Should I have seen this coming?

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MoneyMarathon
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Re: Should I have seen this coming?

Post by MoneyMarathon »

masonstone wrote: Sat Mar 21, 2020 8:51 am I understand but what’s the downside on pulling money out for 3 months?
The risk is that, in late June, with more known than today about what to expect, equities go up. Selling low, buying high.
UpperNwGuy
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Re: Should I have seen this coming?

Post by UpperNwGuy »

Stef wrote: Sun Mar 22, 2020 2:52 am At this point I wonder what the better strategy is. Follow the news or just ignore everything what's happening out there and invest blindly?
Invest blindly is better.
jello_nailer
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Re: Should I have seen this coming?

Post by jello_nailer »

dh wrote: Sat Mar 21, 2020 10:03 am At times like this I am reminded of Jack Bogle commenting on being 50% stocks and 50% bonds - he said something to the effect that half the time he felt like he had too much in stocks, and half the time he felt like he had too little in stocks. It is a classic Jack Bogle response (apologizes for not having his exact quote).
^ This says it all. Embrace and accept the beauty of an imperfect world, you will always be wrong.

It's amazing how the market seems to know what each of us does, and then goes against you, specifically.

Regarding the Bogle quote above, I feel the same about cash. Half the time I feel I have too much and half the time I feel I don't have enough. Now is the later.
SandysDad
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Re: Should I have seen this coming?

Post by SandysDad »

masonstone wrote: Sat Mar 21, 2020 8:19 am When China closed Wuhan shouldn’t I have converted my VTSAX to money-market since I should have known an epidemic never stays local?

Worst case scenario, if I had pulled the funds out, I would’ve been out of the market for 2-3 months and could put money back in VTSAX if nothing happened? Im in my 30s and have a long investment horizon left so I want get some lessons for the future.

PS: after the market tanked I did not sell any stocks and and plan not to, now that the market has already tanked. I’m in it for the long haul. I’m just saying that there were definite signs that something bad was on the horizon and like a good boglehead I did not do anything about it. I’m regretting that now.
Yes.

While I do not believe in market timing for ordinary economic situations, I do believe in market timing when you see stuff that makes zero sense like "china is fully shut down, markets at all time high" on the same news day.

This whole notion that "the market" is some kind of intelligence that knows all is simply not true. It reflects current business results, yes, but it also reflects momentum, future sentiment, and herd mentality as well. All of these can be positive and negative.

Because of the lack of real information right now, I believe many are simply following what they know. Maintain AA and rebalance, this will work itself out over the long run etc. I believe this will be viewed in retrospect as a black swan. We will be ok, but will be devastated economically. We will recover. How long is anyones guess.

My strategy is (was since I did it starting in early Feb til early march) to lower AA in equities, buy some Puts as insurance; and reenter the market at a TBD lower price point (that is back to my original AA).

Here is a quote from Barry Ritholtz "Too late to sell, too early to buy".

Here is a contrarian view:

Why are you anchoring on a price point achieved by 30% gains in 2019?
robphoto
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Re: Should I have seen this coming?

Post by robphoto »

HomerJ wrote: Sat Mar 21, 2020 1:50 pm
masonstone wrote: Sat Mar 21, 2020 9:07 am
Kenkat wrote: Sat Mar 21, 2020 9:04 am
masonstone wrote: Sat Mar 21, 2020 8:51 am I understand but what’s the downside on pulling money out for 3 months?
Because if we pulled money out for three months every time there was a threat of trouble in the world, we’d be pulling money out a lot. Which events are the real deal and which ones are false alarms? Very clear in hindsight, 0% clear ahead of time.

For example, I thought we were heading into another middle eastern war in January of this year but it didn't happen.
Sure but when China quarantines 11million people for a virus it’s not a minor threat. I’m sure taking this approach you’d be wrong multiple times, but even if you’re right some of the times , you’d come out ahead.
11 million people for China is less than 1% of their population.

It would be like the U.S. quarantining one town of 250,000 (say Irving, Texas).

It could have played out differently. It could have been contained. Like other viruses were contained in the recent past.

People who bet on it having a huge impact were right. But it was still a bet. Nothing is ever 100%.
Your math is in error here; in the U.S. it would be 2,500,000 people
motorcyclesarecool
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Re: Should I have seen this coming?

Post by motorcyclesarecool »

masonstone wrote: Sat Mar 21, 2020 8:51 am
nisiprius wrote: Sat Mar 21, 2020 8:43 am
masonstone wrote: Sat Mar 21, 2020 8:19 am When China closed Wuhan shouldn’t I have converted my VTSAX to money-market since I should have known an epidemic never stays local?
No, you shouldn't have.

.....

Expect to be taken by surprise.
I understand but what’s the downside on pulling money out for 3 months?
Nassim Nicholas Taleb shows that the S&P 500’s performance in any given year is driven by roughly 5-10 trading days with big movement for one reason or another. In a Gaussian construct, missing three months in a growth year should mean missing out on 1/4 of the growth. In the actual, fractal world we live in, missing three months in the market could mean missing out on all the growth for the year. On the flip-side, it could mean missing out on all the losses for the year. I recommend Taleb’s books Fooled by Randomness and The Black Swan In late 2019, after the yield curve inversion and the Repo markets went insane, I realized I was not sleeping well at night, and de-risked to a roughly 50-50 AA. On the “non equities” side, I moved into a mix of TIPS, CDs, Short Treasuries, G-Fund, and Gold. I gotta tell you, they haven’t done great, but I can sleep at night. I had a general unease about credit markets, but I had no idea where / when / whether calamity would strike. And I had never heard of the Wuhan Wet Market at that point.

