How it really feels to have investments during a bear market?

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BogleMelon
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How it really feels to have investments during a bear market?

Post by BogleMelon » Tue Sep 27, 2016 8:11 am

Hi,
I came to USA at age of 33 (4 years ago), so I wasnt here when the market crashed. I didn't have any investments in my home country back in 2008, the access to investing is very limited and very expensive there!
I am now educated enough to keep my plan even during a bear market, or that is what I think! I really not sure if my education will override my emotions, or I will give up! It is easy to presume that "I am smarter than the rest, I won't sell low" but since I haven't experienced such an event, I can not say for sure if I will pass (although I make every effort to pass the test when that happens, through basically reading decent books and learning more and more everyday).
My investments are all in a Roth IRA, I contribute monthly to VTIVX (Vanguard target 2045).
I am only curious, how does it really feels when the market "crashes"? How difficult is it to fight (sheep following) and not locking your losses? Or it is not that difficult after all with good education?

Would you personally share how did you feel and how did you react during the 2008 crash?
Last edited by BogleMelon on Tue Sep 27, 2016 8:23 am, edited 1 time in total.
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Re: How it really feels to have investments during a bear market?

Post by Grt2bOutdoors » Tue Sep 27, 2016 8:15 am

How does it feel? Take your balance today, then reduce it by 60%, and let it stay at that balance for three months. Let us know how it feels.
Read Your Money and Your Brain, or a bunch of other books on the behavioral aspects of investing. The market was down almost 10% in February, how much fun was watching a years worth of savings go up in temporary smoke? I kind of got a little excited, could purchase more cheaply - when you get to that stage, you'll know how to overcome the sheep mentality.
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Re: How it really feels to have investments during a bear market?

Post by slayed » Tue Sep 27, 2016 8:19 am

During a bear market the main temptation is to "sell now and buy in later at a lower price" and it is very enticing when you see the markets trending downwards.

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Re: How it really feels to have investments during a bear market?

Post by BogleMelon » Tue Sep 27, 2016 8:19 am

Grt2bOutdoors wrote:How does it feel? Take your balance today, then reduce it by 60%, and let it stay at that balance for three months. Let us know how it feels.

I understand that, but I also understand that the number of the shares won't be reduced by 60%. The number of shares stay the same or increases as I contribute. I wish that brokers shows the number of shares (in the same font size on the landing page) instead/along with the amount in dollars when people log in to their account.
Excuse my English, it is my second language! | | "One of the funny things about stock market, every time one is buying another is selling, and both think they are astute" - William Feather

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Re: How it really feels to have investments during a bear market?

Post by SQRT » Tue Sep 27, 2016 8:20 am

Personal thing. Takes a big crash to find out. I can assure you it doesn't feel very good but your actions will depend on your personal risk tolerance, net worth, income, age, financial plan.

Edit to add: I retired in 2006 with a load of uncashed employee options and DSU's. Cashed some prior to 2008 but still had the majority outstanding. My portfolio (including the uncashed options which all submerged) dropped by about 75%. Single day losses hit 7 figures! Suddenly my retirement looked a lot different than I had planned. Did virtually nothing( what could I have done?). Luckily I had about 4 years of expenses in cash. Didn't feel very well. Cut back on discretionary expenses. Everything came back by the fall of 2009 and went up from there. That felt like hell but certainly has prepared me for the next decline.
Last edited by SQRT on Wed Sep 28, 2016 7:39 am, edited 3 times in total.

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Re: How it really feels to have investments during a bear market?

Post by Valuethinker » Tue Sep 27, 2016 8:26 am

slayed wrote:During a bear market the main temptation is to "sell now and buy in later at a lower price" and it is very enticing when you see the markets trending downwards.


And catch the falling knife ....

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Re: How it really feels to have investments during a bear market?

Post by KlangFool » Tue Sep 27, 2016 8:33 am

OP,

Until you had experienced it, you will have no idea how you will react. Please note that your experience in facing the bear market when you have 100K is not useful and does not translate into when you have 1 million. You may react differently.

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Re: How it really feels to have investments during a bear market?

Post by JDCarpenter » Tue Sep 27, 2016 8:42 am

lagflag wrote:Hi,
...
I am now educated enough to keep my plan even during a bear market, or that is what I think! I really not sure if my education will override my emotions, or I will give up! It is easy to presume that "I am smarter than the rest, I won't sell low" but since I haven't experienced such an event, I can not say for sure if I will pass (although I make every effort to pass the test when that happens, through basically reading decent books and learning more and more everyday).
...

