Good times: 2008 vs Now

Discuss all general (i.e. non-personal) investing questions and issues, investing news, and theory.
KlangFool
Posts: 13257
Joined: Sat Oct 11, 2008 12:35 pm

Re: Good times: 2008 vs Now

Post by KlangFool » Wed Jul 03, 2019 12:31 pm

smitcat wrote:
Wed Jul 03, 2019 12:26 pm
KlangFool wrote:
Wed Jul 03, 2019 12:21 pm
Coburn wrote:
Wed Jul 03, 2019 12:13 pm
KlangFool wrote:
Wed Jul 03, 2019 9:47 am
fortyofforty wrote:
Wed Jul 03, 2019 7:46 am
Good points, nedsaid.

One other thing I'll add. There is nothing - NOTHING - that can adequately prepare you for a deep, severe bear market. Nor is there anything that can truly predict how you will react to your first one. They are terrible. Until you live through one or two, you cannot truly prepare yourself psychologically. As Mike Tyson famously said, "Everyone has a plan until they get punched in the mouth."
fortyofforty,

I disagreed that a person can be prepared psychologically. This is true even if they went through a few. I had been experienced this myself. The reason is each experience is different depending on the person's portfolio size and employment situation at that time.

The following experiences are different.

A) Going through a recession with full employment and complete job security and a small portfolio
B) Going through a recession with unemployment and 500K portfolio
C) Going through a recession with unemployment and 1 million portfolio

Just because someone went through the previous recession with a portfolio of 500K, it does not mean the person is prepared with a portfolio of 1 to 2 million.

KlangFool
Everyone is different, but to me I see little difference betwenn B and C just based on employment and net worth and enduring a recession. IOW, if you went thru a recession as B, then facing a recession as C...should not be drastically different.
Coburn,

Just to complete your post. Is your opinion based on actual experience or it is just your belief with no actual experience?

My belief is based on my actual first-hand experience.

KlangFool
FWIW - we saw little difference going thru a recession with smaller and larger portfolios.
YMMV
smitcat,

Just to complete your post.

A) Do you have job security in both cases?

B) Small and large portfolio in some relative sizes. For example, small = 1 year of expense. Large = 20 years of expense.

KlangFool

User avatar
nedsaid
Posts: 12144
Joined: Fri Nov 23, 2012 12:33 pm

Re: Good times: 2008 vs Now

Post by nedsaid » Wed Jul 03, 2019 12:39 pm

fortyofforty wrote:
Wed Jul 03, 2019 7:46 am
Good points, nedsaid.

One other thing I'll add. There is nothing - NOTHING - that can adequately prepare you for a deep, severe bear market. Nor is there anything that can truly predict how you will react to your first one. They are terrible. Until you live through one or two, you cannot truly prepare yourself psychologically. As Mike Tyson famously said, "Everyone has a plan until they get punched in the mouth."

Despite what your risk profile looks like in those free online questionnaires (like this one by Vanguard), it doesn't really reflect how you will react when it's real money, your money. Thousands and thousands of dollars of your hard-earned funds disappear, week after week, month after month. (Personally, I think those people who choose not to look at their investment returns as a way to get through these periods might have too much in risky assets, but that's just my opinion. I prefer to know exactly what is going on, and accept reality for what it is with my shrinking portfolio.)

Sites like this one can and will help you keep some perspective. However, even the best of us can lose nerve and bail out. Sometimes, people bail and avoid the very bottom. Sometimes people bail and jump out close to the bottom. And they often fail to get back in, or miss most of the following runup.

In short, keep investing, have a plan, stay focused, and, as Jack Bogle would often say, "Stay the course." Come here for reassurance and perspective. Boglehead handholding is free. :beer
The online questionnaires are helpful but in my opinion have a bias towards higher risk. So you might consider having a stock allocation 10%-15% lower than what the questionnaire recommends. If you have a 70% stock allocation recommended to you, you might consider a 60% or even a 55% stock allocation. Another quick way to check your risk profile is to compare your portfolio allocation to the asset allocation of the Target Date Funds that correspond to your projected retirement date. So I am almost 60 years old and have a projected retirement age of 2025, so it would be helpful for me to look at the asset allocations of the Target Date 2025 Funds for Vanguard, Fidelity, and T. Rowe Price to see if I am in the ballpark.
A fool and his money are good for business.

Coburn
Posts: 56
Joined: Sat Jun 08, 2019 12:46 pm

Re: Good times: 2008 vs Now

Post by Coburn » Wed Jul 03, 2019 12:46 pm

KlangFool wrote:
Wed Jul 03, 2019 12:21 pm
Coburn wrote:
Wed Jul 03, 2019 12:13 pm
KlangFool wrote:
Wed Jul 03, 2019 9:47 am
fortyofforty wrote:
Wed Jul 03, 2019 7:46 am
Good points, nedsaid.

One other thing I'll add. There is nothing - NOTHING - that can adequately prepare you for a deep, severe bear market. Nor is there anything that can truly predict how you will react to your first one. They are terrible. Until you live through one or two, you cannot truly prepare yourself psychologically. As Mike Tyson famously said, "Everyone has a plan until they get punched in the mouth."
fortyofforty,

I disagreed that a person can be prepared psychologically. This is true even if they went through a few. I had been experienced this myself. The reason is each experience is different depending on the person's portfolio size and employment situation at that time.

The following experiences are different.

A) Going through a recession with full employment and complete job security and a small portfolio
B) Going through a recession with unemployment and 500K portfolio
C) Going through a recession with unemployment and 1 million portfolio

Just because someone went through the previous recession with a portfolio of 500K, it does not mean the person is prepared with a portfolio of 1 to 2 million.

KlangFool
Everyone is different, but to me I see little difference betwenn B and C just based on employment and net worth and enduring a recession. IOW, if you went thru a recession as B, then facing a recession as C...should not be drastically different.
Coburn,

Just to complete your post. Is your opinion based on actual experience or it is just your belief with no actual experience?

My belief is based on my actual first-hand experience.

KlangFool
The 2008 recession hit me just as it did others. I certainly didn't step into a time machine and fast-forward to now.

So I don't understand your question about whether I speaking from first-hand experience???

Coburn
Posts: 56
Joined: Sat Jun 08, 2019 12:46 pm

Re: Good times: 2008 vs Now

Post by Coburn » Wed Jul 03, 2019 12:47 pm

If you are asking would I behave differently between B and C if I were in those shoes... no.

I would be unemployed in both cases and if the only difference was having more money (C), I fail to see why they are so different.

There is something else you are not sharing, I think.

KlangFool
Posts: 13257
Joined: Sat Oct 11, 2008 12:35 pm

Re: Good times: 2008 vs Now

Post by KlangFool » Wed Jul 03, 2019 1:08 pm

Coburn wrote:
Wed Jul 03, 2019 12:47 pm
If you are asking would I behave differently between B and C if I were in those shoes... no.

I would be unemployed in both cases and if the only difference was having more money (C), I fail to see why they are so different.

There is something else you are not sharing, I think.
Coburn,

<<If you are asking would I behave differently between B and C if I were in those shoes... no.>>

You have not experienced two recessions. So, your answer is you believe that you would not behave differently.

<<I would be unemployed in both cases and if the only difference was having more money (C), I fail to see why they are so different.>>

In summary, you do not know. You assume that there is no difference.

KlangFool

User avatar
AerialWombat
Posts: 749
Joined: Tue May 29, 2018 1:07 pm

Re: Good times: 2008 vs Now

Post by AerialWombat » Wed Jul 03, 2019 1:13 pm

chrismj wrote:
Wed Jun 19, 2019 1:15 pm
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 went bankrupt as a direct result of the 2007 real estate crash. I was a broker and investor. I lost all my property, and ended up homeless.

I started buying property again — as pure buy/hold rentals this time — in 2015. Different strategy, smarter strategy. A recession will not significantly impact me this time around.

