"experienced" investors: is this time different?

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latesaver
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"experienced" investors: is this time different?

Post by latesaver »

Myself included (I am 42 years old), many forum members didn't live through the emotional investing "tolls" brought on by the 2000 dot com bust or the great recession of 2008/2009.

Some older BH's even saw the challenges presented by earlier time periods in the 60s and 70s.

For what it is worth, I don't consider those that survived the "crash" of March 2020 as battle tested.

For those that have actually lived and invested during these time periods (70s, 2000s, 2008/2009), i am curious to hear how you see the current investing landscape. There is no shortage of "wisdom" from younger (hindsight) professionals throwing out CAPE figures, soft new-economy stats, etc., but in this case I am more interested in hearing from experienced investors why they are staying the course.
Normchad
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Re: "experienced" investors: is this time different?

Post by Normchad »

It’s a walk in the park compared to 2008.

We have full employment right now. Everybody has gobs of cash. This whole thing would feel very different is folks were losing their jobs.

Remember, we are just back to where we were like 14 months ago….

I don’t sense a feeling of “fear” or “despair” in people, like I did in the past.
Parkinglotracer
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Re: "experienced" investors: is this time differen

Post by Parkinglotracer »

latesaver wrote: Sat May 21, 2022 8:39 pm Myself included (I am 42 years old), many forum members didn't live through the emotional investing "tolls" brought on by the 2000 dot com bust or the great recession of 2008/2009.

Some older BH's even saw the challenges presented by earlier time periods in the 60s and 70s.

For what it is worth, I don't consider those that survived the "crash" of March 2020 as battle tested.

For those that have actually lived and invested during these time periods (70s, 2000s, 2008/2009), i am curious to hear how you see the current investing landscape. There is no shortage of "wisdom" from younger (hindsight) professionals throwing out CAPE figures, soft new-economy stats, etc., but in this case I am more interested in hearing from experienced investors why they are staying the course.
At age 61 I don’t like the amount of money and bond buying the gov has spent to support the financial markets during the recent years and pandemic. It is evident the Fed keeping interest rates so low for so long has fueled inflation. I don’t know if the amounts of liquidity pumped into markets is unheard of (different this time). I tell my kids to save money by buying index funds as I am sure 5, 10, 15 years from now the stock market will be higher than it is now and they will be happy in retirement that they did invest.

I have no idea if it is different this time. I’d invest in my personal skills, capital, education AND live beneath my means and invest - that is all you can do. You can’t control the rest. Learn a skill that people will pay you to do.
Wanderingwheelz
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Re: "experienced" investors: is this time different?

Post by Wanderingwheelz »

Normchad wrote: Sat May 21, 2022 8:41 pm It’s a walk in the park compared to 2008.

We have full employment right now. Everybody has gobs of cash. This whole thing would feel very different is folks were losing their jobs.

Remember, we are just back to where we were like 14 months ago….

I don’t sense a feeling of “fear” or “despair” in people, like I did in the past.
Not everybody has gobs of cash, and those who do are not spending it like they were only weeks ago.

Thankfully my business is holding up pretty well, but one successful business a few doors down is off 40% so far this May. Reports I’m hearing from others are not encouraging, either. Things are slowing down incredibly fast, which of course the stock market is telling all of us who care to pay attention. Talk to your business owner friends and see what they tell you. I bet they’re concerned.

People losing their jobs may not be a problem right now, but there’s no reason to think it can’t be a problem in the future. We’re only in the beginning, if much of what has been talked about is followed through on.

So sure, this time is different. None of us know what the next couple of years is going to look like. Maybe it will turn around quickly, maybe not.
lostcoast
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Re: "experienced" investors: is this time different?

Post by lostcoast »

When the market was soaring did you ask yourself, is this time different? It's just the other side of the same coin.
Last edited by lostcoast on Sat May 21, 2022 11:01 pm, edited 1 time in total.
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Re: "experienced" investors: is this time different?

Post by nisiprius »

It's always different, but it's no more different than it usually is.

One thing that makes this unlike 2008-2009 (so far) is that what was really scary about 2008-2009 was a seemingly unending series of giant financial institutions collapsing. There are literally too many to remember, and each of them was simply unthinkable. Some will remember Jim Cramer hollering "Do not sell Bear Stearns! There is nothing wrong with Bear Stearns! Bear Stearns is all right," a day or two before it collapsed. Washington Mutual, Lehman Brothers, Fannie Mae and Freddie Mac, AIG, that's less than half of them. Citicorp--the firm with a single-letter stock ticker, C--was in serious danger but squeaked by.

This time, nothing like that has happened; maybe it will happen, but is hasn't begun.
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Re: "experienced" investors: is this time different?

Post by Artful Dodger »

I remember 2000-2001 and 2008-2009 well. I also remember back Friday from October 1987. Investing in the eighties and nineties was different because you didn’t have the immediate feedback that you get now from checking your accounts online, the 24 hour cable news cycle, and all the online news and resources. Most of my investments were in my work 401k and we got quarterly statements. That’s it. For me, I don’t remember much drama in 2000-2001. The people who really got killed were the ones overweight in tech. Probably similar to the people holding crypto now. By 2008, I had some real money, was close to a 100% AA, had some soon to be bankrupt mortgage lenders in my portfolio, and saw more than a 50% decline. It was gut wrenching. But the thing that precipitated the 08/09 crisis was breakdown in the world banking and risk assessment system. That spawned high unemployment, underemployment, and the effects were being felt years later. I think (of course, who really knows) the most likely outcome this time will be a slow recovery with higher than normal inflation, a bear market, and then mediocre market returns for a few years.
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Re: "experienced" investors: is this time different?

