I would like to hear from some of the old timers on this. . .

[KTG]

So being a new Mustachian myself, and being thankful for the new outlook I have on life and on investing, I have also noticed that it seems that the majority of Money Mustache and many of its followers seemed to have started following these principles during a long bull market since the crash (at least it seems that way to me). And its pretty easy to be excited and say that all this is working in an environment where just about everyone should be making money. The market has produced a few duds, but most companies have had a steady incline in their stock price since the Great Recession, so its easy to say if you invest in X, you will make money. And many of us have.

So given the volatility in the market lately, I was thinking where a lot of the newer Mustachian's heads might be if there was a period of disappointing returns. Its easy to say, doesn't matter I am still invested, but most of us haven't gone through a bear market. So that being said, I was wondering if some of the veterans of investing (lets say, 20-30 years), have gone thru turbulent times, what they did, and how it paid off. I know the conventional wisdom is to just stay on course, but I guess I need to hear its actually been done in more difficult times, and everything still worked out in the end.

I think this advice is worth more than just what some have done just in the last 8 or so years.

[swinginbeef]

http://jlcollinsnh.com/2012/04/19/stocks-part-ii-the-market-always-goes-up/

few, if anyone, here could say it better than Jim.

[Capt j-rod]

I'm not an old timer, but this process has to work. Spend less than you make, pay off your debt, don't buy stupid shit, invest the rest, and wait. Sometimes it goes down, sometimes it jumps up, but look at a historical graph of the market. Zoom out 20 years and draw your own conclusion. The coolest part of this lifestyle is not freaking out or worrying about what happens day to day. Set the auto pilot, live your life, and enjoy the total freedom that is the true benefit of growing a mustache. Be sure to stay healthy and eat well, you are gonna want to stick around as long as possible to eat all the fruits from your labor!!!

[Dicey]

Getting through market troughs is easy and can even be fun.
1. Don't look at your balances constantly. 
2. Keep adding, 'cuz everything's on sale!
3. Repeat often: It's a long term game.
4. Given enough time, the markets always recover. This one's no different.
5. You have plenty of time, be patient.
6. Panic selling turns a paper loss into an actual loss.

P.S. I am an old timer. This shit works.

[trollwithamustache]

high volatility, wtf are you talking about?

after a period of historically low volatility, the market is now in a period of low volatility.

[KTG]

high volatility, wtf are you talking about?

wtf are you talking about? Have you been paying attention to the swings in the market this month?

[trollwithamustache]

high volatility, wtf are you talking about?

wtf are you talking about? Have you been paying attention to the swings in the market this month?

I watch the market and the VIX yes. See, the thing is after the dip, prices have for the most part returned.

[Dances With Fire]

Getting through market troughs is easy and can even be fun.
1. Don't look at your balances constantly. 
2. Keep adding, 'cuz everything's on sale!
3. Repeat often: It's a long term game.
4. Given enough time, the markets always recover. This one's no different.
5. You have plenty of time, be patient.
6. Panic selling turns a paper loss into an actual loss.

P.S. I am an old timer. This shit works.

+1 Pick an Asset Allocation that you can live with in good times and in bad. This is Key! Have a personal IPS (Investment Policy Statement) that you can follow, again in good times and in bad. Let the "compounding machine" have time to work.

Volatility? I have a newspaper (remember those) pinned to a cork bulletin board in my office Dated April 15th 2000. (Google a Nasdaq chart for that year if you like.) As a reminder of what did (and Can, will? happen.) Pick a sane AA that will let you ride the wave and grow...Just my 2 cents, best of luck to you. Cheers!

[ducky19]

I have a simple strategy that works for me. When the market's doing well, I find myself checking my accounts daily or at least every other day. When we hit a bump in the road and there's uncertainty in the market, I just ignore my accounts - at most checking them once a week, but even going two weeks or more without checking them. I'm disciplined enough not to do anything stupid, but I find it makes me worry less and be in a generally better mood. My mindset shifts to "everything's on sale" vs. "oh no, I've lost $20k in a few days" (which would only be true if I cashed it in). Regardless, will continue to live below my means and invest like hell.

[Maenad]

I've been investing for a little over 20 years, so got in shortly before the Internet bubble popped. Overall, our total invested was low enough in 2000-2002 that the crash wasn't that noticeable.

