When did the musicians on the titanic realize their fate?

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

Post by ofcmetz » Fri Dec 21, 2018 9:19 pm

KlangFool wrote:
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
Good post.

Klang, I too have a rebalance rule like that. There is a minimum that I simply won’t rebalance beyond. You are showing why it’s important to have a detailed plan in place before a downturn.
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staythecourse
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Re: When did the musicians on the titanic realize their fate?

Post by staythecourse » Fri Dec 21, 2018 9:20 pm

livesoft wrote:
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.
Agree. This is the state I can Financial Nirvana. The point where you just don't care about your portfolio size. I came to this several years ago. I realized no matter how much the dollars were going up in my account I didn't really care. It didn't add to my happiness as I would have thought.

Since then I rarely think about my net worth and focus on my wife and kids which give me more happiness.

Good luck.

p.s. I used to call it Financial Malaise, but someone correctly pointed out malaise was not a good adjective.
"The stock market [fluctuation], therefore, is noise. A giant distraction from the business of investing.” | -Jack Bogle

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

Post by KlangFool » Fri Dec 21, 2018 9:28 pm

ofcmetz wrote:
Fri Dec 21, 2018 9:19 pm
KlangFool wrote:
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
Good post.

Klang, I too have a rebalance rule like that. There is a minimum that I simply won’t rebalance beyond. You are showing why it’s important to have a detailed plan in place before a downturn.
ofcmetz,

Thanks.

It is very simple.

If I am worried enough about something, I will find out what I "Can Do" to prepare for it. If I am not worried enough to do something about that, then, it is not a problem.

KlangFool

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

Post by The Wizard » Fri Dec 21, 2018 9:34 pm

staythecourse wrote:
Fri Dec 21, 2018 9:20 pm
p.s. I used to call it Financial Malaise, but someone correctly pointed out malaise was not a good adjective.
While it's not a good adjective, it's definitely a good noun...
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Re: When did the musicians on the titanic realize their fate?

Post by kolea » Fri Dec 21, 2018 9:40 pm

Whatever the market is doing I get by osmosis since I have not really looked at it and I don't watch TV news. I read the newspaper on-line and have seen snippets that the market is having a terrible week (or month) but I don't know the details. I also don't look at my portfolio since it is not yet time for me to make a withdrawal. Basically, I do care but it is so out of my control that I don't care enough to look into it. I constructed my portfolio with the idea that there will be corrections and crashes, and I have faith in its ability to weather whatever is going on.
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Re: When did the musicians on the titanic realize their fate?

Post by Teague » Fri Dec 21, 2018 9:55 pm

I think no one really likes to see their portfolio declining, so I'd guess everyone worries just a tad when it goes down significantly, whether they admit it or not. Some worry earlier in the decline, or worry more than others. And everyone would like it if all of their investments increased in value steadily in perpetuity. But of course that's not how things work in the real world, so some worry more, and some less, depending on their individual particulars.

As for me, well, I retired a year ago so the timing of the current decline is less than optimal for me. But though I don't especially like it, I did plan for this possibility. Now, if I see Jack Bogle and Warren Buffett singing a duet of Nearer My God To Thee with an iceberg in the background, at that point I reserve the right to worry just a little bit more.
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Re: When did the musicians on the titanic realize their fate?

Post by MDCrab » Fri Dec 21, 2018 9:57 pm

This is a terrible analogy. People died on the Titanic. The market equivalent of the Titanic would be the collapse of our financial system and there’s no evidence that’s happening right now. This isn’t the Titanic, it’s a little bit of sea sickness.

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

Post by nisiprius » Fri Dec 21, 2018 10:10 pm

I am concerned, indeed fearful, and I am staying the course. Those are not exclusive.

Your colorful analogy is... interesting. Every account says that the musicians kept playing because, in the tradition of performers everywhere, they wanted to keep people calm and avoid panic. Also, all the musicians were men. It was, more or less, "women and children first," and the statistics--75% of women on the Titanic survived, 20% of men--show that's really what they did. The musicians would have surely realized that they needed to wait for the women and children, and that their own chances of survival were not high.

You seem to be suggesting that they musicians were stupid and could have saved themselves by taking action early on. How?

Similarly, I decided a long time ago that painful as it is, the reality is that I do not know what is going to happen; it only seems obvious in retrospect. For example, what's happened so far is no worse than what happened in the second half of 2011. The behavioral economist, Cass Sunstein, has admitted to panic-selling at that time. I did not. Not because I knew what was going to happen, but because I felt pretty sure that staying the course would work better for me than trying to rely on my hunches, gut feelings, and precognition.

Being honest about your risk tolerance and adjusting your portfolio to it when things are still good is key, too. I'm a fraidycat and I know it. My stock allocation is low. If stocks literally went to zero and (miraculously) everything else in financial life chugged along "normally," we wouldn't be in great shape but we'd be OK.

