When did the musicians on the titanic realize their fate?

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TVD
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When did the musicians on the titanic realize their fate?

Post by TVD » Fri Dec 21, 2018 5:15 pm

There have been several threads about the current drop in the equity markets. Some wanting to predict the bottom, many discussing the possible bear market (we've been in one since Oct at least). Anyways, I look at the replies and many posters are still joking about this drop, many do not have the fear and many are giving the common one liners of a crystal ball, etc. I intended the last statement to be an observation rather than any type of criticism but, admittedly, it does convey my disbelief for how little fear there is currently. And, I too am enjoying responding to those threads. However, when I pull up a chart on several of the stocks/indexes or look at the fundamentals, I do get a little concerned of what these charts are suggesting even though I've been battening the hatches for at least the last 2 years.

This comes to remind me of the Titanic, or at least the movie portrayal where everyone is joking and laughing after the ship hits the iceberg. The most poignant are the musicians on the Titanic who continued to play music ignoring the realities and went down with the ship. Now, maybe I am chicken little and this isn't the Titanic, but...

What are the conditions where people on this site become concerned? Everyone can talk about staying the course etc, but even the most diehard buy and hold must have some loss limit or set of conditions (stocks and bonds fall together) where they become a little concerned. And others may state that those who panic didn't have the proper asset allocation, but any asset allocation is based on assumptions that may or may not be correct. So at what point do you have a maximum tolerate loss (and everyone does...just check the posts from 2007-2009)? And if you made it through 2007-2009, has your maximum tolerated loss changed? I am very interested in the psychology to these questions. Thanks in advance.

randomguy
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Re: When did the musicians on the titanic realize their fate?

Post by randomguy » Fri Dec 21, 2018 5:29 pm

Is this year drop worse the crashes of 2010 or 2011 which was the start of the double dip that was going to lead to the market losing another 50% What about the crashes of 1990 or 1998 which were signs that the long bull market was finally over?:) Drops like we have had this year are a regular occurance that happen every couple of years. I am unaware of anyone that can predict when they we go from this normal level of volatility which you should expect every couple of years to the 50% losses that are more like every 25 year events. There is no real good way of avoiding them

Broken Man 1999
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Re: When did the musicians on the titanic realize their fate?

Post by Broken Man 1999 » Fri Dec 21, 2018 5:32 pm

I'll start worrying when I've depleated our bond fund holdings. And annuitized our annuuty. And sold our I-bonds. And exhausted our home equity via a reverse mortgage. I honestly believe we would be dead by then.

Broken Man 1999
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JustinR
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Re: When did the musicians on the titanic realize their fate?

Post by JustinR » Fri Dec 21, 2018 5:38 pm

I think it's useless being scared of something you have no control over. The only thing you can control is selling or not.

A falling market isn't a death sentence. The only death sentence is selling in a falling market. Since most Bogleheads are not planning to sell, then there really isn't any actionable response to it.

If you have a reasonably safe job, then you're just going to keep working no matter what. Your FIRE date may now be further but again... Not something you can control. What's the alternative, not investing? So for these people, again - nothing actionable.

If you're retired, hopefully you have a good buffer. Only those skating on the razor edge would I be somewhat worried.
Last edited by JustinR on Fri Dec 21, 2018 7:45 pm, edited 2 times in total.

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ray.james
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Re: When did the musicians on the titanic realize their fate?

Post by ray.james » Fri Dec 21, 2018 5:39 pm

World war III
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JoMoney
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Re: When did the musicians on the titanic realize their fate?

Post by JoMoney » Fri Dec 21, 2018 5:42 pm

My net worth dropped this month more than my annual income.
<shrug> I own the same assets I did a month ago (a little extra from new contributions)
Per share earnings estimates are, for the most part, the same as they were.
I was happy with what I owned a month ago, and I'm still happy with it now. If anything, I'm jealous of the people with the opportunity to buy at current prices.
What situations like this highlights, is that some people don't understand what they're getting into, don't have their allocation right for their risk tolerance, maybe some people aren't suited to own stocks at all.
"To achieve satisfactory investment results is easier than most people realize; to achieve superior results is harder than it looks." - Benjamin Graham

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renditt
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Re: When did the musicians on the titanic realize their fate?

Post by renditt » Fri Dec 21, 2018 5:45 pm

As the losses continue you will see the tone change. And I don’t mean that gleefully, it’s just human nature.

I fully expect this downturn to get real ugly. I went into the 2008 crisis with 75% equity and realized that was too high. I’m now @ 40% and the declines don’t bother me, but then again I think this is only the beginning.

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Re: When did the musicians on the titanic realize their fate?