We all need to do what lets us sleep at night, remembering that nobody knows nothing.
Understand that choosing an HDHP is very much a "red pill" approach. Most would rather pay higher premiums for a $20 copay per visit. They will think you weird for choosing an HSA.
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ClevrChico
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Re: Should I have seen this coming?

Post by ClevrChico »

No, you shouldn't have. By definition, most mortals can't predict a black swan, can they?

We saw this impacting family and friends in China before it was big news. It worried me enough to give me insomnia for the first time in my life.

I still didn't sell when I had a chance. It would have meant a large tax bill for taxable, and I had no idea it would spread beyond China. SARS/MERS never became a pandemic despite a lot of fear they would at the time, and I assumed the US would be able to keep Covid-19 out. (Wishful thinking.)

You can't panic sell whenever there is bad news. Remember the daily news that debt in Greece was going to destroy the world economy? You might get it right once in a while, but you will usually be wrong.

The plus side has been massive TLH, hitting rebalancing bands, and new money buying stocks on sale.
pascalwager
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Re: Should I have seen this coming?

Post by pascalwager »

masonstone wrote: Sat Mar 21, 2020 8:19 am When China closed Wuhan shouldn’t I have converted my VTSAX to money-market since I should have known an epidemic never stays local?

Worst case scenario, if I had pulled the funds out, I would’ve been out of the market for 2-3 months and could put money back in VTSAX if nothing happened? Im in my 30s and have a long investment horizon left so I want get some lessons for the future.

PS: after the market tanked I did not sell any stocks and and plan not to, now that the market has already tanked. I’m in it for the long haul. I’m just saying that there were definite signs that something bad was on the horizon and like a good boglehead I did not do anything about it. I’m regretting that now.
The Vanguard CEO and CIO (recent video) didn't know the market was going to crash. The Vanguard active fund managers didn't go to cash, so I guess they didn't know either. So how would any of us know the market was going to crash?

The CEO also very firmly stated that no one knows the future!

I've lost four or five hundred thousand dollars so far, but I'm adjusting to what I have now, and not dwelling on what I had before.
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Third Son
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Re: Should I have seen this coming?

Post by Third Son »

Stef wrote: Sun Mar 22, 2020 2:52 am At this point I wonder what the better strategy is. Follow the news or just ignore everything what's happening out there and invest blindly?
Don't invest blindly but realize where you are on the investment timeline and act accordingly. You are young. Hang in there and you will be fine. We should have faith in the resilience of the American people. Don't watch the news on a regular basis. Don't watch your portfolio go down every day if it makes you uneasy. You will be fine.
"A part of all you earn is yours to keep" | | -The Richest Man in Babylon
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Tamarind
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Re: Should I have seen this coming?

Post by Tamarind »

masonstone wrote: Sat Mar 21, 2020 8:19 am When China closed Wuhan shouldn’t I have converted my VTSAX to money-market since I should have known an epidemic never stays local?

Worst case scenario, if I had pulled the funds out, I would’ve been out of the market for 2-3 months and could put money back in VTSAX if nothing happened? Im in my 30s and have a long investment horizon left so I want get some lessons for the future.

PS: after the market tanked I did not sell any stocks and and plan not to, now that the market has already tanked. I’m in it for the long haul. I’m just saying that there were definite signs that something bad was on the horizon and like a good boglehead I did not do anything about it. I’m regretting that now.
When they closed Wuhan there were only 500 known cases and it looked a lot like SARS from 2002-2003, which never really got a foothold. If there hasn't been so many asymptomatic folks (not known at the time of shutdown) they would have been able to control it, I think, and stopped the outbreak like they stopped SARS.

So let's say the key bit of news was the discovery of asymptomatic spread. The first news article I could find on that is dated 1/31, and it was retracted a few days later because it turned out to be false: https://www.statnews.com/2020/02/04/hig ... cials-say/

So how much warning did everyone really have? And how much of your feeling of certainty is due to the very well documented phenomenon of "hindsight bias"?
keelerjr12
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Re: Should I have seen this coming?

Post by keelerjr12 »

Knowing the event that would cause this downturn was impossible. However, the US market was so over-valued (and still is) that it accelerated losses.

For example, had the market been under-valued then the rate of loss would have lower. Why is this? Because stocks would have less change in value. Less change in value for a fixed time results in a shallower derivative.

We were due for a market correction; what caused it was impossible to know. The higher the market valuations, the lower the probability of future returns.
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nps
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Re: Should I have seen this coming?

Post by nps »

Tamarind wrote: Mon Mar 23, 2020 6:11 am
masonstone wrote: Sat Mar 21, 2020 8:19 am When China closed Wuhan shouldn’t I have converted my VTSAX to money-market since I should have known an epidemic never stays local?

