Why have so many people forgotten about 19% drop 13 months ago?

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1130Super
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Why have so many people forgotten about 19% drop 13 months ago?

Post by 1130Super » Sun Jan 19, 2020 3:57 pm

Some people believe the market can’t continue to keep going up because we haven’t had a major decline in like 10 years and a crash is due. I just think to myself we had a 19% drop at the end of 2018, but because it didn’t cross the 20% it’s not technically a bear market so they missed there chance again. Why would people potentially wait 3,5,7 years for a 30% drop that might happen?

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ResearchMed
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Re: Why have so many people forgotten about 19% drop 13 months ago?

Post by ResearchMed » Sun Jan 19, 2020 4:01 pm

1130Super wrote:
Sun Jan 19, 2020 3:57 pm
Some people believe the market can’t continue to keep going up because we haven’t had a major decline in like 10 years and a crash is due. I just think to myself we had a 19% drop at the end of 2018, but because it didn’t cross the 20% it’s not technically a bear market so they missed there chance again. Why would people potentially wait 3,5,7 years for a 30% drop that might happen?
Along the same line, I've wondered why there isn't more comment about how the "huge run in 2019" is seemingly due at least in part to that extra low start, from that end of year 2018 drop.

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Re: Why have so many people forgotten about 19% drop 13 months ago?

Post by bob60014 » Sun Jan 19, 2020 4:07 pm

What drop?

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Re: Why have so many people forgotten about 19% drop 13 months ago?

Post by hightower » Sun Jan 19, 2020 4:10 pm

Remember, it's all relative to the snippet of time you choose to look at. If you only consider the market since Dec 21st 2018, then yeah we're booming (27% rise in the S&P). But, if you go back to Sept 21st 2018, it's not nearly as impressive (12%). And most of that 12% has happened only since Oct 2019. So it's just been the last few months we've seen a real rise above previous highs.

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Re: Why have so many people forgotten about 19% drop 13 months ago?

Post by KlangFool » Sun Jan 19, 2020 4:14 pm

1130Super wrote:
Sun Jan 19, 2020 3:57 pm
Some people believe the market can’t continue to keep going up because we haven’t had a major decline in like 10 years and a crash is due. I just think to myself we had a 19% drop at the end of 2018, but because it didn’t cross the 20% it’s not technically a bear market so they missed there chance again. Why would people potentially wait 3,5,7 years for a 30% drop that might happen?
1130Super,

Why do you think they are waiting? My AA is 60/40. I buy according to my AA. It won't matter whether we have a 30% or 50% drop. It won't matter when it happened. I am prepared. I am invested all the time.

As of the end of 2018, it was great for me. I "Tax Loss Harvested" (TLH) the drop and saved a bunch of taxes.

KlangFool

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Kenkat
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Re: Why have so many people forgotten about 19% drop 13 months ago?

Post by Kenkat » Sun Jan 19, 2020 4:34 pm

I haven’t forgotten. It’s why I continue to hold my widely diversified portfolio regardless of the ups and downs and the current talk of winners and losers among asset classes.

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Re: Why have so many people forgotten about 19% drop 13 months ago?

Post by retire2022 » Sun Jan 19, 2020 4:35 pm

1130Super wrote:
Sun Jan 19, 2020 3:57 pm
Some people believe the market can’t continue to keep going up because we haven’t had a major decline in like 10 years and a crash is due. I just think to myself we had a 19% drop at the end of 2018, but because it didn’t cross the 20% it’s not technically a bear market so they missed there chance again. Why would people potentially wait 3,5,7 years for a 30% drop that might happen?
Dec 24, 2018 correction you mean, well it depends on whether or not one is following technical analysis, ie 20 day moving average crosses and breaks with 200 day moving average.

It depends where you are in the accumulation stage of the cycle, I seen three crashes, 1987, 2000, 2008 every time i a made money after the recovery. Currently I am 400K ahead from Dec 24, 2018, and the declines started sometime at the market peak in August 2018.

The decline moved slowly a bear market happens when the 20% from all time high of that period, which is the high of Aug 2018 to low of Dec 24, 2018 and slowly started to recover.

Drops are to be embraced, it is an opportunity to do more Roth conversions, yes lots of Bher, no one knows anything, be more alert but don't panic.

