Good times: 2008 vs Now

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chrismj
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Good times: 2008 vs Now

Post by chrismj » Wed Jun 19, 2019 1:15 pm

This is not a market timing kind of post, I'm not trying to read the tea leaves or anything. I'm just curious what folks think of the general state of the economy in a day-to-day sense.

I turned 23 in 2008 and graduated and found a good job that summer before things went downhill in September. I was extremely lucky because I was the last group brought in (still at the same job). I was relatively unaffected because I didn't have any savings or a mortgage, etc.

I know the crash was (very) bad, but for me and my friends at that age we didn't have much to lose or very far to fall, so it was kind of a normal experience, relatively speaking, since we didn't have anything to compare it to.

Fast forward to now and I feel like I can sense a positive shift over the past few years, and I'm wondering if this is considered by some folks a return to "normal". My friends have new cars, new jobs, all my neighbors are getting new fences/decks, last summer there was a month-long waiting list for most house repairs, and EVERYWHERE is hiring. Fast food, hospitals, factories, shipping, police/fire, corporate.

So what do the old timers think who've been through some business cycles before? Have we gone from famine to feast? Is this just a regular bounce back? I remember how bleak the news was with foreclosures and unemployment and QE and all the bears saying another crash is around the corner, and then it sort of just stopped. It wasn't like a switch flipped or anything.

I find myself being skeptical and cynical but I have to remind myself that I'm basing that on a limited past experience that was an extreme. Someone who's 29 isn't that much younger than me but we've already had very different experiences growing up from 2009-2014 vs. 2014-now. Especially, when I hear people younger than me talking about "investing" in real estate. I feel like I have a permanent aversion to anything real estate related.

msmorr
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Re: Good times: 2008 vs Now

Post by msmorr » Wed Jun 19, 2019 1:23 pm

It was hard to get contractors in 2007. Everybody had a job in 2007. People were putting in new decks, buying new cars, etc. after using their houses like ATMs.

Then the party stopped.

Who knows what the future may hold, but there are a lot of indications the economy is slowing.

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FiveK
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Re: Good times: 2008 vs Now

Post by FiveK » Wed Jun 19, 2019 1:23 pm

Consulted my Magic 8 Ball. It said "Reply hazy, try again." So I tried again. It said "Cannot predict now."

That's the best I can do. ;)

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chrismj
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Re: Good times: 2008 vs Now

Post by chrismj » Wed Jun 19, 2019 1:34 pm

FiveK wrote:
Wed Jun 19, 2019 1:23 pm
Consulted my Magic 8 Ball. It said "Reply hazy, try again." So I tried again. It said "Cannot predict now."

That's the best I can do. ;)
Want to nip this in the bud before this post goes off the rails. I'm not asking for predictions, just what people who are older than, say, 40 think of the economy now versus other times. In my ten years as an adult it seems there's been two choices: financial crisis+aftermath and then whatever the last few years has been where everything seems to rolling along smoothly.

I have a very small sample size of really really bad and really really good. I'm curious what folks with more experience think of my limited view.

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Kenkat
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Re: Good times: 2008 vs Now

Post by Kenkat » Wed Jun 19, 2019 1:41 pm

Winter is coming. It might be a mild one or it might be severe, but it’s coming.

I don’t really believe in predictions but things have been really good for a long time now, so I would temper expectations and be ready for it not to last forever. That can be as simple as making sure you are solid in your job and saving a little money for a rainy day. People who were over-extended in 2008 had it really hard; some who were not probably did as well, but most were able to hang on.

hightower
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Re: Good times: 2008 vs Now

Post by hightower » Wed Jun 19, 2019 1:42 pm

chrismj wrote:
Wed Jun 19, 2019 1:15 pm
This is not a market timing kind of post, I'm not trying to read the tea leaves or anything. I'm just curious what folks think of the general state of the economy in a day-to-day sense.

I turned 23 in 2008 and graduated and found a good job that summer before things went downhill in September. I was extremely lucky because I was the last group brought in (still at the same job). I was relatively unaffected because I didn't have any savings or a mortgage, etc.

I know the crash was (very) bad, but for me and my friends at that age we didn't have much to lose or very far to fall, so it was kind of a normal experience, relatively speaking, since we didn't have anything to compare it to.

Fast forward to now and I feel like I can sense a positive shift over the past few years, and I'm wondering if this is considered by some folks a return to "normal". My friends have new cars, new jobs, all my neighbors are getting new fences/decks, last summer there was a month-long waiting list for most house repairs, and EVERYWHERE is hiring. Fast food, hospitals, factories, shipping, police/fire, corporate.

So what do the old timers think who've been through some business cycles before? Have we gone from famine to feast? Is this just a regular bounce back? I remember how bleak the news was with foreclosures and unemployment and QE and all the bears saying another crash is around the corner, and then it sort of just stopped. It wasn't like a switch flipped or anything.