2008-2009 was really awful. If it happens again it will be really awful again. I'm staying the course.
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HomerJ
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Re: When did the musicians on the titanic realize their fate?

Post by HomerJ » Fri Dec 21, 2018 10:19 pm

TVD wrote:
Fri Dec 21, 2018 5:15 pm
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.
I "battened down the hatches" eight years ago.

Many of us... not of all us, but many of us... believe the following:

You should ALWAYS be prepared for the market to drop 50% tomorrow and take a while to recover.

Because it might.

If you've set your Asset Allocation so that you can stay the course through a 50% drop, then you don't have to worry about a 50% drop anymore.

It's like always carrying around an umbrella. When people come on TV and start screaming "It looks like the chance of rain is higher today than yesterday!!", you don't have do anything... because you're already carrying an umbrella.

It's starting to rain now... and I don't worry, and I don't have to do anything... because I'm already carrying an umbrella

The market may indeed crash 50%, 70%, who knows? I have enough in bonds and cash and a paid-off house. I can wait for it to come back.

Even if it never comes back (unlikely but nothing's impossible), my family will still survive.

Sure, I don't like it, sure I hate seeing my balances go down, but I'll be okay no matter what happens, and the smart thing to do is wait it out.

You know the 9%-10% historical long-term return of the stock market?? That INCLUDES the crashes. Read that again.
Last edited by HomerJ on Fri Dec 21, 2018 10:24 pm, edited 2 times in total.
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Hyperborea
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Re: When did the musicians on the titanic realize their fate?

Post by Hyperborea » Fri Dec 21, 2018 10:23 pm

Grt2bOutdoors wrote:
Fri Dec 21, 2018 7:42 pm
Where are the posters who say they are holding 90/10 funds?
Are you really asking out of interest or only a desire to thump your chest and try to reinforce your own belief in the "superiority" of your decision? If it's the former then a less aggressive questioning would be recommended. If it's the later then that's against the terms of the board.

I'm not sure about the other high equity folks but I've been pretty busy despite being retired and I've been keeping quiet on the sidelines mostly. I don't see the need to run into every chicken little thread with those holding a 50/50 allocation with a decent emergency fund and a good job crying about how they should have moved to cash at the beginning of the year or worried that the world is ending. It's usually not a productive use of time.

I've said so a number of times that I was 100/0 (except for a fixed emergency fund - not rebalanced into the portfolio) from the early 90's until about the time I retired in my early 50's a couple of years ago. That included buying more equities through the recession of Bush the Elder, the dot com bust, the great recession and all the blips along the way. I'm at something on the order of 65/35 at this point on a glide up to something around 85/15 over the next few years. It's not a pure glide but a bit of hybrid glide/bucket because of complex international tax reasons.
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Re: When did the musicians on the titanic realize their fate?

Post by HomerJ » Fri Dec 21, 2018 10:23 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.
Yeah, a -7% year after a 21% gain year really isn't the end of the world.
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staythecourse
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Re: When did the musicians on the titanic realize their fate?

Post by staythecourse » Fri Dec 21, 2018 10:37 pm

The Wizard wrote:
Fri Dec 21, 2018 9:34 pm
staythecourse wrote:
Fri Dec 21, 2018 9:20 pm
p.s. I used to call it Financial Malaise, but someone correctly pointed out malaise was not a good adjective.
While it's not a good adjective, it's definitely a good noun...
Well corrected.

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

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

Post by justsomeguy2018 » Fri Dec 21, 2018 11:00 pm

HomerJ wrote:
Fri Dec 21, 2018 10:23 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.
Yeah, a -7% year after a 21% gain year really isn't the end of the world.
VTI $43 in 2009 to latest peak of $151.84 is a 253% increase. A drop back down to $43 would be only a -71% decrease from that peak.

So a 253% increase followed by a -71% decrease basically puts you right back where you started.

Point being comparing percents in this manner doesn't really tell the whole story.

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

Post by fennewaldaj » Fri Dec 21, 2018 11:31 pm

As a middle stage accumulator this decline is a big fat meh. If anything I am kinda happy to get to buy stocks at lower multiples. 2017 was the year I was really able to kick my savings into high gear so the gain that year was not really helpful.

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

Post by HomerJ » Fri Dec 21, 2018 11:48 pm

justsomeguy2018 wrote:
Fri Dec 21, 2018 11:00 pm
HomerJ wrote:
Fri Dec 21, 2018 10:23 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.
Yeah, a -7% year after a 21% gain year really isn't the end of the world.
VTI $43 in 2009 to latest peak of $151.84 is a 253% increase. A drop back down to $43 would be only a -71% decrease from that peak.

So a 253% increase followed by a -71% decrease basically puts you right back where you started.

Point being comparing percents in this manner doesn't really tell the whole story.
You make a good point... But still, 21% gain followed by 7% loss is still a 12% net gain over 2 years. Not 14%, but still not terrible.
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Re: When did the musicians on the titanic realize their fate?