Post by Stormbringer » Fri Dec 21, 2018 5:48 pm

TVD wrote:
Fri Dec 21, 2018 5:15 pm
What are the conditions where people on this site become concerned?
My concern has been that stocks were too expensive. I'd rather buy them at lower prices than at higher prices. If they dropped another 20% from here I would be thrilled!
"Compound interest is the most powerful force in the universe." - Albert Einstein

justsomeguy2018
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Re: When did the musicians on the titanic realize their fate?

Post by justsomeguy2018 » Fri Dec 21, 2018 5:49 pm

Good question to pose. I think this will vary wildly by individual based on their age/income/savings/etc..

I get the joking part. I feel that way too. What else can you do but laugh I guess.

I have at least 23 to 30 years until retirement (age 37) so I am not super concerned with the drop I guess.

Ironically I just started taxable account investing in September. (building up emergency fund prior). Also started HSA investing at that time. My timing couldn't be worse apparently. I lump summed in around $4,000 in the market, I guess. Since then I've DCA'd around $2,500 more each time the market drops. I have about $1,000 left of dry powder to invest with (until monthly cash flow kicks in excess cash). Will keep buying the drops. Think a bottom could be anywhere to 10% to 50% more (if the economy actually craters).

My concern at the moment is if we hit a bad recession and spouse and I lose our jobs and end up having to liquidate the investments. Hopjng that won't happen which is why I spent past 2 years beefing up the emergency fund to 1 year before entering the market. I knew a drop was coming, so I wanted to wait before starting the taxable account - just didn't know when.
Last edited by justsomeguy2018 on Fri Dec 21, 2018 5:53 pm, edited 1 time in total.

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Re: When did the musicians on the titanic realize their fate?

Post by minimalistmarc » Fri Dec 21, 2018 5:52 pm

JustinR wrote:
Fri Dec 21, 2018 5:38 pm
I think it's useless being scared of something you have no control over. The only thing you can control is selling or not.

A falling market isn't a death sentence. The only death sentence is selling in a falling market. Since most Bogleheads are not planning to sell, then there really isn't any actionable response it.

If you have a reasonably safe job, then you're just going to keep working no matter what. Your FIRE date may now be further but again... Not something you can control. What's the alternative, not investing? So for these people, again - nothing actionable.

If you're retired, hopefully you have a good buffer. Only those skating on the razor edge would I be somewhat worried.
Exactly

staythecourse
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Re: When did the musicians on the titanic realize their fate?

Post by staythecourse » Fri Dec 21, 2018 5:56 pm

TVD wrote:
Fri Dec 21, 2018 5:15 pm
What are the conditions where people on this site become concerned? Everyone can talk about staying the course etc, but even the most diehard buy and hold must have some loss limit or set of conditions (stocks and bonds fall together) where they become a little concerned.
Great thread.

For me I don't really care if my portfolio goes to zero. Yes I said zero. My portfolio does not effect me paying my bills every month, making sure I can put food on the table, or pay my mortgage. It is money for some distant liabilities so even if it went to zero its not a big deal I just have to re plan my future liabilities (we sell the house and downsize, kids are more limited to where they are able to go to college price wise, and we move to a LCOLA/ abroad for retirement). Not what I want, but doesn't mean my life ended.

My BIGGEST fear/ concern is is not having a steady income month to month. I remember taking the leap and starting my solo medical practice several years ago. Most don't know but setting up a medical practice and waiting for the revenue cycle can take some time so by the time I started thinking about it to getting my first receipts was about 6 months. Now that was NERVE racking. Not knowing when my next paycheck was coming and dipping a bit into EF to pay for setting up the practice and paying some of the monthly liabilities that my wife's paycheck couldn't cover was much more anxiety evoking then what happens to the market.

Again, money in the market should not be there unless you have a long time horizon. If so, who cares what happens to it. Now if you ask what does it feel not to get a paycheck every month that is different.

Good luck.
"The stock market [fluctuation], therefore, is noise. A giant distraction from the business of investing.” | -Jack Bogle

getthatmarshmallow
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Re: When did the musicians on the titanic realize their fate?

Post by getthatmarshmallow » Fri Dec 21, 2018 5:57 pm

I'll admit to being early enough in the accumulation phase that most of what I'm doing is ignoring the markets, but... didn't we have returns like this in 2011 and 2016? The volatility is different, sure. But I don't expect a repeat of 2008 -- not that we'll never have a bad recession again, but that 2008 seems like its own animal. Right now we have a rising interest rate, jittery tech giants, and a fractious political situation.

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Re: When did the musicians on the titanic realize their fate?

