Author Topic: Anyone Else Worried About an Extended Bear Market?  (Read 15079 times)

ReadySetMillionaire

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Anyone Else Worried About an Extended Bear Market?
« on: January 14, 2016, 01:31:35 PM »
Let me preface with the fact that I agree with the prevailing wisdom: the stock market always goes up. Great Depression, Great Recession, anything that gets thrown at it...the stock market always goes up.

Second, I'm not suggesting that we are currently entering an extended bear market. I have no idea whether the stock market will go up or down 10,000 points in the next decade.

But what gets me a little concerned is the possibility of an extended bear market and how that will affect my FIRE date.  I'm looking to retire hopefully within 13-18 years, and there have been periods of a bear market that long or longer before (as shown by the chart below).

All of my math for early retirement is based on a hypothetical 7% return in my investments. But what if that doesn't happen? What if we enter a prolonged period of limited to no gains? How do you plan on accounting for this possibility?

For me, personally, I'm trying to figure out the best way to diversify my investments and also possibly looking into investing in rental properties.

What about you guys?


zephyr911

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Re: Anyone Else Worried About an Extended Bear Market?
« Reply #1 on: January 14, 2016, 01:36:26 PM »
My NW is already 40% in rentals with 2/3 of new money going that way. Not because I'm afraid of the stock market, but because I like my taxable investments to have higher returns and some tax mitigation (depreciation) so I'll probably never have a meaningful quantity in taxable brokerage accounts - until after FIRE, when practical cash flow begins to trump other priorities.

If you're really concerned about it, then yes, of course... diversify. Also consider finding a job you like and can do part-time for five figures. That alone would add a huge amount of safety margin.

FLBiker

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Re: Anyone Else Worried About an Extended Bear Market?
« Reply #2 on: January 14, 2016, 01:57:35 PM »
I'm not worried.  And I also have no idea what the market will do in the next decade.  I'll keep investing in index funds, though.  And I expect to be FIRE in 8-10 years.

Retire-Canada

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Re: Anyone Else Worried About an Extended Bear Market?
« Reply #3 on: January 14, 2016, 04:15:46 PM »
All of my math for early retirement is based on a hypothetical 7% return in my investments. But what if that doesn't happen? What if we enter a prolonged period of limited to no gains? How do you plan on accounting for this possibility?

I would use cFIREsim for historical data or monte carlo simulation to test your FIRE plans.

Figure out what $$ value you are trying to hit and save and invest towards it.

If you aren't retiring for 13-18yrs I would stop worrying. There is far far far too much time between now and then for you to have any idea of what will happen and spend time worrying.

To give you a practical example of how I am managing my FIRE date:

- I used cFIREsim to wargame a bunch of scenarios against historical data and determine my comfortable WR plan and target investment amount
- cFIREsim will also tell me how long it will take to get from where I am to where I want to be and an average portfolio value at FIRE
- so I save and invest and check my results annually
- each year the gap between my asset values and my target value closes and it's easier to predict when I can FIRE
- I'm planning to downshift to part-time first and then FIRE later so I'm really focused on that date

If you want to get into real estate do so by all means, but keep in mind a prolonged bear market means equities will be available at a good price for a long period so this is a good time to be in the accumulation phase. If you were accumulating during a bull market you'd pay more for equities every time you went to buy more and get less each time.

Since I'm planning to downshift if it takes longer for my investments to hit my FIRE target I'll just work at my side gig a bit longer. Once I am working  6 months a year or less I'm not sure I'll be overly stressed out about FIREing on a specific schedule. If I end up dealing with an extended bear market I'll just keep throwing whatever spare cash I have at the market, reinvest my dividends and accept that the trade off for slower growth is more bang for my invested $.
« Last Edit: January 16, 2016, 07:13:25 AM by Retire-Canada »

Hank Sinatra

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Re: Anyone Else Worried About an Extended Bear Market?
« Reply #4 on: January 14, 2016, 04:29:17 PM »
We've been in an extended bear market since 2000. Unless "it's different this time" we should be coming out of it fairly soon. And, as usual, nobody will see it coming.