Would you personally share how did you feel and how did you react during the 2008 crash?


I don't know that "smarter" is necessarily the most important thing here. Gut feel/emotions/tolerance are all terms that are rolled up into what I think matters; there are a lot of smart people who succumb to selling in bear markets.

My experience: 1987 hurt to lose over 20% in one day, but it was fleeting. 2000 hurt--and for a lot longer. 2008 hurt too, but more as an intellectual exercise. We were 100% stocks in each situation and simply stayed the course--but it wasn't fun. 2008 was easier both because of experience and my reentering law practice after raising kids--so we were in a situation to put a ton of new money in at discounted prices. So too, we don't get delirious with gains; maybe the flipside of that is not getting too upset on losses?

Bottom line, I don't know that one can predict one's reaction....

(I see that KlangFool made much the same point--although in our case, the size of portfolio didn't affect us, the same may not be the case for everyone.)
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Re: How it really feels to have investments during a bear market?

Post by plannerman » Tue Sep 27, 2016 8:46 am

It is apparently very scary, This forum has some of the smartest and most knowledgeable personal investors on the planet. But if you go back and read many of the posts as the market was dropping in 2008 you will find a lot of discussions about folks capitulating and going to " plan B". You are the only one who truly knows how you are going to feel, but don't underestimate the resolve it takes to not panic and sell during a bear market.

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Re: How it really feels to have investments during a bear market?

Post by why3not » Tue Sep 27, 2016 8:47 am

For me 2008/09 felt a little like this:
My employer downsizing from about 500 to 400 to 200 to 75 to 40 to 25 & my wondering if I was next every step of the way.
My neighbors losing their jobs & houses. Foreclosure signs popping up left & right throughout the area I lived in.
Financial doom & fear everywhere - from family, friends, coworkers, my boss, "experts" on tv/print/internet, folks I had even the slightest relationship with.
My wife losing her job (1/2 our income gone).
Running out of 6 month cash fund & unable to ditch the only debt (house: no one buying + a glut of low priced homes on the market).
Wondering how I would handle losing my job (it seemed almost certain) & for the first time in my life tapping my untouchable 401k's suddenly looked like a real possibility to feed my family.
Oops, 401ks were only worth 1/2 as much & mainly in stock... should I sell at a loss (something I previously had KNOWN I would never do) and move into fixed value so I could at least have something left to pull out if needed?

We got really lucky and dodged that bullet & something good financially happened for us instead. It could easily have gone the other way though, as it did for so many of my peers & acquaintances. Since then, we've hugely increased our savings rate & built up our taxable accounts to levels that seemed impossible at the time. That money was our "never again" money & if it doesn't happen again, our (potential) early retirement account.

The hard thing to remember when looking at the graphs that show a drop followed by a recovery... as when it is happening you have no idea how long it is going to last. Is this the start of a great depression? Will there be years of unemployment & decades until the stocks recovered? Does it make sense to liquidate retirement accounts & walk away from the mortgage to buy a chunk of rural land to plant/raise our own food? Etc.

Looking at the charts, it seems like only the idiots would have sold stock at or near the bottom. In real life, there probably wasn't anyone who wanted to sell, they all just considered locking in those losses were better than the alternative.

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Re: How it really feels to have investments during a bear market?

Post by JW-Retired » Tue Sep 27, 2016 8:53 am

Different people seem to feel it very differently. We had no sleeping trouble in 08/09 and didn't worry about it very much at all. Bear markets happen now and then and we seem to have developed an immunity to them.

This last time we set all the new money to go 100% into equities and took advantage of some tax-loss harvesting opportunities. Nothing to do or stew about after that.

Of course, a job loss or some similar disaster would make things different.
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Re: How it really feels to have investments during a bear market?

Post by rkhusky » Tue Sep 27, 2016 8:57 am

Size of your portfolio, how close you are to retirement, how much your nest egg has dropped, and how much you are depending on your investments to fund a comfortable retirement, all play a role in determining your reaction to a bear market.

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Re: How it really feels to have investments during a bear market?

Post by oldcomputerguy » Tue Sep 27, 2016 8:57 am

lagflag wrote:
Grt2bOutdoors wrote:How does it feel? Take your balance today, then reduce it by 60%, and let it stay at that balance for three months. Let us know how it feels.

I understand that, but I also understand that the number of the shares won't be reduced by 60%. The number of shares stay the same or increases as I contribute. I wish that brokers shows the number of shares (in the same font size on the landing page) instead/along with the amount in dollars when people log in to their account.


