Subjective Feelings of Market Crashes and Bottoms

Discuss all general (i.e. non-personal) investing questions and issues, investing news, and theory.
Post Reply
Topic Author
Caduceus
Posts: 2729
Joined: Mon Sep 17, 2012 1:47 am

Subjective Feelings of Market Crashes and Bottoms

Post by Caduceus » Wed Mar 11, 2020 2:24 pm

For those veteran investors who've been through many market crashes, how did it feel as you were passing through what turned out, retrospectively, to be the market bottom?

I guess I'm really curious about your personal stories about what it felt like at the absolute bottom of previous market crashes, and if at that point you thought things were going to get better or worse, if you had an inkling, and what your emotional experience generally was.

Just out of curiosity, I pulled up newspaper articles on the very day of various market bottoms, and what struck me was that virtually none of the participants realized that for all the doom and gloom, that very day represented the absolute bottom of the bear market and that it was virtually straight upwards from there. Basically, everyone passed through the bottom unknowingly - I understand that that is as it should be, because no one can call the absolute bottom. But what I'm curious about is your mental state at or around the absolute bottom - were you panicking? Did you guess things were on the upturn? Did it surprise you in retrospect that the bottom had already been reached? Did it come earlier or later than you expected?

I guess I learn a lot from stories from those who've gone through it many times, hence the question. :beer

Jack FFR1846
Posts: 12071
Joined: Tue Dec 31, 2013 7:05 am
Location: 26 miles, 385 yards west of Copley Square

Re: Subjective Feelings of Market Crashes and Bottoms

Post by Jack FFR1846 » Wed Mar 11, 2020 2:26 pm

Nobody knows nothin'

For all the bottoms I've experienced.....I felt nothing.
Bogle: Smart Beta is stupid

User avatar
firebirdparts
Posts: 1581
Joined: Thu Jun 13, 2019 4:21 pm

Re: Subjective Feelings of Market Crashes and Bottoms

Post by firebirdparts » Wed Mar 11, 2020 2:37 pm

I was very interested in responding in 2008 and paying a lot of attention, but I am not very emotional, so I am not sure I know how I felt. If you look at the fundamentals of any company, you'll see that predicting their own earnings is perfectly normal, and in addition, they'll each company have a group of analysts whose job it is to give their own opinions. So if you look at a company that is trading at a PE of 8, or 6, let's say, and maybe with a dividend that is just a fraction of the company's earnings, and all the people who analyze the company for a living agree "yes that's where we're at" then you kind of have 2008. As an index investor, you may not have digested any of this sort of information.

Now, of course, if the company in question is a bank with a big trading group, that's different. A guy with an 8th grade education can bring a big bank down at any moment, and they have, even when times are good. I am talking about companies that actually produce something and sell it. These companies have a prediction of what they are going to sell. It's just a prediction, of course, but when the analysts call in they'll have to defend it.
A fool and your money are soon partners

Unladen_Swallow
Posts: 784
Joined: Tue Dec 10, 2019 6:12 pm

Re: Subjective Feelings of Market Crashes and Bottoms

Post by Unladen_Swallow » Wed Mar 11, 2020 2:42 pm

Caduceus wrote:
Wed Mar 11, 2020 2:24 pm
For those veteran investors who've been through many market crashes, how did it feel as you were passing through what turned out, retrospectively, to be the market bottom?
I lived through 2000 and 2008. One can go through these significant events as either an early accumulator (as I was), or someone close to retirement, or someone already retired.

All three categories of people can look at such an event reasonably. In my opinion, ideally this would be the result:
1. Early accumulator- focus on keeping a job, ignore everything else. This was me.
2. Close to retirement - is my AA appropriate? Am I following sound principles?
3. Retired - Do I need to tighten my belt? How should I withdraw?

If you are not in either of these three camps, something went wrong. Hopefully some lessons were learned and shared.

Bogleheads is an excellent forum. But an online investing forums sometimes do more harm than good. I was not on BH in 2008. I was not even reading it. I was lucky. I knew I needed to stay invested, that my money was buying more, and that I had to keep my job.

