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

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

Post by onourway »

TheBogleWay wrote: Sat Mar 14, 2020 6:29 am 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.
I think that information in this case is heavily influenced by current conditions on the ground in your particular location. The populace understands generally that this will have a significant impact, but how fully they comprehend the gravity of the situation is dependent on where they happen to be in the cycle. Things are changing significantly in our area literally hour by hour.

Ultimately though, as I stated, believing that things are likely to get worse before they get better has absolutely no bearing on whether one is a “market timer” or not. The two are not linked in any way. I don’t plan to make any changes as a result of this belief and I would suggest anyone who asks to do the same.
retiredjg
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Re: So.... is this really "it"? Is this what we needed to mentally prepare for?

Post by retiredjg »

TheBogleWay wrote: Fri Mar 13, 2020 10:26 pm
CoastalWinds wrote: Fri Mar 13, 2020 10:06 pm 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?
Having an opinion about the future is not market timing. Market timing is when you change your portfolio because you think you know the future.
thx1138
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Re: So.... is this really "it"? Is this what we needed to mentally prepare for?

Post by thx1138 »

This really isn’t a test market wise. More like a quiz and an open book one at that. As of this moment the market is only down to where it was about 13 months ago. We can look at other countries already over the infection rate hump to get some idea of the likely path forward though of course there are a lot of unknowns still. It is fairly clear which industries are most likely to cause job losses as far as planning for lost income. Everyone knows why we are here and what are the most probable paths for the future. That said we still don’t know exactly where the market itself will be in one day, one week, one month or even one year. But that’s true all the time.

In comparison for past market crises that I’d consider actual “tests” the market drops by 50% or more and people really don’t even understand why at the time (that usually comes quite a while after) nor do they have any idea what the path forward is. Not having a clue why you are in a situation or having any reference for what comes next makes it much harder psychologically. That was a significant component of what 2008 was like for many people. That’s not really the same in this situation as far as the market goes. I think that is more of a component this time for many folks’ feelings of health and safety - especially those in a more vulnerable population or who care for someone who is. But as to one’s portfolio this really isn’t much of a test in my opinion. At least not yet.
dknightd
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Re: So.... is this really "it"? Is this what we needed to mentally prepare for?

Post by dknightd »

retiredjg wrote: Sat Mar 14, 2020 6:49 am
TheBogleWay wrote: Fri Mar 13, 2020 10:26 pm
CoastalWinds wrote: Fri Mar 13, 2020 10:06 pm 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?
Having an opinion about the future is not market timing. Market timing is when you change your portfolio because you think you know the future.
agree with all the above.
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Re: So.... is this really "it"? Is this what we needed to mentally prepare for?

Post by TomatoTomahto »

retiredjg wrote: Sat Mar 14, 2020 6:49 am
TheBogleWay wrote: Fri Mar 13, 2020 10:26 pm
CoastalWinds wrote: 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?
Having an opinion about the future is not market timing. Market timing is when you change your portfolio because you think you know the future.
Ding ding ding winner winner chicken dinner!

I haven’t changed anything, other than minimal TLH, and hope for the best, but the goat rodeo handling of the crisis makes me expect much more disruption to come.
Okay, I get it; I won't be political or controversial. The Earth is flat.
theplayer11
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Re: So.... is this really "it"? Is this what we needed to mentally prepare for?

Post by theplayer11 »

come back when you or your spouse get laid off and the market drops 50% 8-)
DoTheMath
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Re: So.... is this really "it"? Is this what we needed to mentally prepare for?

Post by DoTheMath »

retiredjg wrote: Sat Mar 14, 2020 6:49 am
TheBogleWay wrote: Fri Mar 13, 2020 10:26 pm
CoastalWinds wrote: Fri Mar 13, 2020 10:06 pm 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?
Having an opinion about the future is not market timing. Market timing is when you change your portfolio because you think you know the future.
+1

As to the OP's question, no this isn't "it". This is nowhere near 2008 (yet). Go back and read some of the realtime threads during 2008-2009. The stock market was down ~50%, people were being laid off left and right, people who kept their jobs were having their salaries cut, and a second great depression seemed like a genuine possibility. As KlangFool suggested, a lot of your self-confidence is based on the fact you feel secure in your job. If your industry starts seeing big layoffs, you can trust you'll quickly feel very different.

So far, it seems to me many people are optimistic that in the coming weeks and months it will become clear we're getting a handle on Covid-19 and that things will get back to normal relatively quickly (and we'll have a V-shaped market recovery). But if in the coming weeks and months it instead becomes clear that the pessimists were right and we've lost control of the situation, then it will start to feel like the worst days of 2008-2009 when it seemed a real possibility the Feds might not be able to pull us out of the nosedive.
“I am losing precious days. I am degenerating into a machine for making money. I am learning nothing in this trivial world of men. I must break away and get out into the mountains...” -- John Muir
RJC
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Re: So.... is this really "it"? Is this what we needed to mentally prepare for?