Post by Mike Scott »

This time does not seem as catastrophic but there is uncertainty and a lack of confidence at home and across the world. It's hard to know what happens next but my guess is that things will continue to bounce around until some of the uncertainty eases. I will do another tax loss harvest if there is 10% more drop. My autoinvest will continue each month. I'm staying in for the long haul.
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Re: "experienced" investors: is this time different?

Post by Tundrama »

latesaver wrote: Sat May 21, 2022 8:39 pm Myself included (I am 42 years old), many forum members didn't live through the emotional investing "tolls" brought on by the 2000 dot com bust or the great recession of 2008/2009.

Some older BH's even saw the challenges presented by earlier time periods in the 60s and 70s.

For what it is worth, I don't consider those that survived the "crash" of March 2020 as battle tested.

For those that have actually lived and invested during these time periods (70s, 2000s, 2008/2009), i am curious to hear how you see the current investing landscape. There is no shortage of "wisdom" from younger (hindsight) professionals throwing out CAPE figures, soft new-economy stats, etc., but in this case I am more interested in hearing from experienced investors why they are staying the course.
Same song, second verse. Different ingredients and flavors but outcome will remain the same for the S and P 500.

People are people and human reactions become very predictable when these same folks freak out at 10% down verses 40% down. In order for the market to go down, down, down…people are selling.

I won’t allow or permit losses. In order to achieve losses in the Market, you need to sell and sell when your shares are worth less than what you paid.

Why am I staying the course… because we only know what Has happened in the past.

From my 30 plus years in the game, the Market is not for the weak hearted. But here is a fact, the biggest factor in Market trends is Human Emotion. Add to that greed, technology, cash flow, and speculation and in my opinion, how over time can the Market lose?

If you think of the S and P 500 as the single greatest company on planet earth, who the hell doesn’t bet on That!

Will it take one year, three years…maybe. But if instant gratification moves the wind within a person’s lungs, the Market is certainly not for them.
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Re: "experienced" investors: is this time different?

Post by Random Musings »

Bear markets are all a little different, but what stands out compared to the 2000-2002 and 2008-2009 bear markets is that bonds are not providing ballast to a portfolio and inflation is having more of an impact on real returns.

Reminds me when inflation impacted real returns from the late 60's to the early 80's, and nominal returns were poor to begin with. Hopefully, we won't go through another stretch like that, but that required aggressive Fed rate hikes to end that inflationary cycle.

RM
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Re: "experienced" investors: is this time different?

Post by CraigTester »

I fear it's exactly the same.

Collective denial, that keeps working out fine, until finally it doesn't
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Re: "experienced" investors: is this time different?

Post by KlangFool »

OP,

1) I do not know.

2) I know that I do not know.

3) I choose to be prepared regardless of whatever happened next. I am prepared for it to be worst than whatever happened before.

4) My employer had laid off some people and announced hiring freeze.

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Re: "experienced" investors: is this time different?

Post by delamer »

The alternative to staying the course is “selling low.” Which is a pretty lousy alternative.

We were 10ish years out from retirement during the Great Recession. We were comfortable with our portfolio’s diversification and risk level. We rebalanced and continued contributing to our 401(k)s.

Today, it’s the same (well, no contributions now).

Either you believe in the long-term viability of the stock market or you don’t. If you do, then ignore the noise. Keep your eye on the long-term prize.

And if you invested in stocks in order to make a short-term profit, then you aren’t going to get any sympathy from me when you end up with losses instead.

That said, many people find out during market drops that they aren’t comfortable with their portfolio’s diversification/risk. I suspect there are tech-heavy investors discovering that now. If that’s the case, then you should make the adjustments that you need so you can sleep at night.

But like the wise poster here says “You can’t get the risk premium without taking the risk.” Accept that as you lower your stock allocation, you lower your long-term return.
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Re: "experienced" investors: is this time different?

Post by freyj6 »

nisiprius wrote: Sat May 21, 2022 9:13 pm It's always different, but it's no more different than it usually is.
Haha I love this.

One thing that I find particularly interesting right now, although it probably isn’t one of the major variables, is the “buy the dip”sentiment being so strong among the younger generation. So many people seem so sure that everything, regardless of how speculative, goes back up.

It’ll be interesting to see if/when this sentiment changes, or we run out of willing and able buyers.
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Re: "experienced" investors: is this time different?

Post by HanSolo »

latesaver wrote: Sat May 21, 2022 8:39 pm ... I am more interested in hearing from experienced investors why they are staying the course.
I'd just reference Jack Bogle's books and say... "what he said". I think he explained it pretty well.

I think anyone bothered by the current situation might benefit from holding a target-date index fund long term.
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Re: "experienced" investors: is this time different?

Post by Marseille07 »

freyj6 wrote: Sat May 21, 2022 10:10 pm Haha I love this.

One thing that I find particularly interesting right now, although it probably isn’t one of the major variables, is the “buy the dip”sentiment being so strong among the younger generation. So many people seem so sure that everything, regardless of how speculative, goes back up.

It’ll be interesting to see if/when this sentiment changes, or we run out of willing and able buyers.
It's not just the younger generation though. Even the notion of rebalancing, held strongly by the Bogleheads, is essentially buying the dip phrased differently.
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Re: "experienced" investors: is this time different?