There are more up periods than downs, in the long view you be fine.

see nisiprius thread he makes good points: viewtopic.php?f=10&t=301136#p4964001
Last edited by retire2022 on Sun Jan 19, 2020 4:44 pm, edited 1 time in total.

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Re: Why have so many people forgotten about 19% drop 13 months ago?

Post by SovereignInvestor » Sun Jan 19, 2020 4:36 pm

The run up is because the low start pointing.

Reminds me of people saying market is up nearly 5x since 2009...but from 2000 to 2009 it was down 55% in 9 years which is one of the worse performances ever.

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Re: Why have so many people forgotten about 19% drop 13 months ago?

Post by sambb » Sun Jan 19, 2020 4:41 pm

yes the bear market has already occurred. economy is humming along ..

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Re: Why have so many people forgotten about 19% drop 13 months ago?

Post by mindboggling » Sun Jan 19, 2020 4:43 pm

1130Super wrote:
Sun Jan 19, 2020 3:57 pm
Some people believe the market can’t continue to keep going up because we haven’t had a major decline in like 10 years and a crash is due. I just think to myself we had a 19% drop at the end of 2018, but because it didn’t cross the 20% it’s not technically a bear market so they missed there chance again. Why would people potentially wait 3,5,7 years for a 30% drop that might happen?
Because the recovery from the 19% drop was too quick.
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Re: Why have so many people forgotten about 19% drop 13 months ago?

Post by livesoft » Sun Jan 19, 2020 4:50 pm

I think a big part is that they didn't market time the big drop by buying equities on the shortened trading session on 12/24/2019.
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Re: Why have so many people forgotten about 19% drop 13 months ago?

Post by nisiprius » Sun Jan 19, 2020 4:53 pm

1130Super wrote:
Sun Jan 19, 2020 3:57 pm
...I just think to myself we had a 19% drop at the end of 2018, but because it didn’t cross the 20% it’s not technically a bear market so they missed their chance again. Why would people potentially wait 3,5,7 years for a 30% drop that might happen?
That's really an interesting question.

And I think you are right, people who didn't buy on a 19% drop might well fail to buy when they actually get that 30% drop.

I think part of the answer is that it is really hard to believe the difference between what you see in hindsight and how it feels at the time. The stock market was down 19% on 9/26/2008 (from 10/31/2007).

Source

Image

Did it feel like a good time to buy? I'm sure it did to some people and not others. The thing is that when the stock market is actually down 19%, you realize at that time that it could bounce right back up again, as it did in 2018, or it might go much lower, as it did in 2008-2009:

Image

It's easy to say after the fact that "the lower it is, the higher the expected future return" or "the lower it is, the closer to the bottom," or "reversion to the mean, the lower it is, the more likely it is to reverse." When it is actually happening, up or down feels closer to "50/50" than to "certain to go up."

I am willing to pat myself on the back for not selling during 2008-2009, and not berate myself for not buying.
Last edited by nisiprius on Sun Jan 19, 2020 4:54 pm, edited 1 time in total.
Annual income twenty pounds, annual expenditure nineteen nineteen and six, result happiness; Annual income twenty pounds, annual expenditure twenty pounds ought and six, result misery.

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Re: Why have so many people forgotten about 19% drop 13 months ago?

Post by ReformedSpender » Sun Jan 19, 2020 4:54 pm

Mostly because it came and went in a blink of an eye.
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: Why have so many people forgotten about 19% drop 13 months ago?

Post by sambb » Sun Jan 19, 2020 4:54 pm

2018 was a down year. we've been up for a total of 1 year now.

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Re: Why have so many people forgotten about 19% drop 13 months ago?

Post by JAZZISCOOL » Sun Jan 19, 2020 4:55 pm

Kenkat wrote:
Sun Jan 19, 2020 4:34 pm
I haven’t forgotten. It’s why I continue to hold my widely diversified portfolio regardless of the ups and downs and the current talk of winners and losers among asset classes.
+1

I just reviewed 2008 returns earlier today and the potential for market losses is always in the back of my mind. :?

When I think about 2008 (e.g. large cap US equities -37%) and other down markets, it's always a good time to review the concept of the Investment Policy Statement with asset allocation being key:

https://www.bogleheads.org/wiki/Investm ... _statement

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Re: Why have so many people forgotten about 19% drop 13 months ago?

