Are any early accumulators thankful for the current correction?

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willthrill81
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Are any early accumulators thankful for the current correction?

Post by willthrill81 »

We've heard many say that early accumulators should be praying for a market downturn because this results in higher expected forward returns.

That being said, I'm wondering how many early accumulators are actually rejoicing for the current downturn.

Personally, I'm grateful for it because now that our mortgage is paid off, we're about to triple our retirement contributions. A long sideways market would be great for us.
“It's a dangerous business, Frodo, going out your door. You step onto the road, and if you don't keep your feet, there's no knowing where you might be swept off to.” J.R.R. Tolkien,The Lord of the Rings
Dink2018
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Re: Are any early accumulators thankful for the current correction?

Post by Dink2018 »

I've been killing it with business lately so yeah, I'm pretty happy with damn near everything now. Put away over $500k last year after taxes so I'm catching up quick for all the years I went sideways.

I'm not happy it went down but I'm super focused on business and know that doing that is 90% of me getting there not the market.
surfstar
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Re: Are any early accumulators thankful for the current correction?

Post by surfstar »

Not yet. If it continues to go down and then we have a 10-year bull run, that coincides with our planned early retirement, THEN we'll be very thankful.

There are a few moving parts and steps along the way, but this is one of those steps to us being thankful ;)
thx1138
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Re: Are any early accumulators thankful for the current correction?

Post by thx1138 »

Not an early accumulator at all but still an accumulator so perfectly happy to see a correction. We are essentially already at our number but still accumulating for another 10 years likely. So the "discount" is nice. Assuming it all comes back in ten years or so which of course is like anything else in the market an assumption.

2008 certainly was wonderful for us as we were early accumulators then and bought steadily through it all (we were 100/0 back then). So far though this as of today is still a bit of a nothing-burger in comparison. Really aren't down all that much. But give it time and maybe we will be!

As a reminder just how much of a non-event this is I just checked to see if I need to rebalance. I'm 75/25 and was running near the top of the rebalance band before this all started. Still haven't hit the bottom of the rebalance band yet. If today repeats tomorrow then we finally will be.

EDIT: I would prefer a "correction" that doesn't involve people dying though...
Last edited by thx1138 on Mon Mar 09, 2020 1:31 pm, edited 1 time in total.
Triple digit golfer
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Re: Are any early accumulators thankful for the current correction?

Post by Triple digit golfer »

I don't know if I'm an early accumulator, as I've been working in my field and investing for 13 years. I wouldn't say I'm thankful because a lot of people are hurting, but being a frugal guy, I enjoy buying things cheap. Right now, stocks are cheaper than they've been for a while.

I have an adequate bond portfolio in that even in a 2+ year period of no income, the bond portion will cover all of our expenses.
Last edited by Triple digit golfer on Mon Mar 09, 2020 1:23 pm, edited 1 time in total.
as9
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Re: Are any early accumulators thankful for the current correction?

Post by as9 »

I'm good with it as long as it doesn't get to the point where employment is impacted.

We were around 91/9 when this started and for the last couple of months I've been questioning why we're not 100/0. Now we're at 87/13 and I am starting to convert bonds to stocks. Plan to be 100/0 coming out of this.
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Re: Are any early accumulators thankful for the current correction?

Post by Day9 »

Is this the kind of correction that will harm an accumulator's human capital? For example someone entering the job market shortly after the 2008 financial crisis may have had their whole career stunted, when corporations were firing and not thinking of hiring new grads. A certain kind of tech worker may have been harmed by the 2000 crash.
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Fruition15
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Re: Are any early accumulators thankful for the current correction?

Post by Fruition15 »

I'm 43 so not sure I qualify as an "early accumulator," but from a financial perspective I'm definitely excited about this. Figuring that we would get a crash at some point, I've maintained a measly 50% of my portfolio in stocks. It's time to start loading up, especially given how low bond yields have gotten.
Last edited by Fruition15 on Mon Mar 09, 2020 1:24 pm, edited 1 time in total.
JD2775
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Re: Are any early accumulators thankful for the current correction?