Post by Ocean77 »

So far it's a total non-event. The market is about where it was in early 2021. I don't recall anybody worrying about the market being too low back then, so why should we now. And if we had been told last year to expect a flat market for the next year (after those big recent gains), I think we would have said "Fine".
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Re: "experienced" investors: is this time different?

Post by MarkRoulo »

latesaver wrote: Sat May 21, 2022 8:39 pm Myself included (I am 42 years old), many forum members didn't live through the emotional investing "tolls" brought on by the 2000 dot com bust or the great recession of 2008/2009.

Some older BH's even saw the challenges presented by earlier time periods in the 60s and 70s.

For what it is worth, I don't consider those that survived the "crash" of March 2020 as battle tested.

For those that have actually lived and invested during these time periods (70s, 2000s, 2008/2009), i am curious to hear how you see the current investing landscape. There is no shortage of "wisdom" from younger (hindsight) professionals throwing out CAPE figures, soft new-economy stats, etc., but in this case I am more interested in hearing from experienced investors why they are staying the course.
I don't have any specific suggestion about what you should do (buy more, flee into cash, ...) that is different from any of these other downturns. But ... one thing that MIGHT be different about the environment is that we weren't dealing with inflation in the dot-com crash, the 2008 collapse or the 2020 drop.

We *were* dealing with inflation in 1980-2 (and 1973-4) so this isn't "new," but it will be something that a lot of folks haven't experienced. Imagine that the stock market is doing whatever it is doing (going up, going down, fluctuating, whatever ...) AND your take home pay is dropping by 5% a year in real terms. That's not the same thing as your 401(k) dropping.

During the drops in the past 20-ish years "hang on and wait it out" worked fine. And this may well work fine for this one, too. For your investments. But you may also have to deal with a drop in take home pay in real terms this go-around. And the fun created by rising interest rates. That could be quite different that what we saw in 2000, 2008, 2020 (though not in 1980-2). So maybe keep this in mind when looking back at the earlier stock market drops.
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Re: "experienced" investors: is this time different?

Post by blarg »

I've posted before about how I crashed and burned in 08-09, which maybe counts? It was definitely an experience, anyway :oops:

This time around I'm feeling pretty sanguine about my investments, and about the market generally. It was looking very frothy before this, so I've been expecting it for quite a while and when the risk finally showed up I wasn't taken by surprise. I have my emergency fund, I've kept the 60/40 allocation I've had ever since I got back into the market years ago, and I'm down about 15%. My partner and I are happy and healthy, and we're in a good position to ride this out. Life is good.
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Re: "experienced" investors: is this time different?

Post by HomerJ »

Normchad wrote: Sat May 21, 2022 8:41 pm It’s a walk in the park compared to 2008.

We have full employment right now. Everybody has gobs of cash. This whole thing would feel very different is folks were losing their jobs.
This... Until people start losing their jobs, this is nothing.
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Re: "experienced" investors: is this time different?

Post by HomerJ »

nisiprius wrote: Sat May 21, 2022 9:13 pm Some will remember Jim Cramer hollering "Do not sell Bear Stearns! There is nothing wrong with Bear Stearns! Bear Stearns is all right," a day or two before it collapsed.
It's amazing he's still allowed to even talk on television.

How many actual real people's financial lives has he ruined? And no one cares.

You should almost go to jail for being that wrong.
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Re: "experienced" investors: is this time different?

Post by HomerJ »

CraigTester wrote: Sat May 21, 2022 9:53 pm I fear it's exactly the same.

Collective denial, that keeps working out fine, until finally it doesn't
And then it does work out again.

So far, every single crash, has been followed by new historic highs where someone who just stayed the course, still gets rich.

The 9%-10% nominal long-term return of the stock market INCLUDES the crashes...

It's true that the future may be different, but the past is written. Collective denial, then a crash, then on to new heights, where you still make a ton of money even though there was a crash.

This time may be different, but I don't know why CraigTester "fears it's exactly the same". The "same" was very good to long-term investors.
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Re: "experienced" investors: is this time different?

Post by ClassII »

HomerJ wrote: Sun May 22, 2022 12:19 amThis time may be different, but I don't know why CraigTester "fears it's exactly the same". The "same" was very good to long-term investors.
It's all fun and games until someone gets laid off. I used to work for a guy who's grandfather made a kajillion dollars during the Great Depression. All he had to do was buy up a ton of real estate! Helped of course that he had money all the way through the 20s and 30s when everyone else lost everything. Smart guy for sure but also extremely lucky he a) had the business acumen b) had the money when nobody else did and c) didn't manage to step on any land mines along the way.

I remember being in Miami in 2009 and a brand new high-rise right on the water was selling condos for $80k. Man I wish I had bought back then but I was dead broke and living paycheck to paycheck simply happy to have a job. I had friends moving back with their parents, leaving the career they worked hard for in college for good, even had one die in an accident working construction to keep food on the table. The deals were there, I saw them right before my eyes but I was in no position to reach out and grab them.

Its a great thing that so many here are ready to scoop up some amazing deals. Truly you could end up like my boss' grandfather BUT don't think that recessions are for other people. There's a reason everything goes on fire sale.
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Re: "experienced" investors: is this time different?

