Did you get spooked by the December 2018 fall and gave up on passive?

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mrspock
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Re: Did you get spooked by the December 2018 fall and gave up on passive?

Post by mrspock » Sat Feb 16, 2019 2:34 pm

student wrote:
Sat Feb 16, 2019 7:42 am
No. I did not. I only did TLH.
This. The correction was actually a gift... I sold the last of my company stock in 2018 and this allowed me to TLH away 2/3 of the capital gains taxes... sitting here in Feb with the market almost back where it started, I am feeling quite lucky! :D

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bengal22
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Re: Did you get spooked by the December 2018 fall and gave up on passive?

Post by bengal22 » Sat Feb 16, 2019 2:54 pm

Corrections are normal and expected. Some are deeper(50%) and longer(18 months). If you are comfortable with AA just hold the course and use dips and peaks to rebalance. I have been through many corrections since 80's.
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White Coat Investor
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Re: Did you get spooked by the December 2018 fall and gave up on passive?

Post by White Coat Investor » Sat Feb 16, 2019 4:12 pm

livesoft wrote:
Sat Feb 16, 2019 1:06 pm
White Coat Investor wrote:
Sat Feb 16, 2019 10:19 am
Personally, I wish there were a bit less volatility. I was okay with the magnitude of the decline, but I really needed it to stay there for a while. Between the 30 day rule and the 60 day rule I didn't get all the TLHing in that I wanted to, much less invest a lot of money. I invested at the beginning of December and the beginning of January and missed most of the buying opportunity!
Although I did not sell any shares for a loss in my taxable account in all of 2018, I would not have let any TLH, nor 30- nor 60-day rules interfere with any rebalancing that I would want to do. I had plenty of bond funds in tax-deferred and simply sold them and bought equity funds following my IPS.

In retrospect, I bought too soon, too often, and too little. But at least one of the days for buys was 12/24. :twisted:
Not sure I hit any rebalancing bands and even if I had, I'm still mostly rebalancing with new money so that would have taken effect in January. December and January buys were all stocks, but that's as close as I got to really buying low. I was nowhere near the 24th unfortunately.
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DrGoogle2017
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Re: Did you get spooked by the December 2018 fall and gave up on passive?

Post by DrGoogle2017 » Sat Feb 16, 2019 4:12 pm

No, but I only did a bit of buying, not a big buying. Not a huge gain. But whatever I owned went up bigly.

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GerryL
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Re: Did you get spooked by the December 2018 fall and gave up on passive?

Post by GerryL » Sat Feb 16, 2019 4:51 pm

When I checked the balance of my IRA on New Year's Day, I saw that it had dipped below $1M for the first time in a long time. Since I have to start RMDs this year and don't need the distribution to live on, I saw that as sort of a good thing as it would mean a smaller RMD, leaving the rest to continue growing tax deferred. But by the time the final dividend reinvestments of the year were accounted for, the 12/31 balance was again over $1M. No big deal.

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Earl Lemongrab
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Re: Did you get spooked by the December 2018 fall and gave up on passive?

Post by Earl Lemongrab » Sat Feb 16, 2019 5:44 pm

That was "brutal"? Huh. Let me tell you my little tale.

Years ago, at age 50, I finally got serious about investing. I read a bunch of books and web sites, I developed a portfolio, then I implemented it. That included bringing in a bunch of cash that had been in taxable.

When, you might ask? I finished all the buying in fall of 2007. I probably don't need to tell you what happened next.

If I didn't panic and abandoned index investing in the worst recession/market of my adult life, then why would a transitory blib last year bother me.

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Re: Did you get spooked by the December 2018 fall and gave up on passive?

Post by TropikThunder » Sat Feb 16, 2019 5:59 pm

mariezzz wrote:
Sat Feb 16, 2019 1:08 pm
Seriously? You think you would have fared better with active? If your risk tolerance isn't appropriate for your current asset allocation, adjust it. It sounds like you need to assess that.
Right? Has OP ever come back and addressed what they meant by specifically giving up on passive? What an odd question, unless they mean active funds could have been more, well, active, and thus avoided the "brutal" drop?

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Re: Did you get spooked by the December 2018 fall and gave up on passive?

Post by UpperNwGuy » Sat Feb 16, 2019 6:00 pm

revhappy wrote:
Fri Feb 15, 2019 6:53 pm
The December plunge was brutal and to rub salt on injury, lots of experts said cash is an asset class that will now compete with equities. So now that the markets have reverted back to their early December 2018 levels, are you feeling like getting into cash, or have already gotten into cash?

