Author Topic: Were there news scares like this 2 to 3 years ago?  (Read 1814 times)

JenniferW

  • Bristles
  • ***
  • Posts: 322
Were there news scares like this 2 to 3 years ago?
« on: January 23, 2019, 09:16:25 PM »
I keep seeing news articles talking about growing stock market volatility, global trade issues, brexit, slowing growth, etc..

Is this something I need to be concerned about now, or have they been putting out this sort of negative news like this every year for the past decade?  They need something to write I guess.


ILikeDividends

  • Bristles
  • ***
  • Posts: 459
Re: Were there news scares like this 2 to 3 years ago?
« Reply #1 on: January 23, 2019, 09:50:59 PM »
I keep seeing news articles talking about growing stock market volatility, global trade issues, brexit, slowing growth, etc..

Is this something I need to be concerned about now, or have they been putting out this sort of negative news like this every year for the past decade?  They need something to write I guess.
Volatility has been low, on average, ever since the great recession and the extraordinary QE measures taken by the fed.  Recent volatility might seem high in recent months, but it is really just getting back to normal as the fed normalizes its balance sheet.  It only seems like it is growing now because it has been artificially suppressed for the last ten years.

And, yes, global trade issues, brexit, slowing growth, government shutdown, you name it, all introduce uncertainty; which generally stokes the fires of volatility until those issues are resolved.  And the 24 hour news cycle feeds on it incessantly.

But here's the thing.  If your investment horizon is far in the future, volatility just doesn't mean anything.  It's all just noise.  If you are close to FIRE, then you should already have adjusted your asset allocation to include a larger part of lower volatility assets to dampen any short term effects of volatility.
« Last Edit: January 23, 2019, 10:01:19 PM by ILikeDividends »

JenniferW

  • Bristles
  • ***
  • Posts: 322
Re: Were there news scares like this 2 to 3 years ago?
« Reply #2 on: January 23, 2019, 10:12:53 PM »
Thanks for the reply.  Yeah I am investing 100% into VTI and told myself I was going to ignore the news and volatility, but I am new and it takes a while I guess to adjust.  I plan on retiring at 67, I am 48 now.  I know I shouldn't care that I put a relatively large lump sum in a week ago: $4500. I just fear it dropping to $2500 next month lol.  I don't know why because I should be happy if the stock market dropped that low in a month as my savings right is 70% and would be putting about $2000 per month in VTI.   What's wrong with me? lol.   I shouldn't care at all.. I don't need that money.. when I put in retirement I don't ever plan on drawing it out unless I really need it.  Heck I might not even need to draw the money out at 67 because my social security check alone would easily cover my current cost of living.

When I get into my late 60's I'll reallocate say 30 to 40% to bonds.

ILikeDividends

  • Bristles
  • ***
  • Posts: 459
Re: Were there news scares like this 2 to 3 years ago?
« Reply #3 on: January 23, 2019, 10:20:04 PM »
When I get into my late 60's I'll reallocate say 30 to 40% to bonds.
Sounds like you've got a plan.  Just hang in there.  In a couple of years you, too, will consider recent volatility just a ho-hum kind of everyday thing.  If it still rattles you later, then maybe you should consider legging into a small allocation of bonds sooner; otherwise, just stay the course.
« Last Edit: January 23, 2019, 10:23:15 PM by ILikeDividends »

EscapeVelocity2020

  • Handlebar Stache
  • *****
  • Posts: 2345
  • Age: 45
  • Location: Houston
    • EscapeVelocity2020
Re: Were there news scares like this 2 to 3 years ago?
« Reply #4 on: January 23, 2019, 10:56:52 PM »
Volatility in and of itself is nothing new to the markets.  Things like climate change, global debt levels, and record long US government shutdowns/Brexit/populist nationalism are not normal, but we hope they are not worse long term than WWII, great depression, etc.