Worst case scenario, if I had pulled the funds out, I would’ve been out of the market for 2-3 months and could put money back in VTSAX if nothing happened? Im in my 30s and have a long investment horizon left so I want get some lessons for the future.

PS: after the market tanked I did not sell any stocks and and plan not to, now that the market has already tanked. I’m in it for the long haul. I’m just saying that there were definite signs that something bad was on the horizon and like a good boglehead I did not do anything about it. I’m regretting that now.
When they closed Wuhan there were only 500 known cases and it looked a lot like SARS from 2002-2003, which never really got a foothold. If there hasn't been so many asymptomatic folks (not known at the time of shutdown) they would have been able to control it, I think, and stopped the outbreak like they stopped SARS.

So let's say the key bit of news was the discovery of asymptomatic spread. The first news article I could find on that is dated 1/31, and it was retracted a few days later because it turned out to be false: https://www.statnews.com/2020/02/04/hig ... cials-say/

So how much warning did everyone really have? And how much of your feeling of certainty is due to the very well documented phenomenon of "hindsight bias"?
+1
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HomerJ
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Re: Should I have seen this coming?

Post by HomerJ »

Stef wrote: Sun Mar 22, 2020 2:52 am At this point I wonder what the better strategy is. Follow the news or just ignore everything what's happening out there and invest blindly?
In the past, the second choice was usually better.
A Goldman Sachs associate provided a variety of detailed explanations, but then offered a caveat, “If I’m being dead-### honest, though, nobody knows what’s really going on.”
KyleAAA
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Re: Should I have seen this coming?

Post by KyleAAA »

That's a difficult question. By early February, some form of the current situation was very foreseeable, as in greater than 50% chance of severe economic disruption. Professionals had been sounding the alarm since late January, although few were listening. That said, it's difficult to predict the market. Case in point: even though the current economic distress was completely predictable by mid February, as in close to 100%, the market hadn't yet started to crash, which I find somewhat perplexing. We knew it spread asymptomatically by mid-late January, or at least we knew it PROBABLY did. We knew we were much less prepared to respond to an epidemic than at any point in the last 30 years.
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CyclingDuo
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Re: Should I have seen this coming?

Post by CyclingDuo »

masonstone wrote: Sat Mar 21, 2020 8:19 am When China closed Wuhan shouldn’t I have converted my VTSAX to money-market since I should have known an epidemic never stays local?

Worst case scenario, if I had pulled the funds out, I would’ve been out of the market for 2-3 months and could put money back in VTSAX if nothing happened? Im in my 30s and have a long investment horizon left so I want get some lessons for the future.

PS: after the market tanked I did not sell any stocks and and plan not to, now that the market has already tanked. I’m in it for the long haul. I’m just saying that there were definite signs that something bad was on the horizon and like a good boglehead I did not do anything about it. I’m regretting that now.
Focus in on bullet point #3: "Every 5 years or so markets decline 30%+"

Image

Bear markets are part of the journey, regardless of what causes them or how suddenly they occur no matter what the causes. Consider this one as part of your journey. :beer

Image

The caveat being in every bear market, how does it impact your household's income regarding keeping your job(s) and ability to continue to contribute to your investments on a routine basis (weekly, bi-weekly, monthly, etc...) through it all? If your income is still coming in and your job will remain - just keep on target with your regular contributions like clockwork. Whether it takes 2 years or 6 years (or more) to bounce back to previous levels, companies will continue to conduct business and work hard for your investments in them.

CyclingDuo
"Save like a pessimist, invest like an optimist." - Morgan Housel
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Yesterdaysnews
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Re: Should I have seen this coming?

Post by Yesterdaysnews »

Many, many outbreaks and epidemics don't become pandemics. Most don't

Having said that, the next bug that pops up in the news people will sell like crazy anyways so will be good chance to short the market.
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dmcmahon
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Re: Should I have seen this coming?

Post by dmcmahon »

Based on what happened with SARS, MERS, H1N1, Ebola, Swine Flu, and then farther back in time the Hong Kong flu and the Asian flu, then no. We didn’t shut our economy down for any of those. So who’da thunk we’d do it for this one? No one ever expects the Spanish Inquisition, er, I mean Flu, 2.0.
illumination
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Re: Should I have seen this coming?

Post by illumination »

dmcmahon wrote: Mon Mar 23, 2020 8:21 pm Based on what happened with SARS, MERS, H1N1, Ebola, Swine Flu, and then farther back in time the Hong Kong flu and the Asian flu, then no. We didn’t shut our economy down for any of those. So who’da thunk we’d do it for this one? No one ever expects the Spanish Inquisition, er, I mean Flu, 2.0.
+1

I remember a respected doctor friend of mine saying if Ebola ever ever gets to the United States, it's basically game over and would be like a horror movie. This was when we had some isolated cases of it in the US and people doing some stupid things...and nothing much happened to markets. Or the human race. And we had so many of those other ones like MERS SARS H1N1, etc that we just sort of shrugged.

Early on, it seemed like there was a lot of bogus info on this as well from W.H.O. and China that didn't get everyone alarmed. It was like I had already heard the news and "expert" assessment and stopped paying close attention.

