Race from $2M to $4M...and Beyond!

[Exflyboy]

Today is toe dipping day.. well maybe half a foot..:)

I have 17 years in bond+cash.. so I gotta rebalace a bit.

You have 17 years of expenses in bonds&cash? Wow - I thought I was extreme in having six years :-)
I think tomorrow is going to be my toe dipping day.

Thats not counting the future pensions.. But yeah I'm taking chunks out, I rolled about 1/3rd of the way to my desired point of 7 years in bonds+cash.

[Ozlady]

My paper losses so far: $102K...

thank God it is less than a year's passive income for me...

I am still feeling like a pig rolling in mud; salivating at the prospect of more buying...see ..the eternal optimist:)

[DavidAnnArbor]

I have about 50,000 in cash and I have to put money in my solo 401k for the 2019 tax year.  So this seems like a good time to start doing it.

[DavidAnnArbor]

If Biden gets elected most things that change will be slight and not impactful, but the big thing would be tax rates - if they go back to pre tax cut levels that would be another 20% cut to earnings and the markets - that is the big risk.   

If the economy improves under Biden, even an increase in taxes might not be a risk toward stock market valuations.

[pecunia]

Looks like the lowest since 2017.  I have been hoarding some cash since I've been told for 2 years this drop was due.  Do you guys expect the disease fear to last for a few months?  I wonder if we're nearing the bottom.   Any cash I can put in will not make up for my losses, but it would be good to have it work for me.

This keeps going and I will be another dipping below the $2M mark.

[DavidAnnArbor]

We haven't gotten the worst of this yet.  Expect about 50% of the population to get hit with the Coronavirus, but the vast overwhelming majority will be fine, it will be like getting a cold.

So yes I'd expect the market to freak out more.  Schools are closing, we're definitely going to be in a recession, incomes are going to decline.

I have no idea when the bottom will peak. You just do your best and invest your cash and over the long term stocks are headed back up.

We've been through this rodeo before, just different issues freaked everyone out (understandably).

[Exflyboy]

Yeah I could see another 10% down from here.. Heck the futures are down 2.5% for tomorrow already.

Another 10% down would take us to a 37% retraction.. Thats a pretty decent recession pricing so do we really see it going much lower?

[itchyfeet]

The ASX passed -30% which is what I had set for myself as a Buy signal. So I threw another $50K on the fire. Here hoping for a quick recovery.

[EscapeVelocity2020]

The ASX passed -30% which is what I had set for myself as a Buy signal. So I threw another $50K on the fire. Here hoping for a quick recovery.

I've always been in an investing situation where I'm investing my savings (delaying gratification) in hopes (and confidence) in historical outcomes to have a better situation in the relatively near future.

This is the first downturn where I'm fat-FI, have cash savings on the side, and don't really need to invest and put money at risk in hopes of quick reward, I just want to hang on to my FI and have enough invested that the 4% rule works.

Not sure about all of the other folks that are passing 'trigger points' that force them to put money in to equities, but I'm still not sure I'm going to re-balance to get back to my 50/50 super-conservative AA tomorrow.  I know that I should, this should not be an emotion-driven decision, but I'm struggling...  There will likely be one or more 'dead cat / bear trap' bounces before we bottom out so I'm not going to blindly chase an up day but I do need to figure out when I rebalance if it is not done for me (by a sudden equity recovery)...

[soccerluvof4]

Wait is this the 2-4 million race to zero? yesterday was a painful one but the last two days I have been buying one day using cash the other day sold some bonds all for more VTSAX. I have plenty of powder to add but just would like to see us settle somewhere and or a green day for a change would be a nice break. Yesterday though I gotta say stung a little more than the other days. Oh well in it for the long run but sentiment looks like could be aways down yet before we go higher.

[jdfergason]

Boy this has been a painful month and a half! It's probably going to delay my early retirement by several years as I am committed to reaching my magic number (which is admittedly high). Oh well, can't do much about that now -- I think we should all switch back to talking about biking and other fun things!