In 2008 I followed ducky19's strategy - Just Don't Look. I did it earlier this month too. I'll be honest with you- it's not fun doing your monthly portfolio update and seeing the line on the chart going down, and your RE date moving out a bit. But once you go through a big crash, you can be a bit more philosophical about it. It never gets "fun" for me to contemplate, and I foresee being bummed when the next bear market hits, but "bummed out" is a long way from panic-induced selling.

I think there will be a lot of hand-holding in places like these boards once we start seeing a 20%-30% drop. We'll be coming to each other for reassurance and a dose of gallows humor. The "Top Is In" thread will probably go bonkers.

[TartanTallulah]

I invested some money in a Stakeholder Pension in the first few years after they were introduced. Then I had a period of almost a decade when I wasn't able to contribute, moved house and stopped getting statements, and effectively became like one of those dead people who are reputed to be the most successful long term investors, so I got through a stock market dip and gained from the subsequent recovery by effectively forgetting that I had investments that would be affected. It would have been even better if I'd been able to keep the monthly payments going and had the benefit of making investments when shares were relatively cheap

I couldn't have done anything with the pension plan anyway because I wasn't old enough to unlock the money. I do have some non-pension investments now that I could sell on impulse. My approach is to avoid buying individual company stocks so that news of the fortunes of individual companies doesn't send me into a tailspin, and to avoid logging on to look at my investments during little wobbles like the one we've had this year. Seeing columns of red figures will do me no good at all.

And to keep investing, because it's a long game and I don't intend to touch this portion of my portfolio for several years.

[Brother Esau]

I rode through the 2000 and 2008 drops and stayed the course with my investments. My time horizon has me not touching equity investments for at least 12 years. My allocations have certainly been adjusted from where they were in 2000 and 2008.

Top Is In.

[MilesTeg]

So being a new Mustachian myself, and being thankful for the new outlook I have on life and on investing, I have also noticed that it seems that the majority of Money Mustache and many of its followers seemed to have started following these principles during a long bull market since the crash (at least it seems that way to me). And its pretty easy to be excited and say that all this is working in an environment where just about everyone should be making money. The market has produced a few duds, but most companies have had a steady incline in their stock price since the Great Recession, so its easy to say if you invest in X, you will make money. And many of us have.

So given the volatility in the market lately, I was thinking where a lot of the newer Mustachian's heads might be if there was a period of disappointing returns. Its easy to say, doesn't matter I am still invested, but most of us haven't gone through a bear market. So that being said, I was wondering if some of the veterans of investing (lets say, 20-30 years), have gone thru turbulent times, what they did, and how it paid off. I know the conventional wisdom is to just stay on course, but I guess I need to hear its actually been done in more difficult times, and everything still worked out in the end.

I think this advice is worth more than just what some have done just in the last 8 or so years.

While there is a bit of volatility, the overall market trend has been to correct back to a longer term upward trend. The hype bubble after the tax changes has regressed due to interest rate concerns.

[Stachless]

I am old enough to have been an investor thru 2000 and 2008.

2008 was shockingly scary because ALL of these 'non-correlated' assets all dropped at the same time, including stocks, real estate, and the job market.  As an Evil Banker by trade, it was beyond disturbing to have comp plans slashed (mine went down 80%) because the employer's motto was 'you are lucky to have a job' and literally thousands of people would have been glad to take my place.

I thought I was 'bulletproof' in that I had a large savings cushion, but the dramatic reduction in comp burned through my savings remarkably quickly and I was 'forced' to sell some stocks near the bottom.

The market may *always* go up in the long term, but then again in the long term we are all dead.  The possibility of another 'lost decade' for investors remains a far greater risk (in my opinion) than believed by many who just came off of their very first month of stock losses.

[SugarMountain]

http://jlcollinsnh.com/2012/04/19/stocks-part-ii-the-market-always-goes-up/

few, if anyone, here could say it better than Jim.

The market always goes up. Until it doesn't.  The Nikkei is still 30% below where it was 30 years ago and almost 50% off it's peak.