Fidelity does.
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Re: How it really feels to have investments during a bear market?

Post by BogleMelon » Tue Sep 27, 2016 8:59 am

why3not wrote:.


Thanks for sharing this post!
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Re: How it really feels to have investments during a bear market?

Post by Independent George » Tue Sep 27, 2016 9:16 am

It's awful - just awful - but survivable. I was in double trouble in '08, because I had just cleared out most of my savings to buy a condo in '07. Not only did my retirement accounts drop 60%, but I was suddenly holding a 200k mortgage on a 150k property. I still had my six months' living expenses in my emergency account, but a negative net worth.

At the same time, though... none of that really affected my day-to-day living. I could still make my mortgage payments, and I still kept contributing to my retirement accounts, and still put away a monthly surplus. My budget and expenditures remained exactly the same as before.

I remember my biggest worry at the time wasn't that my portfolio crashed, but that I might lose my job because of the economy's ripple effects. And that I wouldn't be able to find another one at the same pay.

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Re: How it really feels to have investments during a bear market?

Post by soboggled » Tue Sep 27, 2016 9:28 am

How you feel at a young age with minimum investments is probably different from when you are retiring and see your financial future crumbling.
Many seem to think the worst was 2007. The fact is that the monte carlo models that advise on AA assume if you lived through the Great Depression in which the market lost in double digits over several years, you would blissfully rebalance back to your equity-heavy AA every year, while unemployment was 25%, everyone around you was panicking and your spouse was yelling at you for losing so much money. And the market did not recover for over a decade.

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Re: How it really feels to have investments during a bear market?

Post by kaudrey » Tue Sep 27, 2016 10:30 am

It doesn't feel good, I can tell you that. It can feel scary and make you nervous; but knowing that you will be investing for decades, and don't need the money now, and it is only on paper unless you actually sell, helps a lot.

I started investing in 1991, right out of college. I kept investing through the dot-com bust and 2008. In 2008, I was 90/10; my portfolio dropped about 40%. I normally update my net worth chart monthly - that year, I didn't look at all. I did it on 12/31/07, and didn't look again until 12/31/08. In the meantime, I kept all of my automatic investing going - in the 401(k) and taxable account, so I kept buying on the down slope. I tried not to listen to the market news. I wasn't happy with the 12/31/08 number, of course, but at least I wasn't actively watching the number drop every month all year.

This "out of sight, out of mind" plan helped me sleep at night and stay the course. It wasn't easy, but I never once thought about selling on the way down. Only recently, in the last two years, have I slowly gone to 80/20, and am working toward 75/25 over the next few years; but that is due to my age and retirement plan (less than 10 years to go), as compared to any market fluctuations.

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Re: How it really feels to have investments during a bear market?

Post by Watty » Tue Sep 27, 2016 10:41 am

Often a bear market will follow a big run up in stocks so one thing I do is look at it as to how many months or years it was since my portfolio had the same balance. The classic example of this was during the Dot Com bubble and drop in the late 1990's and 2000. I pretty much just stuck with index funds then so when the market dropped it set me back several years not as being down a high percentage from the market peak.

KlangFool wrote:Please note that your experience in facing the bear market when you have 100K is not useful and does not translate into when you have 1 million. You may react differently.


A big reason for that is that if you have $100k and are saving $10K a year then a 20% drop in the portfolio will mean that with the new contributions you are only down 10% for the year which is not too alarming just frustrating.


Independent George wrote:I remember my biggest worry at the time wasn't that my portfolio crashed, but that I might lose my job because of the economy's ripple effects. And that I wouldn't be able to find another one at the same pay.


+1

In 2008 it was not just that people were being laid off, but companies were doing very little hiring so that finding another job would have been a lot more difficult than in normal times.

People that were graduating from college at that time often had a very hard time finding a decent first job.

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Re: How it really feels to have investments during a bear market?

Post by BolderBoy » Tue Sep 27, 2016 10:59 am

lagflag wrote:Would you personally share how did you feel and how did you react during the 2008 crash?

I think this thread discusses that at length: https://www.bogleheads.org/forum/viewtopic.php?f=10&t=79939
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Re: How it really feels to have investments during a bear market?

Post by KlangFool » Tue Sep 27, 2016 11:09 am

OP,

I protected myself from my emotion by not doing slice and dice. During 2008, most of my investment was in Life Strategy Moderate Fund and Wellington fund. Even now, 40% of my portfolio is in Wellington fund.

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Re: How it really feels to have investments during a bear market?

