They Stayed The Course

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sapphire96
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They Stayed The Course

Post by sapphire96 »

“According to a new Vanguard Perspective, 95% of investors in defined contribution plans didn’t make a single transaction during the Corona crash. 83% of retail accounts also stayed the course.

Less than 0.5% of investors pulled the ripcord and moved entirely to cash. That’s just 5 out of every 1,000.”

Article Link: https://theirrelevantinvestor.com/2020/ ... he-course/

Vanguard Perspective: https://advisors.vanguard.com/insights/ ... 1097516435
Keep interest as your friend, not your foe. | Use money as a tool for bettering your life, not squandering it. | Stay the course, don’t deviate from it.
sailaway
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Re: They Stayed The Course

Post by sailaway »

Are contributions not transactions?
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whodidntante
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Re: They Stayed The Course

Post by whodidntante »

I made several transactions. Not one was based on fear.
Actin
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Re: They Stayed The Course

Post by Actin »

I wish I could have bought more than I did in March. A friend actually cashed out in February and bought back in at almost the bottom in March. His portfolio looks like a magic trick right now
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FIREchief
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Re: They Stayed The Course

Post by FIREchief »

Actin wrote: Mon Aug 17, 2020 9:05 pm I wish I could have bought more than I did in March. A friend actually cashed out in February and bought back in at almost the bottom in March. His portfolio looks like a magic trick right now
Yeah, I used to have people tell me that as well. If they aren't showing you their statements, it didn't happen. :P
I am not a lawyer, accountant or financial advisor. Any advice or suggestions that I may provide shall be considered for entertainment purposes only.
Valuethinker
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Re: They Stayed The Course

Post by Valuethinker »

FIREchief wrote: Tue Aug 18, 2020 1:07 am
Actin wrote: Mon Aug 17, 2020 9:05 pm I wish I could have bought more than I did in March. A friend actually cashed out in February and bought back in at almost the bottom in March. His portfolio looks like a magic trick right now
Yeah, I used to have people tell me that as well. If they aren't showing you their statements, it didn't happen. :P
Actually it does ;-). Sort of.

The UK tax year ends 5th April. The stock market bottomed in March 2009 and in April 2020. So my annual contributions to the IRA like product (Investment Savings Account - ISA) went in just about the market bottom ;-). Even better my spouse's ISA went in April 1st this year (into a VG Lifestrategy product) & so has done very well. The only thing better than making money for yourself is making money for your spouse ;-).

I have a great record of making bad investment timing decisions. As a technical market signal, the Valuethinker buy signal has an almost perfect record - buying stock in August 2008, beg December 2018, etc.

So bless the medieval English government that set the tax year ending at the the then year end - ie April.

And underlines the value of mechanical investing strategies & the power of procrastination ;-).
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FIREchief
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Re: They Stayed The Course

Post by FIREchief »

Valuethinker wrote: Tue Aug 18, 2020 4:35 am
FIREchief wrote: Tue Aug 18, 2020 1:07 am
Actin wrote: Mon Aug 17, 2020 9:05 pm I wish I could have bought more than I did in March. A friend actually cashed out in February and bought back in at almost the bottom in March. His portfolio looks like a magic trick right now
Yeah, I used to have people tell me that as well. If they aren't showing you their statements, it didn't happen. :P
Actually it does ;-). Sort of.

The UK tax year ends 5th April. The stock market bottomed in March 2009 and in April 2020. So my annual contributions to the IRA like product (Investment Savings Account - ISA) went in just about the market bottom ;-). Even better my spouse's ISA went in April 1st this year (into a VG Lifestrategy product) & so has done very well. The only thing better than making money for yourself is making money for your spouse ;-).
That's a very believable story! I was referring to those who start spouting off after a big drop, followed by a big recovery, that they had perfect foresight and sold at the top and rebought at the bottom. We even get a few of those here on the forum. :annoyed Again, if they aren't providing proof, it didn't happen. :twisted:
I am not a lawyer, accountant or financial advisor. Any advice or suggestions that I may provide shall be considered for entertainment purposes only.
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arcticpineapplecorp.
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Re: They Stayed The Course

Post by arcticpineapplecorp. »

FIREchief wrote: Tue Aug 18, 2020 1:07 am
Actin wrote: Mon Aug 17, 2020 9:05 pm I wish I could have bought more than I did in March. A friend actually cashed out in February and bought back in at almost the bottom in March. His portfolio looks like a magic trick right now
Yeah, I used to have people tell me that as well. If they aren't showing you their statements, it didn't happen. :P
+1

not only that, but Actin, let's assume your friend actually did what he claims he did. So what? Was that enough for him to reach his goals (retirement or other)? If not, then he has to keep investing until he has enough to reach his goals, right? So it may have gotten lucky, but he'd have to repeat that again and again and again for the rest of his life, right? Unless he's able to give up that ghost and just invest over time and reach his goals. The likelihood is he'll try this again and won't be as lucky. Thing is, he won't be bragging about it then, will he? It's been said a broken clock is right twice a day but you shouldn't rely on it to tell you the time. Don't confuse outcome with strategy. He may have had a good outcome, but that doesn't mean he had the right strategy.

