So.... is this really "it"? Is this what we needed to mentally prepare for?

[TheBogleWay]

I hope this doesn't come across as insensitive to people who are impacted more than I am, maybe those who just retired, etc. I do very much feel for them and wish the best for those in other scenarios.


However... all of my investing life and life at Bogleheads, everyone tells you to mentally prepare yourself. They say it's the hardest part of investing, to control the fears and jitters when the inevitable corrections/recessions happen.


Here we are, I've lost maybe 20% of my net worth in ~45 days. I've lost upwards of $300,000 on paper.


Yet, I almost couldn't care less. I have zero fear about this. I had thoughts about trying to save a few dollars but no fear. I showed it to my wife and screen captured it because it's interesting, and crazy to see how much these numbers go up and down, and a little chuckle and move on with our day. I have enough to pay bills, I'm likely to remain employed and I'm in this for the long gain. Even if this compounding work issue means another 20/30/40% drop, I suspect I'll feel the same.


Is this really it? Does this mean I pass the jitters test? Because if so, I'll be one happy guy. I haven't personally lived (as a significant investor) through a recession so I couldn't be 100% sure until actually lived through it how I'd react. I'm actually encouraged, game plan is in effect.


Is anyone else out there proud of themselves and how they're handling this drop?

[z3r0c00l]

This is one of the 3-5 "its" that you will encounter during an investing career. If your AA was set right from the start, you should do just fine. The real test is job loss, however, and most of that has not hit yet. Layoffs will progress through the next month or two and it will cause the most severe, existential economic anguish.

I have the kind of job that allows me to work from home all month, and the money on hand to stock up on food and supplies no problem. Let's just remember that most people have nothing saved and they will be suffering dearly from this economic slowdown.

[CoastalWinds]

Stay humble. This isn’t even close to being done with.

Think about when someone spends a dollar. It moves through the system many times over as it changes hands. That works both ways. Think about the ripple-through effect to the economy if that dollar isn’t spent. Now multiply that by the scale in which dollars aren’t being spent because billion dollar industries are losing 60-90% of sales.

Buckle up.

[KlangFool]

OP,

Wait until your employer starts laying off people. Or, you are unemployed. Then, you can say that you passed the test.

KlangFool

[TheBogleWay]

Stay humble. This isn’t even close to being done with.

So you're a market timer? You know stocks will continue to go down?

[CoastalWinds]

Stay humble. This isn’t even close to being done with.

So you're a market timer? You know stocks will continue to go down?

Not a market timer. Just saying we are not out of the woods, not even close.

[TheBogleWay]

Stay humble. This isn’t even close to being done with.

So you're a market timer? You know stocks will continue to go down?

Not a market timer. Just saying we are not out of the woods, not even close.

...that's market timing. This thread is talking about the stock market, not peoples health.

So if you're sure that we're not near the bottom, have you sold your stocks? When do you think you'll buy back in? Just curious.

[HomerJ]

OP,

Wait until your employer starts laying off people. Or, you are unemployed. Then, you can say that you passed the test.

KlangFool

This is a good point... The last one was scarier with all the job losses (including white-collar jobs).

[jdilla1107]

I'm with you. My portfolio is down 500k+ and I could not care any less. Went up 180k today and it meant nothing to me. No emotion whatsoever.

My perspective is for 20-30 years. What difference does it make if we go:

down, down, up, up, up, down, down, up
or
up, down, up, up, up, down, up, up, down

The daily prices just literally don't matter.

For example, if you had to sell your house this week, you would probably be forced to take a 30%+ loss. But, who would do that? (by choice at least) Do people check their home prices every day and feel emotion on the swings?

The liquidity that stocks provide are almost a hinderance to the long term investor. Who cares what stock prices are if you are not planning to buy/sell in large quantities?

I focus on the things I can control.

[bluquark]

I have a theory that events that really test your mettle are those that challenge a narrative you believe in.

For example, I think many people right now are expecting a quick V-shaped recession, and for those people bullishly buying or staying the course, the real test will arrive gradually if the market slowly drops further or fails to rise over the next 5 years. Just like it feels today that US stock market usually goes up and international usually stays flat, imagine the feeling of: in recent memory, no stocks "ever" go up.

Another thing that happened in history that really stressed people out is the 70s stagflation, which crashed both stocks and (real value of) bonds. Bogleheads mostly don't think about this possibility and would be very disturbed by that in a way that the current "vanilla" crash does not disturb them.

So no, there are still potential tests ahead.

[mbasherp]

This is something like “it.”

Down 30%. I was just furloughed indefinitely. No resolution in sight. Yet, other than trimming down the budget in tiny ways, I have changed nothing. I even invested as planned when my “last paycheck” posted today. All to total international at the lowest price I ever paid.

I’m 95% equities with a 6 month emergency fund. As long as DW is employed and I get unemployment, we won’t touch any savings.

If she loses her job, our EF will last about 10 months counting unemployment benefits. Then we’d have to tap taxable. If stocks drop a further 50% from here (always my base case), that would last us 10 more months. Then perhaps Roth principal, or sell the house, or whatever... I’m sure before then others would be desperate to rent a room in our home!

I’m not worried. We and our investments will be fine. I AM worried about many friends and colleagues and I’m unsure how much help we can/should offer them. Definitely some dinner parties in store!

[limeyx]

OP,

Wait until your employer starts laying off people. Or, you are unemployed. Then, you can say that you passed the test.

KlangFool

Yeah this is the big one. Been at companies where there was round after round of layoffs....scariest things you will see

[MarkRoulo]

I hope this doesn't come across as insensitive to people who are impacted more than I am, maybe those who just retired, etc. I do very much feel for them and wish the best for those in other scenarios.