Post by 3funder » Fri Dec 21, 2018 5:59 pm

Stormbringer wrote:
Fri Dec 21, 2018 5:48 pm
TVD wrote:
Fri Dec 21, 2018 5:15 pm
What are the conditions where people on this site become concerned?
My concern has been that stocks were too expensive. I'd rather buy them at lower prices than at higher prices. If they dropped another 20% from here I would be thrilled!
+1

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Re: When did the musicians on the titanic realize their fate?

Post by Shallowpockets » Fri Dec 21, 2018 6:05 pm

A quick look at an S and P chart shows we are at about the same level as July 2017. So, 18 months lost on anyone's time horizon right there.
Looking at the 2009 bottom shows that it took until 2014 to reclaim that 2009 level?
That's 5 years.
So a 30 year savings and work and invest horizon is needed to realize about 20 years of productive advance on your assets.
Figuring we may not be at bottom yet, then perhaps we are looking out to up to 5 years before things settle down and are back to where they were mid 2018.
Hopefully we all can weather that timeframe. We can get our assets back but we cannot get the time back.
As some have said, they prepare by having 5 years of living expenses targeted for such things. The 4% rule could become an 8% rule by default.
Unfortunately the financial world does not live in a vacuum. There can and will be social, political implications beyond a bunch of BHs sitting still and waiting for the future returns. Most of us will have to deal with that sort of fallout. The very rich can be above the fray. So the best you can do is be very rich and live wisely.

I like your comparison to the Titanic band and the stay the course philosphy, but what else can one do? The musicians knew what was happening and what else could they do?
That is the crux of it.
What was Nero thinking while Rome burned?

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Re: When did the musicians on the titanic realize their fate?

Post by ofcmetz » Fri Dec 21, 2018 6:08 pm

I’m concerned because I like seeing the balances increase, but I’m not making changes besides putting new contributions into equities. The big investing decision is how much do you have in equities as a percentage of your portfolio. This decision should be made prior to a market drop and only changed during the drop if something fundemantal changes like the loss of a job or some other non stock market disaster. Now those who are retired and are 100% in equities may want to reevaluate their situation.

I think the musicians on the Titanic knew their fate long before they drowned. They went down doing what they loved, and did they really have any other option? It’s more fun to go down with some music and a drink anyway. :sharebeer
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Re: When did the musicians on the titanic realize their fate?

Post by Iridium » Fri Dec 21, 2018 6:11 pm

TVD wrote:
Fri Dec 21, 2018 5:15 pm
What are the conditions where people on this site become concerned? Everyone can talk about staying the course etc, but even the most diehard buy and hold must have some loss limit or set of conditions (stocks and bonds fall together) where they become a little concerned.
Twenty percent drops are not common, but they are not exceptionally rare. They certainly do not always pressage a larger drop or a recession. The same can be said of 10 and 30 percent drops. I would propose that the worry will come in when Main Street is effected, not with some percent drop in the market. Ultimately, it is really hard for me to feel worried when we are at full employment, wages have modest real growth, the economy is growing at a healthy clip and companies are setting records for profits. Yes, the market is saying that my particular slice of the economy is worth no more than what it was worth 15 months ago (I was thrilled with my net worth then, so it seems inconsistent to be concerned with having the same worth just a few months later). However, if you look behind the funds at the company ownership they represent, I simply don't see much cause for concern; by and large the publicly traded companies of the world are growing and healthy.

To use your metaphor, I think we are seeing people heading to the lifeboats, but nobody has actually felt us hit an iceberg yet. They are just standing in line to be ready once an iceberg does hit, despite the fact that none seem immediately threatening (you are making a North Atlantic crossing in the winter, there is always going to be ice around). Maybe they'll be proven right, but far, far more likely they'll be proven wrong: presumably the Olympic made the journey innumerable times in similar conditions without incident.

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Re: When did the musicians on the titanic realize their fate?

Post by WhiteMaxima » Fri Dec 21, 2018 6:17 pm

Shallowpockets wrote:
Fri Dec 21, 2018 6:05 pm
A quick look at an S and P chart shows we are at about the same level as July 2017. So, 18 months lost on anyone's time horizon right there.
Looking at the 2009 bottom shows that it took until 2014 to reclaim that 2009 level?
That's 5 years.
So a 30 year savings and work and invest horizon is needed to realize about 20 years of productive advance on your assets.
Figuring we may not be at bottom yet, then perhaps we are looking out to up to 5 years before things settle down and are back to where they were mid 2018.
Hopefully we all can weather that timeframe. We can get our assets back but we cannot get the time back.
As some have said, they prepare by having 5 years of living expenses targeted for such things. The 4% rule could become an 8% rule by default.
Unfortunately the financial world does not live in a vacuum. There can and will be social, political implications beyond a bunch of BHs sitting still and waiting for the future returns. Most of us will have to deal with that sort of fallout. The very rich can be above the fray. So the best you can do is be very rich and live wisely.

