The Money Mustache Community
General Discussion => Welcome and General Discussion => Topic started by: RedmondStash on August 06, 2019, 01:49:35 PM
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My various thoughts yesterday were:
1. Wow, a more than 3% drop! Impressive. And kinda funny.
2. I wonder if this is a good time to move IRA money into a Roth -- nah, I'll wait until the end of the year when my income situation is clearer.
3. I'm very glad I've got my AA set so that the ups and downs don't stress me out.
4. I feel like I have a financial superpower in that I no longer panic at the market's whims.
5. I'm really grateful I learned about FIRE and educated myself about investing and taxes. So many people I know are running around like Chicken Little, especially with all the clickbait stock headlines. I don't need that kind of stress.
6. I'm also grateful for this forum, which helped me educate myself and steel my financial nerves.
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I would say all of those reactions are good. But 3% is nothing, especially with a booming economy. What about 30%? 50%? And all indications that there is no end in sight. That's what separates the men from the boys (or women from the girls).
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I'm hoping for the market to keep dropping. I think economic growth can be dangerous if too prolonged because it can lead to bubbles and inflation.
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I saw lots of panic. Including here. Everyone was talking about how now was the time to hop out because the recession was coming.
But now that we're up 1.2% today, I guess the next bull run is imminent?
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I didn't laugh, I drooled. I tend to think that I'm approximately one recession away from ending my salaried career, and am actually kind of excited for the next one. I plan on living as cheaply as possible through it, investing as much as I can, and riding my success straight to FIRE in the next expansion
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I loves stock sales! I moved $3k worth of bonds in my IRA to VTSAX. I'll be investing another $1k tomorrow via my biweekly paycheck. I still have 2-4 years of working for the man, so it's mostly on investing autopilot, no matter how the market performs. It seems a little frothy, but still doesn't feel near as bad as 2008. I guess we'll see...
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...the market dropped yesterday? *shrug*
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Only at how ludicrous the reason was.
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...the market dropped yesterday? *shrug*
This is the correct answer.
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I'm surprised at all the threads here talking about it. I assumed that mustachians would generally care as little about it as I do. Which is none at all. I didn't even know about it until I read the first thread on the forum that mentioned it.
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I put $3K into my brokerage account yesterday. DCA for the win.
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Oh no! The markets are, er, at the same place where they were just over a month ago! Everyone panic!
Meh, it's noise.
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...the market dropped yesterday? *shrug*
This is the correct answer.
Didn't even know till I saw this thread, doesn't really affect me.
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I got scared so I moved my money into negative-yielding Danish mortgage bonds. Just to be safe.
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Little concerned if it were to continue that rate over a couple weeks. Corrections are fine, but that fast in a day isn't good for the market.
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I posted almost the exact same thing in my journal today. I was in college during the 2008 recession so whenever this one comes, it will be my first as a working professional. I cannot WAIT to shovel my paychecks into the market, even on the way down, and ride it all the way back up. Until then, about 32% of my take home pay gets invested already.
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I'm surprised at all the threads here talking about it. I assumed that mustachians would generally care as little about it as I do. Which is none at all. I didn't even know about it until I read the first thread on the forum that mentioned it.
I was terrified. Hold me! 🤣
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I thanked the error in the Vanguard App that prevented me from buying VTSAX on Friday for the extra share.
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No where near panic, but I'd rather see the markets go up than down.
If I were early in the accumulation phase, I'd be more excited to pick up more shares, but as someone who is getting close to FIRE, seeing these drops is no fun because its like someone snatching the finish line away from you.
Long term, it not a big deal, but I'm not as happy to see drops as some people seem to be.
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No panic.. Be nice to have a correction to put some money to work. Got a dead cat bounce yesterday so see what happens rest of week. Numbers just look so much bigger because the Market is so High but percentage wise these swings down are very low.
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My various thoughts yesterday were:
1. Wow, a more than 3% drop! Impressive. And kinda funny.
2. I wonder if this is a good time to move IRA money into a Roth -- nah, I'll wait until the end of the year when my income situation is clearer.
3. I'm very glad I've got my AA set so that the ups and downs don't stress me out.
4. I feel like I have a financial superpower in that I no longer panic at the market's whims.
5. I'm really grateful I learned about FIRE and educated myself about investing and taxes. So many people I know are running around like Chicken Little, especially with all the clickbait stock headlines. I don't need that kind of stress.
6. I'm also grateful for this forum, which helped me educate myself and steel my financial nerves.
How much money do you have invested right now? Is it a laughable sum?
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One paycheck away from having enough to buy VSAX again (cashed out when I got divorced and split all assets). Really hoping for a good dive right when I'm ready to buy in ($3k minimum).
Deployed now and using the financial boost to get back into index funds.
So every time I hear that the market is dropping I get more and more excited.
Now, if we could only get a real estate value collapse in Colorado I'd be elated, but I'm not holding my breath.
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I was curious and checked my balance. Then shrugged.
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Didn't laugh. Didn't cry. Didn't care.
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My various thoughts yesterday were:
1. Wow, a more than 3% drop! Impressive. And kinda funny.
2. I wonder if this is a good time to move IRA money into a Roth -- nah, I'll wait until the end of the year when my income situation is clearer.
3. I'm very glad I've got my AA set so that the ups and downs don't stress me out.
4. I feel like I have a financial superpower in that I no longer panic at the market's whims.
5. I'm really grateful I learned about FIRE and educated myself about investing and taxes. So many people I know are running around like Chicken Little, especially with all the clickbait stock headlines. I don't need that kind of stress.
6. I'm also grateful for this forum, which helped me educate myself and steel my financial nerves.
How much money do you have invested right now? Is it a laughable sum?
Everything we have. And we're living off our investments. So on paper, we lost quite a bit.
The laughter is partly of relief, because I am not panicking; I believe the market will recover just fine. Some people I know are panicking, and I try to talk them down. One person I know is taking advantage of other people's panic in order to sell financial instruments, and I keep losing respect for them.
The way I look at it, drops are temporary, and rises are eventually permanent, though "eventually" can take many years.
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I don't laugh at losing $45k.
It's going to happen along the bumpy road and I expect it, but nothing to laugh about.
I'm full invested so, a market drop is not a chance to get money in cheap.
There are people that are really hurt by such a thing.
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Didn't notice. Probably for the best.
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Nobody care about a small or even a sizeable drop in the market.
what people care much more about is the safety of their income stream.
Ask again when the market falls AND unemployment is rocketing.
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I don't laugh at losing $45k.
It's going to happen along the bumpy road and I expect it, but nothing to laugh about.