Post by RJC »

My spouse works for a Fortune 500 company and they are starting cuts - reduced hours, reduced budget, layoffs. This is just the beginning folks...
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tvubpwcisla
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Re: So.... is this really "it"? Is this what we needed to mentally prepare for?

Post by tvubpwcisla »

Your doing great, that's awesome! You must have low monthly expenses?

I always try to stress to folks that it doesn't matter how much money you have it is how much money you have that is going out on a monthly basis. If you have low monthly expenses then short or even longer term panic selling doesn't bother you because you don't need the money and can let it safely rest in your funds. :sharebeer
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Re: So.... is this really "it"? Is this what we needed to mentally prepare for?

Post by vested1 »

TheBogleWay wrote: Fri Mar 13, 2020 10:26 pm
CoastalWinds wrote: Fri Mar 13, 2020 10:06 pm 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?
I think you missed this part, which is recognizable by the contrary responses you've received as compared to those who didn't respond to CoastalWinds. This reveals that most agree with the admonition to stay humble or to be humble when thinking about throwing stones in a glass house.

To the OP's original question, IMHO, this one is different, but probably not the "it". I say probably because most believe that the virus is seasonal, and most believe that a vaccine will be developed within about 1.5 years. I admit to being in this camp but I don't know and neither do you. I believe this will pass because doing so allows me to sleep at night.

With that being said, each individual has to weigh their own situation and apply what they think is the most reasonable path forward to accomplish their goals. My wife and I have been retired for over 4 years. Our goal has been reached, so our determination may be different than someone for whom retirement is on the distant horizon. We have no mortgage, our kids are grown and on their own. Someone who is single, retired, and with a mortgage may have different goals.

My advice, for what it's worth is to not be swayed by strict BH philosophies, or any other one for that matter. Heresy is allowed. No one knows what will happen in the near or far future, making it prudent to keep an open mind. The great depression wasn't caused by polio, although it contributed to it. The crash in 1987 and the "Great" recession in 2008 weren't caused by a global pandemic, but by an overheated economy and greed.

The encouraging aspect of this discussion is that the OP and others are thinking about it, which is the last defense of the ignorant. We are all ignorant, but at least we are thinking about it, which is more than can be said of those who are content to remain ignorant.

Edited for spelling.
Last edited by vested1 on Sat Mar 14, 2020 9:17 am, edited 2 times in total.
nigel_ht
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Re: So.... is this really "it"? Is this what we needed to mentally prepare for?

Post by nigel_ht »

TheBogleWay wrote: Fri Mar 13, 2020 10:26 pm
CoastalWinds wrote: Fri Mar 13, 2020 10:06 pm 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?
This is no more market timing than your assumption you passed any test. This isn’t 2008 much less Nikkei or 1929. 20% down is a normal run of the mill bear...just a bit quicker than usual.

Enjoy your boasting and hope that a year from now you can still pat yourself on the back.

This ain’t nuthin yet. It can and has gotten worse before. Or it can better...and if it does then more folks will think they “passed a test” by going through what will have been a mild bear.
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Re: So.... is this really "it"? Is this what we needed to mentally prepare for?

Post by nigel_ht »

harvestbook wrote: Sat Mar 14, 2020 6:37 am
TheBogleWay wrote: Fri Mar 13, 2020 10:31 pm

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?
Because calling someone a “market timer” is the ultimate in school boy insults around here.
FoolMeOnce
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Re: So.... is this really "it"? Is this what we needed to mentally prepare for?

Post by FoolMeOnce »

DrPayItBack wrote: Sat Mar 14, 2020 4:00 am
oken wrote: Sat Mar 14, 2020 3:47 am
careytilden wrote: Sat Mar 14, 2020 3:28 am
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.
Some one-way rebalancers describe their reasons here: viewtopic.php?f=10&t=307240

Searching the site for one-way rebalancing turns up some older threads, too (and different terms describing it you can then search for).
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Re: So.... is this really "it"? Is this what we needed to mentally prepare for?

Post by GoldenFinch »

My state closed the k-12 schools. My college kids came home. Many restaurants in my area have announced closing for up to eight weeks. News reports our downtown was empty last night. Clubs/music venues which had sold hundreds and in some cases over 1,000 tickets were cancelled. Sports cancelled. Gyms closed, etc. My husband had to cancel his 10 day business trip to a high impact area in Canada because he was worried about being quarantined on either side of the border. His plane, which had been sold out, now has mostly empty seats because apparently he is not alone in canceling his trip.

I can see how the economy is really going to take a hit. I’m just really worried about all of the vulnerable people. :(
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Re: So.... is this really "it"? Is this what we needed to mentally prepare for?

