Downturn? Has there been a downturn?

[LilyFleur]

Just what I've been thinking too. Much ado about nothing.

That really depends on one's specific situation and is therefore a huge oversimplification. Not everyone is decades away from retirement.

I agree. My allocation of equities had risen, and I needed to rebalance. Last week I sold $100,000 of FXAIX (Fidelity's S&P 500 Index fund) at $203/share, and put it in a Treasury.

Now it's at $193.

I'm retired. The recent drop in the market, now that I'm withdrawing from my portfolio and relying on it for half my income, is not "nothing."

I sleep well at night, but I don't minimize what's happening, either.

[rkhusky]

It seems a good point about keeping perspective, though it may not be of much help to investors who've taken on too much risk and for whom just one downturn reveals their true risk tolerance.

This is what I think is happening when I read all of the "the time its different" posts. Hubris prevents them from admitting they had the wrong AA.

Thanks to BH I am very, very happy with my AA and no issues with what is happening now. I am at the end of my first year of retirement.

+2
Too much stock causes jitters around any little blip.

[BrooklynInvest]

Well the reasons are certainly different. I honestly don't recall this ever happening before.

Financially at least my perspective remains, perhaps naively, the same - the economic impact will pass. And my financial response remains the same - stay the course, tighten my belt a bit.

[EnjoyIt]

I posted something similar in other threads and I will post here. I want to make it clear that I am not posting about politics specifically.

About half of the country believes what is going on is bad, while the other half believes what is going on is good. There are very intelligent people on both sides of the equation. I am asking rhetorically, who is right and who is wrong? What I can tell you is that most of the news on the subject are opinions pieces disguised as news designed to draw emotion and keep us watching or reading. My advice is to try and ignore the opinion pieces. We as humans are very near sighted when it comes to current events. We invest for decades and not for a 4 year term. Even if the sky is falling people are correct, in short order the people will vote and our course will change. Relax and allow the future to unfold.

Please do not respond to this post with specific political comments. They are not allowed on this forum.

[HighLonesome]

Well the reasons are certainly different. I honestly don't recall this ever happening before.

Financially at least my perspective remains, perhaps naively, the same - the economic impact will pass. And my financial response remains the same - stay the course, tighten my belt a bit.

2008 nor covid happened before either. The market did what it always does then and should follow suit this time.

[Nicolas]

Well the reasons are certainly different. I honestly don't recall this ever happening before.

Financially at least my perspective remains, perhaps naively, the same - the economic impact will pass. And my financial response remains the same - stay the course, tighten my belt a bit.

2008 nor covid happened before either. The market did what it always does then and should follow suit this time.

“2008” happened in 1929 and “covid” happened in 1918 (flu epidemic).

[gunny]

I'm retired. The recent drop in the market, now that I'm withdrawing from my portfolio and relying on it for half my income, is not "nothing."

I sleep well at night, but I don't minimize what's happening, either.

Exactly...

We invest for decades and not for a 4 year term.

By "we" I assume you mean you as there is no "we" generally speaking. Different people have different situations. Many older people are not investing for decades.

[wunderkind]

Past performance is not indicative of future results.

[CoAndy]

Is this decrease in the market a surprise at all? Remember, 5 of the last 6 years have seen returns of at least 18% or greater (S&P 500), and 4 of the last 6 years have shown a 25% return or greater. Everybody breathe.

[AHK-Hero]

Haha I love this. Thanks for posting some healthy (and blurry) perspective.

[ROIGuy]

2008 nor covid happened before either. The market did what it always does then and should follow suit this time.

“2008” happened in 1929 and “covid” happened in 1918 (flu epidemic).

+1

[EnjoyIt]

I'm retired. The recent drop in the market, now that I'm withdrawing from my portfolio and relying on it for half my income, is not "nothing."

I sleep well at night, but I don't minimize what's happening, either.

Exactly...

We invest for decades and not for a 4 year term.