I find myself being skeptical and cynical but I have to remind myself that I'm basing that on a limited past experience that was an extreme. Someone who's 29 isn't that much younger than me but we've already had very different experiences growing up from 2009-2014 vs. 2014-now. Especially, when I hear people younger than me talking about "investing" in real estate. I feel like I have a permanent aversion to anything real estate related.
I had a similar experience to you. I was 26 in 2008. I was starting my residency in internal medicine at the time and my income was guaranteed from that. I had no savings to speak of and a pile of student loan debt that I was oblivious to. I remember at the time thinking to myself "What is everyone complaining about?" I thought that everyone seemed fine, still buying new cell phones and new cars, so it didn't seem like a financial disaster to me. Now I realize that it was bad for those about to retire or who were already retired and saw their savings plummet overnight. I am anxiously awaiting the next big fall to see how I feel in a similar situation. Though, I'm still no where near retirement, I have some skin in the game and I'm sure it won't feel good.
I am also very skeptical of real estate as an investment because we were living in a house in 2006 that dropped in value by 50% in 2008. It was cheap and in my wife's name so we just walked away from the mortgage and it sold as a short sale. It was a countrywide loan (they are now out of business of course), so there were no long term consequences to this. My wife's credit took a hit for 7 years, but she now has a near perfect credit score, lol and that whole mortgage thing vanished from her report. Which I find hilarious. So, two things I learned...Real Estate is a very risky investment and two, mortgages are easy to get out of without any real consequences, so I can see why people use them as ATMs.
Last edited by hightower on Wed Jun 19, 2019 1:49 pm, edited 1 time in total.

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FiveK
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Re: Good times: 2008 vs Now

Post by FiveK » Wed Jun 19, 2019 1:42 pm

chrismj wrote:
Wed Jun 19, 2019 1:34 pm
FiveK wrote:
Wed Jun 19, 2019 1:23 pm
Consulted my Magic 8 Ball. It said "Reply hazy, try again." So I tried again. It said "Cannot predict now."

That's the best I can do. ;)
Want to nip this in the bud before this post goes off the rails. I'm not asking for predictions, just what people who are older than, say, 40 think of the economy now versus other times. In my ten years as an adult it seems there's been two choices: financial crisis+aftermath and then whatever the last few years has been where everything seems to rolling along smoothly.

I have a very small sample size of really really bad and really really good. I'm curious what folks with more experience think of my limited view.
I am older than 40 and in all seriousness that is the best I can do. One can also say It’s Difficult to Make Predictions, Especially About the Future.

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Re: Good times: 2008 vs Now

Post by GoldenFinch » Wed Jun 19, 2019 1:48 pm

I’m 52 and have seen good and bad over the decades. Right now, where I live in the mostly forgotten rust belt, things are very good. So yes it is good times for now. However, I know things can change dramatically on short order. I just make sure that we don’t do anything stupid with our money, save and stick to an asset allocation we are comfortable with. I’m not worried about business cycle risk.

My advice to you is live below your means and save, save, save. The more you do those two things the less you will have to care about good times vs. bad times.

CrossOverGuy
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Re: Good times: 2008 vs Now

Post by CrossOverGuy » Wed Jun 19, 2019 2:02 pm

Diversify your holdings, rebalance to your preferred asset allocation at some point when they are out of whack - and have some money in bond funds and in cash. During times the stock market goes haywire, there might be days US stock, international stocks and even bonds go down. But wait a few days or so and you'll notice the bond funds tend to go positive as many other things stay down. You'll appreciate holding bonds then, even when in normally good times bonds will tend to lag what your stock funds are doing. In a way, that's the function of bonds in a portfolio. It's also good to have some cash for emergencies so you don't have to sell things like stocks at too big a loss for something at short notice and at the worst possible time.

If you've been investing for a while and see that if you hold on and not do panic selling, things like fear and greed will eventually change places and stock prices will rise again.
Last edited by CrossOverGuy on Wed Jun 19, 2019 2:38 pm, edited 1 time in total.

new2bogle
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Re: Good times: 2008 vs Now

Post by new2bogle » Wed Jun 19, 2019 2:11 pm

I was just a few years older than you in 2008 but also just out of grad school with a new job. DW and I bought a house in March 2008, which must have been the peak at that point. Didn't know much about finance, mortgages or anything. My investments lost ~50% by April 2009, which was completely stressing me out.

But there were a few things I did:
1) did not panic and sell investments
2) kept on putting money in 401k and Roth IRA as I could afford
3) LBYM --> this one was huge in terms of positive impact
4) Huge savings rate tempered by good vacations to relax

Fast forward now, my income is easily 3X more but I still follow the 4 points above. Doing so, I am looking forward to the next crash, the one after that, the recovery and then sell it all for retirement. If it works out, I'll be 55 then :D

garlandwhizzer
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Re: Good times: 2008 vs Now

Post by garlandwhizzer » Wed Jun 19, 2019 2:26 pm

I've been investing for 4 decades and fortunately a lot of that was in the great 1982 -1999 bull market when productivity growth was consistently high, economic growth was robust, total debt levels were low, demographics were favorable, and inflation was decreasing consistently for 30+ years. Returns of stocks were exceptional until the tech bubble popped in 2000 and returns for bonds were great in the longest bond bull market in history. There were substantial macroeconomic tailwinds during most of those 4 decades that juiced all portfolio returns. Going forward there may be headwinds: levels of economic growth are expected to be low, aggregate debt levels are high for governments, households, and corporations, productivity growth has been slowing for many years and is now much lower than in the golden age, inflation seems on life support and there appears to be a risk of deflation in DMs. What this means is that growth in aggregate demand which is what largely drives the economy, is weak and not responding briskly to ultra low interest rates. We have had 2 massive bubbles popping in stocks over the last 19 years both aided and abetted by easy money from FED policy. Our country has never seen until now a 10+ year period of historically low interest rates and even QE that failed to fire up robust and increasing economic growth. The current bull market ia absolutely dependent on ultra low rates. Still we can't seem to keep inflation above the 2% level. This ultra-aggressive monetary policy has been a bit like beating a deal horse trying to get it to move. It was certainly helpful in the time of crisis (2007 - 9), preventing another Great Depression, but even with new tax cuts and lots of pork barrel governmental spending, our economy struggles to maintain modest economic growth. In other DMs the situation is worse, stagnant economies in spite of zero interest rates.