Now people come to BH to find a hundred ways to worry. And 100 ways to shoot themselves in the foot. People trying to buy stocks with their Emergency fund, using credit cards, with lines of credit...

Too much information sometimes is worse than no information.
"I think it's much more interesting to live not knowing than to have answers which might be wrong." - Richard Feynman

RadAudit
Posts: 3857
Joined: Mon May 26, 2008 10:20 am
Location: Second star on the right and straight on 'til morning

Re: Subjective Feelings of Market Crashes and Bottoms

Post by RadAudit » Wed Mar 11, 2020 2:53 pm

Caduceus wrote:
Wed Mar 11, 2020 2:24 pm
But what I'm curious about is your mental state at or around the absolute bottom - were you panicking? Did you guess things were on the upturn? Did it surprise you in retrospect that the bottom had already been reached? Did it come earlier or later than you expected?
IIRC, when we hit bottom in 2008 - 2009, I had already rebalanced twice IAW my IPS and I couldn't pull the trigger to rebalance a third time. So, I just sat there, locked in place. This time, after I switched the portfolio over to a LifeStrategy fund early this year (because DW didn't want to rebalance a portfolio if I wasn't around and she had it to do on her own), I am watching financial porn more as a diversion. I don't know if the difference is between a 50% drop in the Dow vs. a ~20% drop we have now or because I can't do anything about it anyway. Or, maybe it's knowing I have > 1 year's w/d in cash equivalents. Could be anything.

But, thanks to BHers' thoughtful answers to an earlier question, I have accepted the idea it's going to be extremely difficult for a LifeStrategy fund to rebalance to zero on any downturn I'm likely to live through. Not looking forward to that test either way: but, it is somewhat comforting to know the answer before hand.
Last edited by RadAudit on Wed Mar 11, 2020 3:14 pm, edited 1 time in total.
FI is the best revenge. LBYM. Invest the rest. Stay the course. - PS: The cavalry isn't coming, kids. You are on your own.

User avatar
Kenkat
Posts: 6332
Joined: Thu Mar 01, 2007 11:18 am
Location: Cincinnati, OH

Re: Subjective Feelings of Market Crashes and Bottoms

Post by Kenkat » Wed Mar 11, 2020 2:57 pm

It felt awful.

In 2000, I avoided a lot of the initial pain as I was highly diversified out of large growth and tech. 2000 and 2001 weren’t too bad as I had only low single digit negative returns. It was more like watching a train wreck from the outside. But after 9/11, the economy slowed down a lot and the market crashed. No one knew if we were going to see additional attacks, if we’d be at war, etc. Luckily my job situation was fairly stable and I was reasonably young so the amounts lost were relatively small and we bounced back in 2004. Still, I remember looking at my portfolio balance and thinking wow, this thing really got decimated.

In 2008, I had a lot more money in the market. The economy was crashing, lots of people were losing their jobs and it seemed unclear that things would be ok. We might be experiencing another Great Depression. The thought of rebalancing made me very very uncomfortable - like I was flushing what money I still did have left down into a black hole. I couldn’t do a “big”, one time rebalance. I set up automatic transfers to sell bonds and buy stocks in equal amounts over an 18 month period starting towards the end of 2008. I was able to end those early as the market bounced back but it was a couple years or more before I got back to where I was at the end of 2007.

In this current market I am well off over a year worth of gross earnings. I haven’t hit a rebalance point and am not sure how things will play out from here so I am sitting tight for now. The economy and my financial situation is pretty strong heading into this, so I don’t feel too worried (yet) - less than 2008; maybe more in line with 2000.

User avatar
SimpleGift
Posts: 3869
Joined: Tue Feb 08, 2011 3:45 pm
Location: Central Oregon

Re: Subjective Feelings of Market Crashes and Bottoms

Post by SimpleGift » Wed Mar 11, 2020 3:08 pm

Caduceus wrote:
Wed Mar 11, 2020 2:24 pm
For those veteran investors who've been through many market crashes, how did it feel as you were passing through what turned out, retrospectively, to be the market bottom?
Once one is committed to "staying the course" during a deep, protracted bear market, (e.g., 1973-75, 2000-02 and 2007-09), where markets are grinding lower every month, month after month for a year or more, my dominant feeling was a sort of numbness after a while, trying to tune out the news of "new market lows" and to focus on other aspects of life.