Will this be replicated in the US? I doubt it, but one of the big concerns I have with the Trinity and other studies around "safe withdrawal rates" that use the US market as their base investment is the last 100 years has been by far the greatest economic and technological growth century in the history of the world.  Will that continue for the next 50 years?  Maybe.  But maybe not.

[EmFrugal]

Got married in 1989, started some very timid 401(k) savings. Had $14 dollars net worth.  Bought first home in 1990 with an interest rate at 10.5%.  Rates dropped big time, home value doubled by 1994.  Moved up in house but still kept things very practical.

1996: started some non-retirement investing.  Some wins, some spectaular losses, but kept plugging away savings and learned to not be stupid.  Internet trading was born and there was lots of opportunity for stupid but we kept a sensible approach.  Negative net worth for a long time paying off student loans and buying houses, had 2 kids. 

2000:  Kept investing through the dot-com bust, never stopped and never took any 401(k) loans.  Felt sick about losses but didn’t bail out.

About 2002:  decided we would never carry debt on credit cards or cars again.  Committed to never borrow on that kind of stuff again.

2008:  Got bent over in the stock market crash like everyone, but changed no strategies.  Bought and held stocks, started to look for dividend producers too.  Well diversified and added a lot more Vanguard funds to the mix.  Drumbeat of save-save-save and frugal living.  Felt sick again but just kept playing the long game with quality stock.

2011:  Officially hit $1MM net worth.  Kept plugging away money as before.  Began to cash flow DD1 college.  DD2 started in 2013.

2015:  Paid off house.  Officially hit $2MM net worth.  Set goal to retire at 49YO in 2019.  Save-save-save every paycheck, live well below our means, pile more into Vanguard and dividend stocks.  Savings rate at least 50%.

2017:  Divorced. (XH has massive mid life crisis and abandons me after 3 decades.)  Joint NW in spring of 2017 $2.6MM.  I get a bit more than half in the settlement.  Bought my own place for cash at the end of 2017.

2018:  Drumbeat of save-save-save continues through heartbreak. About $1.5MM net worth on my own.  Figuring out if I can still retire at 49 next spring or if I should hang on to provide youngest daughter medical till she is 26 (3 yrs out).  Currently saving 60% of earnings and think I can do more.  I am wrapping up the DD2 cashflow college on my own, she took 5 years to finish. 

Lesson throughout is save save save and don’t do dumb debt.  Buy and hold.  Choose index and high quality stock.  Forget about the Joneses.  Choose a better spouse than I did.

@MissNancyPryor, I'm so sorry for your troubles.  But I just wanted to say that your post is so very inspiring! And you are an inspiration to me. Thank you!

[KTG]

high volatility, wtf are you talking about?

wtf are you talking about? Have you been paying attention to the swings in the market this month?

I watch the market and the VIX yes. See, the thing is after the dip, prices have for the most part returned.

We must not be watching the same VIX and market. The one I am looking at has the Dow is currently down 400+ today. We weren't even at pre-correction levels either.

Edit: Check that, down 500 at the moment.

[KTG]

@MissNancyPryor, I'm so sorry for your troubles.  But I just wanted to say that your post is so very inspiring! And you are an inspiration to me. Thank you!

+ 1

MissNancyPryor, even though your ex was a douche, you seemed to do everything else right. These are the things I am trying to learn about.

I actually was late to the party, and didn't invest in a 401k until after the .com bust. And when I did, I did aggressively, but when I was laid off in 2008, I cashed it out. I know now you shouldn't do that, but I could see the economy was starting to have issues, and I didn't know how long I would be unemployed for. Well, it turned out I was unemployed for about 2 weeks, and got a job as a consultant. I didn't look into their plans much because I wasn't sure how long I would be a consultant for. Instead, I just saved the money I had.

So when the stock market melted down, I was actually holding all of that money that I withdrew pretty close to the peak. I sat on it, and eventually used it for a down payment on a house I got an amazing deal on, and invested in stocks on the rebound (like Ford at $1 a share (remember that?)).

So I kind of feel lucky there. I feel like I accidently dodged a bullet. Had I not withdrawn that money, my account would have tanked like everyone elses.

So now having built up a pretty sizeable 401k again, and using cash to buy a lot of VTI, I just feel on edge about going through a time like that and seeing a drop of 30% or something to your net worth. So seeing how other coped with that is why I was asking about this.

