Do we have a "dealing net worth volatility" thread?

[johndoe]

In the last few months I've been surprised to NOT see "wow the stock market volatility has me bummed!", etc.  (we have "race" threads, "brag" threads, and "advice" threads but I haven't seen anything along these lines)  After the last few years of the market being on "easy mode" I imagine this is one of the first times many users have experienced a downturn or even lull (heck my net worth has been stagnant now longer than during early 2020). 

Perhaps there is such a thread and I've just missed it?  If there isn't already such a thread, maybe this could be a place to support each other.  Hopefully everyone is well; any doubt on big-picture goals, asset allocations, etc?  I like to check Personal Capital (maybe every day or two) to ensure no credit card hacks etc but it's still strange to see big swings.  For instance it looks like last week my NW swung by around 1/3 annual salary ... just strange to imagine!  I'm trying to convince myself of the "buying assets on sale" mantra!

[EscapeVelocity2020]

Not sure what you're hoping for.  Wall St. bets had a 'loss porn' fetish that got quite popular, but I don't see that taking off here since most folks own the indices and dollar cost average.  Most of the 'common wisdom' is to not look at it very often and remember how far we've all come, just wait this out.  Even if you are down this year, you're still way up since the start of the pandemic in 2020, so why worry?  Maybe if the S&P goes back down into the 3,000's threads of the apocalypse will start to pop up, but anything above 4,000 is still in line with being way ahead, even if it is 20% below all time highs.

There are plenty of 'dealing with inflation' threads that have popped up in the meantime...

[SwordGuy]

If one's stache isn't large enough to safely retire on, then one's focus should generally be on cash flow and savings rate.   Net worth doesn't matter all that much.

If one's stache is large enough to safely retire on, then the volatility is built into the safety margin.   So, other than reducing optional expenses (and a safe FI budget has room for those), there's nothing that needs doing.     And depending on one's financial setup, reducing optional expenses might not be needed either.

[NorthernIkigai]

If it weren’t for these big dips, the stock market wouldn’t return as much on average as it does (since we’re being rewarded for taking risks). So when the dips come, it’s just like “this too shall pass”, and whatevz.

For a while I enjoyed looking at the big daily losses and realising how calm I felt despite them. But then that got boring, too.

(Pandemics and wars, on the other hand, are things I can’t just shrug at, so it’s not just that I’m a robot or a psychopath. I know economic hardship is real, too, but it’s still not being bombed or not being able to breath.)

[Glenstache]

https://forum.mrmoneymustache.com/investor-alley/top-is-in/

[wenchsenior]

In the last few months I've been surprised to NOT see "wow the stock market volatility has me bummed!", etc.  (we have "race" threads, "brag" threads, and "advice" threads but I haven't seen anything along these lines)  After the last few years of the market being on "easy mode" I imagine this is one of the first times many users have experienced a downturn or even lull (heck my net worth has been stagnant now longer than during early 2020). 

Perhaps there is such a thread and I've just missed it?  If there isn't already such a thread, maybe this could be a place to support each other.  Hopefully everyone is well; any doubt on big-picture goals, asset allocations, etc?  I like to check Personal Capital (maybe every day or two) to ensure no credit card hacks etc but it's still strange to see big swings.  For instance it looks like last week my NW swung by around 1/3 annual salary ... just strange to imagine!  I'm trying to convince myself of the "buying assets on sale" mantra!

You mean like in 2000 and 2008?  :yawns:  Just kidding, I realize not everyone has ridden out big drops or swings, but these kind of statements make me feel so old LOL.

[rantk81]

You mean like in 2000 and 2008?  :yawns:  Just kidding, I realize not everyone has ridden out big drops or swings, but these kind of statements make me feel so old LOL.

Yeah, when 2008 happened, I was only a few years into my career, post-college education... and it seemed like the sky was falling.  It seemed very painful to watch (what was a pitiful small total-dollar-amount) of my retirement/investments get cut in half.  Even more painful, was watching so many of my friends and colleagues become unemployed.  I weathered the storm.

Now? I'm much more calm.  Even though Feb/March 2020 was quite a bit unsettling, it didn't feel AT ALL like 2008 to me.  Even though, in raw-dollar-amount, I had paper-losses of an unfathomable amount of money... Perhaps it didn't feel the same as 2008 because it wasn't as deep (percentage wise?), and because things bounced back so fast this time?  I don't know.  I still am paranoid that "The big one" (a-la 2008) might come again?  That's why I've been caught in the OMY/OMY/OMY trap :(

[Much Fishing to Do]

This downturn barely registered to me, as it just didn't drop very far.  Acting like a pretty average correction and given those happen every other year on average I'm not gonna let myself give them much thought or I'd be a wreck.  It helps for me to just look away when things are bad because its natural to become concerned when you're constantly bombarded with it.

2002 & 2008 certainly registered given how far they dropped, and so did 2020 (which I think was more about how unique the whole situation seemed and even doomsday-like for about a month there...and how at that point I was nearing RE so had a huge deal riding on it).  But given those 3 all happened in 20 years I certainly expect to deal with a couple/few of those in RE, so there's no way I'd let what has happened this year bug me.