However... all of my investing life and life at Bogleheads, everyone tells you to mentally prepare yourself. They say it's the hardest part of investing, to control the fears and jitters when the inevitable corrections/recessions happen.


Here we are, I've lost maybe 20% of my net worth in ~45 days. I've lost upwards of $300,000 on paper.


Yet, I almost couldn't care less. I have zero fear about this. I had thoughts about trying to save a few dollars but no fear. I showed it to my wife and screen captured it because it's interesting, and crazy to see how much these numbers go up and down, and a little chuckle and move on with our day. I have enough to pay bills, I'm likely to remain employed and I'm in this for the long gain. Even if this compounding work issue means another 20/30/40% drop, I suspect I'll feel the same.


Is this really it? Does this mean I pass the jitters test?

Wait until you are down 50%, the downturn is a year old and you know people who are looking for work in vain.

If you still don’t care less, then you’ve passed the jitters test.

[Unladen_Swallow]

I do not consider such events a test of my investing acumen, nor my fortitude. That is just a side effect.

My priorities are different at this point in my life. Financial downturn is not the top of my list. We will adapt and do whatever it takes.

My focus is on family, health, and peace and quiet. That is the origin of my gratefulness and also my worries.

[CoastalWinds]

Stay humble. This isn’t even close to being done with.

So you're a market timer? You know stocks will continue to go down?

Not a market timer. Just saying we are not out of the woods, not even close.

...that's market timing. This thread is talking about the stock market, not peoples health.

So if you're sure that we're not near the bottom, have you sold your stocks? When do you think you'll buy back in? Just curious.

I believe the market will continue to move up and down with large volatility. I do not and have not predicted if we are at a bottom. As another possibility, we could go sideways for a long time. But I do believe that other economic indicators will worsen, such as unemployment, and this goes to the heart of the OPs comment about “is this it?”. If folks get laid off and there EFs get depleted, then even this “only 20%” drop can look more significant. These are just my opinions. You are welcome to disagree, but you have no right to call me names.

[jpmorganfunds]

Here we are, I've lost maybe 20% of my net worth in ~45 days. I've lost upwards of $300,000 on paper.

Wait til the market goes down 60%.

[jjface]

I will say this one has gone quickly so far. The long drawn out ones are the worst.

[Algernon]

45 days? I wouldn't even say this crash has even been acknowledged as a crash for 2/3 weeks so far. The 2008 stock market crash didn't hit it's bottom for 18 months, the great depression took 4 years to hit it's bottom. This isn't "it", not yet at least, this is just another short term blip so far. Yeah, it sucks that people are losing jobs now, but they haven't been unemployed for a year or longer. People lose jobs every day, it takes a year to be unemployed for a year.

I'm not saying this, as of yet "little blip", is going to last that long and become "it", but do let us know how it feels in the event that it does. Do also stick to your plan, and try to keep the same spirit.

[TheBogleWay]

Stay humble. This isn’t even close to being done with.

So you're a market timer? You know stocks will continue to go down?

Not a market timer. Just saying we are not out of the woods, not even close.

...that's market timing. This thread is talking about the stock market, not peoples health.

So if you're sure that we're not near the bottom, have you sold your stocks? When do you think you'll buy back in? Just curious.

I believe the market will continue to move up and down with large volatility. I do not and have not predicted if we are at a bottom. As another possibility, we could go sideways for a long time. But I do believe that other economic indicators will worsen, such as unemployment, and this goes to the heart of the OPs comment about “is this it?”. If folks get laid off and there EFs get depleted, then even this “only 20%” drop can look more significant. These are just my opinions. You are welcome to disagree, but you have no right to call me names.

Lol I'm not calling you names, I'm just describing your behavior.

Yes, the market could do anything. Your posts in here suggest that you're pretty sure they're going to continue to get worse, therefore the jitters test isn't passed compared to whats coming from Covid-19.

Regarding all of the unemployment and anticipated worsening economic factors, why do you think those aren't already factored into the market? Do you know something that others don't?


...I'm intentionally antagonizing you a bit because I think it will get a more specific answer from you, or trigger you to realize your comments sound like market timing. Don't take it personally, I just want you to dive deeper on these thoughts. I'm learning as well.

[MathWizard]

I hope this doesn't come across as insensitive to people who are impacted more than I am, maybe those who just retired, etc. I do very much feel for them and wish the best for those in other scenarios.


However... all of my investing life and life at Bogleheads, everyone tells you to mentally prepare yourself. They say it's the hardest part of investing, to control the fears and jitters when the inevitable corrections/recessions happen.


Here we are, I've lost maybe 20% of my net worth in ~45 days. I've lost upwards of $300,000 on paper.


Yet, I almost couldn't care less. I have zero fear about this. I had thoughts about trying to save a few dollars but no fear. I showed it to my wife and screen captured it because it's interesting, and crazy to see how much these numbers go up and down, and a little chuckle and move on with our day. I have enough to pay bills, I'm likely to remain employed and I'm in this for the long gain. Even if this compounding work issue means another 20/30/40% drop, I suspect I'll feel the same.


Is this really it? Does this mean I pass the jitters test? Because if so, I'll be one happy guy. I haven't personally lived (as a significant investor) through a recession so I couldn't be 100% sure until actually lived through it how I'd react. I'm actually encouraged, game plan is in effect.


Is anyone else out there proud of themselves and how they're handling this drop?

I congratulate you on being able to handle the downturn.

I have just a bit more than you, but I was only 50/50 before the downturn, so I am down much less than you are. I'm not worried much about my personal finances during this crisis.