Post by carminered2019 »

Every time is different, but the is ending is the same. Best way to prepare is to live debt free, mortgage free, low expenses and have a high saving rate.
Last edited by carminered2019 on Sun May 22, 2022 12:39 am, edited 1 time in total.
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Re: "experienced" investors: is this time different?

Post by invest4 »

Normchad wrote: Sat May 21, 2022 8:41 pm It’s a walk in the park compared to 2008.

We have full employment right now. Everybody has gobs of cash. This whole thing would feel very different is folks were losing their jobs.

Remember, we are just back to where we were like 14 months ago….

I don’t sense a feeling of “fear” or “despair” in people, like I did in the past.
This. There was considerable fear during the Great Financial Crisis...and rightfully so as companies collapsed and / or had to be propped up by the government while people lost their jobs, houses, etc. This is nothing like that...so far. While the recent volatility is annoying (have a paper loss that is as much now at -19% as I did in 2008 @-50%), I'm not getting too concerned until people start losing their jobs.

As fewer people have pensions / options to support their retirement, what alternative is there really but to stay the course?
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Re: "experienced" investors: is this time different?

Post by HomerJ »

ClassII wrote: Sun May 22, 2022 12:28 am
HomerJ wrote: Sun May 22, 2022 12:19 amThis time may be different, but I don't know why CraigTester "fears it's exactly the same". The "same" was very good to long-term investors.
It's all fun and games until someone gets laid off. I used to work for a guy who's grandfather made a kajillion dollars during the Great Depression. All he had to do was buy up a ton of real estate! Helped of course that he had money all the way through the 20s and 30s when everyone else lost everything. Smart guy for sure but also extremely lucky he a) had the business acumen b) had the money when nobody else did and c) didn't manage to step on any land mines along the way.

I remember being in Miami in 2009 and a brand new high-rise right on the water was selling condos for $80k. Man I wish I had bought back then but I was dead broke and living paycheck to paycheck simply happy to have a job. I had friends moving back with their parents, leaving the career they worked hard for in college for good, even had one die in an accident working construction to keep food on the table. The deals were there, I saw them right before my eyes but I was in no position to reach out and grab them.

Its a great thing that so many here are ready to scoop up some amazing deals. Truly you could end up like my boss' grandfather BUT don't think that recessions are for other people. There's a reason everything goes on fire sale.
I didn't scoop up any great deals in 2008... I was lucky enough to keep my job, and I just kept investing each month, and everything turned out fine.

If this crash turns out the "same" as crashes in the past, that's good.

If it's "different this time", then maybe not.

CraigTester seems to think that buying and holding through the 2000-2003 and 2008-2009 crashes somehow destroyed investing dreams. They didn't. All of us who stayed the course, and bought and hold, are rich today.

Sure, the future may be different... Maybe the next crash will last 30 years. But there's no reason to fear the "same". The "same" (the past) was very good to buy and hold.
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Re: "experienced" investors: is this time different?

Post by secondopinion »

ClassII wrote: Sun May 22, 2022 12:28 am
HomerJ wrote: Sun May 22, 2022 12:19 amThis time may be different, but I don't know why CraigTester "fears it's exactly the same". The "same" was very good to long-term investors.
It's all fun and games until someone gets laid off. I used to work for a guy who's grandfather made a kajillion dollars during the Great Depression. All he had to do was buy up a ton of real estate! Helped of course that he had money all the way through the 20s and 30s when everyone else lost everything. Smart guy for sure but also extremely lucky he a) had the business acumen b) had the money when nobody else did and c) didn't manage to step on any land mines along the way.

I remember being in Miami in 2009 and a brand new high-rise right on the water was selling condos for $80k. Man I wish I had bought back then but I was dead broke and living paycheck to paycheck simply happy to have a job. I had friends moving back with their parents, leaving the career they worked hard for in college for good, even had one die in an accident working construction to keep food on the table. The deals were there, I saw them right before my eyes but I was in no position to reach out and grab them.

Its a great thing that so many here are ready to scoop up some amazing deals. Truly you could end up like my boss' grandfather BUT don't think that recessions are for other people. There's a reason everything goes on fire sale.
Right. “The market can stay irrational longer than the investor can stay solvent.” So, if one can stay solvent, then they can buy the fire sale.

A layoff should not dislodge investment plans. If it can, then they are investing incorrectly; it is that simple. I saw my job on the chopping block in slow motion during 2020 (it come a year later); I not only stayed put, but also I increased the portfolio risk. It could have gone sour, but I do not enter positions that I cannot afford to lose. Of course it is not fun and games; it is serious business. I was not having fun in 2020 for sure, but a lot of unexpected profits did result.
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Re: "experienced" investors: is this time different?

Post by secondopinion »

latesaver wrote: Sat May 21, 2022 8:39 pm Myself included (I am 42 years old), many forum members didn't live through the emotional investing "tolls" brought on by the 2000 dot com bust or the great recession of 2008/2009.

Some older BH's even saw the challenges presented by earlier time periods in the 60s and 70s.

For what it is worth, I don't consider those that survived the "crash" of March 2020 as battle tested.

For those that have actually lived and invested during these time periods (70s, 2000s, 2008/2009), i am curious to hear how you see the current investing landscape. There is no shortage of "wisdom" from younger (hindsight) professionals throwing out CAPE figures, soft new-economy stats, etc., but in this case I am more interested in hearing from experienced investors why they are staying the course.
I think too many underestimated what was going to happen in 2020 prior to the crash. I think too many underestimated what actually occurred. I think too many are underestimating the repercussions of it. 2020 was a battle; the next few years are the war.
Passive investing: not about making big bucks but making profits. Active investing: not about beating the market but meeting goals. Speculation: not about timing the market but taking profitable risks.
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Re: "experienced" investors: is this time different?