Post by meowcat » Tue Sep 27, 2016 11:15 am

Don't know what you all were invested in to lose 60% of your portfolio's value. In 2008/2009 I was invested in 100% equities (S&P index) and my total decline was 47%.
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Re: How it really feels to have investments during a bear market?

Post by tetractys » Tue Sep 27, 2016 11:21 am

lagflag wrote:I am only curious, how does it really feels when the market "crashes"? How difficult is it to fight (sheep following) and not locking your losses? Or it is not that difficult after all with good education?

Would you personally share how did you feel and how did you react during the 2008 crash?

How it "really feels" is entirely up to you--of course. The knowledge you've acquired can make all the difference.

For me as an accumulator, bear markets like 2008 have been opportunities to shovel in as much money as possible into my portfolio's most depressed assets. It's not always easy to put off enjoyable purchases and tighten the belt; but it certainly rewards the portfolio. -- Tet

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Re: How it really feels to have investments during a bear market?

Post by chicagoan23 » Tue Sep 27, 2016 11:35 am

I like to focus on the good parts of the portfolio. Fixed income was up annually in 2007, 2008, and 2009. That's why diversification is so important to me, even if it means sacrificing some upside.

For stocks, I tried to remember that American industry consists of buildings, raw materials, processing plants, trucks, planes, IT, energy reserves, etc. Owning equities means owning a piece of those physical and productive assets. Whatever the ticker says, those have value and always will have value. Berkshire Hathaway's 2011 shareholder letter has a good discussion of this concept.

http://www.berkshirehathaway.com/letters/2011ltr.pdf

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Re: How it really feels to have investments during a bear market?

Post by BL » Tue Sep 27, 2016 11:46 am

why3not and Independent George above seem to have some real-life memories of those days. It is easy to sort of forget now even if it was really bad then. Try to Google some late 2008 to early-'09 threads to get a real feeling. I tried "Plan B" which gave me some. Someone recently started a thread on this topic but I don't recall who it was. The above-linked thread also is a good start.

It is not easy to imagine or even recall how bad it can be when there is scary news everywhere: stocks crashing, jobs, housing, banks and big businesses in bad trouble, etc.

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Re: How it really feels to have investments during a bear market?

Post by Fallible » Tue Sep 27, 2016 11:50 am

You really won't know how it feels until you actually feel it, i.e., come face to face with your emotional risk tolerance. Even then it may depend on what the crash involves because each crash is different and individual reactions will differ. The '87 crash was deep but relatively brief. The '00-'02 tech crash and bear market included a recession. The '08-'09 crash included the housing bust, Great Recession, and a frightening credit crunch, i.e., a near financial meltdown. Among Bogleheads posting about the '08 crash, some held but did not rebalance (me), some held and rebalanced, and it appeared that some bailed.

You are wise to be asking these questions now in order to prepare as best you can for the next big one.
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Re: How it really feels to have investments during a bear market?

Post by VictoriaF » Tue Sep 27, 2016 11:57 am

1987 - I was not investing, and the crash was a non-event for me.
2001 - My 401(k) was loaded with Lucent stock which I acquired in the falling-knife fashion while working for Bell Labs. The bad news is that I lost hundreds of thousands of dollars in the tech bubble burst. The good news is that a financial calamity has led me to discovering the Bogleheads.
2008 - I was invested conservatively and have not lost much even at the bottom of the market. However, I started contemplating Plan-B of retiring later than the earliest possible date.
2016 - I am retired and immune from bear markets. My cash assets will carry me to the maximum Social Security which I will start collecting at the age of 70.

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Re: How it really feels to have investments during a bear market?

Post by bigcmagor » Tue Sep 27, 2016 12:04 pm

Imagine 20 years of investment gains and employer matching funds vaporizing. Imagine friends and family losing jobs and scared. Imagine having to reduce staffing by 150 close-knit people and being responsible for choosing who stays and who goes. Imagine your lifetime best friend and next door neighbor committing suicide so his family could survive with the life insurance proceeds. Imagine paying for college for two of your children while all this is happening. You can't adequately prepare for that nightmare, only try to survive it when it's trying to drown you.

That's how it felt to me.

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Re: How it really feels to have investments during a bear market?

Post by VictoriaF » Tue Sep 27, 2016 12:11 pm

bigcmagor wrote:Imagine 20 years of investment gains and employer matching funds vaporizing. Imagine friends and family losing jobs and scared. Imagine having to reduce staffing by 150 close-knit people and being responsible for choosing who stays and who goes. Imagine your lifetime best friend and next door neighbor committing suicide so his family could survive with the life insurance proceeds. Imagine paying for college for two of your children while all this is happening. You can't adequately prepare for that nightmare, only try to survive it when it's trying to drown you.