I like your comparison to the Titanic band and the stay the course philosphy, but what else can one do? The musicians knew what was happening and what else could they do?
That is the crux of it.
What was Nero thinking while Rome burned?
If we have 5 years to settle, then we would have 5 years to accumulate.

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Re: When did the musicians on the titanic realize their fate?

Post by mouses » Fri Dec 21, 2018 6:32 pm

ofcmetz wrote:
Fri Dec 21, 2018 6:08 pm
I think the musicians on the Titanic knew their fate long before they drowned. They went down doing what they loved, and did they really have any other option? It’s more fun to go down with some music and a drink anyway. :sharebeer
+1

snailderby
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Re: When did the musicians on the titanic realize their fate?

Post by snailderby » Fri Dec 21, 2018 6:39 pm

From Wikipedia:
The musicians of the RMS Titanic all perished when the ship sank in 1912. They played music, intending to calm the passengers, for as long as they possibly could, and all went down with the ship.
But to your question: I think I would start to get worried if I didn't have enough time to wait for stocks to recover -- i.e., for the Titanic to rise out of the water in this analogy -- OR if at some point I began to believe stocks would never recover from this market downturn (which is unlikely).
Last edited by snailderby on Fri Dec 21, 2018 6:44 pm, edited 2 times in total.

bradshaw1965
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Re: When did the musicians on the titanic realize their fate?

Post by bradshaw1965 » Fri Dec 21, 2018 6:43 pm

The average time to return to even after a drawdown of this size is 4 months. Too much drama around drawdowns. They are a normal part of the process.

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Re: When did the musicians on the titanic realize their fate?

Post by HEDGEFUNDIE » Fri Dec 21, 2018 6:45 pm

By some EDV for downside protection and you will sleep like a baby.

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Re: When did the musicians on the titanic realize their fate?

Post by Dottie57 » Fri Dec 21, 2018 6:51 pm

I try to sound calm. My portfolio is 50/50 and s down. I am a bit scared as I justretired. However, Ifeel that selling or big alterations are a bad idea. Gritting my teeth, hoping to stay the course.


My spending will be carefully evaluated in the future.

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Re: When did the musicians on the titanic realize their fate?

Post by Dottie57 » Fri Dec 21, 2018 6:54 pm

HEDGEFUNDIE wrote:
Fri Dec 21, 2018 6:45 pm
By some EDV for downside protection and you will sleep like a baby.
How would EDV work for a retiree with limited runway? Not terribly well given this year’s returns. I assets which are not down cash.

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Re: When did the musicians on the titanic realize their fate?

Post by Doom&Gloom » Fri Dec 21, 2018 6:57 pm

I am always concerned. Money is money, after all. But I vividly recall my reaction when someone at work told me about the big drop in 1987. I literally laughed out loud. What difference does it make whether you laugh or cry? But I was certainly concerned as I looked at the prices of the stocks I owned in the next day's newspaper.

At this stage in my life I am retired, my house is paid for, I receive a moderate pension and SS. Unless Armageddon is lurking around the corner, I will be ok even if my pension goes bust and the stock market really tanks.

I have come to realize that things have gone fairly well for me for most of my life. If I get to the point that my life is as tough as my parents' lives were for the first half of their lives, I will get really worried. Until then I hope to retain my sense of humor as well as a healthy concern for the financial pain of other people.

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Re: When did the musicians on the titanic realize their fate?

Post by KlangFool » Fri Dec 21, 2018 7:03 pm

TVD wrote:
Fri Dec 21, 2018 5:15 pm

What are the conditions where people on this site become concerned?
TVD,

I am prepared for a market downturn plus recession lasting 5 years. I assumed that I could be unemployed for 5 years too. I am prepared. How about you? Are you prepared?

Yes, I set a threshold in my IPS for my rebalancing too. I will rebalance from bond to stock until my bond is at 5 years of my annual expense. Then, I will stop my rebalancing. My spreadsheet is set up to calculate this.

I had been through many recessions/economic crisis over 30+ years.

Houston Oil Bust, Texas Saving & Loan Crisis, Asian Currency Crisis, Telecom Bust, 2008/2009 recession.

KlangFool

columbia
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Re: When did the musicians on the titanic realize their fate?

Post by columbia » Fri Dec 21, 2018 7:05 pm

HEDGEFUNDIE wrote:
Fri Dec 21, 2018 6:45 pm
By some EDV for downside protection and you will sleep like a baby.
That 3x leveraged, 20 year treasury ETF - referenced a few weeks ago by a poster - is probably doing well.