In sum I don't think the future is going to be nearly as rewarding to investors as the past has been due to macro-economic factors. Just my opinion. There is a great deal of luck involved in investing and a big part of it is period dependence. Those who started in in 1929 before the crash suffered long years of struggle. Those who started in 1982 got rich by 1999. I believe that long term returns going forward from here in both stocks and bonds will be significantly lower than historical averages due to the factors listed above. That doesn't mean you shouldn't invest. As always getting a solid all weather portfolio and sticking with it through thick and thin is the best course. If you do that for decades you'll be very surprised at your wealth accumulation. Dollar cost averaging from your monthly income every month into a broadly based portfolio for decades is a fool proof way to reach your financial goals. The longer you stay invested the better your chances to experience exuberant bull markets. Nothing has changed in terms of approach.

Garland Whizzer

sambb
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Re: Good times: 2008 vs Now

Post by sambb » Wed Jun 19, 2019 2:31 pm

I dont know what happened in 2015 or 2016, but seems like things have gotten better for the economy since then. Jobs everywhere. But for the OP, the crash was scary and people are still affected. Foreclosures, debt, lost years and lost experience.

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Artful Dodger
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Re: Good times: 2008 vs Now

Post by Artful Dodger » Wed Jun 19, 2019 2:35 pm

chrismj wrote:
Wed Jun 19, 2019 1:34 pm
FiveK wrote:
Wed Jun 19, 2019 1:23 pm
Consulted my Magic 8 Ball. It said "Reply hazy, try again." So I tried again. It said "Cannot predict now."

That's the best I can do. ;)
Want to nip this in the bud before this post goes off the rails. I'm not asking for predictions, just what people who are older than, say, 40 think of the economy now versus other times. In my ten years as an adult it seems there's been two choices: financial crisis+aftermath and then whatever the last few years has been where everything seems to rolling along smoothly.

I have a very small sample size of really really bad and really really good. I'm curious what folks with more experience think of my limited view.
I'm 64, so have been through this a few times. I recall in 1999/2000 the "warning" signs were current stock prices (mostly in tech) reflected unreasonable projected future earnings. Sometimes a 60-70 times multiple, or no forward earnings (which could have been one of many internet sellers who went belly up or Amazon). High signing bonuses coming out of college, lots of easy money. I think if you were there, and had some investing experience, you had to have doubts about how long the rally could go on.

In 2008, I think most, but not all people, did not understand why real estate was going up in such a frantic manner, and totally underestimated the risk to the financial markets that would be caused by the unwinding of the unregulated mortgage backed insurance schemes. In the final days there were many who were worried, but the quote “As long as the music is playing, you've got to get up and dance,” said it all. Then it all came crashing down in the worst financial crisis since the 1930s depression.

If I look at the financial landscape now, I see elevated earnings multiples, but they don't seem to be anywhere near a bubble. I could easily see a correction of 20-30% that would bring multiples down to a more historic level, but that's something you have to expect every few years or once a decade. If that's the case, you hold the course, rebalance when the dips come, and wait out the eventual return to increasing earnings and/or multiples in the equities market.

There could obviously be a worldwide crisis precipitated by conflict in the middle east or somewhere else unforeseen. That's hard to plan against.

I wonder about the increasing government debt in both the U.S. and around the world, and whether in the future that will precipitate a financial crisis.

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unclescrooge
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Re: Good times: 2008 vs Now

Post by unclescrooge » Wed Jun 19, 2019 2:38 pm

People are a lot more pessimistic this right now than they were in 2007.

We have gone a long time since a recession, but the growth of the economy fitting that time had been mediocre compared to previous cycles.

While home prices have recovered, I feel they are demand driven, and not speculation driven. Here in SoCal, there is a huge shortage of housing with a large homeless population, something we didn't have in 2007.

People aren't quitting their day jobs to speculate in real estate, or day trade stocks like in 1999.

I think that day may come again, but it is not today.

So I think the next recession will be over before it is officially announced. And that's when the real fun will begin.

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Re: Good times: 2008 vs Now

Post by firebirdparts » Wed Jun 19, 2019 3:16 pm

First poster here. I probably shouldn't make a philosophical first post.

In 2008, there were warnings about loan practices and real estate for a very long time. People had plenty of time to move money around, but of course in some cases people didn't realize what other people were doing to put them at risk. I remember columnists, for example Ben Stein, writing as early as 2007 that these threats to the financial world would not have much effect. Real estate prices were being called a "boom" in 2004 and 2005. Concerns about the real estate bubble were being voiced in 2006. Prices were declining in 2007.

My father-in-law was investing in cityscape, who combined subprime lending with 120% loan-amount-to-value, in the 1990's. My wife wanted to "get in on it" and I said "that is insane, on the face of it." When it was delisted (in the 1990's) they might have owned the whole company for all I know.

The problem was well known, but the nature of credit default swaps, and who would be ruined by attempts to pay them, was not known. I would say that was not known even by the people who traded in them, not that I was there.

The production and consumption areas of the economy were okay. Government debt at the time was a lot lower than it is now. The world was relatively peaceful. So really, 2008 was a good time, and that was evidenced by the valuation of financial instruments before the crisis. The fun broken up, as I understand it, mainly by financial innovations that didn't make sense.

So today, there is less threat of that particular event. Stock P/E is not as high now, employment is lower now. You would expect the economy to have cycles, then and now. Pessimism now might seem worse, but that's because it's now. It always seems worse now. I suppose another difference now is that a lot more money is passively invested.

warner25
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Re: Good times: 2008 vs Now

Post by warner25 » Wed Jun 19, 2019 3:19 pm

I graduated from college in 2008 as well. I remember thinking that both home prices and oil/gas prices (especially in 2008) obviously couldn't continue rising as they had been, or else nobody would be able to afford either in a short period of time. I also remember reading dire warnings of impending doom as early as 2006 (of course now I know that you can always find someone sounding an alarm and making such predictions). But I didn't believe that we were entering a recession, let alone a financial market collapse.