Just because tens of thousands die in car crashes every doesn’t mean you shouldn’t drive. Same with any asset class.
“Life doesn’t come with a warranty.” -Michael LeBoeuf

smitcat
Posts: 3766
Joined: Mon Nov 07, 2016 10:51 am

Re: Good times: 2008 vs Now

Post by smitcat » Wed Jul 03, 2019 1:15 pm

KlangFool wrote:
Wed Jul 03, 2019 12:31 pm
smitcat wrote:
Wed Jul 03, 2019 12:26 pm
KlangFool wrote:
Wed Jul 03, 2019 12:21 pm
Coburn wrote:
Wed Jul 03, 2019 12:13 pm
KlangFool wrote:
Wed Jul 03, 2019 9:47 am


fortyofforty,

I disagreed that a person can be prepared psychologically. This is true even if they went through a few. I had been experienced this myself. The reason is each experience is different depending on the person's portfolio size and employment situation at that time.

The following experiences are different.

A) Going through a recession with full employment and complete job security and a small portfolio
B) Going through a recession with unemployment and 500K portfolio
C) Going through a recession with unemployment and 1 million portfolio

Just because someone went through the previous recession with a portfolio of 500K, it does not mean the person is prepared with a portfolio of 1 to 2 million.

KlangFool
Everyone is different, but to me I see little difference betwenn B and C just based on employment and net worth and enduring a recession. IOW, if you went thru a recession as B, then facing a recession as C...should not be drastically different.
Coburn,

Just to complete your post. Is your opinion based on actual experience or it is just your belief with no actual experience?

My belief is based on my actual first-hand experience.

KlangFool
FWIW - we saw little difference going thru a recession with smaller and larger portfolios.
YMMV
smitcat,

Just to complete your post.

A) Do you have job security in both cases?

B) Small and large portfolio in some relative sizes. For example, small = 1 year of expense. Large = 20 years of expense.

KlangFool

Lost job both times - and 'yes' on the relative sizes.

Rus In Urbe
Posts: 464
Joined: Sat Dec 09, 2017 2:12 pm

Re: Good times: 2008 vs Now

Post by Rus In Urbe » Wed Jul 03, 2019 1:18 pm

The problem with looking around and trying to figure out what is going on (ie. where we might be in the business cycles of bust'n'boom) is that there is too much "noise." That is to say, complex factors---too numerous to take into account---influence economic outcomes.

MARKET RETURNS = consumer spending, confidence, fear, consumer investment, greed, corporate profits, Fed moves, R&D investment, hiring, natural disasters, politics, business and scientific innovation, international trade agreements....need I go on? Want to predict all of those factors?

Even one element can be deceiving: one teeny example of how "noise" can get in the way is that when you look around and see "everyone" buying new cars, houses, and vacations. You have no way of knowing how much of the money being spent is borrowed. Is it a bubble or is there really a fundamental expansion of spending? Even economists disagree (though I do think personal and national debt levels are approaching worrisome levels----but who knows? We have floated out of these kinds of debts before, so it has not changed my plan).

Richard1580
» Wed Jun 19, 2019 8:52 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.
This.
Richard1580 offers Good advice.

So look around and notice. But realize that what you see is only one tiny slice of a huge, complex tapestry. And what you see should not sway you from LBYM, STC and all the other fundamental Bogleheadish ways of achieving Financial Independence.

At 64, I've been through many bust'n'booms---in 2008, we managed to STC and reaped a huge reward from that.
You will too when the time comes.

Good luck to you! :beer :beer :beer
I'd like to live as a poor man with lots of money. ~Pablo Picasso

KlangFool
Posts: 13257
Joined: Sat Oct 11, 2008 12:35 pm

Re: Good times: 2008 vs Now

Post by KlangFool » Wed Jul 03, 2019 1:28 pm

smitcat wrote:
Wed Jul 03, 2019 1:15 pm
KlangFool wrote:
Wed Jul 03, 2019 12:31 pm
smitcat wrote:
Wed Jul 03, 2019 12:26 pm
KlangFool wrote:
Wed Jul 03, 2019 12:21 pm
Coburn wrote:
Wed Jul 03, 2019 12:13 pm


Everyone is different, but to me I see little difference betwenn B and C just based on employment and net worth and enduring a recession. IOW, if you went thru a recession as B, then facing a recession as C...should not be drastically different.
Coburn,

Just to complete your post. Is your opinion based on actual experience or it is just your belief with no actual experience?

My belief is based on my actual first-hand experience.

KlangFool
FWIW - we saw little difference going thru a recession with smaller and larger portfolios.
YMMV
smitcat,

Just to complete your post.

A) Do you have job security in both cases?

B) Small and large portfolio in some relative sizes. For example, small = 1 year of expense. Large = 20 years of expense.

KlangFool

Lost job both times - and 'yes' on the relative sizes.
Thanks.

KlangFool

shawn_lad
Posts: 68
Joined: Tue Mar 20, 2018 4:01 pm

Re: Good times: 2008 vs Now

Post by shawn_lad » Wed Jul 03, 2019 1:32 pm

hightower wrote:
Wed Jun 19, 2019 1:42 pm
... 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.
Setting aside obvious ethical issues...

What would prevent a bank that does NOT go out of business suing you for mortgage that you refuse to pay? (or giving you to collection agency that sues you)

Can you declare bankruptcy while still having assets or having a spouse with any assets / trusts / etc?

gougou
Posts: 175
Joined: Thu Sep 28, 2017 7:42 pm
Location: San Francisco Bay Area

Re: Good times: 2008 vs Now

Post by gougou » Wed Jul 03, 2019 1:40 pm

shawn_lad wrote:
Wed Jul 03, 2019 1:32 pm
hightower wrote:
Wed Jun 19, 2019 1:42 pm
... 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.
Setting aside obvious ethical issues...

What would prevent a bank that does NOT go out of business suing you for mortgage that you refuse to pay? (or giving you to collection agency that sues you)

Can you declare bankruptcy while still having assets or having a spouse with any assets / trusts / etc?
If they are in a non-recourse state then the bank can only take the house. A mortgage is a business contract where the bank makes profit and assumes risks. I see no ethical issues for consumers to walk away.

User avatar
midareff
Posts: 6274
Joined: Mon Nov 29, 2010 10:43 am
Location: Biscayne Bay, South Florida

Re: Good times: 2008 vs Now

Post by midareff » Wed Jul 03, 2019 1:43 pm

KlangFool wrote:
Fri Jun 21, 2019 12:16 pm
HomerJ wrote:
Fri Jun 21, 2019 12:06 pm
KlangFool wrote:
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
Of course there was a recovery for you Klang. You're being silly. You've been working, you've saved a ton of money. You've financially recovered your losses from 2008.

Sure, you haven't recovered your youthful optimism. You've apparently been emotionally scarred for life, and will remain pessimistic forever, but this thread about is about recovering financial assets.
HomerJ,

Somebody claimed that we had good times after 2008/2009. I am claiming that nothing had changed since 10+ years ago. My peers that are permanently under-employed and/or unemployed did not face any better prospect.

In my case, I had been unemployed for more than 1 year a few times and facing permanent under-employment and unemployment every year. So, nothing had changed over the last 10+ years. There weren't any better times and/or prospect for many of us.

<<You've been working,>>

I had been unemployed for more than 1 year too.

KlangFool
Klang... with all due respect let me look at two sides of the coin.

Side #1. Single or family, matters not. Gainfully employed and lives quite modestly saving a reasonable percentage (>10%-15%) of earnings. Over the course of a lifetime will accumulate significant assets.

Side #2. Single or family, matters not. Gainfully employed and lives to the extent of the pay received without rainy day or retirement savings. Runs debt and pays high interest for it to maintain a lifestyle larger than needed or deserved. Over the course of a lifetime will accumulate very little and be considered poor at retirement time.

My peers that were under-employed and/or unemployed went to classes, obtained certifications and made them selves more valuable to employers. They faced much better prospects and did better because they made themselves better and more valuable. I've been unemployed... with a family, a mortgage, car payments and limited cash on hand. I took whatever I could get and kept looking taking better and better opportunities until I returned to main line full time employment. I'd flip burgers if I needed to get a paycheck.... lol, and basically did. It took less than a week to find a job with a paycheck.

I think we control much more of the outcome of our life than you seem to express.
Last edited by midareff on Wed Jul 03, 2019 1:49 pm, edited 1 time in total.