That's how it felt to me.


It's a very powerful description. Thank you!

Importantly, in 2007-2009, there was no assurance that the crisis would end. Banking and housing crises are more insidious than equity market crashes. The extraordinary measures by the Administration and central banks in the U.S. and Europe have reversed the calamity. It worked but it was far from certainty at the time when it was happening. The next crisis may not end well, even if the last one did.

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Re: How it really feels to have investments during a bear market?

Post by bligh » Tue Sep 27, 2016 12:17 pm

bigcmagor wrote:Imagine 20 years of investment gains and employer matching funds vaporizing. Imagine friends and family losing jobs and scared. Imagine having to reduce staffing by 150 close-knit people and being responsible for choosing who stays and who goes. Imagine your lifetime best friend and next door neighbor committing suicide so his family could survive with the life insurance proceeds. Imagine paying for college for two of your children while all this is happening. You can't adequately prepare for that nightmare, only try to survive it when it's trying to drown you.

That's how it felt to me.


That is rough. :(

It puts a different perspective on downturns for me. As a relatively young boglehead in his accumulation phase and in an industry with very stable employment prospects I actually root for market downturns so that I may be able to continue to buy in while the market is depressed.

This makes me pause and evaluate my thoughts a little more deeply.

Thank you for sharing it.

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Re: How it really feels to have investments during a bear market?

Post by Valuethinker » Tue Sep 27, 2016 12:29 pm

bligh wrote:
bigcmagor wrote:Imagine 20 years of investment gains and employer matching funds vaporizing. Imagine friends and family losing jobs and scared. Imagine having to reduce staffing by 150 close-knit people and being responsible for choosing who stays and who goes. Imagine your lifetime best friend and next door neighbor committing suicide so his family could survive with the life insurance proceeds. Imagine paying for college for two of your children while all this is happening. You can't adequately prepare for that nightmare, only try to survive it when it's trying to drown you.

That's how it felt to me.


That is rough. :(

It puts a different perspective on downturns for me. As a relatively young boglehead in his accumulation phase and in an industry with very stable employment prospects I actually root for market downturns so that I may be able to continue to buy in while the market is depressed.

This makes me pause and evaluate my thoughts a little more deeply.

Thank you for sharing it.


One caveat.

NO industry has a 20 year view any more. Even electric utilities.

If I go back to the early 90s, it was IBM and pharmaceuticals and consumer products. Well IBM has been through 20+ years of cuts and rationalization. Big pharma makes huge acquisitions to cut costs (ie people) and is running hard to stay still. Consumer products? Ask anyone if they get an easy ride from their customers-- likes of WalMart etc.

Government? UK government has made huge cuts, outsourcing, privatising. Same is true of many US state governments. Education? Far more contract employees.

Nothing is safe on a 20 year view. Nothing.

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Re: How it really feels to have investments during a bear market?

Post by Valuethinker » Tue Sep 27, 2016 12:31 pm

bigcmagor wrote:Imagine 20 years of investment gains and employer matching funds vaporizing. Imagine friends and family losing jobs and scared. Imagine having to reduce staffing by 150 close-knit people and being responsible for choosing who stays and who goes. Imagine your lifetime best friend and next door neighbor committing suicide so his family could survive with the life insurance proceeds. Imagine paying for college for two of your children while all this is happening. You can't adequately prepare for that nightmare, only try to survive it when it's trying to drown you.

That's how it felt to me.


Thank you.

I think the big problem for most people is if they lose their job, have to draw down savings.

At least until you are early-mid 50s, when you are really running out of time to recover by retirement age (and being forcibly retired is a common outcome these days it seems).

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Re: How it really feels to have investments during a bear market?

Post by Fallible » Tue Sep 27, 2016 1:11 pm

bigcmagor wrote:Imagine 20 years of investment gains and employer matching funds vaporizing. Imagine friends and family losing jobs and scared. Imagine having to reduce staffing by 150 close-knit people and being responsible for choosing who stays and who goes. Imagine your lifetime best friend and next door neighbor committing suicide so his family could survive with the life insurance proceeds. Imagine paying for college for two of your children while all this is happening. You can't adequately prepare for that nightmare, only try to survive it when it's trying to drown you.

That's how it felt to me.


This well describes much of the human suffering that followed for years the '08 market crash and full-blown global financial crisis. It certainly is difficult to prepare for these tragic events, but I think just knowing they can and do happen can help.
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Re: How it really feels to have investments during a bear market?