Post by willthrill81 » Fri Dec 21, 2018 11:53 pm

Yeah, a ~20% market drop implies that the entire stock market is going to go to zero. :oops:

Time to break out the beans, bullets, and Band-aids I suppose.
“It's a dangerous business, Frodo, going out your door. You step onto the road, and if you don't keep your feet, there's no knowing where you might be swept off to.” J.R.R. Tolkien,The Lord of the Rings

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

Post by hdas » Fri Dec 21, 2018 11:57 pm

The way I can sleep while crashing the iceberg is truly diversifying our assets:

> Home
> Cold hard cash
> 80/20 Boglehead Portfolio
> Abs Return Portfolio (Job/Business)
> The wife’s safe income
> Artwork
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Re: When did the musicians on the titanic realize their fate?

Post by MJW » Sat Dec 22, 2018 12:03 am

Grt2bOutdoors wrote:
Fri Dec 21, 2018 7:42 pm
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?
Hi.

I don't bang drums. Never said a word about "buy the dip." That happens to be one of the "-isms" on this forum that I find to be overwrought and slightly obnoxious.

But anyway, is there something you wanted to ask me?

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

Post by justsomeguy2018 » Sat Dec 22, 2018 12:24 am

HomerJ wrote:
Fri Dec 21, 2018 11:48 pm
justsomeguy2018 wrote:
Fri Dec 21, 2018 11:00 pm
HomerJ wrote:
Fri Dec 21, 2018 10:23 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.
Yeah, a -7% year after a 21% gain year really isn't the end of the world.
VTI $43 in 2009 to latest peak of $151.84 is a 253% increase. A drop back down to $43 would be only a -71% decrease from that peak.

So a 253% increase followed by a -71% decrease basically puts you right back where you started.

Point being comparing percents in this manner doesn't really tell the whole story.
You make a good point... But still, 21% gain followed by 7% loss is still a 12% net gain over 2 years. Not 14%, but still not terrible.
Except this year isn't finished yet. :beer

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

Post by justsomeguy2018 » Sat Dec 22, 2018 12:28 am

willthrill81 wrote:
Fri Dec 21, 2018 11:53 pm
Yeah, a ~20% market drop implies that the entire stock market is going to go to zero. :oops:

Time to break out the beans, bullets, and Band-aids I suppose.
The market lost 90% of its peak value during the Great Depression. We're not there yet and may never be but you never see these things coming until they have unfolded.

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

Post by Ztx » Sat Dec 22, 2018 12:28 am

100% stocks ...~15 years till retirement.
Not enjoying seeing my balance decrease, but nothing I can do about it. Staying the course, hoping to remain employed and keep accumulating.

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

Post by willthrill81 » Sat Dec 22, 2018 12:29 am

justsomeguy2018 wrote:
Sat Dec 22, 2018 12:28 am
willthrill81 wrote:
Fri Dec 21, 2018 11:53 pm
Yeah, a ~20% market drop implies that the entire stock market is going to go to zero. :oops:

Time to break out the beans, bullets, and Band-aids I suppose.
The market lost 90% of its peak value during the Great Depression. We're not there yet and may never be but you never see these things coming until they have unfolded.
As I posted in another thread, we've had a total of 8 bear markets since the Great Depression.

What are you recommending or seeking advice for, specifically?
Last edited by willthrill81 on Sat Dec 22, 2018 12:30 am, edited 1 time in total.
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Re: When did the musicians on the titanic realize their fate?

Post by greenhill » Sat Dec 22, 2018 12:29 am

On the other hand, I enjoy watching Air Crash Investigation. I remember that there is an episode about Air France 447, the plane missed over Atlantic a few years ago. The plane entered a thunderstorm. The plane would have been fine if the pilots do nothing and stay the course. Unfortunately, the pilots panicked, made a series of mistakes, and the plane was doomed.

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

Post by justsomeguy2018 » Sat Dec 22, 2018 12:48 am

willthrill81 wrote:
Sat Dec 22, 2018 12:29 am
justsomeguy2018 wrote:
Sat Dec 22, 2018 12:28 am
willthrill81 wrote:
Fri Dec 21, 2018 11:53 pm
Yeah, a ~20% market drop implies that the entire stock market is going to go to zero. :oops:

Time to break out the beans, bullets, and Band-aids I suppose.
The market lost 90% of its peak value during the Great Depression. We're not there yet and may never be but you never see these things coming until they have unfolded.
As I posted in another thread, we've had a total of 8 bear markets since the Great Depression.

What are you recommending or seeking advice for, specifically?
Nothing, I was just pointing out that a 20% drop could become a 90% drop. In response to: "Yeah, a ~20% market drop implies that the entire stock market is going to go to zero."