I'm full invested so, a market drop is not a chance to get money in cheap.
There are people that are really hurt by such a thing.
You only lost $45K if you sold your shares. Otherwise, you didn't lose anything. You shouldn't have money in the market you need in the short term. I've got 2 years of expenses out of the market, so I'm mildly interested in what's going on.
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I think it's funny how I never learn about market drops except from other people or these forums. lol
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I got scared so I moved my money into negative-yielding Danish mortgage bonds. Just to be safe.
I stuffed mine into pork butts. So long as you have money in pork butts, you'll be okay.
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I think it's funny how I never learn about market drops except from other people or these forums. lol
I only started checking the S&P to determine whether or not it's a good day for jokes over at "Top is in"
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I got scared so I moved my money into negative-yielding Danish mortgage bonds. Just to be safe.
I stuffed mine into pork butts. So long as you have money in pork butts, you'll be okay.
Short asada, long carnitas!
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I got scared so I moved my money into negative-yielding Danish mortgage bonds. Just to be safe.
I stuffed mine into pork butts. So long as you have money in pork butts, you'll be okay.
I stuffed mine into Frozen Concentrated Orange Juice Futures.
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There was a nice infographic over on Reddit the other day, showing that the % change in the stock market over one day looks like a typical Bell curve distribution, with a standard deviation of about 1% or so. Sometimes RNGesus throws a pretty bad roll; it happens and doesn't necessarily mean anything. When you start seeing foreclosures and mass layoffs again, then you can bother looking up from your newspaper.
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Diversified and had large gains, still a little nerve racking to see the swings and amount of fear starting to take hold.
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I got scared so I moved my money into negative-yielding Danish mortgage bonds. Just to be safe.
I stuffed mine into pork butts. So long as you have money in pork butts, you'll be okay.
I stuffed mine into Frozen Concentrated Orange Juice Futures.
I'm sinking mine into pumpkin stocks. Given how high they are in October, imagine how high they'll be in November!
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Yawn. What happened? I'm not really up to date on things.
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I posted almost the exact same thing in my journal today. I was in college during the 2008 recession so whenever this one comes, it will be my first as a working professional. I cannot WAIT to shovel my paychecks into the market, even on the way down, and ride it all the way back up. Until then, about 32% of my take home pay gets invested already.
The problem is not all recessions are like the 08' recession, markets can (and have) gone sideways for 30 years in the past, so i'm a bit weary of possible recency bias, even though I kindof have the same thoughts since I've only experienced one recession aswell and had just started working.
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I got scared so I moved my money into negative-yielding Danish mortgage bonds. Just to be safe.
I stuffed mine into pork butts. So long as you have money in pork butts, you'll be okay.
I stuffed mine into Frozen Concentrated Orange Juice Futures.
Nice Trading Places reference!
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I don't laugh at losing $45k.
It's going to happen along the bumpy road and I expect it, but nothing to laugh about.
I'm full invested so, a market drop is not a chance to get money in cheap.
There are people that are really hurt by such a thing.
You only lost $45K if you sold your shares. Otherwise, you didn't lose anything. You shouldn't have money in the market you need in the short term. I've got 2 years of expenses out of the market, so I'm mildly interested in what's going on.
This. Paper losses. Although now that we are all (mostly) paperless, I guess they are pixel losses.
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I posted almost the exact same thing in my journal today. I was in college during the 2008 recession so whenever this one comes, it will be my first as a working professional. I cannot WAIT to shovel my paychecks into the market, even on the way down, and ride it all the way back up. Until then, about 32% of my take home pay gets invested already.
The problem is not all recessions are like the 08' recession, markets can (and have) gone sideways for 30 years in the past, so i'm a bit weary of possible recency bias, even though I kindof have the same thoughts since I've only experienced one recession aswell and had just started working.
Fair point, but if markets are going sideways and your alternative is holding cash, then you're no worse off than if you didn't invest at all. If you have access to tax-advantage vehicles like a 401k or an IRA, putting money in them during a sideways market is still strictly better than holding cash because of the reduction in taxes. It's really only prolonged losses that you need to be concerned with. Unless, of course, you have other "non-market" investment options that might have better returns.
My reaction to the dip: bring it on. I'm mildly concerned for older family and friends who might be exposed to sequence of returns risk and/or don't have time to recover, but otherwise I'm just wondering how much of a discount I'm going to get when it comes time to make my next buy.
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I felt quite content last Monday when I sold a couple dozen VIX calls for a 50% profit.
Then I felt pretty good about my mid week decision to dial back the 401k from 100% stocks to about 60/40.
Then I felt a bit of gratitude for the long term perspective that allowed me to hold option hedges on most of the rest of my equities even though the market value of these hedges had been declining for months.
Meanwhile, I felt a twinge if regret for selling a couple of puts on CRM a couple weeks ago. That obviously ain’t working out so well. At least I’ll get rid of the shares by selling calls in a high volatility environment.
Yet I should have felt none of these things. I’m studying Roman Stoic philosophy so this is an interesting application for the emotional control and mental tranquility advocated by Seneca, Epictetus, and Marcus Aurelius. By holding both bullish and bearish positions, I’m in a position to find both fortune and misfortune in whatever happens, but to be an emotional yo-yo would be ridiculous. Maybe it’s just an attempt to “feel wise” but overall my solitude comes from using reason to place myself in a position where if stocks go down, I can look forward to pivoting bullish and if stocks go up I will participate in most of the ride. Either outcome ends in my retirement, and the journey there involves more of a focus on life and less of a focus on Marketwatch or Yahoo Finance doom articles.
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Hum, are you writing calls and puts, or just selling ones you already own?
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I posted almost the exact same thing in my journal today. I was in college during the 2008 recession so whenever this one comes, it will be my first as a working professional. I cannot WAIT to shovel my paychecks into the market, even on the way down, and ride it all the way back up. Until then, about 32% of my take home pay gets invested already.
The problem is not all recessions are like the 08' recession, markets can (and have) gone sideways for 30 years in the past, so i'm a bit weary of possible recency bias, even though I kindof have the same thoughts since I've only experienced one recession aswell and had just started working.
Fair point, but if markets are going sideways and your alternative is holding cash, then you're no worse off than if you didn't invest at all. If you have access to tax-advantage vehicles like a 401k or an IRA, putting money in them during a sideways market is still strictly better than holding cash because of the reduction in taxes. It's really only prolonged losses that you need to be concerned with. Unless, of course, you have other "non-market" investment options that might have better returns.