Exflyboy

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Re: Anyone Else Worried About an Extended Bear Market?
« Reply #5 on: January 14, 2016, 04:42:32 PM »
My NW is already 40% in rentals with 2/3 of new money going that way. Not because I'm afraid of the stock market, but because I like my taxable investments to have higher returns and some tax mitigation (depreciation) so I'll probably never have a meaningful quantity in taxable brokerage accounts - until after FIRE, when practical cash flow begins to trump other priorities.

If you're really concerned about it, then yes, of course... diversify. Also consider finding a job you like and can do part-time for five figures. That alone would add a huge amount of safety margin.

Tax mitigation (depreciation).. Yeah right, you do know how that works right?.. Its great now but when you sell your properties there will be a little thing called "depreciation recapture".. Which means you will will pay back any taxes you managed to withold due to depreciation over the years.. Only they will be guarranteed to be at 25%... Even if you are in the 10 or 15% tax bracket.

Depritiation is a con to get MORE money out of you from what I can see.. The IRS is just prepared to wait a little longer.. oh and don't forget State taxes on that too!

Exflyboy

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Re: Anyone Else Worried About an Extended Bear Market?
« Reply #6 on: January 14, 2016, 04:49:26 PM »
To the OP.. You know what they say right?.. There are "worriers" and there are "liars"...:)

I know that I am more than FI.. I have a stash that according to Cfiresim would not have failed ever and pension income on top of that (assuming my ex company doesn't pull a "Detroit").. So I'm not worried one little bit..cough...:)

NoraLenderbee

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Re: Anyone Else Worried About an Extended Bear Market?
« Reply #7 on: January 14, 2016, 05:15:44 PM »
We've been in an extended bear market since 2000. Unless "it's different this time" we should be coming out of it fairly soon. And, as usual, nobody will see it coming.

Did you mean bear or bull?

cats

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Re: Anyone Else Worried About an Extended Bear Market?
« Reply #8 on: January 14, 2016, 06:55:35 PM »
So far, not concerned or planning on changing investment strategy.  We're in our mid-30s now and our long-term financial plan is roughly something like so:

30s: Accumulate as much as possible (2 FT jobs, earning maximum $$ and adding lots of money to investments is top priority).  Hopefully hit FI.
40s: Earn enough to cover annual expenses (so don't draw on investment/savings accounts, but don't worry about adding to them either, just reinvest dividends).  Part of our thinking here is that it will be beneficial to maintain/develop some bankable skill sets just in case things do go haywire and we need to return to FT employment, and having a goal of covering annual expenses seems a good way to motivate ourselves, but removing the obligation to add to savings means we can be more flexible.
50s and onwards: REALLY retired--can draw on retirement accounts in a sensible manner.  No obligation to earn money via work unless it's an interesting project that happens to also pay us.

So for us at least, if we are entering a bear market, it's going to have to be a looooooooong one to cause us serious trouble.

Also, I don't know what your current savings rate is, but if it's very high, might be worth reminding yourself that even if the market behaves in such a way as to prevent FULL retirement at your desired date, you can still be in a position to considerably cut back on your work hours, so it's not like you are stuck in your current situation for an extra 5-10 years.  In our scenario, we will ideally be FI at 40, and the plan to not actually touch our savings/investments from 40-50 is just to add a little safety margin. However, our savings rate is well over 50% and we could easily cover all our basic expenses on just one income, so if we get to 40 and the market has behaved in such a way that we are not FI, we will probably still cut down to 1 FT or 2 PT incomes, enjoy the extra time, and hope the market resolves itself before we hit 50.  If it doesn't resolve itself and we find we can't FIRE at 50, well...working PT from 40 to 55 or even 60 still sounds better than working FT until 45 or so just to hit the magic number. 

Tjat

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Re: Anyone Else Worried About an Extended Bear Market?
« Reply #9 on: January 14, 2016, 07:01:32 PM »
I wouldn't say worried, but lower returns will obviously lengthen the time to FI. However, with no control over it, I will just continue to save as much as possible and accept the future for what it will be.