I think it will be a bumpy ride for at least a few more months, maybe over a year, so keep cool, this has just begun.

[Cubicle]

You are properly allocated for your risk tolerance & place in life. So you prepared well. So far.

Older age. More risk averse. Shaky job security. More significant "crashing". Those could mentally torment anyone.

[watchnerd]

Seems a bit early for an emotional victory lap and round of self-congrats....

[Briscoe]

Stay humble. This isn’t even close to being done with.

So you're a market timer? You know stocks will continue to go down?

So you're a market timer? You know stocks will not continue to go down?

[franklinsimms]

...I'm intentionally antagonizing you a bit because I think it will get a more specific answer from you, or trigger you to realize your comments sound like market timing. Don't take it personally, I just want you to dive deeper on these thoughts. I'm learning as well.

You're being a bit rude in some of your responses.

Back to your original question - good on you for having a plan and sticking to it. But as to whether or not this is really "it"? We don't know where things will go from here. Your confidence can be construed as assuming the worst is over, which is what I think the other poster was getting at.

[oken]

So you're a market timer? You know stocks will continue to go down?

Not a market timer. Just saying we are not out of the woods, not even close.

...that's market timing. This thread is talking about the stock market, not peoples health.

So if you're sure that we're not near the bottom, have you sold your stocks? When do you think you'll buy back in? Just curious.

I believe the market will continue to move up and down with large volatility. I do not and have not predicted if we are at a bottom. As another possibility, we could go sideways for a long time. But I do believe that other economic indicators will worsen, such as unemployment, and this goes to the heart of the OPs comment about “is this it?”. If folks get laid off and there EFs get depleted, then even this “only 20%” drop can look more significant. These are just my opinions. You are welcome to disagree, but you have no right to call me names.

Lol I'm not calling you names, I'm just describing your behavior.

Yes, the market could do anything. Your posts in here suggest that you're pretty sure they're going to continue to get worse, therefore the jitters test isn't passed compared to whats coming from Covid-19.

Regarding all of the unemployment and anticipated worsening economic factors, why do you think those aren't already factored into the market? Do you know something that others don't?


...I'm intentionally antagonizing you a bit because I think it will get a more specific answer from you, or trigger you to realize your comments sound like market timing. Don't take it personally, I just want you to dive deeper on these thoughts. I'm learning as well.

Ah... Feels like high school.
"I'm just teaching you to man up, nerd! I'm doing this so you can learn to be a man!"

Yeah...

[CardinalRule]

I'm in it for the long haul too, but "chuckling" is not something I've been doing a lot of the past couple of weeks.

Yet, I almost couldn't care less. I have zero fear about this. I had thoughts about trying to save a few dollars but no fear. I showed it to my wife and screen captured it because it's interesting, and crazy to see how much these numbers go up and down, and a little chuckle and move on with our day. I have enough to pay bills, I'm likely to remain employed and I'm in this for the long gain. Even if this compounding work issue means another 20/30/40% drop, I suspect I'll feel the same.

[random_walker_77]

OP, approx how old are you? I'd hate to spoil your happiness, but I don't think this is anywhere near as scary as either 2008 or 2001. 2008 scared me the most, though I was still able to pinch my nose and rebalance a couple of times. You'll know it's bad when you (and everyone else) is/are scared to rebalance back into stocks.

Let me paint a scenario that would better convey the sense of despair that needs to happen. Please don't accuse me of fear-mongering -- I don't actually think the following fictional drivel is likely to happen, but imagine how you'd feel if it did:

The stock market continues wildly rising and falling for the next few months, but trends down 5% per week. 6 weeks from now, it becomes clear that there's not going to be a quick bouceback and the dow has dropped nearly another 1/3 to 17K but is still showing wild jumps up and down. More weeks go by and the decrease in economic activity starts to show up in massively bad earnings reports as company after company reports huge losses. The relatively high levels of corporate debt starts to look worrisome, and companies are under pressure to reduce opex to service debt, forcing them to layoff workers so as to conserve cash.

Meanwhile, Europe has stabilized and started to recover from the virus, but the US is on a bad overall trajectory. Perhaps the US bungled containment of the virus and the rest of the world is stable and is now quarantining the USA. Perhaps the dollar no longer looks as attractive as the world's reserve currency and there are fears about the US's ability and/or willingness to cover its obligations. US interest rates rise as money flees for safer holdings in Europe and asia, and this sparks further fears about companies ability to borrow. The fed prints more cash, but this time, the world doesn't want it and inflation rises. More companies go bankrupt, and the higher cost of capital makes it hard to service high debt loads that looked fine at 3% but is burdensome at 7%, especially when consumers have stopped buying. "Everyone" expects that the Dow will drop much further, maybe going under 10K.

Coincident with this, there are massive layoffs and firings as companies restructure and every week, another big name goes under. The virus interferes w/ domestic production and distribution, causing massive price increases and shortages of basic goods and even of food supplies. Inflation of consumer goods skyrockets, treasury rates skyrocket, and both stocks and bonds further crash. Many people are forced to declare bankruptcy, and food banks are under siege.

A few more months pass. You find yourself still unemployed, have burned through 1/2 of your emergency fund, and what's left is not going as far as you thought it would because prices at the store have skyrocketed. Your stocks have crashed, and your bonds have taken a haircut. What's left has lost purchasing power, and the thought of selling to replenish your emergency fund is starting to look very prudent. It's a very real possibility that stocks could go down an additional 50+% like they did during the great depression. No companies are hiring. Even though you're in the top 5% of talent, companies have already trimmed their fat, and lots of muscle down to bone. In order to hire you, they need to fire someone else, but they know that you'd take time to ramp up so they'll just stick with their hiring freeze, thank you very much.

