Example of why this forum is so good

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llessac15
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Example of why this forum is so good

Post by llessac15 » Sat Jun 17, 2017 10:07 pm

I was reading threads from the 2008-09 crisis and this quote popped up in one from October 2008. Thought it was worth reposting since it likely gave many people large amounts of money with just these few short sentences. Young investors like me would have needed this to encourage us to stay the course.

Rick Ferri wrote:This crisis has set up a once in a lifetime buying opportunity for baby boomers who are saving for retirement. I highly suggest that savers continue to put money into stocks at these incredibly low prices.

Boomers have a unique opportunity to truly set themselves up for retirement 10-15 years from now as long as they do not focus on the rain, rather they focus on the crops that rain will generate in the future.

Be smart buyers when other people are panic sellers.

Rick Ferri

TigerNest
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Re: Example of why this forum is so good

Post by TigerNest » Sat Jun 17, 2017 10:32 pm

That is a great quote. Thank you for sharing.

WhyNotUs
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Re: Example of why this forum is so good

Post by WhyNotUs » Sat Jun 17, 2017 10:59 pm

Rick's mic drop
I own the next hot stock- VTSAX

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TD2626
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Re: Example of why this forum is so good

Post by TD2626 » Sun Jun 18, 2017 12:02 am

One of the few places grounded in common sense is here, it seems. Very civil and focused on sensible, low cost, broadly diversified investment strategies that the vast majority can easily understand and implement. The best parts of the philosophy are also about what not to do - panic sell, speculate, market time, etc. It's also amazing the consistency over time. Bogleheads have been "staying the course" with the recommendation to "stay the course" for many years.

WildBill
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Re: Example of why this forum is so good

Post by WildBill » Sun Jun 18, 2017 12:47 am

TD2626 wrote:One of the few places grounded in common sense is here, it seems. Very civil and focused on sensible, low cost, broadly diversified investment strategies that the vast majority can easily understand and implement. The best parts of the philosophy are also about what not to do - panic sell, speculate, market time, etc. It's also amazing the consistency over time. Bogleheads have been "staying the course" with the recommendation to "stay the course" for many years.


Howdy

I agree this is an outstanding forum, but I would not get carried away patting ourselves on the back. If Mr. Ferri's quote is not a market timing call -"once in a lifetime opportunity" - then I have never seen one. If you agree with him in this example, then clearly you are buying into market timing. Which I most certainly do when valuations are favorable.

I agreed with him then (although I had never heard of him) and upped my equity allocation to over 90%. It worked out well, but I did sweat some.

I guess this gets me excommunicated from the High Church of No Market Timing, but I never took communion anyway :beer .

Happy market timing.

W B
"Through chances various, through all vicissitudes, we make our way." Virgil, The Aeneid

Avo
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Re: Example of why this forum is so good

Post by Avo » Sun Jun 18, 2017 1:45 am

Completely agree that this was market timing on Ferri's part. He happened to be right. But market-timers are usually not favorably regarded here, eg this thread from 3 months ago: viewtopic.php?t=215044

DomDangelina
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Re: Example of why this forum is so good

Post by DomDangelina » Sun Jun 18, 2017 2:00 am

Market timing. But does the fact that he was so spectacularly right make a difference?
"Often the remedy causes the disease. It is by no means the least of life's rules: to let things alone." | Baltasar Gracián, S.J., The Art of Worldly Wisdom, Maxim 121

richardglm
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Re: Example of why this forum is so good

Post by richardglm » Sun Jun 18, 2017 2:31 am

First, I don't believe thIs is market timing. Note the use of the "continue" word. Rather it's an encouragement to not market time, but to stay the course and pour in money at a normal rate even though (quite likely) it would drop even further the next day and you would be underwater on your investment for months, possibly years.

But even if it were market timing, its highly rational advice. Over any 10-15 year period of history market returns have been good, and the worst returns on such long periods have always been when starting at market peaks, something virtually impossible if it has just fallen by 40%

Vanguard Fan 1367
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Re: Example of why this forum is so good

Post by Vanguard Fan 1367 » Sun Jun 18, 2017 2:45 am

The wife and I like to listen to Jack Bogle and others on YouTube. Yesterday we listened to a recording with some age to it where Jack talked about the high PE ratio of the S & P 500 before the 2000 drop. He says that he adjusted his stocks to bond ratio to a much higher bond (I think 70 percent bonds). His point was that at the time bonds yielded 7 percent and he said at the time that it didn't make any sense to own stocks with their current valuations, I believe he said the PE ratio was 35.