But, before we do that, morningstar had a pretty good analysis of COVID-19 and likely short-/long-term impacts to the economy:

https://www.morningstar.com/articles/971254/morningstars-view-the-impact-of-coronavirus-on-the-economy

[PathtoFIRE]

Argh, first time I've tried to time my solo 401k contributions, and now looking back, there's always been a 2 day lag between initiating and execution, so guess I'm getting Monday's price since I started it yesterday before the bell. Oh well, looking like a dead cat bounce so far today, and this is all just nibbling around the edges anyway.

Felt good to shift a few bonds into stocks yesterday, less than a 2% shift in my AA. However, I was surprised to see I'm starting to track out of my US/ex-US desired allocation too, so it all went into VTSAX yesterday.

[PathtoFIRE]

Oh, also I think I've got the virus. Pretty solid link from DW to colleague to child whisked back from Milan when this all started going down a few weeks back. I was certain it was usual seasonal allergies, always get this time of year when we see some warm days (85F the past 2 days), but what tipped me off, other than the DW's story, is that the symptoms are too mild for my typical allergies...so far.

[tooqk4u22]

Looks like the lowest since 2017.  I have been hoarding some cash since I've been told for 2 years this drop was due.  Do you guys expect the disease fear to last for a few months?  I wonder if we're nearing the bottom.   Any cash I can put in will not make up for my losses, but it would be good to have it work for me.

This keeps going and I will be another dipping below the $2M mark.

We haven't gotten the worst of this yet.  Expect about 50% of the population to get hit with the Coronavirus, but the vast overwhelming majority will be fine, it will be like getting a cold.

So yes I'd expect the market to freak out more.  Schools are closing, we're definitely going to be in a recession, incomes are going to decline.

I have no idea when the bottom will peak. You just do your best and invest your cash and over the long term stocks are headed back up.

We've been through this rodeo before, just different issues freaked everyone out (understandably).

This.   There are absolutely 100's of thousands if not millions more people here and globally that have or have had the virus but can't or haven't or won't be tested (no kits, not severe enough symptoms) and while this is perfectly logical the irrational will continue to win out as the numbers increase dramatically over the next 30 days. 

My probabilities for the next 30-90 days:
Get back to correction territory (10% off highs) - 2%
Range bound between Dec 2018 Lows and 20% off highs - 75%
down another 10% from high - 20%
Hit 50% down from highs - 3%

[lhamo]

Down $252k on paper.

Considering initiating some Roth rollovers.

[DavidAnnArbor]

Oh, also I think I've got the virus. Pretty solid link from DW to colleague to child whisked back from Milan when this all started going down a few weeks back. I was certain it was usual seasonal allergies, always get this time of year when we see some warm days (85F the past 2 days), but what tipped me off, other than the DW's story, is that the symptoms are too mild for my typical allergies...so far.

I think I did too. My symptoms were nasal congestion, feeling some slight chills, tickle in the back of the throat.  This started 2 days ago. If I had fever, it was no more than half a degree.
I'm feeling a lot better today.

[Bateaux]

Started frontloading my 401K.   Will be plugging 40 percent of income in there till maxed.  I'm over 50 now so that's substantial.  As far as losses go, looks like were down a little more than 200K.  Sitting at about 2.2M liquid at present, there is a chance we don't dip below 2M at this point.   Made a tiny(for those in this thread) 1/1000 of net worth buy today.  May get in a few more next week.

[soccerluvof4]

Oh, also I think I've got the virus. Pretty solid link from DW to colleague to child whisked back from Milan when this all started going down a few weeks back. I was certain it was usual seasonal allergies, always get this time of year when we see some warm days (85F the past 2 days), but what tipped me off, other than the DW's story, is that the symptoms are too mild for my typical allergies...so far.

I think I did too. My symptoms were nasal congestion, feeling some slight chills, tickle in the back of the throat.  This started 2 days ago. If I had fever, it was no more than half a degree.
I'm feeling a lot better today.