Jack Bogle used to say about market timing:
"The idea that a bell rings to signal when investors should get into or out of the market is simply not credible. After nearly 50 years in this business, I do not know of anybody who has done it successfully and consistently. I don’t even know anybody who knows anybody who has done it successfully and consistently.”

source: https://financinglife.org/bogle-quotes/
It's "Stay" the course, not Stray the Course. Buy and Hold works. You should really try it sometime. Get a plan: www.bogleheads.org/wiki/Investment_policy_statement
chuckb84
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Re: They Stayed The Course

Post by chuckb84 »

On the way down, we hit a rebalance band, so sold bonds and bought stocks, much to DW's trepidation.

On the way up, we hit the opposite rebalance band, so sold the cheap stocks we bought earlier to rebalance.

Stayed course, made a little money.
core4portfolio
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Re: They Stayed The Course

Post by core4portfolio »

i was watching NTSX vs VTI during those days
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dodecahedron
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Re: They Stayed The Course

Post by dodecahedron »

Mostly stayed the course. Decided to dump my (small) remaining holding of TIAA´s idiosyncratic TREA (real estate) in early March. That was a permanent change of course (and a continuation/completion of earlier decision to pull mostly out of TREA) combined with a desire for fewer moving parts and more simplicity. Funds reallocated to mix of Schwab TIPS fund, direct-purchase CDs, and total equity funds.
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anon_investor
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Re: They Stayed The Course

Post by anon_investor »

FIREchief wrote: Tue Aug 18, 2020 1:07 am
Actin wrote: Mon Aug 17, 2020 9:05 pm I wish I could have bought more than I did in March. A friend actually cashed out in February and bought back in at almost the bottom in March. His portfolio looks like a magic trick right now
Yeah, I used to have people tell me that as well. If they aren't showing you their statements, it didn't happen. :P
Yeah, need to see proof or it didn't happen!
Independent George
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Re: They Stayed The Course

Post by Independent George »

FIREchief wrote: Tue Aug 18, 2020 10:49 am
Valuethinker wrote: Tue Aug 18, 2020 4:35 am
FIREchief wrote: Tue Aug 18, 2020 1:07 am
Actin wrote: Mon Aug 17, 2020 9:05 pm I wish I could have bought more than I did in March. A friend actually cashed out in February and bought back in at almost the bottom in March. His portfolio looks like a magic trick right now
Yeah, I used to have people tell me that as well. If they aren't showing you their statements, it didn't happen. :P
Actually it does ;-). Sort of.

The UK tax year ends 5th April. The stock market bottomed in March 2009 and in April 2020. So my annual contributions to the IRA like product (Investment Savings Account - ISA) went in just about the market bottom ;-). Even better my spouse's ISA went in April 1st this year (into a VG Lifestrategy product) & so has done very well. The only thing better than making money for yourself is making money for your spouse ;-).
That's a very believable story! I was referring to those who start spouting off after a big drop, followed by a big recovery, that they had perfect foresight and sold at the top and rebought at the bottom. We even get a few of those here on the forum. :annoyed Again, if they aren't providing proof, it didn't happen. :twisted:
I fully believe it happens. I just also believe they don't tell you about the gains they missed by timing it wrong. Anecdotally, I've noticed that most of the people who market time track only their actual gains/losses, and not the opportunity costs versus buy & hold.
bogledogle
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Re: They Stayed The Course

Post by bogledogle »

I usually try to maxout my 401k in the first few months of the year so I set my contributions high. I set it unusually high this year due to market crash and to make up for paternity leave. My yearly bonus got paid out in March and it hit the market at the rock bottom along with the employer match almost maxing out my contribution.

That was perfect market timing 8-)
Independent George
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Re: They Stayed The Course

Post by Independent George »

bogledogle wrote: Tue Aug 18, 2020 2:13 pm I usually try to maxout my 401k in the first few months of the year so I set my contributions high. I set it unusually high this year due to market crash and to make up for paternity leave. My yearly bonus got paid out in March and it hit the market at the rock bottom along with the employer match almost maxing out my contribution.

