The Dark Side of "Stay the Course"

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watchnerd
Posts: 6146
Joined: Sat Mar 03, 2007 11:18 am
Location: Seattle, WA, USA

Re: The Dark Side of "Stay the Course"

Post by watchnerd »

sergeant wrote: Sat Mar 07, 2020 6:41 pm I have been a huge football fan since I was a kid. I believed that I was all dialed in to predict winners and thought about putting my expertise to the test by gambling on games. Before actually wagering money though I started tracking my skill level. I'm terrible. I have been keeping track for four years and seem to be getting worse. I've decided to stay the course and not wager on football games.

Pick an appropriate AA and stay the course.
+1
60% Global Market Weight Equities | 15% Long Treasuries 15% short TIPS 10% cash || RSU + ESPP
Cg2
Posts: 15
Joined: Sat Feb 22, 2020 9:24 pm

Re: The Dark Side of "Stay the Course"

Post by Cg2 »

Enganerd wrote: Sun Mar 01, 2020 8:50 am I started investing in 2010. I never have been tested in a significant, concerning market cycle like the tech bubble or the Great Recession. However, I did my homework and internalized the buy and hold long term investor should expect harrowing times. Odds are if you tune in to the news and try to time the market, you will lose out to the long term DCA investor, therefore do not expect it to be easy and "Stay the Course." I am an aggressive saver, some years I have put over 50% gross income into equities.

Right now I am disappointed in myself. Not because the market dropped and I lost $. But because it was obvious to me that it was more likely to drop in large %s than increase in large %s in the near future. I feel like I gave up my agency to an mantra/ideology. There were multiple visible risks. In general ppl were downplaying these risks or ignorant of them, but they were empirically there. By 2/08 it was apparent Chinese manufacturing had been significantly reduced and this would lead to global gdp hit. It was apparent COVID19 would turn up in the US if it was not already. We already have low interest rates and QE. It was bothering me that weekend so the following Monday I made move from 100/0 to 95/5. I have read here that small inconsequential moves can ease the psychological need to do something without veering too far off course. So I did, but I still feel regret about not sticking to my intuition. Again, right now this does not feel like it is about the $ as much as it is just regret over not acting in line with my beliefs.

I feel like many are still underestimating long term potential market effects. But I am a bit too stubborn to sell after last weeks sell off. I will simply tighten the belt more, work hard, and start buying back in. I still believe that in 20+ years public equities will yield returns based off today's prices. But these next 8-12 months will be very interesting with a wide range of potential outcomes. Stay safe and wash your hands.
Intuition = timing the market and no one can consistently do this except by luck. When 1000s of people try to market time, some will succeed and a very few will succeed multiple times. That's called luck, though. You've only been investing since 2010. I learned after 2000 that I didn't know anything and that no one else did either. Incredibly useful knowledge. Buy and hold. Stay the course. You are not smarter than everybody else..the sooner you realize that the better off you'll be. (the smarter you are, the harder that is to learn). Good luck. I'm pulling for you😀
HowlerNine
Posts: 44
Joined: Thu Feb 27, 2020 10:35 pm

Re: The Dark Side of "Stay the Course"

Post by HowlerNine »

watchnerd wrote: Sat Mar 07, 2020 2:51 pm
HowlerNine wrote: Sun Mar 01, 2020 12:10 pm This thread has been a good read. I met my risk tolerance last week and returned to cash. This was a very un-Boglehead action. I too felt as though the Coronavirus would continue to impact markets negatively a few weeks ago, but stayed in as that was what I planned to do from the start. I've only been invested for 1 year, so pulling my money out was less complicated. If I was in the market longer I would not have thought pulling out would be an option and in the future I plan on staying the course.

Everything people keep saying about not knowing when to get back in makes compete sense and to be honest this will be a bridge I'll have to cross soon. I certainly don't know when this all will end. I have no idea when the market will stabilize, improve, etc. I also don't feel like I'm a superhero and can guess the ups and downs of the market with any consistency. I may very well be wrong about my entire choice to pull to cash and people have already been vocal (helpful and with intent to educate) about it being a poor choice.

As cliche as it is to say, I feel like this situation is unique and I feel things will continue to get worse over the coming weeks.

I'm not greedy in the sense that I'm trying to market time and strike it rich. I'm afraid of losing a big portion my initial investment and would rather be safe than sorry. This is why I'm waiting with my cash right now. I'm not trying to wait for clear skies and zero risk, but I'm personally just too uncomfortable to have a lot invested at this current moment.

Just wanted to share my choice, especially with the OP.

The biggest flaw in your thinking isn't financial, it's behavioral.

Like being in a contact sport, if you're going to play in the stock market you have to learn to take hits.

There is a behavioral training aspect to this and it's an incredibly important lesson to learn.

You're at the right time to learn it -- low amount invested.

Learn to take the hits now while your tuition costs are low.
Thank you. I do appreciate the advice and agree with the majority of it. It's definitely a behavioral training regimen.

I have a lump sum I'm working with. I could use the strategy if spacing it out over time as I'm not trying to catch a falling knife. That being said, I'm looking forward to getting my money back in and letting it sit there. I feel hypocritical for saying I want to follow a strategy, but then deviating from it right away. I let myself get way to focused in this current virus event and against better judgement went on my hunch that this was going to be devastating for the market. In the future I'll cool my jets for sure.

The past month has been a big learning opportunity. One of the biggest lessons is just how much time and energy it takes to try following the market and how little sense it actually makes. Also how much time would be better spent improving my quality of life with other pursuits. These are Boglehead principles I've always appreciated, but do even more now.
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