I had exactly the same but with a sore throat so I have self quarantined for the most part going on day 10. Started with sore throat, tickle cough and head cold but never a fever. So maybe not but no need to take chances but cant get rid 100% of sore throat. So far have not had or developed anything in the lungs.

Bounce back was nice to wake up to this morning but sure we will see more downside till all the dust settles so I will continue to stick to my plan and add on further 5% drops and rebalance as needed.

[pecunia]

Working long hours out of town as usual.  I've kinda ignored the frenzy about this illness.  I drove back home last night.  I was surprised to see empty shelves in the grocery store.  Clerks say some people have gone batsh*t crazy about this illness.  Strangely illogical.  Seems like the chances of a car accident and many other things are still much higher, but people are people.

So,.......we are not out of the woods for a while, OK, I get it.

Before the illness I was hearing a lot of noise about stocks being overpriced per historic evaluation.  Some made reference to price / earnings ratios and other measures.  Once again I am asking you smart people.  How is the value in reference to historic measures after the "correction?"

Seeing the posts, I guess we should be taking some measures.  This illness is probably not a pretty way to cash out.

[jdfergason]

Working long hours out of town as usual.  I've kinda ignored the frenzy about this illness.  I drove back home last night.  I was surprised to see empty shelves in the grocery store.  Clerks say some people have gone batsh*t crazy about this illness.  Strangely illogical.  Seems like the chances of a car accident and many other things are still much higher, but people are people.

So,.......we are not out of the woods for a while, OK, I get it.

Before the illness I was hearing a lot of noise about stocks being overpriced per historic evaluation.  Some made reference to price / earnings ratios and other measures.  Once again I am asking you smart people.  How is the value in reference to historic measures after the "correction?"

Seeing the posts, I guess we should be taking some measures.  This illness is probably not a pretty way to cash out.

Depends what sector of the economy you are talking about but overall we are still high with a p/e of about 20 compared to a long-term average of approximately 16. See:  https://www.multpl.com/s-p-500-pe-ratio

You have to be careful with these measures of valuation though. There are significant differences between the stock markets of the 1960's and those of today which might cause the fair value p/e to be larger (i.e., greater market participation, different tax law, etc.) Also valuation always has to be viewed in light of interest rates and with the low rates we have today stocks actually look cheaper than they would if interest rates were higher but the p/e was lower.

If you believe the efficient market hypothesis there's really no such thing as over-valued and under-valued. The intrinsic value of a stock is constantly changing and is a complex combination of current performance, future expectations, and other stocks performance.

[itchyfeet]

And if a big chunk of the market books losses in the coming quarter then the P/E could go up instead of down, not withstanding the share price drop....

[pecunia]

I'm planning to finally retire this Spring so the fall of stock prices concern me.  However, the causes seem to be temporary this time.  The price of oil will inevitably return to it's higher state.  People cannot hide away from this virus forever.  It's not the Bubonic plague where a major portion of the populace will be removed.  People will only hide away with their hoarded toilet paper so long until the bullsh#t flag is raised and schools will reopen and business will return to normal.  I figure a maximum of 2 months.

I somehow find it easier to lose money due to natural causes than due to the actions of the greedy men in 2008.

After the populace accepts the present status,  the economy will ramp up and I would expect stock prices to return to almost their former levels.  Since they were overpriced, they will probably rebound to a lower level than before the crash.  I'll still feel good when they go back up.

Is my prognosis off the mark?  I am not known as a seer.  I'd like to know the prediction of you folks.  From the entries that I've seen made you all are far more into the money thing than I ever want to be. 

[secondcor521]

I'm planning to finally retire this Spring so the fall of stock prices concern me.  However, the causes seem to be temporary this time.  The price of oil will inevitably return to it's higher state.  People cannot hide away from this virus forever.  It's not the Bubonic plague where a major portion of the populace will be removed.  People will only hide away with their hoarded toilet paper so long until the bullsh#t flag is raised and schools will reopen and business will return to normal.  I figure a maximum of 2 months.