Coburn
Posts: 56
Joined: Sat Jun 08, 2019 12:46 pm

Re: Good times: 2008 vs Now

Post by Coburn » Wed Jul 03, 2019 1:47 pm

KlangFool wrote:
Wed Jul 03, 2019 1:08 pm
Coburn wrote:
Wed Jul 03, 2019 12:47 pm
If you are asking would I behave differently between B and C if I were in those shoes... no.

I would be unemployed in both cases and if the only difference was having more money (C), I fail to see why they are so different.

There is something else you are not sharing, I think.
Coburn,

<<If you are asking would I behave differently between B and C if I were in those shoes... no.>>

You have not experienced two recessions. So, your answer is you believe that you would not behave differently.

<<I would be unemployed in both cases and if the only difference was having more money (C), I fail to see why they are so different.>>

In summary, you do not know. You assume that there is no difference.

KlangFool
For me, there would be no difference. Zero. Zilch.

if my net worth is double what it was during the last recession, and a recession were to happens again...I wouldn't look at it as "I have more to lose this time compared to last time...".

But it seems perhaps you view it that way.

User avatar
midareff
Posts: 6274
Joined: Mon Nov 29, 2010 10:43 am
Location: Biscayne Bay, South Florida

Re: Good times: 2008 vs Now

Post by midareff » Wed Jul 03, 2019 1:48 pm

In 2008 I was tech heavy (90%) equities without bonds and was quite market savvy stupid. I watched a $1.3M portfolio become $484K before things started to get better and it took some 7+ years for recovery. Now with 50% or slightly greater in investment grade bonds, average duration a bit under 5 years, and a strong cash flow 8 years into retirement I feel like I'm wearing three raincoats and the suns still out. .. it's OK, there will be storms and regardless of the when I will be ready.

KlangFool
Posts: 13257
Joined: Sat Oct 11, 2008 12:35 pm

Re: Good times: 2008 vs Now

Post by KlangFool » Wed Jul 03, 2019 1:56 pm

midareff wrote:
Wed Jul 03, 2019 1:43 pm

My peers that were under-employed and/or unemployed went to classes, obtained certifications and made them selves more valuable to employers. They faced much better prospects and did better because they made themselves better and more valuable. I've been unemployed... with a family, a mortgage, car payments and limited cash on hand. I took whatever I could get and kept looking taking better and better opportunities until I returned to main line full time employment. I'd flip burgers if I needed to get a paycheck.... lol, and basically did.

I think we control much more of the outcome of our life than you seem to express.
midareff,

Then, let me show another side.

The engineer making good money and believe that the good time will last forever. Got married and buy a house at 3 or more time the gross income as per conventional wisdom. House poor and save close to nothing,

Then, hit a recession and unemployed for a while.

<<I'd flip burgers if I needed to get a paycheck.... lol, and basically did.>>

At 50K to 100K of annual expense, unemployment insurance, and the flipping burger is not good enough to keep the house.

<<My peers that were under-employed and/or unemployed went to classes, obtained certifications and made them selves more valuable to employers.>>

At lower income and annual expense level, this is possible. At a higher income level, why would the employer give the older person a fresh start? It is cheaper to hire a fresh graduate with the latest technology.

KlangFool

User avatar
fortyofforty
Posts: 1560
Joined: Wed Mar 31, 2010 12:33 pm

Re: Good times: 2008 vs Now

Post by fortyofforty » Wed Jul 03, 2019 2:57 pm

KlangFool wrote:
Wed Jul 03, 2019 9:47 am
fortyofforty wrote:
Wed Jul 03, 2019 7:46 am
Good points, nedsaid.

One other thing I'll add. There is nothing - NOTHING - that can adequately prepare you for a deep, severe bear market. Nor is there anything that can truly predict how you will react to your first one. They are terrible. Until you live through one or two, you cannot truly prepare yourself psychologically. As Mike Tyson famously said, "Everyone has a plan until they get punched in the mouth."
fortyofforty,

I disagreed that a person can be prepared psychologically. This is true even if they went through a few. I had been experienced this myself. The reason is each experience is different depending on the person's portfolio size and employment situation at that time.

The following experiences are different.

A) Going through a recession with full employment and complete job security and a small portfolio

versus

B) Going through a recession with unemployment and 500K portfolio

versus

C) Going through a recession with unemployment and 1 million portfolio

Just because someone went through the previous recession with a portfolio of 500K, it does not mean the person is prepared with a portfolio of 1 to 2 million.

KlangFool
I think you can indeed be prepared psychologically once you've experienced one or two severe bear markets. Not that you MUST be prepared, just that you CAN prepare yourself. Your odds increase. It all depends on your psychological makeup. Since we're caviling here, I'll just leave that for clarification.
"In a time of universal deceit, telling the truth becomes a revolutionary act." - George Orwell | Diligentia. Vis. Celeritas. - Jeff Cooper | Original Vanguard Diehard

smitcat
Posts: 3766
Joined: Mon Nov 07, 2016 10:51 am

Re: Good times: 2008 vs Now

Post by smitcat » Wed Jul 03, 2019 3:22 pm

midareff wrote:
Wed Jul 03, 2019 1:43 pm
KlangFool wrote:
Fri Jun 21, 2019 12:16 pm
HomerJ wrote:
Fri Jun 21, 2019 12:06 pm
KlangFool wrote:
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
Of course there was a recovery for you Klang. You're being silly. You've been working, you've saved a ton of money. You've financially recovered your losses from 2008.

Sure, you haven't recovered your youthful optimism. You've apparently been emotionally scarred for life, and will remain pessimistic forever, but this thread about is about recovering financial assets.
HomerJ,

Somebody claimed that we had good times after 2008/2009. I am claiming that nothing had changed since 10+ years ago. My peers that are permanently under-employed and/or unemployed did not face any better prospect.

In my case, I had been unemployed for more than 1 year a few times and facing permanent under-employment and unemployment every year. So, nothing had changed over the last 10+ years. There weren't any better times and/or prospect for many of us.

<<You've been working,>>

I had been unemployed for more than 1 year too.

KlangFool
Klang... with all due respect let me look at two sides of the coin.

Side #1. Single or family, matters not. Gainfully employed and lives quite modestly saving a reasonable percentage (>10%-15%) of earnings. Over the course of a lifetime will accumulate significant assets.

Side #2. Single or family, matters not. Gainfully employed and lives to the extent of the pay received without rainy day or retirement savings. Runs debt and pays high interest for it to maintain a lifestyle larger than needed or deserved. Over the course of a lifetime will accumulate very little and be considered poor at retirement time.

My peers that were under-employed and/or unemployed went to classes, obtained certifications and made them selves more valuable to employers. They faced much better prospects and did better because they made themselves better and more valuable. I've been unemployed... with a family, a mortgage, car payments and limited cash on hand. I took whatever I could get and kept looking taking better and better opportunities until I returned to main line full time employment. I'd flip burgers if I needed to get a paycheck.... lol, and basically did. It took less than a week to find a job with a paycheck.

I think we control much more of the outcome of our life than you seem to express.
Good post - we did the same thing when we lost jobs, got to work right away.

User avatar
midareff
Posts: 6274
Joined: Mon Nov 29, 2010 10:43 am
Location: Biscayne Bay, South Florida

Re: Good times: 2008 vs Now

Post by midareff » Wed Jul 03, 2019 3:27 pm

KlangFool wrote:
Wed Jul 03, 2019 1:56 pm
midareff wrote:
Wed Jul 03, 2019 1:43 pm

My peers that were under-employed and/or unemployed went to classes, obtained certifications and made them selves more valuable to employers. They faced much better prospects and did better because they made themselves better and more valuable. I've been unemployed... with a family, a mortgage, car payments and limited cash on hand. I took whatever I could get and kept looking taking better and better opportunities until I returned to main line full time employment. I'd flip burgers if I needed to get a paycheck.... lol, and basically did.

I think we control much more of the outcome of our life than you seem to express.
midareff,

Then, let me show another side.

The engineer making good money and believe that the good time will last forever. Got married and buy a house at 3 or more time the gross income as per conventional wisdom. House poor and save close to nothing,

Then, hit a recession and unemployed for a while.

<<I'd flip burgers if I needed to get a paycheck.... lol, and basically did.>>

At 50K to 100K of annual expense, unemployment insurance, and the flipping burger is not good enough to keep the house.