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Re: When did the musicians on the titanic realize their fate?

Post by WhyNotUs » Fri Dec 21, 2018 7:09 pm

TVD wrote:
Fri Dec 21, 2018 5:15 pm
And if you made it through 2007-2009, has your maximum tolerated loss changed? I am very interested in the psychology to these questions. Thanks in advance.
I made it through 07-09 and my actions and attitude have changed. The rebound after that event helped me to rebuild my portfolio after a divorce. I was pretty aggressive with adding investments and through a series of unintended events had some cash to invest.

The current situation finds me 10 years older and within sight of shifting to mostly passive income. I have been "retired" in the sense that I work only on things that are interesting to me for a couple years and expect to do that as long as I continue to enjoy it, hopefully until I hit Medicare age.

I changed my asset allocation in March to 50/50 so the current fall has not impacted me to the degree of those with larger equity holdings but it is still a big number to look at compared to a few months ago.

My larger change is a skepticism about America's future that I did not have in 2008. I understand that those who bet against the US have had a poor track record and recall the social dynamics at play in 1968 so I know this is not the first or only time that the county has faces challenging times. At the same time, the lack of commitment to the common good and individual greed that are celebrated give me pause.

Perhaps it is a sign of aging and I have not made any changes in holdings of US investments but it is something that is a concern. I may in fact be a musician on the Titanic but if I flinch for every time of challenge, then I am just changing dilemmas.

I can't answer what would make me change at this point, I imagine that it would be finding a source of passive income that could satisfy my future needs. My ears and eyes are open to such but I have not found anything that has excited me yet.
I own the next hot stock- VTSAX

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Re: When did the musicians on the titanic realize their fate?

Post by soda_bandit » Fri Dec 21, 2018 7:21 pm

TVD wrote:
Fri Dec 21, 2018 5:15 pm
The most poignant are the musicians on the Titanic who continued to play music ignoring the realities and went down with the ship.
I think this is a mis-telling of the story of the band of the Titanic. The reason so many people died was not because people didn't panic earlier enough but because there were not enough life boats. The eight member band were not women and children nor first class passengers. They weren't going to get spots in the lifeboats. So they could have either run around panicking and died just as assuredly or spent their last several hours doing the thing they had spent their lives learning how to do well. They even moved forward and kept playing as their original location slipped below the water.

Anyway, I bring this up because I think the real story is actually a better allegory for the stock market. Probably we will be okay. Maybe (almost certainly not but it could happen) we are doomed. But panicking won't make us any less doomed if we are, would make our last hours more unpleasant than they need to be, and could make things far worse if we aren't. Long worded way of rephrasing the "Don't do something, just stand there" quote.

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Re: When did the musicians on the titanic realize their fate?

Post by Kenkat » Fri Dec 21, 2018 7:37 pm

Here’s the sequence of returns of Vanguard Total Stock Market Index Inv from 2009 to 2017:

+28.70%, +17.09%, +0.96%, +16.25%, +33.35%, +12.43%, +0.29%, +12.53%, +21.05%

9 years of positive returns. Not a single down year since 2009. Granted, we were coming off a historic market drop, but we have become very accustomed to continued good news year after year. That’s not how things usually work. Stocks have risk - it’s pretty unrealistic to not experience some drops. Total Stock Index is down this YTD @ -6.86%. It was bound to happen sooner or later, so I can’t say I am all that surprised. I still don’t love it, but I understand this is pretty normal behavior so I am a long way from freaking out.

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Re: When did the musicians on the titanic realize their fate?

Post by gator15 » Fri Dec 21, 2018 7:41 pm

For the last 17 years I’ve just thrown money at my various investment accounts without thinking much about my asset allocation. The recent drop made me take a look at my AA to determine whether it’s what I desire. What I’ve learned from the recent drop is I may be too aggressive with my AA. Now I’m trying to figure how to go from a portfolio which was 100% stocks to something closer to 70% stocks. I don’t have 20+ years of accumulation left like many people. Ideally, I would work no longer than 10 more years. As a result, I need to change my asset allocation.

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Re: When did the musicians on the titanic realize their fate?

Post by Grt2bOutdoors » Fri Dec 21, 2018 7:42 pm

When the boat is heavily listing to one side, when they realized after all the women and children were on the lifeboats, there was not enough space available for the remaining passengers, when the call came to abandon ship, they went down with the ship.

There is a reason why we hold bonds and cash, yes cash in emergency funds. Where are the posters who say they are holding 90/10 funds? Lately, they've been keeping quiet, surprised they aren't banging the drum to buy the dip? I'm not, declines like this usually cause a deer in the headlights look. Look at your IPS, when it says to rebalance do so, but monies needed to keep you afloat over the next 5 years belongs in cash and bonds, unless you have so much money that even a 50% decline in value will still let you live the same standard of living you have today.
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Re: When did the musicians on the titanic realize their fate?