Post by Sheepdog » Tue Sep 27, 2016 1:12 pm

What if you are living off of your investments in retirement and the markets have been dropping. You have been watching your and your spouse's economic future deteriorating, then on one day there is the largest to date one day drop and you realize that on that one day alone you lost one full year of normal withdrawals and you feel panic. You may think, what if there are 10 more days like that coming...20 more days... You start to wonder when it will turn around. You start to wonder if it will turn around. Irrationally, sure, you may think, but..... How a person feels at that time is very personal, isn't it?
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Re: How it really feels to have investments during a bear market?

Post by mickeyd » Tue Sep 27, 2016 1:18 pm

I do not have any "feelings" about my investable assets. They are just out there working for me in the allocation that I have chosen as they have for the last 50 years or so.
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Re: How it really feels to have investments during a bear market?

Post by soboggled » Tue Sep 27, 2016 1:35 pm

Sheepdog wrote:What if you are living off of your investments in retirement and the markets have been dropping. You have been watching your and your spouse's economic future deteriorating, then on one day there is the largest to date one day drop and you realize that on that one day alone you lost one full year of normal withdrawals and you feel panic. You may think, what if there are 10 more days like that coming...20 more days... You start to wonder when it will turn around. You start to wonder if it will turn around. Irrationally, sure, you may think, but..... How a person feels at that time is very personal, isn't it?

Multiply that by 10 for the Great Depression. Or Japan, which is still not back to its 1991 high. But, but...the market is always guaranteed to go up! Maybe, so far, and almost always, it may be a good bet, but you may have to wait a decade or more, fearlessly rebalancing into the teeth of a declining market all the way.

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Re: How it really feels to have investments during a bear market?

Post by El Greco » Tue Sep 27, 2016 2:00 pm

Having gone through the dot-com and 2008-09 bear markets, I can say it was certainly a terrifying time, however, in both instances I bit the bullet and stayed invested.

I had always been an erratic saver and always 100% in equities, so the crash in 08-09 decimated the relatively small portfolio I had. I went from about 350K down to less than 200K and was in my early fifties at the time and underemployed. To my credit, I didn’t panic, stayed invested and scraped together as much as possible to buy beaten down stocks within 15% of their lows. I absolutely refused to believe that companies like Dow Chemical, Verizon and Valero were going to go out of business, no matter how hard their stock was beaten down.

As the market started to rise and my employment prospects improved, I made a conscious decision to save like mad and remain 100% in equity funds and individual stocks as a sort of “go for broke” strategy because someday I actually hoped to be able to retire and my time horizon was short. Even though it has been extremely risky, it has worked out pretty well and though I still haven’t hit my preferred number yet, I have about 3 or 4 more work years to go.

Recently, at the age of 61, I had a dream where I heard the voice of god (or was it Jack Bogle? :D ) urging me to de-risk. Thankfully, I have and now have a much more sensible allocation for my age, about 60/40. If I had to do it all over again, I would have saved more, saved consistently, owned a few bonds, joined Bogleheads a lot sooner, and be retired right now instead of in 3 or 4 more years. But that’s life. My advice? Come up with a good plan, stick with it and when the next Bear hits, think about ANYTHING but the markets. I can’t tell you how many people I know that panicked and sold and are still in bad financial shape.
Last edited by El Greco on Tue Sep 27, 2016 3:54 pm, edited 1 time in total.

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Re: How it really feels to have investments during a bear market?

Post by Independent George » Tue Sep 27, 2016 2:43 pm

meowcat wrote:Don't know what you all were invested in to lose 60% of your portfolio's value. In 2008/2009 I was invested in 100% equities (S&P index) and my total decline was 47%.


I entered the workforce in 2001, and a combination of student loan payments, increasing income, and youthful stupidity (I was a market timer through 2005-ish) meant that a disproportionate share of my portfolio was purchased between 2006-2008.

Worse, my uncertainty after the crash pushed me to reduce my 401k contributions to build my cash reserves in case I got laid off. I actually don't regret this one bit even though it effectively meant missing out on the bull run that followed. It taught me an awful lot about my true risk tolerance, and the importance of my reserve cash; I am now much better equipped to handle the next crash, in no small part due to the Bogleheads.

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Re: How it really feels to have investments during a bear market?

Post by midareff » Tue Sep 27, 2016 2:51 pm

Having had the experience of going through the 2007/08 and 1998/99 "evernts" I can tell you it feels awful. You have watched significant portions of the money you saved and invested for your future vanish, literally, day after day. If you are thinking you can watch hundred of thousands of dollars evaporate and still be a smiley happy go lucky upbeat guy more power to ya, I couldn't.