My reaction to the dip: bring it on. I'm mildly concerned for older family and friends who might be exposed to sequence of returns risk and/or don't have time to recover, but otherwise I'm just wondering how much of a discount I'm going to get when it comes time to make my next buy.
Depends what kind of sideways, what I meant was 30 years of 0 returns can and has happened, a well as 30 years to get back above a previous peak
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Depends what kind of sideways, what I meant was 30 years of 0 returns can and has happened, a well as 30 years to get back above a previous peak
Not in the US market as far as I know. Japan maybe? What market and time period are you thinking of?
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I don't laugh at losing $45k.
It's going to happen along the bumpy road and I expect it, but nothing to laugh about.
I'm full invested so, a market drop is not a chance to get money in cheap.
There are people that are really hurt by such a thing.
You only lost 45k if you sold. Otherwise, you've lost nothing.
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I posted almost the exact same thing in my journal today. I was in college during the 2008 recession so whenever this one comes, it will be my first as a working professional. I cannot WAIT to shovel my paychecks into the market, even on the way down, and ride it all the way back up. Until then, about 32% of my take home pay gets invested already.
The problem is not all recessions are like the 08' recession, markets can (and have) gone sideways for 30 years in the past, so i'm a bit weary of possible recency bias, even though I kindof have the same thoughts since I've only experienced one recession aswell and had just started working.
Fair point, but if markets are going sideways and your alternative is holding cash, then you're no worse off than if you didn't invest at all. If you have access to tax-advantage vehicles like a 401k or an IRA, putting money in them during a sideways market is still strictly better than holding cash because of the reduction in taxes. It's really only prolonged losses that you need to be concerned with. Unless, of course, you have other "non-market" investment options that might have better returns.
My reaction to the dip: bring it on. I'm mildly concerned for older family and friends who might be exposed to sequence of returns risk and/or don't have time to recover, but otherwise I'm just wondering how much of a discount I'm going to get when it comes time to make my next buy.
Depends what kind of sideways, what I meant was 30 years of 0 returns can and has happened, a well as 30 years to get back above a previous peak
It was the former scenario that I was responding to - market prices holding steady over time and neither increasing nor decreasing. You should be making your decisions based on your opportunity cost.
Let's say you decide to hold cash instead of investing it in a potentially sideways market. Average APR for a savings account is 0.09% right now, or maybe you'd get closer to 2% if you go with an online high-interest account. If you had instead invested in the stock market you would get all of the dividends from those stocks, which is generally going to be as good or better than the interest on a bank account (VTSAX has a dividend yield of 1.86%, for example). That means you're really no worse off by investing in the stock market, and you get the potential to be better off if the market goes up over time.
Another thing to keep in mind is that the Trinity Study that the 4% rule is based on includes those 30 year periods, at least if you're looking at US markets.
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I don't laugh at losing $45k.
It's going to happen along the bumpy road and I expect it, but nothing to laugh about.
I'm full invested so, a market drop is not a chance to get money in cheap.
There are people that are really hurt by such a thing.
You only lost 45k if you sold. Otherwise, you've lost nothing.
I'm always mystified by these comments-- "you only lost if if you sold and locked in that loss" or "it's only paper losses". Try going to your banker and explaining, "yes I know yesterday I had 50K and now my account shows its down 45K...but, really I haven't lost anything because it's just a paper loss." See how that goes over.
By that logic, when your account goes up 45K because the market rises---then you can't really count that as an increase in your wealth or net worth because you haven't sold it and locked in that gain.
Losses are losses when the market closes....and gains are gains....you can't have it both ways. Pretending otherwise is silly.
I agree with the poster that losses in the market do hurt people, especially those close to retirement. It's not something to be taken lightly or laugh about. But with ten years of gains in the rearview since the last recession, its easy to think the market is predictable and infallible. It's asset speculation...but if you wanna call it investing....go head and do that too.
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The U.S as well as others, why only look at the U.S?
Depends what kind of sideways, what I meant was 30 years of 0 returns can and has happened, a well as 30 years to get back above a previous peak
Not in the US market as far as I know. Japan maybe? What market and time period are you thinking of?
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I don't laugh at losing $45k.
It's going to happen along the bumpy road and I expect it, but nothing to laugh about.
I'm full invested so, a market drop is not a chance to get money in cheap.
There are people that are really hurt by such a thing.
You only lost 45k if you sold. Otherwise, you've lost nothing.
I'm always mystified by these comments-- "you only lost if if you sold and locked in that loss" or "it's only paper losses". Try going to your banker and explaining, "yes I know yesterday I had 50K and now my account shows its down 45K...but, really I haven't lost anything because it's just a paper loss." See how that goes over.
By that logic, when your account goes up 45K because the market rises---then you can't really count that as an increase in your wealth or net worth because you haven't sold it and locked in that gain.
Yes. That is correct. Until you sell you don't have a gain or loss. You have a bunch of stocks. When you convert the stocks into money, then you experience a gain or loss.
Losses are losses when the market closes....and gains are gains....you can't have it both ways. Pretending otherwise is silly.
No. Losses and gains are all theoretical until you have the money in your hand. When you have invested in a stock, the only real thing that you have is the stock. You haven't invested 10,000$ of stock, you have invested in x number of stock. The value of the stock isn't static . . . so it's ridiculous to say that you've gained 3% one day and lost 3% the next. You haven't gained or lost anything. You still have the same thing . . . the stock. The market might give you more or less money for it depending on it's whims. You haven't gained or lost anything until you sell though.
This is why you're not taxed on gain/loss until you sell.
I agree with the poster that losses in the market do hurt people, especially those close to retirement. It's not something to be taken lightly or laugh about. But with ten years of gains in the rearview since the last recession, its easy to think the market is predictable and infallible. It's asset speculation...but if you wanna call it investing....go head and do that too.
Losses in the market hurt people only when people have to sell. Then they lock in their losses. That's why it's a good idea to hold investments that are more stable than stocks so that you can sell these for a few years if necessary due to drops in prices to avoid losing money. If you don't need to take money out and lock in a loss, then market fluctuations shouldn't matter to you at all.
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Losses are losses when the market closes....and gains are gains....you can't have it both ways. Pretending otherwise is silly.
It's a mark-to-market loss. Which only affect the number of dollars you would get if you sold. It's different if you trade on a margin account (common in the futures market) then the profit and loss is settled daily. Its like you close out the position at the end of every trading day and then reopen it the next. If you don't have more margin in your account you either have to put in more or your broker closes the position and comes after you for any residual loss.
