Is it time to admit that this time really is different?

[Donethat96]

Bogleheads have a few core beliefs that underpin their philosophy and strategy. One can be summed up as "Don't believe the people claiming this time is different" which leads inevitably to "Stay the course". I know we are not supposed to discuss politics on this site and I have no desire to, but is it possible that political events could theoretically be different enough that our economics and markets could be fractured like never before with the downstream conclusion being "This is no time to stay the course. This is a time to run for the exits......particularly if you have "won the game"? Just asking.

[jebmke]

probably no different than each of the downturns in the past were different

[HighLonesome]

Bogleheads have a few core beliefs that underpin their philosophy and strategy. One can be summed up as "Don't believe the people claiming this time is different" which leads inevitably to "Stay the course". I know we are not supposed to discuss politics on this site and I have no desire to, but is it possible that political events could theoretically be different enough that our economics and markets could be fractured like never before with the downstream conclusion being "This is no time to stay the course. This is a time to run for the exits......particularly if you have "won the game"? Just asking.

Your post sure seems political to me.

Lets see, 2 years of 20% growth in the S&P. Market at all time highs. Do you see a reason for profit taking yet or are you only subject to the media?

[calmaniac]

Even if "this time really is different", my sense is that none of us have the wisdom or foresight to weave the chaos of information into effective investing tactics.

[BogleMelon]

My IPS tell me now what my asset allocation would be look like as I approach the “winning the game” phase someday in my life. I will basically be around 55% stocks only. In such case I should not be worried as much as someone who is 90% stocks, about those types of events.

I personally don’t think this time is different anyways. Comparing to a pandemic market that was threatening the entire humanity, this is nothing.

[munemaker]

We have all seen this movie before. Someone posts that they sold off because of an election or some other political event. Then, when the market moves against their bet, they ask for advice on how to get back in.

MUN

[brcarls]

Many people made the emotional decision to alter their asset allocation in 2016 and got left behind, doing permanent damage to their portfolios,

Turn off the unhinged disaster porn, tune out your social media echo chambers and stick to your plan.

[RickBoglehead]

To determine if today's environment is different than any past environment, you have to look at the cause. Today, the economy is being intentionally shot in the foot. Has that happened in the past?

Bogleheads have their heads in the sand if they say this is normal.

[Florida Orange]

My IPS tell me now what my asset allocation would be look like as I approach the “winning the game” phase someday in my life. I will basically be around 55% stocks only. In such case I should not be worried as much as someone who is 90% stocks, about those types of events.

I personally don’t think this time is different anyways. Comparing to a pandemic market that was threatening the entire humanity, this is nothing.

This! I make changes to my investments based on changes in my personal circumstances, including an asset allocation that has drifted too far from target. Reacting to external economic conditions is nothing more than market timing. I assume there will be turbulence in the market from time to time; I don't let it dictate my actions.

[rich126]

Unfortunately nowadays many people can't answer things w/o showing their political biases.

The real issues now is:
1. weakening dollar
2. job losses
3. inflation
4. very inconsistent policies
5. already over valued market

I think for those already or near retirement the choice may need to be increasing safety in investing with more and more diversification. For those with 25+ years before retirement, well, I think they may have a very difficult future. Many current retirees lucked out in terms of when they were born and are recipients of solid or even generous pensions. Most of the current workforce are totally reliant on investments.

[Valuethinker]

Bogleheads have a few core beliefs that underpin their philosophy and strategy. One can be summed up as "Don't believe the people claiming this time is different" which leads inevitably to "Stay the course". I know we are not supposed to discuss politics on this site and I have no desire to, but is it possible that political events could theoretically be different enough that our economics and markets could be fractured like never before with the downstream conclusion being "This is no time to stay the course. This is a time to run for the exits......particularly if you have "won the game"? Just asking.

That might be true in human affairs, but it's probably not true in the field of investing.

"Stay the course" has tended to work the best. Certainly in the long view what seems all-important seems much less so.

I would say this. If someone says "I want to have a significant non-US weighting" then that's not wrong. Once you get above about 30-35% equities in international (as a US investor) though you are starting to risk quite wide deviation from the US market (if your deviation is large enough). But we should also understand that, particularly in a bear market, the correlations of US and other developed markets move towards 1.0.

[hoofaman]

And this is part of the reason why investing seems so simple on the surface, but difficult in reality. The average investor earns much less than the market return for a reason

[rkhusky]

Every time is different. But current fluctuations are a drop in the bucket compared to 2000-2002, 2008, 2020. I am only 0.5% off my stock/bond AA, not even enough to rebalance.

[StartedAt22]

If I already won the game I'd probably feel differently, but as an early accumulator, this is the kind of stuff I just completely ignore.

Invest we must. Need, ability, and willingness to take risks -- in this climate, now more than ever, we have the need to take risks. The risks of not taking risks far outweigh the alternative in my opinion.

[JordanIB]

enough that our economics and markets could be fractured like never before

What exactly are you exiting to if this is the case?

[Impatience]

Suggest you zoom out on the chart.