Moving forward though, I guess every rumor of a pandemic I might think about liquidating. Because if we did have something way more serious like Ebola that was moving through us and had almost a 50% fatality rate, that's probably a giant reset on markets instead of this with around a 1% fatality rate.
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Yesterdaysnews
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Re: Should I have seen this coming?

Post by Yesterdaysnews »

Ebola is actually fairly easy to contain, because while it is very lethal it is not that contagious. You have to come directly in contact with infected bodily fluids, it does not spread via aerosol droplets.
james22
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Re: Should I have seen this coming?

Post by james22 »

CyclingDuo wrote: Mon Mar 23, 2020 7:43 pm
Image
Were it a FACT that buying low and selling high NEVER worked, it wouldn't be so tempting.

The problem is buying low and selling high does SOMETIMES work.

It is a SCARE TACTIC to claim it never does, and Bogleheads who won't admit it will struggle convincing others against market timing.
Ari
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Re: Should I have seen this coming?

Post by Ari »

james22 wrote: Tue Mar 24, 2020 4:09 am
CyclingDuo wrote: Mon Mar 23, 2020 7:43 pm
Image
Were it a FACT that buying low and selling high NEVER worked, it wouldn't be so tempting.

The problem is buying low and selling high does SOMETIMES work.

It is a SCARE TACTIC to claim it never does, and Bogleheads who won't admit it will struggle convincing others against market timing.
Read that card again.
All in, all the time.
ks289
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Re: Should I have seen this coming?

Post by ks289 »

Ari wrote: Tue Mar 24, 2020 4:28 am
james22 wrote: Tue Mar 24, 2020 4:09 am
CyclingDuo wrote: Mon Mar 23, 2020 7:43 pm
Image
Were it a FACT that buying low and selling high NEVER worked, it wouldn't be so tempting.

The problem is buying low and selling high does SOMETIMES work.

It is a SCARE TACTIC to claim it never does, and Bogleheads who won't admit it will struggle convincing others against market timing.
Read that card again.
+1
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LiveSimple
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Re: Should I have seen this coming?

Post by LiveSimple »

I stayed the course and was able buy more stocks as well, however in hindsight, if I sold equities on first week of March and bought back this week, my portfolio would be 30% up than 30%, down with the number of shares...in a year later, could have bought a nice house for cash, in a nice location....if I market timed well !!!!

Staying the course !!! Just ranting !!!
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zaboomafoozarg
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Re: Should I have seen this coming?

Post by zaboomafoozarg »

KyleAAA wrote: Mon Mar 23, 2020 12:59 pmWe knew it spread asymptomatically by mid-late January, or at least we knew it PROBABLY did. We knew we were much less prepared to respond to an epidemic than at any point in the last 30 years.
Yep, I feel like I really dropped the ball this time. The warning signs were there but I didn't pay close enough attention. Even Bogle drastically changed his allocation when things were getting crazy in 2000.

Going forward I need to be much more aware of what is going on in the world and the market, provided I survive this thing.
keelerjr12
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Re: Should I have seen this coming?

Post by keelerjr12 »

zaboomafoozarg wrote: Tue Mar 24, 2020 6:39 am
KyleAAA wrote: Mon Mar 23, 2020 12:59 pmWe knew it spread asymptomatically by mid-late January, or at least we knew it PROBABLY did. We knew we were much less prepared to respond to an epidemic than at any point in the last 30 years.
Yep, I feel like I really dropped the ball this time. The warning signs were there but I didn't pay close enough attention. Even Bogle drastically changed his allocation when things were getting crazy in 2000.

Going forward I need to be much more aware of what is going on in the world and the market, provided I survive this thing.
Wait just a minute... are you implying that THE John Bogle was a market timer!?
ljb1234
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Re: Should I have seen this coming?

Post by ljb1234 »

masonstone wrote: Sat Mar 21, 2020 8:19 am When China closed Wuhan shouldn’t I have converted my VTSAX to money-market since I should have known an epidemic never stays local?

Worst case scenario, if I had pulled the funds out, I would’ve been out of the market for 2-3 months and could put money back in VTSAX if nothing happened? Im in my 30s and have a long investment horizon left so I want get some lessons for the future.

PS: after the market tanked I did not sell any stocks and and plan not to, now that the market has already tanked. I’m in it for the long haul. I’m just saying that there were definite signs that something bad was on the horizon and like a good boglehead I did not do anything about it. I’m regretting that now.
Of course hindsight is 2020.
Now, let us know when it is time to go all in.

In hindsight, that will have been "obvious" too. And you will probably miss that one.
bugleheadd
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Re: Should I have seen this coming?

Post by bugleheadd »

masonstone wrote: Sat Mar 21, 2020 8:19 am When China closed Wuhan shouldn’t I have converted my VTSAX to money-market since I should have known an epidemic never stays local?

Worst case scenario, if I had pulled the funds out, I would’ve been out of the market for 2-3 months and could put money back in VTSAX if nothing happened? Im in my 30s and have a long investment horizon left so I want get some lessons for the future.