By "we" I assume you mean you as there is no "we" generally speaking. Different people have different situations. Many older people are not investing for decades.

If you only have 4-10 years, then I would hope that your portfolio is designed for that and what happens in the market should not affect your life. Might be worth re-evaluating your asset allocation. If your goal is to also leave an inheritance, then yes, you are investing for decades.

[LilyFleur]

Well, from a purely factual and economic (not political at all) viewpoint, the United States has instituted tariffs which have been followed by drops in the market.

There's a good discussion here:
https://www.whitecoatinvestor.com/trump-tariffs/

By the way, White Coat Investor is a member of the forum, and I think this is a well-thought-out piece, and I appreciate the economic history that is included.

I have been careful not to discuss politics nor pending legislation in this post.

Please, if you respond, limit your response to the economic and investing aspects of this topic. (And, as a reminder, politics and disrespect are not tolerated on this forum.)

[YeahBuddy]

Nope, not a big one, yet. But VTSAX is down 8% the past month.

[Everlast311]

Well, from a purely factual and economic (not political at all) viewpoint, the United States has instituted tariffs which have been followed by drops in the market.

I have been careful not to discuss politics nor pending legislation in this post.

Please, if you respond, limit your response to the economic and investing aspects of this topic. (And, as a reminder, politics and disrespect are not tolerated on this forum.)

Also, it's worth noting that policies can change on a moment's notice, particularly since the one in question here was not subjected to the slower legislative process. By the time a headline hits the news wire, the market will have reacted before you have a chance to do so. Another argument in favor of just staying the course.

[EnjoyIt]

Well, from a purely factual and economic (not political at all) viewpoint, the United States has instituted tariffs which have been followed by drops in the market.

There's a good discussion here:
https://www.whitecoatinvestor.com/trump-tariffs/

By the way, White Coat Investor is a member of the forum, and I think this is a well-thought-out piece, and I appreciate the economic history that is included.

I have been careful not to discuss politics nor pending legislation in this post.

Please, if you respond, limit your response to the economic and investing aspects of this topic. (And, as a reminder, politics and disrespect are not tolerated on this forum.)

I couldn't agree more. There is nothing to do here. 10% drops happen all the time. How these tariffs play out and will affect our portfolio long term is impossible to predict. We are not investing for the short term which means staying the course is the only reasonable response.

Like everyone else here, I love my portfolio going up and up and up. But the reality is, if all it does is go up, then we get irrational exuberance and finally a bubble pop. Instead I would rather have the markets climb a wall of worry. Having corrections like this are necessary.

Current events are constantly putting fear in the economy. That is just how it work.

[jaqenhghar]

Chasing emotions is not the way to wealth.

Saving this!

[gunny]

If you only have 4-10 years, then I would hope that your portfolio is designed for that and what happens in the market should not affect your life. Might be worth re-evaluating your asset allocation. If your goal is to also leave an inheritance, then yes, you are investing for decades.

Depends on how you define "affect your life." What happens in the market most certainly can affect one's life.

And (for ex.) someone who is 80 is not realistically investing for decades, even if they are trying to build an inheritance.

[Silverado]

This is what I think is happening when I read all of the "the time its different" posts. Hubris prevents them from admitting they had the wrong AA.

Thanks to BH I am very, very happy with my AA and no issues with what is happening now. I am at the end of my first year of retirement.

You, and many others, are totally missing the point. It has nothing to do with AA, or rebalancing. The point that some refuse to accept is that the market and the economy (of the world) is currently being manipulated in a way that is different from the past, and therefore the outcome is uncertain. "It all works out over time" or "if you have a long term outlook" is simply not something you can count on right now.

Does that mean someone who thinks that should get out of the market? No. It's simply an acceptance of the reality that this is unlike what has been experienced before, at least in the last 50 years.

One could easily argue the GFC was partially caused by manipulation that is not unlike what I read people think is happening now. No reason that I can think of now that refutes a positive long term outlook.

