[60 year old - anxiety over market downturn]

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doc2547
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[60 year old - anxiety over market downturn]

Post by doc2547 »

I have been a Boglehead for years and rarely post anything. I know the philosophy of being a member, however does anybody else out there feel like I do about our large losses this year and worry about our retirements being curtailed.I have stayed the course for my entire investing 35 years , but this market stings. Any thoughts or words of inspiration out there.

[Topic title edited for clarity by moderator oldcomputerguy]
Jack FFR1846
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Re: 60 year old professional anxiety

Post by Jack FFR1846 »

The market goes up. The market goes down. The market cycles continuously. I've learned to ignore these moves. I will be retiring early next year. DW left her job a few months ago. Our portfolio has lost a few hundred grand. Who cares?
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Broken Man 1999
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Re: 60 year old professional anxiety

Post by Broken Man 1999 »

This too, will pass!

The market has gone through many declines over the years, some drops less, some drops more, but thus far has always recovered.

What is your AA?

Broken Man 1999
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jebmke
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Re: 60 year old professional anxiety

Post by jebmke »

This is actually a pretty routine downturn as they go; much less dramatic than the last couple of major ones.

The 08-09 down tick was a major financial system crisis. I retired in December, 2007; not the best timing from that perspective but I managed fine keeping to my plan. 2020 was a pandemic. Both of these were pretty dramatic.

The current one seems to be a more natural cycle that should work itself out and allow a lot of assets to re-price and clear out a lot of dead wood.
When you discover that you are riding a dead horse, the best strategy is to dismount.
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JoeRetire
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Re: 60 year old professional anxiety

Post by JoeRetire »

doc2547 wrote: Thu Sep 22, 2022 7:40 am I have been a Boglehead for years and rarely post anything. I know the philosophy of being a member, however does anybody else out there feel like I do about our large losses this year and worry about our retirements being curtailed.I have stayed the course for my entire investing 35 years , but this market stings. Any thoughts or words of inspiration out there.
If you've stayed the course for 35 years, you've seen the market go up and down lots of times. And you've certainly seen bigger percentage losses.
Are you that close to the edge such that this year actually changes your retirement plans?

When do you plan to retire?
Oh, noooooo! I'm so sorry, it's the moops! The correct answer is 'the moops'.
Leesbro63
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Re: 60 year old professional anxiety

Post by Leesbro63 »

jebmke wrote: Thu Sep 22, 2022 7:55 am This is actually a pretty routine downturn as they go; much less dramatic than the last couple of major ones.
What's different this time from most (but not all....such as 73-74) bear markets is that the "bond cushion" has declined with stocks. Longer term bonds almost as much as stocks. So it feels more severe. I understand the original poster's emotions.
Iorek
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Re: 60 year old professional anxiety

Post by Iorek »

I try to keep the perspective that this has been such a huge bull market for a long time.
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Re: 60 year old professional anxiety

Post by jebmke »

Leesbro63 wrote: Thu Sep 22, 2022 7:58 am
jebmke wrote: Thu Sep 22, 2022 7:55 am This is actually a pretty routine downturn as they go; much less dramatic than the last couple of major ones.
What's different this time from most (but not all....such as 73-74) bear markets is that the "bond cushion" has declined with stocks. Longer term bonds almost as much as stocks. So it feels more severe. I understand the original poster's emotions.
That demonstrates the flaw of looking at components rather than the whole.

I understand the emotions as well. Behavioral aspects of investing can be as important as analytical. Sometimes the success or failure of a plan is determined by how one manages the behavioral aspect.
When you discover that you are riding a dead horse, the best strategy is to dismount.
afan
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Re: 60 year old professional anxiety

Post by afan »

Not that I am doing anything in response, but this time there is a fear of stagflation. That combination can be truly miserable. But no one knows whether it will happen, if so when, or how long it might last.

On the bright side, lower valuations imply higher long term returns.

So stay the course.
We don't know how to beat the market on a risk-adjusted basis, and we don't know anyone that does know either | --Swedroe | We assume that markets are efficient, that prices are right | --Fama
Leesbro63
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Re: 60 year old professional anxiety

Post by Leesbro63 »

afan wrote: Thu Sep 22, 2022 8:08 am Not that I am doing anything in response, but this time there is a fear of stagflation. That combination can be truly miserable. But no one knows whether it will happen, if so when, or how long it might last.

So stay the course.
To me it's the fear of what's really different this time: A record debt-to-GDP with demographics that trend toward exacerbating that. But I agree that staying the course is still the optimal thing to do.
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JoeRetire
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Re: 60 year old professional anxiety

Post by JoeRetire »

afan wrote: Thu Sep 22, 2022 8:08 am Not that I am doing anything in response, but this time there is a fear of stagflation.
What leads you to be worried about that?
Oh, noooooo! I'm so sorry, it's the moops! The correct answer is 'the moops'.
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Offshore
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Re: 60 year old professional anxiety

Post by Offshore »

I am 62, partially retired and feel exactly as you do! I have stayed the course rather easily through past market turmoil when there was a full paycheck coming in. Now? Not so much. As others have identified, it's the bond market that has gotten to me in this cycle. I don't see those losses coming back, even with higher monthly dividends.

