What Happened to you during the Financial crisis of 2007–2008

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AllStarDaniel
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What Happened to you during the Financial crisis of 2007–2008

Post by AllStarDaniel »

A part of 'staying the course' is riding the market, including really bad times. So I am curious, and would love to learn from people's experience, what happened to you and your stocks and savings during the financial crisis of 2007–2008? How did you ride it out? How did it go? What lessons were learned and what advice would you give to someone just starting who remembers it as a young person. Apparently, studies are showing young people are not willing to invest because of what they saw during 08.
Cleverusername
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Re: What Happened to you during the Financial crisis of 2007–2008

Post by Cleverusername »

Being 100% stocks I learned a powerful lesson in why everyone should have an allocation of bonds as “dry powder”
Housedoc
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Re: What Happened to you during the Financial crisis of 2007–2008

Post by Housedoc »

I was busy working and raising 2 active sons. Wife and I kept contributions the same. I admit I did not check my balance very often. All and all I was glad I was busy and the returns returned! Retired now and loving life.
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cheese_breath
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Re: What Happened to you during the Financial crisis of 2007–2008

Post by cheese_breath »

My portfolio declined about 20%, but I had already been retired 10 years then and had an appropriate AA. Someone younger with a more aggressive portfolio would have lost more on paper, but would have recovered more if (s)he didn't panic and stayed the course.
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GerryL
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Re: What Happened to you during the Financial crisis of 2007–2008

Post by GerryL »

I embraced my ignorance. I thought about shifting my investments around but I had no idea about what could be better … and maybe could even be worse for me. So I just kept doing what I was doing: Maxing out 401k and Roth IRA and leaving the AA well enough alone.

I was lucky in that although the situation at work was getting scary, I managed to stay employed.

I remember a friend (and former colleague) telling me that they had cashed out -- around the bottom. And I remember being shocked.
OkieIndexer
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Re: What Happened to you during the Financial crisis of 2007–2008

Post by OkieIndexer »

In 2008 I was 27 and had been investing for 2 years. From Nov. 2008-July 2009, I felt like the ONLY reasonably safe place to park money was in 1-month T-Bills. Not a bank savings account (ANY bank). It seemed like a 1930s deflationary Depression Part
2 was absolutely a possibility, even likely. Even months after the market bottom in the summer of 2009, it wasn't at all obvious the bottom was in or that Depression 2.0 was off the table. I didn't even trust FDIC protection (how could FDIC bail out thousands of banks at the same time, potentially?). I was thinking any morning I could wake up to a Citi or Bank of America failure, or govt. nationalizing all of the big banks. "Tanks in the streets" was tossed around by at least one high level govt. official during the crisis...

I think a lot of people have forgotten how scary it was in late 2008-mid 2009, if they were paying attention to what was going on...

And even then, I felt like the actual T-Bills were safer than a Treasury Money Market Fund.
"In bull markets, people say 'The more risk I take, the greater my return.' But when people aren't afraid of risk, they'll accept risk without being compensated." -Howard Marks, Oaktree Capital
MJW
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Re: What Happened to you during the Financial crisis of 2007–2008

Post by MJW »

Memory is hazy, but I remember a cold, steel table and three figures looming over me. They were grey, had large black eyes and…..oh, right, wrong forum.

I was out of grad school and trying to find a job in my field. Life was like a Bruce Springsteen song for a while. Eventually it got better. Investment-wise had no skin in the game at the time; hence, my current feeling of invincibility. 8-)
Elysium
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Re: What Happened to you during the Financial crisis of 2007–2008

Post by Elysium »

Stayed the course with 80/20 allocation, bought with regular contributions in retirement plans, lost 30% on paper and gained all of it back by end 2009. Lesson learned: Never to take on untested assets ever again. Reason: CCF did not help, sold all and took the losses on the chin, moved on.
stoptothink
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Re: What Happened to you during the Financial crisis of 2007–2008

Post by stoptothink »

I was in my mid-20's and in the process of losing nearly my entire life savings (~$300k, retirement consisted of nothing but a low 5-figure amount in a Roth IRA) in real estate development and investing. I am fortunate that I had a full-time job (I was not leveraged at all), was responsible for nobody but myself, and that I learned those lessons early enough to recover, many of the people I had business relationships with lost everything and have yet to recover.
Typ997S
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Re: What Happened to you during the Financial crisis of 2007–2008

Post by Typ997S »

My wife and I got very lucky. At the end of August of 2008, we put in an offer on a "move-up" house. The offer was accepted, with a closing date of late October (cue foreshadowing music.) Without thinking much I about it, I decided to move all of our investments to cash in early September, just to guard against having a problem with the down-payment. That paid off big time when early October hit, as we didn't have a problem with the down payment, and the portfolio didn't take a hit. Mortgage financing also started to rapidly dry up, particularly for "super-jumbo" loans, but our credit union came through and we successfully closed in late October. The sellers of the house told us they were astonished, as they thought for sure we'd have to break the contract. After moving in, I gradually moved back into the market over the next 9 months.