At the end of the day, you have to make a judgement call on where you currently are and what asset allocation you are comfortable with.  Bogleheads use a test - asses your need, ability, and willingness to take on risk.  Take your time with that concept, it has done a lot for me over the years.  But it is not optimal (not expected to produce the highest balance over the majority of 30 year periods)  to be at 100% equities. 

Even at 90/10 - equity/bond allocation and re-balancing will both smooth returns and improve your chance of ER success.  If you are shooting the moon hoping to catch up on growth for the next 20 years, there is a good chance that 100% equities will outperform in accumulation (but could also fall catastrophically short), but then you really do have to switch to holding some bonds to improve your outcome in the drawdown phase, as long as it is expected to be 30 years or less.   

There really is no reliable research on optimal allocation for drawdowns of 40 years or more, which makes me question what the 30 yo ER's rely on if not hustle income to ensure 4% SWR success for potentially 50 years or more.  Many of them are 100% equities which reflects either having more than enough NW to weather a downturn (say, a 3% SWR) or sufficient hustle income.  Guess we will eventually see what happens!  But I'm ultimately looking out for myself, their advice is only a starting point to help you to get you thinking for yourself.  Maybe start your own blog about what you learn and want to share with others!

patrickza

  • Pencil Stache
  • ****
  • Posts: 546
  • Age: 40
    • The Investor Challenge
Re: Were there news scares like this 2 to 3 years ago?
« Reply #5 on: January 24, 2019, 02:47:53 AM »
I started investing in 2013 and back then there was a huge fear that when QE started tapering off all hell would break loose. Some people I knew even stood on the sidelines waiting for it to happen. They're miles behind now.

My strategy is to pretend I can't read or understand finance news, and to just buy on autopilot when the money hits my account.

MrOnyx

  • Pencil Stache
  • ****
  • Posts: 616
  • Location: East Anglia, UK
Re: Were there news scares like this 2 to 3 years ago?
« Reply #6 on: January 24, 2019, 04:01:21 AM »
Market volatility is nothing new, and is nothing to fear. Just in case you aren't already acquainted, I'm leaving this here: https://jlcollinsnh.com/stock-series/

Like others have said, the day-to-day ups and downs of the market do not matter if you're in this long term. At that point, all that matters is "will the market be higher in 20 or so years than it is right now?" and the answer to that has historically been a resounding "yes", with only a few caveats. But if you go exactly 20 years from now to the day, and we're in the middle of the biggest recession since the 1920's, then you'd obviously hold fire on the FIRE trigger for a bit - just a few more years if that.

YttriumNitrate

  • Pencil Stache
  • ****
  • Posts: 627
  • Location: Northwest Indiana
Re: Were there news scares like this 2 to 3 years ago?
« Reply #7 on: January 24, 2019, 04:36:48 AM »
I keep seeing news articles talking about growing stock market volatility, global trade issues, brexit, slowing growth, etc..
Is this something I need to be concerned about now, or have they been putting out this sort of negative news like this every year for the past decade?  They need something to write I guess.

Just the fears de jour of the news cycle ... here's a little reminder of the scare stories from a few years ago.
Hello everyone.  I'm fairly new at this and have recently got obsessed with studying the US/global market trends.
I remember when I first got interested in finance...I watched Jim Cramer, read the Financial Times, check my portfolio on a daily basis, and did some stock picking. After a while, I came to the conclusion that "nobody knows nothing" really is true.

Sure, it's possible that a substantial correction is imminent, but don't forget that people were making the same predictions in 2010, 2011, 2012, 2013, 2014, 2015, 2016, and 2017. Instead of "fed rates and trade war" we had fiscal cliff, government shutdown, Zika, Trump election, Korean nukes, Clinton Election, quantitative easing, and so on and so forth as the fears de jour back then.

Rob_bob

  • Stubble
  • **
  • Posts: 216
  • Location: Oregon
Re: Were there news scares like this 2 to 3 years ago?
« Reply #8 on: January 24, 2019, 01:24:08 PM »
Here is a chart of all the past reasons to be worried about the stock market.

marty998

  • Walrus Stache
  • *******
  • Posts: 6491
  • Location: Sydney, Oz
Re: Were there news scares like this 2 to 3 years ago?
« Reply #9 on: January 24, 2019, 01:33:15 PM »
Here is a chart of all the past reasons to be worried about the stock market.