Post by randomguy » Sun Jan 19, 2020 5:19 pm

mindboggling wrote:
Sun Jan 19, 2020 4:43 pm
1130Super wrote:
Sun Jan 19, 2020 3:57 pm
Some people believe the market can’t continue to keep going up because we haven’t had a major decline in like 10 years and a crash is due. I just think to myself we had a 19% drop at the end of 2018, but because it didn’t cross the 20% it’s not technically a bear market so they missed there chance again. Why would people potentially wait 3,5,7 years for a 30% drop that might happen?
Because the recovery from the 19% drop was too quick.
Pretty much. Looking back most of us remember the 80s,90s as one big bull market with only Black Monday interrupting the party. Along the way though there were plenty of 15%+ drops along the way. But they tend to only last a couple weeks/months and so we don't remember any of them.

The market might not be truely a series of independent events ( i.e. coin flips) but it isn't strongly correlated with past actions either. We like to talk about valuations but if you look at historically what causes crashes it isn't valuations as much as learning new info or world events. 2007-9 was caused by the real estate bubble. 2000-2 was a result of cooking the books (see enron, Xerox, worldcom) destroying the faith in the numbers and having the uncertainty of 9/11 as much as the dot.com mania. 1973 was a result of nixon reelection strategy and the oil shocks. 1929 was kicked off by tariffs. High valuations lower your margin of error (i.e. at low valuations it is easier to ignore this bad news and stocks dorp less) and eventually you will have something bad happen. But if that bad event is in 1 or 10 years isn't something that can really be predicted. In our current situation it is easy to imagine things like impeachment, war with iran, trade wars, nov election results or just predications of those results, and so on causes a shock that results in a big crash. It is also possible we skate on by for another 8 years.

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Re: Why have so many people forgotten about 19% drop 13 months ago?

Post by JBTX » Sun Jan 19, 2020 5:23 pm

nisiprius wrote:
Sun Jan 19, 2020 4:53 pm
1130Super wrote:
Sun Jan 19, 2020 3:57 pm
...I just think to myself we had a 19% drop at the end of 2018, but because it didn’t cross the 20% it’s not technically a bear market so they missed their chance again. Why would people potentially wait 3,5,7 years for a 30% drop that might happen?
That's really an interesting question.

And I think you are right, people who didn't buy on a 19% drop might well fail to buy when they actually get that 30% drop.

I think part of the answer is that it is really hard to believe the difference between what you see in hindsight and how it feels at the time. The stock market was down 19% on 9/26/2008 (from 10/31/2007).

Source

Image

Did it feel like a good time to buy? I'm sure it did to some people and not others. The thing is that when the stock market is actually down 19%, you realize at that time that it could bounce right back up again, as it did in 2018, or it might go much lower, as it did in 2008-2009:

Image

It's easy to say after the fact that "the lower it is, the higher the expected future return" or "the lower it is, the closer to the bottom," or "reversion to the mean, the lower it is, the more likely it is to reverse." When it is actually happening, up or down feels closer to "50/50" than to "certain to go up."

I am willing to pat myself on the back for not selling during 2008-2009, and not berate myself for not buying.
When the market is tanking and everybody is selling very few want to buy in. That's why it is tanking. those that don't have the stomach now but think they will when the world seems like it is collapsing are fooling themselves.

Like you once it tanked I didn't do anything. It wasn't great insight or anything. It was more of a resigned indifference along the lines of "crap I just lost almost 50% of my net worth. Selling now would be pointless"

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Re: Why have so many people forgotten about 19% drop 13 months ago?

Post by Huberpc27 » Sun Jan 19, 2020 5:29 pm

Is there data somewhere showing the returns of someone 100% in US equities, someone in a 60/40 mix of US equities/US bonds, and someone in a 60/40 mix of 50/50 US/international equities and al US bonds since 2008?

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Re: Why have so many people forgotten about 19% drop 13 months ago?

Post by Oicuryy » Sun Jan 19, 2020 5:55 pm

Huberpc27 wrote:
Sun Jan 19, 2020 5:29 pm
Is there data somewhere showing the returns of someone 100% in US equities, someone in a 60/40 mix of US equities/US bonds, and someone in a 60/40 mix of 50/50 US/international equities and al US bonds since 2008?
https://www.portfoliovisualizer.com/bac ... tion3_3=40
Money is fungible | Abbreviations and Acronyms

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Re: Why have so many people forgotten about 19% drop 13 months ago?