To make matters worse, with the US on its heels, armed conflict breaks out somewhere sensitive to US interests, threatening to further destabilize the world. Will it escalate into a full-blown war? Worse, we start to learn that the coronavirus infections had a horrific secondary impact. Perhaps, like Zika, it's leaving a scar on our unborn, leaving us with long-lasting damage. Maybe, we also find that it mutates, meaning that another culling of our elderly is likely to happen the following winter.

Now, do you rebalance into stocks? Do you hold? Or do you sell to pull out some cash to keep yourself afloat longer, b/c if you wait, you'll probably have less in your brokerage account, and it's looking grim out there...

Ahem, perhaps that last bit about war was a bit over the top, but the point is, right now we've simply reset ourselves back to where we were before an amazingly large runup in the stock market. The last couple years were really good. Oh well. The fear and terror that something *truly bad* is about to happen -- well, we're not there yet, and I sure hope we won't get there. For now, I think it's too early to pat yourself on the back and declare victory.

[watchnerd]

OP, approx how old are you? I'd hate to spoil your happiness, but I don't think this is anywhere near as scary as either 2008 or 2001. 2008 scared me the most, though I was still able to pinch my nose and rebalance a couple of times. You'll know it's bad when you (and everyone else) is/are scared to rebalance back into stocks.

Let me paint a scenario that would better convey the sense of despair that needs to happen. Please don't accuse me of fear-mongering -- I don't actually think the following fictional drivel is likely to happen, but imagine how you'd feel if it did:

The stock market continues wildly rising and falling for the next few months, but trends down 5% per week. 6 weeks from now, it becomes clear that there's not going to be a quick bouceback and the dow has dropped nearly another 1/3 to 17K but is still showing wild jumps up and down. More weeks go by and the decrease in economic activity starts to show up in massively bad earnings reports as company after company reports huge losses. The relatively high levels of corporate debt starts to look worrisome, and companies are under pressure to reduce opex to service debt, forcing them to layoff workers so as to conserve cash.

Meanwhile, Europe has stabilized and started to recover from the virus, but the US is on a bad overall trajectory. Perhaps the US bungled containment of the virus and the rest of the world is stable and is now quarantining the USA. Perhaps the dollar no longer looks as attractive as the world's reserve currency and there are fears about the US's ability and/or willingness to cover its obligations. US interest rates rise as money flees for safer holdings in Europe and asia, and this sparks further fears about companies ability to borrow. The fed prints more cash, but this time, the world doesn't want it and inflation rises. More companies go bankrupt, and the higher cost of capital makes it hard to service high debt loads that looked fine at 3% but is burdensome at 7%, especially when consumers have stopped buying. "Everyone" expects that the Dow will drop much further, maybe going under 10K.

Coincident with this, there are massive layoffs and firings as companies restructure and every week, another big name goes under. The virus interferes w/ domestic production and distribution, causing massive price increases and shortages of basic goods and even of food supplies. Inflation of consumer goods skyrockets, treasury rates skyrocket, and both stocks and bonds further crash. Many people are forced to declare bankruptcy, and food banks are under siege.

A few more months pass. You find yourself still unemployed, have burned through 1/2 of your emergency fund, and what's left is not going as far as you thought it would because prices at the store have skyrocketed. Your stocks have crashed, and your bonds have taken a haircut. What's left has lost purchasing power, and the thought of selling to replenish your emergency fund is starting to look very prudent. It's a very real possibility that stocks could go down an additional 50+% like they did during the great depression. No companies are hiring. Even though you're in the top 5% of talent, companies have already trimmed their fat, and lots of muscle down to bone. In order to hire you, they need to fire someone else, but they know that you'd take time to ramp up so they'll just stick with their hiring freeze, thank you very much.

To make matters worse, with the US on its heels, armed conflict breaks out somewhere sensitive to US interests, threatening to further destabilize the world. Will it escalate into a full-blown war? Worse, we start to learn that the coronavirus infections had a horrific secondary impact. Perhaps, like Zika, it's leaving a scar on our unborn, leaving us with long-lasting damage. Maybe, we also find that it mutates, meaning that another culling of our elderly is likely to happen the following winter.

Now, do you rebalance into stocks? Do you hold? Or do you sell to pull out some cash to keep yourself afloat longer, b/c if you wait, you'll probably have less in your brokerage account, and it's looking grim out there...

Ahem, perhaps that last bit about war was a bit over the top, but the point is, right now we've simply reset ourselves back to where we were before an amazingly large runup in the stock market. The last couple years were really good. Oh well. The fear and terror that something *truly bad* is about to happen -- well, we're not there yet, and I sure hope we won't get there. For now, I think it's too early to pat yourself on the back and declare victory.

Dang, dude.

The only thing you left out was "and your parents die, too."

I need to go watch a romantic comedy after that.

[politely]

OP,

Wait until your employer starts laying off people. Or, you are unemployed. Then, you can say that you passed the test.

KlangFool

This is a good point... The last one was scarier with all the job losses (including white-collar jobs).

Yep, that was scary. But as I recall, the fear was compounded because it felt like your company could disappear, and maybe your entire industry. So, if you got fired, it felt like there was no place to go. I really don't think we'll see something like that again, unless we head into a depression. And while this current bear market isn't great, it doesn't feel like 2008. At least, not yet. I think there's a lot of hope that this epidemic and the oil issues will be fairly temporary, and as long as that hope exists, it won't be so bad. When companies start thinking that the economic downturn will be long-lasting, that's when things will get ugly.

[TheBogleWay]

Not a market timer. Just saying we are not out of the woods, not even close.