Post by Mr. Rumples »

This time is different in as much as every economic cycle is different in one way or another. Its unique in that we are in a pandemic, have supply side issues, war disrupting the global economy, but how to quantify that historically? Are we entering a new phase of capitalism? We have gone from mercantile, to competitive to New Deal and perhaps are now entering or are in a post industrial economy.

But as noted above, prudence in savings, investing is the only recourse since only the clairvoyant know the future.
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Re: "experienced" investors: is this time different?

Post by JoeRetire »

Wanderingwheelz wrote: Sat May 21, 2022 8:57 pm Not everybody has gobs of cash, and those who do are not spending it like they were only weeks ago.
You can speak for yourself, but not for all of "those who do".
I can tell you from personal experience that you are incorrect. I have not changed my spending at all.
People losing their jobs may not be a problem right now, but there’s no reason to think it can’t be a problem in the future.
Pretty much anything can be a "problem in the future". Or not.
So sure, this time is different. None of us know what the next couple of years is going to look like. Maybe it will turn around quickly, maybe not.
Just like every other time.
This is gonna be my time. Time to taste the fruits and let the juices drip down my chin. I proclaim this: The Summer of George!
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Re: "experienced" investors: is this time different?

Post by JoeRetire »

Random Musings wrote: Sat May 21, 2022 9:50 pm Bear markets are all a little different, but what stands out compared to the 2000-2002 and 2008-2009 bear markets is that bonds are not providing ballast to a portfolio and inflation is having more of an impact on real returns.
... and very low unemployment.
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Flymore
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Re: "experienced" investors: is this time different?

Post by Flymore »

The Fed's balance sheet unwinding is different this time. I cannot remember a time in my life when the Fed had nine trillion of assets to sell. Can anyone else?

Some speculate the Fed stepped in last Friday to buy more assets and prop up the market.

https://www.federalreserve.gov/monetary ... trends.htm

https://www.advisorperspectives.com/art ... 2781719905
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burritoLover
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Re: "experienced" investors: is this time different?

Post by burritoLover »

HomerJ wrote: Sun May 22, 2022 12:19 am And then it does work out again.

So far, every single crash, has been followed by new historic highs where someone who just stayed the course, still gets rich.
Except Japan but of course that couldn't happen here cause 'Merica.
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Re: "experienced" investors: is this time different?

Post by retiredjg »

latesaver wrote: Sat May 21, 2022 8:39 pm"experienced" investors: is this time different?
Right now is very different from the past bear markets you mentioned...because we are not nearly "there" yet. We are barely in a bear, it's been about 2 seconds, and we may not even stay in a bear market. In reality, nothing much has happened so far.

If things continue to go south by a lot more and if it stays that way a long time, then we'll be able to look back and see what things were the same and what things were different. Maybe that will happen. Maybe it won't. None of us knows.


....but in this case I am more interested in hearing from experienced investors why they are staying the course.
Because that is all one can do without permanently losing money. And I might need it all. :happy

I will be staying the course (including rebalancing if the need arises) because I prepared for this many years ago by investing in a way that would not be very uncomfortable when the bad times come. I was able to know where that place is by having been through a really bad time before.
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Re: "experienced" investors: is this time different?

Post by JDave »

I started investing in 1980, so have been through the crashes of '87, 2000, and 2008. What we are seeing now is mild - a little ripple. Remember the "We're all gonna die" Covid-19 panic of April, 2020? People felt that way about the economy in 2008-2009. I didn't go to cash in the three crashes I've experienced, and that turned out to be a good thing.
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Re: "experienced" investors: is this time different?

Post by Call_Me_Op »

2008 was unique and much scarier than 2000-2002 (or 1987). What happened in 2020 scared me less because (in part) I was much more seasoned. In 2008, we really were at the precipice of collapse of the financial system. Even if you went to "cash" you were not safe. To get a sense of how scary it was, take a look at the famous Sheepdog post - showing that even experienced investors were capitulating.
Last edited by Call_Me_Op on Sun May 22, 2022 7:06 am, edited 1 time in total.
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Re: "experienced" investors: is this time different?

Post by Sandtrap »

latesaver wrote: Sat May 21, 2022 8:39 pm Myself included (I am 42 years old), many forum members didn't live through the emotional investing "tolls" brought on by the 2000 dot com bust or the great recession of 2008/2009.

Some older BH's even saw the challenges presented by earlier time periods in the 60s and 70s.

For what it is worth, I don't consider those that survived the "crash" of March 2020 as battle tested.


1
For those that have actually lived and invested during these time periods (70s, 2000s, 2008/2009), i am curious to hear how you see the current investing landscape.
2
There is no shortage of "wisdom" from younger (hindsight) professionals throwing out CAPE figures, soft new-economy stats, etc.,
3
but in this case I am more interested in hearing from experienced investors why they are staying the course.[/u]


Top OP;

Note: "Experienced" investors. . . is highly subjective depending on the person and life and income position:
IE:
1. Those working and watching their retirement accounts fluctuate.
2. Whose working and having their savings and investments at less than 10% or just a few dollars relatively speaking, of their net worth or percentage of income. (not much to lose in the big picture). Enough experience to talk about it, sometimes knowingly. :shock:
3. Those who had everything they own and all of their income tied up in the economy and investing world as employers and/or business owners without the relative safety of institutional employment, etc, etc, etc.
4. Others.