<<My peers that were under-employed and/or unemployed went to classes, obtained certifications and made them selves more valuable to employers.>>

At lower income and annual expense level, this is possible. At a higher income level, why would the employer give the older person a fresh start? It is cheaper to hire a fresh graduate with the latest technology.

KlangFool
I think the fly in the ointment is that by the time the individual is older they should not have bought a house at 3X and be saving nothing. The older person who is house poor and no or limited savings did that by themselves as in my earlier examples in my post.

KlangFool
Posts: 13257
Joined: Sat Oct 11, 2008 12:35 pm

Re: Good times: 2008 vs Now

Post by KlangFool » Wed Jul 03, 2019 3:39 pm

midareff wrote:
Wed Jul 03, 2019 3:27 pm
KlangFool wrote:
Wed Jul 03, 2019 1:56 pm
midareff wrote:
Wed Jul 03, 2019 1:43 pm

My peers that were under-employed and/or unemployed went to classes, obtained certifications and made them selves more valuable to employers. They faced much better prospects and did better because they made themselves better and more valuable. I've been unemployed... with a family, a mortgage, car payments and limited cash on hand. I took whatever I could get and kept looking taking better and better opportunities until I returned to main line full time employment. I'd flip burgers if I needed to get a paycheck.... lol, and basically did.

I think we control much more of the outcome of our life than you seem to express.
midareff,

Then, let me show another side.

The engineer making good money and believe that the good time will last forever. Got married and buy a house at 3 or more time the gross income as per conventional wisdom. House poor and save close to nothing,

Then, hit a recession and unemployed for a while.

<<I'd flip burgers if I needed to get a paycheck.... lol, and basically did.>>

At 50K to 100K of annual expense, unemployment insurance, and the flipping burger is not good enough to keep the house.

<<My peers that were under-employed and/or unemployed went to classes, obtained certifications and made them selves more valuable to employers.>>

At lower income and annual expense level, this is possible. At a higher income level, why would the employer give the older person a fresh start? It is cheaper to hire a fresh graduate with the latest technology.

KlangFool
I think the fly in the ointment is that by the time the individual is older they should not have bought a house at 3X and be saving nothing. The older person who is house poor and no or limited savings did that by themselves as in my earlier examples in my post.
midareff,

1) Average American save less than 5% of their gross income.

2) Average American buy the house at 3 or more times their gross income.

You are describing a normal American behavior. We are the weird one.

KlangFool

smitcat
Posts: 3766
Joined: Mon Nov 07, 2016 10:51 am

Re: Good times: 2008 vs Now

Post by smitcat » Wed Jul 03, 2019 3:42 pm

KlangFool wrote:
Wed Jul 03, 2019 3:39 pm
midareff wrote:
Wed Jul 03, 2019 3:27 pm
KlangFool wrote:
Wed Jul 03, 2019 1:56 pm
midareff wrote:
Wed Jul 03, 2019 1:43 pm

My peers that were under-employed and/or unemployed went to classes, obtained certifications and made them selves more valuable to employers. They faced much better prospects and did better because they made themselves better and more valuable. I've been unemployed... with a family, a mortgage, car payments and limited cash on hand. I took whatever I could get and kept looking taking better and better opportunities until I returned to main line full time employment. I'd flip burgers if I needed to get a paycheck.... lol, and basically did.

I think we control much more of the outcome of our life than you seem to express.
midareff,

Then, let me show another side.

The engineer making good money and believe that the good time will last forever. Got married and buy a house at 3 or more time the gross income as per conventional wisdom. House poor and save close to nothing,

Then, hit a recession and unemployed for a while.

<<I'd flip burgers if I needed to get a paycheck.... lol, and basically did.>>

At 50K to 100K of annual expense, unemployment insurance, and the flipping burger is not good enough to keep the house.

<<My peers that were under-employed and/or unemployed went to classes, obtained certifications and made them selves more valuable to employers.>>

At lower income and annual expense level, this is possible. At a higher income level, why would the employer give the older person a fresh start? It is cheaper to hire a fresh graduate with the latest technology.

KlangFool
I think the fly in the ointment is that by the time the individual is older they should not have bought a house at 3X and be saving nothing. The older person who is house poor and no or limited savings did that by themselves as in my earlier examples in my post.
midareff,

1) Average American save less than 5% of their gross income.

2) Average American buy the house at 3 or more times their gross income.

You are describing a normal American behavior. We are the weird one.

KlangFool
1) Average American save less than 5% of their gross income.
We have most always saved more than 5% of gross income.

2) Average American buy the house at 3 or more times their gross income.
We did buy a house at 3X income , it was a 2 family and worked out very well.

User avatar
midareff
Posts: 6274
Joined: Mon Nov 29, 2010 10:43 am
Location: Biscayne Bay, South Florida

Re: Good times: 2008 vs Now

Post by midareff » Wed Jul 03, 2019 4:14 pm

KlangFool wrote:
Wed Jul 03, 2019 3:39 pm
midareff wrote:
Wed Jul 03, 2019 3:27 pm
KlangFool wrote:
Wed Jul 03, 2019 1:56 pm
midareff wrote:
Wed Jul 03, 2019 1:43 pm

My peers that were under-employed and/or unemployed went to classes, obtained certifications and made them selves more valuable to employers. They faced much better prospects and did better because they made themselves better and more valuable. I've been unemployed... with a family, a mortgage, car payments and limited cash on hand. I took whatever I could get and kept looking taking better and better opportunities until I returned to main line full time employment. I'd flip burgers if I needed to get a paycheck.... lol, and basically did.

I think we control much more of the outcome of our life than you seem to express.
midareff,

Then, let me show another side.

The engineer making good money and believe that the good time will last forever. Got married and buy a house at 3 or more time the gross income as per conventional wisdom. House poor and save close to nothing,

Then, hit a recession and unemployed for a while.

<<I'd flip burgers if I needed to get a paycheck.... lol, and basically did.>>

At 50K to 100K of annual expense, unemployment insurance, and the flipping burger is not good enough to keep the house.

<<My peers that were under-employed and/or unemployed went to classes, obtained certifications and made them selves more valuable to employers.>>

At lower income and annual expense level, this is possible. At a higher income level, why would the employer give the older person a fresh start? It is cheaper to hire a fresh graduate with the latest technology.

KlangFool
I think the fly in the ointment is that by the time the individual is older they should not have bought a house at 3X and be saving nothing. The older person who is house poor and no or limited savings did that by themselves as in my earlier examples in my post.
midareff,

1) Average American save less than 5% of their gross income.

2) Average American buy the house at 3 or more times their gross income.

You are describing a normal American behavior. We are the weird one.

KlangFool
Klang,

Normal is live as large as you can today and the hell with tomorrow. I started my deferred compensation program upon hiring in where it was available. I started at about 5% as a new hire about 1979 or 1978. Every time I received a cola, a raise or a promotion I took a bit as an increase.... generally a bit more than enough to cover the increased tax and the rest went into deferred compensation. Eventually the deferred comp account was received more than 30% of my pay and that went on for years if not decades. There are easy choices in life such as live large and retire poor, if at all, or live modestly below your means and retire large. Just got home Sunday from a month with Viking in Europe. Easy to figure what my choice was...... and it is an individual choice we have to live with later.

User avatar
patrick013
Posts: 2660
Joined: Mon Jul 13, 2015 7:49 pm

Re: Good times: 2008 vs Now

Post by patrick013 » Wed Jul 03, 2019 4:24 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 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.
Image

The 1st quarter of 2019 is still preliminary. You can see the drop in EPS and Price in Dec 2018.

So to me current EPS would be predictive if positive of a better market but still probably 6% growth only. Sales and dividends tell a good story. One year at a time. If sales per share was down too we'd have all the papers predicting the "recession". Have to wait and see as usual.
age in bonds, buy-and-hold, 10 year business cycle

FI4LIFE
Posts: 150
Joined: Sun Apr 28, 2019 9:27 am

Re: Good times: 2008 vs Now

Post by FI4LIFE » Wed Jul 03, 2019 9:06 pm

The only thing I can add to this thread is my personal experience leading up to the 2008 crash. I was looking to purchase my first home starting around 2005. The real estate market was so hot that if you were a buyer there was an incredible sense of urgency to buy something you liked as soon as possible. Real estate in my area was jumping 12%+ year over year. There was a sense that you just HAD to get into the real estate market both because it was a "sure" investment and because if you didn't get in you would be priced out. I don't see that happening in any asset class at the moment.