...that's market timing. This thread is talking about the stock market, not peoples health.

So if you're sure that we're not near the bottom, have you sold your stocks? When do you think you'll buy back in? Just curious.

I believe the market will continue to move up and down with large volatility. I do not and have not predicted if we are at a bottom. As another possibility, we could go sideways for a long time. But I do believe that other economic indicators will worsen, such as unemployment, and this goes to the heart of the OPs comment about “is this it?”. If folks get laid off and there EFs get depleted, then even this “only 20%” drop can look more significant. These are just my opinions. You are welcome to disagree, but you have no right to call me names.

Lol I'm not calling you names, I'm just describing your behavior.

Yes, the market could do anything. Your posts in here suggest that you're pretty sure they're going to continue to get worse, therefore the jitters test isn't passed compared to whats coming from Covid-19.

Regarding all of the unemployment and anticipated worsening economic factors, why do you think those aren't already factored into the market? Do you know something that others don't?


...I'm intentionally antagonizing you a bit because I think it will get a more specific answer from you, or trigger you to realize your comments sound like market timing. Don't take it personally, I just want you to dive deeper on these thoughts. I'm learning as well.

Ah... Feels like high school.
"I'm just teaching you to man up, nerd! I'm doing this so you can learn to be a man!"

Yeah...

Lol. I think you missed my point, or maybe I didn't explain it well. I was never telling him to man up. I was saying his comment implies that he knows this stock market downfall is nothing compared to whats coming. So, I was poking at that thought trying to learn more from it. Not for anything personal towards the poster whatsoever, but I want to make sure people here aren't aware of something I'm not. In reality, I could see myself making the exact same comment he/she did, but again I'm telling myself to learn. So, if there's something I'm missing (such as a statistic that the market about to go down further for a fact) I want to know. Also, I'm parroting advice I've heard that makes sense to me - whatever you (we) think we know about the economy and current risks, potential for failure, it's already accounted for in the stock market prices. So when people tell tales of what could happen (see the above long post) I'm thinking to myself... isn't that information already accounted for in the stock value? So, when I say that, if the conventional wisdom here about that saying has changed, somebody is likely to quote me and disagree with me and tell me. Then, I'll learn.

[jpmorganfunds]

Stay humble. This isn’t even close to being done with.

So you're a market timer? You know stocks will continue to go down?

So you're a market timer? You know stocks will not continue to go down?

ROFLMAO

[mrspock]

OP, approx how old are you? I'd hate to spoil your happiness, but I don't think this is anywhere near as scary as either 2008 or 2001. 2008 scared me the most, though I was still able to pinch my nose and rebalance a couple of times. You'll know it's bad when you (and everyone else) is/are scared to rebalance back into stocks.

Let me paint a scenario that would better convey the sense of despair that needs to happen. Please don't accuse me of fear-mongering -- I don't actually think the following fictional drivel is likely to happen, but imagine how you'd feel if it did:

The stock market continues wildly rising and falling for the next few months, but trends down 5% per week. 6 weeks from now, it becomes clear that there's not going to be a quick bouceback and the dow has dropped nearly another 1/3 to 17K but is still showing wild jumps up and down. More weeks go by and the decrease in economic activity starts to show up in massively bad earnings reports as company after company reports huge losses. The relatively high levels of corporate debt starts to look worrisome, and companies are under pressure to reduce opex to service debt, forcing them to layoff workers so as to conserve cash.

*Etc etc etc*

Ahem, perhaps that last bit about war was a bit over the top, but the point is, right now we've simply reset ourselves back to where we were before an amazingly large runup in the stock market. The last couple years were really good. Oh well. The fear and terror that something *truly bad* is about to happen -- well, we're not there yet, and I sure hope we won't get there. For now, I think it's too early to pat yourself on the back and declare victory.

OR ... you can just focus on (much) more likely outcomes.

[Unladen_Swallow]

OP

This is NOT "it".

Most experienced investors here are not posting about selling everything because a 20% downturn scared them. This is not their first rodeo.

If you are a novice investor, this might seem like a big deal to you. It isn't. Many here have gone through far worse, more than once. If you are fortunate enough to have a long and fruitful investing life, you will be lucky to do the same.

[Rupert Dacat]

(Snip)


Here we are, I've lost maybe 20% of my net worth in ~45 days. I've lost upwards of $300,000 on paper.


Yet, I almost couldn't care less. I have zero fear about this.

(Snip)


Is anyone else out there proud of themselves and how they're handling this drop?

Pat yourself on the back after you've been through a 50+% market decline with equanimity.

Btw, to lose 20% of your net worth in this time period indicates that you are close to 100% equities! That is certainly not "the Bogle way."

Rupe

[Chicken Little]

Everybody has their number. Hopefully you never meet yours.

[Foredeck]

I'll be losing my job any day now. Perhaps as soon as this
coming Monday.

My first priority is to make sure my family is provided for in terms of food, shelter, and security (if that's possible.) and trying to keep everyone healthy.

Given the circumstances, I'm not even thinking about my retirement savings. I'm just trying to survive.

My wife and I have been saving in our emergency fund and stashing away any tax returns or bonuses and making monthly contributions for years.

Thanks to the Boglehead community, my family is in a slightly better situation than the average person. Thank you for all the wonderful information and guidance over the years.

The coming weeks and months, or longer could be very challenging.

Stay safe everyone.

[TheBogleWay]

(Snip)


Here we are, I've lost maybe 20% of my net worth in ~45 days. I've lost upwards of $300,000 on paper.


Yet, I almost couldn't care less. I have zero fear about this.