What I have done is move 25% of my fixed income into short term T-bills that I buy at auction. It has stemmed the losses and I am darn close to locking in more losses by cashing out of VBTLX and buying individual bonds. Haven't done that yet because I really want to "Stay the course" as much as I can.

Can anyone give me a reason other than locking in losses to NOT move from mutual funds to individual bonds considering the Federal Reserve has told us there will be more rate hikes in the last quarter of 2022?
Tamalak
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Re: 60 year old professional anxiety

Post by Tamalak »

We're not experiencing stagflation. If anything we're experiencing the opposite of that.. inflation is lingering because the economy is being stubbornly STRONG even in the face of rate hikes.
JS-Elcano
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Re: 60 year old professional anxiety

Post by JS-Elcano »

jebmke wrote: Thu Sep 22, 2022 7:55 am This is actually a pretty routine downturn as they go; much less dramatic than the last couple of major ones.

The 08-09 down tick was a major financial system crisis. I retired in December, 2007; not the best timing from that perspective but I managed fine keeping to my plan. 2020 was a pandemic. Both of these were pretty dramatic.

The current one seems to be a more natural cycle that should work itself out and allow a lot of assets to re-price and clear out a lot of dead wood.
I am not sure about pretty routine if we end the year with the 20% downturn that we currently have in SP500, not to mention the concurrent 13% downturn in Total Bond funds that someone @60 may have shifted to in recent years. There have only been 3 years with >20% annual losses in the SP500 the past 85 years (2008, 2002, 1937). So, it is understandable to me that some people are feeling anxious because it reminds them of major crises rather than routine, especially @60.
Normchad
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Re: 60 year old professional anxiety

Post by Normchad »

Staying the course only makes sense if you’re on a good course. Are you?

What was the reasoning you picked the AA you did? Is that reasoning still valid?

I’m staying the course. I have an AA that is fairly typical around here, about 60/40. The paper dollar losses are large, but that’s almost a symptom of having a big portfolio :)

I’m betting my personal future that everything will turn out just fine.

Although I certainly understand your feelings. As we get older, we know we have “less ability” and “less human capital” and “less time” to recover. So we can’t just laugh this stuff off like we did in our twenties.
Last edited by Normchad on Thu Sep 22, 2022 8:17 am, edited 1 time in total.
Mike Scott
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Re: 60 year old professional anxiety

Post by Mike Scott »

This may be a routine/normal down cycle but it may feel more personal impact for an individual as you get closer to retirement. Perhaps having someone else who is more objective review your portfolio and plan would help? Perhaps your 35 year old plan needs an updated transition into retirement phase? It sounds like you are still working so you have some time to see how things go for a while longer. We also see people being fearful about their 100X portfolios so fear and anxiety seem to be common feelings no matter the resources available.

You could post a portfolio review if you want more specific feedback.
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AnalogKid22
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Re: 60 year old professional anxiety

Post by AnalogKid22 »

Iorek wrote: Thu Sep 22, 2022 7:59 am I try to keep the perspective that this has been such a huge bull market for a long time.
Exactly. An historical 10+ year bull run, sustaining record highs, was a gift to investors, so a major correction was inevitable. With inflation running so high, so quickly, that was a red flag to those nearing retirement to perhaps begin reducing risk. Of course, fixed income, for example, hasn't exactly been a safe haven compared to stocks.
Leesbro63
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Re: 60 year old professional anxiety

Post by Leesbro63 »

JS-Elcano wrote: Thu Sep 22, 2022 8:14 am
jebmke wrote: Thu Sep 22, 2022 7:55 am This is actually a pretty routine downturn as they go; much less dramatic than the last couple of major ones.

The 08-09 down tick was a major financial system crisis. I retired in December, 2007; not the best timing from that perspective but I managed fine keeping to my plan. 2020 was a pandemic. Both of these were pretty dramatic.

The current one seems to be a more natural cycle that should work itself out and allow a lot of assets to re-price and clear out a lot of dead wood.
I am not sure about pretty routine if we end the year with the 20% downturn that we currently have in SP500, not to mention the concurrent 13% downturn in Total Bond funds that someone @60 may have shifted to in recent years. There have only been 3 years with >20% annual losses in the SP500 the past 85 years (2008, 2002, 1937). So, it is understandable to me that some people are feeling anxious because it reminds them of major crises rather than routine, especially @60.
I think this misses the 1973-1975 period. I don't know the actual years or numbers, but I am almost certain that over a few consecutive years the losses were way greater than 20%. So while TECHNICALLY that period didn't have any single year without a 20% loss, IN REALITY they did.
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Re: 60 year old professional anxiety

Post by carolinaman »

Inflation is a major wild card in the markets right now. We have not seen inflation this bad in more than 40 years. No one knows what inflation's impact will be. Add to that the Russian/Ukraine war and energy shortages, and you have a lot of uncertainty. IMO, the market has navigated these issues relatively well so far, but will that continue? More than enough to cause some anxiety.