In retrospect, I know that S&P 500 earnings peaked in June 2007 at 104 and had fallen to 55 by the time things got scary in September 2008 and the market really started to reflect such lower earnings, so clearly a lot of things were already in bad shape.

Now the latest S&P 500 earnings are at an all-time high of 135, for what that's worth.

Source: https://www.multpl.com/s-p-500-earnings/table/by-month

cuendillar
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Re: Good times: 2008 vs Now

Post by cuendillar » Wed Jun 19, 2019 3:34 pm

Since living through not one, not two, but three crappy financial periods (70's, 80's, 2008-09), I always have the feeling that another "crash is a' comin". I realize this is based on my prior experiences and worries, coupled with periods of up and down, and is completely unpredictable in any real sense. I fall back on "stay the course". The current market seems different than it did back then (2008-2009). I remember co-workers who bought houses they couldn't remotely afford, and driving cars there was no way they could afford, and going on vacations there was no way they could afford. At the time I was half-jealous, half-concerned, knowing that some sort of adjustment seemed necessary. Even then though, I chose to "stay the course" and overall came out OK (or at least am OK at the moment).

Hypersion
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Re: Good times: 2008 vs Now

Post by Hypersion » Wed Jun 19, 2019 5:15 pm

I remember in 2007 a coworker who labeled bottles for a living and worked as a line cook at chuck e cheese on the weekends bought a ~$600K house zero down. In April of this year I sold my condo to a person who put $4,000 down on a $330K condo. Maybe the bubbling is going to burst again.

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Re: Good times: 2008 vs Now

Post by dharrythomas » Wed Jun 19, 2019 5:27 pm

Go back and reread garlandwheezer. Then understand that before that was a lost decade and a half going back to 1966. We had Vietnam, race riots, busing demonstrations, Watergate, inflation, oil embargoes, a 10x increase in the cost of oil, gas shortages, our economy was going to be eaten by Japan.

The thing about real estate is that it is location dependent and location is very dependent on where they placed the interstate. There is a great deal of land out there for a few thousand dollars an acre, some of it where the price hasn’t moved much since the early 1980s when the Volker Fed broke inflation. If you were in the right location, the price moved multiples.

My best guess is that returns will be lower going forward but I don’t have a better idea than global diversification. Just about the only the only thing I know about life is “This too shall pass.”

Good luck.

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Re: Good times: 2008 vs Now

Post by willthrill81 » Wed Jun 19, 2019 5:40 pm

Between the inverted yield curve and the purchasing manager index being close to crossing into 'pessimism' territory, my gut is that the U.S. will go into a recession within the next 18 months. However, I'm not convinced that the recession will have a very adverse impact on stocks. The U.S. stock market has not appeared to be 'irrationally exuberant' at all since 2018. Frankly, I think that so many investors are expecting a recession and have already more or less priced it in that if a recession actually occurs, the negative impact won't be too bad, perhaps no worse than the ~20% decline we saw during the last year.
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Re: Good times: 2008 vs Now

Post by Sandtrap » Wed Jun 19, 2019 5:41 pm

msmorr wrote:
Wed Jun 19, 2019 1:23 pm
It was hard to get contractors in 2007. Everybody had a job in 2007. People were putting in new decks, buying new cars, etc. after using their houses like ATMs.

Then the party stopped.

Who knows what the future may hold, but there are a lot of indications the economy is slowing.
With high R/E valuations, I suspect that many are still using their home equity like an ATM.

Seniors that retired mortgage free are now loaded up with HELOC's, some maxed out, and others are turning to reverse mortgages to fund retirement that they did not save for.

When things will flatten, or stall, or fall . . . is unknown.
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Re: Good times: 2008 vs Now

Post by Sandtrap » Wed Jun 19, 2019 5:45 pm

Hypersion wrote:
Wed Jun 19, 2019 5:15 pm
I remember in 2007 a coworker who labeled bottles for a living and worked as a line cook at chuck e cheese on the weekends bought a ~$600K house zero down. In April of this year I sold my condo to a person who put $4,000 down on a $330K condo. Maybe the bubbling is going to burst again.
Not "if" but "when".
And, unknown if a "stall", or a "fall", or a "crash" as well as duration and recovery time.
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chenzi
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Re: Good times: 2008 vs Now

Post by chenzi » Wed Jun 19, 2019 5:51 pm

I was 26 in 2008 and was making $66K in NYC with zero savings. I was an entry-level tech consultant in an investment bank and saw loads of people getting fired month after month.
The recession forced me to go back to my home country, and I came back after a few years. My skills and annual income have jumped almost 8X in the last 11 years (mainly during the previous 4) excluding my spouse's income, and we do have a couple of millions saved up to handle a crisis. We are so tech-heavy in terms of jobs and portfolio (FAANG) - it does keep me awake sometimes what to do in case of a 2008ish scenario. I don't have an answer, though!