Independent George
Posts: 465
Joined: Wed Feb 17, 2016 12:13 pm

Re: Good times: 2008 vs Now

Post by Independent George » Wed Jul 03, 2019 11:15 pm

KlangFool wrote:
Wed Jul 03, 2019 3:39 pm

1) Average American save less than 5% of their gross income.

2) Average American buy the house at 3 or more times their gross income.

You are describing a normal American behavior. We are the weird one.
I actually bought my home in 2007 at 4.5x my gross income, because (1) I assumed my income would continue to grow at the same rate it had the last 4 years, and (2) I was afraid of getting priced out of the red-hot housing market. Over the next two years, I'd taken a ~20% pay cut, and my mortgage was underwater when my home's value dropped by 45%.

Nevertheless, I always saved at least 10% of my (reduced) income even during the worst of times, and never missed a single mortgage payment. Ironically, that trait was a large reason why mortgage backed securities became so popular and drove the bubble in the first place - I cut a lot of expenses and sacrificed a lot of consumption to make sure I could keep paying my mortgage, just as a lot of those quants' models predicted. So I guess I'm only half weird.

I think my big lessons were (1) there is far more fat in your budget than you think, (2) staying employed is the single most important thing anyone can do in bad times, as much for the psychological boost as for the paycheck, (3) paper losses hurt even when you're young, but are bearable, and (4) persistence in the face of adversity is not something you are born with - it is a skill that can be learned and practiced.

One of the more unexpected things I experienced was that I found myself far less sympathetic to the real estate sob stories I kept reading about at the time, because I was in the exact same situation and couldn't see how it was anyone's fault but my own. I, too, overstretched myself on my mortgage, and suffered a huge loss when the bubble collapsed. Nobody tricked me into buying or borrowing; if the worst came to pass, I didn't see how I was entitled to keep a home I could no longer afford. If I was forced to declare bankruptcy (and I considered it), I saw it as a means of making a clean break that was far more generous to the debtor than the creditor. I was actually angry at how people behaved - as if they were somehow entitled to flip a home for a 20% gain.

User avatar
HomerJ
Posts: 13121
Joined: Fri Jun 06, 2008 12:50 pm

Re: Good times: 2008 vs Now

Post by HomerJ » Wed Jul 03, 2019 11:48 pm

Coburn wrote:
Wed Jul 03, 2019 1:47 pm
if my net worth is double what it was during the last recession, and a recession were to happens again...I wouldn't look at it as "I have more to lose this time compared to last time...".

But it seems perhaps you view it that way.
This just my opinion, so I could be wrong, but that just makes me think you haven't experienced two crashes yet.

I experienced 2000, and it was no big deal because I was young and lost about ten thousand dollars.

I experienced 2008, and it was a very big deal because I lost hundreds of thousands of dollars.

They were very different events, even though in both cases, I lost 50% of my money.

I find it hard to believe that you would feel the same way about losing a million dollars (of $2 million), and losing $10,000 (of $20,000).

But I suppose it's possible the two events would be equal in your mind.
The J stands for Jay

HawkeyePierce
Posts: 527
Joined: Tue Mar 05, 2019 10:29 pm
Location: Colorado

Re: Good times: 2008 vs Now

Post by HawkeyePierce » Thu Jul 04, 2019 3:21 am

I have yet to experience a bear market. I graduated college in 2012 into a roaring bull market. Given that, I have no idea how I'll actually react in a market dive.

Since then I've tried to prepare for the inevitable recession in the following ways:

1) Paid down all debt. I paid off my car in 2015 and my (six figure :shock:) student loan earlier this year. I'm debt free.

2) Save >60% of my gross income. I now have about 5x annual expenses in my portfolio, more if I were to reduce my discretionary spending. All my tax-advantaged accounts are maxed out: backdoor Roth IRA, traditional 401k, after-tax 401k and HSA. I also max out my ESPP.

3) Eight month emergency fund which I am going to extend to 12.

4) Educating myself on market history. I can't predict where markets are going to go but I can at least understand where they've been. The books I've found most useful have been Devil Take the Hindmost by Edward Chancellor on the history of financial speculation, Crashed by Adam Tooze on the run-up and consequences of 2008, and All the Devils Are Here by Bethany McLean also on the 2008 GFC with an emphasis on the roles of Fannie and Freddie. I've read many of the books written on 2008 and those two (IMO) were the best.

Honorable mentions to The Prize: The Epic Quest for Oil, Money and Power by Daniel Yergin on the history of oil and its role in geopolitics plus The Battle of Bretton Woods by Benn Steil on the creation of the post-war international financial order.

Also Smartest Guys in the Room also by McLean on Enron's rise and fall, When Genius Failed: The Rise and Fall of Long-Term Capital Management and Barbarians at the Gate: The Fall of RJR Nabisco. Those three books taught me just how much greed and stupidity exists in our economy.

My goal isn't to predict the next crisis. My goal is to learn caution and patience with financial markets. My hope is that understanding this history reduces my chances of panic during our next bear market or recession.

5) A conservative asset allocation (for my age). I'm now at 70/30.

6) Keeping myself employable. I have a strong network both within the company I work for (a Fortune 500 tech company) and externally. I speak at high-profile conferences, keep myself visible within the community on Twitter and have built a reputation in my field.

7) Keeping lifestyle inflation in check. I make mid six figures but I still drive my 2011 Honda. I don't eat out too often and though I travel frequently I do so on a budget. This isn't to say I live a miserly lifestyle—my annual expenses are about $70k—but I don't want to get used to an income that may not be around six months from now.

8) Keeping a strict budget. This is the corollary to #7. I use You Need A Budget religiously. I track every transaction and do my best to only spend money I've already budgeted for that purpose. This also gives me confidence in my emergency fund because I can see exactly where my money goes each month, so I know just what can be cut back in order to stretch my cash if needed. The peace of mind that comes from a well-kept budget is priceless.

That seems to be about all I can do to prepare. All I can do now is take advantage of the good times while they're here and take comfort in my preparations for when they're not.

hightower
Posts: 569
Joined: Mon Dec 12, 2016 2:28 am

Re: Good times: 2008 vs Now

Post by hightower » Thu Jul 04, 2019 6:54 am

gougou wrote:
Wed Jul 03, 2019 1:40 pm
shawn_lad wrote:
Wed Jul 03, 2019 1:32 pm
hightower wrote:
Wed Jun 19, 2019 1:42 pm
... 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.
Setting aside obvious ethical issues...

What would prevent a bank that does NOT go out of business suing you for mortgage that you refuse to pay? (or giving you to collection agency that sues you)

Can you declare bankruptcy while still having assets or having a spouse with any assets / trusts / etc?
If they are in a non-recourse state then the bank can only take the house. A mortgage is a business contract where the bank makes profit and assumes risks. I see no ethical issues for consumers to walk away.
This. It's not about ethics. It's about business. When you sign up for a mortgage, you agree to pay back X-Amount of dollars and If you can't the bank agrees to take the house from you. There's nothing in that contract that says you're morally obligated to pay back the money no matter what happens. That's my whole point. Mortgages are very favorably debts for this reason.
As long as you live in a state without re-course laws, the bank can't do anything about it. Choose which state you buy in carefully, lol. And not only that, but make sure you read the fine print on your mortgage before you sign it. Some states allow recourse from the mortgage company, but not all mortgages have a clause about recourse.
Last edited by hightower on Thu Jul 04, 2019 6:56 am, edited 1 time in total.

User avatar
hagridshut
Posts: 45
Joined: Tue Apr 10, 2012 6:54 pm

Re: Good times: 2008 vs Now

Post by hagridshut » Thu Jul 04, 2019 6:56 am

FI4LIFE wrote:
Wed Jul 03, 2019 9:06 pm
The only thing I can add to this thread is my personal experience leading up to the 2008 crash. I was looking to purchase my first home starting around 2005. The real estate market was so hot that if you were a buyer there was an incredible sense of urgency to buy something you liked as soon as possible. Real estate in my area was jumping 12%+ year over year. There was a sense that you just HAD to get into the real estate market both because it was a "sure" investment and because if you didn't get in you would be priced out. I don't see that happening in any asset class at the moment.
I remember people telling me in 2007-2008 to get into real estate before it was "too late", but I had only been working for a few years and chose to invest in VFINX and pay down college debt rather than save for a home down payment.