People's attitude toward the market can change as they near retirement. When I was working, I was not as concerned about market downturns. But when I retired, I realized that I could no longer replace market losses with saving any more. I had to rely on the market. It is a different mindset and affects some people more than others.
Nowizard
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Re: 60 year old professional anxiety

Post by Nowizard »

I commented to my wife that three friends or family members have expressed concern over the same issue in the past week, all of whom have been prudent with expenditures and investing. One, in fact, was a CFP before retirement. It is normal, but one key is to not put your head in the sand. In other words, it is better to know what we are dealing with than denying or avoiding, even if the choices are not ideal. In short, post your portfolio and you will get specific responses about your particular circumstances. That will help in determining whether you are only a member of a large group of folks or in a situation where your circumstances suggest some possible changes.

Tim
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Re: 60 year old professional anxiety

Post by chassis »

1976-1980 inflation runup took around 3.5 years, then about 2.5 years to return to some normal-ish level

2020-2022 inflation runup took 2.5 years, if the peak is behind us. Probably late 2024 until normal-ish inflation is back.

Did anyone read the Fed projections posted on their website? Inflation with a 2-handle in 2023.

Happy days are around the corner, right?
JS-Elcano
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Re: 60 year old professional anxiety

Post by JS-Elcano »

Leesbro63 wrote: Thu Sep 22, 2022 8:17 am
JS-Elcano wrote: Thu Sep 22, 2022 8:14 am
jebmke wrote: Thu Sep 22, 2022 7:55 am This is actually a pretty routine downturn as they go; much less dramatic than the last couple of major ones.

The 08-09 down tick was a major financial system crisis. I retired in December, 2007; not the best timing from that perspective but I managed fine keeping to my plan. 2020 was a pandemic. Both of these were pretty dramatic.

The current one seems to be a more natural cycle that should work itself out and allow a lot of assets to re-price and clear out a lot of dead wood.
I am not sure about pretty routine if we end the year with the 20% downturn that we currently have in SP500, not to mention the concurrent 13% downturn in Total Bond funds that someone @60 may have shifted to in recent years. There have only been 3 years with >20% annual losses in the SP500 the past 85 years (2008, 2002, 1937). So, it is understandable to me that some people are feeling anxious because it reminds them of major crises rather than routine, especially @60.
I think this misses the 1973-1975 period. I don't know the actual years or numbers, but I am almost certain that over a few consecutive years the losses were way greater than 20%. So while TECHNICALLY that period didn't have any single year without a 20% loss, IN REALITY they did.
Yes, I meant 2008, 2002, 1974. Thanks for catching it.
In the last 82 years, there were actually no consecutive years with smaller losses that added up to >20%. In the last 85 years it only happened from 1939-41, which had losses that added up to 39% over three years of annual losses.
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Re: 60 year old professional anxiety

Post by Katietsu »

I can commiserate. Spouse made first 401k contribution 29 years ago. The primary difference this year is that I am imagining life without a salary in the nearish future to smooth out the investment losses. A near double digit inflation is also different, effectively doubling the decrease in change of purchasing power. Next, add anxiety from Fidelity red zone commercials and sequence of return risk charts.

The primary reality check is knowing that our net worth now is still the same as it was in March 2021. Even adjusting net worth for inflation, only sends me back 2 years to Fall 2020. Medicare and social security eligibility within a decade means that I have a safety net that was not there at age 30 or 40. I have lost out on some great returns as a conservative investor. I not only have less stocks that many, but also split up fixed income amongst BND, TIPs, stable value and CD/treasuries. Therefore I have that ballast that let’s me worry less.
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Re: 60 year old professional anxiety

Post by jebmke »

JS-Elcano wrote: Thu Sep 22, 2022 8:14 am
jebmke wrote: Thu Sep 22, 2022 7:55 am This is actually a pretty routine downturn as they go; much less dramatic than the last couple of major ones.

The 08-09 down tick was a major financial system crisis. I retired in December, 2007; not the best timing from that perspective but I managed fine keeping to my plan. 2020 was a pandemic. Both of these were pretty dramatic.

The current one seems to be a more natural cycle that should work itself out and allow a lot of assets to re-price and clear out a lot of dead wood.
I am not sure about pretty routine if we end the year with the 20% downturn that we currently have in SP500, not to mention the concurrent 13% downturn in Total Bond funds that someone @60 may have shifted to in recent years. There have only been 3 years with >20% annual losses in the SP500 the past 85 years (2008, 2002, 1937). So, it is understandable to me that some people are feeling anxious because it reminds them of major crises rather than routine, especially @60.
I mean routine in sense of underlying economic trends.
When you discover that you are riding a dead horse, the best strategy is to dismount.
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TomatoTomahto
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Re: 60 year old professional anxiety

Post by TomatoTomahto »

I get some comfort from realizing that much of the money I lost this year is money I didn't have 5 years ago. Regardless of where you fall on the NW spectrum, I think many on this site have far more than they ever thought they'd have.
I get the FI part but not the RE part of FIRE.
Leesbro63
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Re: 60 year old professional anxiety

Post by Leesbro63 »

TomatoTomahto wrote: Thu Sep 22, 2022 8:40 am I get some comfort from realizing that much of the money I lost this year is money I didn't have 5 years ago. Regardless of where you fall on the NW spectrum, I think many on this site have far more than they ever thought they'd have.
Good point and agreed. I think it's more the fear of a 1966-1981 grinding down of assets, perhaps with inflation to boot, as retirees slowly age out before things substantially turn up again.
staustin
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Re: 60 year old professional anxiety

Post by staustin »

After suffering through 2008, and thanks to the work of the good Dr. Bernstein, we have an asset allocation that allows for restful sleep.