Post by reln » Sun Jan 19, 2020 6:09 pm

bob60014 wrote:
Sun Jan 19, 2020 4:07 pm
What drop?
:sharebeer great answer

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Re: Why have so many people forgotten about 19% drop 13 months ago?

Post by Unladen_Swallow » Sun Jan 19, 2020 6:19 pm

If I search the forum, I have found threads for most years since 2010 that talks about:

"We have had a huge run up since 2009, this cant last! Stocks are overvalued! "
Or
"Oh dear! Stocks have fallen drastically. Is this the beginning of a recession?"
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Re: Why have so many people forgotten about 19% drop 13 months ago?

Post by Watty » Sun Jan 19, 2020 6:51 pm

bob60014 wrote:
Sun Jan 19, 2020 4:07 pm
What drop?
My target date 2015 fund was down 2.87% in 2018.

https://investor.vanguard.com/mutual-fu ... ve-returns

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Re: Why have so many people forgotten about 19% drop 13 months ago?

Post by manatee2005 » Sun Jan 19, 2020 7:10 pm

Huberpc27 wrote:
Sun Jan 19, 2020 5:29 pm
Is there data somewhere showing the returns of someone 100% in US equities, someone in a 60/40 mix of US equities/US bonds, and someone in a 60/40 mix of 50/50 US/international equities and al US bonds since 2008?
You can backtest a porfolio here
https://www.portfoliovisualizer.com/backtest-portfolio

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Re: Why have so many people forgotten about 19% drop 13 months ago?

Post by nisiprius » Sun Jan 19, 2020 7:34 pm

Unladen_Swallow wrote:
Sun Jan 19, 2020 6:19 pm
If I search the forum, I have found threads for most years since 2010 that talks about:

"We have had a huge run up since 2009, this cant last! Stocks are overvalued! "
Or
"Oh dear! Stocks have fallen drastically. Is this the beginning of a recession?"
It has been ever thus.
In 'A Tale of Two Cities,' Dickens wrote:It was the best of times, it was the worst of times, it was the age of wisdom, it was the age of foolishness, it was the epoch of belief, it was the epoch of incredulity, it was the season of Light, it was the season of Darkness, it was the spring of hope, it was the winter of despair, we had everything before us, we had nothing before us, we were all going direct to Heaven, we were all going direct the other way— in short, the period was so far like the present period, that some of its noisiest authorities insisted on its being received, for good or for evil, in the superlative degree of comparison only.
Annual income twenty pounds, annual expenditure nineteen nineteen and six, result happiness; Annual income twenty pounds, annual expenditure twenty pounds ought and six, result misery.

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Re: Why have so many people forgotten about 19% drop 13 months ago?

Post by Rowan Oak » Sun Jan 19, 2020 7:53 pm

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Re: Why have so many people forgotten about 19% drop 13 months ago?

Post by snackdog » Sun Jan 19, 2020 7:57 pm

Most people never knew about the drop, so there is nothing to remember. Ask five people on the street how the market did in 2018. I certaintly couldn't tell you without looking.

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Re: Why have so many people forgotten about 19% drop 13 months ago?

Post by illumination » Sun Jan 19, 2020 8:03 pm

I also think too many people assume what happened in 2008-09 was a normal cycle, so until we have another one of those real epic meltdowns, it doesn't count and there must be one around the corner. But we could easily go through generations without something like that happening again.

I consider there to have been two "bear markets" since 2009. I guess some people want to quibble over whether one of them formally hit the 20% number by a few tenths of a point and therefore it doesn't "count" (which seems silly) but I'm scoring that as two bear markets. In 2018 and 2011. Two bear markets in 10-11 years seems pretty "normal" to me. The S&P500 since January 2000 is 5.94% growth per year. I guess I don't buy that's it's 1990 Japan in the US right now and we're on the edge of a cliff.

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Re: Why have so many people forgotten about 19% drop 13 months ago?

Post by watchnerd » Sun Jan 19, 2020 8:19 pm

1130Super wrote:
Sun Jan 19, 2020 3:57 pm
19% drop at the end of 2018, but because it didn’t cross the 20% it’s not technically a bear market so they missed there chance again.
2019 was just a haircut.
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Re: Why have so many people forgotten about 19% drop 13 months ago?