Hank Sinatra

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Re: Anyone Else Worried About an Extended Bear Market?
« Reply #10 on: January 14, 2016, 07:13:34 PM »
We've been in an extended bear market since 2000. Unless "it's different this time" we should be coming out of it fairly soon. And, as usual, nobody will see it coming.

Did you mean bear or bull?

I mean bear. Yogi. Smokey. Big furry over-engineered  creature that eats nuts and berries and occasionally fish in season. Rhymes with pear and care and fair

KittyFooFoo

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Re: Anyone Else Worried About an Extended Bear Market?
« Reply #11 on: January 14, 2016, 07:18:51 PM »
We've been in an extended bear market since 2000. Unless "it's different this time" we should be coming out of it fairly soon. And, as usual, nobody will see it coming.

Did you mean bear or bull?

I mean bear. Yogi. Smokey. Big furry over-engineered  creature that eats nuts and berries and occasionally fish in season. Rhymes with pear and care and fair

Hehe!

Fire2025

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Re: Anyone Else Worried About an Extended Bear Market?
« Reply #12 on: January 14, 2016, 07:23:53 PM »
Let me preface with the fact that I agree with the prevailing wisdom: the stock market always goes up. Great Depression, Great Recession, anything that gets thrown at it...the stock market always goes up.
...
But what gets me a little concerned is the possibility of an extended bear market and how that will affect my FIRE date.  I'm looking to retire hopefully within 13-18 years, and there have been periods of a bear market that long or longer before (as shown by the chart below).

I'm so sorry if this sounds stupid, this is all very new to me.  But I'm really excited about the current market, because I'm buying/ accumulating, for the next 10 years. 

And yes the market maybe down and possibly it could stay down.  But that just means I'm buying my stocks at rock bottom prices.  And if I believe, which I do, that it will go up...eventually.  Then maybe I don't get 7% over the next XXyears, but when the whole thing rises by YY% my boat goes up all the faster because I've been buying cheap.

And if I'm only using 4% a year, when I Fire, my other 96% is still earning during that whole "market goes up period".....right.  Or have I missed something very important.

bobechs

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Re: Anyone Else Worried About an Extended Bear Market?
« Reply #13 on: January 14, 2016, 08:07:34 PM »
We've been in an extended bear market since 2000. Unless "it's different this time" we should be coming out of it fairly soon. And, as usual, nobody will see it coming.

Did you mean bear or bull?

I mean bear. Yogi. Smokey. Big furry over-engineered  creature that eats nuts and berries and occasionally fish in season. Rhymes with pear and care and fair

Only those who don't understand the concept of inflation adjustment would think otherwise.

Evidently there are a lot of those, but that doesn't alter the facts.

One brief peak above last year levels, and just before the 2008 collapse.  Otherwise rather beary and no real gain since 2000.





lostamonkey

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Re: Anyone Else Worried About an Extended Bear Market?
« Reply #14 on: January 14, 2016, 08:15:17 PM »
I wouldn't say worried, but lower returns will obviously lengthen the time to FI. However, with no control over it, I will just continue to save as much as possible and accept the future for what it will be.

This is exactly how I feel.

tobitonic

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Re: Anyone Else Worried About an Extended Bear Market?
« Reply #15 on: January 14, 2016, 08:23:22 PM »
Nah. One of the benefits, for us, at least, of a paid off house.

FIRE_Buckeye

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Re: Anyone Else Worried About an Extended Bear Market?
« Reply #16 on: January 14, 2016, 10:15:31 PM »
Everyone is nervous about the prospect of another bear market.
All you can do is stick to whatever plan you have in place and trust that historical trends will prevail. If you stick to the plan, and the the market doesn't eventually revert back to the mean, there will be a few hundred million people riding the failboat with you if that makes you feel any better.

Ceridwen

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Re: Anyone Else Worried About an Extended Bear Market?
« Reply #17 on: January 15, 2016, 06:53:08 AM »
Let me preface with the fact that I agree with the prevailing wisdom: the stock market always goes up. Great Depression, Great Recession, anything that gets thrown at it...the stock market always goes up.
...
But what gets me a little concerned is the possibility of an extended bear market and how that will affect my FIRE date.  I'm looking to retire hopefully within 13-18 years, and there have been periods of a bear market that long or longer before (as shown by the chart below).

