Did you learn anything from the market correction?

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hilink73
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Re: Did you learn anything from the market correction?

Post by hilink73 » Tue Feb 13, 2018 1:08 pm

AlohaJoe wrote:
Tue Feb 13, 2018 3:25 am
bantam222 wrote:
Tue Feb 13, 2018 2:45 am
Our first market correction (10% decline from peak) after an 8 year bull run
There was a correction in 2010 (-16%), a correction in 2011 (-19%), another correction in 2011 (-9.8%), one in 2012 (-9.9%), one in 2015 (-12%), and another one in 2015-2016 (-13%). (All based on the S&P 500.)

So 6 correction (7, if you include the most recent one) during the "8 year bull run".

I learned as much from this correction as I did from the one that was 24 months ago.
Is it over already?
Just asking for a friend...

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Re: Did you learn anything from the market correction?

Post by bobcat2 » Tue Feb 13, 2018 1:10 pm

Did you learn anything from the market correction?

Given that volatility measures are still fluctuating between the mid 20s and the mid 30s, after averaging about 13 over the previous twelve months, I suspect there is a significant probability (greater than 25%) the market drop will continue.

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B. Wellington
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Re: Did you learn anything from the market correction?

Post by B. Wellington » Tue Feb 13, 2018 1:17 pm

njboater74 wrote:
Tue Feb 13, 2018 11:22 am
nisiprius wrote:
Tue Feb 13, 2018 7:30 am
P.S. Am I the only person who sees a phrase like "eight year bull run" and thinks "first battle of the Civil War?" (Revealing myself as a Yankee, of course...)
an 8 year Manassas?
Continuing onto Culpeper or Fredericksburg? :beer

In response to the OP, someone mentioned experience is GOLD. Your personal AA is GOLD. Early last year I settled into an AA that I can live with going into retirement...Should mention that YOUR IPS is GOLD as well...

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Re: Did you learn anything from the market correction?

Post by Grt2bOutdoors » Tue Feb 13, 2018 1:19 pm

I learned that the price of filet mignon is getting cheaper by the day, while the yield from the corn field is in a holding pattern.
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Dottie57
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Re: Did you learn anything from the market correction?

Post by Dottie57 » Tue Feb 13, 2018 1:19 pm

I learned I wanted to "DO SOMETHING!"

I just stood there.

So far all is well, although my numbers are lower. The world has not ended.

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Re: Did you learn anything from the market correction?

Post by Grt2bOutdoors » Tue Feb 13, 2018 1:20 pm

hilink73 wrote:
Tue Feb 13, 2018 1:08 pm
AlohaJoe wrote:
Tue Feb 13, 2018 3:25 am
bantam222 wrote:
Tue Feb 13, 2018 2:45 am
Our first market correction (10% decline from peak) after an 8 year bull run
There was a correction in 2010 (-16%), a correction in 2011 (-19%), another correction in 2011 (-9.8%), one in 2012 (-9.9%), one in 2015 (-12%), and another one in 2015-2016 (-13%). (All based on the S&P 500.)

So 6 correction (7, if you include the most recent one) during the "8 year bull run".

I learned as much from this correction as I did from the one that was 24 months ago.
Is it over already?
Just asking for a friend...
No, it's not over, it's just getting started.
"One should invest based on their need, ability and willingness to take risk - Larry Swedroe" Asking Portfolio Questions

JoeRetire
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Re: Did you learn anything from the market correction?

Post by JoeRetire » Tue Feb 13, 2018 1:24 pm

bantam222 wrote:
Tue Feb 13, 2018 2:45 am
What did you learn from this?
Nothing I didn't already know.

It was obvious to anyone paying attention that a correction would happen sooner or later. My asset allocation hasn't changed, and won't until something in my goals/personal timeline changes. It won't be changed due to a correction - that was already anticipated.

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Re: Did you learn anything from the market correction?

Post by Fallible » Tue Feb 13, 2018 1:35 pm

After 30 years in the market beginning with the '87 crash, I doubt there is much more to learn about human behavior with money. It seemed even the best financial writers were a bit bored with the latest correction, maybe because it, or something, had been expected for so long.
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Re: Did you learn anything from the market correction?