[Kay-Ell]

Dang @MissNancyPryor!  You are one badass lady!

[MasterStache]

I'm not an old timer, but this process has to work. Spend less than you make, pay off your debt, don't buy stupid shit, invest the rest, and wait. Sometimes it goes down, sometimes it jumps up, but look at a historical graph of the market. Zoom out 20 years and draw your own conclusion. The coolest part of this lifestyle is not freaking out or worrying about what happens day to day. Set the auto pilot, live your life, and enjoy the total freedom that is the true benefit of growing a mustache. Be sure to stay healthy and eat well, you are gonna want to stick around as long as possible to eat all the fruits from your labor!!!

+1

Don't forget to have a couple drinks every day. Apparently it boost longevity more than exercising. Whodda thunk it!

[MissNancyPryor]

@MissNancyPryor, I'm so sorry for your troubles.  But I just wanted to say that your post is so very inspiring! And you are an inspiration to me. Thank you!

+ 1

MissNancyPryor, even though your ex was a douche, you seemed to do everything else right. These are the things I am trying to learn about.

I actually was late to the party, and didn't invest in a 401k until after the .com bust. And when I did, I did aggressively, but when I was laid off in 2008, I cashed it out. I know now you shouldn't do that, but I could see the economy was starting to have issues, and I didn't know how long I would be unemployed for. Well, it turned out I was unemployed for about 2 weeks, and got a job as a consultant. I didn't look into their plans much because I wasn't sure how long I would be a consultant for. Instead, I just saved the money I had.

So when the stock market melted down, I was actually holding all of that money that I withdrew pretty close to the peak. I sat on it, and eventually used it for a down payment on a house I got an amazing deal on, and invested in stocks on the rebound (like Ford at $1 a share (remember that?)).

So I kind of feel lucky there. I feel like I accidently dodged a bullet. Had I not withdrawn that money, my account would have tanked like everyone elses.

So now having built up a pretty sizeable 401k again, and using cash to buy a lot of VTI, I just feel on edge about going through a time like that and seeing a drop of 30% or something to your net worth. So seeing how other coped with that is why I was asking about this.

Thank you both.  I can reflect that being debt free made that part of the divorce easier.  I know there are umpteen pages here about pros and cons of paying off your house and carrying debt to skim the margins but being free and clear of everything made it incredibly smooth financially, if not emotionally.  And yep, he is a douche.

The two key points are that we didn’t jump out of the market when it went down in 2000 and 2008.  It is hard to hold your nose and not freak out but that made all the difference.  Friends who declared that the market was “rigged” and like gambling in the casino after such a whacking were not thinking for the long term.  It is hard to be the millionaire next door sometimes but I can say we still enjoyed our money with a trip to both the Bahamas and to Irelend in 2014 for our 25th anniversary (as examples).  Spend when it is meaningful, but save first. 

[MissNancyPryor]

Dang @MissNancyPryor!  You are one badass lady!

Sheepishly, thank you. 

I have much to learn and the vision went cloudy but there are smart people here who will help me remember it again.

[Sibley]

I am old enough to have been an investor thru 2000 and 2008.

2008 was shockingly scary because ALL of these 'non-correlated' assets all dropped at the same time, including stocks, real estate, and the job market.  As an Evil Banker by trade, it was beyond disturbing to have comp plans slashed (mine went down 80%) because the employer's motto was 'you are lucky to have a job' and literally thousands of people would have been glad to take my place.

I thought I was 'bulletproof' in that I had a large savings cushion, but the dramatic reduction in comp burned through my savings remarkably quickly and I was 'forced' to sell some stocks near the bottom.

The market may *always* go up in the long term, but then again in the long term we are all dead.  The possibility of another 'lost decade' for investors remains a far greater risk (in my opinion) than believed by many who just came off of their very first month of stock losses.

When you say that you burned through your savings - was that pre-MMM and you had much higher expenses?

[trollwithamustache]

high volatility, wtf are you talking about?

wtf are you talking about? Have you been paying attention to the swings in the market this month?

I watch the market and the VIX yes. See, the thing is after the dip, prices have for the most part returned.

We must not be watching the same VIX and market. The one I am looking at has the Dow is currently down 400+ today. We weren't even at pre-correction levels either.