After six months or so into a long bear market, I'd say my dominant feeling was exhaustion — from concern about our shrinking portfolio and from anxiety about how it all will end. There's certainly stress involved in doing nothing. Can't say I was ever aware of a market bottom, only that within a month or so after the trough, the news and market reports started to become more positive.

So to answer your question, my dominant feelings were numbness and a bit of psychological exhaustion from doing nothing!
Last edited by SimpleGift on Wed Mar 11, 2020 3:13 pm, edited 1 time in total.

User avatar
watchnerd
Posts: 5981
Joined: Sat Mar 03, 2007 11:18 am
Location: Seattle, WA, USA

Re: Subjective Feelings of Market Crashes and Bottoms

Post by watchnerd » Wed Mar 11, 2020 3:13 pm

SimpleGift wrote:
Wed Mar 11, 2020 3:08 pm
Caduceus wrote:
Wed Mar 11, 2020 2:24 pm
For those veteran investors who've been through many market crashes, how did it feel as you were passing through what turned out, retrospectively, to be the market bottom?
Once one is committed to "staying the course" during a deep, protracted bear market, (e.g., 1973-75, 2000-02 and 2007-09), where markets are grinding lower every month, month after month for a year or more, my dominant feeling was a sort of numbness after a while, trying to tune out the news of "new market lows" and to focus on other aspects of life.
+1

Just stopped wasting emotional and mental energy on something that is beyond my control.

It was a good time to focus on non-investing hobbies and exercising more.
70% Global Market Weight Equities | 15% Long Treasuries 15% short TIPS & cash || RSU + ESPP

Dottie57
Posts: 8672
Joined: Thu May 19, 2016 5:43 pm
Location: Earth Northern Hemisphere

Re: Subjective Feelings of Market Crashes and Bottoms

Post by Dottie57 » Wed Mar 11, 2020 3:19 pm

Great Recession was the only crash I paid attention to. I turned 50 as it started going downhill. I felt nausea. I saw my retirement going down the drain. It was terrible. I survived and upped my stock percent (5% - big deal). It worked for me. Hope the current situation works for others as well.

Before GR, I DIDN’t have access to my 401k account via internet. S only saw my balances quarterly, which led to an oblivious invested.

User avatar
hagridshut
Posts: 193
Joined: Tue Apr 10, 2012 6:54 pm

Re: Subjective Feelings of Market Crashes and Bottoms

Post by hagridshut » Wed Mar 11, 2020 3:41 pm

Caduceus wrote:
Wed Mar 11, 2020 2:24 pm
For those veteran investors who've been through many market crashes, how did it feel as you were passing through what turned out, retrospectively, to be the market bottom?

I guess I'm really curious about your personal stories about what it felt like at the absolute bottom of previous market crashes, and if at that point you thought things were going to get better or worse, if you had an inkling, and what your emotional experience generally was.
If you haven't read this thread from October 2008 already, check it out: viewtopic.php?t=25126

From my own personal observation of coworkers and older folks, the "absolute bottom" is total despair and hopelessness: when many people close to retirement cash out what is left for a pittance (which is the wrong move). A lot of people bailed in early 2009. They suffered permanent and irreversible financial damage as a result.

My guess is that we hit rock bottom when financial discussion forums like this one and Reddit become "ghost towns" as people become so discouraged that they don't even want to talk about the markets anymore.
First Principles: (1) Diversify (2) Low Cost (3) Stay the Course | 3-Fund Index Portfolio

ZMonet
Posts: 31
Joined: Sun Dec 15, 2019 2:43 pm

Re: Subjective Feelings of Market Crashes and Bottoms

Post by ZMonet » Wed Mar 11, 2020 3:58 pm

I can't remember the exact feeling, but this is nowhere like the GR as of yet. At least around me, people were seriously talking about contingency plans (stockpiling food, etc.) in case the financial system broke. The market just kept grinding lower and lower and lower. Banks were failing or were going through rumors of failure. It was scary in a noplace to hide sort of way. You didn't care about your portfolio and just wanted to stay employed. This is not that...yet.