Two lessons:

1) It's better to be lucky than good.

2) I believe in being fully invested with long term money and not trying to time the market, but if you have a large purchase coming up, invest and allocate accordingly.
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Kenkat
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Re: What Happened to you during the Financial crisis of 2007–2008

Post by Kenkat »

I was fortunate that I was able to stay employed, although we didn’t get a raise one year and no bonus the second year. I stuck to my asset allocation and rebalanced, but I could only bring myself to do it over a period of several months, not all at once as the market continued to fall. I did keep investing in my 401(k) throughout. I was also fortunate that I live in an area where housing prices did not fall all that much, and my mortgage was small and I had significant savings, so that was also not an issue. I am glad I did not need to sell my house during that time though.
averagedude
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Re: What Happened to you during the Financial crisis of 2007–2008

Post by averagedude »

I was in my late 30s and was 100% stocks. I viewed it as an opportunity and increased my percentage in our 401ks and continued on with my life. We were fortunate that neither of us lost our jobs like so many other people did. We had a moderate to high savings rate, was close to paying off our home, so it was really like a non event for us.
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Toons
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Re: What Happened to you during the Financial crisis of 2007–2008

Post by Toons »

i just kept buying shares of Vanguard Lifestrategy Growth and other funds as I had been for years.
It was a maybe once in a lifetime OPPORTUNITY...
Just didn't know it at the time.
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quantAndHold
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Re: What Happened to you during the Financial crisis of 2007–2008

Post by quantAndHold »

I was in my 40’s. Working. 90/10 portfolio. Ran a retirement calculator in late 2008 to see when I could retire. Ack! Started pouring every extra penny into savings for retirement at the beginning of 2009. Retired in 2017.
Yes, I’m really that pedantic.
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racy
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Re: What Happened to you during the Financial crisis of 2007–2008

Post by racy »

I was in my mid-50's at the time. Our net worth high was May 2008. Our low was March 2009: a decline of 21%. We recovered back to the high in Jan 2010, 21 months later. A year later, Jan 2011, our moderate portfolio was 15.4% higher.

What did I do during the downturn? Just kept adding to my 401k and quit watching business tv!
Last edited by racy on Tue Dec 11, 2018 8:34 pm, edited 3 times in total.
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AllStarDaniel
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Re: What Happened to you during the Financial crisis of 2007–2008

Post by AllStarDaniel »

stoptothink wrote: Tue Dec 11, 2018 8:15 pm I was in my mid-20's and in the process of losing nearly my entire life savings (~$300k, retirement consisted of nothing but a low 5-figure amount in a Roth IRA) in real estate development and investing. I am fortunate that I had a full-time job (I was not leveraged at all), was responsible for nobody but myself, and that I learned those lessons early enough to recover, many of the people I had business relationships with lost everything and have yet to recover.
Holy crap. You lost 300k?!
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HomerJ
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Re: What Happened to you during the Financial crisis of 2007–2008

Post by HomerJ »

We were 66/33 stocks/bonds.

I rebalanced once on the way down, then got freaked out as the market kept crashing and the talking heads starting mentioning total global financial meltdown (aka Great Depression II). I had a couple of neighbors and friends lose their jobs.

I never was too tempted to sell stocks, they had already dropped too far. I was very thankful for our bonds.

I did stop rebalancing on the way down. I set a hard limit on our bond money at $200,000 and I wasn't going to risk any more of it. We had three kids, and I wanted a solid floor that would keep them warm and fed even if the Great Depression happened again with 25% unemployment and bread lines.

New money (for 401k contributions) went 100% into stocks though. It is weird... I didn't want to risk any more of our existing bond money, but NEW money, I had zero problems investing in stocks. That felt like buying on sale.

My wife and were lucky enough to keep our jobs, we kept investing month after month, my wife even got a bonus (!!) in March 2009 that we invested 100% in the market (pure luck to hit the bottom there).

This is way too short of a post though. I can't explain very well how scary it really was. Breadlines and tent cities were on my mind. Have you seen the boxing movie "Cinderella Man"?