Edit: Check that, down 500 at the moment.

afternoon was a mess in the markets, but a vix of 22 would imply the options lads think there is a good chance things revert to the mean.

[jim555]

I remember the mid August 1982 launch of the bull market on FNN.  I had no money but have always been interested in the markets.  I remember the 1987 crash, -25% in one day.  I had some money but it was in fixed.  The 1999-2000 top I had a co worker try to convince me I had to be in stocks or I couldn't retire.  I told him I will pass on that, still in fixed.  Right after that the markets tanked hard.  The 2007 top and crash I was still in fixed.  So no impact.  Fixed wasn't as bad as today since I would get a decent rate, 5-7%, after 2008 the rates went to zero. 

Probably would have has a lot more money today if I was in the stocks but I have always been risk adverse.

[Rubic]

I've stayed invested throughout every market crash since Black Monday
in October 1987.

Nothing really prepares you emotionally for your first crash,
and the resulting wait for the market recovery can seem like
forever.  If you're patient, things will eventually recover.  Remember
that this is a time when money returns to its rightful owners.

[Scortius]

http://jlcollinsnh.com/2012/04/19/stocks-part-ii-the-market-always-goes-up/

few, if anyone, here could say it better than Jim.

The market always goes up. Until it doesn't.  The Nikkei is still 30% below where it was 30 years ago and almost 50% off it's peak.

Will this be replicated in the US? I doubt it, but one of the big concerns I have with the Trinity and other studies around "safe withdrawal rates" that use the US market as their base investment is the last 100 years has been by far the greatest economic and technological growth century in the history of the world.  Will that continue for the next 50 years?  Maybe.  But maybe not.

Every century has seen the greatest economic and technological growth in the history of the world. Well, at least since the Dark Ages and those still saw the rise of new technologies and populations.

Further, if you had been dollar cost averaging into Nikkei over the past 30 years, you wouldn't be up a ton, but you'd be doing just fine. Also, Nikkei is still a very regional index and doesn't hold the diversity of the US market, let alone the US market + a non-US index to complement it.

[BTDretire]

I don't have records available for 2000.
I have data on 2008, from Feb 2008 to Feb 2011,
I continued to invest and put $113,000 into VTSAX in those
three years, even though at on Feb 2009 I had market losses of $170,000.
I suggest you continue to invest.

 For 2000 I do recall on Feb 11, 2000, my GURU* said withdraw a high percentage out of the market.
 I did, however, after some correction my GURU said put 35% into QQQ, I put more than 35%.
It didn't do well. I ended up with an $80,000 loss and still have $3000 capital loss writeoff every year.
I should have just held on to it.
 It was a great call, if, I had stayed out of the market longer. That's the problem with market timing!
My GURU totally missed 2008. Probably a good thing!
 We are FI with 40x spending, but my wife still works and I work about 15 hours a week.

*GURU--Bob Brinkers Marketimer ( that's really a poor name for his letter, he is a Vanguard noLoad
index fund type of guy. Listening to his radio broadcast 30 years ago is what set me on the right path.)

[Stachless]

I am old enough to have been an investor thru 2000 and 2008.

2008 was shockingly scary because ALL of these 'non-correlated' assets all dropped at the same time, including stocks, real estate, and the job market.  As an Evil Banker by trade, it was beyond disturbing to have comp plans slashed (mine went down 80%) because the employer's motto was 'you are lucky to have a job' and literally thousands of people would have been glad to take my place.

I thought I was 'bulletproof' in that I had a large savings cushion, but the dramatic reduction in comp burned through my savings remarkably quickly and I was 'forced' to sell some stocks near the bottom.

The market may *always* go up in the long term, but then again in the long term we are all dead.  The possibility of another 'lost decade' for investors remains a far greater risk (in my opinion) than believed by many who just came off of their very first month of stock losses.

When you say that you burned through your savings - was that pre-MMM and you had much higher expenses?

It was pre-MMM and I certainly had higher expenses.  We just had kiddo #3 a few months before it all hit the fan, and kiddo #2 was a mere 53 weeks before that!