Post by JD2775 »

Yes and no. 45 years old so not exactly "early accumulator" but from what I have learned, something like this could be great for long term returns. Only thing I wish is my auto-pilot 401k and Roth/Taxable contributions hit on all the low days (like today) but I can't really control that :)
theorist
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Re: Are any early accumulators thankful for the current correction?

Post by theorist »

We are both 49, so not early accumulators, but not planning to retire for at least 15 years (and with very, very stable jobs). We are probably investing a little over 200k per year right now (which has been less than the compounding of the previous investments themselves in the past several years). So I’m happy to have a downturn — though I’m mindful of the pain it can cause retirees, and of course the health impacts of the virus are awful and not be wished upon anyone. But it will only really influence our accumulation if it goes a bit deeper and lasts long enough for our “cheap purchases” to add up, as far as I can tell. (We are certainly staying the course, and I’m tempted to become more aggressive, but will hew to our 70/30 allocation on general principles I think.)
Last edited by theorist on Mon Mar 09, 2020 1:26 pm, edited 1 time in total.
dziuniek
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Re: Are any early accumulators thankful for the current correction?

Post by dziuniek »

Me, me, me!

Knowing life, it'll be back up before I get my bi-weekly contribution in...
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JonnyDVM
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Re: Are any early accumulators thankful for the current correction?

Post by JonnyDVM »

My sincere condolences to any of the recently retired or soon to be retired. As someone who will be working for another 20 years this has the potential to be the best investing opportunity of my working lifetime. I wouldn’t use the term thankful though. I wish ill health on no one.
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lessismore22
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Re: Are any early accumulators thankful for the current correction?

Post by lessismore22 »

I try not to outwardly express joy in a market like this. However, I have 20 years left to invest and a big bonus hitting my bank account on Friday. I'd be fine with all RED this week.
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Re: Are any early accumulators thankful for the current correction?

Post by Caduceus »

Well, I am, but my timing kinda sucked a little.

I had the amazing good fortune to be in 100% cash equivalents until around Jan 27, 2020 after selling in December 2019, which meant I captured all the market runup. I was mostly in BIL and SHV and actually asked the forum a lot of questions about these two vehicles during that time. But between Jan 27 and Feb 24, I basically plonked in something like 40% of my cash .... so I still got the biggest bit of the crash! Part of me was like ... "what's the point of getting out at the right time when you just get in too early .. right!?"

I understand, intellectually, that technically I "won" the market-timing game, because I got back in at a lower cost basis than originally. But it sure doesn't feel that way when waiting a measly 14 days more would have preserved the entire buying power of my 100% cash.

I only have 25% cash left to be invested. A good deal of it went in today. I think people are going to coin a name for today - maybe "Black Monday" or "Black Oil Monday" or "CoronaMonday" - and I want to be able to look back in a few decades and be proud I bought in today :greedy

I mean ... a 10% crash in one day in many stocks. I'm amazed how much money I lost in literally 14 days .... I already have a mental list of all the things I could have bought had I perfectly missed the crash lol
Last edited by Caduceus on Mon Mar 09, 2020 1:32 pm, edited 1 time in total.
JD2775
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Re: Are any early accumulators thankful for the current correction?

Post by JD2775 »

JonnyDVM wrote: Mon Mar 09, 2020 1:28 pm My sincere condolences to any of the recently retired or soon to be retired. As someone who will be working for another 20 years this has the potential to be the best investing opportunity of my working lifetime. I wouldn’t use the term thankful though. I wish ill health on no one.
Perfectly said. Yea its great for some of us, but not so great for others. Gotta keep that in mind.
SirBotsALots
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Re: Are any early accumulators thankful for the current correction?