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

Post by SoAnyway » Sat Dec 22, 2018 1:02 am

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. 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.
With apologies, OP, I've not read all of the responses. There are just too many "freak out" threads of late. I can't keep up with all of them.

Bottom line: As someone who's stayed the course through all of the ups and downs since the crash of '87 - and to your point, there were DEFINITELY times when I wondered if I was going to go down with the sinking ship : o - I've never regretted staying the course, even when my belief was shaken by external events. The dot-com bust in in the early aughts, the financial crisis in 2007-2008, yada yada yada - those were VERY scary times. Much scarier than this most recent blip.

To answer your questions, OP, I have no (to use your words) "maximum tolerated loss" or defined point "at which I become concerned". Why? Because I've not invested more in the market than I can afford to lose all of, and I've allocated appropriately in my portfolio for my own risk tolerance. If the current volatility is making you fretful, I suggest you revisit your AA or why you're investing at all. See here.
Last edited by SoAnyway on Sat Dec 22, 2018 8:30 am, edited 3 times in total.
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Re: When did the musicians on the titanic realize their fate?

Post by srt7 » Sat Dec 22, 2018 1:03 am

So if I am getting this right ...

Musicians = Us investors
Titanic = Current stock market condition

The stock market will bounce back up but I don't think the Titanic would. My point being that while this isn't the best of analogies, it should put things in to perspective. For one there is NOTHING we can do about the market currently going down and secondly (unlike the musicians in Titanic) we get the opportunity to live to fight another day :sharebeer

PS: The musicians realized their fate at pretty much the same time as other passengers and crew. But their choice on how to react to it is what makes them look superior.
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Re: When did the musicians on the titanic realize their fate?

Post by dgm » Sat Dec 22, 2018 1:17 am

TVD wrote:
Fri Dec 21, 2018 5:15 pm
What are the conditions where people on this site become concerned?
I think it differs by personal circumstance. Obviously people have different tolerances based on personality but even the same person has different tolerances depending on their own situation.

1. where are you in your career? Just getting started/mid career with a secure job and plenty of future earnings to come? I wouldn't be surprised if you're pretty stoked! Just retired and watching your nest egg dwindle every day? I wouldn't be surprised if it is concerning. If you are at the end of your career/retired, this could be the titanic. If you are at the beginning, this is more like a temporary sale.

2. how invested are you in the market? Do you have lots of cash on the side from having been frightened during the 08 downturn? or are you all in?

3. how recently did you put a good chunk of money in? If its been a while and you are sitting on gains, its probably easier to swallow

4. how financially secure are you? warren buffett i'm sure sleeps fine at night even if the market drops 80%, partly because he can lose 99% of his wealth and still be quite rich. If you're counting on some market gains to get you up to your desired income level in retirement -- thats tougher to watch things evaporate.

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

Post by Dead Man Walking » Sat Dec 22, 2018 1:32 am

I like the song "Dance Band on the Titanic." Meaningful discussions of anything that might lead to actionable behavior are not permitted on this forum.

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

Post by 2015 » Sat Dec 22, 2018 1:33 am

HomerJ wrote:
Fri Dec 21, 2018 10:19 pm
TVD wrote:
Fri Dec 21, 2018 5:15 pm
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.
I "battened down the hatches" eight years ago.

Many of us... not of all us, but many of us... believe the following:

You should ALWAYS be prepared for the market to drop 50% tomorrow and take a while to recover.

Because it might.

If you've set your Asset Allocation so that you can stay the course through a 50% drop, then you don't have to worry about a 50% drop anymore.

It's like always carrying around an umbrella. When people come on TV and start screaming "It looks like the chance of rain is higher today than yesterday!!", you don't have do anything... because you're already carrying an umbrella.

It's starting to rain now... and I don't worry, and I don't have to do anything... because I'm already carrying an umbrella

The market may indeed crash 50%, 70%, who knows? I have enough in bonds and cash and a paid-off house. I can wait for it to come back.

Even if it never comes back (unlikely but nothing's impossible), my family will still survive.

Sure, I don't like it, sure I hate seeing my balances go down, but I'll be okay no matter what happens, and the smart thing to do is wait it out.

You know the 9%-10% historical long-term return of the stock market?? That INCLUDES the crashes. Read that again.
Excellent.
Those who prepared well in advance for worst case scenarios by securing a lifeboat are unconcerned while the Titanic sinks. They might be thinking "I told you so" to the overconfident who got caught in the rainstorm without so much as an umbrella as a result of wasting so much time reading every blog, new study, latest pronouncement by an academic, "distinguished" author, the "good guys", etc.

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

Post by MJW » Sat Dec 22, 2018 2:36 am

2015 wrote:
Sat Dec 22, 2018 1:33 am
Excellent.
Those who prepared well in advance for worst case scenarios by securing a lifeboat are unconcerned while the Titanic sinks. They might be thinking "I told you so" to the overconfident who got caught in the rainstorm without so much as an umbrella as a result of wasting so much time reading every blog, new study, latest pronouncement by an academic, "distinguished" author, the "good guys", etc.
Why stop at thinking "I told you so?" Why not point and laugh? Why not also kick a little mud on them while they're down?