[boarder42]

Someone asked me something similar in my journal.  I just retired in Jan.  It's far too early to tell how these will affect the longevity of our stashe but we have other income streams that offset our spend and we're more likely at 2% vs 4% so we'll be fine. Everyone works too long and over saves I think. Market fluctuatations are just noise and dwelling on them isn't good for your mental state.  I'd avoid looking at the market with how you approach this currently.

[Ron Scott]

Don’t allow market-based swings in your NW to tell you anything about your future safety net or determine your stock purchasing decisions.

In your accumulation phase it is better to buy assets in accordance with your allocation strategy on a regular schedule than to accumulate funds in a cash account waiting to buy stocks on sale.

If you fear saving with a normal allocation split, work on your fear instead of becoming to conservative.

Save more than you think you will need. If that means working longer at a job you hate, find another job instead of retiring with less money.

We are entering an employees’ market. It should be easier to find satisfactory working conditions…until the great reduction in work happens.

[Dicey]

Do we need one?

[YttriumNitrate]

After the last few years of the market being on "easy mode" I imagine this is one of the first times many users have experienced a downturn or even lull (heck my net worth has been stagnant now longer than during early 2020).

Wasn't there a 30% drop in the market two years ago?

[sui generis]

I've been FIREd for going on 4 years now and I rarely look at my portfolio.  But, I keep my finger on the general pulse of things and there is some question in my mind about when I might need to take some action. 

As an example, when I REd, I think the cFIREsim or whatever I ran had me at....was it 98% success rate?  So there are some scenarios I could fail and some scenarios that counted as success that would not be so great to actually live through.  But I always knew that those scenarios had me being totally passive.  And if the market tanked IRL, I wouldn't be passive.  I'd cut some expenses, like my extravagant budgeting for travel (well, I ended up cutting that without wanting to the past couple of years), the significant portion of my budget that I give to charity, etc.  And of course, the more quickly you can tighten that belt if those bleak markets come to pass, the better your ultimate outcome.

So I do feel an obligation to be responsive if things are getting quite bad, but also not to overreact to normal volatility.  The kind where cFIREsim would still have me dying with $18MM in the end, which is a bad outcome in the opposite direction (for me).  None of us are clairvoyant, though, so it's hard to know which scenario this is.  Right now it doesn't feel like something I need to take action on.  But I honestly don't have a specific number or formula for when it would get to that point.

[LightStache]

I was more nervous when the market went on its crazy melt-up in the second half of 2020 and most of 2021. The higher it gets the harder it falls, so the recent corrections are comforting to me. At least we're closer to reasonable valuations.

Starting in mid-2020 I started deviating from my AA, shifting to more cash. After the S&P took a 10% hit (intraday) I rebalanced back to my target AA. I consider that deviation a weakness, but luckily I'm doing well relative to major indices on a trailing two-year basis.

Now I'm looking at the biggest daily swings ever, but I view them more like training wheels as my NW continues to grow. Every time I see a $10K unrealized daily loss I think to myself, "That's going to become a $25K loss in just a few years so you better get used to it!" Plus my NW is only down 2%-3% since the peak, which is much less than the 20%-or-so max expected.

Although I stay plugged into the markets and news, I think I'm getting better at looking through the short-term static and not reacting. Still far from perfect, but I'm trending in the right direction.

[2sk22]

Now I'm looking at the biggest daily swings ever, but I view them more like training wheels as my NW continues to grow. Every time I see a $10K unrealized daily loss I think to myself, "That's going to become a $25K loss in just a few years so you better get used to it!" Plus my NW is only down 2%-3% since the peak, which is much less than the 20%-or-so max expected.

Although I stay plugged into the markets and news, I think I'm getting better at looking through the short-term static and not reacting. Still far from perfect, but I'm trending in the right direction.

No kidding about the magnitude of daily swings. In our case, it has, on some recent days, been as much as $100k! But that's still a fairly small fraction of our invested net worth. Mostly, I just update my numbers once a week and I am done. 

I started investing in the mid 1990s so I have been through several bear markets - really trains you to not focus on the sort term. The time period 2008-2011 was especially trying as no matter how much we poured into our investments, the net worth numbers barely seemed to budge. But 15 years later, our dogged persistence has paid off and I have been able to retire comfortably.

[Fomerly known as something]

I heard one theory about why we might “remain optimistic” even with volatility.  It’s that since we generally arewhat Clark Howard likes to call Super Savers, we realize even in volatility our actions over the years have put us so far ahead of the general public that while it hurts, it could be so much worse.

[RyanAtTanagra]

I heard one theory about why we might “remain optimistic” even with volatility.  It’s that since we generally arewhat Clark Howard likes to call Super Savers, we realize even in volatility our actions over the years have put us so far ahead of the general public that while it hurts, it could be so much worse.