[HeavyChevy]

Can't help but be amused when the "total return" crowd overreacts to minor market fluctuations while the gullible, value-stock, dividends-are-free-money investors are unaware since their income streams just keep on flowing.

Most all Bogleheads will do fine. We are a very conservative lot regardless of investment approach.

[HighLonesome]

Well, from a purely factual and economic (not political at all) viewpoint, the United States has instituted tariffs which have been followed by drops in the market.

There's a good discussion here:
https://www.whitecoatinvestor.com/trump-tariffs/

By the way, White Coat Investor is a member of the forum, and I think this is a well-thought-out piece, and I appreciate the economic history that is included.

I have been careful not to discuss politics nor pending legislation in this post.

Please, if you respond, limit your response to the economic and investing aspects of this topic. (And, as a reminder, politics and disrespect are not tolerated on this forum.)

I couldn't agree more. There is nothing to do here. 10% drops happen all the time. How these tariffs play out and will affect our portfolio long term is impossible to predict. We are not investing for the short term which means staying the course is the only reasonable response.

Like everyone else here, I love my portfolio going up and up and up. But the reality is, if all it does is go up, then we get irrational exuberance and finally a bubble pop. Instead I would rather have the markets climb a wall of worry. Having corrections like this are necessary.

Current events are constantly putting fear in the economy. That is just how it work.

^^^^^THIS ^^^^^^

[HighLonesome]

Can't help but be amused when the "total return" crowd overreacts to minor market fluctuations while the gullible, value-stock, dividends-are-free-money investors are unaware since their income streams just keep on flowing.

Most all Bogleheads will do fine. We are a very conservative lot regardless of investment approach.

^^^^^AND THIS^^^^^

[nisiprius]

Can't help but be amused when the "total return" crowd overreacts to minor market fluctuations while the gullible, value-stock, dividends-are-free-money investors are unaware since their income streams just keep on flowing.

Most all Bogleheads will do fine. We are a very conservative lot regardless of investment approach.

My posting was somewhat tongue-in-cheek, but I'm a member of the "total return" crowd, and the whole point of my posting was not to overreact to what is, in context, a small downturn.

[quantAndHold]

While I agree that there’s nothing new to see here, I also recognize that WWI and WWII happened, and entire countries that were on the wrong side or in the wrong place were completely wiped out. The American Civil War also happened, and caused economic devastation.

I think a lot of people are thinking that the only things that are in the range of future possibilities are things that already happened in the USA during the 20th and 21st centuries. Which is not correct. There’s a whole range of stuff that has happened around the world throughout the past couple of hundred years of history, that could just as easily happen here. Our past luck may hold…or it may not.

I’m sorta talking about current events, but also not. The existential threats are always there. We’re just more or less aware of them at different times.

Does that change how I invest? Not really, but I read Nassim Taleb a while ago, and have been thinking about this stuff ever since.

[HeavyChevy]

Can't help but be amused when the "total return" crowd overreacts to minor market fluctuations while the gullible, value-stock, dividends-are-free-money investors are unaware since their income streams just keep on flowing.

Most all Bogleheads will do fine. We are a very conservative lot regardless of investment approach.

My posting was somewhat tongue-in-cheek, but I'm a member of the "total return" crowd, and the whole point of my posting was not to overreact to what is, in context, a small downturn.

I'm well aware of, and respect, your position (hard to argue with math).

My observation holds that the total return orthodoxy should perhaps be tempered by understanding the psychological benefits of passive-income-producing investments when so many proponents of the orthodoxy post about their discomfort during even the mildest of market downturns.

[goodenyou]

What you see is often dictated by what lens you are looking through.

[LadyGeek]

I removed an off-topic post regarding market manipulation. Also, a post on the political aspects of a tariff has been removed. This thread has run its course and is locked (general economic discussion). As noted in the site owner's post in the locked thread Re: U.S. stocks in free fall:

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