My son and I were discussing this last night on our apocalypse run to the grocery store (limited outages, generally not the end of the world, found everything we wanted except the kind of bottled water we prefer, and butter).

I think it will be much shorter - probably on the order of two weeks.

We also discussed what metric we would use to decide when things have subsided.  We decided one good metric would be what the top news headline of the day is.  He also opined that people in general can't remain scared of one topic for very long, and so the media out of necessity will switch to something else (plane crash, war, mass shooting, something like that would be my guess as to what will dislodge stupidVirus from page 1).

[Dancin'Dog]

2 weeks??

[secondcor521]

2 weeks??

Yup.  That's my opinion.  But I am an eternal optimist.  We will see.

[pecunia]

Thanks - I don't think it is maximized yet.  More and more places seem to be cutting back.

[deborah]

2 weeks??

Yup.  That's my opinion.  But I am an eternal optimist.  We will see.

One of our state governments is opening a lot of hospital beds for elective surgery this week and next, so that they get rid of as much of that queue as possible before the coronavirus cases ramp up. They expect that to happen in a couple of weeks. I would expect 1 to 2 months.

[Exflyboy]

Annd the Fed has just cut short term rates to zero% and futures are down nearly 5%.. This is a wild ride..:)

[Car Jack]

Today is toe dipping day.. well maybe half a foot..:)

I have 17 years in bond+cash.. so I gotta rebalace a bit.

You have 17 years of expenses in bonds&cash? Wow - I thought I was extreme in having six years :-)
I think tomorrow is going to be my toe dipping day.

25 years for me.

Plus will have SS and a small pension.

[Threshkin]

Today is toe dipping day.. well maybe half a foot..:)

I have 17 years in bond+cash.. so I gotta rebalace a bit.

You have 17 years of expenses in bonds&cash? Wow - I thought I was extreme in having six years :-)
I think tomorrow is going to be my toe dipping day.

25 years for me.

Plus will have SS and a small pension.

We have 3 to 4 years in "cash".  The balance is >90% equities (ETF).  The last couple of weeks has been "interesting" but I am not too worried.  If the SHTF for more than our cash reserves we can always take SS which would cover 80 to 120% of our expenses.  I consider SS to be the fixed income portion of our portfolio and balance the rest accordingly.

[Bateaux]

The cash crunch will hit the poor and lower middle class very soon.  The current government is about to do a 180 on socialism.  I'm not shoving politial daggers here.  It's just that a social safety net will be of absolute necessity in coming weeks and months.  A lot of the people I hang out with are already on the verge of bankruptcy.   Not necessarily the legal form, just completely empty pockets.  Just ramping up their supplies killed their emergency fund.   Most didn't look at money the way we do, they were actually happy just getting by each month.  Many of thrir jobs are already shut down.  My workplace just canced the janitorial services!!!   WTF!  I work in a southern Louisiana chemical plant, many of our office wokers will be working from home.  Engineers, computer geeks, accountants, sales reps, managers, regulatory and compliance. Our scheduled big maintence turnarounds are canceled.  So no welders, pipefitters, carpenters, equipment operators, crane operators, general laborers, etc.  Only essential personal will be on site,  I'm one of those.  I've ridden out many hurricanes not at home, but at work. I'll be paid very well during this time.  I expect to work overtime actually, which I'd choose not to.  Our own core company employees will be paid unlese this gets much worse.   The contact labor may or may not get paid.  They will be getting unemployment checks.  Those don't cover a full load of debt long.  This isn't going to just ramp back up overnight. 

[soccerluvof4]

Stock futures halted looks like another sell off today though you never know how the day is going to end. Having said that the last super up day Friday a week or so back Monday was hit hard and we had a turn around Tuesday. Will that be the case this time? who knows. But, lets get through today and if we significantly drop  will put more in which will be the third time. The virus is real but so many things going on our just bat shit crazy like the PT hoarding. Its hard to keep up with all the closings its to the point just shut everything down for two weeks and be done with it. IMO its going to be 6 weeks before we start seeing light at the end of the tunnel but hope I am wrong. I feel for the Elderly that cant even get around groceries stores, sad enough they need to go out and get groceries but then they cant find or get the things they need. My goal is during this all to stay at least in this club! haha... 