Post by itstoomuch » Tue Feb 13, 2018 1:39 pm

My Discretionary trading acct held up well. Even added more shares. Our exposure to the equity/bond markets is limited to just these Discretionary Accts, Less than 10% of NW.
RE ignores this stuff. Perhaps because the transaction costs and hassle to prep for moving people into/outof or taking the really long view.
Everything went according to plan.
YMMV
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Re: Did you learn anything from the market correction?

Post by caffeperfavore » Tue Feb 13, 2018 1:40 pm

I learned that I'm older than I thought, because that seemed like just a little minor turbulence.

I'm honestly shocked that people are making so much ado about it.


*Edited for not good grammar talk.
Last edited by caffeperfavore on Tue Feb 13, 2018 1:46 pm, edited 2 times in total.

JoeRetire
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Re: Did you learn anything from the market correction?

Post by JoeRetire » Tue Feb 13, 2018 1:42 pm

caffeperfavore wrote:
Tue Feb 13, 2018 1:40 pm
I honestly shocked that people are making so much ado about it.
People tend to have very short memories, and to not learn from the past.

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Re: Did you learn anything from the market correction?

Post by tesuzuki2002 » Tue Feb 13, 2018 1:45 pm

bantam222 wrote:
Tue Feb 13, 2018 2:45 am
Our first market correction (10% decline from peak) after an 8 year bull run

For many recent / young investors, the first real "test" of your AA. 80/20 is a lot of fun when the market is going up every day but not as fun during the last few weeks.

What did you learn from this? Confirmed you are in the correct AA? Or a lesson you need to adjust? 10% swing is a good test for us, a nice "punch in the gut" but not large enough for anyone to really get hurt.

Are you making any adjustments after this week or staying steady?

Personally I experienced losses of 10k and 19k on back to back days and still feeling good so this helped confirm my aggressive AA (100/0) is fine for me. I read somewhere you should be able to buy a car for the amount your portfolio swings in one day... I need to go upgrade my car :D

This isn't my first round and honestly on paper ad dollar wise I lost a lot more than the first time and this didn't even feel bad. Back then I remember it being $10- 15K and in the last 2 weeks I've seen my portfolio drop more than my annual income. I didn't even care... kind of a bummer to see my further from my year end hopes.. but there are 9 and half months left.

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Re: Did you learn anything from the market correction?

Post by nisiprius » Tue Feb 13, 2018 1:47 pm

caffeperfavore wrote:
Tue Feb 13, 2018 1:40 pm
I learned that I'm older than I thought, because that seemed like just a little minor turbulence.

I honestly shocked that people are making so much ado about it.
Me, too. I'm a little shocked that a Facebook acquaintance who used to work at Wellington Management posted distress that, after the drop, "all of my mutual funds, even the balanced funds, are down." I guess she thought that in a "balanced fund," due to the urban legend about the relation between stocks and bonds, "balanced" means that you can expect bonds "balance out" drops in stocks on a day-by-day basis.

If there's this much fuss about a 10% correction I can only imagine what a 20% drop would be like. What do you think is the power-law relationship between percentage drop and emotional distress? Cube law? Fifth power? (20% drop is 32 times as bad as a 10% drop?)
Last edited by nisiprius on Tue Feb 13, 2018 1:52 pm, edited 2 times in total.
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HomerJ
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Re: Did you learn anything from the market correction?

Post by HomerJ » Tue Feb 13, 2018 1:50 pm

I learned my wife has been listening to me.

She handled those down days extremely well. She was completely "ah well, stay the course, and wait for it to come back".

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Re: Did you learn anything from the market correction?

Post by DoubleR » Tue Feb 13, 2018 1:52 pm

I learned that the media acts as if it wants the market to crash.....well that part I already knew.

I need to adjust my AA also.

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Re: Did you learn anything from the market correction?

Post by chasm » Tue Feb 13, 2018 2:14 pm

When the market was rising over the last two years,were people rebalancing to keep AAs in the desired range? And now that portfolios have been distorted by the big equities drop, are they rebalancing? Isn't rebalancing part of the boglehead approach? And yet no one mentions it. Am I learning something by that?