(Snip)


Is anyone else out there proud of themselves and how they're handling this drop?

Pat yourself on the back after you've been through a 50+% market decline with equanimity.

Btw, to lose 20% of your net worth in this time period indicates that you are close to 100% equities! That is certainly not "the Bogle way."

Rupe

I am probably 95/5 or so right now, however I don't think that means it's not the Bogle way. It's my AA I made when I designed my plan - I'm 20+ years from retirement age and high income/1+m nw/job stability, therefore (from what I understand) it's not a bad idea to have a high equity portfolio. Do you agree with that with the additional details?

[TheBogleWay]

I'll be losing my job any day now. Perhaps as soon as this
coming Monday.

My first priority is to make sure my family is provided for in terms of food, shelter, and security (if that's possible.) and trying to keep everyone healthy.

Given the circumstances, I'm not even thinking about my retirement savings. I'm just trying to survive.

My wife and I have been saving in our emergency fund and stashing away any tax returns or bonuses and making monthly contributions for years.

Thanks to the Boglehead community, my family is in a slightly better situation than the average person. Thank you for all the wonderful information and guidance over the years.

The coming weeks and months, or longer could be very challenging.

Stay safe everyone.

I really wish you the best, continue to find ways to pay bills without selling stocks and just hang tight. We will get through this.


I've heard a few great lines recently.

1. Average stock performance does include great recessions. The ~8% performance we all love to imagine does include bad times.

2. Stock plummeting is partly due to crowd hysteria, the exact same ridiculousness as people buying up all the toilet paper. That same herd mentality is the cause for a lot of the drop (along with some justified reasons) so it seems worse than it really is. Eventually well get people back to work and the same economic drivers that made us strong will continue.

[Rupert Dacat]

(Snip)


Here we are, I've lost maybe 20% of my net worth in ~45 days. I've lost upwards of $300,000 on paper.


Yet, I almost couldn't care less. I have zero fear about this.

(Snip)


Is anyone else out there proud of themselves and how they're handling this drop?

Pat yourself on the back after you've been through a 50+% market decline with equanimity.

Btw, to lose 20% of your net worth in this time period indicates that you are close to 100% equities! That is certainly not "the Bogle way."

Rupe

I am probably 95/5 or so right now, however I don't think that means it's not the Bogle way. It's my AA I made when I designed my plan - I'm 20+ years from retirement age and high income/1+m nw/job stability, therefore (from what I understand) it's not a bad idea to have a high equity portfolio. Do you agree with that with the additional details?

I don't agree. I think your portfolio has a high capitulation risk!

Keep in touch,

Rupe
: )

[careytilden]

You should think about the effect time will have on your state of mind. This downturn has happened very fast. After a while it may start to feel different. Though it sounds like you're in it for the long run and confident in your choices, so you may never be tempted to capitulate. But if the market stays down long enough, combined with an economic downturn and a never ending parade of human suffering, you may find yourself feeling less jubilant about the situation.

I know this from personal experience. I didn't ever waver during the financial crisis from 2007-2009, but it didn't feel good for very long. I started out feeling defiant and confident, and ended up grimly determined and waiting to see my losses turn back into gains. It took a long time.

[oken]

I know this from personal experience. I didn't ever waver during the financial crisis from 2007-2009, but it didn't feel good for very long. I started out feeling defiant and confident, and ended up grimly determined and waiting to see my losses turn back into gains. It took a long time.

This is why I don't quite understand the argument for only rebalancing out of stocks. The fastest way for your portfolio to move into the green is to buy more while it's low. The less you buy, the more you have to wait for the bottom to reach the previous peak, and then to catch up to inflation... By which time perhaps it will be time for the next bear?

[DrPayItBack]

I know this from personal experience. I didn't ever waver during the financial crisis from 2007-2009, but it didn't feel good for very long. I started out feeling defiant and confident, and ended up grimly determined and waiting to see my losses turn back into gains. It took a long time.

This is why I don't quite understand the argument for only rebalancing out of stocks. The fastest way for your portfolio to move into the green is to buy more while it's low. The less you buy, the more you have to wait for the bottom to reach the previous peak, and then to catch up to inflation... By which time perhaps it will be time for the next bear?

Who makes this argument? I’ve never heard it. If anything seems mentally harder to sell high than buy low.

[Schlabba]

I'll be losing my job any day now. Perhaps as soon as this
coming Monday.

My first priority is to make sure my family is provided for in terms of food, shelter, and security (if that's possible.) and trying to keep everyone healthy.

Given the circumstances, I'm not even thinking about my retirement savings. I'm just trying to survive.

My wife and I have been saving in our emergency fund and stashing away any tax returns or bonuses and making monthly contributions for years.

Thanks to the Boglehead community, my family is in a slightly better situation than the average person. Thank you for all the wonderful information and guidance over the years.

The coming weeks and months, or longer could be very challenging.

Stay safe everyone.

I really wish you the best, continue to find ways to pay bills without selling stocks and just hang tight. We will get through this.


I've heard a few great lines recently.

1. Average stock performance does include great recessions. The ~8% performance we all love to imagine does include bad times.

2. Stock plummeting is partly due to crowd hysteria, the exact same ridiculousness as people buying up all the toilet paper. That same herd mentality is the cause for a lot of the drop (along with some justified reasons) so it seems worse than it really is. Eventually well get people back to work and the same economic drivers that made us strong will continue.

You are already saying ‘seems worse than it really is’, but if the stock market drops another 50% this 30% won’t seem worse than it really was.

I agree with the person you called a market timer, the situation with the virus will get worse, and I believe that will be reflected in the stock market. The first layoff in my family is already a fact (working for an airline company).

