In a Bear Market, What Are Some Best Practices

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nedsaid
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Re: In a Bear Market, What Are Some Best Practices

Post by nedsaid »

Grt2bOutdoors wrote: Fri Dec 14, 2018 8:19 pm
nedsaid wrote: Fri Dec 14, 2018 10:41 am
Also a reminder to de-risk your portfolio as you get older. I personally am having a hard time doing that.
Don't worry Ned, Mr. Market will do that for you. Today Mr. Market de-risked another 1%+ from us. :twisted:
Yep, it sure did. The market has turned a 66/34 portfolio into a 63/37 portfolio and I didn't have to do a thing.
A fool and his money are good for business.
Money Market
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Re: In a Bear Market, What Are Some Best Practices

Post by Money Market »

If you enjoy a little financial schadenfreude like I do,
  • Take a list of everyone on Reddit/this forum that says they're 100% in stocks right now
  • Search their post history when the market drops 20% or more
  • Enjoy a cup of coffee
  • TLH and rebalance according to your AA
VTSAX and chill.
Grt2bOutdoors
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Re: In a Bear Market, What Are Some Best Practices

Post by Grt2bOutdoors »

Money Market wrote: Sat Dec 15, 2018 4:32 am If you enjoy a little financial schadenfreude like I do,
  • Take a list of everyone on Reddit/this forum that says they're 100% in stocks right now
  • Search their post history when the market drops 20% or more
  • Enjoy a cup of coffee
  • TLH and rebalance according to your AA
You don’t even need to go there, watch the posts on here that say the same. Oops, missed the part where you said “this forum”. Cup of coffee is in order.
"One should invest based on their need, ability and willingness to take risk - Larry Swedroe" Asking Portfolio Questions
heyyou
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Re: In a Bear Market, What Are Some Best Practices

Post by heyyou »

Having low necessary expenses in retirement would be a "best practice" for every market condition.

As opposed to "best", you can do nothing (not sell, nor buy) in a bear market, and that is better than selling out your equities.
Having retired in November of 2005, age 55, I was stunned by my portfolio losses in 2008, and I did nothing.
Before the recent market fluctuations, our 60/40 portfolio was only double its 2008 low, but we have steadily spent some from it, while delaying SS to age 70. Others did much better, but we still have enough.
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happysteward
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Re: In a Bear Market, What Are Some Best Practices

Post by happysteward »

Helpful thread revisited….

1. Rebalance
2. Keep investing
3. Tax loss harvest
4. Roth conversions
5. Monitor investments, I do this but I only look at percentages in my spreadsheet, I blackout the dollar cells…helps me stay the course…

And enjoy this :happy https://youtu.be/OOGU94eL07E
"How much money is enough?", John Rockefeller responded, "...just a little bit more."
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HMSVictory
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Re: In a Bear Market, What Are Some Best Practices

Post by HMSVictory »

  • Stay the Course
  • Continue to DCA into the market every month like clockwork, investments on autopilot
  • TLH and strategic Roth conversions
  • Turn off CNBC, phone, tablet, computer, iWatch and everything else that bombards you with negative news, this too shall pass
  • Follow the IPS you created
  • Sleep well knowing future returns will now be higher!
Stay the course!
aristotelian
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Re: In a Bear Market, What Are Some Best Practices

Post by aristotelian »

renue74 wrote: Wed Dec 05, 2018 3:03 pm
I haven't "actively" witnessed a bull market where a significant portion of my worth was tied to the market. Yes...I went through the 2008 recession, but only a small amount of worth really took a hit and I wasn't really worried about it then.
What about March 2020 and December 2018?

Best practice is to stay the course. Have an asset allocation you can live with in any scenario. Assume a bear market is going to happen because they are fairly common events. Then stick to the plan. Repeat: stay the course.
MrCheapo
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Re: In a Bear Market, What Are Some Best Practices

Post by MrCheapo »

renue74 wrote: Wed Dec 05, 2018 3:03 pm I'll be honest. I started investing in January 1997 and really didn't focus on it until 2013 when I sold a business.

I haven't "actively" witnessed a bull market where a significant portion of my worth was tied to the market. Yes...I went through the 2008 recession, but only a small amount of worth really took a hit and I wasn't really worried about it then.

Right now, I'm 44 and I tend to run about a 65/35 allocation.

So what are some of the best practices from those who know more than I do?

For example....if the market really goes down and my allocation hits 55/45 or some significant #....best practice I assume is to buy stock funds by using my bond funds...right. Do most folks use a normal 5% band before making any changes?