My wife and kids were trusting me to make sure we were safe no matter what happened. It was a bit terrifying to "stay the course", but the hard floor in bonds really made all the difference. I can't stress that enough. I didn't do anything stupid with the rest of our money, because I had that safety net to calm my mind.

We changed our allocation to 50/50 a few years after it all came back to better reflect our risk tolerance, and aggressively paid down our mortgage until it was gone.

I'm more conservative than most, but I love the fact that my house is paid off, so my expenses are low, and I have 50% of my money in CDs and bonds. Another crash will come someday, maybe even tomorrow, but I sleep very well knowing I'm a good financial position to weather the storm.

Been rebalancing on the way up all this time back to 50/50 every time stocks go on a tear, so I've locked away quite a chunk of those gains over the years.

FYI - I decided long ago I won't rebalance on the way down during the next crash. I have a new hard floor set for my bonds and CDs. But I'm fairly certain I'll be able to handle the stock losses like a pro... I hope. :)
Last edited by HomerJ on Tue Dec 11, 2018 8:35 pm, edited 2 times in total.
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JeepDaze
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Re: What Happened to you during the Financial crisis of 2007–2008

Post by JeepDaze »

I was early 30s then. Didn't look at at my 401k for 2 years and left it on auto pilot. Glad I did.
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AllStarDaniel
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Re: What Happened to you during the Financial crisis of 2007–2008

Post by AllStarDaniel »

HomerJ wrote: Tue Dec 11, 2018 8:32 pm We were 66/33 stocks/bonds.

I rebalanced once on the way down, then got freaked out as the market kept crashing and the talking heads starting mentioning total global financial meltdown (aka Great Depression II). I had a couple of neighbors and friends lose their jobs.

I never was too tempted to sell stocks, they had already dropped too far. I was very thankful for our bonds.

I did stop rebalancing on the way down. I set a hard limit on our bond money at $200,000 and I wasn't going to risk any more of it. We had three kids, and I wanted a solid floor that would keep them warm and fed even if the Great Depression happened again with 25% unemployment and bread lines.

New money (for 401k contributions) went 100% into stocks though. It is weird... I didn't want to risk any more of our existing bond money, but NEW money, I had zero problems investing in stocks. That felt like buying on sale.

My wife and were lucky enough to keep our jobs, we kept investing month after month, my wife even got a bonus (!!) in March 2009 that we invested 100% in the market (pure luck to hit the bottom there).

This is way too short of a post though. I can't explain very well how scary it really was. Breadlines and tent cities were on my mind. Have you seen the boxing movie "Cinderella Man"?

My wife and kids were trusting me to make sure we were safe no matter what happened. It was a bit terrifying to "stay the course", but the hard floor in bonds really made all the difference. I can't stress that enough. I didn't do anything stupid with the rest of our money, because I had that safety net to calm my mind.

We changed our allocation to 50/50 a few years after it all came back to better reflect our risk tolerance, and aggressively paid down our mortgage until it was gone.

I'm more conservative than most, but I love the fact that my house is paid off, so my expenses are low, and I have 50% of my money in CDs and bonds. Another crash will come someday, maybe even tomorrow, but I sleep very well knowing I'm a good financial position to weather the storm.

Been rebalancing on the way up all this time back to 50/50 every time stocks go on a tear, so I've locked away quite a chunk of those gains over the years.

FYI - I decided long ago I won't rebalance on the way down during the next crash. I have a new hard floor set for my bonds and CDs. But I'm fairly certain I'll be able to handle the stock losses like a pro... I hope. :)
I am more conservative than most as well. Just loosing anything feels painful but I know its the only way to make money work because you cannot earn enough.
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Re: What Happened to you during the Financial crisis of 2007–2008

Post by AlohaJoe »

I was 100% stocks. Didn't care about the crash. Went to work. Lived my life. I wasn't going to use the money for several decades anyway. Found the "maybe this is the end of modern economies" stuff histrionic. I was trying to sell my house at the time which meant it took 6 months and I ended up selling it for the same exact price I had paid several years before. I didn't care about the price but taking six months was annoying.
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Re: What Happened to you during the Financial crisis of 2007–2008

Post by dogagility »

We were 100% stock.
Here's what happened to us.
1. We "lost" (on paper) a sum of money.
2. We were confident in the world economy and trusted the loss would rebound.
3. We were resilient in knowing we could change our lifestyle/spending habits if need be to weather the duration of the downturn.
4. Because of 2 and 3, 1 didn't matter to us.
5. We stayed the course.
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gorow
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Re: What Happened to you during the Financial crisis of 2007–2008

Post by gorow »