PS: after the market tanked I did not sell any stocks and and plan not to, now that the market has already tanked. I’m in it for the long haul. I’m just saying that there were definite signs that something bad was on the horizon and like a good boglehead I did not do anything about it. I’m regretting that now.
i thought for sure the news comng out of China was fake or a hoax, or that even if true they were going overboard with extreme measures. i thought it would just be like the flue where most people would get no or mild symptoms and coronaviruses have been around for a while anyway. i'm sure many saw it this way too.

i think the stock market going up 15% from oct to jan was more of a warning sign than coronavirus.
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zaboomafoozarg
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Re: Should I have seen this coming?

Post by zaboomafoozarg »

keelerjr12 wrote: Tue Mar 24, 2020 6:44 amWait just a minute... are you implying that THE John Bogle was a market timer!?
He did say in his book "Enough":
"But, in late 1999, concerned about the (obviously) speculative level of stock prices, I reduced my equities to about 35% of assets, thereby increasing my bond position to about 65%"
And in an interview:
"But I freely confess it was also a market timing move. Market values had deviated from their intrinsic values by a degree that investors might experience three or four times in a lifetime. Price-to-earnings ratios were at 35 and it was clear they would not double to 70. Dividend yields were 1%, so how much lower could they get?"
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Will do good
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Re: Should I have seen this coming?

Post by Will do good »

No, because Wall street, professional money managers, financial institutions, bankers didn't see this coming. Why do you think you are that special and should have seen it.

I'm sure the few blogs and newsletters that claim to seen this coming will milk it until their next bad call. Even a broken clock is correct twice a day.
james22
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Re: Should I have seen this coming?

Post by james22 »

Ari wrote: Tue Mar 24, 2020 4:28 am
james22 wrote: Tue Mar 24, 2020 4:09 am
CyclingDuo wrote: Mon Mar 23, 2020 7:43 pm
Image
Were it a FACT that buying low and selling high NEVER worked, it wouldn't be so tempting.

The problem is buying low and selling high does SOMETIMES work.

It is a SCARE TACTIC to claim it never does, and Bogleheads who won't admit it will struggle convincing others against market timing.
Read that card again.
Ha! Whoops.
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AspireToRetire
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Re: Should I have seen this coming?

Post by AspireToRetire »

nisiprius wrote: Sat Mar 21, 2020 8:43 am
masonstone wrote: Sat Mar 21, 2020 8:19 am When China closed Wuhan shouldn’t I have converted my VTSAX to money-market since I should have known an epidemic never stays local?
No, you shouldn't have.

First of all, "an epidemic never stays local" is vacuous. An epidemic never stays local, because until it does spread, it's not an "epidemic."

Second, it's a short enough period of time that you should be able to think back and remember the great divergence of opinion at the time on how serious a threat it was. When they closed Wuhan, a realistic humility would have said "I think it's bad but I might be wrong."

What tends to happen is that one experience mood swings. Some days you think "it's going to be a pandemic." Other days you think "No, it's going to be OK." Unless you literally write them down in a notebook with a timestamp on which one, you're almost unconscious of it. Then afterwards you edit your memories and only remember the times you were right.

Tangentially, it's always interesting, after taking a trip to a new place--one that you haven't seen in hundreds of pictures beforehand--to ask yourself the question "how did I actually expect it to look?" Personally, before the trip I have a mental image of what I expect. When I get there, the reality quickly erases that and a week later I literally just cannot recall what I expected.

A big part of the Boglehead message is that we believe that picking a course you can stay with, and then blindly, staunchly, pigheadedly staying the course, actually works better than trying to anticipate the things that look obvious in hindsight.

The coronavirus took me by surprise. The timing of the stock market drop took me by surprise. 2008-2009 took me by surprise. In late 1996, when Alan Greenspan said "But how do we know when irrational exuberance has unduly escalated asset values, which then become subject to unexpected and prolonged contractions as they have in Japan over the past decade?" I thought that, coming from Greenspan, that was a screaming air raid siren of a warning. I didn't go to cash, but I did pull back on stock allocation. And nothing happened for three years.

Expect to be taken by surprise.
This post is so incredibly full of wisdom. I couldn’t agree more. Thank you Nisiprius!
beth65
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Re: Should I have seen this coming?

Post by beth65 »

Will do good wrote: Tue Mar 24, 2020 10:51 am No, because Wall street, professional money managers, financial institutions, bankers didn't see this coming. Why do you think you are that special and should have seen it.

I'm sure the few blogs and newsletters that claim to seen this coming will milk it until their next bad call. Even a broken clock is correct twice a day.
What if they did see it coming? We know some politicians with insider information saw it coming and were selling in January and February. There was a ton of buzz about the markets at all-time highs, hyping the economy even though there were red flags, like BLS and ADP having very conflicting jobs numbers in November, the Fed adding over $500billion into the repo market since September - way before anyone could even think about a virus taking down the economy, valuations completely detached from reality, etc.

TINA was being thrown around a lot, which reminded me a lot of 2000 and 2008. The analysts and bankers were trying very hard to hype the markets and get everyone into equities. It seems like they worked very hard to tell us how great the economy was every 2 minutes, and used a lot of lagging indicators, like employment and consumer sentiment, which we all should know better than to trust.

If we had access to all trades being made, it would be interesting to see who and how much were actually selling in January and early February. Even Loeffler, the GA senator who sold millions the day she had the closed-door meeting with the CDC on January 23, actually bought back into the market, but she invested in Citrix, a tech company with teleworking solutions.