I mean, if we're going to be haughty and disdainful about it, why not go all out?

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

Post by dratkinson » Sat Dec 22, 2018 3:51 am

Had to go look. I last bought TSM/TISM in 2012. Since then I've been buying bonds to stay in balance.

I notice TSM is ~double what it was when I last bought in 2012. TISM is ~even with 2012.

Planning to buy TSM on Monday, and will be satisfied that there's enough international exposure in the embedded S&P500 companies.

Thinking it would be nice to buy equities for a little while, for a change.
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Re: When did the musicians on the titanic realize their fate?

Post by Grt2bOutdoors » Sat Dec 22, 2018 8:41 am

greenhill wrote:
Sat Dec 22, 2018 12:29 am
On the other hand, I enjoy watching Air Crash Investigation. I remember that there is an episode about Air France 447, the plane missed over Atlantic a few years ago. The plane entered a thunderstorm. The plane would have been fine if the pilots do nothing and stay the course. Unfortunately, the pilots panicked, made a series of mistakes, and the plane was doomed.
Are you sure? My recollection was the pitot tubes responsible for reading airspeed was sending incorrect data to the cockpit. The pilots reaction was due to a crucial part of the planes navigation malfunctioning, hence their reaction was not that solely attributed to them.
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Re: When did the musicians on the titanic realize their fate?

Post by Grt2bOutdoors » Sat Dec 22, 2018 8:45 am

MJW wrote:
Sat Dec 22, 2018 2:36 am
2015 wrote:
Sat Dec 22, 2018 1:33 am
Excellent.
Those who prepared well in advance for worst case scenarios by securing a lifeboat are unconcerned while the Titanic sinks. They might be thinking "I told you so" to the overconfident who got caught in the rainstorm without so much as an umbrella as a result of wasting so much time reading every blog, new study, latest pronouncement by an academic, "distinguished" author, the "good guys", etc.
Why stop at thinking "I told you so?" Why not point and laugh? Why not also kick a little mud on them while they're down?

I mean, if we're going to be haughty and disdainful about it, why not go all out?
I agree with you, what’s the point of kicking someone when they are down. Lots of nastiness on the forum lately. The market is down about 9%, okay it stings, but you learn from these experiences - revisit your plan, read some more change course a bit and keep going.
"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 mouses » Sat Dec 22, 2018 8:51 am

Dottie57 wrote:
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.
Yes, it's not like I'm out buying jewelry etc. normally, but I am also looking carefully at my spending.

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

Post by munemaker » Sat Dec 22, 2018 8:53 am

Some of us have been through these declines so many times in the past, and after such a long bull run, we knew a big drop was inevitable. We have weathered these before and are prepared to do it again. The only questions are how deep it goes and how long it lasts.

Investors, market timers and speculators who started after 2008 have never felt anything like this, and they are understandably very uncomfortable. Those who proclaimed their fortitude for 100% equities in the past will be tested, and some will falter. You can think about it and talk about it, but you never know how you are going to react until your money is on the line during a bear.

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

Post by jeffyscott » Sat Dec 22, 2018 9:08 am

nisiprius wrote:
Fri Dec 21, 2018 10:10 pm
2008-2009 was really awful. If it happens again it will be really awful again. I'm staying the course.
I am trying to remember when 2008-09 actually started feeling like 2008-09. I am not sure when, but do know that I was down to rebabalancing by (seemingly) throwing away something like $250 daily and had decided on an end point, where we would stop and conserve what was left in order to ensure the ability to retire as planned. It was awful and I know it had to feel far worse for those who feared losing their job (or did lose it) and had no pension waiting for them.

But 2008-09 didn't feel like it did just because of the amount by which stocks had declined, it was that it was potentially going to be what someone above called the market equivalent of the Titanic, the collapse of our financial system. The current decline, like 2000, does not have that feeling at all, not even close (at least not yet).
Time is your friend; impulse is your enemy. - John C. Bogle

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

Post by greenhill » Sat Dec 22, 2018 9:21 am

Grt2bOutdoors wrote:
Sat Dec 22, 2018 8:41 am
greenhill wrote:
Sat Dec 22, 2018 12:29 am
On the other hand, I enjoy watching Air Crash Investigation. I remember that there is an episode about Air France 447, the plane missed over Atlantic a few years ago. The plane entered a thunderstorm. The plane would have been fine if the pilots do nothing and stay the course. Unfortunately, the pilots panicked, made a series of mistakes, and the plane was doomed.
Are you sure? My recollection was the pitot tubes responsible for reading airspeed was sending incorrect data to the cockpit. The pilots reaction was due to a crucial part of the planes navigation malfunctioning, hence their reaction was not that solely attributed to them.
A bit off topic here so I would make it as short as possible. The plane was getting incorrect data temporarily, but it would be absolutely fine if they just do nothing and let the plane continue to fly. The plane had no immediate threat of crashing so the pilots should really not overreact. However one of the pilots panicked, his instint made him trying to climb up all the way and thus stalling the plane.