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Re: Good times: 2008 vs Now

Post by Sandtrap » Wed Jun 19, 2019 5:56 pm

chenzi wrote:
Wed Jun 19, 2019 5:51 pm
I was 26 in 2008 and was making $66K in NYC with zero savings. I was an entry-level tech consultant in an investment bank and saw loads of people getting fired month after month.
The recession forced me to go back to my home country, and I came back after a few years. My skills and annual income have jumped almost 8X in the last 11 years (mainly during the previous 4) excluding my spouse's income, and we do have a couple of millions saved up to handle a crisis. We are so tech-heavy in terms of jobs and portfolio (FAANG) - it does keep me awake sometimes what to do in case of a 2008ish scenario. I don't have an answer, though!
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G12
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Re: Good times: 2008 vs Now

Post by G12 » Wed Jun 19, 2019 6:25 pm

I find myself being skeptical and cynical but I have to remind myself that I'm basing that on a limited past experience that was an extreme. Someone who's 29 isn't that much younger than me but we've already had very different experiences growing up from 2009-2014 vs. 2014-now. Especially, when I hear people younger than me talking about "investing" in real estate. I feel like I have a permanent aversion to anything real estate related.
I'm definitely older than 40. When everyone starts talking about investing in real estate it can be a great time to be a seller, meaning existing owners/sellers will likely do much better than new prospective buyers. :happy I'm not a believer in "this time is different". As much as some of my neighbors and I like to bitch about subsidizing a corporation in CO that owns a local MLB team, that project has greatly increased property values reasonably close by, much more so than otherwise would have happened. Whether the local current values are excessive, I'm not certain, yet I hope they hold until May 2020 to sell our house.

Richard1580
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Re: Good times: 2008 vs Now

Post by Richard1580 » Wed Jun 19, 2019 7:52 pm

OP - You raise interesting questions. Bad things will happen.

If you have a long life (hopefully) you will encounter *multiple* instances of the market dropping 20-50%. Your best bet is to sit back and ask yourself, "what will I do if that happens?" Write it down as a note to yourself. You do not want to be making decisions on the fly when the market (inevitably) tanks. Think about it now and detail how you will react. Also explain the logic behind your reaction, because when it happens you will need a calm voice to tell you what to do.

It would also be a good idea to lay out a plan of what you will do if you lose your job (it happens). Keep your CV up to date. Maintain contacts outside of your current employer.

Hope for the best, have plans for the worst. It sounds like you are on the right track.
Last edited by Richard1580 on Thu Jun 20, 2019 2:27 pm, edited 1 time in total.

bhsince87
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Re: Good times: 2008 vs Now

Post by bhsince87 » Wed Jun 19, 2019 8:45 pm

I'm 54, been investing since I was 22, and have always been an economy/business nerd.

IMO, things are good now. Might even say "goldilocks good". Not too hot and hyper and full of speculation. But solid in most areas.

And I would also say 2008/9 wasn't the worst I've seen in my lifetime. It definitely hurt some sectors much worse than others. One of those being finance, and that scared a lot of people. And of course housing.

Where we live housing took maybe a 10% hit, and it's now back. But we never had a huge run up either.

But this is one case where I will, yes, this time IS different.

Economies change over time. Good times now will never be exactly good times in the past. Same for bad times. The next downturn will probably be nothing like the last one.
Retirement: When you reach a point where you have enough. Or when you've had enough.

nodenuff2
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Re: Good times: 2008 vs Now

Post by nodenuff2 » Wed Jun 19, 2019 9:06 pm

Well in 08 I was 58 approaching retirement but was naive thinking the good times would keep on rolling . That fall I had open heart surgery. 09 saw my 401k cut in half. I just kept contributing and eventually recovered . Retired in Jan. 14. This feels nothing like 08. As posted . I see no wildness today. I remember the 87 crash the dot com debacle and 08 . Also may others Never sold during any of them. Select a asset allocation that lets you sleep at night. Save a part of every raise. Drive vehicles to their wheels fall off. Keep your head down at work with nose to the grindstone. It will all be ok.
2014 No. 42 2015 No.342 2016 No. 6 2017 238 2018 no. 175 What do I know? "Good bless America land that I love..."

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Top99%
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Re: Good times: 2008 vs Now

Post by Top99% » Thu Jun 20, 2019 7:29 am

If you had a secure job and money to invest 2008-2009 was a _very_ good time. The 2001-2002 and 2008-2009 asset sales certainly shortened our time to financial independence.
Adapt or perish

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Re: Good times: 2008 vs Now

Post by ReformedSpender » Thu Jun 20, 2019 7:35 am

cuendillar wrote:
Wed Jun 19, 2019 3:34 pm
Since living through not one, not two, but three crappy financial periods (70's, 80's, 2008-09)
Were you no longer with us in '00-'01?

:confused
Market history shows that when there's economic blue sky, future returns are low, and when the economy is on the skids, future returns are high. The best fishing is done in the most stormy waters.

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Re: Good times: 2008 vs Now

Post by Psyayeayeduck » Thu Jun 20, 2019 8:20 am

The state of the economy is generally irrelevant to me. Bad things can happen during good times, good things can happen during bad times, and everything in between. People still get laid off, get pay raises/bonuses, move jobs, get sick, die, and so forth even in the best of times.

What I do is to make sure that my defenses are up all the time -- a sizable emergency fund, networking, keeping up with my skill set, exercise (not all good moves are just strictly financial), keep up with my car maintenance, prioritize my mental health, diversify my investments, keeping my expenses and debts low and manageable.

The more you prepare yourself now, in good times and bad, the better you will be in outlasting the bad times.

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Re: Good times: 2008 vs Now

Post by Dude2 » Thu Jun 20, 2019 12:04 pm

Maybe a good indicator of if something big is going to happen is to notice when something seems weird. During the Tech Bubble and the Housing Bubble, there was something weird going on. Now, the only truly weird thing I notice is how high money markets are paying versus intermediate term bonds. That's a bit weird.