I was 52 years old, 30 years into my career, my youngest had just graduated high school and my older two were done with college. I was just beginning to think about when I might retire. At the time, I had already accepted that I would stay with my allocation and re-balance, which was a good move, and the reason you do so.
I also had been thinking about "my number" that would be the number that would allow me to walk away. When the market dropped, my timeline slid to the right, as it recovered, it slid to the left.
By 2011 I realized that the number was not really the target, and that I had to understand our spending and understand retirement income streams. I'm three weeks from retirement today, and not concerned about sequence of return risk as I have been preparing with 2 years cash as part of my asset allocation.
The lesson learned was that my investment policy was designed for good times and bad.
Retired 1/1/2019. Not concerned about sequence of returns because two years here taught me what I need to know.
GCD
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Re: What Happened to you during the Financial crisis of 2007–2008

Post by GCD »

Investible assets, 100% stock:

2006: X
2007: X + $71,000
2008: X - $67,000
2009: X + $94,000

Meh, whatever...
Snowjob
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Re: What Happened to you during the Financial crisis of 2007–2008

Post by Snowjob »

I thought the crisis ended over the summer in 2008 -- may have been July, there was a huge take down in a lot of the US publicly traded banks, on a big washout week. Having watched all these individual subprime lenders go bust and bear sterns collapse I figured this was the big reset (LOL) so I did what any enterprising youth would do (I was in my mid 20's at the time) I started to rack up as much debt as I possibly could to buy stocks at what I thought was a great deal. personal loans. credit cards you name it. I was sure I was getting a good price and it was worth the leverage...

Well a month or two later, Lehaman bit the dust and the market just imploded over two weeks in October. I remember watching in awe every morning the unrelenting carnage -- felt like 9 straight days of 2%+ drops, before a rebound on Friday. Of course, at this juncture I began experimenting with other ways to gain leverage, including levered products and margin. I mean, it couldn't get worse right? Wrong.. lol.

Another 5 months would grind most of us to capitulation at the bottom. Thankfully I survived, mostly because I was betting on individual stocks and bonds and other instruments that held up in aggregate just enough.. Another board member levered with futures and his outcome was not as fortunate. The drama was pure gold though, as terrifying as it was. I was literally glued to the TV and news sites when I wasn't in the office, watching futures round the clock. Reputable business and Ponzie schemes alike folded. Massive government intervention, questions of moral hazard, broadcast interviews of clueless senators grilling CEO's that left you with a sick feeling that no-one in office knew what they were doing. News of defaults, earnings write downs, investigations, nationalizations, every headline around the world 24/7 was driving the fear cycle.

Friends and co-workers lost their jobs... We joked at first about the slowdown, oh we'll just become strippers one friend laughed. Then work ground to a halt. Customers stopped buying anything that was not essential, defaults on our receivables, the backlog evaporating. This was February of 2009, and the fear across the office was real. Many of us knew friends or even family members that had lost their jobs, or their savings. It looked like even the layoff survivors among us might be next, and the market continued to rollover, again. a final 2 week plunge into early March before Wells Fargo, announced positive earnings, and wall street smelled the the bottom.

Many of my friends, especially the younger ones took several years to recover and find decent employment again. I slowly recovered to positive net worth (I would gather sometime in 2010 or so) but I never made the killing on the upside that I'm sure some people did. In fact the entire ordeal, including the near jobloss outcome made me more conservative. Even if I use leverage from time to time, I still own bonds, I watch my liquidity and volatility exposure. I'm sure there are folks a few years younger than me who where lucky enough to get a decent job out of school around the bottom or a year or so after the bottom of the crisis who ended up with better returns than I've managed simply because they've been 100% stock. They never experienced what it was like to see the world ending on the way down. I'm glad I had that experience, because it will prepare me for the next time.

Interestingly enough I kept a journal of my thoughts on investments and portfolio construction during that time. I threw it away at some point in the last few years but it was interesting to go back and see my thought process evolve from 2007 through 2013. As far as a general asset allocation now I'm flexible. I try to stay in the Ben Graham rules of 75/25. but for quite a while I also toyed with the idea of a hard floor like HomerJ has. I think it makes a lot of sense.
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smarcus3
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Re: What Happened to you during the Financial crisis of 2007–2008

Post by smarcus3 »

I was luckily young and in college. And too young and dumb to liquidate my brokerage / Roth accounts which was great. O built these up with money from highschool jobs and saved all my birthday money. I know a miser ...


Allowing those funds to bounce back and then some. I know a few family members who cashed out and are doomed as they've missed out on too many years of market gains at this point.