That was perfect market timing 8-)
Do you get an employer match? Most plans I've seen cap the match as a % of each paycheck; front-loading means giving up the match once you hit the limit.
mtwhmemn
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Re: They Stayed The Course

Post by mtwhmemn »

Funny I was just calculating my paper gains (I know paper gains aren't really gains but whatever) from my 3 purchases. I bought March 9, 12 & 16. I was sticking fairly close to my 5% rebalance plan in my Boglehead 3 Fund Portfolio. Anyway, I was thinking about the original post and I really don't find it that much of a surprise people didn't do anything because what percentage of folks with Vanguard have total control of their money to rebalance any day or any time they want? I just about have total control of our money as about 90% of it I can move anytime I like, the rest is in my wife's 401k which is in a target fund and it just rode it out. My point is however terrifying it was to buy, buy, buy I was thinking how much more terrifying it would be to have my hands tied behind my back and just have to ride it out. Thoughts?
mak1277
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Re: They Stayed The Course

Post by mak1277 »

Don't most people just set their 401k and forget it for the course of their employment? This is not at all surprising to me. I would expect that most people wouldn't change their behavior based primarily on inertia.
Candor
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Re: They Stayed The Course

Post by Candor »

I guess I didn't stay the course. I moved from basically a 50/50 AA to 60/40 during the crash and had plans to go to 75/25 if the market had continued to decline. I planned to keep it there until at least new highs but the market came back a little too fast for my liking so I moved back to 50/50 approximately a month ago. Made a little and missed out on some gains but it's all good.
livesoft
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Re: They Stayed The Course

Post by livesoft »

mak1277 wrote: Tue Aug 18, 2020 3:50 pm Don't most people just set their 401k and forget it for the course of their employment? This is not at all surprising to me. I would expect that most people wouldn't change their behavior based primarily on inertia.
That's exactly what the article states, as long as you believe that what happened with clients of Vanguard DC plans happens at other firms and that "95%" is equivalent to most people.
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JoMoney
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Re: They Stayed The Course

Post by JoMoney »

My 401k plan at Fidelity went to cash for a single day... because I rolled it out of a former employers plan to an IRA at Fidelity.
The timing lucked to my advantage of about +0.50% relative to the similar investments (same index) it was tracking before the rollover.
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bogledogle
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Re: They Stayed The Course

Post by bogledogle »

Independent George wrote: Tue Aug 18, 2020 2:21 pm
bogledogle wrote: Tue Aug 18, 2020 2:13 pm I usually try to maxout my 401k in the first few months of the year so I set my contributions high. I set it unusually high this year due to market crash and to make up for paternity leave. My yearly bonus got paid out in March and it hit the market at the rock bottom along with the employer match almost maxing out my contribution.

That was perfect market timing 8-)
Do you get an employer match? Most plans I've seen cap the match as a % of each paycheck; front-loading means giving up the match once you hit the limit.
Yes, I get an employer match even when I front load, up to a certain percentage of my salary.
mak1277
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Re: They Stayed The Course

Post by mak1277 »

livesoft wrote: Tue Aug 18, 2020 4:22 pm
mak1277 wrote: Tue Aug 18, 2020 3:50 pm Don't most people just set their 401k and forget it for the course of their employment? This is not at all surprising to me. I would expect that most people wouldn't change their behavior based primarily on inertia.
That's exactly what the article states, as long as you believe that what happened with clients of Vanguard DC plans happens at other firms and that "95%" is equivalent to most people.
I guess my point was that the article maybe made it sound like those people were "staying the course" intentionally...in other words they were showing confidence in their plan, or the market, or something else. My point of view is that most of those people were just doing nothing and not even thinking about whether they should or shouldn't be doing something.

Sometimes blissful ignorance accidentally guides you to the right decision.
bighatnohorse
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Re: They Stayed The Course

Post by bighatnohorse »

mak1277 wrote: Tue Aug 18, 2020 3:50 pm Don't most people just set their 401k and forget it for the course of their employment? This is not at all surprising to me. I would expect that most people wouldn't change their behavior based primarily on inertia.
Your question is probably right.
Others may simply be too far overweight in stocks and needed to get out - and needed that little push to action.
It could mean that they take Capital Gains rather than suffer losses? Or have losses and want to capture capital gains to offset the losses?
Lots of variables . . .
Independent George
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Re: They Stayed The Course

Post by Independent George »

mak1277 wrote: Wed Aug 19, 2020 7:50 am I guess my point was that the article maybe made it sound like those people were "staying the course" intentionally...in other words they were showing confidence in their plan, or the market, or something else. My point of view is that most of those people were just doing nothing and not even thinking about whether they should or shouldn't be doing something.

Sometimes blissful ignorance accidentally guides you to the right decision.
I think that's why they split their data between defined contribution (DC) accounts and retail accounts - retail accounts were more likely to trade (17% of accounts vs 5%, though I would guess a significant number of those trades were TLH or rebalancing), but fewer than 0.5% went straight to cash in both sets.
rich126
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Re: They Stayed The Course

Post by rich126 »

Were the $100K figures the average balance for everyone? Or just the traders? Or just the ones who did nothing?

The average person has a very small account (obviously not typical of people on this site). And it is easier to do nothing with a small balance than when you have $300K, $500K or more. I know when I was younger I just put money into a 401K and never looked at it.
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