The era of zero interest rates and qe ending has and will continue to impact asset prices.
dbr
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Re: 60 year old professional anxiety

Post by dbr »

doc2547 wrote: Thu Sep 22, 2022 7:40 am I have been a Boglehead for years and rarely post anything. I know the philosophy of being a member, however does anybody else out there feel like I do about our large losses this year and worry about our retirements being curtailed.I have stayed the course for my entire investing 35 years , but this market stings. Any thoughts or words of inspiration out there.
We retired somewhat before the "bad events" of 2009-2011 and it made no difference at all.

But I think a good way to look at short run numbers is to overlay your asset value with a moving average curve. If you lay a 36 month average over the last few years what you find is that both the big run ups prior to the last year or so and the big losses recently are both wiped out and nothing has happened. My 36 month running average has me with more money today than in my whole life and that after 15 years of taking withdrawals.

What would reduce your retirement prospects would be that right now is the start of a bad secular period to retire, like 1966 was. But there is no way to forecast that from current short term events. More than that retirement planning is supposed to be taking account of the fact that one can retire into a bad long term history just as I seemingly retired into a good long term history 2010 notwithstanding.
Conch55
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Re: 60 year old professional anxiety

Post by Conch55 »

I get some comfort from realizing that much of the money I lost this year is money I didn't have 5 years ago. Regardless of where you fall on the NW spectrum, I think many on this site have far more than they ever thought they'd have.
Ditto for me. I am three years from collecting social security at age 70 so that's a big anxiety buster but I am also aware that the current economy could be with us past that date. I don't have a fallback plan, just the AA I chose and some optimism for the future.
homebuyer6426
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Re: 60 year old professional anxiety

Post by homebuyer6426 »

staustin wrote: Thu Sep 22, 2022 8:51 am After suffering through 2008, and thanks to the work of the good Dr. Bernstein, we have an asset allocation that allows for restful sleep.

The era of zero interest rates and qe ending has and will continue to impact asset prices.
How did your asset allocation help you this year when bonds are way down too?
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Re: 60 year old professional anxiety

Post by KlangFool »

OP,

My AA is 60/40. My portfolio is down 12% YTD. My portfolio would be at 30X when the mortgage is paid off in three months. I am looking at this down turn as an opportunity for more tax loss harvesting.

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enad
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Re: 60 year old professional anxiety

Post by enad »

Leesbro63 wrote: Thu Sep 22, 2022 7:58 am
jebmke wrote: Thu Sep 22, 2022 7:55 am This is actually a pretty routine downturn as they go; much less dramatic than the last couple of major ones.
What's different this time from most (but not all....such as 73-74) bear markets is that the "bond cushion" has declined with stocks. Longer term bonds almost as much as stocks. So it feels more severe. I understand the original poster's emotions.
Yes my sentiments as well regarding the bond cushion, yet if I get signals that my equity allocation needs to be rebalance I will either use cash or one of the two bond funds to buy just enough shares of the equity to be rebalanced. I did this 3 times in 2007 and was richly rewarded when the market recovers. This one is just one of those gradual declines instead of sharp.

I think the both stocks and bonds moving in the same direction could tend to unnerve people, but this too shall pass. Don't panic and lock in your losses. Stay the course, rebalance as you see fit to keep your allocation and you'll be rewarded down the line.
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KlangFool
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Re: 60 year old professional anxiety

Post by KlangFool »

homebuyer6426 wrote: Thu Sep 22, 2022 9:05 am
staustin wrote: Thu Sep 22, 2022 8:51 am After suffering through 2008, and thanks to the work of the good Dr. Bernstein, we have an asset allocation that allows for restful sleep.

The era of zero interest rates and qe ending has and will continue to impact asset prices.
How did your asset allocation help you this year when bonds are way down too?
homebuyer6426,

VTI is down 18% YTD. My 60/40 portfolio is down 12%.

Bond helps by not being down 18%.

KlangFool
40% VWENX | 12.5% VFWAX/VTIAX | 11.5% VTSAX | 16% VBTLX | 10% VSIAX/VTMSX/VSMAX | 10% VSIGX| 40% Wellington 40% 3-funds 20% Mini-Larry
Leesbro63
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Re: 60 year old professional anxiety

Post by Leesbro63 »

enad wrote: Thu Sep 22, 2022 9:08 am
Leesbro63 wrote: Thu Sep 22, 2022 7:58 am
jebmke wrote: Thu Sep 22, 2022 7:55 am This is actually a pretty routine downturn as they go; much less dramatic than the last couple of major ones.
What's different this time from most (but not all....such as 73-74) bear markets is that the "bond cushion" has declined with stocks. Longer term bonds almost as much as stocks. So it feels more severe. I understand the original poster's emotions.
Yes my sentiments as well regarding the bond cushion, yet if I get signals that my equity allocation needs to be rebalance I will either use cash or one of the two bond funds to buy just enough shares of the equity to be rebalanced. I did this 3 times in 2007 and was richly rewarded when the market recovers. This one is just one of those gradual declines instead of sharp.