Post by dknightd »

TheBogleWay wrote: Sat Mar 14, 2020 3:12 am I'm 20+ years from retirement age and high income/1+m nw/job stability
If you have high income, and high job stability, and high net worth, it is easy to be complacent.
Think about what might threaten your high income stable job. What happens if for some reason you can no longer do your job. Or if for some reason your job is no longer highly compensated. What happens if the people around you suffer from a similar fate? Hope for the best and plan for the worse is not unreasonable.
If you value a bird in the hand, pay off the loan. If you are willing to risk getting two birds (or none) from the market, invest the funds.
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fredflinstone
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Re: So.... is this really "it"? Is this what we needed to mentally prepare for?

Post by fredflinstone »

We probably have a long way to go. See how you feel, OP, when stocks are down 50 or 60 percent.
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Re: So.... is this really "it"? Is this what we needed to mentally prepare for?

Post by nisiprius »

TheBogleWay wrote: Fri Mar 13, 2020 10:01 pm...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.... Is anyone else out there proud of themselves and how they're handling this drop?
Watch out! The first thing I notice is that you have let yourself decide that it's over. Otherwise, it would never occur to you that this is a suitable time to assess your own reactions.

From a combination of my own experience of 2008-2009 and other things I've read, here's what I think you are missing.

1) Due to the fractal behavior of the stock market, you have movements within movements within movements. Dips within rallies within plummets. The broad outline of what happened doesn't become visible until after it's all over. While it's happening, you are constantly being taken by surprise. Even the difference between how things look if you're watching intraday and how things look if you only look at the closes is huge, as was shown by yesterday. A 20% drop could be the end or just the beginning. A 10% rise could be a recovery or a dead cat bounce. During a long decline you will be seeing many such events; at each time people will argue about which it is; at each time it could go either way.

2) I don't know if this is a staple of basic training, but I have read about "the sickener." This is a deliberate training strategy in which soldiers are told that they are going on a march of some certain length, an exhausting stretch-you-to-the-limits distance, and allowed to mentally prepare themselves for a difficult but known challenge. Only as the exhausted soldiers reach the end is it revealed that it is not the end and they have twenty more miles to go.

If you read accounts of e.g. the 1929 crash, repeated disappointment occurs over and over again. Long-forgotten daily and weekly movements seemed huge at the time.
Early in September the stock market broke... A bad break, to be sure, but there had been other bad breaks, and the speculators who escaped unscathed proceeded to take advantage of the lessons they had learned in June and December of 1928 and March and May of 1929: when there was a break it was a good time to buy. In the face of all this tremendous liquidation, brokers' loans as compiled by the Federal Reserve Bank of New York mounted to a new high record on October 2nd, reaching $6,804,000,000--a sure sign that margin buyers were not deserting the market but coming into it in numbers at least undiminished... those who picked up Anaconda at 109 3/4 or American Telephone at 281 would count themselves wise investors. And sure enough, prices once more began to climb... Something was wrong, however. The decline began once more.
Hoover famously met in 1930 with a group urging a public works program and said "Gentlemen, you are sixty days too late. The depression is over." And based on conditions at the moment Hoover said it, it was not a crazy thing to say.

3) In 2008-2009, and even more so now, the extreme behavior of the stock market was taking place against a backdrop of extreme external events. The hair-short-of-20% drop in 2011 was pretty much a stock market event. The hair-short-of-20% drop in late 2018 was pretty much a stock market event. Both could be seen as the "normal" occasional irrational behavior of crowds. 2008-2009 was accompanied by the successive collapse, month after month, of giant household name "always there" financial institutions--the most dramatic being Lehman Brothers, 1850-2008, RIP, aged 158. But the point is that it wasn't one thing. Just as you'd absorbed the failure of IndyMac, Fannie Mae and Freddie Mac collapsed. Just when the shock had faded, there were giant headlines about AIG (particularly rattling since we have an annuity from an AIG company). Then Lehman Brothers. Then the original, oldest money market fund "breaks the buck." The "sickener" effect was in full operation.

4) There's a qualitative difference. It's not like 20% drop, 21% drop, 22% drop. It's like the difference between "bumpy ride, look at those wings flex" and "there's a limit, the wings are close to breaking off." It's the difference between your car rocking slightly as a semi whooshes by at high speed in the opposite lane, and the semi being a little over the center line.

Right now, as I write this, I, too, can say "I almost couldn't care less, I have zero fear about this." That is partly because I'm in a good situation: retired, secure income from Social Security and annuities, and a very conservative asset allocation. Another reason is that I am more fearful about the possibility that Covid-19 will not disappear like a miracle than I am about the stock market.

I don't know if the drop will stop any time soon. Whether it does or not, it could be followed by another drop. Or not. What I'm much surer of is that we're in the middle of a volatility cluster and that isn't going to stop.

Don't judge how you are handling this while you're in the middle of it. We are all almost certainly going to experience several false dawns, several moments of thinking the worst is over and being proved wrong, several "sickeners," before it is all done and gets a name.
Last edited by nisiprius on Sat Mar 14, 2020 1:47 pm, edited 4 times in total.
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Shackleton
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Re: So.... is this really "it"? Is this what we needed to mentally prepare for?