[mjr]

I have over 20 years of expenses in cash - deliberately not invested over the last 2-4 years so that I could sleep at night during the inevitable stock market armageddon.....

[LightTripper]

Honestly I think in the "real world" this is going to be a problem for at least a year.  I'll be really happy if this thing doesn't bite back next winter even after whatever we are about to go through but I'm planning my life on the assumption that this will go on for some time.  Already in the UK our government (generally criticised for not taking it seriously enough) is saying older/vulnerable people may be asked to self-isolate for 4 months or more, so if even the "relaxed" end of the spectrum is saying that this takes us into the summer I think we should prepare for at least that.

Of course, stock markets may improve before that, if the situation starts to stabilise.  And I've no doubt that in time retailers and governments together will figure out a way to keep us all fed and with access to toilet roll...

[2sk22]

I have over 20 years of expenses in cash - deliberately not invested over the last 2-4 years so that I could sleep at night during the inevitable stock market armageddon.....

Indeed cash == comfort in these times. I wonder if younger people who are in the accumulation phase will get scarred by this experience.

I know that the Dotcom crash in 2000 absolutely had an impact on me so I have been a lot more cautious than many. I never stopped my automatic monthly/weekly investments through the 2000 and the 2008 crashes but I did make an effort to build up a healthy cash buffer.

[Dicey]

I have over 20 years of expenses in cash - deliberately not invested over the last 2-4 years so that I could sleep at night during the inevitable stock market armageddon.....

Hmmm, we had about half that after the sale of our last renovation project, but we just paid cash for an expensive used RV. So maybe now we only have seven year's expenses in cash reserves, but we have our own mobile isolation unit should we need one, for the win, right??

Also, we sold the last flip in September, and have found nothing that makes sense since, despite plenty of looking, number crunching and offer writing. Now we feel so fortunate that we're not in the middle of a project. I won't be surprised if this virus has a negative impact on the housing market, at least in the short term. BTW, we're FI and FIRE. We flip for fun, so not having a project in the pipeline is no hardship.

[Exflyboy]

Both my renters work at the local Hospital (the areas only major trauma unit).. This I assume means their jobs (and our rent checks) are safe..:)

We also have another $150k or so to drop in the market before my self imposed limit of having 7 years in bonds and cash.

I'm setting my remaining VTSAX buy points at 2200 and 2030.. roughly 35 and 40% down.

After that I'm buying food an ammunition!

[itchyfeet]

I don’t have much cash lying around, but have a steady job I feel secure in until this uncertain period passes.

I feel it will take me some time to get back to where I was, but you never know. A spark of optimism may hit the markets very, very soon if Europe get on top of the virus like China seem to have.

[DavidAnnArbor]

I have about $70K in cash. I will slowly move most of it into stocks.  Today I just purchased another $7,000 in mainly total stock market index, with some in international index in order to meet my 2020 tIRA contribution. Time will tell if I'm the fool.

[EscapeVelocity2020]

Not that I think we're even close to the bottom of this, but another thing I remind myself of is how strong the rally was in 2009 once the market began to rebound.  Of course, things were priced for armageddon by the time we got to S&P 667 (many times businesses were valued below their liquidation value).  I don't think we're at the irrational point yet, but I have to get off my hands at some point and start putting some money in the market.  Maybe this Friday.

[Dancin'Dog]

Not to be rude about the situation, but won't the markets keep falling until there's a some sort of a sign that things are getting better?  This is going to be like a long slow hurricane, and the winds are just now starting to blow.




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[soccerluvof4]

Not to be rude about the situation, but won't the markets keep falling until there's a some sort of a sign that things are getting better?  This is going to be like a long slow hurricane, and the winds are just now starting to blow.