[jebmke]

the economy is being intentionally shot in the foot. Has that happened in the past?

Probably. Although, I have no idea as to the relative caliber of the bullet.

I'd argue that deregulation of derivatives in the early '0s would count as a foot shot as would Smoot-Hawley. I'm not an economic historian. Perhaps someone will publish a book some day that gives us some perspective on past foot shots.

[stan1]

There have been threads about this for two months now, many removed or locked. I see a lot that is different, others do not or see that the changes being made impact other people not themselves.

Each of us has to make our own decisions. It is perfectly acceptable to realize that your asset allocation did not properly reflect your willingness, ability or need to take risk.

It's not just the stock market. People whose job or income is at risk in ways they never expected may very well change their assumptions leading to a different view of risks. I would not wish job insecurity on anyone.

Only you can make the right decisions for yourself and your family.

[bloom2708]

The status quo is very very strong. Can the deep status quo be untrenched?

The changes might not make a dent. We are not far from interest expense being the entire budget. Borrowing for all spending.

I'll take some pain now to course correct. Am I confident the status quo will allow a course correction? No.

Have a good mix of stock index funds and "safer" cash, bonds and Treasuries.

If "it" stops working, then we'll have to set a new course. 15% is just a blip.

[rkhusky]

To determine if today's environment is different than any past environment, you have to look at the cause. Today, the economy is being intentionally shot in the foot. Has that happened in the past?

Bogleheads have their heads in the sand if they say this is normal.

The New Deal was quite the disruption in the way of doing business (DD just finished that chapter in US History, still have WW II, Korean and Vietnam wars, Great Society, 70’s inflation, etc to look forward to)

[nisiprius]

Let's say it is. For the sake of argument, let's say we are in, let's call it a "transition," to a social, political, and economic structure in the US that will be radically different from what it was in 2024. Maybe better, but different.

Let's assume you think "worse." Remembering that you might be wrong.

Well, what then?

Surely you don't think you can build yourself a shield of invulnerability with a few quick, cheap, easy clicks on your brokerage website. My own stock allocation is currently 20% international. Let's say I increased it to 30% international, and let's say US stocks fell -50% and international stocks only fell -35%. Try something like that in your own portfolio, using dollar numbers. I think you will find that even if the whole chain-of-many-weak-links storyline came true exactly as you fear, that you would only be slightly better off.

[VanityPlate]

Duplicate

[VanityPlate]

I agree that this time is different but am still staying the course. We’re 35 and 36, mortgage, two small kids. What is the alternative to stocks for accumulators with 20+ years to go and all of our money in retirement accounts? I guess if I’m verging on foreclosure I would liquidate but we’re still both employed.

[increment]

1. weakening dollar

Well, as prominent textbook author Greg Mankiw writes, Econ 101 says that tariffs should help strengthen the dollar.

[ETK517]

In previous threads like this, my take has been that historically most political action in the US, regardless of party and irrespective of rhetoric, has been directed at preserving, protecting, and enhancing exactly the entrenched corporate interests that constitute a typical BH portfolio, and my admittedly somewhat cynical view was therefore that this time would likely not be different, despite the bombast. I'm actually wavering on that, for reasons that I don't think I can explain under forum rules. That said, there is not much for me to do about it. Pulling all my money out to cash won't do much good if we endure runaway inflation, for instance.

[MDfan]

If you really think this time is different (spoiler alert - it's probably not), then you should get out.

[brcarls]

If I already won the game I'd probably feel differently, but as an early accumulator, this is the kind of stuff I just completely ignore.

I retired decades early because when the 2008 "Great Recession" happened, I cranked up my investment contributions. When I had no more discretionary income to divert to investments, I sold all of my toys and invested that money too.

Now, I'm FIREd with a 5 year bond tent.... A repeat of a 2008 scale recession wouldn't be great, but would be an opportunity to upgrade toys and maybe get a lake house.

[iceport]

If you really think this time is different (spoiler alert - it's probably not), then you should get out.

Is there any pathway to Canadian citizenship for an old retired guy?

Or were you referring to the market?

[WillRetire]

OP: Do what you feel is best for you, but first consider whether your AA is appropriate for your personal risk tolerance.

There are many reasons for optimism about the future of capitalism (which drives markets) and human ingenuity, but no guarantees. Fasten your seatbelt, the bumpy ride continues.

[steadyosmosis]

Bogleheads have a few core beliefs that underpin their philosophy and strategy. One can be summed up as "Don't believe the people claiming this time is different" which leads inevitably to "Stay the course". I know we are not supposed to discuss politics on this site and I have no desire to, but is it possible that political events could theoretically be different enough that our economics and markets could be fractured like never before with the downstream conclusion being "This is no time to stay the course. This is a time to run for the exits......particularly if you have "won the game"? Just asking.

If you are selling your stock shares, I am a buyer.

[rockstar]

I wouldn’t worry about it.

I’m planning for a one time inflationary spike this year, the Fed staying put, and potentially lower taxes in the near future. No idea if the tax cuts on top of the already existing ones will offset the inflationary spike. But it’s in my plan.