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Re: Did you learn anything from the market correction?

Post by alfaspider » Tue Feb 13, 2018 2:17 pm

I learned that I don't react emotionally to such things even now that I have enough money for it to seem like a large amount. Who knows, maybe I'd feel differently with a 50% drop.

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Re: Did you learn anything from the market correction?

Post by darrvao777 » Tue Feb 13, 2018 2:18 pm

I learned I could be much more aggressive with my asset allocation

But I'm still sticking with 66/33 for the time being

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Re: Did you learn anything from the market correction?

Post by ray.james » Tue Feb 13, 2018 2:23 pm

This correction was pretty much a blip compared to early 2016/2011 one. I graduated in 2009-10 :- scared, jobless, hopeless, student loans, extended credit cards, weeks from bankruptcy. I do not think I will ever be that scared or learning something as substantial as was during that period. On the contrary, amusing to see the posts/media.
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Re: Did you learn anything from the market correction?

Post by goblue100 » Tue Feb 13, 2018 2:28 pm

Did somebody ring a bell and say the correction is over? I mean, it might be, but it might not. Staying the course, regardless.
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Re: Did you learn anything from the market correction?

Post by BogleMelon » Tue Feb 13, 2018 2:31 pm

I don't know what you are talking about! I am 85% stocks, and haven't even hit my rebalance bands :D
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Re: Did you learn anything from the market correction?

Post by eye.surgeon » Tue Feb 13, 2018 2:33 pm

I learned that I can tolerate my current 80/20 risk, but that I'm prone to buying the big dips, sometimes to my detriment. Next correction I plan on sitting on my hands and not trying to buy the dips, but continue my regular investment contributions monthly at the usual time. That's hard to do when the market drops 4% in a day. I felt no desire to sell thanks to the wisdom here, instead I felt compelled to buy the discounts, which is foolish considering that same "discount" was available to me a month ago.
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Re: Did you learn anything from the market correction?

Post by SimplicityNow » Tue Feb 13, 2018 2:56 pm

To the OP. I learned that people, including people on our forum, don't really know as much as they should . Many ask a question or two, listen to the few responders on their thread, pick their AA based on that and then are off to the races.

I don't believe a 10% drop over a two week period is a test of anything. Granted if you panicked at that drop, you probably shouldn't be in the market or should decrease the stock percentage in your AA immediately.

There are too many posters who have responded I'm not worried at all and too many who are ready to sell everything.

I don't believe learning one's risk tolerance can be learned after 2 weeks.

The best part of this thread was the turkey post!

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Re: Did you learn anything from the market correction?

Post by JBTX » Tue Feb 13, 2018 3:47 pm

No didn’t really learn anything new.

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Re: Did you learn anything from the market correction?

Post by CantPassAgain » Tue Feb 13, 2018 3:55 pm

bantam222 wrote:
Tue Feb 13, 2018 2:45 am
Our first market correction (10% decline from peak) after an 8 year bull run
You lost me here.

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Re: Did you learn anything from the market correction?

Post by jmk » Tue Feb 13, 2018 4:05 pm

Although I've had assets since 2000, this is the first correction I've been through where I've had very large amounts at stake, $ amounts larger than salaries. Though I had mentally prepared for a correction (even having a separate tab on my spreadsheet for 20% crash), it was different in real time. Even a 10% blip was more emotional than I thought given the high $ (not %) figures for me. In fact I found myself double checking "this is only 10%???" because it felt more since it was a years salary within 2 weeks. And I'm at 50/50 AA! The lesson for me was: don't assume intellectually understanding or being okay is the same as emotionally understanding it. You can only "fake" so much preparation ahead of time; but once you've experienced it you'll remember the feelings and urges. Be firm intellectually in why you chose your AA. A good lesson. Unfortunately my rebalancing is messed up now though....
Last edited by jmk on Thu Feb 15, 2018 7:59 am, edited 3 times in total.

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Re: Did you learn anything from the market correction?