I was 100% equities then and still am.
Last edited by smarcus3 on Tue Dec 11, 2018 9:41 pm, edited 1 time in total.
This is my personal opinion. I'm an engineer not a financial advisor.
J295
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Re: What Happened to you during the Financial crisis of 2007–2008

Post by J295 »

It was a brutal time. In my mind, nothing even remotely close to these recent gyrations or anything else I experienced in nearly 40 years of investing. There was more than just the typical market “noise.” Major companies failing, government bailouts, a money market fund breaking the buck, significant number of job losses, construction grinding to a halt, etc. And of course, steep steep equity drops with no guarantees as to when, or if, there would be a recovery. It may be easy for some to just shrug and say it was not so bad, and good for them if they experienced it that way, but for nearly everyone I knew it was a difficult environment. In the bad weeks, for some of us the equity drops were in the six-figure range with no end in sight.
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Re: What Happened to you during the Financial crisis of 2007–2008

Post by LiterallyIronic »

I graduated in 2008 and couldn't find a job. Took one in a call center making $9.50/hour. No money in the stock market when it crashed. No money to put in the stock market to take advantage of the ensuing run-up.

Sucks. Just like everything else in my life.
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Re: What Happened to you during the Financial crisis of 2007–2008

Post by tadamsmar »

I followed my plan and rebalance around my birthday (November) which was close to the bottom. It worked out well.
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Random Musings
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Re: What Happened to you during the Financial crisis of 2007–2008

Post by Random Musings »

I lived my life. The markets are going to do what the markets are going to do.

Didn't change my AA.

RM
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Bacchus01
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Re: What Happened to you during the Financial crisis of 2007–2008

Post by Bacchus01 »

Stayed the course

Laid off a lot of people. That was hard.

Didn’t cash out $350K worth of options that I should have. What would they be worth now on TSM? More than enough. That was also hard.

We moved in 2010. Took 18 months to sell our house at a $100K loss from what we paid in 2006. Company covered $75K of it fortunately. Ironically, the house just sold again recently, still lower than what we paid in 2006. Wow.
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Re: What Happened to you during the Financial crisis of 2007–2008

Post by 22twain »

I was in my mid 50s. I kept my college-teaching job, and continued to contribute to my 403(b) plan as before. My contributions were always split 50/50 between a stock fund and a stable-value fund (TIAA Traditional). Between the ongoing contributions and the "ballast" provided by the stable-value fund, my account balance dropped by "only" 17% between June 2008 and March 2009. It was before I found this forum, so I didn't even rebalance, but simply let the stock fund recover naturally. At the beginning of 2010 the account was above its June 2008 level.
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Re: What Happened to you during the Financial crisis of 2007–2008

Post by stoptothink »

AllStarDaniel wrote: Tue Dec 11, 2018 8:30 pm
stoptothink wrote: Tue Dec 11, 2018 8:15 pm I was in my mid-20's and in the process of losing nearly my entire life savings (~$300k, retirement consisted of nothing but a low 5-figure amount in a Roth IRA) in real estate development and investing. I am fortunate that I had a full-time job (I was not leveraged at all), was responsible for nobody but myself, and that I learned those lessons early enough to recover, many of the people I had business relationships with lost everything and have yet to recover.
Holy crap. You lost 300k?!
Many people lost far more. Due to my natural risk aversion, real estate was a side hustle for me and I was playing with cash so at least didn't end up in debt. One of my closest friends, who at that point had been very successful in real estate development for nearly two decades and had a net worth well into 7-figures, lost everything. Literally, everything. Everybody in real estate thought they could do no wrong at that point and many were way under diversified and overleveraged. He has never recovered; his family of 6 went from living in a 11,000sq. ft. home to living in his elderly parent's basement and he has barely scraped by the last decade.

I doubled up on the losses 5yrs later by getting a divorce, after having cash-flowed my ex's dental school. Had I managed to dodge both those life experiences, there is a decent chance I'd be retired today at 37. I am very fortunate to have had those learning experiences early in life.
gator15
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Re: What Happened to you during the Financial crisis of 2007–2008

Post by gator15 »

In the 2008, I had every reason to panic sell, but didn't because it felt like I was losing money to quickly to sell. I reached a point where I said I should just ride this out. That year, I had just reached a six figure amount in savings and I saw it cut in half in no time. That year, I left a stable job with good income to take a break and travel the world. I wanted to travel the world for a year and return to work afterwards. While I did travel some, I only stayed out of work for a few months because I figured I couldn't further deplete my funds as I had already lost a lot of money in the market. When I went back to work, I took a job paying significantly less than my previous job because of the market. That year was fun, yet tough. Thinking back, that year sought me on the path I'm currently on, but it was a scary time.
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Re: What Happened to you during the Financial crisis of 2007–2008

Post by Dottie57 »

I turned 50 in 2007. Old enough to have accumulated quite a bit in mid 6 figures. As the system looked like it could topple over, I saw my retirement slip away. In late 2008, I sold about 30k of stock funds and bought bonds in my 401k. I wanted to sell more but restrained myself. To counter the selling I upped my percentage going to stocks in the 401k. A very strange reaction.