In equities or ETF or mutual funds you never make or loose money until you sell. (You make some if you receive coupons/dividend payments while holding). What happens in the meantime is that the price at which you cold have sold (or bought more) fluctuates. This is one of the reasons why leveraging is so risky - your bank might force you to sell when you don't want to.
The outlier is if you own single stock and the company goes bankrupt. Then your stock is worthless even if you never actually sold it or intended to. You have then lost the sum you bought for less any dividends received while holding it.
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I don't laugh at losing $45k.
It's going to happen along the bumpy road and I expect it, but nothing to laugh about.
I'm full invested so, a market drop is not a chance to get money in cheap.
There are people that are really hurt by such a thing.
You only lost 45k if you sold. Otherwise, you've lost nothing.
I'm always mystified by these comments-- "you only lost if if you sold and locked in that loss" or "it's only paper losses". Try going to your banker and explaining, "yes I know yesterday I had 50K and now my account shows its down 45K...but, really I haven't lost anything because it's just a paper loss." See how that goes over.
Others have already given good explanations but I want to respond to just this portion. When people say "paper losses" they don't mean because it's a number on paper or on a screen, they're saying that it's the value of an asset as opposed to real dollars. Your bank account shows a number that represents real dollars. Your brokerage account shows a number that represents the present value of an asset.
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If the fair market value of my house goes down 10%, I don't say "I've lost $60,000 on my house this year". And if it goes up, I don't say, "I made $60k on my house this year." Because I still have exactly what I had before--a house. And that's how most people look at it.
But suddenly when it comes to equities, people get squirrelly and want to count a change in value as a loss in a way they wouldn't with a home, car, or other things they own. But the same principle applies. You have what you had the day before. When you sell, then you have something different, and that's when it makes sense co calculate what you've gained or lost.
You are correct that people can't really have it both ways. It's equally silly to say you made 4% on your mutual funds today than it is to say you lost 4% (or $40k) if you aren't actually making any transactions that lock in those prices.
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If the fair market value of my house goes down 10%, I don't say "I've lost $60,000 on my house this year". And if it goes up, I don't say, "I made $60k on my house this year." Because I still have exactly what I had before--a house. And that's how most people look at it.
But suddenly when it comes to equities, people get squirrelly and want to count a change in value as a loss in a way they wouldn't with a home, car, or other things they own. But the same principle applies. You have what you had the day before. When you sell, then you have something different, and that's when it makes sense co calculate what you've gained or lost.
Probably because when I log into my brokerage account it says $XXX rather than "yep, still XX shares" :)
You are correct that people can't really have it both ways. It's equally silly to say you made 4% on your mutual funds today than it is to say you lost 4% (or $40k) if you aren't actually making any transactions that lock in those prices.
But it would be fair to say your wealth or net worth has changed by 4%, which is what Sultan58 was arguing against.
By that logic, when your account goes up 45K because the market rises---then you can't really count that as an increase in your wealth or net worth because you haven't sold it and locked in that gain.
Losses are losses when the market closes....and gains are gains....you can't have it both ways. Pretending otherwise is silly.
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Everyone still laughing now?
As far as losses go that’s up to you, I only count them annually. You have to pick an appropriate way to measure and go from there otherwise you’ll be doing gains and losses daily which is not only bad for your sanity but for good decision making as well.
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When the stocks are worth a lot I feel rich, and when they have a low market value, I feel like I'm getting them on sale. Right now I'm agitated, not bc my NW is going down but bc I don't have a bunch of extra money to buy more shares. But I console myself with the fact that I'm still reinvesting dividends, so that's something.
Money that I would need today is not in stocks, although I'm super tempted to scrape every dime together to buy stock like they're beanie babies.
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Looks like by this logic there are a lot of people on here with a Net Worth near zero, until they sell their stock!
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Riddle me this, Batman...
I sold a put option on CRM a couple weeks ago at a strike price of $150 for about $2 a share. CRM then fell to $140. The shares will be assigned to me on Friday at $150 UNLESS they rally AND UNLESS I buy back the puts at a loss AND UNLESS I roll the position to a later date, taking a credit in the process.
Have I lost money yet?
How much?
When will I know?
Is this advice consistent with your advice regarding a simple stock position?
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No. Net worth isn’t the same as hard cash. Mr market can take away a lot of your net worth in a short time, but not cash. Everything you buy or consume you pay for in cash. You can’t buy shit off net worth - stores don’t accept it.
Your net worth can be enough to FIRE until it isn’t. And then it can take 10 years until you are. You still own the same - it’s just worth less.
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Looks like by this logic there are a lot of people on here with a Net WorthMonies near zero, until they sell their stock!
This would be correct. Net worth is exactly what it sounds like. If you take all of the things you own and figure up what they're worth, that's your net worth.
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If the fair market value of my house goes down 10%, I don't say "I've lost $60,000 on my house this year". And if it goes up, I don't say, "I made $60k on my house this year." Because I still have exactly what I had before--a house. And that's how most people look at it.
But suddenly when it comes to equities, people get squirrelly and want to count a change in value as a loss in a way they wouldn't with a home, car, or other things they own. But the same principle applies. You have what you had the day before. When you sell, then you have something different, and that's when it makes sense co calculate what you've gained or lost.
You are correct that people can't really have it both ways. It's equally silly to say you made 4% on your mutual funds today than it is to say you lost 4% (or $40k) if you aren't actually making any transactions that lock in those prices.
Sorry but this has to be the dumbest thing I've ever read on here. Stocks are basically as liquid as the money in your checking account. By your logic, a 70 yr old with $5M in stock that they purchase 40 yrs ago for $1k is basically destitute. The correct way of looking at it is they have made $5M. They risk losing the $5M if they leave it in the market. If you don't acknowledge that they have made $5M then you have to say there is no risk in leaving the money in the market because they don't have any money anyway.
I guess you can think of it however you want. But just know that the entire banking, accounting and finance industry do not agree. And it's really hard to do financial planning if you are using cost basis.
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I guess you can think of it however you want. But just know that the entire banking, accounting and finance industry do not agree. And it's really hard to do financial planning if you are using cost basis.
When are you taxed on capital gains?
Hint - it's not the moment that the stock is worth more than it used to be . . . it's when you sell it. Because that's when the gain actually becomes real.
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If the fair market value of my house goes down 10%, I don't say "I've lost $60,000 on my house this year". And if it goes up, I don't say, "I made $60k on my house this year." Because I still have exactly what I had before--a house. And that's how most people look at it.
But suddenly when it comes to equities, people get squirrelly and want to count a change in value as a loss in a way they wouldn't with a home, car, or other things they own. But the same principle applies. You have what you had the day before. When you sell, then you have something different, and that's when it makes sense co calculate what you've gained or lost.