The day of the bottom, I remember watching Mark Haines call the bottom. At the time I didn't realize it was the bottom even though the market shot straight up. As others have said, I just felt fatigued and some degree of indifference about the whole thing since I felt no control over it. There was never an "all clear" and there was lots of thought that we would retest.

My base case, for what little that is worth, is that this will pass in 2-3 months. I don't know how much lower we'll go, if lower at all. And once this is done, and people realize the ONLY game in town is stocks, they'll pile back into stocks. I mean, what other choice do they have? Until that doesn't work...

User avatar
firebirdparts
Posts: 1581
Joined: Thu Jun 13, 2019 4:21 pm

Re: Subjective Feelings of Market Crashes and Bottoms

Post by firebirdparts » Wed Mar 11, 2020 5:21 pm

I'll just add here, notice, if you will, how many people you know who take an active interest in price discovery. During an event like this, people talk about stocks all the time, and if you work in a big building with really smart people, then you can get a good idea of just how few people you know who even care what the prices mean. Like none. For me it's none. That is how people can have ideas like, for instance, "it might go down more" or "I think it'll rebound". The actual price just means nothing to anybody.
A fool and your money are soon partners

seychellois_lib
Posts: 266
Joined: Tue Mar 25, 2014 12:05 am

Re: Subjective Feelings of Market Crashes and Bottoms

Post by seychellois_lib » Wed Mar 11, 2020 5:38 pm

I had done quite well in my 401K up to 2008/9. As the market tanked I panicked and went to all cash. I had no idea where the bottom would be of course but at the time I sold, the bottom had been in for a month or so. After a week or two I realized I had made a critical mistake. I sucked it up and went back into a age based portfolio which was about 55e/45f at the time.

So, had I not regained my sanity, I would have missed the market which made my retirement what it is. I retired mid 16 and, by that time had years of max contributions and had settled on a 40e/60f allocation which I have maintained to date.

All I can say is Thank Goodness I came to my senses.

As a result of the market sell off I am at 36e/64f. I rebalance twice a year June/Dec. I plan to stick with the schedule although if the market falls out as it did in 2009 I may rebalance to a little lower equity allocation. I am fortunate to in be a position where I can afford to do that.

I also have two pensions. I worry a bit about them. I would not want to be a pension fund manager right now.

jebmke
Posts: 10908
Joined: Thu Apr 05, 2007 2:44 pm
Location: Delmarva Peninsula

Re: Subjective Feelings of Market Crashes and Bottoms

Post by jebmke » Wed Mar 11, 2020 5:45 pm

2000-2003 seemed like a long grind to me. I was actually surprised at how fast 2009 turned. Looking back, my last domestic equity TLH transaction was on 3/16/09.
When you discover that you are riding a dead horse, the best strategy is to dismount.

winterfan
Posts: 208
Joined: Mon Jan 05, 2015 11:06 am

Re: Subjective Feelings of Market Crashes and Bottoms

Post by winterfan » Wed Mar 11, 2020 5:50 pm

I was only in my 20s during 2000. I remember it well, but I didn't have enough money in the market to be concerned. In 2008, I was very concerned. It really seemed awful. It seemed like every story was about long-term unemployment and housing foreclosures. My DH and I both had steady employment though, so it didn't "feel" as bad as it could have. Since most of our NW was tied up in retirement accounts, we didn't really do anything besides hold tight.

Our DD was born right before the the market bottom. As luck would have it, I put a lump sum right at that time to start off her 529 plan. It felt like throwing good money after bad. I was questioning my decision because I wasn't sure if we'd need the money to live on. It sure seemed like everyone was losing their jobs at the time! We might be next! In retrospect, it was a great thing to do.

seychellois_lib
Posts: 266
Joined: Tue Mar 25, 2014 12:05 am

Re: Subjective Feelings of Market Crashes and Bottoms

Post by seychellois_lib » Wed Mar 11, 2020 5:50 pm

hagridshut wrote:
Wed Mar 11, 2020 3:41 pm
Caduceus wrote:
Wed Mar 11, 2020 2:24 pm
For those veteran investors who've been through many market crashes, how did it feel as you were passing through what turned out, retrospectively, to be the market bottom?