I kept my job and ended up relatively unscathed.

It really was terrifying. I thought the whole system could go down the toilet.
motorcyclesarecool
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Re: What Happened to you during the Financial crisis of 2007–2008

Post by motorcyclesarecool »

I lost my Megacorp job the day after the election. Two weeks’ pay was my severance.

I had been invested haphazardly across too many §401(k) options. I held target date funds from two different companies, as well as some institutional total stock market fund, and some stable value. I avoided company stock at least. I had been investing aggressively and was gutted to have to stop investing.

Fortunately, being single and a renter, I was able to scrape by. I got a menial job immediately, and I refused to take unemployment insurance, even though it would have paid much better. I was too proud, self-righteous, and arrogant. It would have been legal for me to receive a reduced unemployment benefit while underemployed and actively looking for work. In retrospect, it was foolish of me not to do that. I had to deal with COBRA.

Eventually, Megacorp came knocking, and I returned in 2009. I had a coworker who had annihilated his §401(k) balances by selling when the market was at its nadir, and never looking back. He had been ready to retire. I am very lucky that I left my account alone. Mostly because between working two low wage jobs and interviewing for I just didn’t have the bandwidth to even logon to my account.

It was a terrible time in my life. I was lucky. It opened my eyes to the consequences of an inappropriate AA given my time horizon. I learned from others’ mistakes, that easily could have been mine.
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Re: What Happened to you during the Financial crisis of 2007–2008

Post by gmc4h232 »

I graduated college (after 5 yrs) in 2008. I drug my feet on finding a full time engineering job and continued to work at my summer job. I made a point to open a taxable brokerage account and invest all I could in individual stocks. I didnt know about the bogleheads philosophy at the time and my parents and grandparents had only ever invested in individual stocks and i didnt know what an index fund was. I watched my balances fall weekly and kept throwing what little money i was earning into my account thinking i was hot stuff and able to pick winners. Fact of the matter was that I could have picked nearly any blue chip stock at the time and made money on the ride up. Looking back if had continued to buy and hold VTSAX like i do now, I would have been significantly better off, but if i remember correctly all of my peers (college age and full grown) were too afraid to invest any money at the time, so i think i came out ahead comparatively speaking.

When i got my first full time job in june of 2009 I continued to invest in my roth and max out my new 401k even though i thought the plan sucked if i recall. I say full time, but on day one the boss called me into his office and tells me "hey did anybody tell you we are only working 4 days a week?" - um no.
Katie
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Re: What Happened to you during the Financial crisis of 2007–2008

Post by Katie »

I was lucky to have a job and I kept my contributions in my 401(k) the same. I made a slight adjustment in my asset allocation in my 401(k) to bonds, but didn't cash out any of my stock funds in my after tax accounts. It was depressing to see them go down, but I stuck with them.
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changingtimes
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Re: What Happened to you during the Financial crisis of 2007–2008

Post by changingtimes »

I was in my early 40s, and panicked a bit, moving my 401k (80-20) to money market funds somewhere on the way down, and didn't come back in until late 2009, so missed out on some very good dollar cost averaging and gains. But I kept contributing the max every paycheck at least. (I did also buy some CDs at 4.75% with some taxable monies right as things got hairy--seems so long ago!)

But I learned my lesson. Stay the course.
MWONE
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Re: What Happened to you during the Financial crisis of 2007–2008

Post by MWONE »

I was 42 and remember the fallout, but didn't pay much attention to it at the time because we knew we were in for the long haul. I am glad I didn't pay much attention, as it allowed me to eliminate the noise and keep maxing out our 401K. Now that I'm a bit older and closer to retirement, I have a much greater empathy of how it affected people, and it worries me that it will happen again. That said, since I found this site I constantly read the wisdom of those who know much more than me, and it has helped me set a proper asset allocation which helps me sleep.
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Portfolio7
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Re: What Happened to you during the Financial crisis of 2007–2008

Post by Portfolio7 »

I've posted this before, but my perspective shifts, so... I'd been through the dot.com crash already. I wanted to hedge in late 1999, but wasn't sure what I was doing, hesitant to follow my instincts, so I rode it out. Once the crash started, I wasn't tempted to sell at all (I only had very low 6 figures), but it was a very painful experience and I decided I was going to learn how to avoid that in the future. I don't say that was the right resolution, but that was my mindset. I scoured on-line resources (didn't run into bogleheads until much much later), while maintaining a healthy sense of skepticism.