[size=78%] [/size]

The markets will drop till we get to a point people are exhausted from selling, we reach a point its just gotten stupid and as much things are built in the market can think of , and the stimulus package is put in. One or all the above. At that point the recovery will most likely be based on how long it takes to rationalize or be able to put PE's on stocks and so on. This is why I never understood the case to base things on a 50% drop. Could be more could be close to the bottom now. Nobody knows and its just speculation. The surest thing is that it will come back at some point and the further it drops the better things are on sale. Since you cant guess the bottom add to your tolerance if you can on the way down. The biggest mistake is people get to a point they cant take seeing anymore of the falling knife and sell close to when things are going to slow down and perhaps turn. Crazy times right now.

[pecunia]

Here's the thing I kind of wonder in reading all of these comments in particular those of Bateaux.  As less people are working, the margin in the system is reduced.  They spend less on goods and services.  More people get laid off or fired and the margin is further reduced.  This action will have a sort of financial inertia.  It kind of takes on a life of it's own like a blazing fire consuming the hopes and dreams of people.

There have been complaints about bars and restaurants closing due to this pandemic.  Let's say they stay closed for a couple months.  In conjunction with that other people either are forced to stay home or their working hours are severely curtailed.  Less money is gained by these people.  After the two months, the bars and restaurants are set to reopen.  However, their customers have been tapped dry.  They have far fewer customers.  Without the cash flow from their former customers, they close.  Their employees are no longer employed.  They are not alone.  The downward spiral continues.  Without that margin, the system collapses in on itself.

And, you know, it's world wide.

I looked for a similar happenstance in history.  The Spanish flu of 1918 which killed 50-100 million people lasted a year or so.

It almost seems like chaos theory in action.  A few bats flapping their wings spreading a bit of virus in China unleashes a hurricane.

I hope it's only 2 weeks.

[LightTripper]

Universal basic income anybody??

Anyway, I'm going to start moving some more money towards my Dealing account. I'd forgotten how miserable buying sticks on sale always feels.... Particularly given the nature of the drivers for this one.

[Exflyboy]

Universal basic income anybody??

Anyway, I'm going to start moving some more money towards my Dealing account. I'd forgotten how miserable buying sticks on sale always feels.... Particularly given the nature of the drivers for this one.

Remember that markets are both forward looking and irrational. It certainly feels like we have a way to go to hit bottom but I have missed many a dip because I was expecting further pullbacks.

[LightTripper]

Yes exactly. I was planning to drip cash in over the next 2-3 years anyway. So just accelerating that a bit, but not going crazy.

[soccerluvof4]

Another 6 Digit drop. Yesterday was a ass kicker and I am down close to 450k ish. I am handling it thus far fine probably because i have the cash position i do and could mentally handle 3 more large drops before It would really bug me BUT any red I am adding to VTSAX today.

[2Birds1Stone]

Fututes gave up all overnight gains. Back up the truck!

I got severely burned in 2013 trying to catch a falling knife with commodities, so will hold off until real market panic sets in.

[soccerluvof4]

Fututes gave up all overnight gains. Back up the truck!

I got severely burned in 2013 trying to catch a falling knife with commodities, so will hold off until real market panic sets in.

Thats exactly why I am incrementally buying on percentage drops.

[itchyfeet]

Fututes gave up all overnight gains. Back up the truck!

I got severely burned in 2013 trying to catch a falling knife with commodities, so will hold off until real market panic sets in.

Thats exactly why I am incrementally buying on percentage drops.

I will keep buying too. I don’t have a huge amount to play with but will get my 2019 bonus next week so will add that to what I have.

At least if I buy now it brings down my average purchase price closer to today’s prices so I feel less bad about the difference between the average I have bought in at and today’s price.

Also, I want to be in the market as much as possible for a recovery if there is one.

If the market doesn’t recover then I am destined to work for ever. It will be what it will be.