Post by Shackleton »

Nisiprius- I always love your posts. This is another great one. After this is all over, if you are ever in my neighborhood I want to buy you a drink! But for now, here’s a COVID-19-health-safety-precaution-approved virtual beer :sharebeer
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Re: So.... is this really "it"? Is this what we needed to mentally prepare for?

Post by nisiprius »

Shackleton wrote: Sat Mar 14, 2020 8:53 am Nisiprius- I always love your posts. This is another great one. After this is all over, if you are ever in my neighborhood I want to buy you a drink! But for now, here’s a COVID-19-health-safety-precaution-approved virtual beer :sharebeer
Thanks, stay safe there in the Arctic :oops: Antarctic and keep washing your hands.
Last edited by nisiprius on Sat Mar 14, 2020 1:43 pm, edited 1 time in total.
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bling
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Re: So.... is this really "it"? Is this what we needed to mentally prepare for?

Post by bling »

humans really do have short memories... i don't recall any drop happening the 2nd half of 2018, but i'm glued to the screen every day right now. i think i'm handling it OK so far, as i've stuck to my guns and continued to plow any extra money into the market as soon as it hits my bank account.

i've also never made so many trades in such a short period of time. when every day is -10% there are a ton of TLH opportunities. a nice side effect is that once you sell you don't see it in your holdings anymore and thus you don't see the total % loss on the main holdings screen. out of sight, out of mind.
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Re: So.... is this really "it"? Is this what we needed to mentally prepare for?

Post by Shallowpockets »

A frequent refrain here is, “I have 20-30 years”. So I don’t care.

Well, you just lost two of those years. Market is more or less back to start of 2018. You now have 18-28 years. Oh, wait, 2018 was a down year too.So subtract another year.
Historical returns have to average and that average includes those lost or negative years.

The only mental prep you can actually account for is what else can you do?

Again, with our losses, it is not how much you have so much as how much you need. If you had 20x expenses and now have 15x, you can perhaps foresee that you can outlast.
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Re: So.... is this really "it"? Is this what we needed to mentally prepare for?

Post by Pinotage »

nisiprius wrote: Sat Mar 14, 2020 8:40 am From a combination of my own experience of 2008-2009 and other things I've read, here's what I think you are missing.
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Thoughtful, rational, and eloquent. Outstanding post.

Thank you Nisi - your level headed contributions are some of the best the forum has to offer.
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Re: So.... is this really "it"? Is this what we needed to mentally prepare for?

Post by HomerJ »

Shallowpockets wrote: Sat Mar 14, 2020 10:04 am A frequent refrain here is, “I have 20-30 years”. So I don’t care.

Well, you just lost two of those years. Market is more or less back to start of 2018. You now have 18-28 years. Oh, wait, 2018 was a down year too.So subtract another year.
That's not really how it works.
Historical returns have to average and that average includes those lost or negative years.
Yep, but so far the 9%-10% nominal long-term returns INCLUDE the 50% crashes. So, in the past, one would still see 9%-10% over 20-30 years. You don't "lose" 2-3 years because of a crash.
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Re: So.... is this really "it"? Is this what we needed to mentally prepare for?

Post by RadAudit »

I doubt if this is really "it." IIRC, in 2008 - 2009, the decline went on for months. Maybe close to a year. The news was consistently negative day after day. The drop in stock prices was ~50%. This go round we're about 45 days in and only about 20% down in stock prices - ~10% down on a 50/50 portfolio.

Come back in a year or so and we'll see how things are working out then.
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Re: So.... is this really "it"? Is this what we needed to mentally prepare for?

Post by abuss368 »

harvestbook wrote: Sat Mar 14, 2020 6:37 am
TheBogleWay wrote: Fri Mar 13, 2020 10:31 pm

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?
No one knows what bottom, if any, we may or may not be near. No one thought the bull market would go 11 years either! We could go lower or slingshot form here.
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Re: So.... is this really "it"? Is this what we needed to mentally prepare for?

Post by Ollie123 »

I'm also feeling remarkably calm about all this. Anxious about the general situation of course,the safety of my friends and family though fortunately most are young and in (reasonably) good health. Stressed about the giant mess this is creating at work, but not the economic impact. Admittedly we are still young-ish and fairly new to investing so our dollar loss is not that large in absolute amounts compared to most on this board, but its quite meaningful to us. We're over 90% equities so this hit us hard.

I think folks discussing job loss hit the nail on the head. Losing 30% of your investments <feels> very different. If I got laid off tomorrow I would be far more worried than I am right now. I hadn't thought about this much until now, but this experience has helped me be far more grateful for the careers my wife and I pursued (clinical psychology, health insurance analyst). Our pay is solid, though nowhere near what some here earn. However, both are remarkably stable even in bad times. Psychology actually runs somewhat counter to market cycle - we actually tend to boom during recessions. We have also managed to keep expenses low so even if one of us <did> get laid off we could probably subsist virtually indefinitely off a single income, though it would certainly impact retirement savings and require us to cut back on a lot of things.