Just want to know how many people are feeling like me. I sold a chunk of my equities last week and now I am down to 33% equities from 50% equities.
OP: Where are you? You initiated this thread and then disappeared. Why aren't you interacting with the many comments?

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Doom&Gloom
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Re: Did you get spooked by the December 2018 fall and gave up on passive?

Post by Doom&Gloom » Sat Feb 16, 2019 6:02 pm

TropikThunder wrote:
Sat Feb 16, 2019 5:59 pm
mariezzz wrote:
Sat Feb 16, 2019 1:08 pm
Seriously? You think you would have fared better with active? If your risk tolerance isn't appropriate for your current asset allocation, adjust it. It sounds like you need to assess that.
Right? Has OP ever come back and addressed what they meant by specifically giving up on passive? What an odd question, unless they mean active funds could have been more, well, active, and thus avoided the "brutal" drop?
Well, that is frequently part of the sales pitch, isn't it?

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Rowan Oak
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Re: Did you get spooked by the December 2018 fall and gave up on passive?

Post by Rowan Oak » Sat Feb 16, 2019 6:06 pm

I Buy, Hold, and Rebalance. I did a good bit of tax loss harvesting and rebalancing in December 2018 including 12/24. I have already rebalanced again from Vanguard Total Stock Market Index Fund into Vanguard Total Bond Market Index Fund. As of 2/15/2019 I’m almost exactly at my chosen asset allocation.
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dogagility
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Re: Did you get spooked by the December 2018 fall and gave up on passive?

Post by dogagility » Sat Feb 16, 2019 6:29 pm

Stir, stir, stir. :twisted:
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LilyFleur
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Re: Did you get spooked by the December 2018 fall and gave up on passive?

Post by LilyFleur » Sat Feb 16, 2019 6:50 pm

In January 2018, I was 90% (in one company stock), 10% cash in my 401k. I had doubled the value of my portfolio in 2017 due to the company stock. Then all the tariff talk started up, and at age 58 (already retired for a year), I changed my AA. Now I am 60/40, but I kept 10% in my company stock. Earnings on that stock have been 29% this year. I will not pull money out of that stock to rebalance it down to 10%. I try not to think about how much I would have had had I not exited out of most of that company stock, but I changed my AA to ensure that I could hang onto all that had been earned in 2017 and also to be more age appropriate. I also hung onto that company stock in 2007-2008 due to my Mom's advice. She was a CFP and an extremely bright woman. She had studied that stock and said, "You just hang on and don't lose a wink of sleep over it." Thanks, Mom. I miss you!

yogesh
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Re: Did you get spooked by the December 2018 fall and gave up on passive?

Post by yogesh » Sat Feb 16, 2019 6:56 pm

I messed up.
- Target date fund in 401k/IRA did great rebalance
- Taxable TLH worked great capturing losses
- In one account I did TLH from FZILX to cash and waited 30 days to get back in same fund. Big mistake as market picked up during those 30 days. I wish I did exchange instead but that was good learning to not get out of market even for a day.

For guys like me; Target date or lifestrategy taxable is perfect. It removes the urge to tinker with it. If I make another mistake like this; I am just going to put all taxable into M1 finance or Fidelity GO 60/40 pie.
Emergency: FDIC | Taxable: VTMFX | Retirement: TR2040

Silverado
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Re: Did you get spooked by the December 2018 fall and gave up on passive?

Post by Silverado » Sat Feb 16, 2019 7:09 pm

Wricha wrote:
Fri Feb 15, 2019 9:51 pm
Not as smart as the rebalancing folks in December. Although, I did sell $100k worth of loses and bought an ETF that moved up with the market locking in my short term loss. I guess I am a market timer now.
Congrats on having such a large taxable account that you had $100,000 in losses from that little blip.

We got lucky, our sizable bonuses come in mid December, and we made large purchases a couple times in the final two weeks of the year according to our AA.

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Re: Did you get spooked by the December 2018 fall and gave up on passive?

Post by MotoTrojan » Sat Feb 16, 2019 7:13 pm

mrspock wrote:
Sat Feb 16, 2019 2:34 pm
student wrote:
Sat Feb 16, 2019 7:42 am
No. I did not. I only did TLH.
This. The correction was actually a gift... I sold the last of my company stock in 2018 and this allowed me to TLH away 2/3 of the capital gains taxes... sitting here in Feb with the market almost back where it started, I am feeling quite lucky! :D
I had a similar situation (much less than 2/3's though) but I did want to point out it is often more valuable to TLH when you don't have capital gains taxes (long-term) to offset as you'll get an income write-off for years to come. Of course this can be offset by the added growth of getting less money but getting it back now rather than over the coming years.

I'm not complaining :).

