylor
Hi Taylor,

I want to thank you again for the guidance I received from you, Mel, and Bob Stowe in October 2001, when I came to Morningstar Vanguard Diehards. The dot-com bubble had just popped, I was out of work and my 401(k) was depleted due to high Lucent stock holdings. I asked a specific question, but instead of answering it, you, Mel, and Bob have guided me through the principles of developing a strategy and staying the course.

You frequently say that you live in a house that Jack has built. Similarly, I am now enjoying retirement that you, Mel, and Bob have masterminded for me.

Declines, corrections, recessions, and other market declines tend to focus our attention on the investing essentials. Let this decline bring attention of numerous readers of this site to your ageless advice and serve them well in the long run.

Thank you, Taylor!

Victoria
Victoria, you brought up an important point. Investors need to develop a strategy. This is why I counsel new investors to write up an Investment Policy Statement. Something about putting thoughts on paper that really helps. Too often people post their portfolios and ask help in picking investments. What I focus on is age appropriate asset allocation, pretty much how much in stocks and how much in fixed income investments. I want new investors to think the big picture first, too often they get embroiled in the details.

Taylor, Mel, and Bob did a great thing for you. You had to learn the Boglehead philosophy first and that made the investment decisions much easier. If they had just told you to buy three funds without understanding the rationale behind it, you probably would not have stuck with it.

Another important point is to have a long term outlook. Too many investors focus on the short-term. Sometimes the only way to deal with market craziness like we are experiencing right now is just to ride it out. Knowing some market history really helps to give a long term perspective and that makes it easier to look beyond short term turbulence.
A fool and his money are good for business.

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Re: "The stock market is officially in a correction... here's what usually happens next"

Post by fortyofforty » Sat Feb 10, 2018 3:59 pm

That's the rub, isn't it? Have to predict when to get in. Have to predict when to get out. Will a 35% decline be close enough? What about 39%? What if it's just 30%? Lots of questions, with no easy answers.
"In a time of universal deceit, telling the truth becomes a revolutionary act." - George Orwell | There are many roads to doublin'. | Original Vanguard Diehard

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VictoriaF
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Re: "The stock market is officially in a correction... here's what usually happens next"

Post by VictoriaF » Mon Feb 12, 2018 10:52 am

Miriam2 wrote:
Fri Feb 09, 2018 9:38 pm
VictoriaF wrote: Hi Taylor,

I want to thank you again for the guidance I received from you, Mel, and Bob Stowe in October 2001, when I came to Morningstar Vanguard Diehards. The dot-com bubble had just popped, I was out of work and my 401(k) was depleted due to high Lucent stock holdings. I asked a specific question, but instead of answering it, you, Mel, and Bob have guided me through the principles of developing a strategy and staying the course.

You frequently say that you live in a house that Jack has built. Similarly, I am now enjoying retirement that you, Mel, and Bob have masterminded for me.

Declines, corrections, recessions, and other market declines tend to focus our attention on the investing essentials. Let this decline bring attention of numerous readers of this site to your ageless advice and serve them well in the long run.

Thank you, Taylor!

Victoria
Victoria, a beautiful post :happy

PS - At the close of the market today, you were #8 in Taylor's Highly Esteemed S&P 500 contest, so you apparently also learned how to predict the markets quite well :wink: 8-)

https://www.lostoak.com/ls/diehards/con ... fault.aspx
Thank you Miriam!

If I win a second Bogleheads contest, I will start a financial newsletter. That will not be a betrayal of my retirement, because I will be reposting Taylor's messages and not do any work.

Victoria
WINNER of the 2015 Boglehead Contest. | Every joke has a bit of a joke. ... The rest is the truth. (Marat F)

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