But by far the brunt of my savings erosion was due to the 80% haircut at work.  Working 3 or 4 times as much/hard for 20% of what  I 'used' to make took some getting used to.  Even months where I'd kill my sales targets (which was hard cuz banks did NOT want to lend then!!) I'd only cover a fraction of my expenses.   My neighbors in HCOL san diego were losing their houses left and right (literally, both next door neighbors were foreclosed) and job prospects (except for the dudes that would go around and spray paint front lawns green) were exceptionally bleak.  These 'times that try men's (and women's) souls', along with anything else that doesn't kill you do indeed make you stronger...just not richer!

Along with an epic bull market, folks that just started investing post 2008 have also seen epic low rates, almost no inflation and historically low volatility.  None of these are permanent conditions and each requires a repricing of risk in general and equities in particular.  For many years, the Price you paid for a stock/mutual fund/ index fund was a giant factor in your performance, also unlike the last 9 years of rising tides lifting almost all boats.

Still, the math of earning more and spending less will win out in the end.  It just might be a whole lot harder without a considerable tailwind.

Best of luck and planning to us all!

[koshtra]

I've stayed invested throughout every market crash since Black Monday
in October 1987.

Nothing really prepares you emotionally for your first crash,
and the resulting wait for the market recovery can seem like
forever.  If you're patient, things will eventually recover.  Remember
that this is a time when money returns to its rightful owners.

Yeah, it's the first crash that's the hard one. (And the present little blip really doesn't even count yet!) You ride through it and the next one's a lot easier, and you don't even pay attention to the ones after that, except to momentarily wish you had more cash to buy up the cheap stocks.

The Nikkei's a good sobering counterexample, but it was always a much smaller, less diverse piece of the global market, even in the best of times, than the American market, which is huge and includes a lot more global leviathans (and a lot more of the world's farming and raw resource extraction). But remember even there that nobody doing it the Mustachian way ever buys much at the pinnacle prices. We're buying month after month, good times and bad. So we don't have to recoup to the market heights to do all right.

[Rosy]

I am old enough to have been an investor thru 2000 and 2008.

2008 was shockingly scary because ALL of these 'non-correlated' assets all dropped at the same time, including stocks, real estate, and the job market.  As an Evil Banker by trade, it was beyond disturbing to have comp plans slashed (mine went down 80%) because the employer's motto was 'you are lucky to have a job' and literally thousands of people would have been glad to take my place.

I thought I was 'bulletproof' in that I had a large savings cushion, but the dramatic reduction in comp burned through my savings remarkably quickly and I was 'forced' to sell some stocks near the bottom.

The market may *always* go up in the long term, but then again in the long term we are all dead.  The possibility of another 'lost decade' for investors remains a far greater risk (in my opinion) than believed by many who just came off of their very first month of stock losses.

That is exactly my fear. That trifecta of job loss, realty disasters and a tumbling stock market is a sinister combo. The possibility of another lost decade or god forbid, longer, would mean the end of financial security in retirement for all the boomers.
ER's might be able to suck it up if they are healthy and the job market doesn't collapse - they can just keep working and hope they get another opportunity to stash while the market is riding high.
We don't know anything for sure - may the odds be in our favor and time and timing on our side:).

[Dicey]

That is exactly my fear. That trifecta of job loss, realty disasters and a tumbling stock market is a sinister combo. The possibility of another lost decade or god forbid, longer, would mean the end of financial security in retirement for all the boomers.

There's a solution for this:
A BIG, FAT EMERGENCY FUND AND BADASS FRUGALITY SKILLS!

[PDXTabs]

So given the volatility in the market lately, I was thinking where a lot of the newer Mustachian's heads might be if there was a period of disappointing returns. Its easy to say, doesn't matter I am still invested, but most of us haven't gone through a bear market. So that being said, I was wondering if some of the veterans of investing (lets say, 20-30 years), have gone thru turbulent times, what they did, and how it paid off. I know the conventional wisdom is to just stay on course, but I guess I need to hear its actually been done in more difficult times, and everything still worked out in the end.

I'm a newer mustachian, but I still remember the 2008 crash. I remember loving how cheap stocks were, and I hope that I get another opportunity like that.

http://jlcollinsnh.com/2012/04/19/stocks-part-ii-the-market-always-goes-up/

few, if anyone, here could say it better than Jim.