You are correct that people can't really have it both ways. It's equally silly to say you made 4% on your mutual funds today than it is to say you lost 4% (or $40k) if you aren't actually making any transactions that lock in those prices.
Sorry but this has to be the dumbest thing I've ever read on here. Stocks are basically as liquid as the money in your checking account. By your logic, a 70 yr old with $5M in stock that they purchase 40 yrs ago for $1k is basically destitute. The correct way of looking at it is they have made $5M. They risk losing the $5M if they leave it in the market. If you don't acknowledge that they have made $5M then you have to say there is no risk in leaving the money in the market because they don't have any money anyway.
I guess you can think of it however you want. But just know that the entire banking, accounting and finance industry do not agree. And it's really hard to do financial planning if you are using cost basis.
And the bolded is one of the dumber things I've read on here, if we are pointing that out now and hurling insults as part of a debate. I didn't say that your stocks should be looked at as $0 in your net worth. You may have inferred that, but it's not what I said or implied. I said that you haven't lost (or gained) (as in "lost or gained anything actual or tangible") until you sell. I didn't say you had zero net worth until you sell. So that person certainly isn't destitute and nothing I said implies they are.
Then again, I'm also someone who doesn't track or care about net worth, in large part because I consider it a meaningless number. That's because it includes my car, which is depreciating and which I won't sell (until it dies, in which case I will replace it). And it includes my sofa and my shoes and the canned goods in my pantry, if we are being pedantic
My net worth as of today is $X. A week ago it might have been $X*1.04. It would be accurate, though fairly meaningless in the long term, to say that my net worth went down 4%. That is not the same as saying I lost $50k. I *lost* nothing, because I have what I always had. The value of what I had has changed.
If I had a painting inherited from Great Grandpa Villanello, signed by and in the style of Picasso, I might consider it to be worth $1M, especially after getting an estimate telling me that similar Picasso's have sold for $900k-1.3M. If the next day it is found that my "Picasso" was painted over an "E.T" movie poster by a guy named Bob, I have *LOST* nothing, IMO, though my net worth has taken a significant hint. And had I sold that Picasso a day earlier, I'd have then had $1m. But since I didn't, I have what I've always had--a painting of a guy with crocked eyes.
You and others can certainly choose to look at it differently, but I hardly think this is a "stupid" way to view things. And my way is far less likely to cause people to freak out and sell during a downturn.
Yes, stocks are liquid. But until they are liquidated, what you have made or lost on them is theoretical. And as such, unless you are preparing to sell*, it isn't a particularly useful piece of information.
*Since this conversation has turned a bit polemical, I will point out that yes, there are a few other ways it may matter, including things like using the current value to qualify for a loan of some kind. Just to head that off at the pass...
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Sorry but this has to be the dumbest thing I've ever read on here. Stocks are basically as liquid as the money in your checking account. By your logic, a 70 yr old with $5M in stock that they purchase 40 yrs ago for $1k is basically destitute. The correct way of looking at it is they have made $5M. They risk losing the $5M if they leave it in the market. If you don't acknowledge that they have made $5M then you have to say there is no risk in leaving the money in the market because they don't have any money anyway.
Nope, they have not "made" a dime until they cash out. They have stocks "worth" 5m. They may also have a car worth 80K. But they don't have 80K--they have a car worth 80K. If next year the car is only worth 70K, then they still have a car but it's only worth 70K. They haven't lost anything. They still have the car.
Think Beanie Babies. Ppl bought them and held them and they were worth a bunch of money bc other people wanted them and were willing to pay. Until one day nobody wanted them and the demand shrank. But the person who spent 50 bucks on them still is only out 50 bucks--they are just sad that they didn't sell in time when the sacks of beads were worth a lot more.
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Sorry but this has to be the dumbest thing I've ever read on here. Stocks are basically as liquid as the money in your checking account. By your logic, a 70 yr old with $5M in stock that they purchase 40 yrs ago for $1k is basically destitute. The correct way of looking at it is they have made $5M. They risk losing the $5M if they leave it in the market. If you don't acknowledge that they have made $5M then you have to say there is no risk in leaving the money in the market because they don't have any money anyway.
Nope, they have not "made" a dime until they cash out. They have stocks "worth" 5m. They may also have a car worth 80K. But they don't have 80K--they have a car worth 80K. If next year the car is only worth 70K, then they still have a car but it's only worth 70K. They haven't lost anything. They still have the car.
Think Beanie Babies. Ppl bought them and held them and they were worth a bunch of money bc other people wanted them and were willing to pay. Until one day nobody wanted them and the demand shrank. But the person who spent 50 bucks on them still is only out 50 bucks--they are just sad that they didn't sell in time when the sacks of beads were worth a lot more.
Like I said think whatever you want but when you go for a loan they don't care whether your money is in stocks or cash because according to most people stocks are basically the same as cash. And they are much different than beanie babies because they can be converted to cash in seconds. They value of the dollar also changes constantly do you only consider the value of paper money once you have spent it? In the beanie baby example those people gained thousands, decided to continue to hold them and then lost thousands. Again you can think of it however you want, that's the way the IRS thinks about it, and cost accounting for inventory, but not many other people.
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If the fair market value of my house goes down 10%, I don't say "I've lost $60,000 on my house this year". And if it goes up, I don't say, "I made $60k on my house this year." Because I still have exactly what I had before--a house. And that's how most people look at it.
But suddenly when it comes to equities, people get squirrelly and want to count a change in value as a loss in a way they wouldn't with a home, car, or other things they own. But the same principle applies. You have what you had the day before. When you sell, then you have something different, and that's when it makes sense co calculate what you've gained or lost.
You are correct that people can't really have it both ways. It's equally silly to say you made 4% on your mutual funds today than it is to say you lost 4% (or $40k) if you aren't actually making any transactions that lock in those prices.
Sorry but this has to be the dumbest thing I've ever read on here. Stocks are basically as liquid as the money in your checking account. By your logic, a 70 yr old with $5M in stock that they purchase 40 yrs ago for $1k is basically destitute. The correct way of looking at it is they have made $5M. They risk losing the $5M if they leave it in the market. If you don't acknowledge that they have made $5M then you have to say there is no risk in leaving the money in the market because they don't have any money anyway.
I guess you can think of it however you want. But just know that the entire banking, accounting and finance industry do not agree. And it's really hard to do financial planning if you are using cost basis.