Post by arcticpineapplecorp. » Sun Jan 19, 2020 8:26 pm

Watty wrote:
Sun Jan 19, 2020 6:51 pm
bob60014 wrote:
Sun Jan 19, 2020 4:07 pm
What drop?
My target date 2015 fund was down 2.87% in 2018.

https://investor.vanguard.com/mutual-fu ... ve-returns
in answer to the OP's question:
1. the decline didn't last long. in fact while it only occurred during a part of the 4th quarter, it was entirely erased by the 1st quarter of 2019.
2. perhaps people think in terms of losses when describing yearly gains/losses. For instance, people often mention 2008 in part because the market ended down 38% (see chart below), whereas the yearly loss for 2018 was "only" 6% according to the chart below (I thought it was 4.5% but whatever. it's not like the market ended down 30+% in 2018.

Image

source: https://am.jpmorgan.com/us/en/asset-man ... ets/viewer

3. in answer to bob50014's post (see the chart above)
4. Watty (you probably know this, but more for the benefit of others) the target date fund probably only had 40%-50% in stocks, which is why the loss of the td 2015 fund was half the market's loss.
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Re: Why have so many people forgotten about 19% drop 13 months ago?

Post by koala2 » Sun Jan 19, 2020 8:28 pm

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Last edited by koala2 on Fri Jan 24, 2020 12:43 pm, edited 1 time in total.

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Re: Why have so many people forgotten about 19% drop 13 months ago?

Post by sambb » Sun Jan 19, 2020 8:30 pm

Why is past performance relevant? past performance doesnt indicate future results.

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Re: Why have so many people forgotten about 19% drop 13 months ago?

Post by mrspock » Sun Jan 19, 2020 8:38 pm

illumination wrote:
Sun Jan 19, 2020 8:03 pm
I also think too many people assume what happened in 2008-09 was a normal cycle, so until we have another one of those real epic meltdowns, it doesn't count and there must be one around the corner. But we could easily go through generations without something like that happening again.

...
+1 makes a lot of sense. Blows my mind how weak people’s discipline is when it comes to investing.... you literally read this (E.g. Little Book of Common Sense Investing) book, do what it says ... die a millionaire. But people can’t resist getting in their own way... go figure :oops: .

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Re: Why have so many people forgotten about 19% drop 13 months ago?

Post by RetiredAL » Sun Jan 19, 2020 8:46 pm

I concur with "what drop".

OK, from the 2018 high, the drop was not quite 20%. But what about the gains earlier in the year? The drop did not resemble a typical bear. It more resembled a flash crash.

Now for the food on the table stuff. My Fido balance was only down 6% from Jan 1 to Dec 31 2018. Across 2019, my balance went up 20%. Those percentages were calc'd using simple subtraction for my ongoing withdrawals, so they are just approximate, but IMO, close enough.

Any set of numbers, when sufficiently tortured, can be made to give any result. Comparing the year high to the year low does not give a true picture of how most buy-holders fared in 2018.

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Re: Why have so many people forgotten about 19% drop 13 months ago?

Post by UpperNwGuy » Sun Jan 19, 2020 8:50 pm

OP, I don't understand your point. People believe all kinds of things. Watch what they do, not what they say. I have not forgotten the drop, but I haven't changed the way I invest because of that drop.

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Re: Why have so many people forgotten about 19% drop 13 months ago?

Post by randomguy » Sun Jan 19, 2020 8:52 pm

manatee2005 wrote:
Sun Jan 19, 2020 7:10 pm
Huberpc27 wrote:
Sun Jan 19, 2020 5:29 pm
Is there data somewhere showing the returns of someone 100% in US equities, someone in a 60/40 mix of US equities/US bonds, and someone in a 60/40 mix of 50/50 US/international equities and al US bonds since 2008?
You can backtest a porfolio here
https://www.portfoliovisualizer.com/backtest-portfolio
If you do that you should also look at 2000-7, 1990-2000, 1980-1990, and so on to reduce your recency bias. Unfortunately portfolio visualizer doesn't contain much data on the periods when bonds didn't perform significantly above their historical average.

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Re: Why have so many people forgotten about 19% drop 13 months ago?