My point is that it seems like during every crash, it's the retail investors left holding the bag. Not everyone goes broke, and every crash, from the depression to this one, leaves winners and losers, and there is a transfer of wealth that occurs.

I had many doubts, and still mostly stayed the course (albeit I did a reallocation in my AA in early March after deciding I wasn't comfortable with my AA being the same during bulls and bears) because I follow the BH, and I genuinely don't know when to get back in. I still feel like buy and hold is the best course, but it's a system set up to benefit those who own and manage all of the wealth.
illumination
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Re: Should I have seen this coming?

Post by illumination »

Will do good wrote: Tue Mar 24, 2020 10:51 am No, because Wall street, professional money managers, financial institutions, bankers didn't see this coming. Why do you think you are that special and should have seen it.

I'm sure the few blogs and newsletters that claim to seen this coming will milk it until their next bad call. Even a broken clock is correct twice a day.
I think most of the people bragging they got out in time were ones that had other reasons like they were nervous about the market before Corona and were looking for any reason. Even a lot of experts in this field got it wrong early on. Much less calculating this virus and its effect on markets globally.

I will say, I was prepared for business cycles moving up and down, I didn't even blink in the last bear market, but pandemics are a new black swan I had not scrutinized much and I'm wondering if it makes sense from now on to have a hair trigger on selling or getting aggressive with stop losses.
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cashboy
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Re: Should I have seen this coming?

Post by cashboy »

masonstone wrote: Sat Mar 21, 2020 8:19 am When China closed Wuhan shouldn’t I have converted my VTSAX to money-market since I should have known an epidemic never stays local?
when looking back at past events everything always seems so 'obvious'.


masonstone wrote: Sat Mar 21, 2020 8:19 am PS: after the market tanked I did not sell any stocks and and plan not to, now that the market has already tanked. I’m in it for the long haul. I’m just saying that there were definite signs that something bad was on the horizon and like a good boglehead I did not do anything about it. I’m regretting that now.
we all have regrets

ex: i should have asked that girl out who was in my HS science class, sigh...

but that cannot change the past.

look forward to the bounceback from here!

:sharebeer
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CyclingDuo
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Re: Should I have seen this coming?

Post by CyclingDuo »

james22 wrote: Tue Mar 24, 2020 11:29 am
Ari wrote: Tue Mar 24, 2020 4:28 am
james22 wrote: Tue Mar 24, 2020 4:09 am
CyclingDuo wrote: Mon Mar 23, 2020 7:43 pm
Image
Were it a FACT that buying low and selling high NEVER worked, it wouldn't be so tempting.

The problem is buying low and selling high does SOMETIMES work.

It is a SCARE TACTIC to claim it never does, and Bogleheads who won't admit it will struggle convincing others against market timing.
Read that card again.
Ha! Whoops.
No worries.

Forgot to give credit to the author of that index card. Ritholtz Wealth Management's Anthony Isola tweeted it out back in 2018. Original story where I saw it is here...

https://www.marketwatch.com/story/panic ... 2018-02-08

Now, my other favorite story board of recent is to recommend everyone be like Sarah and contribute an an automatic, regular basis through bull and bear markets...

https://imgur.com/gallery/BlK4jzM
"Save like a pessimist, invest like an optimist." - Morgan Housel
BW1985
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Re: Should I have seen this coming?

Post by BW1985 »

beth65 wrote: Tue Mar 24, 2020 11:46 am
If we had access to all trades being made, it would be interesting to see who and how much were actually selling in January and early February. Even Loeffler, the GA senator who sold millions the day she had the closed-door meeting with the CDC on January 23, actually bought back into the market, but she invested in Citrix, a tech company with teleworking solutions.

My point is that it seems like during every crash, it's the retail investors left holding the bag. Not everyone goes broke, and every crash, from the depression to this one, leaves winners and losers, and there is a transfer of wealth that occurs.
I got very upset when this news broke. The game just seems so rigged.
Chase the good life my whole life long, look back on my life and my life gone...where did I go wrong?
Sic Vis Pacem
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Re: Should I have seen this coming?

Post by Sic Vis Pacem »

Call_Me_Op wrote: Sat Mar 21, 2020 2:55 pm
Sic Vis Pacem wrote: Sat Mar 21, 2020 9:45 am
Lots of people seem to be second-guessing themselves. Did you have a written plan before this happened? i did (and still do) - and it said (says) nothing about bailing out of stocks before or during a perceived crisis. We have had many crises and the stock market has always recovered and then proceeded to make new highs.

I am going to go out on a limb and say that will happen this time too.
I have a written IPS, and it too says nothing about bailing out of stocks. I followed the plan on the way up rebalancing by buying bonds as equities shot up, and I've been rebalancing on the way down.

What my IPS does not have is a a guide on when to re-evaluate my AA (not in response to events, but ever). I think the unease I've felt since this crisis has started is teaching / has taught me that my AA is likely too aggressive. Now I'm not going to change it in the middle and lock in my losses, but I'm thinking of revising my IPS to include AA rules based on age and/or absolute $$$ in portfolio, or to include a fixed income floor.

I'm on the same limb as you with respect to market eventually recovering.
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HomerJ
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Re: Should I have seen this coming?