Today, the atmosphere does feel very different. I could describe it in one word: uncertainty.

In my browsing of other message boards, people seem constantly worried that a recession/crash is just around the corner. There's constant talk about the "inverted yield curve", people asking if they should buy gold, people asking if they should acquire bitcoin, and people asking when the next recession would happen. Asset prices across the board are relatively high, but a creeping sense of dread, rather than the euphoria of the real estate boom, permeates the online discussions.
First Principles: (1) Diversify (2) Low Cost (3) Stay the Course | 3-Fund Index Portfolio: S&P500; Intl; U.S.Bonds

StandingRock
Posts: 260
Joined: Sat Feb 02, 2019 6:54 pm

Re: Good times: 2008 vs Now

Post by StandingRock » Thu Jul 04, 2019 7:04 am

I think Bogleheads will be OK. There are good times and bad times, sometimes you have a little and sometimes you have a lot. The wildcard factor would be if the socialists take over. You don't come back from that.

Smoke
Posts: 407
Joined: Thu Aug 30, 2018 12:45 pm
Location: TN retired

Re: Good times: 2008 vs Now

Post by Smoke » Thu Jul 04, 2019 7:19 am

I like to watch the little things shoppers do or don't do and how it changes over time.

A silly thing is shopping at Aldi's, for those who don't know if you want a shopping cart you need a quarter to insert into the cart slot to release it from the other carts by a chain lock.
You get the quarter back when you return the cart.
For the past few years I noticed it was very common for people not to take their quarter when they returned their cart, takes a second to do.
For the past 6 months, I have not seen one quarter left.
Is that saying something about at least my areas economic leanings?
Who knows, but it's fun to see differences over time with shoppers.
Arguing for the sake of arguing is something I am not going to engage in.

Bacchus01
Posts: 3014
Joined: Mon Dec 24, 2012 9:35 pm

Re: Good times: 2008 vs Now

Post by Bacchus01 » Thu Jul 04, 2019 7:52 am

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.
While most indicators suggest things are good, as someone who lived through 2008, I can tell you that it has never seemed to get back to the euphoria of the early 2000s. Nor the 1990s run ups. As good as it’s been, there has been a constant cautious mood.

I just looked last night. Our net worth has grown 6X since 2009. 6X in just 10 years. And yet, I don’t feel that secure. I never lost my job in 2008. Never lost a home. Never worried about making a house payment, etc. And yet, this time around things just feel like there is more room to run up. It does not feel like a euphoric rise like the early 2000s and mid-90s.

That said, I follow ITR economics closesly more for the business cycle analysis than stock analysis. I believe we will hit a slowdown the remainder of this year into next with a full recession in 2021 followed by the “roaring 20a” until a crash in late 20s. Yep, it’ll feel like it did 100 years prior.

Coburn
Posts: 56
Joined: Sat Jun 08, 2019 12:46 pm

Re: Good times: 2008 vs Now

Post by Coburn » Thu Jul 04, 2019 9:45 am

HomerJ wrote:
Wed Jul 03, 2019 11:48 pm
Coburn wrote:
Wed Jul 03, 2019 1:47 pm
if my net worth is double what it was during the last recession, and a recession were to happens again...I wouldn't look at it as "I have more to lose this time compared to last time...".

But it seems perhaps you view it that way.
This just my opinion, so I could be wrong, but that just makes me think you haven't experienced two crashes yet.

I experienced 2000, and it was no big deal because I was young and lost about ten thousand dollars.

I experienced 2008, and it was a very big deal because I lost hundreds of thousands of dollars.

They were very different events, even though in both cases, I lost 50% of my money.

I find it hard to believe that you would feel the same way about losing a million dollars (of $2 million), and losing $10,000 (of $20,000).

But I suppose it's possible the two events would be equal in your mind.
I experienced both the 2000 and 2002/2003 downturns too.

The first had relatively little impact to me because I had zero money in the market having foolishly chosen to opt-out of any 401k contribution with my employer then. The second one...I might have had some skin-in-the-game re:the market, but still no 401k participation.

I state it again...the size of my portfolio doesn't dictate how I view or handle downturns. Apparrently, that isn't the case with some of you.

Sure, when the market tanks or when the next recession lands, my portfolio will be impacted. But in my mind, I treat it as more of a paper loss since I'm not tapping this money yet.

The biggest thing for me is whether I have a job or not.

Everything else...the market up or down, lending bubbles, etc are out of my control and I try not to let it dwell on my mind.

KlangFool
Posts: 13257
Joined: Sat Oct 11, 2008 12:35 pm

Re: Good times: 2008 vs Now

Post by KlangFool » Thu Jul 04, 2019 9:59 am

Coburn wrote:
Thu Jul 04, 2019 9:45 am
HomerJ wrote:
Wed Jul 03, 2019 11:48 pm
Coburn wrote:
Wed Jul 03, 2019 1:47 pm
if my net worth is double what it was during the last recession, and a recession were to happens again...I wouldn't look at it as "I have more to lose this time compared to last time...".

But it seems perhaps you view it that way.
This just my opinion, so I could be wrong, but that just makes me think you haven't experienced two crashes yet.

I experienced 2000, and it was no big deal because I was young and lost about ten thousand dollars.

I experienced 2008, and it was a very big deal because I lost hundreds of thousands of dollars.

They were very different events, even though in both cases, I lost 50% of my money.

I find it hard to believe that you would feel the same way about losing a million dollars (of $2 million), and losing $10,000 (of $20,000).

But I suppose it's possible the two events would be equal in your mind.
I experienced both the 2000 and 2002/2003 downturns too.

The first had relatively little impact to me because I had zero money in the market having foolishly chosen to opt-out of any 401k contribution with my employer then. The second one...I might have had some skin-in-the-game re:the market, but still no 401k participation.

I state it again...the size of my portfolio doesn't dictate how I view or handle downturns. Apparrently, that isn't the case with some of you.

Sure, when the market tanks or when the next recession lands, my portfolio will be impacted. But in my mind, I treat it as more of a paper loss since I'm not tapping this money yet.

The biggest thing for me is whether I have a job or not.

Everything else...the market up or down, lending bubbles, etc are out of my control and I try not to let it dwell on my mind.
Coburn,

In summary, you assume that either

A) You will be fully-employed continuously until retirement age.

Or,

B) You will never be unemployed long enough plus not having any financial emergency to use up all your emergency fund. Then, you have to use your portfolio before retirement age.

I wish you the best of lucks.

<<The biggest thing for me is whether I have a job or not. >>

If you cannot be sure whether you will have a job and how long the unemployment will last, how could you be sure that you would not need to use your portfolio before the retirement age?

How does this make any sense?

A) What is your AA? 100/0?

B) How big is your emergency fund?

KlangFool
Last edited by KlangFool on Thu Jul 04, 2019 10:24 am, edited 1 time in total.

Coburn
Posts: 56
Joined: Sat Jun 08, 2019 12:46 pm

Re: Good times: 2008 vs Now

Post by Coburn » Thu Jul 04, 2019 10:05 am

KlangFool wrote:
Thu Jul 04, 2019 9:59 am
Coburn wrote:
Thu Jul 04, 2019 9:45 am
HomerJ wrote:
Wed Jul 03, 2019 11:48 pm
Coburn wrote:
Wed Jul 03, 2019 1:47 pm
if my net worth is double what it was during the last recession, and a recession were to happens again...I wouldn't look at it as "I have more to lose this time compared to last time...".

But it seems perhaps you view it that way.
This just my opinion, so I could be wrong, but that just makes me think you haven't experienced two crashes yet.

I experienced 2000, and it was no big deal because I was young and lost about ten thousand dollars.

I experienced 2008, and it was a very big deal because I lost hundreds of thousands of dollars.

They were very different events, even though in both cases, I lost 50% of my money.