Post by columbia » Fri Dec 21, 2018 7:43 pm

Either don’t get on the boat (unlikely to yield returns fit to fund a retirement) or get off the boat before it hits rough waters.

One had better have a life preserver (cash, bonds, CDs, stable value) in the mix, otherwise.

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Re: When did the musicians on the titanic realize their fate?

Post by Grt2bOutdoors » Fri Dec 21, 2018 7:44 pm

gator15 wrote:
Fri Dec 21, 2018 7:41 pm
For the last 17 years I’ve just thrown money at my various investment accounts without thinking much about my asset allocation. The recent drop made me take a look at my AA to determine whether it’s what I desire. What I’ve learned from the recent drop is I may be too aggressive with my AA. Now I’m trying to figure how to go from a portfolio which was 100% stocks to something closer to 70% stocks. I don’t have 20+ years of accumulation left like many people. Ideally, I would work no longer than 10 more years. As a result, I need to change my asset allocation.
If you have exactly 10 years of working left, sell down to 70% stock and 30% bonds as you prefer, then continue to invest at that same ratio. If your employment is less than certain, you may not have another opportunity to accumulate that 30% in bonds, so do it now or Monday.
"One should invest based on their need, ability and willingness to take risk - Larry Swedroe" Asking Portfolio Questions

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Re: When did the musicians on the titanic realize their fate?

Post by randomguy » Fri Dec 21, 2018 7:44 pm

renditt wrote:
Fri Dec 21, 2018 5:45 pm
As the losses continue you will see the tone change. And I don’t mean that gleefully, it’s just human nature.

I fully expect this downturn to get real ugly. I went into the 2008 crisis with 75% equity and realized that was too high. I’m now @ 40% and the declines don’t bother me, but then again I think this is only the beginning.
There are 2 basic possibilities
a) in 12 months we are up 20% and people have forgotten about the crash of 2018
b) in 12 months we are down another 20% an people start to panic

In case a all the people that sell will regret their panic. In case B all the people that didn't sell will regret their lack of panic:)

randomguy
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Re: When did the musicians on the titanic realize their fate?

Post by randomguy » Fri Dec 21, 2018 7:47 pm

Grt2bOutdoors wrote:
Fri Dec 21, 2018 7:42 pm
When the boat is heavily listing to one side, when they realized after all the women and children were on the lifeboats, there was not enough space available for the remaining passengers, when the call came to abandon ship, they went down with the ship.

There is a reason why we hold bonds and cash, yes cash in emergency funds. Where are the posters who say they are holding 90/10 funds? Lately, they've been keeping quiet, surprised they aren't banging the drum to buy the dip? I'm not, declines like this usually cause a deer in the headlights look. Look at your IPS, when it says to rebalance do so, but monies needed to keep you afloat over the next 5 years belongs in cash and bonds, unless you have so much money that even a 50% decline in value will still let you live the same standard of living you have today.
Isn't everyone buying the dip? I mean every month I invest money and right now it is all going into stocks to rebalance. Just like I have done for the last 200 or so months. I sure don't see anything to suggest changing my AA from 70/30 to 100/0 or to sell and go 40/60.

gator15
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Re: When did the musicians on the titanic realize their fate?

Post by gator15 » Fri Dec 21, 2018 7:54 pm

Grt2bOutdoors wrote:
Fri Dec 21, 2018 7:44 pm
gator15 wrote:
Fri Dec 21, 2018 7:41 pm
For the last 17 years I’ve just thrown money at my various investment accounts without thinking much about my asset allocation. The recent drop made me take a look at my AA to determine whether it’s what I desire. What I’ve learned from the recent drop is I may be too aggressive with my AA. Now I’m trying to figure how to go from a portfolio which was 100% stocks to something closer to 70% stocks. I don’t have 20+ years of accumulation left like many people. Ideally, I would work no longer than 10 more years. As a result, I need to change my asset allocation.
If you have exactly 10 years of working left, sell down to 70% stock and 30% bonds as you prefer, then continue to invest at that same ratio. If your employment is less than certain, you may not have another opportunity to accumulate that 30% in bonds, so do it now or Monday.
I figure I will just sell stock funds in my TSP and wife’s 401k then buy bonds. What I’m not sure of is what to do with my taxable account. I won’t need that money for 10 years and I don’t want to exchange for bonds as it will trigger a taxable event. As a result, I figure I would just leave it as is then spend the next year plus buying enough bonds to get to my target of 30%.

MJW
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Re: When did the musicians on the titanic realize their fate?