What other "you should or could be doing X?"
Personally, I increase my exposure during bear markets by increasing my DCA amounts.
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ruralavalon
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Re: In a Bear Market, What Are Some Best Practices

Post by ruralavalon »

If in the accumulation stage don't panic, find something else to occupy your attention, don't sell off, continue to make regular contributions every pay period, and increase contributions if practical.

If in the accumulation stage don't panic, find something else to occupy your attention, don't sell off, watch unnecessary expenses.
"Everything should be as simple as it is, but not simpler." - Albert Einstein | Wiki article link: Bogleheads® investment philosophy
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Raspberry-503
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Re: In a Bear Market, What Are Some Best Practices

Post by Raspberry-503 »

RobLIC wrote: Thu Dec 13, 2018 9:55 pm So, when it comes time to rebalance according to my IPS, are BHers encouraged to bring the AA back in line by selling bond funds that have also decreased in value — obviously, not to the degree of the stock funds — even if it means realizing a loss of the bond fund’s original value? (Also, just FYI it’s not always possible for me bring an AA back in line using new money.)

I’m not sure the logic behind selling anything at a loss for the sake of your AA, but I want my AA to stay the course. Hope that made sense. I’m trying to figure out which is the lesser evil Thanks! Rob
Yes, you do want to sell those bonds even at a loss when you are ready to rebalance, the idea is that the stocks you then bought on sale will eventually grow much faster than if you had kept the bond fund. And maybe you can TLH some of those losses.
But at the same time, it's Ok to let things get out of whack some. That's why some rebalance only once a year, it prevents you from fretting about the small changes. Also, remember that rebalancing can still cost some in transaction costs. Others (many here?) send "bands" rather than rebalancing on fixed dates. I use the 5/25 rule (look it up) for each asset class (so for example I look at Emerging and Developed Int'l as their own asset class with their own bands, but some don't). since both bonds and stock are down, the AA is not getting out of whack as fast as if bonds were up and stocks down, so I'm not even close to needing to rebalance. So not touching it.

I'm making an extra effort to find a little more to invest every month, knowing that stocks are on sale (even if they may be even more on sale later), but that's more of a way to thumb my nose at the market gloom and doom articles than anything else. I do have a good prospect for continued employment, and my Cash+IBonds can last me for 2 years, more if I ask my kid to get a loan for the rest of college.

the only reason I look at my balances is to decide whether to TLH again or not.
SuperSaver
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Re: In a Bear Market, What Are Some Best Practices

Post by SuperSaver »

Is anyone on here prepared to go through a multi-year bear market? I'm talking 3-8 years?

I know that is not the historical norm... But the last few years have been anything but typical (ie, COVID, 0% interest rates x 10 years). I mean, 8% inflation, paltry savings rate from the bank/CDs, and negative returns from Total Market every year?

What if... this time is indeed different from other 18-24mo bear markets???
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ccf
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Re: In a Bear Market, What Are Some Best Practices

Post by ccf »

SuperSaver wrote: Tue May 24, 2022 5:09 pm Is anyone on here prepared to go through a multi-year bear market? I'm talking 3-8 years?

I know that is not the historical norm... But the last few years have been anything but typical (ie, COVID, 0% interest rates x 10 years). I mean, 8% inflation, paltry savings rate from the bank/CDs, and negative returns from Total Market every year?

What if... this time is indeed different from other 18-24mo bear markets???
not really :( the last many years culminating in November 2021 had me thinking that i was going to retire early. if it's gonna be 8 years, I don't think I can last that long in tech.

OP you already got tons of good feedback but to answer your question: yes you want to rebalance, now would be a good time to decide what your triggers are. I think 5% out of whack is reasonable and common.
Last edited by ccf on Tue May 24, 2022 5:20 pm, edited 1 time in total.
carminered2019
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Re: In a Bear Market, What Are Some Best Practices

Post by carminered2019 »

SuperSaver wrote: Tue May 24, 2022 5:09 pm Is anyone on here prepared to go through a multi-year bear market? I'm talking 3-8 years?

I know that is not the historical norm... But the last few years have been anything but typical (ie, COVID, 0% interest rates x 10 years). I mean, 8% inflation, paltry savings rate from the bank/CDs, and negative returns from Total Market every year?

What if... this time is indeed different from other 18-24mo bear markets???
Yes, I prepare by having zero debt, I could flip burgers and still keep the lights on.
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