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

Post by RadAudit » Sat Dec 22, 2018 9:24 am

OK. I'll try to answer your last question.

I found out my risk tolerance wasn't what I thought it was in ~Dec., 2008, IIRC. I guess it was about 3 months before the bottom. I didn't sell; but, I didn't rebalance either. The overall loss on the portfolio at that time was about 1/3, IIRC. It would have been the third rebalance during that market drop as the portfolio fell through successive rebalance bands of +/- 5% on the top line AA. So, the tone on this forum may change a bit when the markets have been going down for more than a year and are about +40% down from the top, if history is any guide. Just a guess. Don't know.

It was then that I made an AA change from 60 / 40 to 50 / 50 and have held there ever since. I was ~ 61 at the time. Retired two years later. I now have a number of years (more than 10) of safe withdrawals in bonds that'll hopefully plug the gap between projected expenditures and other cash inflows. But, I still am concerned. Concerned the unexpected expenditures that I can't control and are currently unknown may pop up and throw a monkey wrench in to the gears. But, I still remind myself that I should be OK; and, I believe the withdrawal strategy is sound.

Downturns do strange things to some folks. Guess I'm one of them. Guess we'll find out together.
FI is the best revenge. LBYM. Invest the rest. Stay the course. - PS: The cavalry isn't coming, kids. You are on your own.

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

Post by HomerJ » Sat Dec 22, 2018 10:02 am

dgm wrote:
Sat Dec 22, 2018 1:17 am
TVD wrote:
Fri Dec 21, 2018 5:15 pm
What are the conditions where people on this site become concerned?
I think it differs by personal circumstance. Obviously people have different tolerances based on personality but even the same person has different tolerances depending on their own situation.

1. where are you in your career? Just getting started/mid career with a secure job and plenty of future earnings to come? I wouldn't be surprised if you're pretty stoked! Just retired and watching your nest egg dwindle every day? I wouldn't be surprised if it is concerning. If you are at the end of your career/retired, this could be the titanic. If you are at the beginning, this is more like a temporary sale.

2. how invested are you in the market? Do you have lots of cash on the side from having been frightened during the 08 downturn? or are you all in?

3. how recently did you put a good chunk of money in? If its been a while and you are sitting on gains, its probably easier to swallow

4. how financially secure are you? warren buffett i'm sure sleeps fine at night even if the market drops 80%, partly because he can lose 99% of his wealth and still be quite rich. If you're counting on some market gains to get you up to your desired income level in retirement -- thats tougher to watch things evaporate.
This is a really good post.
The J stands for Jay

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

Post by iamlucky13 » Sat Dec 22, 2018 10:45 am

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.
Are you asking about retirees with 90/10 portfolios?

I'm 20+ years from retirement, and perfectly comfortable with my retirement accounts in 100/0.

It's been suggested that I think of all my accounts as one combined asset allocation, although I haven't started tracking it that way so far. Partially because it gets a little more complicated when merging taxable and pre-tax account values and planning conditions under which Roth account principles can be withdrawn.

If I lump everything together, I'm about 75/10/15. This drop is renewing thoughts I had that the taxable money I'm tentatively earmarking for a step up from our starter home has too much cash drag in it considering our timeline is flexible. The drop is certainly a good opportunity for me to make that previously planned change to a more aggressive portfolio.

However, I don't bang drums about that, because I know that my situation is not the same as probably the majority of investors.

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

Post by soda_bandit » Sat Dec 22, 2018 10:48 am

munemaker wrote:
Sat Dec 22, 2018 8:53 am
Some of us have been through these declines so many times in the past, and after such a long bull run, we knew a big drop was inevitable. We have weathered these before and are prepared to do it again. The only questions are how deep it goes and how long it lasts.

Investors, market timers and speculators who started after 2008 have never felt anything like this, and they are understandably very uncomfortable. Those who proclaimed their fortitude for 100% equities in the past will be tested, and some will falter. You can think about it and talk about it, but you never know how you are going to react until your money is on the line during a bear.
How are you coming to your conclusion about how people who started investing post 2008 feel at the moment? As someone who only started to accumulate significant investments after 2008, and has a bond allocation somewhere around 3-5% I don't feel particularly uncomfortable yet.

I am happy to continue reporting back if the decline continues and accelerates.

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

Post by vested1 » Sat Dec 22, 2018 11:36 am

When this subject comes up I always come back to the notion of riding the coattails of those who will be unlikely to lose money in the long run. I don't have the expertise nor the insight to be able to zig or zag at precisely the right moment, so there's no point in stressing about it.