I find it hard to believe that you would feel the same way about losing a million dollars (of $2 million), and losing $10,000 (of $20,000).

But I suppose it's possible the two events would be equal in your mind.
I experienced both the 2000 and 2002/2003 downturns too.

The first had relatively little impact to me because I had zero money in the market having foolishly chosen to opt-out of any 401k contribution with my employer then. The second one...I might have had some skin-in-the-game re:the market, but still no 401k participation.

I state it again...the size of my portfolio doesn't dictate how I view or handle downturns. Apparrently, that isn't the case with some of you.

Sure, when the market tanks or when the next recession lands, my portfolio will be impacted. But in my mind, I treat it as more of a paper loss since I'm not tapping this money yet.

The biggest thing for me is whether I have a job or not.

Everything else...the market up or down, lending bubbles, etc are out of my control and I try not to let it dwell on my mind.
Coburn,

In summary, you assume that either

A) You will be fully-employed continuously until retirement age.

Or,

B) You will never be unemployed long enough plus not having any financial emergency to use up all your emergency fund. Then, you have to use your portfolio before retirement age.

I wish you the best of lucks.

<<The biggest thing for me is whether I have a job or not. >>

If you cannot be sure whether you will have a job and how long the unemployment will last, how could you sure that you would not need to use your portfolio before the retirement age?

How does this make any sense?

A) What is your AA? 100/0?

B) How big is your emergency fund?

KlangFool
I assume nothing and I take nothing for granted.

I could be out of a job tomorrow, next month, or next year as I work in the private sector.

KlangFool
Posts: 13257
Joined: Sat Oct 11, 2008 12:35 pm

Re: Good times: 2008 vs Now

Post by KlangFool » Thu Jul 04, 2019 10:27 am

Coburn wrote:
Thu Jul 04, 2019 10:05 am

I assume nothing and I take nothing for granted.

I could be out of a job tomorrow, next month, or next year as I work in the private sector.
Coburn,

Then, you should plan to use your portfolio before the retirement age. Assuming that you never need to tap your portfolio before the retirement age is unrealistic.

KlangFool

Coburn
Posts: 56
Joined: Sat Jun 08, 2019 12:46 pm

Re: Good times: 2008 vs Now

Post by Coburn » Thu Jul 04, 2019 10:44 am

KlangFool wrote:
Thu Jul 04, 2019 10:27 am
Coburn wrote:
Thu Jul 04, 2019 10:05 am

I assume nothing and I take nothing for granted.

I could be out of a job tomorrow, next month, or next year as I work in the private sector.
Coburn,

Then, you should plan to use your portfolio before the retirement age. Assuming that you never need to tap your portfolio before the retirement age is unrealistic.

KlangFool
Really...you are getting quite tiresome. :D I say that in a sort of amused and exasperated way.

Now that I've extablished that I've lived through several downturn cycles, you next want to caution and warn me that I'm perhaps unrealistic about whether my portfolio might be touched prematurely?!

As said, I have zero job security in that I work in the private sector and am not part of any union or government/state/city pensioned or secure ayatem. Yes, I have an emergency fund.

Shall you go on?

User avatar
FrugalInvestor
Posts: 5129
Joined: Fri Nov 07, 2008 12:20 am

Re: Good times: 2008 vs Now

Post by FrugalInvestor » Thu Jul 04, 2019 10:49 am

Now is not normal. Cycles are normal. To be properly prepared be you must be mentally and financially prepared for cycles, both good and bad, so you don't become complacent during the good times nor overreactive during the bad ones.

In other words as Jack often preached, have a plan and stay the course.
IGNORE the noise! | Our life is frittered away by detail... simplify, simplify. - Henry David Thoreau

Rus In Urbe
Posts: 464
Joined: Sat Dec 09, 2017 2:12 pm

Re: Good times: 2008 vs Now

Post by Rus In Urbe » Thu Jul 04, 2019 11:17 am

Coburn wrote: Sure, when the market tanks or when the next recession lands, my portfolio will be impacted. But in my mind, I treat it as more of a paper loss since I'm not tapping this money yet.
BRAVO, Coburn! :D :D :D :D :D
Yes indeed, a paper loss is not an actual loss. A paper loss is converted to an actual loss only when you sell. Same with paper gains. On this board, few make the differentiation between actual and paper losses and gains.

When some of our fellow BHs write that they "lost so much money in 2008," I want to ask them if their losses were paper losses or if they locked them in by panic-selling at the bottom---but why potentially rub salt in a wound? So I refrain.

Remembering this fundamental difference between a paper loss/gain and an actual loss/gain has kept me steady through decades of investing. As John Bogle pointed out: “The two greatest enemies of the equity fund investor are expenses and emotions.” It has also helped me (in the words of Warren Buffett) “Be fearful when others are greedy and greedy when others are fearful.” And that really pays off in the long run.

STC. :beer
I'd like to live as a poor man with lots of money. ~Pablo Picasso

User avatar
fortyofforty
Posts: 1560
Joined: Wed Mar 31, 2010 12:33 pm

Re: Good times: 2008 vs Now

Post by fortyofforty » Thu Jul 04, 2019 12:12 pm

Rus In Urbe wrote:
Thu Jul 04, 2019 11:17 am
Coburn wrote: Sure, when the market tanks or when the next recession lands, my portfolio will be impacted. But in my mind, I treat it as more of a paper loss since I'm not tapping this money yet.
BRAVO, Coburn! :D :D :D :D :D
Yes indeed, a paper loss is not an actual loss. A paper loss is converted to an actual loss only when you sell. Same with paper gains. On this board, few make the differentiation between actual and paper losses and gains.

When some of our fellow BHs write that they "lost so much money in 2008," I want to ask them if their losses were paper losses or if they locked them in by panic-selling at the bottom---but why potentially rub salt in a wound? So I refrain.

Remembering this fundamental difference between a paper loss/gain and an actual loss/gain has kept me steady through decades of investing. As John Bogle pointed out: “The two greatest enemies of the equity fund investor are expenses and emotions.” It has also helped me (in the words of Warren Buffett) “Be fearful when others are greedy and greedy when others are fearful.” And that really pays off in the long run.

STC. :beer
As I'd further add, the losses or gains aren't locked in until they are converted to cash or other short term instrument. They don't necessarily have to be cashed in and moved to your bank account. Any time a gain or loss is exchanged for cash or cash-like instruments, it's locked in. It sounds like both of you have the stomachs to ride out downturns and not react with unrealistic exuberance during upswings. Cheers! :beer
"In a time of universal deceit, telling the truth becomes a revolutionary act." - George Orwell | Diligentia. Vis. Celeritas. - Jeff Cooper | Original Vanguard Diehard

Coburn
Posts: 56
Joined: Sat Jun 08, 2019 12:46 pm

Re: Good times: 2008 vs Now

Post by Coburn » Thu Jul 04, 2019 12:23 pm

Rus In Urbe wrote:
Thu Jul 04, 2019 11:17 am
Coburn wrote: Sure, when the market tanks or when the next recession lands, my portfolio will be impacted. But in my mind, I treat it as more of a paper loss since I'm not tapping this money yet.
BRAVO, Coburn! :D :D :D :D :D
Yes indeed, a paper loss is not an actual loss. A paper loss is converted to an actual loss only when you sell. Same with paper gains. On this board, few make the differentiation between actual and paper losses and gains.

When some of our fellow BHs write that they "lost so much money in 2008," I want to ask them if their losses were paper losses or if they locked them in by panic-selling at the bottom---but why potentially rub salt in a wound? So I refrain.

Remembering this fundamental difference between a paper loss/gain and an actual loss/gain has kept me steady through decades of investing. As John Bogle pointed out: “The two greatest enemies of the equity fund investor are expenses and emotions.” It has also helped me (in the words of Warren Buffett) “Be fearful when others are greedy and greedy when others are fearful.” And that really pays off in the long run.

STC. :beer
Thank you, sir!

...paper gains are just as intangible as paper losses. :D :D :D

If I have any lasting memories of the 2008 recession perhaps the most noteworthy was this:

By then, I was most assuredly contributing to my 401k (total $$$ amounted to under 40k )...and I remember thinking after I logged into my retirement account and seeing the running balance lower than it was a year ago despite my adding 10k to the pot..."Wait, where did my money go?!". :shock:

Such is life.