Post by MJW » Fri Dec 21, 2018 7:55 pm

Kenkat wrote:
Fri Dec 21, 2018 7:37 pm
Here’s the sequence of returns of Vanguard Total Stock Market Index Inv from 2009 to 2017:

+28.70%, +17.09%, +0.96%, +16.25%, +33.35%, +12.43%, +0.29%, +12.53%, +21.05%

9 years of positive returns. Not a single down year since 2009. Granted, we were coming off a historic market drop, but we have become very accustomed to continued good news year after year. That’s not how things usually work. Stocks have risk - it’s pretty unrealistic to not experience some drops. Total Stock Index is down this YTD @ -6.86%. It was bound to happen sooner or later, so I can’t say I am all that surprised. I still don’t love it, but I understand this is pretty normal behavior so I am a long way from freaking out.
This sums up my attitude nicely. We've had a great run that we all knew would come to an end. Now the market is doing what the market always eventually does and you would think the sky is falling. I certainly do not hope it results in worst-case scenarios for me or anyone else, but I am nowhere close to freaking out yet. In my own case I would become more concerned when it was evident that the impact was reaching beyond the market. Otherwise, as much as I don't like seeing my account balances drop, I will do nothing but press forward as planned.

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stemikger
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Re: When did the musicians on the titanic realize their fate?

Post by stemikger » Fri Dec 21, 2018 7:55 pm

I'm proud that I let myself learn and now consider myself a seasoned index investor which is why I have the proper temperament and asset allocation in place to just sit back and ignore the ups and downs of the market. If it ever gets as bad as you alluded to, it will not matter if you have stocks or bonds, it will be canned food and ammo. So, I'm just enjoying the way I am behaving and as Jack says don't just do something stand there!!
Choose Simplicity ~ Stay the Course!! ~ Press on Regardless!!!

JBTX
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Re: When did the musicians on the titanic realize their fate?

Post by JBTX » Fri Dec 21, 2018 7:56 pm

With some the recent macroeconomic and other developments, it wouldn't surprise me if the markets came down further. Quite a bit further.

Am I concerned? Slightly. I am worried? Not really. Has the recent drop bothered me? Not at all really. What I've invested doesn't seem like it has gone down a lot, because it's diversified and I have new money coming in.

I've been through 2000 and I've been through 2007.

I don't get too worried because I don't plan to pull much or any money out for probably a decade or more. Also I honestly believe I don't have any insight as to what markets will do. So if I'm making a decision to get out, it would likely be a permanent removal. And I'm certainly not there.

If they go down a lot I'll probably buy more.

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Taylor Larimore
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Re: When did the musicians on the titanic realize their fate?

Post by Taylor Larimore » Fri Dec 21, 2018 8:00 pm

Bogleheads:

I am in retirement. Money that I cannot afford to lose is in reasonably safe Total Bond Market Index Fund; the rest of my savings are in a 500 index fund. Result: No worry about the stock market.

If I could start over, I would own The Three-Fund Portfolio.

Happy Holiday!
Taylor
"Simplicity is the master key to financial success." -- Jack Bogle

staythecourse
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Re: When did the musicians on the titanic realize their fate?

Post by staythecourse » Fri Dec 21, 2018 8:02 pm

stemikger wrote:
Fri Dec 21, 2018 7:55 pm
So, I'm just enjoying the way I am behaving and as Jack says don't just do something stand there!!
Honestly, of all the great advice he has given I think this may be his best. It is actionable when advice is needed the most. No one needs advice when the sun is out, but when the thunderstorms start pouring is when it is helpful to hear advice on what to do in that situation. That is when it is human nature to guess oneself and look left and right to see what others are doing thinking that is the best move to make. He makes it clear do nothing even when everyone else is doing something.

Good luck.
"The stock market [fluctuation], therefore, is noise. A giant distraction from the business of investing.” | -Jack Bogle

Scassi
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Re: When did the musicians on the titanic realize their fate?

Post by Scassi » Fri Dec 21, 2018 8:02 pm

WhyNotUs wrote:
Fri Dec 21, 2018 7:09 pm
..... My larger change is a skepticism about America's future that I did not have in 2008. I understand that those who bet against the US have had a poor track record and recall the social dynamics at play in 1968 so I know this is not the first or only time that the county has faces challenging times. At the same time, the lack of commitment to the common good and individual greed that are celebrated give me pause.....
I too recently revised my AA (had posted on the issue earlier so the plan had been in the works mentally for some time). Good thing too as I timed it right by shear luck. But I too simply have a 'sense' of things amiss. I am not a pessimist by nature. But i see a bit of 'Through the Looking-Glass' :

“Well, in OUR country,’ said Alice, still panting a little, ‘you’d generally get to somewhere else—if you ran very fast for a long time, as we’ve been doing.’