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Re: Good times: 2008 vs Now

Post by corn18 » Thu Jun 20, 2019 12:15 pm

My personal good times in 2008 were a result of being leveraged to the point of bankruptcy if something bad happened. Well, something bad happened. I survived, but there was some crying and emotional breakdowns involved.

Today we are debt free except the mortgage and we are considering paying that off (we have the funds). What a difference a crash makes.

I get the impression people still remember 2008 and aren't getting as crazy as those heady days of free money from real estate. At least I hope so. Other than Beyond Meat, the recent IPO's have been meh.

I guess it's the bullet we don't see that will get us.
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Re: Good times: 2008 vs Now

Post by CnC » Thu Jun 20, 2019 1:22 pm

I have a very similar situation and topic up.

I also graduated in spring 08 got a job bought a house got married and I'm still with the same woman in the same house with the same company.

We are doing very well. Got into investing a few years ago and life is pretty great.


It's almost like beginning in 08 till now life has just been too good too simple and I'm not looking forward to a bad run.

08 - 09 wasn't great I paid too much for my house and didn't see much in the way of raises for a few years but as a young guy it was hardly a blip.

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Re: Good times: 2008 vs Now

Post by HomerJ » Thu Jun 20, 2019 1:32 pm

garlandwhizzer wrote:
Wed Jun 19, 2019 2:26 pm
In sum I don't think the future is going to be nearly as rewarding to investors as the past has been due to macro-economic factors. Just my opinion. There is a great deal of luck involved in investing and a big part of it is period dependence. Those who started in in 1929 before the crash suffered long years of struggle. Those who started in 1982 got rich by 1999. I believe that long term returns going forward from here in both stocks and bonds will be significantly lower than historical averages due to the factors listed above.
The historical averages INCLUDE the bad times.

We may indeed have lower returns ahead, but then they will probably be followed by good times afterwards.

The best time to start investing was not 1982... It was 1966, and you suffered through 16 years of bad returns... but by 1982 you had a bunch saved and all that money grew 10x (!!) over the NEXT 16 years.
That doesn't mean you shouldn't invest. As always getting a solid all weather portfolio and sticking with it through thick and thin is the best course. If you do that for decades you'll be very surprised at your wealth accumulation. Dollar cost averaging from your monthly income every month into a broadly based portfolio for decades is a fool proof way to reach your financial goals. The longer you stay invested the better your chances to experience exuberant bull markets. Nothing has changed in terms of approach.
Correct. Excellent ending to your post.
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Re: Good times: 2008 vs Now

Post by HomerJ » Thu Jun 20, 2019 1:35 pm

chenzi wrote:
Wed Jun 19, 2019 5:51 pm
I was 26 in 2008 and was making $66K in NYC with zero savings. I was an entry-level tech consultant in an investment bank and saw loads of people getting fired month after month.
The recession forced me to go back to my home country, and I came back after a few years. My skills and annual income have jumped almost 8X in the last 11 years (mainly during the previous 4) excluding my spouse's income, and we do have a couple of millions saved up to handle a crisis. We are so tech-heavy in terms of jobs and portfolio (FAANG) - it does keep me awake sometimes what to do in case of a 2008ish scenario. I don't have an answer, though!
Pretty easy answer... Don't be so tech-heavy (FAANG) in your portfolio.
The J stands for Jay

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Re: Good times: 2008 vs Now

Post by Boglegrappler » Thu Jun 20, 2019 3:03 pm

Here's a link to some historical data from the S&P 500 index going back to 1960.

http://pages.stern.nyu.edu/~adamodar/Ne ... spearn.htm

I'd note a couple of aspects, but most important is that the market peaked in the late 1960s (this is when the DowJones first hit 1,000), and touched near that level again in 1972. For the next ten years, it never got back to that level!!!!

But....... other things were going on in that period. If you look at the earnings from '72 to '82, they nearly tripled, and the dividends roughly doubled. The country was experiencing high inflation, and high interest rates. If you had a bond portfolio that was short to intermediate term, the rates were generally rising and you were being paid a rising level of interest. (It's important to note that the cost of living was rising very quickly as well, with prices of everything rising at remarkable rates.)

Once the Fed decided the medicine was worse than the disease, in the second week of August 1982, it was onward and upward for the next 25 or so years as rates fell, economic activity surged, and valuations and earnings expanded. There were the hiccups of '87, and '99 to '02, plus 08-09. But earnings for the companies as a whole keep progressing more of less steadily. It is worth noting that those hiccups didn't seem like just hiccups at the time

I think the key takeaway is to be able to weather the drops, which can be severe. I sold the first investment I ever made, in the T Rowe Price Growth Stock fund after it lost about half its value in the mid 70's market collapse. I didn't really "need" the money, but we didn't have much, and I was afraid it would go to zero. That's the issue.

Further, I'll note, on the stay the course theme, that you just don't know when things will change for the better. If you were out of the market in August 1982, you missed a stunning rally, and probably would have expected priced to come back in your direction to give a better "entry point". They didn't. Most of us have a fear of losses, but we should probably have a greater fear of "opportunity losses"---AKA missing out. That's what staying the course does for you.

Good luck in getting used to the ups and downs, and the fears that we all have.

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Re: Good times: 2008 vs Now

Post by Toons » Thu Jun 20, 2019 3:16 pm

Keep The Debt To a Bare Minimum
At your age
Vanguard Total Stock Market
Hope for a extended bear markets along the journey.
Keep investing .
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Re: Good times: 2008 vs Now

Post by Dottie57 » Thu Jun 20, 2019 3:25 pm

hightower wrote:
Wed Jun 19, 2019 1:42 pm
chrismj wrote:
Wed Jun 19, 2019 1:15 pm
This is not a market timing kind of post, I'm not trying to read the tea leaves or anything. I'm just curious what folks think of the general state of the economy in a day-to-day sense.