So even the great Jack who says that he doesn't know anyone, nor does he know anyone who knows anyone who can successfully time the market sometimes wakes up and looks at where he is that day and makes some changes. When you have that once in a lifetime opportunity that Ferri talks about in this thread it might be something to consider investing more in stocks rather than in fear avoiding the stock market.

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Devil's Advocate
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Re: Example of why this forum is so good

Post by Devil's Advocate » Sun Jun 18, 2017 2:56 am

"First, I don't believe thIs is market timing. Note the use of the "continue" word. Rather it's an encouragement to not market time, but to stay the course and pour in money at a normal rate even though (quite likely) it would drop even further the next day and you would be underwater on your investment for months, possibly years."


+1

Not market timing. Encouraging you NOT to sell low. Stay the course. Rebalance into equities. Totally Bogleheadish and appropriate.

DA

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bottlecap
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Re: Example of why this forum is so good

Post by bottlecap » Sun Jun 18, 2017 6:10 am

WildBill wrote:If Mr. Ferri's quote is not a market timing call -"once in a lifetime opportunity" - then I have never seen one. If you agree with him in this example, then clearly you are buying into market timing. Which I most certainly do when valuations are favorable.


If you read his actual words, he is saying "stay the course," which most don't think is market-timing.

It also portends that markets often revert to their means, a sentiment which also does not require a belief in market-timing.

Mr. Ferri's comment was simply a call not to panic and to provide a reminder that when things look darkest, staying the course if oft rewarded.

There is conspicuously absent any call to even so much as change your asset allocation.

But words and context can be ignored.

Someday the world will end and/or markets will not recover. When that happens, neither believing in market-timing or not believing in market timing will be of any help.

JT
Last edited by bottlecap on Sun Jun 18, 2017 6:30 am, edited 1 time in total.

llessac15
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Re: Example of why this forum is so good

Post by llessac15 » Sun Jun 18, 2017 6:28 am

His quote does not seem like marking timing at all to me. Actually, not following his advice would have been market timing. Because anyone with even a small percentage of stocks at the time would have been way out of balance with their predetermined asset allocation. If you weren't buying stocks at that time, you would have been letting your stock allocation drop way below your normal mark. That goes against Boglehead principals. I guess if he would have worded it as:

"Don't panic and sell! Don't do nothing! Keep buying stocks to keep your asset allocation intact. You will be richly rewarded down the road."

Maybe something like that would have been more 'Bogle-ish', even though it's really saying the same thing.
Last edited by llessac15 on Sun Jun 18, 2017 6:50 am, edited 1 time in total.

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KSOC
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Re: Example of why this forum is so good

Post by KSOC » Sun Jun 18, 2017 6:35 am

Is "Buy Low Sell High" market timing? If it is I'm guilty. I'm positioning my self now to buy equities when the market declines. I'm not hording cash, but stocking extra in my stable value fund.
Too soon old, too late smart.

goingup
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Re: Example of why this forum is so good

Post by goingup » Sun Jun 18, 2017 9:34 am

Thanks for posting Rick Ferri's excellent advice to this forum during the throes of the financial crisis. I was a long-time lurker during that time and his measured words about staying the course and continued investing had a powerful effect. By training (Marine pilot) and disposition he's a guy who stays calm under pressure. His leadership was reassuring.

Rick posted recently on BH. Just maybe he's drafting another book while erstwhile traversing the country in an RV.

dwickenh
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Re: Example of why this forum is so good

Post by dwickenh » Sun Jun 18, 2017 9:41 am

To me his advice reads "Stay the course". What could be more Bogleheadish than that?

I hope he is enjoying his new found freedom, even if his wife had to talk him into it!!!