Post by IowaFarmWife » Tue Feb 13, 2018 4:39 pm

I discovered that the market swings don't bug me too much. Sure, it is no fun logging on and seeing that I am poorer today than I was a few weeks ago, but honestly I'm fine. I have no plans to change my AA or my investing amount or schedule.

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Re: Did you learn anything from the market correction?

Post by jrbdmb » Tue Feb 13, 2018 4:46 pm

Did you learn anything from the market correction?
The main thing I learned is that I have no idea whether we just experienced a market correction or the beginning of a severe bear market. Not clear yet if I will get away with a hard tap on the shoulder or if the market is still going to punch me in the mouth. :shock:

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Re: Did you learn anything from the market correction?

Post by GoldenFinch » Tue Feb 13, 2018 4:55 pm

I learned that I could probably be doing something more productive than paying attention to the stock market.

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Re: Did you learn anything from the market correction?

Post by FIREchief » Tue Feb 13, 2018 5:18 pm

I learned absolutely nothing. I was 100% equities through decades of accumulation. I eschewed common advice and did the opposite of "don't peek." I stared the beast in the eyes and shrugged it off. I learned the good, the bad and ugly of equity investing and ultimately concluded that "all is well that ends well."

Things like this so called "correction," aren't even a flesh wound. They're mostly entertainment (as evidenced by many comments in the free fall thread). This didn't even feel like a correction. What, was it down 10% for about two days? If a person blinked they would have missed it.
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Re: Did you learn anything from the market correction?

Post by jrbdmb » Tue Feb 13, 2018 5:37 pm

Just to change the course of this thread for one post, what didn't I learn?

Well, I know that I'm generally OK with the ups and downs of the market, but since I didn't hit any of my rebalancing bands I didn't learn if I have the stomach to rebalance into the teeth of a significant decline. That exam will have to wait for another day.
Last edited by jrbdmb on Tue Feb 13, 2018 6:01 pm, edited 1 time in total.

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Re: Did you learn anything from the market correction?

Post by codedude » Tue Feb 13, 2018 5:44 pm

I learnt to share. To share my misfortune with Uncle Sam and his cousins in the state government by TLHing :D .

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Re: Did you learn anything from the market correction?

Post by Tycoon » Tue Feb 13, 2018 6:19 pm

I learned that Pavlov was right.
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Re: Did you learn anything from the market correction?

Post by amindu » Tue Feb 13, 2018 6:28 pm

I learned i want another correction so i can buy more on the cheap.

Learned the 10% didn't bother me much.

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Re: Did you learn anything from the market correction?

Post by itstoomuch » Tue Feb 13, 2018 6:50 pm

IntraDay volatility seems to be getting higher.
InterDay volatility seems to be moderating.
Something else to worry about, eh? :( :annoyed :mrgreen:
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Re: Did you learn anything from the market correction?

Post by dacalo » Tue Feb 13, 2018 7:08 pm

I learned that I don't give s*** about these movements and I slept well at night despite being 100% equity. Staying the course with my AA. If it falls 40%? I still wouldn't care and buy more.

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Re: Did you learn anything from the market correction?

Post by Mr.BB » Tue Feb 13, 2018 7:53 pm

AlohaJoe wrote:
Tue Feb 13, 2018 3:25 am
bantam222 wrote:
Tue Feb 13, 2018 2:45 am
Our first market correction (10% decline from peak) after an 8 year bull run
There was a correction in 2010 (-16%), a correction in 2011 (-19%), another correction in 2011 (-9.8%), one in 2012 (-9.9%), one in 2015 (-12%), and another one in 2015-2016 (-13%). (All based on the S&P 500.)

So 6 correction (7, if you include the most recent one) during the "8 year bull run".

I learned as much from this correction as I did from the one that was 24 months ago.
+1
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Re: Did you learn anything from the market correction?

Post by ETadvisor » Tue Feb 13, 2018 8:22 pm

I learned in my 401k the power of rebalancing. My AA is allocated 0% to employer stock but my match is paid with employer stock so I reached my band and rebalanced in January which resulted in selling all the employer stock high. In February it significantly declined in value and I no longer owned it. My 401k portfolio lost all its 2018 gains on paper but is still around the Nov/Dec 2017 values.