I turned 23 in 2008 and graduated and found a good job that summer before things went downhill in September. I was extremely lucky because I was the last group brought in (still at the same job). I was relatively unaffected because I didn't have any savings or a mortgage, etc.

I know the crash was (very) bad, but for me and my friends at that age we didn't have much to lose or very far to fall, so it was kind of a normal experience, relatively speaking, since we didn't have anything to compare it to.

Fast forward to now and I feel like I can sense a positive shift over the past few years, and I'm wondering if this is considered by some folks a return to "normal". My friends have new cars, new jobs, all my neighbors are getting new fences/decks, last summer there was a month-long waiting list for most house repairs, and EVERYWHERE is hiring. Fast food, hospitals, factories, shipping, police/fire, corporate.

So what do the old timers think who've been through some business cycles before? Have we gone from famine to feast? Is this just a regular bounce back? I remember how bleak the news was with foreclosures and unemployment and QE and all the bears saying another crash is around the corner, and then it sort of just stopped. It wasn't like a switch flipped or anything.

I find myself being skeptical and cynical but I have to remind myself that I'm basing that on a limited past experience that was an extreme. Someone who's 29 isn't that much younger than me but we've already had very different experiences growing up from 2009-2014 vs. 2014-now. Especially, when I hear people younger than me talking about "investing" in real estate. I feel like I have a permanent aversion to anything real estate related.
I had a similar experience to you. I was 26 in 2008. I was starting my residency in internal medicine at the time and my income was guaranteed from that. I had no savings to speak of and a pile of student loan debt that I was oblivious to. I remember at the time thinking to myself "What is everyone complaining about?" I thought that everyone seemed fine, still buying new cell phones and new cars, so it didn't seem like a financial disaster to me. Now I realize that it was bad for those about to retire or who were already retired and saw their savings plummet overnight. I am anxiously awaiting the next big fall to see how I feel in a similar situation. Though, I'm still no where near retirement, I have some skin in the game and I'm sure it won't feel good.
I am also very skeptical of real estate as an investment because we were living in a house in 2006 that dropped in value by 50% in 2008. It was cheap and in my wife's name so we just walked away from the mortgage and it sold as a short sale. It was a countrywide loan (they are now out of business of course), so there were no long term consequences to this. My wife's credit took a hit for 7 years, but she now has a near perfect credit score, lol and that whole mortgage thing vanished from her report. Which I find hilarious. So, two things I learned...Real Estate is a very risky investment and two, mortgages are easy to get out of without any real consequences, so I can see why people use them as ATMs.
Depends on employers. Some run background checks including credit checks. Not good if marks against you are found. Applies to job hunters too.

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Re: Good times: 2008 vs Now

Post by Dottie57 » Thu Jun 20, 2019 3:27 pm

Psyayeayeduck wrote:
Thu Jun 20, 2019 8:20 am
The state of the economy is generally irrelevant to me. Bad things can happen during good times, good things can happen during bad times, and everything in between. People still get laid off, get pay raises/bonuses, move jobs, get sick, die, and so forth even in the best of times.

What I do is to make sure that my defenses are up all the time -- a sizable emergency fund, networking, keeping up with my skill set, exercise (not all good moves are just strictly financial), keep up with my car maintenance, prioritize my mental health, diversify my investments, keeping my expenses and debts low and manageable.

The more you prepare yourself now, in good times and bad, the better you will be in outlasting the bad times.
Man is this true.

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Re: Good times: 2008 vs Now

Post by HomerJ » Thu Jun 20, 2019 4:10 pm

Psyayeayeduck wrote:
Thu Jun 20, 2019 8:20 am
The state of the economy is generally irrelevant to me. Bad things can happen during good times, good things can happen during bad times, and everything in between. People still get laid off, get pay raises/bonuses, move jobs, get sick, die, and so forth even in the best of times.

What I do is to make sure that my defenses are up all the time -- a sizable emergency fund, networking, keeping up with my skill set, exercise (not all good moves are just strictly financial), keep up with my car maintenance, prioritize my mental health, diversify my investments, keeping my expenses and debts low and manageable.

The more you prepare yourself now, in good times and bad, the better you will be in outlasting the bad times.
This.

This post should be at the top of every thread.

The universe owes you nothing.
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heyyou
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Re: Good times: 2008 vs Now

Post by heyyou » Thu Jun 20, 2019 6:43 pm

As above, there is always a stock market crash coming. Often each new one has a different trigger than the previous ones, but the effects are still the same, stock prices fall far. Currently this has been a longer period and height of recovery from the last one, than recoveries in the past, which could indicate for a deeper fall in the next one.

All we can do is to prep for them using the same techniques that produce savings for us in a good economy.

Note that during the Great Depression starting in 1929, stock prices recovered from an 80-90% drop, then soon crashed again in the mid-1930s. The working people did not notice the initial stock recovery.

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Re: Good times: 2008 vs Now

Post by Watty » Thu Jun 20, 2019 7:49 pm

chrismj wrote:
Wed Jun 19, 2019 1:15 pm
So what do the old timers think who've been through some business cycles before? Have we gone from famine to feast? Is this just a regular bounce back?
I don't feel like an oldtimer but I am in my 60s so I have seen my share of different markets.

It is just my impression but I think that a lot of the current "good times" are fueled by deficit spending and ongoing quantitative easing and that is the elephant in the room that few people are talking about.

It is impossible to discuss that much without getting into politics but I am concerned that at some point interest rates and inflation will be major problems that could play out in a lot of ugly ways.