Post by SirBotsALots »

Each of these 20% corrections during the bull run has confirmed that I'm comfortable at 90/10 AA. I've only been investing since 2013 so I'm curious to see how I feel after I deeper drop. So far so good though.
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Re: Are any early accumulators thankful for the current correction?

Post by backofbeyond »

double post
Last edited by backofbeyond on Mon Mar 09, 2020 1:39 pm, edited 1 time in total.
The question isn't at what age I want to retire, it is at what income. - George Foreman
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backofbeyond
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Re: Are any early accumulators thankful for the current correction?

Post by backofbeyond »

backofbeyond wrote: Mon Mar 09, 2020 1:38 pm I"m very thankful that with less that 8/10th of 1% (at the time I'm posting this), we can finally put a dagger into this longest living Bull. Yes, I know some peeps will point out that we were or were close back in Dec 2018 and other points, but the Media just can't kill this longest living Bull until we are clearly in bear territory.

I'm 8 years out from retirement and have set aside sufficient assets in safe investments to get me from age 62-70 without needing SS.

HOWEVER, if this turns into a bear market for the next 3 years then zooms back up to a Super Bull, I can put my cashflow from a RE note into the stock market and possibly shave off a few years until I retire.

Either way, it's an exciting time to be alive.
The question isn't at what age I want to retire, it is at what income. - George Foreman
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Re: Are any early accumulators thankful for the current correction?

Post by Boilermaker10 »

Yes, I am thrilled. 25 years old, wife just started working with 6 figure job in Dec 2019. Saw virus coming in Feb, moved from about 70/30 stock/bond to about 10/90. Started buying back in today and turned auto-investments back to stocks from bonds. We are finally producing quite a bit of extra income and can now buy equities at discounted prices.

Plan to move back to 70/30 over time. If interest rates get crazy low and stocks get cheaper, at some point may look to lever up on the stock side.
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rocket354
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Re: Are any early accumulators thankful for the current correction?

Post by rocket354 »

Thankful might be a little strong of a word. Especially since I front-loaded my 401(k) contributions this year, and had my annual bonus come through Feb 19 which immediately went into index funds.

But I'm very aware that for periodic investors, it's not just where the market ends up, it's also how it gets there. So a long low period followed by a big spike is significantly better to the final bottom line than is sustained regular growth to the same final market ending point.

My dad always talks about how his generation had to deal with the 1966-1982 break-even period and high inflation. I pointed out to him that his working years were basically 1966-1999 which had not just great returns overall, but just about the optimal returns sequence--even for the first half, and a huge bull run the second half. He had so much more of his contributions already in the market to benefit from the growth.

Ultimately, it depends on how long this correction/recession lasts. But given I have at least 10 more years before I'm likely to even consider pulling the plug, if the market is taking orders, I'll take whatever maximizes my final nest egg, thank you very much.
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Re: Are any early accumulators thankful for the current correction?

Post by Forester »

I think we might look back on this period, ten years from now, as a golden opportunity to buy Emerging markets / Asian stocks. If one only thinks about the US then it's tempting to think the opportunity went away in the 2010s. 2020s will likely have a weaker US dollar, so a tailwind for other nations.
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Re: Are any early accumulators thankful for the current correction?

Post by getthatmarshmallow »

I'm not grateful for the massive disruption and risk to others' lives. I'm glad I have a couple of decades before any of this matters to me. But I'd have been okay with twenty years of uninterrupted growth, too.
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Re: Are any early accumulators thankful for the current correction?

Post by Wanderingwheelz »

Not to hijack the thread since I’m over 45, but..

Early accumulators aren’t nearly as likely to benefit from this as the person in her 40s or early 50s who is allocated somewhere between 40/60 and 60/40- i.e. moderately. Many of us have a sizable nest egg already accumulated so this sharp sell off gives us the opportunity to make LARGE stock purchases w/o too much concern for having too short of a runway to allow this to sort itself out over the longer haul.