I guess I'm really curious about your personal stories about what it felt like at the absolute bottom of previous market crashes, and if at that point you thought things were going to get better or worse, if you had an inkling, and what your emotional experience generally was.
If you haven't read this thread from October 2008 already, check it out: viewtopic.php?t=25126

From my own personal observation of coworkers and older folks, the "absolute bottom" is total despair and hopelessness: when many people close to retirement cash out what is left for a pittance (which is the wrong move). A lot of people bailed in early 2009. They suffered permanent and irreversible financial damage as a result.

My guess is that we hit rock bottom when financial discussion forums like this one and Reddit become "ghost towns" as people become so discouraged that they don't even want to talk about the markets anymore.
I checked the link and, man, does that bring back some memories. And to think the fortunus that were made since that time. Amazing!

And I am one of those who almost...almost blew it.

Fallible
Posts: 7421
Joined: Fri Nov 27, 2009 4:44 pm
Contact:

Re: Subjective Feelings of Market Crashes and Bottoms

Post by Fallible » Wed Mar 11, 2020 6:07 pm

Caduceus wrote:
Wed Mar 11, 2020 2:24 pm
...
...what I'm curious about is your mental state at or around the absolute bottom - were you panicking? Did you guess things were on the upturn? Did it surprise you in retrospect that the bottom had already been reached? Did it come earlier or later than you expected?
...
Based on market bottoms I’ve been through since ’87, my answer is yes to all of your questions above. There was some panic, some guessing, much surprise, both earlier and later than expected. When one doesn’t know and can’t know the future, all of the above is all that’s left. At least for me it was.
The first principle is that you must not fool yourself – and you are the easiest person to fool. ~Richard Feynman

MathWizard
Posts: 4175
Joined: Tue Jul 26, 2011 1:35 pm

Re: Subjective Feelings of Market Crashes and Bottoms

Post by MathWizard » Wed Mar 11, 2020 6:20 pm

I've been through the tech crash, 2001/3 and 2008/9

I was fine. On Jan 1, 2009, I even joked about being down $200K
(all my gains in 20 yrs of investing, and there was further down to go).

I knew that the prices were far out of reasonable, and had to come down for any hope to have reasonable returns, it was just happening, like it is now. Something triggers a rush to the door, which becomes a stampede, and the market overreacts.

I don't think we are at the bottom yet, we may be only halfway there.

Make sure you are comfortable with your AA, then think about other things. There are much more things to worry about than the stock prices.

Fallible
Posts: 7421
Joined: Fri Nov 27, 2009 4:44 pm
Contact:

Re: Subjective Feelings of Market Crashes and Bottoms

Post by Fallible » Wed Mar 11, 2020 6:20 pm

SimpleGift wrote:
Wed Mar 11, 2020 3:08 pm
...
So to answer your question, my dominant feelings were numbness and a bit of psychological exhaustion from doing nothing!
The psychological exhaustion from doing nothing I think proves a point made in other threads that "just standing there" is not just standing doing nothing, but resisting, often mightily resisting, the urge to "do something." It's a mental battle to control emotion, to be disciplined, and in '08 especially, it was one heck of a battle. Whew!
The first principle is that you must not fool yourself – and you are the easiest person to fool. ~Richard Feynman

User avatar
goodenyou
Posts: 2257
Joined: Sun Jan 31, 2010 11:57 pm
Location: Skating to Where the Puck is Going to Be..or on the golf course

Re: Subjective Feelings of Market Crashes and Bottoms

Post by goodenyou » Wed Mar 11, 2020 6:21 pm

I didn't have much in 2000, and 12 years ago during the Great Recession, retirement seemed long off. I remember just ignoring the news and kept focus on my job and DCA into the market. I was also more illiquid back then with a significant commercial real estate holding. Over the past 12 years, and now in my mid 50s, I have become more focused on retirement and anchored to new balance highs in my portfolio. I have been dreaming a lot of what retirement would look like and feel like given my large run-up in my equities and recent liquidation of my real estate positions. I cashed out of real estate a year ago and had not deployed the cash (I have maintained a large cash position with the idea of building a home for retirement years. I bought the land for the house outright 3 years ago). It is painful to watch the nest egg shrink. I don't know how people can muster up the courage to electively retire during a financial shock.