Per your questions:
1. Depending on the nature of the investment; from market funds in one's 401k, etc, TO personally owned R/E residential multi unit (not single family home) apartment building rental TO a small commercial multi unit and shopping center TO other vehicles in the wide and broad world of investing:
a) The 70's were absolutely crushing. Many went bankrupt and never recovered.
Also, Those heavily invested in various higher risk stocks, "financial advisor sales brokers and firms", etc, also took years or never to recover.
Personally: I have seen some with very substantial holdings survive and then prosper again, and vs vs never to recover.

2. Yes. There is a lot of academic and theoretical and also extensive and deep profesional experience on "thee forum", and also a certain amount of "armchair Monday morning" quarterbacking" with some sharp observations and good things to share.
The resultant exhanges, banter, chatter, discussions, debates, can be beneficial.

3. There were a lot of similar short extreme economic and market (not the same) drops similar to the roughly 30 percent in 30 days in March 2020 (roughly), since the 70's. Depending on how much one actually had "on the line", "skin in the game", as long as one "stayed the course" and made business and personal adjustments to "survive", it worked out okay.

To OP:

Example: Recently passed FIL bought 40,000 dollars of Vanguard Balanced Index Fund when it was lst created. As of about 3 years ago, it was worth 428,000 dollars with no additional contributions along the way, except for dividend/interest auto reinvestment.

j :D
dis laimer: a zillions paths and options to personal investing and life, and a zillion opinionizations from a zillion folks, this is only one.
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Re: "experienced" investors: is this time different?

Post by jh »

I'm 46 and have been investing since I was in college. So I got to see the dot com crash, the 2008 crash, the pandemic crash, and this crash. As well as all the smaller crashes.

IMHO, this is nothing. None of the other crashes come anywhere close to 2008. The 2008 crash was scary as bleepity bleep. What we are going through today is boring, tame, "weak sauce", nap time, etc.

I had finally gotten up to around $100k by 2008 after a decade of savings, and I got to watch that get cut in half at which point I panicked and pulled $50k out and I staid out of the market for the next 2-3 years because I was so disgusted and pissed off at what had happened.

Eventually I got back into investing again but this time I did it my way. The boglehead 3-fund method does not work for me. I need to invest for dividend income to feel comfortable. That way when the market goes down I can see my cash flow continuing to come in and I feel secure. As well as I can invest during the crash and feel good about it because I am buying solid companies with higher yields than normal.

If it were not for dividend investing I would not invest in stocks again. I cannot rely on capital gains.

By the way I am taking a year off from working on June 30, 2022. I'm going to help my parents move closer to where my brother lives and I'm going to move to another state with them. I have been in IT for 22 years. Its going to take me a year to get their house ready to be put on the market and get the three of us moved. Given the nature of IT I'll probably have a hard time getting back into it after a year break, but its fine. I have around $1 million in my taxable account in the Schwab US Equity etf SCHD which throws off reliable income and I have around 2.5 years living expenses in cash.

So, no I am not worried about this crash at all.
Retiring 2022 age 46. Pension = 21.5 years; Trad/Roth IRA = PSLDX, PQTIX, KMLM; Taxable = SCHD
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Re: "experienced" investors: is this time different?

Post by Leesbro63 »

It ALWAYS feels different "this time". In 2008, it seemed that there was no way out of a Depression. I had no idea that the Fed would be as accommodative as it's been and that the national debt would be allowed to grow from $10T to $30T in 14 years. What feels "different this time" is that it feels like there's no way out. The Fed can no longer keep rates low, as the outrage over inflation (especially from aging Boomers who remember the 1970s) is becoming too great. On the other hand, borrowing to keep things going is becoming more and more expensive. Will this FINALLY be the time when it all unravels and we have a 1929 Crash/Depression, or a 1966-1981 inflation era? I worry about both. But have been around long enough to know that there's not much I can do to protect a large taxable portfolio from either.
Last edited by Leesbro63 on Sun May 22, 2022 8:14 am, edited 1 time in total.
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Re: "experienced" investors: is this time different?

Post by Wanderingwheelz »

What makes this period different for experienced investors is where interest rates were a few months ago when the market peaked.
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Re: "experienced" investors: is this time different?

Post by whodidntante »

Every crash has its own unique circumstances.

I reckon this one is due to supply chain constraints impacting corporate profits, high inflation, and the Fed reluctantly unwinding the life support that justified high asset prices. What's concerning is that there is still massive fiscal and monetary stimulus right now, yet things are still getting ugly. The US government is running a huge deficit right now and the Fed still has a massive balance sheet. The checks to individuals that people like to argue about are a smokescreen for the real stimulus.

I've long suspected that valuations matter in spite of the market doing its very best to forget that. If you were not concentrated in "highly valued" growth stocks things have been better for you. If you were concentrated in value instead of market cap weighted, even better.
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Re: "experienced" investors: is this time different?

Post by minimalistmarc »

It’s no different from a behavioural psychology perspective. Every time a correction occurs bears come out proclaiming a massive crash is nigh, it almost feels foolish to invest. I just ignore it all and carry on, I have faith that in the long term it will work out great , or we’ll all be dead.
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Re: "experienced" investors: is this time different?