Post by Zetorman » Sun Jan 19, 2020 9:01 pm

ResearchMed wrote:
Sun Jan 19, 2020 4:01 pm
1130Super wrote:
Sun Jan 19, 2020 3:57 pm
Some people believe the market can’t continue to keep going up because we haven’t had a major decline in like 10 years and a crash is due. I just think to myself we had a 19% drop at the end of 2018, but because it didn’t cross the 20% it’s not technically a bear market so they missed there chance again. Why would people potentially wait 3,5,7 years for a 30% drop that might happen?
Along the same line, I've wondered why there isn't more comment about how the "huge run in 2019" is seemingly due at least in part to that extra low start, from that end of year 2018 drop.

RM
[/quote

You mean like if it drops 50% one year then gains 100% the next....the media goes insane about the 100% gain? Welcome to the financial medias game. Hype it to heck even though the gain is a wash.

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Re: Why have so many people forgotten about 19% drop 13 months ago?

Post by mimiesg » Sun Jan 19, 2020 9:07 pm

Many thanks nisiprius for the wonderful posts, I have learnt a lot reading some of your old threads.

So what's the conclusion? Have a good asset allocation and sleep well and ignore everything else?

I assume Target date funds is the way to go for most folks (tax advantaged).

Won't they actually beat most funds due to the automatic rebalancing since most people will find it very tough to do it themselves?

Btw how often do TDF rebalance? Wouldn't one actually wish for the drops to take the advantage of automatic rebalancing?

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Real Return of U.S. Stock Market since 1850

Post by Taylor Larimore » Sun Jan 19, 2020 9:20 pm

Bogleheads:

Whenever I feel apprehension because the U.S. stock market is down, I look at this graph by Professor Jeremy Siegel showing the US stock market's real (after inflation) return since 1850.

Lesson learned: It is a good bet to invest in the total U.S. stock market and stay-the-course. The graph is a little old, but a time extension will show the upward trend continuing.

https://farm4.staticflickr.com/3775/119 ... 1f41_o.png

Best wishes.
Taylor
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Re: Why have so many people forgotten about 19% drop 13 months ago?

Post by Scooter57 » Sun Jan 19, 2020 9:50 pm

Vanguard keeps changing the makeup of its target date funds by adding brand new funds it needs to find buyers for. You do much better to choose your own core funds and not be subject to their arbitrary and possibly self-serving changes. Personally I would prefer to choose my own bond fund(s) and include CDs in my fixed income allocation instead of their bond fund choices. Bonds are an area where active management usually makes a lot of sense, unlike stocks.

sambb
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Re: Why have so many people forgotten about 19% drop 13 months ago?

Post by sambb » Sun Jan 19, 2020 9:54 pm

despite the graphs, past performance doesnt indicate future performance... sometimes it doesnt work out (japan).. thank goodness the US has done well. THere have been markets that didnt, and countries that also dont exist.

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RootSki
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Re: Why have so many people forgotten about 19% drop 13 months ago?

Post by RootSki » Sun Jan 19, 2020 10:05 pm

The equity mutual funds I purchased in December 2018 are up anywhere from 26%-48%. I love buying a little extra on these dips.

AndroAsc
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Re: Why have so many people forgotten about 19% drop 13 months ago?

Post by AndroAsc » Sun Jan 19, 2020 10:19 pm

There was nearly a 20% drop a year ago? Honestly, I did not know. It wasn't creating enough of a doom and gloom news.

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Rowan Oak
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Re: Why have so many people forgotten about 19% drop 13 months ago?

Post by Rowan Oak » Sun Jan 19, 2020 10:40 pm

mrspock wrote:
Sun Jan 19, 2020 8:38 pm
illumination wrote:
Sun Jan 19, 2020 8:03 pm
I also think too many people assume what happened in 2008-09 was a normal cycle, so until we have another one of those real epic meltdowns, it doesn't count and there must be one around the corner. But we could easily go through generations without something like that happening again.

...
+1 makes a lot of sense. Blows my mind how weak people’s discipline is when it comes to investing.... you literally read this (E.g. Little Book of Common Sense Investing) book, do what it says ... die a millionaire. But people can’t resist getting in their own way... go figure :oops: .
It is true that if you just read The Little Book of Common Sense Investing you'll know everything you need to know.
“If you can get good at destroying your own wrong ideas, that is a great gift.” – Charlie Munger

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Re: Why have so many people forgotten about 19% drop 13 months ago?