Plus, many of us are still working so we aren’t touching our portfolios so we’ll benefit from reinvestment of quarterly dividends over the quarters to come.

If you’re an early accumulator, you would really hope for one of these after you’ve accumulated quite a bit. That’s where many of us were in 2008/2009.
Maven
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Re: Are any early accumulators thankful for the current correction?

Post by Maven »

We might be rejoicing if it weren't for that fact that my DH is in the oil & gas industry with a large percentage of his annual compensation being in RSUs. :(
KineticSync
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Re: Are any early accumulators thankful for the current correction?

Post by KineticSync »

3 years and 10 months out from retirement. I've been hoping for a down year or two since we're still accumulating at a pretty high rate now and I'd rather get any correction over now rather than just as we retire. The big question is severity and the effect on jobs--trimming some of the excess off of the market is good, imploding segments of the job market is bad. At my age I'm in a high risk zone if my job goes away. One interesting facet of this is the ability of many more folks than in the past to work remotely thus changing the impact patterns of the viral outbreak. Anyway, still making deposits on schedule, have done one rebalance so far, keeping same 50/50 allocation and sleeping well.
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Re: Are any early accumulators thankful for the current correction?

Post by CoastalWinds »

39 here, so mid-stage accumulator.

Yes, for the most part, I think a small correction (15-25%) would be nice. But I worry about the potential magnitude of this, and the impact it could have on jobs and industries.

I know it’s foolish to think “this time it’s different”, but I don’t recall ever seeing fear cause so many people to avoid public events, factories to close, entire cities to be quarantined. All under non-leadership. So it feels different to me, and I worry just how deep this will go.
Last edited by CoastalWinds on Mon Mar 09, 2020 1:57 pm, edited 1 time in total.
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backofbeyond
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Re: Are any early accumulators thankful for the current correction?

Post by backofbeyond »

Forester wrote: Mon Mar 09, 2020 1:46 pm I think we might look back on this period, ten years from now, as a golden opportunity to buy Emerging markets / Asian stocks. If one only thinks about the US then it's tempting to think the opportunity went away in the 2010s. 2020s will likely have a weaker US dollar, so a tailwind for other nations.
Agree. China, South Korea and Vietnam stocks look very interesting.
The question isn't at what age I want to retire, it is at what income. - George Foreman
mroe800
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Re: Are any early accumulators thankful for the current correction?

Post by mroe800 »

I don't have bonds to sell to buy stocks, so I don't know? Last few years have been my prime contributing years. Cheaper is better if it goes up of course, but it's not like I have an appreciating asset to sell for gains right now.
Triple digit golfer
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Re: Are any early accumulators thankful for the current correction?

Post by Triple digit golfer »

I just sold $69k worth of Vanguard Total Stock and exchanged to Large Cap Index.

I also sold $11k worth of Vanguard FTSE all world ex-U.S. and exchange to Large Cap Index, then exchanged Total Stock to Total International in an IRA to keep U.S. and international in balance.

If the market stays down 7.5%, I'll have a $5,400 loss to deduct over the next couple years.
Ragan2
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Re: Are any early accumulators thankful for the current correction?

Post by Ragan2 »

I'm 36 and 85/15 AA...I feel pretty good about the downturn. Congrats on the house!
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Re: Are any early accumulators thankful for the current correction?

Post by stoptothink »

Terrible timing for us as we front-loaded almost all our tax-advantaged space for '20 in January. Roth IRA's, family HSA, 529s to state deduction max, and a big chunk of our 401k space is gone. We are also $14k from paying off the mortgage and our plan was to take care of the mortgage (probably next ~4 months) before starting a taxable account. I'm sure in 20yrs it won't matter, but I am not thankful right now.
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Re: Are any early accumulators thankful for the current correction?