In my Roth IRA, I learned that contributing full lump sum in January had me buying higher thus far in 2018 but I shall see what happens at end of 2018. This was only the second year I made a lump sum in January. I still think I will continue contributing lump sum in January each year.

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Re: Did you learn anything from the market correction?

Post by mptfan » Tue Feb 13, 2018 8:26 pm

bantam222 wrote:
Tue Feb 13, 2018 2:45 am
What did you learn from this?
I learned that the media hypes normal market fluctuations (especially down days) and engages in fear mongering to increase ratings/views/clicks.

One example, I heard a media outlet report that "the Dow was down by 1,000 points today, the biggest point decline ever!" or something similar. That was very, very misleading to the point of being meaningless because 1,000 points on the Dow is a much lower percentage of the Dow when it is 25,000 compared to when it is 8,000. Of course the average listener or viewer does not understand this and gets freaked out by a respected media outlet reporting "The Dow is down by the most ever in a single day!"
Last edited by mptfan on Tue Feb 13, 2018 11:57 pm, edited 1 time in total.

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Re: Did you learn anything from the market correction?

Post by arcticpineapplecorp. » Tue Feb 13, 2018 9:16 pm

nisiprius wrote:
Tue Feb 13, 2018 1:08 pm
I learned from a financial columnist that You can no longer trust the 200-day moving average as a stock-market indicator. Just as I learned that I could no longer trust my lucky rabbit's foot when I slipped on the banana peel and fell down the manhole and had the anvil land on me. I learned that the advice from the market timers is to never trust your instincts, you should always follow your system, until your instincts tell you to quit following the system.

I learned that everybody is arguing about "Was this a largely 'technical' pullback that was merely overdue in the wake of a historic rally and an unprecedented stretch of low volatility or does it signal something deeper?" and that nobody knows.

I learned that Nassim Nicholas Taleb's Thanksgiving turkey chart wasn't just a parable.
Image
awesome. I laughed out loud when I saw these two graphs. Just moments before I was reading this:

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Re: Did you learn anything from the market correction?

Post by nisiprius » Tue Feb 13, 2018 9:49 pm

jrbdmb wrote:
Tue Feb 13, 2018 4:46 pm
Did you learn anything from the market correction?
The main thing I learned is that I have no idea whether we just experienced a market correction or the beginning of a severe bear market. Not clear yet if I will get away with a hard tap on the shoulder or if the market is still going to punch me in the mouth. :shock:
Or whether this volatility cluster is over or has only just begun.
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Re: Did you learn anything from the market correction?

Post by aj76er » Tue Feb 13, 2018 11:46 pm

nisiprius wrote:
Tue Feb 13, 2018 7:30 am
bantam222 wrote:
Tue Feb 13, 2018 2:45 am
...Our first market correction (10% decline from peak)... Personally I experienced losses of 10k and 19k on back to back days and still feeling good so this helped confirm my aggressive AA (100/0) is fine for me...
If a 10% decline had spooked you, it would have confirmed that your asset allocation was too aggressive. If a 10% decline didn't spook you, I don't think it confirms that your asset allocation was fine for you. It's not a linear relationship; a 20% decline is much more than twice as disturbing as a 10% decline. A 30% decline is much, much, much, much more disturbing. And a 50% decline is much, much, much, much, much, much, much, much, much, much, much, much, much, much, much, much, much, much, much, much, much, much, much, much more disturbing.
It's like we need some sort of a Richter scale for stock market declines :happy .
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Re: Did you learn anything from the market correction?

Post by Noobvestor » Tue Feb 13, 2018 11:59 pm

I got spooked at the returns of Dec 2017 and Jan 2018, and rebalanced (stocks to bonds) a few times before rebalancing bands were hit. It worked out. Was thinking I should maybe swap back a bit last week, then forgot, but it's fine - I'm still basically right on my target allocation.

So I've been within bands, but it was interesting to be more worried about things going up too fast than down too fast. Last time a drop like this happened (early 2016) I swapped bonds for stocks on what turned out to be the lowest day (for international/emerging). Guess I'm lucky.