Haven't heard that before, but it's what lets me sleep at night.  No matter what happens, I'm in a better position than most.  Not just from savings, but from at least trying to be a little resilient and efficient, and being comfortable with sacrificing.

After the last few years of the market being on "easy mode" I imagine this is one of the first times many users have experienced a downturn or even lull (heck my net worth has been stagnant now longer than during early 2020).

Wasn't there a 30% drop in the market two years ago?

Yea, and a smaller one at the end of 2018 that most people didn't even notice because they were wrapped up in the holidays and not paying attention.  By the time they looked, it had recovered, so they avoided all the stress.  Like what happens if you just ignore the market for even longer periods of time ;-)

[ixtap]

I heard one theory about why we might “remain optimistic” even with volatility.  It’s that since we generally arewhat Clark Howard likes to call Super Savers, we realize even in volatility our actions over the years have put us so far ahead of the general public that while it hurts, it could be so much worse.

Haven't heard that before, but it's what lets me sleep at night.  No matter what happens, I'm in a better position than most.  Not just from savings, but from at least trying to be a little resilient and efficient, and being comfortable with sacrificing.

After the last few years of the market being on "easy mode" I imagine this is one of the first times many users have experienced a downturn or even lull (heck my net worth has been stagnant now longer than during early 2020).

Wasn't there a 30% drop in the market two years ago?

Yea, and a smaller one at the end of 2018 that most people didn't even notice because they were wrapped up in the holidays and not paying attention.  By the time they looked, it had recovered, so they avoided all the stress.  Like what happens if you just ignore the market for even longer periods of time ;-)

I actually felt that one more because we were just shy of a milestone and that quick dip made sure we stayed shy. Plus, we rarely add to investments in December, so we didn't reap the benefits like we did in 2020.

[rantk81]

I typically calculate my net worth every month.  But in the spirit of trying to minimize the display of volatility, I am doing some year-over-year comparisons:

mar '21 -> mar '22 : +367,965
mar '20 -> mar '21 : +752,944
mar '19 -> mar '20 : - 101,046
mar '18 -> mar '19 : +166,400
mar '17 -> mar '18 : +197,981
mar '16 -> mar '17 : +226,009
mar '15 -> mar '16 : +145,395

Yeah, still pretty volatile...

[moof]

In the last few months I've been surprised to NOT see "wow the stock market volatility has me bummed!", etc.  (we have "race" threads, "brag" threads, and "advice" threads but I haven't seen anything along these lines)  After the last few years of the market being on "easy mode" I imagine this is one of the first times many users have experienced a downturn or even lull (heck my net worth has been stagnant now longer than during early 2020). 
...

I got quite bummed in 2000-2002 when it seemed as though my balance kept going lower despite it already being dang small and that I was putting in decent contributions.  I soldiered on and kept it up

2008 was more a bummer for being trapped in a freshly purchased house with few options if my crappy job vaporized, and being single income while my wife went back to school.  I honestly don't recall worrying about my 401k balance much at the time (it was 250k back then).  During the 2020 dip I moved half my bonds into stocks very close to the bottom, and kicked myself later for not doing all of it (I was <20% bonds, so it didn't make that much of a difference really).

As things recovered I went back to being a millionaire, and my balance is now +700k from the 2020 bottom (basically up by twice our gross income over the same period).  It is a good gut check as to whether you'll do something stupid post-FIRE or not.  Timing the market with my bond move was probably a sign I was being dumb, even though it worked out well for me, so I need to work on that.

There will be a decent recession in our future.  Maybe next quarter, maybe in a few years.  We are due.  Have a plan, be sure not to panic, and carry on according to the plan.  Having decent savings set aside should make it much less stressful than if you have little or no savings.  So sure, big negative swings are a bummer, but its better than having your balance barely swing due to pitiful savings to begin with.  Big positive swings also point out how your salary becomes increasingly irrelevant as you approach FI.  When growth not only outstrips your contributions by a large margin, but also regularly eclipses your spending you know if it is time to dust off your FIRE bucket list and start planning your exit strategy.

[Ladychips]

I'll admit that I'm a little freaked out.  I retired in July so no 'buying the dip' for me. In all my research, the only time the 4% rule fails is inflation coupled with falling or flat market. So, I retire and right away we have increased inflation and a falling market.

Now, the rational part of my brain says 1). You can live on your other income streams, 2) your spending is down as a result of retirement...and you could still cut back, 3) your withdrawals have been way less than 4%. You are fine.

But my irrational side said stop withdrawals. So I did.  I'm not going to do anything crazy like change my investments. I'm just going to stop withdrawing for a while. I can live with that (pretty darn comfortably).

[Tempname23]

 I'm looking at my major holding VTI, it was down 12.5% and last time I looked it was only down 4.3%, so the worrying is a little late. As I write we are at a 2% WR.
  I received my yearly, "Your new SS statement is available" email this morning and calculated that if my wife and I wait 3 more years we will get a little over $50k, that makes the volatility a back burner issue. We don't spend much over $50k.