Post by Target2019 »

latesaver wrote: Sat May 21, 2022 8:39 pm Myself included (I am 42 years old), many forum members didn't live through the emotional investing "tolls" brought on by the 2000 dot com bust or the great recession of 2008/2009.

Some older BH's even saw the challenges presented by earlier time periods in the 60s and 70s.

For what it is worth, I don't consider those that survived the "crash" of March 2020 as battle tested.

For those that have actually lived and invested during these time periods (70s, 2000s, 2008/2009), i am curious to hear how you see the current investing landscape. There is no shortage of "wisdom" from younger (hindsight) professionals throwing out CAPE figures, soft new-economy stats, etc., but in this case I am more interested in hearing from experienced investors why they are staying the course.
While you're working and contributing, as I was in 2008/2009, it is a blessing in disguise when you can increase your contributions to funds which are selling at 20% discount or more. On your total investment chart you'll see a steep cliff, but in time that becomes a crater, and then a very small depression.
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Re: "experienced" investors: is this time different?

Post by dbr »

There is no evidence that anything happening now is anywhere near as difficult as many things that have happened in the past. In fact, on that criterion there isn't even anything happening yet. That doesn't preclude something becoming worse than ever before, but there is no reason to expect such a thing. Reasons to expect really bad things have been much worse in the past.

As Nisi says "It's always different, but it's no more different than it usually is."

As far as immediate financial impact, we are still wealthier now 15 years into retirement than at any time more than two years ago! You could say that current financial conditions are actually better than at any time in the past. If 15 years of the greatest bull market in stocks that we have seen has not been good, I don't know what is. While one can point to 2008 as a really bad financial event the astonishing thing about it is how quickly it was overcome. The real danger there is to think such recoveries are routine. 2020 doesn't even exist and is also a warning not to think it is always that easy.

The test for patience in investing would have been 1960-1985. Maybe 2000-2010 was a test. Will 2020 be 1960? Who knows?

I would say that the COVID pandemic has been an extreme in the area of public health and its implications but the truly remarkable thing about it is that it took so long to happen. We were lucky for a long time.

I was born before WW2 was over and my parents grew up through the Great Depression and tried to start careers during that war.
Last edited by dbr on Sun May 22, 2022 9:24 am, edited 1 time in total.
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Re: "experienced" investors: is this time different?

Post by HMSVictory »

latesaver wrote: Sat May 21, 2022 8:39 pm Myself included (I am 42 years old), many forum members didn't live through the emotional investing "tolls" brought on by the 2000 dot com bust or the great recession of 2008/2009.

Some older BH's even saw the challenges presented by earlier time periods in the 60s and 70s.

For what it is worth, I don't consider those that survived the "crash" of March 2020 as battle tested.

For those that have actually lived and invested during these time periods (70s, 2000s, 2008/2009), i am curious to hear how you see the current investing landscape. There is no shortage of "wisdom" from younger (hindsight) professionals throwing out CAPE figures, soft new-economy stats, etc., but in this case I am more interested in hearing from experienced investors why they are staying the course.
I'm 43 and been investing since I was 13 and opened the STAR fund. 3 decades. Been through 99-01 dot com, 07-09 GFC and 20 covid panic.

In college I took a couple thousand and turned it into $40k in the hot Janus funds of the day - then it went to $3k. Lesson learned.

Each was unique but they have the same pattern. Huge run up, this time its different mania, the genius new managers come out (Janus, ARK, ect), one event starts the downward spiral, then its abandon ship and the sky is falling. This is when the big money is made. When everyone else has abandoned all hope of a recovery. 07-09 was real interesting because if they let AIG fail it would have been catastrophic for the entire financial system. Once again we survived as we always do.

Historically this is nothing new and has been happening for centuries. From tullip mania to the west indie companies. If you would like to learn about the history of the markets then the book Devil Take the Hindmost a history of financial speculation is an excellent read.
Stay the course!
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Re: "experienced" investors: is this time different?

Post by CraigTester »

HomerJ wrote: Sun May 22, 2022 12:41 am
ClassII wrote: Sun May 22, 2022 12:28 am
HomerJ wrote: Sun May 22, 2022 12:19 amThis time may be different, but I don't know why CraigTester "fears it's exactly the same". The "same" was very good to long-term investors.
It's all fun and games until someone gets laid off. I used to work for a guy who's grandfather made a kajillion dollars during the Great Depression. All he had to do was buy up a ton of real estate! Helped of course that he had money all the way through the 20s and 30s when everyone else lost everything. Smart guy for sure but also extremely lucky he a) had the business acumen b) had the money when nobody else did and c) didn't manage to step on any land mines along the way.

I remember being in Miami in 2009 and a brand new high-rise right on the water was selling condos for $80k. Man I wish I had bought back then but I was dead broke and living paycheck to paycheck simply happy to have a job. I had friends moving back with their parents, leaving the career they worked hard for in college for good, even had one die in an accident working construction to keep food on the table. The deals were there, I saw them right before my eyes but I was in no position to reach out and grab them.

Its a great thing that so many here are ready to scoop up some amazing deals. Truly you could end up like my boss' grandfather BUT don't think that recessions are for other people. There's a reason everything goes on fire sale.
I didn't scoop up any great deals in 2008... I was lucky enough to keep my job, and I just kept investing each month, and everything turned out fine.