In my opinion, that is the beauty of wide based index investing. I truly believe that institutional investors will takes steps to counteract any permanent affects of market declines, and I am more than happy to let them take the credit for my success. Diversification in a portfolio is only a portion of what's needed to weather a storm however, especially for a retiree. Separate streams of fixed income which are not susceptible to market volatility are the sleeping pill I take every night.

That being said, we are indeed in historic times. I have resigned myself to the possibility that our portfolio may decline even more than 50% because of the uncertainty and recklessness that fills the news, worldwide. If things got really bad, a devastated portfolio would seem to be the least of our worries.

As far as the Titanic goes, as long as there's a lifeboat left for my wife and kids, I'll keep on playing that fiddle.

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

Post by Taylor Larimore » Sat Dec 22, 2018 11:55 am

staythecourse wrote:
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.
Staythecourse:

No one knows the best retirement income strategy because no one can foresee the future.

There are people who make a living developing convoluted retirement income strategies. I think your suggestion is about as good as any.

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

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

Post by Small Law Survivor » Sat Dec 22, 2018 12:08 pm

I'm 67, semi-retired at 65. Moved to 50/50 at that time. We are living off our taxable account until I turn 70, at which point social security will kick in, reducing 4% withdrawals to 3%. That, plus RMDs will change our tax situation, and I'll stop doing Roth conversions, which I am doing pretty aggressively every year from 65-69.

According to the Vanguard website and Morningstar we are down approx. 5% year to date. However, a lot of this attributable to our international funds, which are all down anywhere from 16-21%. Oh, and small cap value funds are down in the mid-teens as well. Total stock market is down only 8% YTD. I'm paying the price for international and value tilts! It hasn't been worth it in the past, but I'm holding steady on these investments, and hoping the future will vindicate them.

The real issue I'm struggling with is how to withdraw from our taxable account in 2019. I'm studying McClung's book "Living Off Your Money," and the massive (438 post) BH thread on this:

viewtopic.php?t=192105

McClung's Prime Harvesting would (if I understand it correctly), require living off cash/bonds in 2019, and selling no stocks. You only sell stocks when they've appreciated 20%.

McClung's system mandates purchasing no stocks (other than dividend/cap gain reinvestments) after retirement, and I'm not sure I buy this 100%. If one of my investments fell 40 or 50%, I'm be temped to buy it in one of our tax sheltered accounts (perhaps Roth IRA, where it could grow (?) for 10 years or more). But, I think I will follow McClung in our taxable account, which was invested 40/60 at the beginning of 2018.

As far as bear markets go, I lived through all of them with equanimity, never sold, only bought more. But, of course, I was working then, and balances were low so actual dollar losses weren't a very big deal. Today, being down 5% is a lot of money! I'm certainly glad (today) that I reduced risk to 50/50.

Small Law Survivor
68 yrs, semi-retired lawyer, 50/40/10 s/b/c, 70/30 dom/int'l. Plan: 4% WR until age 70, 3% after social security kicks in. Boglehead since day 1 (and M* Diehard before that) under various other names

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

Post by praxis » Sat Dec 22, 2018 1:06 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
Happy Holiday to you, Taylor. And to all Bogleheads!
Your advice and that of all the Bogleheads team has tightened our sails and reduced worry during the market slides.

We are in retirement also.

We are invested 40/60, stocks/bonds, all Vanguard funds
All stocks are in taxable, bonds in IRAs.

I turn 70 next year and start RMDs which will all come from the bonds in my IRA
I also will start my Social Security payments. DW starts Medicare next year and SS in 5 more years.

This added cash flow will mostly replace the need to make withdrawals from our taxable accounts (stocks)
So even if it takes a long time for the market to recover, we can leave our stock fund shares alone.
EXCEPT
What this event is reminding me, is that the time is near for us to consider an inflation-adjusted joint SPIA.
The proceeds for this purchase will come from our taxable stock fund investments,
so this market decline has us pondering the timing of the annuity purchase.

We may choose to purchase several smaller annuities over the next 5-10 years, diversifying the risks from market prices, interest and annuity rates.

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

Post by munemaker » Sat Dec 22, 2018 1:15 pm

soda_bandit wrote:
Sat Dec 22, 2018 10:48 am
How are you coming to your conclusion about how people who started investing post 2008 feel at the moment?
Observation and logic. Obviously some people are more risk averse than others.
soda_bandit wrote:
Sat Dec 22, 2018 10:48 am
As someone who only started to accumulate significant investments after 2008, and has a bond allocation somewhere around 3-5% I don't feel particularly uncomfortable yet.
Sounds like you have the temperament to be a good investor.
soda_bandit wrote:
Sat Dec 22, 2018 10:48 am
I am happy to continue reporting back if the decline continues and accelerates.
Please do.