I think the both stocks and bonds moving in the same direction could tend to unnerve people, but this too shall pass. Don't panic and lock in your losses. Stay the course, rebalance as you see fit to keep your allocation and you'll be rewarded down the line.
Agreed on all points! That being said, one positive of both stocks and bonds declining similarly at the same time is no (or little) need to rebalance!
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arcticpineapplecorp.
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Re: 60 year old professional anxiety

Post by arcticpineapplecorp. »

doc2547 wrote: Thu Sep 22, 2022 7:40 am I have been a Boglehead for years and rarely post anything. I know the philosophy of being a member, however does anybody else out there feel like I do about our large losses this year and worry about our retirements being curtailed.I have stayed the course for my entire investing 35 years , but this market stings. Any thoughts or words of inspiration out there.
since the losses in the market are less than they were in 2008 and you got through that, have you asked yourself what is/was different about that time vs. now?

if i did that (and making some assumptions one of which being that bonds are down along with stocks, more than and longer than they were in 2008) I can only assume your portfolio is larger today (and you are closer to retirement today) than back in 2008.

that being said, if your DOLLAR losses are larger now than they were in 2008 either:
1. you have the same/similar allocation as your stock allocation in 2008 and even though the PERCENTAGE LOSSES should be less than they were 2008, the DOLLAR losses are greater (because we're talking about smaller percentage losses on a LARGER portfolio)
or
2. your stock allocation has gotten bigger than it was in 2008 due to lack of rebalancing between 2008 and now or you got enamored with stocks as they went up since 2008 and thought your risk tolerance was greater than it was (because most people think they can handle more risk when they're in a bull market then they really can/and find out in a bear market).

which of these do you think it is?

I wrote about this problem before in terms of people who have had losses in the past need to get used to GREATER DOLLAR losses in the future EVEN IF THE PERCENTAGE LOSSES ARE LESS (because of the size of the portfolio now/future vs past):
For instance, if an investor is upset at "losing 20% of his/her hard earned savings" I'd ask the following:

1. What did that 20% equal in dollar terms?
2. How would you feel if you lost a smaller percentage than that, but it resulted in more dollars lost?

Because the reality is, as one's portfolio grows over time, the dollars lost will increase even though the percentage losses (amount of risk) would decrease if you choose less risk over time.

Failing to understand that, will result in panicking each and every time declines come. Because the dollar losses will be larger as the portfolio grows (even if you take less risk).

And I think people panic more because they say "I lost X dollars!!", not "I lost 20%!"

So, understanding that you're risking losing more dollars later on, even though the percentage will be less (if you take less risk) is crucial to be a good investor.

For those who don't understand this, here's the scenario:

You're in your 20s, contributing to 401k, getting employer match, reinvesting dividends, getting growth on investment.
You're 100% in stock because you have the need, ability and willingness to take risk.
You're portfolio has grown to $50,000.
The stock market falls 30%
What's the dollar loss? $15,000.
(.30 X $50,000 = $15,000)

You stay the course and keep investing over the next few decades.
You're in retirement now.
Your portfolio has grown over the decades to $500,000 (10X the size it was in your 20s. Yes, you hopefully would have a million or more, but just go with me)
But since you're in retirement you can't take the risk you did in your 20s. So now you have 30% of your money in stock. The rest in fixed income.
The stock market now falls 30% (just like it did in your 20s).
What is your percentage loss now? (it's not 30%, you'd have to have 100% invested like in your 20s to lose 30%. But since you only have 30% in stocks, if the 30% in stocks loses 30%...)
You'd have a 9% loss (.30 X .30 = .09 or 9%)
But what's the dollar loss?
$45,000 (.09 X $500,000 = $45,000).


You now lost 3 times the amount (of dollars) you did as when you were in your 20s.
But you only took a third of the risk as you did in your 20s. (30% stock is a third roughly of 100% stock)

See how you will have to get used to larger and larger dollar losses...even if your portfolio gets less and less risky as time goes on?

Of course, you'd rather have 91% of your portfolio remaining (in the example above) than 70% (in the example in your 20s). But do people really say, "Whew. I've got 91% of my portfolio left!" No, they say, "I lost $45,000!!"

Do you think the average investor is really, truly aware of this? I don't.
you also might want to read this excellent post titled A Time to Evaluate Your Jitters

what do you think?
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dbr
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Re: 60 year old professional anxiety

Post by dbr »

homebuyer6426 wrote: Thu Sep 22, 2022 9:05 am
staustin wrote: Thu Sep 22, 2022 8:51 am After suffering through 2008, and thanks to the work of the good Dr. Bernstein, we have an asset allocation that allows for restful sleep.

The era of zero interest rates and qe ending has and will continue to impact asset prices.
How did your asset allocation help you this year when bonds are way down too?
Allocation to stocks produced huge gains before the downturn leaving the end consequence not particularly severe. It is still true that bond losses are less than stock losses even though up till now it is true bond losses have been unusually severe and stock losses so far are not actually even close to as severe as they can be. Asset allocation assumes both assets can be up or down at the same time. When stocks lose 50% then we can say stocks have crashed.

Of course it will be years before we know where things will ultimately end up. As to bonds, higher interest rates produce increased gains in bonds for the future, but it takes time.