This has certainly been an...interesting...week. Hope you all stay safe and calm amidst this craziness.
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Re: So.... is this really "it"? Is this what we needed to mentally prepare for?

Post by CarpeDiem22 »

OP, the reason you don't seem affected is because there was an immediate recovery after 2008 downturn and we assume the same for the future. However, we need to remember that it took 25 years for market to reach 1929 peak again, and it can very well happen again.
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Re: So.... is this really "it"? Is this what we needed to mentally prepare for?

Post by jdilla1107 »

Shallowpockets wrote: Sat Mar 14, 2020 10:04 am A frequent refrain here is, “I have 20-30 years”. So I don’t care.

Well, you just lost two of those years. Market is more or less back to start of 2018. You now have 18-28 years. Oh, wait, 2018 was a down year too.So subtract another year.
This isn't how it works at all. Go look at an annual returns chart for the sp500. The long term averages already include big draw downs.

I hold stocks so that I have a legal ownership right over earnings in the best companies in the world.
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Re: So.... is this really "it"? Is this what we needed to mentally prepare for?

Post by coachd50 »

TheBogleWay wrote: Fri Mar 13, 2020 11:05 pm

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?


.
What an odd thing to say after we just witnessed a whole lot of things (China and Italy's actions) "not being factored into the market"
Keep in mind (as others have mentioned) that you believe something will happen, and placing a bet on it are two different things. I was pretty sure the Kansas City Chiefs were going to win the Superbowl. I did not place a wager on it.

The concepts of low cost index fund investing combined with long-term buy and hold strategy with rebalancing and shifting asset allocation as the time until retirement date decreases has shown to have a positive expectation of providing 6%+ returns. So many people do that and believe they will have "enough" It isn't necessarily a strategy to end up filthy rich.
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Re: So.... is this really "it"? Is this what we needed to mentally prepare for?

Post by Kenkat »

TheBogleWay wrote: Sat Mar 14, 2020 6:29 am
onourway wrote: Sat Mar 14, 2020 5:49 am
TheBogleWay wrote: Fri Mar 13, 2020 10:26 pm
CoastalWinds wrote: Fri Mar 13, 2020 10:06 pm 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.
I think things could get worse and they may or may not be priced into market. I have stuck to my plan and this doesn’t make me a market timer, I just am not willing to say I’m feeling good yet. I haven’t been through the tunnel yet.

I’ve been through 2000-2002 and post 9/11; I’ve been through 2008-2009. All the way through. I don’t know if you have been all the way through something like this. You’ve passed the first test and that’s a good thing. You’ve still got to make it through the rest of the semester before you get your final grade.
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gilgamesh
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Re: So.... is this really "it"? Is this what we needed to mentally prepare for?

Post by gilgamesh »

The general rule is to visualize your stock portfolio to go down by 50% - so we are not there...we had almost a 30% drop, I believe.

Like you, it has been very easy for me, in fact I am overbalancing from 20% bonds (currently at 15%...came home late Thursday, so could not go to 10%...this is not boglehead, it is market timing of the sort approved by Bill Bernstein etc)...

I had a significant loss in 2008 which didn’t faze me at all...I was barely getting into the market prior to .com crash and thus was insignificant - but baptization by fire.

I am prepared for the stock market to go down further and take up to 5 years to recover ...this is just basic bogelhead 101

I am self employed and will not lose my job, but revenue could go down - so that’s something I am hoping my personal emergency funds of about 6 months will suffice...with partial revenue I could extend that a lot more

If house prices go down and stay low for over a year, it could cause a permanent loss for me - but that could not have been prevented.
keepingitsimple
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Re: So.... is this really "it"? Is this what we needed to mentally prepare for?

Post by keepingitsimple »

TheBogleWay wrote: Sat Mar 14, 2020 12:29 am
oken wrote: Fri Mar 13, 2020 11:39 pm
TheBogleWay wrote: Fri Mar 13, 2020 11:05 pm
CoastalWinds wrote: Fri Mar 13, 2020 10:45 pm
TheBogleWay wrote: Fri Mar 13, 2020 10:31 pm

...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.
OP,

While I agree in general with the sentiment that all known information is accounted for in stock market valuations, I disagree with the finality of the statement. I feel stock market valuations don't necessarily price in the impact of all possibilities, rather I believe it is pricing in the probability of certain possibilities materializing. So, for example, the stock market is pricing in the probability that COVID-19 will have a certain level of impact on businesses. As time progresses, we may see the probability of that level of impact increasing or decreasing and thus the market continuing to fluctuating in response. Stock market corrections and crashes occur when unforeseen events happen, events that are foreseen have an unforeseen ripple effect or when the probability of a certain event happening becomes more or less likely than anticipated.
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Re: So.... is this really "it"? Is this what we needed to mentally prepare for?