Dang, try not to be so harsh, especially when you're wrong :)
The two bolded portions are illogical conclusions. Villanelle explained the first. I'm not even sure how you came up with the second. Are you suggesting that the only thing that can be at risk is money? The value of the stock is what's at risk.
Like I said think whatever you want but when you go for a loan they don't care whether your money is in stocks or cash because according to most people stocks are basically the same as cash.
Yes, because what they care about is your liquid assets. Cash is a liquid asset. Stock is a liquid asset.
Stock is similar to cash in that way but stock ≠ cash.
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Again you can think of it however you want, that's the way the IRS thinks about it, and cost accounting for inventory, but not many other people.
The IRS bills you for unsold stock values that change from day to day?
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It's not that difficult to understand. The value of your investment is down, but it's not a loss until you sell.
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It's not that difficult to understand. The value of your investment is down, but it's not a loss until you sell.
I had no expectation of this being point of contention. Then again, this is the internet :)
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If the fair market value of my house goes down 10%, I don't say "I've lost $60,000 on my house this year". And if it goes up, I don't say, "I made $60k on my house this year." Because I still have exactly what I had before--a house. And that's how most people look at it.
But suddenly when it comes to equities, people get squirrelly and want to count a change in value as a loss in a way they wouldn't with a home, car, or other things they own. But the same principle applies. You have what you had the day before. When you sell, then you have something different, and that's when it makes sense co calculate what you've gained or lost.
You are correct that people can't really have it both ways. It's equally silly to say you made 4% on your mutual funds today than it is to say you lost 4% (or $40k) if you aren't actually making any transactions that lock in those prices.
Sorry but this has to be the dumbest thing I've ever read on here. Stocks are basically as liquid as the money in your checking account. By your logic, a 70 yr old with $5M in stock that they purchase 40 yrs ago for $1k is basically destitute. The correct way of looking at it is they have made $5M. They risk losing the $5M if they leave it in the market. If you don't acknowledge that they have made $5M then you have to say there is no risk in leaving the money in the market because they don't have any money anyway.
I guess you can think of it however you want. But just know that the entire banking, accounting and finance industry do not agree. And it's really hard to do financial planning if you are using cost basis.
Dang, try not to be so harsh, especially when you're wrong :)
The two bolded portions are illogical conclusions. Villanelle explained the first. I'm not even sure how you came up with the second. Are you suggesting that the only thing that can be at risk is money? The value of the stock is what's at risk.
Not trying to be harsh, especially not against the person. The idea is just flat out wrong. I think you guys are just arguing semantics so I'll leave it alone. Because to me value in a commodity or other highly liquid asset is the same as money. They are all a store of value with a ready market. Your grandmother's wedding ring, beanie babies, and your house are not as liquid and do not have the same ready market so I understand if you don't want want to consider the gain in value. When people say they gained $60,000 they don't literally mean they have 600 $100 bills, they use dollars because that is the commonly known currency. They could also say I gained 3 Toyota Corollas in the market or 60,000 apples. What happens is you sell all of your shares and then instantly but them back for the same price, then did you gain $60,000? I would say yes, but I would also say you don't have to sell them in order to say you gained $60,000.
Also I agree with the person who mentioned the IRS, they do not recognize the gain until sold. Mostly that is because they want to encourage investment.
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Like I said think whatever you want but when you go for a loan they don't care whether your money is in stocks or cash because according to most people stocks are basically the same as cash. And they are much different than beanie babies because they can be converted to cash in seconds. They value of the dollar also changes constantly do you only consider the value of paper money once you have spent it? In the beanie baby example those people gained thousands, decided to continue to hold them and then lost thousands. Again you can think of it however you want, that's the way the IRS thinks about it, and cost accounting for inventory, but not many other people.
Are you sure about this? Because I swear I've read several threads here on MMM about how difficult it is to get a mortgage with only investments as income. From what I know, banks absolutely do not treat equities equivalent to cash, nor income.
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Like I said think whatever you want but when you go for a loan they don't care whether your money is in stocks or cash because according to most people stocks are basically the same as cash. And they are much different than beanie babies because they can be converted to cash in seconds. They value of the dollar also changes constantly do you only consider the value of paper money once you have spent it? In the beanie baby example those people gained thousands, decided to continue to hold them and then lost thousands. Again you can think of it however you want, that's the way the IRS thinks about it, and cost accounting for inventory, but not many other people.
Are you sure about this? Because I swear I've read several threads here on MMM about how difficult it is to get a mortgage with only investments as income. From what I know, banks absolutely do not treat equities equivalent to cash, nor income.
Lenders recognize the change the in value. They basically consider investments at FMV not cost. They consider equities equivalent to cash but not income from a w2. Because income from equities is too volatile just like self employment income.
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Your grandmother's wedding ring, beanie babies, and your house are not as liquid and do not have the same ready market so I understand if you don't want want to consider the gain in value.
You can think of it however you want but it isn't really a matter of opinion. If my grandmother's ring were worth 60K, I would insure it. The insurer would want it appraised to check its current retail value and would insure it for that amount. And I would list it as an asset. That's why you can get a car loan or a mortgage, bc they are assets and have value as such. But you don't make money on your car or house or stock until you sell it. The fact that there is a system in place to quickly sell stocks does not change the nature of them. They are a thing and things only have the value that others will pay for them (we're not refering here to dividends). If there was an ebay when beanie babies were a craze, there would have been a pretty quick exchange of buying and selling.
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Naaaah. Not even chuckling yet. Today didn’t even pop the circuit breakers. I’ll get interested when a long overdue bear market arrives.
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I don't laugh at losing $45k.
It's going to happen along the bumpy road and I expect it, but nothing to laugh about.
I'm full invested so, a market drop is not a chance to get money in cheap.
There are people that are really hurt by such a thing.
You only lost 45k if you sold. Otherwise, you've lost nothing.
I'm always mystified by these comments-- "you only lost if if you sold and locked in that loss" or "it's only paper losses". Try going to your banker and explaining, "yes I know yesterday I had 50K and now my account shows its down 45K...but, really I haven't lost anything because it's just a paper loss." See how that goes over.
By that logic, when your account goes up 45K because the market rises---then you can't really count that as an increase in your wealth or net worth because you haven't sold it and locked in that gain.
Losses are losses when the market closes....and gains are gains....you can't have it both ways. Pretending otherwise is silly.
Actually, losses are losses WHEN YOU SELL, and gains are gains WHEN YOU SELL. Pretending otherwise is silly, yes. It is the true acid test for whether someone is still trapped in a beginner mindset or not.