Other than that I expect unemployment rate to go up by the end of the year due to Federal worker layoffs.

All I can do is stay the course and stick to inflation protected bonds. And no idea what my equity returns will look like.

[Tamalak]

Every time is different. Every time could be "the big one". We suffer from survivorship bias. The united states market HAS always recovered so we assume it always will. This is not sound reasoning.

Ask anyone if they've ever died. 0% have. So we're going to live forever, right?

The speed and magnitude of this dip does not concern me. The reasons behind it do.

[Pdxnative]

We are not far from interest expense being the entire budget. Borrowing for all spending.

This isn’t even close to correct, unless you consider something around 15% to be “not far” from 100%. Interest payments as a percentage of the federal budget are lower now than in the 1990s.

As for OP’s question, I think it’s reasonable to question if changes in policy, corporate governance, and economic environment represent a qualitative shift such that “stay the course” loses meaning (if confidence in “the course” implied a certain set of rules, constraints, and incentives—not results—for economic activity in the US that might be disappearing).

[MDfan]

Every time is different. Every time could be "the big one". We suffer from survivorship bias. The united states market HAS always recovered so we assume it always will. This is not sound reasoning.

Ask anyone if they've ever died. 0% have. So we're going to live forever, right?

Then people have to do what they think is right for them. It's always a gamble. I haven't changed much of anything in 30+ years and that strategy has worked great for me.

[gammalaser]

Does it really matter if it is different or the same. What matters is if you think you can outsmart the market's assessment of the situation, or if you misjudged your own asset allocation to successfully reach your goals--which applies in any market condition, if you want to be resilient to both foreseen and unforeseen events

[Legitimate-Engine]

Does it really matter if it is different or the same. What matters is if you think you can outsmart the market's assessment of the situation, or if you misjudged your own asset allocation to successfully reach your goals--which applies in any market condition, if you want to be resilient to both foreseen and unforeseen events

[skipper]

Like every other investing metric, you won't know if 'this time really is different' except in the rearview mirror; therefore, it is not time for admissions. Even looking forward, it is too early to admit anything. However, I have used this "downturning" to test out a different accumulation strategy. To date, I've been contributing to my 3-fund according to its 64/36 AA and rebalancing to bonds at the end of every year. I decided to change contributions to 100% equity then see what the rebalance looks like at the end of the year. It makes sense to contribute toward the lagging equity asset; I don't want to rebalance out of bonds nearing retirement. This action and reason is supported by my IPS.

[barnaclebob]

The market and the economy are really good moderators for political extremism. A big recession will put any political party that is making extreme changes into timeout.

[UpperNwGuy]

is it possible that political events could theoretically be different enough that our economics and markets could be fractured like never before with the downstream conclusion being "This is no time to stay the course. This is a time to run for the exits......particularly if you have "won the game"?

Are you planning to cash out your investments?

[Exchme]

I'm so old I remember a similar administration from 2017-2020 when the S&P managed to eke out a mere 76% increase.

[DebiT]

Even if this time is different, eventually this time will change. Even though I’m 67, this money may still need to last me 30 more years. ( ). So the key is asset allocation, which even now allows me to say, “oh, stupid stock market” and go on about my business. When I was accumulating, I would have been greedily ( if nervously) buying more stock. But if someone just started out last year, I agree, it is daunting. So was 2007-8. I cried, a lot, but I didn’t sell, for which I am grateful. The metrics then were that we lost at least 3 full years of contributions, which was very depressing,

[secondopinion]

Bogleheads have a few core beliefs that underpin their philosophy and strategy. One can be summed up as "Don't believe the people claiming this time is different" which leads inevitably to "Stay the course". I know we are not supposed to discuss politics on this site and I have no desire to, but is it possible that political events could theoretically be different enough that our economics and markets could be fractured like never before with the downstream conclusion being "This is no time to stay the course. This is a time to run for the exits......particularly if you have "won the game"? Just asking.

You must realize some bad economic conditions would result in running into the building to buy stocks.

[SeekingSecurity]

I don't have much to contribute here, but I'll say something about my own mindset. Here's how I think of it:

1. If this time *isn't* different, but I behave as if it is, the consequences are dire *for me*.
2. If this time *is* different, no matter how I behave, the consequences are dire *for everyone."

So, I stay the course because it's bad for me to stray from the course if #1 is the case, and it's bad for me to stay or stray if #2 is the case. The only possible good outcome is if this time isn't different and I have stayed the course.

[BrooklynInvest]

I think the reasons differ, my response and the long term outcome tend to be similar - stay the course, cut spending back a bit.

The "shot in the foot" analogy is especially apt today of course. But at some point I think we'll run out of metaphorical bullets.

Or feet.

[Pops1860]

This thread has run its course and is now locked. Forum policy:

Non-actionable or Trolling Topics

If readers can't do anything with the content of a topic other than argue about it, it does not belong here.

Examples include:
US or world economic, political, tax, health care and climate policies
...

Moderator Pops1860