Post by lazydavid »

As another relatively new investor, I'm trying to think of this as a good first test. We read and read about the possibilities, but you don't know what your reaction will be to scenario X until it actually occurs. Things can obviously get worse from here, so one doesn't yet understand the full range of one's reactions, but a little bit is now known.

For myself, I take it as a promising sign that I'm able to be dispassionate about watching a year's combined gross salary for my wife and I vanish in less than two weeks. Does that mean that I'll still be able to remain stoic if that loss expands to 2-3 years' salary? I don't know, because it hasn't happened yet. But the early results suggest that's at least possible, and I take a little bit of solace in that.
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firebirdparts
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Re: So.... is this really "it"? Is this what we needed to mentally prepare for?

Post by firebirdparts »

If you don't lose your job, really, nothing is all that scary. In terms of panic level, it's obviously pretty high when you are hoarding toilet paper, but there haven't been any economic effects at all yet. This is really the pre-panic.

We'll see. I expect to have a real recession, in which many would lose jobs, but you know, that and $5 will buy you a cup of coffee.
A fool and your money are soon partners
nunzabar
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Re: So.... is this really "it"? Is this what we needed to mentally prepare for?

Post by nunzabar »

Nisiprius,

You post caused me to register after lurking for over a year. I just wanted offer you a sincere Thank You. I've gleaned so much wisdom from this forum, and your posts in particular. It's always nice to come here, slow down a bit, and read some thoughtful content.

@All: You've built a wonderful community here. I'm sure you've given countless other lurkers like me the tools to weather this storm.
Cyanide123
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Re: So.... is this really "it"? Is this what we needed to mentally prepare for?

Post by Cyanide123 »

TheBogleWay wrote: Fri Mar 13, 2020 10:26 pm
CoastalWinds wrote: Fri Mar 13, 2020 10:06 pm 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?
I think they meant that this is truly the beginning of a health crisis that we are not ready for.

At baseline, even before covid, a lot of our hospitals are operating near their limit. I'm an emergency room physician, i work in a community hospital where a lot of sick critical patients end up being transferred. Even before this, there will be plenty of days where my transfer patients will wait several hours, up to a day to get a bed at a bigger hospital. Massive centres like the Cleveland clinic, can sometimes be a 48 hour wait till you get an inpatient bed anyone for transfer. This is baseline.

Now throw in corona virus. The 2000 cases that are reported is not true. The numbers are likely thousands more. Why? If you look at the protocol the CDC has sent out, it's really damn hard to meet those testing guidelines. These strict guidelines are there because they don't have the testing capability.

The first part of the algorithm is "do they have a fever and cough/shortness of breath", the next part is if they are healthcare workers, been directly exposed to somebody with known covid or traveled to an area that is endemic. So, if you haven't traveled to San Fransisco, Washington State, new York, China or a few other places. You will not qualify per the cdc guidelines for testing. Then you can't have any other virus, if you're positive for let's say rhino virus, they won't test you again. They again ignore the fact that you simultaneously can have two infections. As a physician, it's no longer as easy as just putting the test i want in a computer, in fact, i call the local health department, and a person who isn't a physician basically decides if they meet criteria. Often times they won't. This will change as more and more hospital systems get their own testing and we aren't reliant on cdc for testing. But a lot of community hospitals are still dependent on the cdc. And the cdc will usually just say no.

Every shift, i see roughly 4-6 people with "flu-like" symptoms. A couple of them are positive for the flu. The rest, i can't test due to the algorithm, and aren't sick enough to admit, and just go home without an answer.

So there are thousands of people that are going around carrying the virus as our medical system doesn't have ability to diagnose everyone. We are failing to diagnose. South Korea is killing it when it comes to testing people. A lot of healthy people are just going around spreading the disease, because they never got diagnosed because of lack of testing. The disease won't affect them, but when they start passing the disease to the elderly, the immunocompromised, the folks with copd, heart disease, that's when it's an issue. And trust me, as a population we are extremely unhealthy. Everyday i see people who are on 15-20 daily medications.

In the next 2-3 weeks, our testing capabilities will ramp up. And soon we will really the true impact. I wouldn't be surprised if there are currently 20-40k cases, out of which only 2000 have been diagnosed. If 1 percent of the US population gets this, so 3.5 mil people, we're looking at 60,000 deaths at a 2 percent mortality rate, 700k admissions at 20 percent, and 175k ICU admissions at 5 percent. We don't have those hospital beds, we hardly had beds 3 months ago.

And don't even get me started on the lack of protective equipment. I'm expected to re-use the one N-95 mask i have -_- that's not how personal protective equipment works. It's supposed to be disposable. we don't really have that many N 95 masks. It's ridiculous. Every ER doctor and nurse knows they will get infected. It's only a matter of when. We will be super spreaders of the disease to many patients, until we become symptomatic and get diagnosed and get quarantined.
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Re: So.... is this really "it"? Is this what we needed to mentally prepare for?