This is probably a good lesson that investing is risky, always.
Last edited by dbr on Thu Sep 22, 2022 9:28 am, edited 1 time in total.
Colorado Guy
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Re: 60 year old professional anxiety

Post by Colorado Guy »

Conch55 wrote: Thu Sep 22, 2022 9:02 am
I get some comfort from realizing that much of the money I lost this year is money I didn't have 5 years ago. Regardless of where you fall on the NW spectrum, I think many on this site have far more than they ever thought they'd have.
Ditto for me. I am three years from collecting social security at age 70 so that's a big anxiety buster but I am also aware that the current economy could be with us past that date. I don't have a fallback plan, just the AA I chose and some optimism for the future.
+1. When I am rationally thinking, that helps me as well. To be honest, I am not always thinking rationally without "OMG, what is happening?!" creeping in. Sometimes I feel like Hedgefundie in today's market.
HEDGEFUNDIE wrote: Wed Mar 18, 2020 5:11 pm I have my hand firmly on the ship’s wheel, staring down into the abyss. Whatever may come, I shall stay the course!
(FYI, I am not into UPRO, but I like the quote)
While I avoid financial websites selling doom & gloom, I am still barraged by newscasts and YT videos blaring end of the world scenarios (not looking at the YT videos, just seeing their titles is jarring). Remember that commercial where a guy is saying wow, I am a millionaire, and then saying wow, I am not a millionaire? https://www.superbowl-ads.com/2022-turb ... llionaire/ The market is testing the resolve of buy and hold people.

I take some additional comfort in realizing that I did TMY (two more years) prior to retiring which I didn't have to. (Working longer is a mixed feeling, to be honest). During the 2020 pandemic market when the market was down and still falling, I had to tell myself that I would simply have to adjust my retirement expectations. In retrospect TMY seems like a well informed prudent action on my part, but that is implying I was smarter than I really am.

I also try to remember retirement is a relatively new historical concept that is really a first world construct. Find your ikigai.
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Kenkat
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Re: 60 year old professional anxiety

Post by Kenkat »

It’s normal to have some of these feelings. The markets are down, including both stocks AND bonds, and you are much closer to the age where you are planning to start using that money.

I retired in July at 58 and have lost about two years of living expenses so far this year. But this happens and my plan accounts for this. Any money I am drawing down right now is invested fairly conservatively and so I should be ok until I reach social security age, in which case other assets I don’t need to use right now will have likely recovered and will probably be higher. I do believe that at some point you will look back and say boy, that would have been a good time to put more money into the market. Thinking this after the fact is easy, though; actually trying it is fraught with peril!

At your age and knowing you are retiring fairly soon, I’d have 3-5 years of living expenses in something fairly safe - money market, short term bonds, I bonds, etc. Then remind yourself - I’ve got that 3-5 years I can fall back on, I’ve got social security available in as little as two years and for sure in eight years. I find this line of thinking helps me sleep well at night.
AlwaysLearningMore
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Re: 60 year old professional anxiety

Post by AlwaysLearningMore »

chassis wrote: Thu Sep 22, 2022 8:23 am 1976-1980 inflation runup took around 3.5 years, then about 2.5 years to return to some normal-ish level

2020-2022 inflation runup took 2.5 years, if the peak is behind us. Probably late 2024 until normal-ish inflation is back.

Did anyone read the Fed projections posted on their website? Inflation with a 2-handle in 2023.

Happy days are around the corner, right?
Indeed, and why would any investor doubt the accuracy of what they predict?

Yellen Sticks with ‘Transitory’ View of U.S. Inflation Bloomberg October 12, 2021 https://www.bloomberg.com/news/articles ... -inflation

Fed’s Powell says high inflation temporary, will ‘wane’ AP News June 22, 2021 https://apnews.com/article/inflation-he ... fe305c1477

Actionable: perhaps don't take what "interested parties" have to say as chiseled in stone, and consider TIPS and I Bonds.
Retirement is best when you have a lot to live on, and a lot to live for. * None of what I post is investment advice.
rebellovw
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Re: 60 year old professional anxiety

Post by rebellovw »

Kenkat wrote: Thu Sep 22, 2022 9:38 am It’s normal to have some of these feelings. The markets are down, including both stocks AND bonds, and you are much closer to the age where you are planning to start using that money.

I retired in July at 58 and have lost about two years of living expenses so far this year. But this happens and my plan accounts for this. Any money I am drawing down right now is invested fairly conservatively and so I should be ok until I reach social security age, in which case other assets I don’t need to use right now will have likely recovered and will probably be higher. I do believe that at some point you will look back and say boy, that would have been a good time to put more money into the market. Thinking this after the fact is easy, though; actually trying it is fraught with peril!