Wricha
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Re: Did you get spooked by the December 2018 fall and gave up on passive?

Post by Wricha » Sat Feb 16, 2019 7:49 pm

Silverado wrote:
Sat Feb 16, 2019 7:09 pm
Wricha wrote:
Fri Feb 15, 2019 9:51 pm
Not as smart as the rebalancing folks in December. Although, I did sell $100k worth of loses and bought an ETF that moved up with the market locking in my short term loss. I guess I am a market timer now.
Congrats on having such a large taxable account that you had $100,000 in losses from that little blip.

We got lucky, our sizable bonuses come in mid December, and we made large purchases a couple times in the final two weeks of the year according to our AA.
Thanks Silverado,
Did not feel so good when I bought $400k of SPY at $290. I refinanced some commercial real estate and pulled out a fair amount of cash. It worked out phew.

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Re: Did you get spooked by the December 2018 fall and gave up on passive?

Post by DesertDiva » Sat Feb 16, 2019 8:21 pm

I stuck to my plan and stayed the course

columbia
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Re: Did you get spooked by the December 2018 fall and gave up on passive?

Post by columbia » Sat Feb 16, 2019 8:25 pm

No.

I cashed out on equities on 10/8/18.

God help you if you’re ignoring 3/29/19 and US/China debacle.

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Re: Did you get spooked by the December 2018 fall and gave up on passive?

Post by IlliniDave » Sat Feb 16, 2019 8:31 pm

No, I rode it out with everything on automatic. I'm getting near retirement so I was already on a glide path to up my bond allocation, and for almost three years now virtually all of my new money has been going into bonds which made it easier (both because holding more bonds than I have in the past blunted some of the dip and I didn't have to struggle with the idea of buying stocks at the top of a fall)
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livesoft
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Re: Did you get spooked by the December 2018 fall and gave up on passive?

Post by livesoft » Sat Feb 16, 2019 8:32 pm

columbia wrote:
Sat Feb 16, 2019 8:25 pm
God help you if you’re ignoring 3/29/19 and US/China debacle.
I know they are coming, so I consider them just more opportunities.
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revhappy
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Re: Did you get spooked by the December 2018 fall and gave up on passive?

Post by revhappy » Sat Feb 16, 2019 8:52 pm

Thanks everyone for your responses. The thing is I got into this game very late and my conviction is not as high as you guys.

This is the 20 years chart of S&P500 v/s earnings.

Image

Before Aug 2014, there was a gap between earnings and the S&P 500 and then as earnings fell, markets kept going up and the gap closed. Now earnings are expected to fall, due to fading tax cut effect, global slowdown related to trade war uncertainty or in general high rates now compared to few years ago. So earnings falling is a given. Hence S&P 500 should fall if it has to stay at the same valuation. If not it becomes even more overvalued.

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Re: Did you get spooked by the December 2018 fall and gave up on passive?

Post by dogagility » Sun Feb 17, 2019 8:32 am

columbia wrote:
Sat Feb 16, 2019 8:25 pm
I cashed out on equities on 10/8/18.
God help you if you’re ignoring 3/29/19 and US/China debacle.
My IPS says to ignore political events (noise), and this has worked very well for the last 20 years.
"The stock market is a device for transferring money from the impatient to the patient" -- Warren Buffett

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Re: Did you get spooked by the December 2018 fall and gave up on passive?

Post by lostdog » Sun Feb 17, 2019 9:08 am

dogagility wrote:
Sun Feb 17, 2019 8:32 am
columbia wrote:
Sat Feb 16, 2019 8:25 pm
I cashed out on equities on 10/8/18.
God help you if you’re ignoring 3/29/19 and US/China debacle.
My IPS says to ignore political events (noise), and this has worked very well for the last 20 years.
What is significant about 3/29/19?
95% VTWAX | 5% BNDW

livesoft
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Re: Did you get spooked by the December 2018 fall and gave up on passive?

Post by livesoft » Sun Feb 17, 2019 9:43 am

lostdog wrote:
Sun Feb 17, 2019 9:08 am
What is significant about 3/29/19?
Brexit deadline ... unless something happens.
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Chief_Engineer
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Re: Did you get spooked by the December 2018 fall and gave up on passive?

Post by Chief_Engineer » Sun Feb 17, 2019 10:39 am

OP, if you got spooked by the activity in December, then your asset allocation is not appropriate for your risk tolerance. What is your current stock/bond mix? The refrain around here is "need, willingness, and ability" to take risk. You mention getting a late start, that may mean you are taking more risk than you are comfortable with in an effort to make up for lost time. I suggest you reassess. You need to find a level of risk that lets you sleep at night.