I feel happier when my account is up 45K than when it is down 45K, but it really doesn't matter what kind of path the graph takes in between. Entry and exit, and whatever cashflow I get from dividends.
Focusing on paper losses and paper gains distracts from what is important: should you still be holding the investment? Not based on the stock price, but the company.
If you are holding index funds and are long, it is in my opinion a waste of time and emotional energy to be tracking the market and your paper gains and losses. Look at the market when you think you might to trade, otherwise, don't.
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Naaaah. Not even chuckling yet. Today didn’t even pop the circuit breakers. I’ll get interested when a long overdue bear market arrives.
How do you know it's overdue? Past performance? I'm not saying it is or isn't.. but trading by charts is risky, and blindly buying or selling when it's up or down is risky, for e.g the Argentinian market dropped 50% the other day so you'd think it's a buy, But it's still up 10x since 2013
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i FiRED last year at age 48.
i also gambled in 2016 by moving a majority of my stock to Bonds when Trump became president.
twice did the stock market tumble a little and my Bonds actually did a little better than stocks from when i converted in 2016.
but the stock market always recovered.
hopefully yesterday's 800 Dow point drop means a long sustained bear market where my Bonds will thrive.
will convert back to stocks when Trump leaves office.
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Looks like its going to be a rough day again, futures plummeting fast when they used to be up...
I'm glad I rearranged my AA after the December movement, learned my lesson there and after markets hit a new high I rebalanced which is the plan I told myself I had to follow back in December. Still losing, but losing 50-60% less than market right now and in theory not giving up nearly that much of the gains. 100% equities is not really worth the premium you get compared to diversifying a bit for me.
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Sorry but this has to be the dumbest thing I've ever read on here. Stocks are basically as liquid as the money in your checking account. By your logic, a 70 yr old with $5M in stock that they purchase 40 yrs ago for $1k is basically destitute. The correct way of looking at it is they have made $5M. They risk losing the $5M if they leave it in the market. If you don't acknowledge that they have made $5M then you have to say there is no risk in leaving the money in the market because they don't have any money anyway.
Nope, they have not "made" a dime until they cash out. They have stocks "worth" 5m. They may also have a car worth 80K. But they don't have 80K--they have a car worth 80K. If next year the car is only worth 70K, then they still have a car but it's only worth 70K. They haven't lost anything. They still have the car.
Think Beanie Babies. Ppl bought them and held them and they were worth a bunch of money bc other people wanted them and were willing to pay. Until one day nobody wanted them and the demand shrank. But the person who spent 50 bucks on them still is only out 50 bucks--they are just sad that they didn't sell in time when the sacks of beads were worth a lot more.
Like I said think whatever you want but when you go for a loan they don't care whether your money is in stocks or cash because according to most people stocks are basically the same as cash. And they are much different than beanie babies because they can be converted to cash in seconds. They value of the dollar also changes constantly do you only consider the value of paper money once you have spent it? In the beanie baby example those people gained thousands, decided to continue to hold them and then lost thousands. Again you can think of it however you want, that's the way the IRS thinks about it, and cost accounting for inventory, but not many other people.
Actually, when we applied for a mortgage (just a few months ago, so under current policy), they refused to even look at our brokerage account balances. They wanted W2s, bank balances (cash), and tax returns, nothing else. Stock holdings counted for nothing, they wouldn't even look at them. The only reason they would have accepted the documentation is if we had sold stock to get our downpayment, because they have to show the trail of where the money came from (anti-money laundering laws). Nothing else.
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Actually, when we applied for a mortgage (just a few months ago, so under current policy), they refused to even look at our brokerage account balances. They wanted W2s, bank balances (cash), and tax returns, nothing else. Stock holdings counted for nothing, they wouldn't even look at them. The only reason they would have accepted the documentation is if we had sold stock to get our downpayment, because they have to show the trail of where the money came from (anti-money laundering laws). Nothing else.
Maybe not for retail clients, but equity can be posted as collateral for loans. The bank will then take a haircut (as there is risk that the market value might fall thus making the collateral less valuable) to the tune of 20-30% or so and most importantly: The bank most likely also have the right to liquidate the collateral if the borrower doesn't pay or the collateral falls below a certain threshold or whatever.
Its a not uncommon way to leverage equity investments, but it's very risky and can lead to very steep losses / loss of everything if the value falls enough and liquidation is forced.
You generally don't want to borrow against your equity portfolio. It's not a good idea 'cause it's very risky.
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I don't laugh at losing $45k.
It's going to happen along the bumpy road and I expect it, but nothing to laugh about.
I'm full invested so, a market drop is not a chance to get money in cheap.
There are people that are really hurt by such a thing.
You only lost 45k if you sold. Otherwise, you've lost nothing.
I'm always mystified by these comments-- "you only lost if if you sold and locked in that loss" or "it's only paper losses". Try going to your banker and explaining, "yes I know yesterday I had 50K and now my account shows its down 45K...but, really I haven't lost anything because it's just a paper loss." See how that goes over.
By that logic, when your account goes up 45K because the market rises---then you can't really count that as an increase in your wealth or net worth because you haven't sold it and locked in that gain.
Losses are losses when the market closes....and gains are gains....you can't have it both ways. Pretending otherwise is silly.
Actually, losses are losses WHEN YOU SELL, and gains are gains WHEN YOU SELL. Pretending otherwise is silly, yes. It is the true acid test for whether someone is still trapped in a beginner mindset or not.
I feel happier when my account is up 45K than when it is down 45K, but it really doesn't matter what kind of path the graph takes in between. Entry and exit, and whatever cashflow I get from dividends.
Focusing on paper losses and paper gains distracts from what is important: should you still be holding the investment? Not based on the stock price, but the company.
If you are holding index funds and are long, it is in my opinion a waste of time and emotional energy to be tracking the market and your paper gains and losses. Look at the market when you think you might to trade, otherwise, don't.
Y'all are just arguing the difference between unrealized and realized gains/losses.
Accounting theory suggests that market value is generally the most accurate way to measure items, and FASB is gradually coming around to that idea. Therefore, even if you have no intention of selling, unrealized losses should still be considered losses.
It's still a silly thing to argue over if you believe the market will eventually recover and have no intention of selling in the short term.
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I don't really pay attention to it. I know that recessions and bear markets are inevitable, so I'd rather have one now rather than closer to retirement.
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Actually, when we applied for a mortgage (just a few months ago, so under current policy), they refused to even look at our brokerage account balances. They wanted W2s, bank balances (cash), and tax returns, nothing else. Stock holdings counted for nothing, they wouldn't even look at them. The only reason they would have accepted the documentation is if we had sold stock to get our downpayment, because they have to show the trail of where the money came from (anti-money laundering laws). Nothing else.