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Re: How it really feels to have investments during a bear market?

Post by JoMoney » Tue Sep 27, 2016 3:02 pm

I remember wishing I had more money to invest during some of the big drops... and then being amazed at how much further it continued to fall. Day after day of huge volatile swings, but for the most part I 'stayed the course' and continued my regular investments in what is pretty much an all stock portfolio.
I had some co-workers that were older and nearing retirement that didn't take it so well. Even they agreed that if/when things turned around it would likely prove to be a great time to be buying, but nobody knows how long that could take, and the drop at that point in time seriously impaired all of their plans for retirement. For me, the investment wasn't 'money' that I expected to use in the next year or two, for them it was... it was money they had day-dreamed about spending, it had been in their grasp, and now it was gone.
If the investment represents money you need for surviving on, and it just keeps falling further, with no signs of anything that will stop the fall and a 'quick recovery' not even imaginable, at what point do you cut your losses and just take what you have left and make sure you don't lose that to?
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Re: How it really feels to have investments during a bear market?

Post by letsgobobby » Tue Sep 27, 2016 3:11 pm

I think your experience may depend a lot on how accurately you have gauged your risk tolerance. The problem is, this is very difficult to do in advance. Barring an incredibly life-like virtual reality experience, nothing can prepare you for losing hundreds of thousands or millions of dollars, as many Bogleheads did. Kind of like virtual reality war games are not like being a Marine in Iraq, even VR probably doesn't come close to capturing the experience.

I tend to encourage folks to be more conservative than they think they need to be, so that when the next severe bear market occurs they are less likely to panic-sell.

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Re: How it really feels to have investments during a bear market?

Post by nisiprius » Tue Sep 27, 2016 3:24 pm

A very important point for me is that I didn't feel it as a percentage drop. I felt it in three ways:

a) Number of years it had taken me to save up the amount of money that had just vanished from my account. The number of years my wife and I settled for keeping older cars, taking inexpensive vacations, and generally "not having nice things" in order to build up a secure retirement, that had now just been undone.

b) Probability of a total collapse, perhaps as bad as the Great Depression, perhaps unrecoverable. Normally this is so small it doesn't really figure into my thinking. During 2008-2009 I would say my personal estimate was about 10%.

c) The feeling of being outside the elastic limits of the system. The rubber band was about to snap, the bough is past bending and close to breaking.

I've likened it to driving north on a two-lane highway and encountering a trailer truck driving south in the other lane.Say the lanes are 12 feet wide, your car is six feet wide, and the truck is 8 feet wide. If you are both in the center of the lane, the truck is two feet from the line, you are three feet from the line, you pass with a clearance of five feet.

If the truck is crowding the line a bit, say a foot closer to the center line, your clearance is four feet, 20% less than usual. No big deal. It's in the range of what's normal.

But if the truck crosses the center line and invades your lane by six inches, it's different. You don't think "our clearance is 2.5 feet or 50% of normal." You think "Holy ----, that ------- is in my lane, he could hit me."
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Re: How it really feels to have investments during a bear market?

Post by goodenyou » Tue Sep 27, 2016 3:58 pm

As a famous comedian would say..."more panic than being stuck in LA traffic and realizing you had 3 cups of coffee and a bran muffin."
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Re: How it really feels to have investments during a bear market?

Post by VictoriaF » Tue Sep 27, 2016 4:12 pm

The fundamental and consequential incongruity of investing is that the logical time to adjust the risk of one's portfolio is when the market is high, and the emotional time is when the market is low. Reminiscing on how we felt during the last bear market does not come close to how we really felt. That's why good investing requires experience of bad markets. And that's why prudent investors make necessary changes and commitments when the things are bad, and do not break these commitments when the things get better.

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Re: How it really feels to have investments during a bear market?

Post by selters » Tue Sep 27, 2016 5:19 pm

That you remained calm at age 35 when you had $100,000 drop to $50,000 due to a banking crisis is not at all a guarantee that you will remain calm at 55 when you have $1,000,000 drop to $500,000 due to a global pandemic killing millions of people.

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Re: How it really feels to have investments during a bear market?

Post by FillorKill » Tue Sep 27, 2016 5:30 pm

JoMoney wrote:I remember wishing I had more money to invest during some of the big drops... and then being amazed at how much further it continued to fall. Day after day of huge volatile swings, but for the most part I 'stayed the course' and continued my regular investments in what is pretty much an all stock portfolio.