In November 2007, I was 100% equity. I read a lot of former hedge fund and wall street type blogs that had me convinced there was a developing risk. I decided to sell about 10% a month, buying mostly stable value and some bonds. I ended up selling equities about 2 of every 3 months because I was buried in work and family issues and wasn't always on top of the investments - but by the end of 2008 I was 100% fixed income. In 2H 2009 I started buying back in due to FOMO, again 10% per month, until I was 60/40. I lost 13% in 2008, and recovered before the S&P did, fwiw.

I was also lucky enough to keep my job. I work for a F500 company, and while there have been a lot of 'resource actions', I managed to get hired and reasonably prosper through 25+ years of down-sizing. I think I'm giving the proverbial a cat a run for it's money, if I stretch the 13 lives metaphor.

I don't claim to have foreseen these crashes; I can only claim that at both times I had become convinced that risk was climbing fast (based on the sum of all the reading I was doing at the time.) I have no faith that the third time I reach that conclusion will yield the same result.

I learned there's more than one way to skin a cat, but also came to the slow realization that much of my problem in 2001 was my portfolio mix. It was a jumble of funds that had little logical relationship; I had been trying to 'diversify' but didn't understand what that meant in the proper context. By 2009 I had learned enough to build a portfolio that could better survive future downturns (I don't figure I will get as lucky in my timing next time the market crashes, so I'm basically back to buy and hold.) I admit I don't have a static equity/bond ratio, but I do have a range (60% +/- 10% equities), and I do some tactical adjustments within that range. The reason I put limits on that range is to avoid doing something stupid, inspired by Charlie Munger. Also, I know that at times I will get overwhelmed with other concerns, and decided I can live with what happens whether I'm 70/30 or 50/50 or somewhere in between... the important thing for me is to avoid impulse (stupid) behavior: have a plan and follow the plan.
"An investment in knowledge pays the best interest" - Benjamin Franklin
KlangFool
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Re: What Happened to you during the Financial crisis of 2007–2008

Post by KlangFool »

OP,

1) I was 50% VSMGX (Lifestrategy Moderate Growth Fund 60/40) and 50% Wellington Fund (65/35) with 1 year of the emergency fund. It rebalanced itself whether I like it or not. I seriously doubt that a young investor with 3 funds portfolio will rebalance in a real bear market.

2) 40% of my current portfolio is still Wellington fund. Hence, my portfolio will rebalance itself most of the time.

3) My employer laid off 50% of its employee at my location on 1/1/2009. Then, it had annually laid off every year. I was laid off a few years later. But, I had been facing annual and quarterly laid off since 2002. So, it is business as usual for me. I am always prepared to be unemployed for at least 1 to 2 years.

KlangFool
mnnice
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Re: What Happened to you during the Financial crisis of 2007–2008

Post by mnnice »

I call the winter of 2008-2009 the “winter of no work”. At the time I lived in a cul-du-sac with six houses and 11 adults. Prior to the recession all 11 had paid employment (9 full time, I worked about.5 time and the guy across the street was mostly retired but did school crossing guard duty). In the height of the recession 4 people of the 11 were laid off. In the end just one house was foreclosed on.

My stock 403b balance was cut in half. We trucked along with a paid for house and one part-time job. My 13 year old has fond memories of the “olden days” before he went to school and when he played with Daddy all day (preschool was not in the budget :mrgreen: ). He wasn’t traumatized but I still think I am a bit.
MoonOrb
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Re: What Happened to you during the Financial crisis of 2007–2008

Post by MoonOrb »

I had only been investing for ten years when that happened so it didn't feel that dire to me. Here are things I noticed:

-I stopped looking at our investments on a routine basis
-Automatic monthly investments still went in on schedule
-I didn't know enough at the time to rebalance so I didn't rebalance

We probably have 4-6(?) times the amount invested as we did in 2008-09 so the stakes feel higher now. For other reasons I've also been feeling a deep pessimism and concern about the future so maybe I'd react differently if something similar would happen, I don't know. I'd like to think the only thing I'd do differently is to be sure and rebalance if rebalancing was appropriate.
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catdude
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Re: What Happened to you during the Financial crisis of 2007–2008

Post by catdude »

What I recall about 2008-09 is how demoralizing it felt to see the stock market slide down, seemingly day after day. It felt miserable but I didn't change anything. I stuck with my automatic investments into my workplace 457 plan, and I kept putting money into my Roth IRA. I think what allowed me to stick with the program is that I had a pension to count on once I retired (and I did in fact retire, in 2010). I always kinda felt like I was playing with house money when it came to my portfolio. It was just gravy. Frankly, I really don't know if I could've stayed the course if I had been relying on my investments for the bulk of my retirement income. I like to think that I could've, but I just don't know.