And that was before the DOW hit 20,000

Blueberries

  • Stubble
  • **
  • Posts: 224
Re: Were there news scares like this 2 to 3 years ago?
« Reply #10 on: January 24, 2019, 01:50:03 PM »
If you need any additional info, here is another image.  The interesting thing is this chart was pre-Great Recession.



In answer to your title, yes, there have always been fears, scares, etc. in the market.  Always.

JZinCO

  • Pencil Stache
  • ****
  • Posts: 701
Re: Were there news scares like this 2 to 3 years ago?
« Reply #11 on: January 24, 2019, 02:13:35 PM »
Here is a chart of all the past reasons to be worried about the stock market.
Although polls demonstrate the consensus among economists is that we will have a recession in 2019 or 2020, graphs like these tell me I needn't sell. That is because:
1) My investment horizon is long enough that any losses will recover at some point.
2) I just don't know when the top-out will occur. So why sit on the sidelines...
That said, I wouldn't begrudge someone who decides to hedge using an uncorrelated asset class that has similar expected returns (though these are far and few between).

edit: It's really fun to look at discussion or blog posts 8 to 4 years ago. Seems like the majority of people's intuition was wrong. I can't fault them for it because the past decade has no historical analogue.
« Last Edit: January 24, 2019, 02:15:20 PM by JZinCO »

Travis

  • Magnum Stache
  • ******
  • Posts: 2557
  • Location: South Korea
Re: Were there news scares like this 2 to 3 years ago?
« Reply #12 on: January 24, 2019, 05:02:41 PM »
I keep seeing news articles talking about growing stock market volatility, global trade issues, brexit, slowing growth, etc..

Is this something I need to be concerned about now, or have they been putting out this sort of negative news like this every year for the past decade?  They need something to write I guess.

It's weekly.  Read a financial article today and compare it to one the same author wrote six weeks ago, and then six weeks before that.  It's as if they wipe their own memories right after they publish.  If you can laugh at this sort of thing, go watch interviews with "experts" who come on every few months to give hot tips and predictions. 

WhiteTrashCash

  • Handlebar Stache
  • *****
  • Posts: 1061
Re: Were there news scares like this 2 to 3 years ago?
« Reply #13 on: January 25, 2019, 05:27:57 PM »
I ignore all articles on financial websites and just check the market values each day or every few days. Absolutely nothing written in the articles has any value whatsoever.

Telecaster

  • Handlebar Stache
  • *****
  • Posts: 1908
  • Location: Seattle, WA
Re: Were there news scares like this 2 to 3 years ago?
« Reply #14 on: January 25, 2019, 05:40:55 PM »
There is always something to worry about. Avoid weekend thinking and ignore the latest dire predictions of the newscasters.

--Peter Lynch

Mr. Green

  • Handlebar Stache
  • *****
  • Posts: 1974
  • Age: 36
  • Location: Wilmington, NC
Re: Were there news scares like this 2 to 3 years ago?
« Reply #15 on: January 27, 2019, 01:23:46 PM »
There absolutely was news like that three years ago when we experienced the first correction of this long bull run. You'd have thought that sky was falling. It's actually kinda ridiculous how extreme they make it sound. It seems like a constant battle to find the scariest verbs and adjectives to use. See a 2% drop and you'll find words like cratered, plummet, crash. All of which are not accurate descriptions. Of course they want to drive fear. Wall Street makes money when you buy and sell, it's as simple as that.

Brother Esau

  • Bristles
  • ***
  • Posts: 477
Re: Were there news scares like this 2 to 3 years ago?
« Reply #16 on: January 27, 2019, 05:01:52 PM »
In 2008 when the economy was tanking they said the sky was falling. Last I checked, it's still there.