Post by manatee2005 »

TheBogleWay wrote: Fri Mar 13, 2020 10:01 pm 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?
No, this is not really it. This is just the first 3 winnings. We still have mass layoffs to work through from the travel industry. Then we have all the bad earnings calls next quarter where they’ll lower guidance. So no, this is not it, it’s just the beginning.

However, at the same time, I don’t trust myself to know when is the bottom and that I won’t be on the sidelines when it goes back up. So for now I’m staying in. It took 5 years to get back to previous highs after the 2008 crash, so it will probably be the same now. Since I won’t retire for 15 years, I’m ok with it.

One thing I’m glad I won’t have to hear anymore is about the 12 year bull market and how it’s due for a drop anytime soon.
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Re: So.... is this really "it"? Is this what we needed to mentally prepare for?

Post by jpmorganfunds »

CoastalWinds wrote: Fri Mar 13, 2020 10:06 pm
Buckle up.

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

Post by gilgamesh »

gilgamesh wrote: Sat Mar 14, 2020 10:57 am The general rule is to visualize your stock portfolio to go down by 50% - so we are not there...we had almost a 30% drop, I believe.

Like you, it has been very easy for me, in fact I am overbalancing from 20% bonds (currently at 15%...came home late Thursday, so could not go to 10%...this is not boglehead, it is market timing of the sort approved by Bill Bernstein etc)...

I had a significant loss in 2008 which didn’t faze me at all...I was barely getting into the market prior to .com crash and thus was insignificant - but baptization by fire.

I am prepared for the stock market to go down further and take up to 5 years to recover ...this is just basic bogelhead 101

I am self employed and will not lose my job, but revenue could go down - so that’s something I am hoping my personal emergency funds of about 6 months will suffice...with partial revenue I could extend that a lot more

If house prices go down and stay low for over a year, it could cause a permanent loss for me - but that could not have been prevented.
In a few hours things have changed dramatically...my self-employed guaranteed job just might be requested to shut it’s doors to direct all resources to go to major hospitals.... But my AA is still fine, just wishing I had even a larger than 6 month expense...nothing is solid yet, but from what the governor just said it’s likely my income will be close to zero until things clear up....glad I have emergency funds.

I am NOT going to elaborate on details - just wanted to point out things can change rapidly.

P.s: I have at least 3 months of business overhead in cash on top of my personal 6 months expense.
derringer
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Re: So.... is this really "it"? Is this what we needed to mentally prepare for?

Post by derringer »

No, this isn’t even close to ‘it’. What are we 20% down? Maybe you looked at your portfolio when we were down 30%? We were up almost that much last year! This still feels like house money, and while you might not realize it intellectually, the amount you have left is still substantial, right? That is undoubtedly influencing your opinion.

I can’t tell what age you are but if your asking this, I assume you didn’t deal with 2008. I did, and I bought a lot in the last few days and weeks of the drop, because I thought I could handle it. I essentially went to 100/0 at one point, and then things dropped further and further. I watched my total balance dropping well below 100k, which for the size portfolio I had just weeks earlier was a massive 50+% drop. And it just kept dropping. There was real fear that it would never come back and that, at a relatively young age, I may have permanently messed up my future ability to retire and squandered a lot of money that was difficult for me to save with a young family.

To replicate the feeling of 2008, consider losing 30% more from here. Actually do the math, calculate the number and look at the balance compared to a month ago. Then block out your optimism (even if it is warranted,) and consider a scenario where you really aren’t sure if the market will stop going down from there and you even believe it’s more likely to down further than up.

We aren’t even close to that yet. I am hoping we don’t go there, but admit the possibility exists.
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Re: So.... is this really "it"? Is this what we needed to mentally prepare for?

Post by Ron Ronnerson »

It is not "it" until you lose your job and aren't able to find another fairly quickly. The market is down somewhat over a few days. Stock markets are volatile and fluctuation like this happens from time to time. Also, a significant percentage of the decline was erased yesterday. In recent years, 2008-2009 was tough. It remains to be seen what will happen this time but, so far, it's not really anywhere close to the same magnitude as that. Hopefully, we will not have a severe recession. People's lives are devastated when that happens. The stock market tends to eventually recover but the same cannot be said of people's lives.
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Re: So.... is this really "it"? Is this what we needed to mentally prepare for?

Post by AlmstRtrd »

gilgamesh wrote: Sat Mar 14, 2020 4:46 pm
In a few hours things have changed dramatically...my self-employed guaranteed job just might be requested to shut it’s doors to direct all resources to go to major hospitals.... But my AA is still fine, just wishing I had even a larger than 6 month expense...nothing is solid yet, but from what the governor just said it’s likely my income will be close to zero until things clear up....glad I have emergency funds.

I am NOT going to elaborate on details - just wanted to point out things can change rapidly.
Wife and I are both self employed and income went to zero starting this past Wednesday. We do have emergency funds as well but you are indeed correct that things can change in a matter of hours. I wish you the best of luck!
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gilgamesh
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Re: So.... is this really "it"? Is this what we needed to mentally prepare for?