Post by HomerJ »

james22 wrote: Tue Mar 24, 2020 4:09 am
CyclingDuo wrote: Mon Mar 23, 2020 7:43 pm
Image
Were it a FACT that buying low and selling high NEVER worked, it wouldn't be so tempting.

The problem is buying low and selling high does SOMETIMES work.

It is a SCARE TACTIC to claim it never does, and Bogleheads who won't admit it will struggle convincing others against market timing.
I'll agree it sometimes work...

But it sure isn't as easy as many people seem to think.
A Goldman Sachs associate provided a variety of detailed explanations, but then offered a caveat, “If I’m being dead-### honest, though, nobody knows what’s really going on.”
james22
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Re: Should I have seen this coming?

Post by james22 »

HomerJ wrote: Tue Mar 24, 2020 4:28 pm
james22 wrote: Tue Mar 24, 2020 4:09 am
CyclingDuo wrote: Mon Mar 23, 2020 7:43 pm
Image
Were it a FACT that buying low and selling high NEVER worked, it wouldn't be so tempting.

The problem is buying low and selling high does SOMETIMES work.

It is a SCARE TACTIC to claim it never does, and Bogleheads who won't admit it will struggle convincing others against market timing.
I'll agree it sometimes work...

But it sure isn't as easy as many people seem to think.
Thanks for making me feel better, Homer. (Read the card again.)
GCD
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Re: Should I have seen this coming?

Post by GCD »

For the market timers or those tempted to market time...

Did you get back in for this?

"The Dow soared 2,112 points to close 11.3% higher, notching its biggest one-day percentage gain since 1933"

https://www.msn.com/en-us/money/markets ... spartanntp
beth65
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Re: Should I have seen this coming?

Post by beth65 »

GCD wrote: Tue Mar 24, 2020 4:40 pm For the market timers or those tempted to market time...

Did you get back in for this?

"The Dow soared 2,112 points to close 11.3% higher, notching its biggest one-day percentage gain since 1933"

https://www.msn.com/en-us/money/markets ... spartanntp
It sounds like a bear trap. They haven't even signed a bill yet for the bailout for corps. Does anyone believe that this is all over, that life will go back to normal in two weeks, and that this will be the shortest bear market in history? There is talks of mass hysteria like we are headed for the next great depression because people will have to order take out and chill at home on the couch spending all of their money online for a few weeks.
BW1985
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Re: Should I have seen this coming?

Post by BW1985 »

beth65 wrote: Tue Mar 24, 2020 5:09 pm
GCD wrote: Tue Mar 24, 2020 4:40 pm For the market timers or those tempted to market time...

Did you get back in for this?

"The Dow soared 2,112 points to close 11.3% higher, notching its biggest one-day percentage gain since 1933"

https://www.msn.com/en-us/money/markets ... spartanntp
It sounds like a bear trap. They haven't even signed a bill yet for the bailout for corps. Does anyone believe that this is all over, that life will go back to normal in two weeks, and that this will be the shortest bear market in history? There is talks of mass hysteria like we are headed for the next great depression because people will have to order take out and chill at home on the couch spending all of their money online for a few weeks.
It doesn't have to be 'all over' for the bottom to have already come and gone. It's not like those two things are mutually exclusive. I'm not saying it has, I have no idea.
Chase the good life my whole life long, look back on my life and my life gone...where did I go wrong?
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watchnerd
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Re: Should I have seen this coming?

Post by watchnerd »

I did see it coming and sold my matured ESPP funds on Feb. 18 and Feb. 20 because I have concentrated risk there correlated with my job.

There was only one thing to get right as that money doesn't go back 'in'.

Gains were >80%.

I left all my index funds in market because that is not correlated with my job and isn't to be touched for 10 years.
Last edited by watchnerd on Tue Mar 24, 2020 6:00 pm, edited 1 time in total.
70% Global Market Weight Equities | 15% Long Treasuries 15% short TIPS & cash || RSU + ESPP
GCD
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Re: Should I have seen this coming?

Post by GCD »

BW1985 wrote: Tue Mar 24, 2020 5:15 pm
beth65 wrote: Tue Mar 24, 2020 5:09 pm
GCD wrote: Tue Mar 24, 2020 4:40 pm For the market timers or those tempted to market time...

Did you get back in for this?

"The Dow soared 2,112 points to close 11.3% higher, notching its biggest one-day percentage gain since 1933"

https://www.msn.com/en-us/money/markets ... spartanntp
It sounds like a bear trap. They haven't even signed a bill yet for the bailout for corps. Does anyone believe that this is all over, that life will go back to normal in two weeks, and that this will be the shortest bear market in history? There is talks of mass hysteria like we are headed for the next great depression because people will have to order take out and chill at home on the couch spending all of their money online for a few weeks.
It doesn't have to be 'all over' for the bottom to have already come and gone. It's not like those two things are mutually exclusive. I'm not saying it has, I have no idea.
It doesn't have to be anything other than what it is. If you can predict the market, get in get out a day later for the win. Collect your 10%ish gain and sit tight for the next winning dip.

If you can predict stuff that is. I can't. So I was in for this along with the downhill ride.
callem1009
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Re: Should I have seen this coming?