This crash is different. The market goes down in every crash. That is the same. This time, the concern of health survival exceedingly overshadows financial survival. The Great Pandemic is much different than the Great Recession. I believe The Market will eventually recover. My focus today is to help my patients and my friends and family make it through this health crisis. The priorities are different. That's why 'this time it's different" resonates with me.
"Ignorance more frequently begets confidence than does knowledge" | Do you know how to make a rain dance work? Dance until it rains.

Seasonal
Posts: 1666
Joined: Sun May 21, 2017 1:49 pm

Re: Subjective Feelings of Market Crashes and Bottoms

Post by Seasonal » Wed Mar 11, 2020 6:26 pm

I'm not happy about it, but there's nothing I can do about it and it's not going to have any real effect on my life. This too shall pass.

I'd prefer the cause be the usual financial stuff rather than health related and its effect on people and activities.

jaqenhghar
Posts: 30
Joined: Sat Feb 22, 2020 3:24 pm

Re: Subjective Feelings of Market Crashes and Bottoms

Post by jaqenhghar » Thu Mar 12, 2020 5:34 pm

I was a baby investor during the Great Recession.

During the first few months of investing, I lost around $1,000 and immediately panicked. My dad, being the wise man he is, told me that if I wasn't ready to lose money in the short term, I shouldn't be in the market at all. Because of him, I stayed the course and have the last decade of gains to show for it.

I think about his comments a lot now, and as the stock market goes down, I don't check my portfolio. Out of habit, I only check it when I know the market is higher than the last time I checked it. A bit weird, I guess...but the last time I checked the market, it was at X, so I will only check again when it's > X.

Instead of focusing on the market, I'm trying to set myself up at work for when things get back to normal. I'll be using this slow-down time to study for a professional certification. Time to hit the books for me!

Topic Author
Caduceus
Posts: 2729
Joined: Mon Sep 17, 2012 1:47 am

Re: Subjective Feelings of Market Crashes and Bottoms

Post by Caduceus » Thu Mar 12, 2020 6:20 pm

jaqenhghar wrote:
Thu Mar 12, 2020 5:34 pm

Instead of focusing on the market, I'm trying to set myself up at work for when things get back to normal. I'll be using this slow-down time to study for a professional certification. Time to hit the books for me!
Your behavior befits your forum handle :D

User avatar
WoodSpinner
Posts: 1493
Joined: Mon Feb 27, 2017 1:15 pm

Re: Subjective Feelings of Market Crashes and Bottoms

Post by WoodSpinner » Thu Mar 12, 2020 6:28 pm

OP,

Here’s the thing, you never really know you went through a bottom for months after you passed it. At some point the market stops going down, perhaps it’s up a bit but you always wonder if today is the day it goes down again.

There is no certainty, no magic bell, or announcement that “All is Well”.

This is the first major downturn since I retired and I definitely feel more vulnerable since I am no longer working and accumulating. It’s definitely more of a struggle to tune out the noise since I have more time to read and think. Fortunately I have spent a great deal of time putting together our AA and IPS while the markets were going up — now comes the test to see how well they serve me.

At this point there is nothing left to do but enjoy my life, be thankful for my health and opportunities and follow my plan.

WoodSpinner

jaqenhghar
Posts: 30
Joined: Sat Feb 22, 2020 3:24 pm

Re: Subjective Feelings of Market Crashes and Bottoms

Post by jaqenhghar » Thu Mar 12, 2020 8:29 pm

Caduceus wrote:
Thu Mar 12, 2020 6:20 pm
jaqenhghar wrote:
Thu Mar 12, 2020 5:34 pm

Instead of focusing on the market, I'm trying to set myself up at work for when things get back to normal. I'll be using this slow-down time to study for a professional certification. Time to hit the books for me!
Your behavior befits your forum handle :D
Love that you made the connection. Just started watching it, and each episode is better than the previous one :beer

Post Reply