The market always goes up. Until it doesn't.  The Nikkei is still 30% below where it was 30 years ago and almost 50% off it's peak.

Will this be replicated in the US? I doubt it, but one of the big concerns I have with the Trinity and other studies around "safe withdrawal rates" that use the US market as their base investment is the last 100 years has been by far the greatest economic and technological growth century in the history of the world.  Will that continue for the next 50 years?  Maybe.  But maybe not.

This is one of the reasons that all my money is in VTWSX - the US could have a lost decade and hopefully I could still retire.

[KTG]

Thanks guys, I appreciate hearing about your experiences.

[SugarMountain]

This is one of the reasons that all my money is in VTWSX - the US could have a lost decade and hopefully I could still retire.

$VTWSX has gotten way out performed by the S&P 500 over the last 10 years.  Will that be true in the next 10?  No idea.

[PDXTabs]

This is one of the reasons that all my money is in VTWSX - the US could have a lost decade and hopefully I could still retire.

$VTWSX has gotten way out performed by the S&P 500 over the last 10 years.  Will that be true in the next 10?  No idea.

I agree. AMZN has outperformed the S&P 500 over the last 10 years, but that doesn't mean putting your entire portfolio into AMZN would have been a good idea. I'm willing to risk lower gains for a broader portfolio. Even VTWSX is 52% US equities, so its not like I'm lacking US exposure.

[Laura33]

And its pretty easy to be excited and say that all this is working in an environment where just about everyone should be making money. The market has produced a few duds, but most companies have had a steady incline in their stock price since the Great Recession, so its easy to say if you invest in X, you will make money. And many of us have.

So given the volatility in the market lately, I was thinking where a lot of the newer Mustachian's heads might be if there was a period of disappointing returns.

See, the thing is, what's the alternative?  If the market doesn't work long-term, I'm not retiring any time soon.  But if I stick all my money in the bank or under the mattress, I'm not retiring any time soon, either.  Since my plan is predicated on reasonable market returns, I pretty much had no choice but to stick it out.

Luckily, it has worked.  When I started investing, everyone was still scared as a result of the 1987 crash -- everything seemed really risky.  But I just sort of held my nose and jumped and stayed the course.  It has turned out better than I had even dared to hope -- by 50, I was FI, could pay off my mortgage any time I want, had zero other debt, and could send both my kids to college no problem. (Honestly, I was probably FI before then, but I was too wrapped up in life and small kids to be paying attention and wasn't really focusing on the Way of the Mustache).

The thing is, this was despite several major market crashes, despite several interstate moves when the economy meant DH's job going away, despite losing almost $100K on a house when the market crash correlated with a job loss correlated with a real estate crash correlated with me being 8 mos. pregnant with our first child, despite spending more than we should have, and despite making just about every mistake known to man.  Except yanking our money when the market crashed -- we never did that.

Max out your available tax-sheltered accounts.  Have a solid EF.  Save the majority of all of your raises and bonuses.  Get reasonable insurance against your realistic downside risks (e.g., disability insurance, life insurance while young, health insurance against catastrophic injury/illness).  And just stick with it.  You do those 5 things, the odds are very very strong that you will be fine.  Maybe not as soon as you'd prefer if everything goes into the shitter -- but you will get there.

[NoraLenderbee]

Sit tight and don't panic.
When (not if) you feel panicky, see rule #1.
Stick to your plan.
If you can, bring yourself to invest more. This can be hard.

Based on my experience being invested  through 2008, 1999, 1991, etc.

[markbike528CBX]

.....  Except yanking our money when the market crashed -- we never did that.

.... Have a solid EF.  ...... And just stick with it. ......... but you will get there.

Awesome Laura33!

On topic, I started stock investing in April 2002.   Promptly lost 30%.
Response?  Oh crap, too late now, let it rot and not look at it too much.  Not looking was Easier to do than it is today, just got quarterly statements from a managed money account (Davis Funds).

Sept 2008, followed my PLAN (pre-IPS) to get a large chunk in index funds on S&P500 20% down.
Result 30% further down.   401K worth less than input.
Response?  Oh crap, too late now, let it rot and not look at it too much.