Dan
The market is the most efficient mechanism anywhere in the world for transferring wealth from impatient people to patient people.” | — Warren Buffett

sambb
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Re: Example of why this forum is so good

Post by sambb » Sun Jun 18, 2017 9:42 am

Elaine Garzarelli, predicted the 1987 crash just prior to it. Later she was ousted.
Cant go by one quote or another, or one post or another.
This forum has a lot of collective wisdom and debate, and that is why i like it
Good call by Mr. Ferri however.

I believe last year, someone called an emerging markets low - good advice there too. Was debated by some.

mortalsonofmortal
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Re: Example of why this forum is so good

Post by mortalsonofmortal » Sun Jun 18, 2017 1:55 pm

As others pointed out already focus could be given to the word "continue". Not market timing advice IMO. I do try to time the market, but that is more of a hobby and only a few hundreds of dollars in that account.

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Re: Example of why this forum is so good

Post by Fallible » Sun Jun 18, 2017 4:48 pm

WildBill wrote:
TD2626 wrote:One of the few places grounded in common sense is here, it seems. Very civil and focused on sensible, low cost, broadly diversified investment strategies that the vast majority can easily understand and implement. The best parts of the philosophy are also about what not to do - panic sell, speculate, market time, etc. It's also amazing the consistency over time. Bogleheads have been "staying the course" with the recommendation to "stay the course" for many years.


Howdy

I agree this is an outstanding forum, but I would not get carried away patting ourselves on the back. If Mr. Ferri's quote is not a market timing call -"once in a lifetime opportunity" - then I have never seen one. If you agree with him in this example, then clearly you are buying into market timing. Which I most certainly do when valuations are favorable. ...


Rick's quote was about taking advantage of an existing opportunity to buy low. It was not about market timing, which is predicting what the market will do and investing based on that prediction.
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Re: Example of why this forum is so good

Post by Silverado » Sun Jun 18, 2017 5:15 pm

Fallible wrote:
WildBill wrote:
TD2626 wrote:One of the few places grounded in common sense is here, it seems. Very civil and focused on sensible, low cost, broadly diversified investment strategies that the vast majority can easily understand and implement. The best parts of the philosophy are also about what not to do - panic sell, speculate, market time, etc. It's also amazing the consistency over time. Bogleheads have been "staying the course" with the recommendation to "stay the course" for many years.


Howdy

I agree this is an outstanding forum, but I would not get carried away patting ourselves on the back. If Mr. Ferri's quote is not a market timing call -"once in a lifetime opportunity" - then I have never seen one. If you agree with him in this example, then clearly you are buying into market timing. Which I most certainly do when valuations are favorable. ...


Rick's quote was about taking advantage of an existing opportunity to buy low. It was not about market timing, which is predicting what the market will do and investing based on that prediction.


Nobody knew they were buying low at the time. Only with hindsight do we know we were buying low. There was a lot more low ground we could have gone to.

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Re: Example of why this forum is so good

Post by Fallible » Sun Jun 18, 2017 6:17 pm

Silverado wrote:
Fallible wrote:
WildBill wrote:
TD2626 wrote:One of the few places grounded in common sense is here, it seems. Very civil and focused on sensible, low cost, broadly diversified investment strategies that the vast majority can easily understand and implement. The best parts of the philosophy are also about what not to do - panic sell, speculate, market time, etc. It's also amazing the consistency over time. Bogleheads have been "staying the course" with the recommendation to "stay the course" for many years.


Howdy

I agree this is an outstanding forum, but I would not get carried away patting ourselves on the back. If Mr. Ferri's quote is not a market timing call -"once in a lifetime opportunity" - then I have never seen one. If you agree with him in this example, then clearly you are buying into market timing. Which I most certainly do when valuations are favorable. ...


Rick's quote was about taking advantage of an existing opportunity to buy low. It was not about market timing, which is predicting what the market will do and investing based on that prediction.


Nobody knew they were buying low at the time. Only with hindsight do we know we were buying low. There was a lot more low ground we could have gone to.


Rick's forum post was made on Oct. 23, 2008, shortly after a historic three-week period during which, according to Investopedia, the Dow plummeted 3,600 points from the September 19, 2008, intraday high of 11,483 to the October 10, 2008, intraday low of 7,882.

That was obviously low, and the only unknown then was what would happen next.
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