Post by DB2 » Sun Jan 19, 2020 10:43 pm

illumination wrote:
Sun Jan 19, 2020 8:03 pm
I also think too many people assume what happened in 2008-09 was a normal cycle, so until we have another one of those real epic meltdowns, it doesn't count and there must be one around the corner. But we could easily go through generations without something like that happening again.

I consider there to have been two "bear markets" since 2009. I guess some people want to quibble over whether one of them formally hit the 20% number by a few tenths of a point and therefore it doesn't "count" (which seems silly) but I'm scoring that as two bear markets. In 2018 and 2011. Two bear markets in 10-11 years seems pretty "normal" to me. The S&P500 since January 2000 is 5.94% growth per year. I guess I don't buy that's it's 1990 Japan in the US right now and we're on the edge of a cliff.
There was a near ~50% loss from 2000-2002 if I recall.

The near 20% drop in 2018 was mostly worries (or temper tantrum?) about the Fed versus poor economic backdrops like 2000 and 2008. If the Fed had stuck to their guns in 2018 and insistence of continued QT with more rate hikes for 2019, I wonder how bad that loss would have been? I still remember when Powell first came in stating to the effect the stock market was not going to influence their decision making. lol

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Re: Why have so many people forgotten about 19% drop 13 months ago?

Post by firebirdparts » Sun Jan 19, 2020 11:01 pm

1130Super wrote:
Sun Jan 19, 2020 3:57 pm
Some people believe the market can’t continue to keep going up because we haven’t had a major decline in like 10 years and a crash is due. I just think to myself we had a 19% drop at the end of 2018, but because it didn’t cross the 20% it’s not technically a bear market so they missed there chance again. Why would people potentially wait 3,5,7 years for a 30% drop that might happen?
The technical answer is Nobody knows nothing. Increases, declines, bear markets, and almost bear markets don't entitle you to predict the future, ever. It's a waste of time to even talk about, and that's exactly what we're trying to do. Arguments between "some people" and "some other people" are just a means to pass the time. Living is easy, and even if we had to grow our own food, it's wintertime. Nothing to do but sit around and argue.
A fool and your money are soon partners

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Re: Why have so many people forgotten about 19% drop 13 months ago?

Post by watchnerd » Sun Jan 19, 2020 11:50 pm

Winter:

Time to pull up the sauerkraut and kimchi from the urns under the house.

Much more productive.
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bhsince87
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Re: Why have so many people forgotten about 19% drop 13 months ago?

Post by bhsince87 » Mon Jan 20, 2020 12:19 am

There's a difference between forgetting about it and talking about it.

Nobody wants to talk about it because it's old news.
"If ye love wealth better than liberty, the tranquility of servitude better than the animating contest of freedom, go home from us in peace." Samuel Adams

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watchnerd
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Re: Why have so many people forgotten about 19% drop 13 months ago?

Post by watchnerd » Mon Jan 20, 2020 12:23 am

bhsince87 wrote:
Mon Jan 20, 2020 12:19 am
There's a difference between forgetting about it and talking about it.

Nobody wants to talk about it because it's old news.
People who want to talk about it the most seem to be those who are looking for a reason to claim there was a reset event / bear market in 2018 and therefore, we're now 1 year into a new, fresh young bull, instead of 10+ years into and old, tired bull.

This makes them feel better about staying in the market and/or high equities.

Which is fairly pointless because:

1. Such an observation has no predictive powers
2. Bear markets don't die of old age alone
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rascott
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Re: Why have so many people forgotten about 19% drop 13 months ago?

Post by rascott » Mon Jan 20, 2020 12:24 am

snackdog wrote:
Sun Jan 19, 2020 7:57 pm
Most people never knew about the drop, so there is nothing to remember. Ask five people on the street how the market did in 2018. I certaintly couldn't tell you without looking.
Market was only down about 5% for the year.

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watchnerd
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Re: Why have so many people forgotten about 19% drop 13 months ago?

Post by watchnerd » Mon Jan 20, 2020 12:31 am

rascott wrote:
Mon Jan 20, 2020 12:24 am

Market was only down about 5% for the year.
Right...YoY it's completely 'meh'.

It's only if you count from the Sep '18 high that it hits low double digits.
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