Post by rbaldini »

willthrill81 wrote: Mon Mar 09, 2020 1:12 pm We've heard many say that early accumulators should be praying for a market downturn because this results in higher expected forward returns.
I just started a post that questions this premise. I don't recall ever seeing any good evidence for it; would like to see any evidence that does exist.
Last edited by rbaldini on Mon Mar 09, 2020 3:48 pm, edited 1 time in total.
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Re: Are any early accumulators thankful for the current correction?

Post by MotoTrojan »

Mildly ashamed to say yes but it’s the honest truth.

I’m also getting deeply desensitized with the recent volatility. I actually found today’s close underwhelming, having hoped to get some negative momentum to push us into bear territory. Then I tell myself this is the largest 1-day drop I can remember being a part of and definitely the largest dollar decline.

DW started a new job and I’m tempted to invest a chunk of the new income but know we need to save some cash for a future home and to get a healthier EF but if this continues that itch will grow stronger. Also thinking I may invest our 2021 Roth contributions in taxable if we get another 10-15% decline.
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willthrill81
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Re: Are any early accumulators thankful for the current correction?

Post by willthrill81 »

rbaldini wrote: Mon Mar 09, 2020 3:44 pm "We've heard many say that early accumulators should be praying for a market downturn because this results in higher expected forward returns."
I just started a post that questions this premise. I don't recall ever seeing any good evidence for it; would like to see any evidence that does exist.
Mathematically, it makes perfect sense. You would rather have poor returns during the early stages of your accumulation and then really good returns for the decade leading up to your retirement and the decade after retirement. Those whose last decade of accumulation was 2000-2009 had a rough go of it.

Now of course, in a perfect world, returns would be strong for one's entire investing tenure, but we all know that that isn't going to happen. But we also know that we don't have any control over returns either.

My secret motive for this thread was to help early accumulators, who likely don't have much experience with such downturns, see that these downturns may help to super-charge their returns later, when it will have a much more positive impact on them vs. getting great returns now.
“It's a dangerous business, Frodo, going out your door. You step onto the road, and if you don't keep your feet, there's no knowing where you might be swept off to.” J.R.R. Tolkien,The Lord of the Rings
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willthrill81
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Re: Are any early accumulators thankful for the current correction?

Post by willthrill81 »

MotoTrojan wrote: Mon Mar 09, 2020 3:47 pm Mildly ashamed to say yes but it’s the honest truth.

I’m also getting deeply desensitized with the recent volatility. I actually found today’s close underwhelming, having hoped to get some negative momentum to push us into bear territory. Then I tell myself this is the largest 1-day drop I can remember being a part of and definitely the largest dollar decline.
I'm sure that today was the biggest loss in dollars that we've ever personally experienced. And I'm not concerned about it in the slightest. For our own sake, I would be totally fine with the market going sideways for a long while. But my gut feeling (that I'm not acting on) is that the market will fully recover no later than the end of 2021. The virus will dissipate, supply chains will be restored to their full capacity, and the Fed will work to stimulate the economy.
Last edited by willthrill81 on Mon Mar 09, 2020 3:52 pm, edited 1 time in total.
“It's a dangerous business, Frodo, going out your door. You step onto the road, and if you don't keep your feet, there's no knowing where you might be swept off to.” J.R.R. Tolkien,The Lord of the Rings
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Re: Are any early accumulators thankful for the current correction?

Post by impatientlady »

I'm quite thankful, since I just graduated late last year and will likely make more this year than my entire portfolio right now. Now to work hard and build a (somewhat) recession-proof career...
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Re: Are any early accumulators thankful for the current correction?

Post by rbaldini »

willthrill81 wrote: Mon Mar 09, 2020 3:49 pm Mathematically, it makes perfect sense. You would rather have poor returns during the early stages of your accumulation and then really good returns for the decade leading up to your retirement and the decade after retirement. Those whose last decade of accumulation was 2000-2009 had a rough go of it.
What you say is technically true, but I think that's a fallacious way of looking at it. It's not like you're guaranteed n bad years, so having them early means you're less likely to have them later. Or rather, I've seen no evidence of that. If that were the case, then sure - you'd celebrate bad days now. But if, say, it's more like a coin flip - heads now doesn't mean more tails later - then it makes no sense at all.