I won’t share my analysis on why I think it will get worse, but Sam Harris has a great podcast on this.

I won’t make any changes to my portfolio though.

(And yes this post is entirely based on my prediction and I could be dead wrong. Thats why I won’t change my portfolio.)

[Schlabba]

I know this from personal experience. I didn't ever waver during the financial crisis from 2007-2009, but it didn't feel good for very long. I started out feeling defiant and confident, and ended up grimly determined and waiting to see my losses turn back into gains. It took a long time.

This is why I don't quite understand the argument for only rebalancing out of stocks. The fastest way for your portfolio to move into the green is to buy more while it's low. The less you buy, the more you have to wait for the bottom to reach the previous peak, and then to catch up to inflation... By which time perhaps it will be time for the next bear?

Who makes this argument? I’ve never heard it. If anything seems mentally harder to sell high than buy low.

If you measure your safety in terms of ‘months of expenses stored in bonds’ you might only want to rebalance to increase safety and not sell your bonds when you think you might rely on them. It makes sense to me.

[mancich]

OP, approx how old are you? I'd hate to spoil your happiness, but I don't think this is anywhere near as scary as either 2008 or 2001. 2008 scared me the most, though I was still able to pinch my nose and rebalance a couple of times. You'll know it's bad when you (and everyone else) is/are scared to rebalance back into stocks.

Let me paint a scenario that would better convey the sense of despair that needs to happen. Please don't accuse me of fear-mongering -- I don't actually think the following fictional drivel is likely to happen, but imagine how you'd feel if it did:

The stock market continues wildly rising and falling for the next few months, but trends down 5% per week. 6 weeks from now, it becomes clear that there's not going to be a quick bouceback and the dow has dropped nearly another 1/3 to 17K but is still showing wild jumps up and down. More weeks go by and the decrease in economic activity starts to show up in massively bad earnings reports as company after company reports huge losses. The relatively high levels of corporate debt starts to look worrisome, and companies are under pressure to reduce opex to service debt, forcing them to layoff workers so as to conserve cash.

Meanwhile, Europe has stabilized and started to recover from the virus, but the US is on a bad overall trajectory. Perhaps the US bungled containment of the virus and the rest of the world is stable and is now quarantining the USA. Perhaps the dollar no longer looks as attractive as the world's reserve currency and there are fears about the US's ability and/or willingness to cover its obligations. US interest rates rise as money flees for safer holdings in Europe and asia, and this sparks further fears about companies ability to borrow. The fed prints more cash, but this time, the world doesn't want it and inflation rises. More companies go bankrupt, and the higher cost of capital makes it hard to service high debt loads that looked fine at 3% but is burdensome at 7%, especially when consumers have stopped buying. "Everyone" expects that the Dow will drop much further, maybe going under 10K.

Coincident with this, there are massive layoffs and firings as companies restructure and every week, another big name goes under. The virus interferes w/ domestic production and distribution, causing massive price increases and shortages of basic goods and even of food supplies. Inflation of consumer goods skyrockets, treasury rates skyrocket, and both stocks and bonds further crash. Many people are forced to declare bankruptcy, and food banks are under siege.

A few more months pass. You find yourself still unemployed, have burned through 1/2 of your emergency fund, and what's left is not going as far as you thought it would because prices at the store have skyrocketed. Your stocks have crashed, and your bonds have taken a haircut. What's left has lost purchasing power, and the thought of selling to replenish your emergency fund is starting to look very prudent. It's a very real possibility that stocks could go down an additional 50+% like they did during the great depression. No companies are hiring. Even though you're in the top 5% of talent, companies have already trimmed their fat, and lots of muscle down to bone. In order to hire you, they need to fire someone else, but they know that you'd take time to ramp up so they'll just stick with their hiring freeze, thank you very much.

To make matters worse, with the US on its heels, armed conflict breaks out somewhere sensitive to US interests, threatening to further destabilize the world. Will it escalate into a full-blown war? Worse, we start to learn that the coronavirus infections had a horrific secondary impact. Perhaps, like Zika, it's leaving a scar on our unborn, leaving us with long-lasting damage. Maybe, we also find that it mutates, meaning that another culling of our elderly is likely to happen the following winter.

Now, do you rebalance into stocks? Do you hold? Or do you sell to pull out some cash to keep yourself afloat longer, b/c if you wait, you'll probably have less in your brokerage account, and it's looking grim out there...

Ahem, perhaps that last bit about war was a bit over the top, but the point is, right now we've simply reset ourselves back to where we were before an amazingly large runup in the stock market. The last couple years were really good. Oh well. The fear and terror that something *truly bad* is about to happen -- well, we're not there yet, and I sure hope we won't get there. For now, I think it's too early to pat yourself on the back and declare victory.

Dang, dude.

The only thing you left out was "and your parents die, too."

I need to go watch a romantic comedy after that.

That's it. I'm going to 100% cash

[Rupert Dacat]

OP, approx how old are you? I'd hate to spoil your happiness, but I don't think this is anywhere near as scary as either 2008 or 2001. 2008 scared me the most, though I was still able to pinch my nose and rebalance a couple of times. You'll know it's bad when you (and everyone else) is/are scared to rebalance back into stocks.

Let me paint a scenario that would better convey the sense of despair that needs to happen. Please don't accuse me of fear-mongering -- I don't actually think the following fictional drivel is likely to happen, but imagine how you'd feel if it did:

The stock market continues wildly rising and falling for the next few months, but trends down 5% per week. 6 weeks from now, it becomes clear that there's not going to be a quick bouceback and the dow has dropped nearly another 1/3 to 17K but is still showing wild jumps up and down. More weeks go by and the decrease in economic activity starts to show up in massively bad earnings reports as company after company reports huge losses. The relatively high levels of corporate debt starts to look worrisome, and companies are under pressure to reduce opex to service debt, forcing them to layoff workers so as to conserve cash.