All of that being said, I had very little skin in the game in 2008/09, so I still don't know how I'd react to a real crisis with current NW.
"In the absence of clarity, diversification is the only logical strategy" -= Larry Swedroe

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Re: Did you learn anything from the market correction?

Post by binvesting » Wed Feb 14, 2018 12:42 am

I was a student during 2008/09 and didn't notice any of the drops after that. This is was the first drop that i have noticed. I am in accumulation stages.
I am at 80/20% and bought 2% more of stocks last week due to the drop.

The whole process lead to the following conclusion:
1. 10% drop didnt bother me, I am guessing the same would be for 20% drop too. But I still dont know how i'll react for a 40 - 50% drop. I think and believe that i can stick to the plan, and even buys stocks at the low, but lets see how it goes in reality.
2. Wife is working so we have a total of 6 accounts and so most of it is in ETFs, and I dont intend to change it. But I have realized the importance of all in one funds due to the drop. Dont have to think about when to buy when there is a drop. Having a system to take care of things is better i guess.

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Re: Did you learn anything from the market correction?

Post by mpsz » Wed Feb 14, 2018 1:06 am

I'm young so summer 2015 was the first correction that I paid attention to. I accelerated my monthly Roth IRA contributions to max my account a few months early.

This time, I rebalanced a few weeks before the correction since I hit my rebalancing bands... partially due to my automatic contributions slightly overweighting stocks compared to my desired AA. I acknowledge this is luck, but having recently rebalanced made it easier to sit there and do nothing.

In my gut, I doubt this correction is over. But who knows, so I am going to sit here and rebalance as needed.

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Re: Did you learn anything from the market correction?

Post by Nate79 » Wed Feb 14, 2018 1:10 am

This was nothing. When comparing a -10% drop vs -50% drop people think, oh it would just feel 5x worse. LOL. -50% drop, banking system feels like it is crumbling, jobs are being lost, etc - that's when you are really tested.

This little piddly 10% drop is gone and barely talked about now. People pat themselves on the back and say " boy, made it thru it no problem. Even wanted to buy more stocks." Now if you can say that when stocks are down >50% and the econony is crumbling.....

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cfs
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Re: Did you learn anything from the market correction?

Post by cfs » Wed Feb 14, 2018 2:42 am

Nothing new for me to learn.
Good luck and gracias por leer / cfs
~ Member of the Active Retired Force since 2014 ~

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cockersx3
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Re: Did you learn anything from the market correction?

Post by cockersx3 » Wed Feb 14, 2018 8:12 am

I saw this whole event as a reminder that, at least in the short term, the market is completely unpredictable. A month ago, I don't think anyone saw this coming. I remember being surprised at it myself - got bored in a meeting and checked the S&P 500 and thought, what the heck? (Actually, I may have used another non-family friendly word...). I then just assumed that the market would simply correct back the next day, as it seems to do lately. And of course, that hasn't happened either. Not yet anyway. Will it? Who knows.

Oh well. I was in 100% stocks back in 2007-2008 and never sold, simply because I didn't think I was smart enough to get back in at the right time. A 10% drop? Meh. I've made no change whatsoever to investment schedule or AA, and have like zero urge to do so. Stay the course!

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cockersx3
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Re: Did you learn anything from the market correction?

Post by cockersx3 » Wed Feb 14, 2018 8:25 am

HomerJ wrote:
Tue Feb 13, 2018 1:50 pm
I learned my wife has been listening to me.

She handled those down days extremely well. She was completely "ah well, stay the course, and wait for it to come back".
Yes - me too! I thought the wife would be worked up about it as well. But when I mentioned to her the amount our portfolio went down (as test to make sure she was OK with our AA that allowed it), she basically blew it off. She told me that these things happen, and that that over the long term it would work itself out. And she just went back to doing her classwork.

Yes - I chose wisely. 8-)

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Re: Did you learn anything from the market correction?

Post by heyyou » Wed Feb 14, 2018 10:15 am

Same stuff, different calendar. Without the volatility, equities would not pay what they do.

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