It's a (sort of) simple empirical question: are returns after large dips actually, predictably larger than otherwise? Look exactly 5, 10, 20 years after a bad day/week/month/year. Do they get a better return than the average? I think I've looked and not found that to be the case, but I don't quite remember.
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willthrill81
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Re: Are any early accumulators thankful for the current correction?

Post by willthrill81 »

rbaldini wrote: Mon Mar 09, 2020 3:53 pm
willthrill81 wrote: Mon Mar 09, 2020 3:49 pm Mathematically, it makes perfect sense. You would rather have poor returns during the early stages of your accumulation and then really good returns for the decade leading up to your retirement and the decade after retirement. Those whose last decade of accumulation was 2000-2009 had a rough go of it.
What you say is technically true, but I think that's a fallacious way of looking at it. It's not like you're guaranteed n bad years, so having them early means you're less likely to have them later. Or rather, I've seen no evidence of it. If that were the case, then sure - you'd celebrate bad days now. But if, say, it's more like a coin flip - heads now doesn't mean more tails later - then it makes no sense at all.

It's a (sort of) simple empirical question: are returns after large dips actually, predictably larger than otherwise?
You seem to be asking whether there is any level of mean reversion to returns. I know several finance professors personally, and all of them are convinced that mean reversion to returns is real, although it can be a long while before it materializes.

You might want to investigate 'Siegel's constant', where he found that over long-term periods, real stock returns have been remarkably consistent.
“It's a dangerous business, Frodo, going out your door. You step onto the road, and if you don't keep your feet, there's no knowing where you might be swept off to.” J.R.R. Tolkien,The Lord of the Rings
rbaldini
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Re: Are any early accumulators thankful for the current correction?

Post by rbaldini »

willthrill81 wrote: Mon Mar 09, 2020 3:57 pm You seem to be asking whether there is any level of mean reversion to returns. I know several finance professors personally, and all of them are convinced that mean reversion to returns is real, although it can be a long while before it materializes.
No need to introduce additional terms like mean reversion. "Are returns greater or aren't they?" seems like simple enough question as is. That's not to say it's easy to answer, of course.
I think people get confused by the term "mean reversion". Is it the price that reverts? Or the return? Those imply different answers to my question! But again, who cares? The question as I asked it is simple enough.
willthrill81 wrote: Mon Mar 09, 2020 3:57 pm You might want to investigate 'Siegel's constant', where he found that over long-term periods, real stock returns have been remarkably consistent.
Consistent in that it they are about the same whether they follow a dip or not? 8-)
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Re: Are any early accumulators thankful for the current correction?

Post by Normchad »

I’m sanguine about it. I’m not an early accumulator; I’ve been investing now for 28 years.

But I’m investing more in absolutely dollar terms than I ever have. And part of me is a bit sad that despite the large buys I’m making now, their impact is muted because they have a much shorter amount of time to grow. In a way, I see the pullback as hopefully juicing the returns of my new additions.
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Re: Are any early accumulators thankful for the current correction?

Post by willthrill81 »