I'm so sorry if this sounds stupid, this is all very new to me.  But I'm really excited about the current market, because I'm buying/ accumulating, for the next 10 years. 

And yes the market maybe down and possibly it could stay down.  But that just means I'm buying my stocks at rock bottom prices.  And if I believe, which I do, that it will go up...eventually.  Then maybe I don't get 7% over the next XXyears, but when the whole thing rises by YY% my boat goes up all the faster because I've been buying cheap.

And if I'm only using 4% a year, when I Fire, my other 96% is still earning during that whole "market goes up period".....right.  Or have I missed something very important.

This is what I'm thinking too.  We currently have no investments (besides RRSPs) but will start investing in Index Funds later this year.  We'll be buying them at a pretty steep discount!

SwordGuy

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Re: Anyone Else Worried About an Extended Bear Market?
« Reply #18 on: January 15, 2016, 07:10:52 AM »
Let me preface with the fact that I agree with the prevailing wisdom: the stock market always goes up. Great Depression, Great Recession, anything that gets thrown at it...the stock market always goes up.
...
But what gets me a little concerned is the possibility of an extended bear market and how that will affect my FIRE date.  I'm looking to retire hopefully within 13-18 years, and there have been periods of a bear market that long or longer before (as shown by the chart below).

I'm so sorry if this sounds stupid, this is all very new to me.  But I'm really excited about the current market, because I'm buying/ accumulating, for the next 10 years. 

And yes the market maybe down and possibly it could stay down.  But that just means I'm buying my stocks at rock bottom prices.  And if I believe, which I do, that it will go up...eventually.  Then maybe I don't get 7% over the next XXyears, but when the whole thing rises by YY% my boat goes up all the faster because I've been buying cheap.

And if I'm only using 4% a year, when I Fire, my other 96% is still earning during that whole "market goes up period".....right.  Or have I missed something very important.

I think you got it right.   

I'm not factoring in ANY stock/bond sales in our regular living expenses despite having a $750,000+ balance.   We're planning on social security, farm and rental income, with an additional buffer of part time money-making hobbies or consulting work that interests us.  The stocks are there for growth.  Any income we have coming in that isn't diverted to rental homes will go into the market, hopefully at low prices relative to when they will be needed.

Personally, I think that all the 401k money pumped into the system over the last few decades has inflated stock market prices.  As my older baby-boomer cohort starts selling off their stock to continue their over-inflated lifestyle, it will have a downward effect on stock prices.   We've got another large generation coming up, as they age into peak earning years the market should recover from that problem.   I'm hoping to be buying on the cheap until that happens.


shotgunwilly

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Re: Anyone Else Worried About an Extended Bear Market?
« Reply #19 on: January 15, 2016, 08:00:23 AM »
We've been in an extended bear market since 2000. Unless "it's different this time" we should be coming out of it fairly soon. And, as usual, nobody will see it coming.

Did you mean bear or bull?

I mean bear. Yogi. Smokey. Big furry over-engineered  creature that eats nuts and berries and occasionally fish in season. Rhymes with pear and care and fair

Only those who don't understand the concept of inflation adjustment would think otherwise.

Evidently there are a lot of those, but that doesn't alter the facts.

One brief peak above last year levels, and just before the 2008 collapse.  Otherwise rather beary and no real gain since 2000.



Sure. Pick 2000 when the market was on a runup and at a historical peak, and draw a line across and compare it to the value of todays market.... "Oh look! We've been in a bear market since 2000!"

HA

onlykelsey

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Re: Anyone Else Worried About an Extended Bear Market?
« Reply #20 on: January 15, 2016, 08:04:01 AM »
I wouldn't say worried, but lower returns will obviously lengthen the time to FI. However, with no control over it, I will just continue to save as much as possible and accept the future for what it will be.