If this crash turns out the "same" as crashes in the past, that's good.

If it's "different this time", then maybe not.

CraigTester seems to think that buying and holding through the 2000-2003 and 2008-2009 crashes somehow destroyed investing dreams. They didn't. All of us who stayed the course, and bought and hold, are rich today.

Sure, the future may be different... Maybe the next crash will last 30 years. But there's no reason to fear the "same". The "same" (the past) was very good to buy and hold.
You raise a good point. We’ve all been so conditioned this time that the Fed will rush in with their fire hat, that all fear has been removed...

As I think further about comparing to past times, what's different is I don't remember ever seeing people sort of giddy about the prospect of a crash...

Rubbing their hands together, ready to pounce, just like in 2020....

IMHO, this dynamic is why the bubble has grown so large this time - everyone saw the same movie.

And this this is what scares me so terribly.... The Fed will be in no position to act this time because they didn’t reload their weapons when they had the chance.

So it's fine to be a cheerleader that everything is gonna just be peachy, but this is ironically the worst thing you can do to soberly prepare people's minds for what could be coming....so that they actually do the right things to ride through, even if it takes 20 years (as it did twice before)...
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Re: "experienced" investors: is this time different?

Post by KlangFool »

ClassII wrote: Sun May 22, 2022 12:28 am
HomerJ wrote: Sun May 22, 2022 12:19 amThis time may be different, but I don't know why CraigTester "fears it's exactly the same". The "same" was very good to long-term investors.
It's all fun and games until someone gets laid off.
ClassII,

Being prepared include the preparation for the possibility of being unemployed in the coming recession and have the resource to survive long enough to wait for the recovery.

You have to survive in order to succeed. If someone cannot survive short-term unemployment in the coming recession, there may not be any long-term success.

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Re: "experienced" investors: is this time different?

Post by AlwaysLearningMore »

While many BH's ratiocinate about whether or not small-cap value is a worthwhile addition to their portfolio, or endlessly debate the value of factor investing, that's not on the radar for many (most?) US investors. BH's are often fixated on "when will the market recover?" "Is this market correction different than those in the past?" Apparently, almost half of Americans own no stock. For them, the stock market and the economy are not intimately intertwined.
Paychecks, fuel prices, and inflation (writ large) are the pressing concerns.

WASHINGTON, D.C. -- Gallup finds 58% of Americans reporting that they own stock, based on its April Economy and Personal Finance survey. https://news.gallup.com/poll/266807/per ... stock.aspx

...Of those earning below the median household income, the typical household owns essentially zero financial assets, and of those who do, most don’t have significant balances. https://www.forbes.com/sites/teresaghil ... a6363c1154

American families hold an average of $40,000 worth of stocks, lower than levels prior to the 2008 recession but well above the values held in the 1990s. https://www.fool.com/research/how-many- ... own-stock/
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Re: "experienced" investors: is this time different?

Post by delamer »

AlwaysLearningMore wrote: Sun May 22, 2022 9:53 am While many BH's ratiocinate about whether or not small-cap value is a worthwhile addition to their portfolio, or endlessly debate the value of factor investing, that's not on the radar for many (most?) US investors. BH's are often fixated on "when will the market recover?" "Is this market correction different than those in the past?" Apparently, almost half of Americans own no stock. For them, the stock market and the economy are not intimately intertwined.
Paychecks, fuel prices, and inflation (writ large) are the pressing concerns.

WASHINGTON, D.C. -- Gallup finds 58% of Americans reporting that they own stock, based on its April Economy and Personal Finance survey. https://news.gallup.com/poll/266807/per ... stock.aspx

...Of those earning below the median household income, the typical household owns essentially zero financial assets, and of those who do, most don’t have significant balances. https://www.forbes.com/sites/teresaghil ... a6363c1154

American families hold an average of $40,000 worth of stocks, lower than levels prior to the 2008 recession but well above the values held in the 1990s. https://www.fool.com/research/how-many- ... own-stock/
This is a forum for investors, after all. What would you expect us to be debating?

And the fact that we are stock owners doesn’t mean we are unaware that most of us are in a better financial position than most other Americans. Nor does it mean that we are unsympathetic to others’ struggles.
One thing that humbles me deeply is to see that human genius has its limits while human stupidity does not. - Alexandre Dumas, fils
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Re: "experienced" investors: is this time different?

Post by Youngblood »

secondopinion wrote: Sun May 22, 2022 1:53 am
latesaver wrote: Sat May 21, 2022 8:39 pm Myself included (I am 42 years old), many forum members didn't live through the emotional investing "tolls" brought on by the 2000 dot com bust or the great recession of 2008/2009.

Some older BH's even saw the challenges presented by earlier time periods in the 60s and 70s.

For what it is worth, I don't consider those that survived the "crash" of March 2020 as battle tested.

For those that have actually lived and invested during these time periods (70s, 2000s, 2008/2009), i am curious to hear how you see the current investing landscape. There is no shortage of "wisdom" from younger (hindsight) professionals throwing out CAPE figures, soft new-economy stats, etc., but in this case I am more interested in hearing from experienced investors why they are staying the course.
I think too many underestimated what was going to happen in 2020 prior to the crash. I think too many underestimated what actually occurred. I think too many are underestimating the repercussions of it. 2020 was a battle; the next few years are the war.
+1

Given your statement, what did you do and what are you doing now? Staying the course?
"I made my money by selling too soon." | Bernard M. Baruch
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