rbaldini wrote: Mon Mar 09, 2020 4:04 pm
willthrill81 wrote: Mon Mar 09, 2020 3:57 pm You seem to be asking whether there is any level of mean reversion to returns. I know several finance professors personally, and all of them are convinced that mean reversion to returns is real, although it can be a long while before it materializes.
No need to introduce additional terms like mean reversion. "Are returns greater or aren't they?" seems like simple enough question as is. That's not to say it's easy to answer, of course.
I think people get confused by the term "mean reversion". Is it the price that reverts? Or the return? Those imply different answers to my question! But again, who cares? The question as I asked it is simple enough.
willthrill81 wrote: Mon Mar 09, 2020 3:57 pm You might want to investigate 'Siegel's constant', where he found that over long-term periods, real stock returns have been remarkably consistent.
Consistent in that it they are about the same whether they follow a dip or not? 8-)
The mean reversion, as Siegel's constant demonstrates, applies to returns. Low returns tend to be followed by good returns, and while they tend to even out over the long-term with regard to CAGR, due to the sequence of returns issue, if you had the choice, you would rather have poor returns when you don't have much invested and good returns when you do.
“It's a dangerous business, Frodo, going out your door. You step onto the road, and if you don't keep your feet, there's no knowing where you might be swept off to.” J.R.R. Tolkien,The Lord of the Rings
rbaldini
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Re: Are any early accumulators thankful for the current correction?

Post by rbaldini »

willthrill81 wrote: Mon Mar 09, 2020 4:07 pm The mean reversion, as Siegel's constant demonstrates, applies to returns. Low returns tend to be followed by good returns, and while they tend to even out over the long-term with regard to CAGR, due to the sequence of returns issue, if you had the choice, you would rather have poor returns when you don't have much invested and good returns when you do.
Let me ask [EDIT] 2 simple question:
1. Let's say person A invests $10k right after an usually large dip in the market. Person B invests $10k on a typical day. Who is expected to have more money exactly 10 years (or whatever long period you wish) from the day that person invested?

If the answer is "there's really no reason to expect either person to have more", then, at least for the long-term investor, there's no reason to think that buying after a dip is a particularly good idea. No better than any other day, that is.

If you have reason to think one person is expected to have more than another, I'd like to see the evidence. Not asking you in particular for that though.

2. A person who is still, say, 30 years from retirement, happens to look at his stock index fund. He sees that it dropped 5% in the last month. Does he now have reason to believe that he will actually have *more* money at retirement than if the price had a more typical behavior over the last month? Should he say "Great! Now there's less likely to be a drop when I'm 60! Sequence of returns win!"? Or "Great! The long-term returns to my investments in the future will be greater now!"? I have not seen convincing evidence suggesting this.
Last edited by rbaldini on Mon Mar 09, 2020 4:34 pm, edited 2 times in total.
Godot
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Re: Are any early accumulators thankful for the current correction?

Post by Godot »

willthrill81 wrote: Mon Mar 09, 2020 3:50 pm
MotoTrojan wrote: Mon Mar 09, 2020 3:47 pm Mildly ashamed to say yes but it’s the honest truth.

I’m also getting deeply desensitized with the recent volatility. I actually found today’s close underwhelming, having hoped to get some negative momentum to push us into bear territory. Then I tell myself this is the largest 1-day drop I can remember being a part of and definitely the largest dollar decline.
I'm sure that today was the biggest loss in dollars that we've ever personally experienced. And I'm not concerned about it in the slightest. For our own sake, I would be totally fine with the market going sideways for a long while. But my gut feeling (that I'm not acting on) is that the market will fully recover no later than the end of 2021. The virus will dissipate, supply chains will be restored to their full capacity, and the Fed will work to stimulate the economy.
I'll take the under on that and bet you $100.
Estragon: I can't go on like this. | Vladimir: That's what you think. | ― Samuel Beckett, Waiting for Godot
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willthrill81
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Re: Are any early accumulators thankful for the current correction?

Post by willthrill81 »

rbaldini wrote: Mon Mar 09, 2020 4:15 pm
willthrill81 wrote: Mon Mar 09, 2020 4:07 pm The mean reversion, as Siegel's constant demonstrates, applies to returns. Low returns tend to be followed by good returns, and while they tend to even out over the long-term with regard to CAGR, due to the sequence of returns issue, if you had the choice, you would rather have poor returns when you don't have much invested and good returns when you do.
Let me ask [EDIT] 2 simple question:
1. Let's say person A invests $10k right after an usually large dip in the market. Person B invests $10k on a typical day. Who is expected to have more money exactly 10 years (or whatever long period you wish) from the day that person invested?