I remember talking to a co-worker one day, during that time, and he said he'd bailed out. He couldn't take it anymore. He sold his investments and moved everything to cash. He was a higher-up at the office, a division chief in fact. I don't know when or if he got back in the market. The same guy told me, a few years prior, that he had all his $$$ in international stocks... at the time, int'l stocks were the hot sector (those were the days!). He was going to ride that baby till it cooled off! I didn't have the heart to ask him how he would know when it was time to sell int'l...
catdude | | "I yield to the gentleman for a few feeble remarks." (Congressman Thaddeus Stevens)
WanderingDoc
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Re: What Happened to you during the Financial crisis of 2007–2008

Post by WanderingDoc »

GCD wrote: Tue Dec 11, 2018 9:12 pm Investible assets, 100% stock:

2006: X
2007: X + $71,000
2008: X - $67,000
2009: X + $94,000

Meh, whatever...
What asset allocation?
I'm not looking to get rich quick (stocks), I'm not looking to get rich slow (indexing), I'm looking to get rich, for sure (real estate) | Don't wait to buy real estate. Buy real estate.. and wait.
Luckywon
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Re: What Happened to you during the Financial crisis of 2007–2008

Post by Luckywon »

I was in my early forties and by March 2009 I calculated that I had less money in the stock market than the sum of my contributions through my entire investing career, having already been through the dot.com bubble, and a bear market earlier that decade. I joked that the best thing that I had ever done with my money up till that point was spend it.

I was about 90% in equities and was also at the peak of earning career and continued to invest as much as I could.
HIinvestor
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Re: What Happened to you during the Financial crisis of 2007–2008

Post by HIinvestor »

We mostly just rode it out. We didn’t have much extra investable assets at the time and had a paper loss like many. We didn’t panic and sell and eventually it went back up. We just kept in the market and patiently waited.

Fortunately, we did have a decent emergency fund and lived below our budget then and now. We also had a mortgage and 2 kids in college. I was able to work full-time for a nonprofit to supplement the family income so we didn’t have to liquidate any investments while the kids were in college.
zuma
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Re: What Happened to you during the Financial crisis of 2007–2008

Post by zuma »

I had a good job, thankfully, and just continued to invest regularly in a target date fund in my 401k all the way through the crisis.
fennewaldaj
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Re: What Happened to you during the Financial crisis of 2007–2008

Post by fennewaldaj »

Wife and I both worked for the US government at the time so no real threat of layoff. Due to shear laziness we were both 100% G fund in my TSP (that was the default investment). Finally got around to actually owning stock in 2011. I did have some general skepticism of stock investing at the time due to reading a bunch of Taleb. I remember at the time thinking the stock market would go even lower than it did.
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asset_chaos
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Re: What Happened to you during the Financial crisis of 2007–2008

Post by asset_chaos »

There was a thread with this same question last month, viewtopic.php?f=1&t=263520. Stock markets must be declining. I'll partly repeat the recitation of my experience from the other thread
... The financial crisis of 2008 was not normal times. Stock losses were deep enough for long enough that by early 2009 my hard band had been breached, and I held my breath and followed my plan: sold what seemed like a lot of bonds and, along with some fresh lumpy money that sometimes comes in the beginning of the year, bought stocks back up to my desired allocation. I thought about Bill Bernstein's idea of over-rebalancing and boldly buying even more stocks, but decided not to do that.

It may sound like I was cool, calm, and calculating during the crisis. Why? My job was never threatened by the financial crisis and its stock market losses. That easily permitted a veneer of calmness, and I think that's a big factor in staying sanguine through large losses. If you, happy youth, are looking forward to your first bear market decline and your job is likely to be in danger during the exercise, I urge you to account for that in deciding your risk tolerance.

As I'm recently retired, I get to now look forward to my first large market decline without having fresh work earnings to use to rebalance. I wonder if I'll be as sanguine the next time. As I have no experience, I'll just have to wait and see, hoping that I've gauged my lower risk retirement portfolio allocation reasonably correctly.
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