Post by callem1009 »

I officially knew this was coming on February 28th. I’d read about Wuhan earlier but it all seemed very distant, not like something that could ever happen here. I assumed that the government would take care of it if it ever reached our shores. That all changed on February 28th, when I read two articles, one in the NYTimes about cases in the U.S. that could only be explained by community spread, and one in ProPublica about problems with testing. I used to work in a molecular biology lab so I’m familiar with how these types of tests are carried out. I had read earlier about issues with the test kits and figured there was some minor technical error, but it didn’t disturb me much. Scientists can work their way around minor technical issues. However, when I read the ProPublica article, I realized the truth -- it was an administrative failure on a massive level and it would be absolutely impossible to deploy the kind of testing capacity necessary to contain the spread, and there did not even seem to be any top-down impetus to change things. From that point forward I was terrified. My back of the envelope calculations showed 2 million deaths and yet strangely life seemed to be going on as if everything was normal. I checked the Dow Jones and said “Oh thank god the markets haven’t crashed yet.” When I checked I wasn’t thinking of stock portfolios, I was picturing bread lines, food riots. Since that day I’ve been obsessively and anxiously following the developments like I’ve never followed anything in my life. It feels like a million years have passed.

Did I make any changes in my 401K? No. The moment I became certain this was happening, certain there was no way to stop the spread, certain that NYC would shut down, certain that the market would crash, all I could think about was what could be done to slow the spread. Changing my 401k honestly never occurred to me, even though I KNEW. This is not a confirmation bias — it was as much a mathematical certainty as the fact that the virus would spread.

So I think here’s the truth — if you really did see this coming, if you really could play out the full extent of it in your head, you, like me, probably would have been too panicked to change your asset allocation. Maybe traders and hedge funders who are trained to think of market events in terms of portfolio losses/gains would have the presence of mind to change their asset allocation. And maybe those guys who saw it earlier, when it was more remote and less of an absolute certainty, they could have retained a sense of calm.

But if you could really see this coming, your mind would have hurtled towards life basics — food, water, shelter, cash-on-hand — not mutual funds. Thinking about mutual funds requires a calmer state of mind. But if you had a calmer state of mind, it would mean you didn’t REALLY know it was coming. Catch 22.
Bryzzo2016
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Re: Should I have seen this coming?

Post by Bryzzo2016 »

Thank you! Threads like this help keep my sanity to stay the course.

This fiasco might make me reconsider my 99/1 asset allocation when I'm closer to retirement age though :-)
SlowlySaving
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Re: Should I have seen this coming?

Post by SlowlySaving »

Sic Vis Pacem wrote: Sat Mar 21, 2020 9:45 am I have numerous facebook posts, emails, and chat logs from late January and early February warning anyone that would listen that this was going to get much worse. The equivalent of the notepad and timestamps discussed above. I even stocked up on food and medicine for my son and some critical supplies about two weeks before the panic-buying really started. I was supposed to be on an international trip starting March 17 with my toddler and elderly in-laws, so I was following these events closely and discussed the potential of cancelling the trip starting in late February/early March.

And yet I never really considered any dramatic change to my investments. I'm having a hard time squaring that cognitive dissonance now. After significant reflection, I can only think that my mind was focused more on our safety/plans for our trip than our investments.

In deep enough now with an 80/20 allocation (and even rebalancing on the way down) to ride this out.

So, you're not alone in your thoughts on this. But what you do with those thoughts is up to you. Since I missed this one, it makes me even less certain I'm going to "get" the next one (whether that's the trigger for the rebound or the next crash). But once this is in the rear view, I think I've learned that my asset allocation is a little higher than my risk tolerance, and I'll be bringing that down a bit.
So may what if's!! I was 100% stocks til about January 2020 then went 80/20. I had meant to make this adjustment for some time but FINALLY got around to doing it. I am so glad I did! Even with that though we got hit HARD! Early March I lost about 15% then switched to about 20/80. With both stocks and bonds losing the last few weeks I am now down about 20% total. :oops: Now I am trying to figure out when to reverse the 20/80. LOL! So much unpredictability!!
SlowlySaving
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Re: Should I have seen this coming?

Post by SlowlySaving »

motorcyclesarecool wrote: Sun Mar 22, 2020 7:48 am We all need to do what lets us sleep at night, remembering that nobody knows nothing.
LOL!! So true!!
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Re: Should I have seen this coming?

Post by LadyGeek »

I removed several off-topic posts relating to ethics of certain US senators. As a reminder, see: Non-actionable (Trolling) Topics
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Portfolio7
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Re: Should I have seen this coming?

Post by Portfolio7 »

GCD wrote: Tue Mar 24, 2020 4:40 pm For the market timers or those tempted to market time...

Did you get back in for this?

"The Dow soared 2,112 points to close 11.3% higher, notching its biggest one-day percentage gain since 1933"

https://www.msn.com/en-us/money/markets ... spartanntp
Not market timing, it was just the day each month when I check my accounts. This weekend I broke my rebalance bands.

Funny enough, I rebalanced at the exact market low. I put in the order Sunday, and Monday evening is when my 401K processed it. (That was half of it anyway, the other half of my rebalance will wait a month).

Rather be lucky than good :wink:
"An investment in knowledge pays the best interest" - Benjamin Franklin
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