At your age and knowing you are retiring fairly soon, I’d have 3-5 years of living expenses in something fairly safe - money market, short term bonds, I bonds, etc. Then remind yourself - I’ve got that 3-5 years I can fall back on, I’ve got social security available in as little as two years and for sure in eight years. I find this line of thinking helps me sleep well at night.
Great post.
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CyclingDuo
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Re: 60 year old professional anxiety

Post by CyclingDuo »

doc2547 wrote: Thu Sep 22, 2022 7:40 amI have been a Boglehead for years and rarely post anything. I know the philosophy of being a member, however does anybody else out there feel like I do about our large losses this year and worry about our retirements being curtailed.I have stayed the course for my entire investing 35 years , but this market stings. Any thoughts or words of inspiration out there.
Based on your age (mine is similar) as both a worker and an investor, in addition to the current bear market, you have been through the bear markets of 2020 (-33.9%), 2007-09 (-56.8%), 2000-02 (-49.1%), and possibly 1987 (-33.5%). So we could count this current bear market as either your 4th or 5th. Assuming your longevity going forward from this point has the potential to be another 20 - 35 years, what plans have you made to navigate through both the short term and the longer term?

No doubt the big ones sting for all of us...

Image

Think about the possibility of the S&P 500 dipping back to the 3000 level (as a few gurus are predicting). Were we not just there in June of 2020? Or to 3200 - were we not just there in 2020? Or 3400 - were we not just there in 2020-21? Or the 3600ish level - were we not just there in June of this year as well as in 2021? Or what if we revisited the Covid lows for a full round trip?

If you have been a Boglehead for years, one would like to assume you have planned and are aware of the secular and cyclical economic trends that cause bull and bear markets (both are features of the stock market). Consider the current down trend as a feature. Our household thinks of it that way as we continue to invest on automatic pilot from each and every paycheck in our chosen AA for our remaining working years. If one was looking for a positive, shouldn't one be pleased to be able to buy shares of funds at lower prices for the coming decades than they were earlier this year?

Our household approaches it from the standpoint of keeping all of our options open. Those options include, working longer to take advantage of our human capital. Delaying SS. Maintaining our skillsets to remain employed. Keeping healthy.

Not trying to take away the sting of it all, as it is real each time we all go through it. At our age, there is still plenty of time for another sting or two in the next 2-3 decades just as there has been in the past. There is also time between the stings for things to go in the other direction. :beer

CyclingDuo
"Save like a pessimist, invest like an optimist." - Morgan Housel
Leesbro63
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Re: 60 year old professional anxiety

Post by Leesbro63 »

CyclingDuo wrote: Thu Sep 22, 2022 9:50 am
doc2547 wrote: Thu Sep 22, 2022 7:40 amI have been a Boglehead for years and rarely post anything. I know the philosophy of being a member, however does anybody else out there feel like I do about our large losses this year and worry about our retirements being curtailed.I have stayed the course for my entire investing 35 years , but this market stings. Any thoughts or words of inspiration out there.
Based on your age (mine is similar) as both a worker and an investor, in addition to the current bear market, you have been through the bear markets of 2020 (-33.9%), 2007-09 (-56.8%), 2000-02 (-49.1%), and possibly 1987 (-33.5%). So we could count this current bear market as either your 4th or 5th. Assuming your longevity going forward from this point has the potential to be another 20 - 35 years, what plans have you made to navigate through both the short term and the longer term?

No doubt the big ones sting for all of us...

Image

Think about the possibility of the S&P 500 dipping back to the 3000 level (as a few gurus are predicting). Were we not just there in June of 2020? Or to 3200 - were we not just there in 2020? Or 3400 - were we not just there in 2020-21? Or the 3600ish level - were we not just there in June of this year as well as in 2021? Or what if we revisited the Covid lows for a full round trip?

If you have been a Boglehead for years, one would like to assume you have planned and are aware of the secular and cyclical economic trends that cause bull and bear markets (both are features of the stock market). Consider the current down trend as a feature. Our household thinks of it that way as we continue to invest on automatic pilot from each and every paycheck in our chosen AA for our remaining working years. If one was looking for a positive, shouldn't one be pleased to be able to buy shares of funds at lower prices for the coming decades than they were earlier this year?

Our household approaches it from the standpoint of keeping all of our options open. Those options include, working longer to take advantage of our human capital. Delaying SS. Maintaining our skillsets to remain employed. Keeping healthy.

Not trying to take away the sting of it all, as it is real each time we all go through it. At our age, there is still plenty of time for another sting or two in the next 2-3 decades just as there has been in the past. There is also time between the stings for things to go in the other direction. :beer

CyclingDuo
I think the bottom line underlying fear is that whatever is causing the current situation is different and will cause something worse and for longer. That's always the concern, I know, but we never know that it isn't that until after. And sometimes it IS that. 1929 and 1966 WAS that.
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beyou
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Re: 60 year old professional anxiety

Post by beyou »

Jack FFR1846 wrote: Thu Sep 22, 2022 7:51 am The market goes up. The market goes down. The market cycles continuously. I've learned to ignore these moves. I will be retiring early next year. DW left her job a few months ago. Our portfolio has lost a few hundred grand. Who cares?
I retired a few months ago.
I care, since you asked.
But not enough to panic and go to cash.
That strong urge has always come at the wrong time to do it, for most people. But not caring is a tall order.
Staying the course is to me, like sticking to a diet.
You know you will lose weight and be better off, but it is not pleasant while doing so. And I want that chocolate cake or ice cream (and my losses back).
Leesbro63
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Re: 60 year old professional anxiety

Post by Leesbro63 »

beyou wrote: Thu Sep 22, 2022 9:56 am Staying the course is to me, like sticking to a diet.
You know you will lose weight and be better off, but it is not pleasant while doing so. And I want that chocolate cake or ice cream (and my losses back).
Fabulous analogy. (And it’s particularly tough since we were having our cake and eating it too last year.)
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Garco
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Re: 60 year old professional anxiety

Post by Garco »

I have been through this kind of market before. The main differences for me this time are: 1) I'm retired; 2) I'm drawing Social Security; 3) I'm old (in upper 70's). 4) I am appreciating more that I have excellent employer-provided health insurance, supplementing Medicare. [I am fully vaxxed.]