That's really all you can do.  It is a better problem to have at 20, 30, 40 or even 50 when you're eyeing retirement.  I'd love to retire at 35 but, realistically, if I have to work until 50, that is not a tragedy.

zephyr911

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Re: Anyone Else Worried About an Extended Bear Market?
« Reply #21 on: January 15, 2016, 08:09:05 AM »
Tax mitigation (depreciation).. Yeah right, you do know how that works right?.. Its great now but when you sell your properties there will be a little thing called "depreciation recapture".. Which means you will will pay back any taxes you managed to withold due to depreciation over the years.. Only they will be guarranteed to be at 25%... Even if you are in the 10 or 15% tax bracket.
LOL... I'm well aware of DRT.
I don't plan on selling anything, ever. Depreciation dramatically accelerates current growth by increasing cash for reinvestment, which is all that matters.
Quote
Depritiation is a con to get MORE money out of you from what I can see..
Do you also think Jews did 9/11?
Quote
The IRS is just prepared to wait a little longer.. oh and don't forget State taxes on that too!
Yep... they're even prepared to wait until I die, at which point this is all going to charity. Meanwhile, the deferred taxes from year 1 alone will compound to $1M+ at typical leveraged return rates.
Even if I do sell at year 28, they can tax the deferred earnings at 25% or even 100%. It's still a six-figure win.

************************************************************************

Sure. Pick 2000 when the market was on a runup and at a historical peak, and draw a line across and compare it to the value of todays market.... "Oh look! We've been in a bear market since 2000!"
Hey now, I'm sure somebody, somewhere invested their entire life savings just before that crash, and $0 before or after.

Jack

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Re: Anyone Else Worried About an Extended Bear Market?
« Reply #22 on: January 15, 2016, 08:15:12 AM »
We've been in an extended bear market since 2000. Unless "it's different this time" we should be coming out of it fairly soon. And, as usual, nobody will see it coming.

Did you mean bear or bull?

I mean bear. Yogi. Smokey. Big furry over-engineered  creature that eats nuts and berries and occasionally fish in season. Rhymes with pear and care and fair

Only those who don't understand the concept of inflation adjustment would think otherwise.

Evidently there are a lot of those, but that doesn't alter the facts.

One brief peak above last year levels, and just before the 2008 collapse.  Otherwise rather beary and no real gain since 2000.



Well, except for the small niggle that a chart like that probably doesn't account for dividends.

Tyler

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Re: Anyone Else Worried About an Extended Bear Market?
« Reply #23 on: January 15, 2016, 09:12:06 AM »
But what gets me a little concerned is the possibility of an extended bear market and how that will affect my FIRE date.  I'm looking to retire hopefully within 13-18 years, and there have been periods of a bear market that long or longer before (as shown by the chart below).

All of my math for early retirement is based on a hypothetical 7% return in my investments. But what if that doesn't happen? What if we enter a prolonged period of limited to no gains? How do you plan on accounting for this possibility?

You've hit on an important point.  The generic saying that "stocks always go up" neglects the critical caveat: "given enough time".  There's absolutely no guarantee they will go up on your personal timeframe (even over 13-18 years), and neglecting uncertainty in your projections can cause a lot of heartache down the road. 

This chart shows the time to financial independence for savers putting away 50% of their income (starting in every year since 1972) and investing it all in the stock market.  Think of it as beginning your accumulation phase in every historical year at once and watching how they all unfolded.  Some lucky people reached FI in 11 years, while other unlucky ones needed 22 years. 



If you're worried about the wide range of outcomes, the good news is that asset allocation can make a big difference.  Here's just one example:



But more importantly, your asset allocation pales in comparison to your savings rate.  On short accumulation timeframes with a high enough savings rate, your new contributions will dwarf your returns and markets largely don't matter.  So even in tough economic times, keep your primary focus on savings and you'll be in good shape.

BTW, if you find the above charts interesting, you might want to read this more detailed explanation.  It includes a calculator where you can generate your own charts with a personalized AA and savings rate.
« Last Edit: January 15, 2016, 10:17:00 AM by Tyler »

NoraLenderbee

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Re: Anyone Else Worried About an Extended Bear Market?
« Reply #24 on: January 15, 2016, 11:07:20 AM »
We've been in an extended bear market since 2000. Unless "it's different this time" we should be coming out of it fairly soon. And, as usual, nobody will see it coming.

Did you mean bear or bull?