Remember, the biggest risk to your portfolio isn't the market tanking, it's behavioral mistakes you might make when panicking.

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Re: Did you get spooked by the December 2018 fall and gave up on passive?

Post by goodenyou » Sun Feb 17, 2019 2:25 pm

Earl Lemongrab wrote:
Sat Feb 16, 2019 5:44 pm

If I didn't panic and abandoned index investing in the worst recession/market of my adult life, then why would a transitory blib last year bother me.
Because this (that) time is (was) different. :oops:
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core4portfolio
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Re: Did you get spooked by the December 2018 fall and gave up on passive?

Post by core4portfolio » Sun Feb 17, 2019 2:28 pm

I went to passive by reducing the individual stocks
I hold 15% individual stocks and rest in index funds.
It really gave me opportunity for understood my needs
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Re: Did you get spooked by the December 2018 fall and gave up on passive?

Post by Peculiar_Investor » Sun Feb 17, 2019 3:08 pm

Chief_Engineer wrote:
Sun Feb 17, 2019 10:39 am
OP, if you got spooked by the activity in December, then your asset allocation is not appropriate for your risk tolerance. What is your current stock/bond mix? The refrain around here is "need, willingness, and ability" to take risk. You mention getting a late start, that may mean you are taking more risk than you are comfortable with in an effort to make up for lost time. I suggest you reassess. You need to find a level of risk that lets you sleep at night.

Remember, the biggest risk to your portfolio isn't the market tanking, it's behavioral mistakes you might make when panicking.
Well said. Good advice not only for the OP but for anyone else who felt spooked in December 2018.
Normal people… believe that if it ain’t broke, don’t fix it. Engineers believe that if it ain’t broke, it doesn’t have enough features yet. – Scott Adams

dmk395
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Re: Did you get spooked by the December 2018 fall and gave up on passive?

Post by dmk395 » Sun Feb 17, 2019 3:13 pm

I sold some gains to pay down mortgages...

Mickey7
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Re: Did you get spooked by the December 2018 fall and gave up on passive?

Post by Mickey7 » Sun Feb 17, 2019 3:54 pm

Nearing retirement I decided to alter my contributions back into FI as my allocation was past the bands by a lot in September and changed back for the last half of December. Also finished off my last Roth contribution in December. So mas o menos came out okay.

I do now understand the degree of separation between spooked and concerned.

harvestbook
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Re: Did you get spooked by the December 2018 fall and gave up on passive?

Post by harvestbook » Mon Feb 18, 2019 10:20 am

retire2022 wrote:
Sat Feb 16, 2019 2:28 pm
I'm 58 still working, people should not only seek downward motions as a buying opportunity, they should include Traditional IRAs, 401, 403b & 457b as Roth conversion opportunities esp younger folks who have this, otherwise the traditional will box them in at a higher tax rate at 70.5 RMD.

I'm in this boat.
[/quote]

True, I did some Roth conversions in December, figuring I was moving over more shares for the same "cost." 56 and semi-retired here.
I'm not smart enough to know, and I can't afford to guess.

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munemaker
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Re: Did you get spooked by the December 2018 fall and gave up on passive?

Post by munemaker » Mon Feb 18, 2019 10:23 am

No I did not get spooked at all by the December 2018 fall (This was so insignificant, I did not even hit my 5% rebalancing band). And no, I did not give up on passive.

I don't think there is any decline that would spook me or lead me to give up on index fund investing.

You mention "lots of experts." Could you mention three of them?
Last edited by munemaker on Mon Feb 18, 2019 10:43 am, edited 1 time in total.

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stemikger
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Re: Did you get spooked by the December 2018 fall and gave up on passive?

Post by stemikger » Mon Feb 18, 2019 10:31 am

If you were 50/50 - you had a moderate but on the conservative side AA. Ignore the macro and focus on the micro. The micro are the underlying businesses you own in the total stock market. Over time they create value and that is all you need to know. Stop listening to all the experts and stick with a long term plan.

If you got spooked at 50/50, try staying where you are and see how you feel when things get volatile again.

Warren Buffett who is in favor of index funds with a high stock allocation for the know-nothing investor also has said not everyone is suited to own stocks at all.

These decisions are not easy, but once you find your sweet spot (which may take some time), you can totally ignore what the market is doing and feel confident things will work out.
Choose Simplicity ~ Stay the Course!! ~ Press on Regardless!!!

Xrayman69
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Re: Did you get spooked by the December 2018 fall and gave up on passive?

Post by Xrayman69 » Mon Feb 18, 2019 1:07 pm

Did nothing during this period. Same weekly and monthly contributions.

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