I've got a fairly large investment portfolio (> $3 million). I have no debt.

But I also have a family. My wife and I live modestly (but not frugally). My kids (in their 40's) are doing well professionally. We focus our estate planning on the succession of our property and investment portfolio.

In short, we don't have professional anxiety. But we do pay attention to the financial status of our extended family.
Last edited by Garco on Thu Sep 22, 2022 10:44 am, edited 1 time in total.
Leesbro63
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Re: 60 year old professional anxiety

Post by Leesbro63 »

Garco wrote: Thu Sep 22, 2022 10:39 am I have been through this kinds of market before. The main differences for me this time are: 1) I'm retired; 2) I'm drawing Social Security; 3) I'm old (in upper 70's). 4) I am appreciating more that I have excellent employer-provided health insurance, supplementing Medicare. [I am fully vaxxed.]

I've got a fairly large investment portfolio (> $3 million). I have no debt.

But I also have a family. My wife and I live modestly (but not frugally). My kids (in their 40's) are doing well professionally. We focus our estate planning on the succession of our property and investment portfolio.

In short, we don't have professional anxiety. But we do pay attention to the financial status of our extended family.
Is there such a thing as “amateur anxiety”? 🤣
MoneyClip
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Re: [60 year old - anxiety over market downturn]

Post by MoneyClip »

As was said the market goes up and the market goes down. Rest assured it will go up again so keep in mind you do not need every penny that is invested the day you retire or all at once. So until you sell the investment it may have lost current potential value but until the investment is sold nothing is actually lost but potential value. In other words stay the course it is a long game after all.
cbs2002
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Re: 60 year old professional anxiety

Post by cbs2002 »

Offshore wrote: Thu Sep 22, 2022 8:13 am I am 62, partially retired and feel exactly as you do! I have stayed the course rather easily through past market turmoil when there was a full paycheck coming in. Now? Not so much. As others have identified, it's the bond market that has gotten to me in this cycle. I don't see those losses coming back, even with higher monthly dividends.

What I have done is move 25% of my fixed income into short term T-bills that I buy at auction. It has stemmed the losses and I am darn close to locking in more losses by cashing out of VBTLX and buying individual bonds. Haven't done that yet because I really want to "Stay the course" as much as I can.

Can anyone give me a reason other than locking in losses to NOT move from mutual funds to individual bonds considering the Federal Reserve has told us there will be more rate hikes in the last quarter of 2022?
By doing this you are chasing short-term performance by selling bonds you have not held to maturity. You will not know if you are stemming losses for a decade, you are just trading the guaranteed nominal long-term return of VBTLX for the rate you are getting on short-term T-bills. Both are guaranteed but for different durations.

Will the return of VBTLX beat inflation after 10 years? Who knows? But don't let the rising short-term rates fool you. VBTLX is also buying bonds at those rising rates.

I am holding my intermediate-term bond funds for the next 10 years. New bond purchases will be short-term to build up that side of things.
Hebell
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Re: [60 year old - anxiety over market downturn]

Post by Hebell »

I'll be honest, I believe in staying the course and holding bonds. But back at the end of 2019 when interest rates were so low, there was no place they could go, but up. (Yes, they could have gone negative, but this was a historic low, and one could reasonably bet that going up was the only direction it could go, after bouncing around the bottom)

At that point it only made sense to shift from bond funds to individually held bonds.

This is not an opinion thing, it is a math problem. If interest rates go up, the value of your bond holdings will fall in price. The only solution then was to buy individual bonds, if you wish to more easily ignore the price fluctuations in your portfolio, by holding each bond to maturity.

I guess I'm still perplexed why more people did not just simply move to individual bonds, or defined maturity ETFs at that time. If only to avoid psychological distress!
afan
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Re: 60 year old professional anxiety

Post by afan »

JoeRetire wrote: Thu Sep 22, 2022 8:12 am
afan wrote: Thu Sep 22, 2022 8:08 am Not that I am doing anything in response, but this time there is a fear of stagflation.
What leads you to be worried about that?
Not so much my personal fear, rather commentary about rising interest rates and falling GDP. From there to stagflation is just a matter of degree.

If the fight against inflation is prolonged, we could have ever rising rates. Meanwhile, the economy is slowing down. Throw in ongoing supply chain issues, limits on agricultural exports, the war... Lots of headwinds.

The combination suggests to many that we may have high inflation at the same time as low or no growth. Bad times for stocks and bonds.

Stay the course because all of this is public knowledge and securities sell for the market consensus estimate of their value. Absent a better than average crystal ball, no way to predict how to change investments in response to these hypothetical events.
We don't know how to beat the market on a risk-adjusted basis, and we don't know anyone that does know either | --Swedroe | We assume that markets are efficient, that prices are right | --Fama
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