‘A slow sort of country!’ said the Queen. ‘Now, HERE, you see, it takes all the running YOU can do, to keep in the same place. If you want to get somewhere else, you must run at least twice as fast as that!”

.............
All I ask is the chance to prove that money can't make me happy - Spike Milligan

Fallible
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Re: When did the musicians on the titanic realize their fate?

Post by Fallible » Fri Dec 21, 2018 8:03 pm

Thinking long-term and having a favorable time horizon kept me in the stock market for 31 years, starting with the crash of '87. I made mistakes here and there (e.g., too scared to rebalance in '08), but having that time was most important.
John Bogle on his often bumpy road to low-cost indexing: "When a door closes, if you look long enough and hard enough, if you're strong enough, you'll find a window that opens."

staythecourse
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Re: When did the musicians on the titanic realize their fate?

Post by staythecourse » Fri Dec 21, 2018 8:06 pm

Taylor Larimore wrote:
Fri Dec 21, 2018 8:00 pm
Bogleheads:

I am in retirement. Money that I cannot afford to lose is in reasonably safe Total Bond Market Index Fund; the rest of my savings are in a 500 index fund. Result: No worry about the stock market.

If I could start over, I would own The Three-Fund Portfolio.

Happy Holiday!
Taylor
Taylor,

Do you think maybe we should start advocating for deciding on the ratio of TBM to TSM+ TISM be decided on how many years of fixed income is needed after Pensions and SS have been accounted for for the retiree? This seems more appropriate way of deciding asset allocation between stocks and bonds for the retiree vs. "Hey I think I can stand losing 20% of my portfolio in any given year so I'll do 60/40".

Good luck.
"The stock market [fluctuation], therefore, is noise. A giant distraction from the business of investing.” | -Jack Bogle

quantAndHold
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Re: When did the musicians on the titanic realize their fate?

Post by quantAndHold » Fri Dec 21, 2018 8:07 pm

The economy is still basically fine, I’m fine with my asset allocation, and from my perspective there’s not much actionable right now. I’m actually more concerned about being able to get health insurance between now and age 65 than I am with the current state of the market.

Short of WWIII, or the financial markets completely seizing up, or some black swan, it’s just business as usual. This happens sometimes. It’ll pass.

DeadPoets
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Re: When did the musicians on the titanic realize their fate?

Post by DeadPoets » Fri Dec 21, 2018 8:10 pm

I’m 35 so I’m not losing sleep over it.

In fact, I’m ready for it to hit already so I can haz discount stocks.

But once recession hits I will feel bad for the parts of the country that feel it the hardest.

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mrspock
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Re: When did the musicians on the titanic realize their fate?

Post by mrspock » Fri Dec 21, 2018 8:12 pm

There is no such dire “Titanic” scenario even on my mind. I don’t make plans for improbable scenarios like some sort of “preper”, I plan for a range of possibilities which are likely and focus my energies there. To do well in this world you don’t need to be perfect, or agonize about every outcome, you need to be “mostly right” . Aim for that, and you’ll do just fine.

In this case, I plan for the equities to drop 50% and be down that far for maybe 2 years. It might be 3 or even 4... unlikely to be 10 or 20. If I’m mostly right... I’ll be just fine. If I’m completely wrong? I’ll probably be better off than most (concrete assets like real estate, solid job/career, my health etc).

Good luck!

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Re: When did the musicians on the titanic realize their fate?

Post by livesoft » Fri Dec 21, 2018 8:53 pm

There are bigger things and more important things to worry about than the decline of the portfolio. I guess I've reached the "I don't care" state when it comes to money. So don't worry about the portfolio is my advice. When you are able to get to that state, I think you will really enjoy it.
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MindBogler
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Re: When did the musicians on the titanic realize their fate?

Post by MindBogler » Fri Dec 21, 2018 9:06 pm

There are a surprising number of people who seem ready to capitulate after a little turbulence. Stop looking at your accounts. The market is risky, it comes with the territory. Go take a walk and look again in 6 months.

Grogs
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Re: When did the musicians on the titanic realize their fate?

Post by Grogs » Fri Dec 21, 2018 9:16 pm

For me, it's all about the job. As long as I stay employed, I don't plan to sell any stocks, and I'll keep buying with every paycheck. Even if the markets keep going down, as long as I have secure employment I can just continue to work and put off retirement. If I lost my job, I expect I could go several years without having to sell stocks, but it would put a big hole in my retirement planning (doubly so because my current job comes with a good pension). I would have to adjust to working longer, having less in retirement, or both.

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