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

Post by ram » Sat Dec 22, 2018 1:21 pm

I was buying stocks all through the downturn of 2008-09. I hope to do so during this downturn as well. We have two steady jobs, a paid off house and possibly over funded 529 accounts. I am not concerned "yet".
Ram

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

Post by dodecahedron » Sat Dec 22, 2018 1:36 pm

MDCrab wrote:
Fri Dec 21, 2018 9:57 pm
This is a terrible analogy. People died on the Titanic. The market equivalent of the Titanic would be the collapse of our financial system and there’s no evidence that’s happening right now. This isn’t the Titanic, it’s a little bit of sea sickness.
Not a terrible analogy. There is a significant body of evidence that ¨negative wealth shocks¨ are associated with increases in mortality rates.

See this JAMA study as well as the articles cited in the bibliography at the end.

https://jamanetwork.com/journals/jama/f ... le/2677445

Note that the JAMA study´s criterion for significant wealth shock was a 75% decrease in net worth over a two year period. Although a not-yet-quite 20% drop in S&P is far from 75%, there are many folks who are so leveraged (due to a variety of types of debt burdens, e.g., credit cards, car loans, HELOC, student loans, etc.) that a 20% drop in the value of financial assets could easily constitute more than a 75% drop in net worth for many folks.

The JAMA study followed a cohort of almost 9,000 folks over age 51 for twenty years (from 1994 through 2014). Of that cohort, 25% experienced at least one ¨negative financial shock¨ during that period.

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

Post by Doom&Gloom » Sat Dec 22, 2018 1:42 pm

vested1 wrote:
Sat Dec 22, 2018 11:36 am
When this subject comes up I always come back to the notion of riding the coattails of those who will be unlikely to lose money in the long run. I don't have the expertise nor the insight to be able to zig or zag at precisely the right moment, so there's no point in stressing about it.

In my opinion, that is the beauty of wide based index investing. I truly believe that institutional investors will takes steps to counteract any permanent affects of market declines, and I am more than happy to let them take the credit for my success. Diversification in a portfolio is only a portion of what's needed to weather a storm however, especially for a retiree. Separate streams of fixed income which are not susceptible to market volatility are the sleeping pill I take every night.

That being said, we are indeed in historic times. I have resigned myself to the possibility that our portfolio may decline even more than 50% because of the uncertainty and recklessness that fills the news, worldwide. If things got really bad, a devastated portfolio would seem to be the least of our worries.

As far as the Titanic goes, as long as there's a lifeboat left for my wife and kids, I'll keep on playing that fiddle.
+1

As I recall, most lifeboats on the Titanic were launched with empty seats due to the chivalry of the era. Maybe we "stay the course" folks are the passengers who stayed behind. Or maybe we were the ones who stayed in England rather than sailing to the US. Who knows?

I wonder if any of the band members were so confident of their survival that they were re-stringing their instruments between pieces.

I have not quite reached a rebalancing point, but I may delay that a bit as my automatic RMD distribution will be coming from my bond portion next month so it may rebalance itself without my being actively involved in the process.

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

Post by Stormbringer » Sat Dec 22, 2018 3:26 pm

Some wisdom from 1987.
Warren Buffett wrote: Ben Graham, my friend and teacher, long ago described the mental attitude toward market fluctuations that I believe to be most conducive to investment success. He said that you should imagine market quotations as coming from a remarkably accommodating fellow named Mr. Market who is your partner in a private business. Without fail, Mr. Market appears daily and names a price at which he will either buy your interest or sell you his.

Even though the business that the two of you own may have economic characteristics that are stable, Mr. Market's quotations will be anything but. For, sad to say, the poor fellow has incurable emotional problems. At times he feels euphoric and can see only the favorable factors affecting the business. When in that mood, he names a very high buy-sell price because he fears that you will snap up his interest and rob him of imminent gains. At other times he is depressed and can see nothing but trouble ahead for both the business and the world. On these occasions he will name a very low price, since he is terrified that you will unload your interest on him.

Mr. Market has another endearing characteristic: He doesn't mind being ignored. If his quotation is uninteresting to you today, he will be back with a new one tomorrow. Transactions are strictly at your option. Under these conditions, the more manic-depressive his behavior, the better for you.

But, like Cinderella at the ball, you must heed one warning or everything will turn into pumpkins and mice: Mr. Market is there to serve you, not to guide you. It is his pocketbook, not his wisdom, that you will find useful. If he shows up some day in a particularly foolish mood, you are free to either ignore him or to take advantage of him, but it will be disastrous if you fall under his influence. Indeed, if you aren't certain that you understand and can value your business far better than Mr. Market, you don't belong in the game. As they say in poker, "If you've been in the game 30 minutes and you don't know who the patsy is, you're the patsy."
"Compound interest is the most powerful force in the universe." - Albert Einstein

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