Meanwhile, Europe has stabilized and started to recover from the virus, but the US is on a bad overall trajectory. Perhaps the US bungled containment of the virus and the rest of the world is stable and is now quarantining the USA. Perhaps the dollar no longer looks as attractive as the world's reserve currency and there are fears about the US's ability and/or willingness to cover its obligations. US interest rates rise as money flees for safer holdings in Europe and asia, and this sparks further fears about companies ability to borrow. The fed prints more cash, but this time, the world doesn't want it and inflation rises. More companies go bankrupt, and the higher cost of capital makes it hard to service high debt loads that looked fine at 3% but is burdensome at 7%, especially when consumers have stopped buying. "Everyone" expects that the Dow will drop much further, maybe going under 10K.

Coincident with this, there are massive layoffs and firings as companies restructure and every week, another big name goes under. The virus interferes w/ domestic production and distribution, causing massive price increases and shortages of basic goods and even of food supplies. Inflation of consumer goods skyrockets, treasury rates skyrocket, and both stocks and bonds further crash. Many people are forced to declare bankruptcy, and food banks are under siege.

A few more months pass. You find yourself still unemployed, have burned through 1/2 of your emergency fund, and what's left is not going as far as you thought it would because prices at the store have skyrocketed. Your stocks have crashed, and your bonds have taken a haircut. What's left has lost purchasing power, and the thought of selling to replenish your emergency fund is starting to look very prudent. It's a very real possibility that stocks could go down an additional 50+% like they did during the great depression. No companies are hiring. Even though you're in the top 5% of talent, companies have already trimmed their fat, and lots of muscle down to bone. In order to hire you, they need to fire someone else, but they know that you'd take time to ramp up so they'll just stick with their hiring freeze, thank you very much.

To make matters worse, with the US on its heels, armed conflict breaks out somewhere sensitive to US interests, threatening to further destabilize the world. Will it escalate into a full-blown war? Worse, we start to learn that the coronavirus infections had a horrific secondary impact. Perhaps, like Zika, it's leaving a scar on our unborn, leaving us with long-lasting damage. Maybe, we also find that it mutates, meaning that another culling of our elderly is likely to happen the following winter.

Now, do you rebalance into stocks? Do you hold? Or do you sell to pull out some cash to keep yourself afloat longer, b/c if you wait, you'll probably have less in your brokerage account, and it's looking grim out there...

Ahem, perhaps that last bit about war was a bit over the top, but the point is, right now we've simply reset ourselves back to where we were before an amazingly large runup in the stock market. The last couple years were really good. Oh well. The fear and terror that something *truly bad* is about to happen -- well, we're not there yet, and I sure hope we won't get there. For now, I think it's too early to pat yourself on the back and declare victory.

Dang, dude.

The only thing you left out was "and your parents die, too."

I need to go watch a romantic comedy after that.

That's it. I'm going to 100% cash

Why not a good slug of TIPS?

[onourway]

Stay humble. This isn’t even close to being done with.

So you're a market timer? You know stocks will continue to go down?

Believing that this is not close to being done with is not in any way related to whether one wants to time the market or not. I too don’t believe this is close to being done. We haven’t reached anywhere near the peak in this country yet, and the government hasn’t really done anything other than make a speech. A lot of people are going to be out of work for the next 1-2 months - and this will hit small businesses and their workers the hardest as they likely have little to no emergency fund, no ability to work remotely in service and retail industries, little to no sick leave, etc. This will be the first wave. Larger businesses have more ability to absorb these costs in the short term, and more of their workers can do some work remotely, but schools are closing for several weeks to a month all over the country. Work in every industry will be impacted. As these larger companies get squeezed they too will need to make cuts which may result in layoffs.

All of this is to say that it’s an extremely complex, dynamic situation, and acknowledging that is prudent, but it doesn’t mean you need to take any action on that information.

[TheBogleWay]

Stay humble. This isn’t even close to being done with.

So you're a market timer? You know stocks will continue to go down?

Believing that this is not close to being done with is not in any way related to whether one wants to time the market or not. I too don’t believe this is close to being done. We haven’t reached anywhere near the peak in this country yet, and the government hasn’t really done anything other than make a speech. A lot of people are going to be out of work for the next 1-2 months - and this will hit small businesses and their workers the hardest as they likely have little to no emergency fund, no ability to work remotely in service and retail industries, little to no sick leave, etc. This will be the first wave. Larger businesses have more ability to absorb these costs in the short term, and more of their workers can do some work remotely, but schools are closing for several weeks to a month all over the country. Work in every industry will be impacted. As these larger companies get squeezed they too will need to make cuts which may result in layoffs.

All of this is to say that it’s an extremely complex, dynamic situation, and acknowledging that is prudent, but it doesn’t mean you need to take any action on that information.

This thread is about the stock market performance. A question for you. All of this info you mentioned, do you think it's unknown to most people and not yet accounted for in current stock prices? If no, are you saying you expect stock prices to continue to go down? The government has done significantly more than "just give a speech" but that's neither here nor there, and I'd ask you not to derail the thread with that talk.

[Nate79]

Wait until it gets really bad. Then let's see your opinion. This is nothing so far.

[harvestbook]

So if you're sure that we're not near the bottom, have you sold your stocks? When do you think you'll buy back in? Just curious.

I am sure we're not near the bottom. I'm not selling stocks. What does this have to do with anything?