I mean bear. Yogi. Smokey. Big furry over-engineered  creature that eats nuts and berries and occasionally fish in season. Rhymes with pear and care and fair

Only those who don't understand the concept of inflation adjustment would think otherwise.

Evidently there are a lot of those, but that doesn't alter the facts.

One brief peak above last year levels, and just before the 2008 collapse.  Otherwise rather beary and no real gain since 2000.


Ah, I understand now.

trailrated

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Re: Anyone Else Worried About an Extended Bear Market?
« Reply #25 on: January 15, 2016, 11:14:04 AM »
I want an extended Beer Market

spokey doke

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Re: Anyone Else Worried About an Extended Bear Market?
« Reply #26 on: January 15, 2016, 11:44:53 AM »
The doom and gloom about CAPE and low rates of returns for the next decade are potentially more of a concern for those who thought they were set to pull the plug, and are worried about sequence of returns risks.  That is my basic situation, as a sustained bear market would be great if I stay in my job and continue major additions to my stache at bargain prices...not so good if I turn to spending that stache.

Exflyboy

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Re: Anyone Else Worried About an Extended Bear Market?
« Reply #27 on: January 15, 2016, 01:23:49 PM »
I want an extended Beer Market

Ok to be more serious now.. I can honestly say the reason I am fully FI'd is because I invested soley in stocks more or less when the market plunged in 2008. as the market went lower and lower I blindly kept my maxed out 401k contributions flowing into stock ETF style investments.

The 2008 crash was dramatic but the whole event lasted about 2 years. whe we popped out of the other side in 2010/11 i was far better off than in 2009.

Now historical events are not a prediction for the future, but do you think this bear market will be worse than 2008? Are you RE'd?.. If the answer is "No" to both those questions then the only logical response is to be jumping up and down with joy at the thought of the market going lower.

Of course we are not logical human beings and if you have say $1M and its now worth $900k, thats painful.

My advice is turn off the TV and keep buying.. If History repeats itself it will turn out great!

Now of course if you have just retired.. Well, do you have at least two years worth of Bonds to live on?.. If so it "should" be great.. Do you have other rental income? some pension maybe. of course the last thing you want to do is to sell stocks.

My personal challenge is when to start converting some bonds into stocks?.. As I don't want to blw my safety stash so to speak.

Jack

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Re: Anyone Else Worried About an Extended Bear Market?
« Reply #28 on: January 15, 2016, 01:28:33 PM »
My personal challenge is when to start converting some bonds into stocks?.. As I don't want to blw my safety stash so to speak.

Sounds like something that should be a no-brainer because it's in your investment policy statement and/or handled by normal rebalancing.

WGH

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Re: Anyone Else Worried About an Extended Bear Market?
« Reply #29 on: January 15, 2016, 01:32:04 PM »
Not worried at all. It's depressing watching days like today when the Dow is down like 400 points and you know if you check your account balance it's going to be way down but if you're not retiring soon who cares?

I watched days like today over and over again in 08/09 along with headlines of massive layoffs. I believe this is a needed correction as the runup since 2009 has been too aggressive. You make your money on these dips as long as you are dollar cost averaging and not panicking all will be well.

As for it being extended? I subscribe to the old adage that times are never as good or as bad as they seem in the moment. The Great Recession crash lasted less than 2 years though it seemed a nightmare at the time and it's been almost a 7 year bull market since.

Jack

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Re: Anyone Else Worried About an Extended Bear Market?
« Reply #30 on: January 15, 2016, 01:44:26 PM »
Not worried at all. It's depressing exciting watching days like today when the Dow is down like 400 points and you know if you check your account balance it's going to be way down the buy order you put in is getting you a bunch more shares than it would have a couple of weeks ago but if you're not retiring soon who cares?

FTFY. ; )

neo von retorch

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Re: Anyone Else Worried About an Extended Bear Market?
« Reply #31 on: January 15, 2016, 02:59:48 PM »
My only annoyance in this is... twofold:
  • My new job doesn't let me start my 401k for six months - not until June! (wish I could front-load, but intend to catch up - so kind of hoping the market continues to drop... for now!)
  • We are saving to buy a house this year so we've been dumping into savings, not investments (glad we did that past tense, but wish I could be dumping it into investments now)

Cookie78

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Re: Anyone Else Worried About an Extended Bear Market?
« Reply #32 on: January 15, 2016, 03:12:15 PM »
I wouldn't say worried, but lower returns will obviously lengthen the time to FI. However, with no control over it, I will just continue to save as much as possible and accept the future for what it will be.