Maybe not for retail clients, but equity can be posted as collateral for loans. The bank will then take a haircut (as there is risk that the market value might fall thus making the collateral less valuable) to the tune of 20-30% or so and most importantly: The bank most likely also have the right to liquidate the collateral if the borrower doesn't pay or the collateral falls below a certain threshold or whatever.
Its a not uncommon way to leverage equity investments, but it's very risky and can lead to very steep losses / loss of everything if the value falls enough and liquidation is forced.
You generally don't want to borrow against your equity portfolio. It's not a good idea 'cause it's very risky.
That still proves the point that the bank does not consider stocks equivalent to cash when deciding to give you a loan. The terms of the loan are quite different if you are putting up a stock portfolio as collateral, vs a mortgage, car loan, or personal loan (no collateral). In all those cases, stocks are not considered equal to cash, and are not generally considered when determining ability to repay.
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I don't laugh at losing $45k.
It's going to happen along the bumpy road and I expect it, but nothing to laugh about.
I'm full invested so, a market drop is not a chance to get money in cheap.
There are people that are really hurt by such a thing.
You only lost 45k if you sold. Otherwise, you've lost nothing.
I'm always mystified by these comments-- "you only lost if if you sold and locked in that loss" or "it's only paper losses". Try going to your banker and explaining, "yes I know yesterday I had 50K and now my account shows its down 45K...but, really I haven't lost anything because it's just a paper loss." See how that goes over.
By that logic, when your account goes up 45K because the market rises---then you can't really count that as an increase in your wealth or net worth because you haven't sold it and locked in that gain.
Losses are losses when the market closes....and gains are gains....you can't have it both ways. Pretending otherwise is silly.
I agree; I've never subscribed to the 'paper losses only' attitude. Mark your investments to market.
That said, if it doesn't affect their daily lives or behavior, and if that rationale helps people steer their way through market dips, then more power to them.
I don't laugh when the market dips, but I generally just shrug. It's going to do what it's going to do. If it drops enough, I do look for whether or not I'm close to triggering a rebalance, or whether I have an opportunity to tax-loss harvest. I don't feel wonderful about the drop or anything - I like to see my balances increase - but I recognize them as a necessary part of investing in high-risk/high-return assets.
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Naaaah. Not even chuckling yet. Today didn’t even pop the circuit breakers. I’ll get interested when a long overdue bear market arrives.
How do you know it's overdue? Past performance? I'm not saying it is or isn't..
There are signs and portents. It is known.
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I laughed because trade barriers are good and I'm happy we're finally getting a bunch of them. Godspeed to my two heroes USA President Donald Trump (very dumb) and Chinese President Comrade Chairman Xi Jinping (very smart, quite handsome, firm handshake)
Your are quite wrong. Try the opposite. We need to fix this unfair trade mess or we will have a very painful economic crunch. These minor over-reaction stock hiccups are pathetic. Fix the unfair trade practices against the USA and watch the economy and market soar.
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Your $$ is what your portfolio says it is that day. If the market dropped badly today and you lost $45k- your portfolio is now down $45K... that is the new reality. Everyday is a new reality.
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Yes, I am aware and definitely wasn't laughing. I don't consider a large single day drop to be actionable but I prefer my investments to increase instead of tanking. With regards to semantics, I do consider the present value of my house and investments to be part of my net worth. If the value of either deceases substantially, my ability to deploy that capital elsewhere is also reduced.
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After seeing my net worth fall by about $200k in the past year due to the housing market in my region not doing well, a small fall in the share markets is barely worth a thought. As most in this thread have said, you play for the long game. Also, something like a recession can be financially handy if you are wanting to find a good bargain.
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Not to beat this very dead horse, but --
Although it is literally true that an unrealized gain in, say, a total-market stock index fund is no more real than an unrealized loss, historically, the market has always eventually gone up. So an unrealized gain is more likely to either stay a gain or be regained, and an unrealized loss is more likely to stop being a loss, if you give them enough time. In practice, they are not the same.
And that's why I laughed when the market dropped 3% on a single day. Because I was relieved that I understood enough about the market not to panic. And also relieved that I'd set an AA to enable me to absorb market drops for a while without locking them in -- so that I can eventually take those currently unrealized gains, and not have to take the unrealized losses.
I'm doing my best to educate my friends similarly, so they are also not hurt by stock market drops. A friend recently panicked about a drop in a specific stock price, and asked if I thought it would tank by the end of summer, so should they sell now? And I said, "You sell if you need the money to live on. If you don't need the money, don't sell. Just wait it out." And they didn't sell, and the stock recovered, and they were quite relieved.
I'm not laughing at people's misfortunes when the market drops. I'm laughing because knowledge has freed me from what might otherwise be a source of panic and poor decisions.
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A friend recently panicked about a drop in a specific stock price, and asked if I thought it would tank by the end of summer, so should they sell now? And I said, "You sell if you need the money to live on. If you don't need the money, don't sell. Just wait it out." And they didn't sell, and the stock recovered, and they were quite relieved.
While you can argue that the market itself eventually will recover, there is no reason to apply the same logic on a single stock. Companies come and go, some become mere shadows of their former self, some go bankrupt and some just go nowhere for years (in price terms).
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We are still in our last half year of actively acquiring stocks, so a sale is always good for that purpose. I have bought as much as I can afford with my extra amount of vacation money. The stocks that from my point of view were most on sale, was a Norwegian index fond. I have also bought a new bunch of those, although I also bought a good bunch of international ones. Let's now hope the Norwegian market will grow back to earlier heights again...
When our home is sold, then we free up a lot of cash. If the market tanks deeply, we might invest a pile of that in the stock markets, but otherwise we might stick to bonds and even put some on a savings account.
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A friend recently panicked about a drop in a specific stock price, and asked if I thought it would tank by the end of summer, so should they sell now? And I said, "You sell if you need the money to live on. If you don't need the money, don't sell. Just wait it out." And they didn't sell, and the stock recovered, and they were quite relieved.
While you can argue that the market itself eventually will recover, there is no reason to apply the same logic on a single stock. Companies come and go, some become mere shadows of their former self, some go bankrupt and some just go nowhere for years (in price terms).
It's true, and I've counseled this friend to sell company stocks in favor of index funds. But this particular stock is for a large, robust company that's unlikely to fade away overnight. Baby steps. At least this friend reached out when they panicked, and then held instead of selling, and then saw everything smooth out again. So they'll be less likely to make rash decisions next time.