To cap off KlangFool: I've had discussions about job security with my sisters as we are all employed in the private sector. We all are aware of the risks and cognizant of the dwindling pros having ventured down this path as opposed to taking a more secure gov't/state job. "Nothing to be done about it now."

7eight9
Posts: 223
Joined: Fri May 17, 2019 7:11 pm

Re: Good times: 2008 vs Now

Post by 7eight9 » Thu Jul 04, 2019 1:19 pm

Rus In Urbe wrote:
Thu Jul 04, 2019 11:17 am
Coburn wrote: Sure, when the market tanks or when the next recession lands, my portfolio will be impacted. But in my mind, I treat it as more of a paper loss since I'm not tapping this money yet.
BRAVO, Coburn! :D :D :D :D :D
Yes indeed, a paper loss is not an actual loss. A paper loss is converted to an actual loss only when you sell. Same with paper gains. On this board, few make the differentiation between actual and paper losses and gains. ...
Selling or not selling does not determine whether or not an investor has lost money in a stock/ETF/mutual fund etc. Any day the price goes down money has been lost. You are poorer than you were the day before. Maybe poorer than you were when you made the investment. And you will need a larger percentage gain to make up that loss (i.e. have a 50% paper loss - you have to enjoy a 100% paper gain to get back to even).

Whether the loss is realized or only on paper doesn't matter. It is a loss. One can be in denial about it and look at their portfolio as "shares" vs. "dollars" but "shares" don't pay bills. Eventually those shares will need to be converted into dollars. Markets are not guaranteed to recover in an investor's time frame, lifetime, or ever.
I guess it all could be much worse. | They could be warming up my hearse.

User avatar
patrick013
Posts: 2660
Joined: Mon Jul 13, 2015 7:49 pm

Re: Good times: 2008 vs Now

Post by patrick013 » Thu Jul 04, 2019 1:41 pm

I think of how the market would look without the trillion dollar bailout
and QE. Some RE indexes knew the mortgage banks were insolvent.

Would we be paying for ATM machines and still shopping at Walmart ?

Without the energy sector decline would the past/future even matter ?

This cycle is different. No real sector collapse but a gradual decline
based on high interest rates, economic valuation, with cont'd consumer spending,
or a gradual decline based on low interest rates and reduced investor interest
in equity values. So I watch EPS just to stay current.

Funny, Bogleheads are non-watchers. That has been good. I think indexes will
glean and replace so at least some gain can be made even if the oft journalized
declines discourage investment in declining markets.

Then production needs to live on.
age in bonds, buy-and-hold, 10 year business cycle

Rus In Urbe
Posts: 464
Joined: Sat Dec 09, 2017 2:12 pm

Re: Good times: 2008 vs Now

Post by Rus In Urbe » Thu Jul 04, 2019 4:20 pm

Coburn wrote: Sure, when the market tanks or when the next recession lands, my portfolio will be impacted. But in my mind, I treat it as more of a paper loss since I'm not tapping this money yet.

Rus In Urbe wrote:
BRAVO, Coburn! :D :D :D :D :D
Yes indeed, a paper loss is not an actual loss. A paper loss is converted to an actual loss only when you sell. Same with paper gains. On this board, few make the differentiation between actual and paper losses and gains. ...

7eight9 » Thu Jul 04, 2019 2:19 pm
Selling or not selling does not determine whether or not an investor has lost money in a stock/ETF/mutual fund etc. Any day the price goes down money has been lost. You are poorer than you were the day before. Maybe poorer than you were when you made the investment. And you will need a larger percentage gain to make up that loss (i.e. have a 50% paper loss - you have to enjoy a 100% paper gain to get back to even).
Whether the loss is realized or only on paper doesn't matter. It is a loss. One can be in denial about it and look at their portfolio as "shares" vs. "dollars" but "shares" don't pay bills. Eventually those shares will need to be converted into dollars. Markets are not guaranteed to recover in an investor's time frame, lifetime, or ever.
7eight9....You and I have had this exchange before on this forum, and your reply is almost word for word what you said before---oh you must have copied and pasted it. You can look back to find my reply to you last time. No need for me to repeat myself. Addendum: Oh! I see from previous posts that you are at a super-conservative 20/80, so clearly our investment strategies are somewhat different and your risk aversion is very high. Good luck to you in your investing.

Fortyofforty wrote (and said it well)
As I'd further add, the losses or gains aren't locked in until they are converted to cash or other short term instrument. They don't necessarily have to be cashed in and moved to your bank account. Any time a gain or loss is exchanged for cash or cash-like instruments, it's locked in. It sounds like both of you have the stomachs to ride out downturns and not react with unrealistic exuberance during upswings. Cheers! :beer
I'd like to live as a poor man with lots of money. ~Pablo Picasso

Rus In Urbe
Posts: 464
Joined: Sat Dec 09, 2017 2:12 pm

Re: Good times: 2008 vs Now

Post by Rus In Urbe » Thu Jul 04, 2019 4:49 pm

Coburn wrote:
If I have any lasting memories of the 2008 recession perhaps the most noteworthy was this:
By then, I was most assuredly contributing to my 401k (total $$$ amounted to under 40k )...and I remember thinking after I logged into my retirement account and seeing the running balance lower than it was a year ago despite my adding 10k to the pot..."Wait, where did my money go?!". :shock:
Such is life.
And--where your money went....buying shares that were on sale, and that fattened up very nicely in the years that followed. Paradoxically, that 10K that you put into the market anyway (that looked like a loss at the time) was a long-term gain for you. This is what comes of perceiving the difference between paper loss/gain and actual loss/gain and STC. Buying low is really hard for most people to do; we did as much buying as we could afford at the bottom of the Great Recession; greatly enjoying the results.

Rus
I'd like to live as a poor man with lots of money. ~Pablo Picasso

Coburn
Posts: 56
Joined: Sat Jun 08, 2019 12:46 pm

Re: Good times: 2008 vs Now

Post by Coburn » Thu Jul 04, 2019 6:52 pm

Rus In Urbe wrote:
Thu Jul 04, 2019 4:49 pm
Coburn wrote:
If I have any lasting memories of the 2008 recession perhaps the most noteworthy was this:
By then, I was most assuredly contributing to my 401k (total $$$ amounted to under 40k )...and I remember thinking after I logged into my retirement account and seeing the running balance lower than it was a year ago despite my adding 10k to the pot..."Wait, where did my money go?!". :shock:
Such is life.
And--where your money went....buying shares that were on sale, and that fattened up very nicely in the years that followed. Paradoxically, that 10K that you put into the market anyway (that looked like a loss at the time) was a long-term gain for you. This is what comes of perceiving the difference between paper loss/gain and actual loss/gain and STC. Buying low is really hard for most people to do; we did as much buying as we could afford at the bottom of the Great Recession; greatly enjoying the results.

Rus
By Jove, your post has given me an idea. Actually, a glimmer of an idea...hmmmn!
.
.
.
.
.
Part of the enjoyment in participating on forums such as this is the opportunity to use phrases that would just elicit a raised eyebrows or a puzzled glance. :D

shelanman
Posts: 500
Joined: Tue Feb 27, 2007 8:35 pm

Re: Good times: 2008 vs Now

Post by shelanman » Thu Jul 04, 2019 11:55 pm

Smoke wrote:
Thu Jul 04, 2019 7:19 am
I like to watch the little things shoppers do or don't do and how it changes over time.

A silly thing is shopping at Aldi's, for those who don't know if you want a shopping cart you need a quarter to insert into the cart slot to release it from the other carts by a chain lock.
You get the quarter back when you return the cart.
For the past few years I noticed it was very common for people not to take their quarter when they returned their cart, takes a second to do.
For the past 6 months, I have not seen one quarter left.
Is that saying something about at least my areas economic leanings?
Who knows, but it's fun to see differences over time with shoppers.
One of my favorite silly "economic indicators" is the fast food menu. Sometimes, places advertise their fancier/higher priced/healthier options... and sometimes it's all about expanding and advertising "the dollar menu".

Studies have shown that customers spend just about the same amount either way, but whether they respond to perceived quality or perceived value more is an interesting indicator of sentiment.

Post Reply