2012, 2016 dips  See above responses.
Brexit dip-- damn,  blinked and I missed it!  edit to remove blank space - OCD issue :-)

[Bee21]

I remember the crash in 90s and the one in early 2000s too- I was at uni at those times and somehow my scholarship was tied to the stockmarket (don't ask how). So, both times by the time the stocks were cashed out to pay us, it was enough for rice and beans instead of a decent baseline living. Not fun.

There is an interesting chapter on the history of crashes in The four pillars of investing, I highly recommend reading it.

There was a previous thread around here about this topic with heaps ofvpersonal examples, if someone remembers it and digs it out of the vault, that would be great

[wenchsenior]

I remember the crash in 90s and the one in early 2000s too- I was at uni at those times and somehow my scholarship was tied to the stockmarket (don't ask how). So, both times by the time the stocks were cashed out to pay us, it was enough for rice and beans instead of a decent baseline living. Not fun.

There is an interesting chapter on the history of crashes in The four pillars of investing, I highly recommend reading it.

There was a previous thread around here about this topic with heaps ofvpersonal examples, if someone remembers it and digs it out of the vault, that would be great

Here are a couple:

https://forum.mrmoneymustache.com/welcome-to-the-forum/biggest-drop-in-portfolio-value-from-peak-that-you've-weathered/msg1635940/#msg1635940

https://forum.mrmoneymustache.com/welcome-to-the-forum/what-is-your-age-and-how-much-did-you-have-invested-in-2007/

[Well Respected Man]

Started my first 401k in 1985 or 1986. The sales guy said I could have $1M by the time I was 65 -- boy was he wrong! I watched the 1987 crash happen, and kept investing, although probably taking a loan or two from my 401k. In 2000-02, I kept investing, and also lost some money doing individual stock trades. In 2008, I moved about 50% of all my assets to cash, and directed a portion of new investments into inflation-protected bonds in the summer of 08, and was too conservative in re-entering the market. I'm not sure whether I saved or lost money during that period, but I gave myself a big pat on the back for predicting the crash. My 401k and IRA took a massive hit, but have since recovered, especially the account in which I kept investing.

It's all a giant bubble, but we have to keep riding it. Maybe be a little more conservative than the historical returns, so that you end up on top in the event of a huge extended crash.

[Bee21]

There was a previous thread around here about this topic with heaps ofvpersonal examples, if someone remembers it and digs it out of the vault, that would be great
[/quote]

Here are a couple:

https://forum.mrmoneymustache.com/welcome-to-the-forum/biggest-drop-in-portfolio-value-from-peak-that-you've-weathered/msg1635940/#msg1635940

https://forum.mrmoneymustache.com/welcome-to-the-forum/what-is-your-age-and-how-much-did-you-have-invested-in-2007/
[/quote]

Wow, thanks for that.

[Laserjet3051]

That is exactly my fear. That trifecta of job loss, realty disasters and a tumbling stock market is a sinister combo. The possibility of another lost decade or god forbid, longer, would mean the end of financial security in retirement for all the boomers.

There's a solution for this:
A BIG, FAT EMERGENCY FUND AND BADASS FRUGALITY SKILLS!

Completely agree. This was the lesson that I learned from 2008 crash. I hit the trifecta, where i lost my job, had no income for 1.25 years, lost my home to foreclosure, and wiped out in the crash. At the time, facing homelessness and difficulty feeding my family, I had a very tiny EF and poor frugality skills. The lesson I learned that will help me face the next (possible) catastophe is exactly what Dicey posted, a big fat EF and badass frugality skills. This has been a primary focus of mine having been traumatized perhaps permanantly from my 2008 experience. Fortunately, MMM continues to empower me with incremental improvements in frugality that continue to pay dividends of their own.

[soccerluvof4]

Getting through market troughs is easy and can even be fun.
1. Don't look at your balances constantly. 
2. Keep adding, 'cuz everything's on sale!
3. Repeat often: It's a long term game.
4. Given enough time, the markets always recover. This one's no different.
5. You have plenty of time, be patient.
6. Panic selling turns a paper loss into an actual loss.

P.S. I am an old timer. This shit works.

This ^+1 and I would just add a #7. If your able save 2-3 years of expenses so when the market does tank (which it will) you can either buy more and live without making withdrawals which your turning your paper loss into real loss.