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Re: Good times: 2008 vs Now

Post by 7eight9 » Thu Jun 20, 2019 7:59 pm

“When people talk about the good old days, I say to people, 'It's not the days that are old, it's you that's old.' I hate the good old days. What is important is that today is good.” --- Karl Lagerfeld

Is now good vs 2008? It depends. How are you doing? That is what matters. The economy? Who cares. All I care about is how I'm doing. If you doing good then now is a good. If you aren't, it isn't. Simple as that. Why compare to another time? Worry about now. The past is the past.
I guess it all could be much worse. | They could be warming up my hearse.

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Re: Good times: 2008 vs Now

Post by KlangFool » Thu Jun 20, 2019 8:31 pm

OP,

What good times? What recovery? I had been facing quarterly and annual laid off from my employers over the last 10+ years. There was no recovery for many of us.

KlangFool

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Re: Good times: 2008 vs Now

Post by 7eight9 » Thu Jun 20, 2019 9:01 pm

For some now is good. My house? Miserable. I lost my job in March. Thus far one phone interview that went nowhere. And a lot of automated rejection letters. Frankly, I would be really happy to get a job paying 50% of what I made. None of my coworkers who were let go when I was have been able to obtain a job thus far. I'm not seeing any hope. Hope is in Arkansas. Now is pretty miserable. In 2008 I was employed.
I guess it all could be much worse. | They could be warming up my hearse.

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Re: Good times: 2008 vs Now

Post by KlangFool » Thu Jun 20, 2019 9:14 pm

7eight9 wrote:
Thu Jun 20, 2019 9:01 pm
For some now is good. My house? Miserable. I lost my job in March. Thus far one phone interview that went nowhere. And a lot of automated rejection letters. Frankly, I would be really happy to get a job paying 50% of what I made. None of my coworkers who were let go when I was have been able to obtain a job thus far. I'm not seeing any hope. Hope is in Arkansas. Now is pretty miserable. In 2008 I was employed.
7eight9,

When I was unemployed and looking for a job a few years ago, I did not remember receiving any rejection letters at all. It was just flatly no response of any kind. This includes folks that I had an on-site interview with.

KlangFool

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Re: Good times: 2008 vs Now

Post by Independent George » Thu Jun 20, 2019 9:38 pm

My biggest worry in 2008 wasn't the value of my stock portfolio, but my job security and income. I was 31 years old, and even then understood that even a 50% drop in my portfolio (and a negative net worth due to my suddenly underwater mortgage) were things that could be overcome.

The much bigger question was whether or not I'd still have a job next week to continue making my payments on that underwater mortgage. Indeed, I took a substantial pay cut in 2009. Even with subsequent increases, my income has never quite recovered; in inflation adjusted terms, I actually make slightly less today than I did in 2007.

So to go back to the OP's questions... 2008 was every bit as hard and stressful as people say it was, but nevertheless I was able to persevere and even prosper. I was luckier than most in that I never lost my job, but was also worse off in that I had just taken on a lot of debt by buying my home at peak bubble. At my lowest moment, I considered filing for bankruptcy despite a net positive monthly income; that is the psychological toll of suddenly going from a six-figure net worth, to negative five figures. Practically overnight.

Still, despite the fear and hardship... I got through it. I had less money coming in, but continued to live below my means, pay my bills on time, and save the rest. My condo is now still about 25% less than the purchase price, but I nevertheless have 21% equity in it. I'm a little behind on my retirement milestones, but I'm still well ahead of the average American (in my age group, I'm in the top 10% despite being in the middle 50% of income). I've got a substantial cash buffer on top of that, and I'm in the best health of my life.

I think the point is, life will have its ups an downs, whether we're talking about the financial markets or anything else. You have little control over the big disasters happening. You can still get through it, though.

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Re: Good times: 2008 vs Now

Post by unclescrooge » Thu Jun 20, 2019 10:00 pm

firebirdparts wrote:
Wed Jun 19, 2019 3:16 pm
First poster here. I probably shouldn't make a philosophical first post.

In 2008, there were warnings about loan practices and real estate for a very long time. People had plenty of time to move money around, but of course in some cases people didn't realize what other people were doing to put them at risk. I remember columnists, for example Ben Stein, writing as early as 2007 that these threats to the financial world would not have much effect. Real estate prices were being called a "boom" in 2004 and 2005. Concerns about the real estate bubble were being voiced in 2006. Prices were declining in 2007.

My father-in-law was investing in cityscape, who combined subprime lending with 120% loan-amount-to-value, in the 1990's. My wife wanted to "get in on it" and I said "that is insane, on the face of it." When it was delisted (in the 1990's) they might have owned the whole company for all I know.
By 2006, was able to borrow 40x my income to speculate in real estate. Employees/management/regulators were either asleep at the wheel, or knowingly turned a blind eye.

Or, like the CEO of countrywide, they were on CNBC every other day pimping their stock while selling it hand over fist.

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Re: Good times: 2008 vs Now

Post by Spinola » Thu Jun 20, 2019 10:09 pm

nodenuff2 wrote:
Wed Jun 19, 2019 9:06 pm
Well in 08 I was 58 approaching retirement but was naive thinking the good times would keep on rolling . That fall I had open heart surgery. 09 saw my 401k cut in half. I just kept contributing and eventually recovered . Retired in Jan. 14. This feels nothing like 08. As posted . I see no wildness today. I remember the 87 crash the dot com debacle and 08 . Also may others Never sold during any of them. Select a asset allocation that lets you sleep at night. Save a part of every raise. Drive vehicles to their wheels fall off. Keep your head down at work with nose to the grindstone. It will all be ok.
^^ this :sharebeer :moneybag

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