If the answer is "there's really no reason to expect either person to have more", then, at least for the long-term investor, there's no reason to think that buying after a dip is a particularly good idea. No better than any other day, that is.

If you have reason to think one person is expected to have more than another, I'd like to see the evidence. Not asking you in particular for that though.

2. A person who is still, say, 30 years from retirement, happens to look at his stock index fund. He sees that it dropped 5% in the last month. Does he now have reason to believe that he will actually have *more* money at retirement than if the price had a more typical behavior over the last month? Should he say "Great! Now there's less likely to be a drop when I'm 60! Sequence of returns win!"? Or "Great! The long-term returns to my investments in the future will be greater now!"? I have not seen convincing evidence suggesting this.
1. Person A would be expected to have more money in ten years. This might be demonstrable with a tool like Portfolio Visualizer.

2. It depends on how the person's contributions. If they are still making contributions, then yes, a drop in value today should be viewed as a good thing for the same reason as in #1, but a 5% drop today isn't likely to move the needle much in 30 years, especially if the drop is short-lived, which most such drops have been.
“It's a dangerous business, Frodo, going out your door. You step onto the road, and if you don't keep your feet, there's no knowing where you might be swept off to.” J.R.R. Tolkien,The Lord of the Rings
rbaldini
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Re: Are any early accumulators thankful for the current correction?

Post by rbaldini »

willthrill81 wrote: Mon Mar 09, 2020 4:50 pm 1. Person A would be expected to have more money in ten years. This might be demonstrable with a tool like Portfolio Visualizer.
I invite you to share the evidence for this claim here: viewtopic.php?f=10&t=306477&newpost=507 ... ead#unread
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Re: Are any early accumulators thankful for the current correction?

Post by Call_Me_Op »

I am not an early accumulator but a late accumulator. I am not happy about this but also not panicky either. Just staying the course per the IPS - which anticipated extreme market movements.
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Re: Are any early accumulators thankful for the current correction?

Post by orhkaf »

Last quarter of last year had me worried we were going up too fast. The past several weeks have given me a sigh of relief. I’d rather have this happen now vs when I accumulate more in several years or months.
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Re: Are any early accumulators thankful for the current correction?

Post by Caduceus »

rbaldini wrote: Mon Mar 09, 2020 4:15 pm
1. Let's say person A invests $10k right after an usually large dip in the market. Person B invests $10k on a typical day. Who is expected to have more money exactly 10 years (or whatever long period you wish) from the day that person invested?

If you have reason to think one person is expected to have more than another, I'd like to see the evidence. Not asking you in particular for that though.
Well, what matters is how many shares you buy for that same amount of money. $10,000 could buy you 1000 shares of a stock trading at $10 pre-dip, and 2000 shares of the exact same stock that has fallen by 50% after the dip. So, of course the person who's bought the stock after the dip would have more money after any period of time.
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Re: Are any early accumulators thankful for the current correction?

Post by BoggledHead2 »

I have a cash e-fund ... every dollar I have left over is going into the market at these prices

Perfect way for me to reach my target US/INT allocation and scoop up a bunch of cheaper shares/reduce cost basis ... and then reap the dividend rewards in a couple weeks

smart phones / instant access / social media is driving this coronavirus hysteria ... through in some middle east drama (I know, shocking) and boom - market tanks

Put in a buy order today which should get my right at my target allocation ... and I'll buy whatever's needed to next week as well when I get paid.

(20+ year horizon ... emergency fund + 100/0 allocation ... bring it on) ... getting closer and closer to "live off the dividends" in 10-20 years with all these cheaper shares
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rule low
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Re: Are any early accumulators thankful for the current correction?

Post by rule low »

I'm glad I've only contributed to 18% of my 401k maximum YTD. I had already maxed out the 401k back in 12/2018 so I didn't get to take advantage of that down turn until the following year.
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