:D That sounds familiar. I started to think I was just shoveling perfectly good liquidity into an incinerator. Which for several months proved to be true. TLH'ing positions I'd held for 3 or 5 or 7 trading days got a bit tiresome too. You run out of partner funds in a hurry and wonder if you'll ever really need 150 years worth of loss carryforwards....

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Re: How it really feels to have investments during a bear market?

Post by VictoriaF » Tue Sep 27, 2016 5:33 pm

selters wrote:That you remained calm at age 35 when you had $100,000 drop to $50,000 due to a banking crisis is not at all a guarantee that you will remain calm at 55 when you have $1,000,000 drop to $500,000 due to a global pandemic killing millions of people.


Very good point. "This time is different" is a sarcastic retort, until it becomes the truth. The next market collapse could be caused by a global pandemic. Or by an Internet calamity, see Bruce Schneier's Someone Is Learning How to Take Down the Internet. Or a massive identity crisis: not "massive" from an individual's point of view but massive as in "masses have irreparably lost their identities to ID thieves." Or something else we can't phantom today. Recovery from previous recessions is not a guarantee that we'll survive the next one.

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Re: How it really feels to have investments during a bear market?

Post by Artsdoctor » Tue Sep 27, 2016 5:54 pm

Each bear market is different. My first introduction was the 1987 plunge, then the 2000 meltdown, and then the 2008 catastrophe.

In 1987 (age 30's), I didn't have perspective at all. I had just started investing and had probably $10,000 in the market! Of course I sold at the bottom because I had no idea that age was on my side and the absolute dollars were miniscule. A few years later, I realized how ridiculous my behavior was.

In 2000 (age 40's), I did "OK" but by then, I realized that I could work my way out of it. Meaning, although I lost money, I could earn my way back. I didn't rebalance but I didn't sell either. I don't remember feeling frightened, but I was anxious. I think I had CDs, but I didn't really know what I was doing with bonds so my portfolio was incredibly aggressive, probably 90% stocks.

In 2008 (age 50's), I was extremely frightened because my portfolio was well into the 7 digits--and my losses were in the 7 digits. The most poignant feeling I remember was never knowing when it was going to stop--there was an abyss. However, because of the magnitude of the losses, I (1) worked overtime in order to pump more savings into my accounts in order to make the balances look less scary, (2) I tax-loss harvested hundreds of thousands of dollars which I carryover now every year, and (3) I rebalanced to a 60/40 allocation all the way through. However, I hated the fear, the nausea, and the uncertainty, and I learned that 60/40 was too aggressive for me; gradually from 2013-2015, I reduced my asset allocation to 50/50 and I now have a Liability Matching Portfolio with a TIPS ladder which is removed from that allocation altogether. The 2008 experience was so nerve-wracking that I kept a diary to keep track of my feelings--this has helped ground me when I second-guess myself nowadays.

You cannot really ask your question. The answer is unique to you, and it is unique to your age. Each time you learn your lesson your own way.

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Re: How it really feels to have investments during a bear market?

Post by whodidntante » Tue Sep 27, 2016 5:59 pm

It feels like going to a party, and once there something terrible happens and everyone makes fun of you for one to ten years.

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Re: How it really feels to have investments during a bear market?

Post by sschullo » Tue Sep 27, 2016 6:14 pm

My late husband and I wrote a book about our portfolio during the rise and fall of the tech bubble. What led to the rise, and the loss of $1.1 million from a $1.5 million dollar portfolio, what we did to hang together, the massive mistakes, how we felt and how we straightened ourselves out, and STILL retired relatively early (I was 61 and he was 59). BTW, I was 53 and Dan had just retired at the beginning of this terrible time. I eventually retired at the beginning of the next crash, summer of 2008. However, we were ready as our portfolio survived relatively unscathed in 2008.
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Re: How it really feels to have investments during a bear market?

Post by Gnirk » Tue Sep 27, 2016 6:35 pm

The market tanked the year after we retired. (How's that for timing??) The majority of our retirement funds consisted of everything saved/invested--husband owned his own retail business-- and to watch 75% of our retirement funds disappear was the scariest thing ever, financially. And we weren't even aware at that time that you could defer collecting SS until age 70, so my husband started collecting at full retirement age, and I started at age 63. This was before we ever read this board, and we made some other mistakes, sold some funds, bought more conservative ones, kept some. Fortunately, we didn't go overboard with the selling, and after awhile everything came back. And we are now buy-and-hold, keep-it-simple retirees.

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