Post by gilgamesh »

AlmstRtrd wrote: Sat Mar 14, 2020 5:03 pm
gilgamesh wrote: Sat Mar 14, 2020 4:46 pm
In a few hours things have changed dramatically...my self-employed guaranteed job just might be requested to shut it’s doors to direct all resources to go to major hospitals.... But my AA is still fine, just wishing I had even a larger than 6 month expense...nothing is solid yet, but from what the governor just said it’s likely my income will be close to zero until things clear up....glad I have emergency funds.

I am NOT going to elaborate on details - just wanted to point out things can change rapidly.
Wife and I are both self employed and income went to zero starting this past Wednesday. We do have emergency funds as well but you are indeed correct that things can change in a matter of hours. I wish you the best of luck!
Thank you and wish you the same...there’s a reason why Bogleheads preach what they preach with emergency funds etc.
quantAndHold
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Re: So.... is this really "it"? Is this what we needed to mentally prepare for?

Post by quantAndHold »

TheBogleWay wrote: Fri Mar 13, 2020 10:26 pm
CoastalWinds wrote: Fri Mar 13, 2020 10:06 pm 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?
You know they won’t?

Whatever this is, it’s just getting started. It’s nowhere near over. A few weeks of volatility and a 20% drop is normal market behavior. The reason for the volatility is not normal, and none of us has a clue where we’re going from here, except that more volatility is almost certain.
Yes, I’m really that pedantic.
anon3838
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Re: So.... is this really "it"? Is this what we needed to mentally prepare for?

Post by anon3838 »

TheBogleWay wrote: Fri Mar 13, 2020 10:01 pm 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’ve lost about the same amount as you (on paper), and I’m not concerned about my own situation either.

For you, where you are in life, it sounds like this probably isn’t “it” (as you say).

It’ll be “it” for you, when you’re scared to show your wife the balance, and instead of screenshots, you’re taking a few shots from a bottle.

Imagine seeing this month after month for several years in a row, and you’ve been retired for 5-8 years or more. And there’s very little optimism to be found anywhere...not online, not in the news, and there’s no hope in sight for when things will start to turn around. You have friends who’ve lost their jobs, and homes to foreclosure, moved in with family members because they have no way to support themselves, and no hope of employment anytime soon.

...and then you must continue to drawdown from what’s left to support yourself and your wife. Again, not knowing when you’ll see “an up day” in the market, and you’re not capable of getting even a small part time job to slow the bleeding, because you’re at that age where most employers don’t want to hire you. Many of us here saw people around us dealing with these realities in 2008-09.

You won’t need to ask the question when the time comes. You’ll already know.

This current situation can, however, help you be comfortable with your AA.
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Nate79
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Re: So.... is this really "it"? Is this what we needed to mentally prepare for?

Post by Nate79 »

Pat yourself on the back. You made it thru a normal small drop.
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Re: So.... is this really "it"? Is this what we needed to mentally prepare for?

Post by MotoTrojan »

jpmorganfunds wrote: Sat Mar 14, 2020 3:50 pm
CoastalWinds wrote: Fri Mar 13, 2020 10:06 pm
Buckle up.

Image
Two linear scales that don’t start at 0; this is one of the most misleading comparisons I’ve ever seen.
acegolfer
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Re: So.... is this really "it"? Is this what we needed to mentally prepare for?

Post by acegolfer »

TheBogleWay wrote: Fri Mar 13, 2020 10:01 pm Is anyone else out there proud of themselves and how they're handling this drop?
I read so many negative responses to your post. IMO, they are nitpicking. You are doing better than 99% of the population.
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Re: So.... is this really "it"? Is this what we needed to mentally prepare for?

Post by SouthernDude »

MotoTrojan wrote: Sat Mar 14, 2020 5:58 pm
jpmorganfunds wrote: Sat Mar 14, 2020 3:50 pm
CoastalWinds wrote: Fri Mar 13, 2020 10:06 pm
Buckle up.

Image
Two linear scales that don’t start at 0; this is one of the most misleading comparisons I’ve ever seen.
Yep, I was about to say the same. Not the same comparison. I like to compare in percentages not dollar values.
Horsefly
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Re: So.... is this really "it"? Is this what we needed to mentally prepare for?

Post by Horsefly »

Seems like the OP asked "was this all?! Seems like nothin!"

Several people have pointed that that this particular event is very unlikely to be over yet, and that the OP should continue to wait to see how it feels once it is really over. It seems like the OP has tried a bit to pick a fight or belittle those who responded this way. Hmmm. :shock:

Count me in as one who thinks this is probably far from over. But I'm also continuing to stay the course. I'm retired, and over 60. I'm not making any further contributions to my nest egg. Yet my AA is 80/20, and I'm not changing anything. When it is over, it will be over. As long as I don't try to figure out when the bottom is (and do anything about it), I will be fine.
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