This is about how I feel, or at least how I try to feel most of the time.

I'm pretty determined to hit my target FI date, and I get a little stressed when I think I might not be able to reach it due to impending financial disasters. I'd FIRE anyway even if I was a little bit low, but not if everything blows up in my face. But then I stop and realize that I'm still better off than most, even in a worst case situation.

What worries me more is the economic and real estate crashes currently occurring in my city, but only because I'd really love to sell my houses, but can't. I can wait another 18 months easily, or 30 months if I have to, and I hope things have recovered well enough by then.

Again, none of it is under my control, so I'll just keep limiting my expenses and saving what I can.

Jack

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Re: Anyone Else Worried About an Extended Bear Market?
« Reply #33 on: January 15, 2016, 03:15:59 PM »
My only annoyance in this is... twofold:
  • My new job doesn't let me start my 401k for six months - not until June! (wish I could front-load, but intend to catch up - so kind of hoping the market continues to drop... for now!)
  • We are saving to buy a house this year so we've been dumping into savings, not investments (glad we did that past tense, but wish I could be dumping it into investments now)

Maybe if we're lucky it'll be even lower six months from now (but not so low that it affects the actual economy).

Aussiegirl

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Re: Anyone Else Worried About an Extended Bear Market?
« Reply #34 on: January 15, 2016, 04:01:25 PM »
There's a fair bit of research around now that shows it's the 5-10 years after retirement that are important when it comes to outliving your money.  Not the ups and downs during the accumulation phase. 

So, would I be worried if I was > 5 years away from retirement - not at this stage.  Would I be worried if I planned to RE this year or next - probably enough to consider OMY unless this is just a blip.

I'm still a couple of years away from RE and my thoughts are that I would do the OMY if the market is in decline when I hit my FIRE date.    BUT I am conservative and don't want to run out of money full stop.  Others might roll the dice and be happy to go back to work if it all unravels. 

mozar

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Re: Anyone Else Worried About an Extended Bear Market?
« Reply #35 on: January 15, 2016, 04:27:24 PM »
Quote
I believe this is a needed correction as the run-up since 2009 has been too aggressive

What goes up must come down, because of...wait for it...human nature. I'm glad that the reasons for the recent turmoil in the market are due to the end of the chinese bull market (economists have been predicting this for years) and cheap oil.
Structural inequality and the fact that all jobs are becoming automated doesn't seem to bother the market. But when the capitalists realize that high growth forever is not sustainable, and they look around the world and consumerism in other countries has been tapped out, that will be interesting.

I don't think its a coincidence that the market run up from '33 to '99 coincides neatly with the formation and repeal of the Glass-Steagull act. And I'm not the only person who has noticed. It would be great if the banks were re-regulated. I would gladly take more consistent and lower returns than less consistent and higher returns. 
But no matter what stock market returns (even after the great depression and great recession) are higher than bonds and real estate.

If you want to diversify, by all means! I'm not going to stop you. But with your timeline I'd be more concerned about your job existing in 13 years than a bear market for 13 years.

Fuzz

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Re: Anyone Else Worried About an Extended Bear Market?
« Reply #36 on: January 15, 2016, 04:44:48 PM »

Only those who don't understand the concept of inflation adjustment would think otherwise.
[/quote]

I'm not sure what to think about inflation, other than the concept seems pretty flawed. Typically, the idea is that "prices go up by 2% a year," yet in reality the basket of goods people buy changes all the time based on the relative prices among goods, and comparing goods across time periods is hard. In 2000, you couldn't by a smartphone at any price. Now, amazing phones are cheap. By most measures, transportation, food and clothes are now a much smaller percentage of the typical income than historically, while healthcare and education take up more of the personal budget (and more of the economy). It's really hard to measure the utility of healthcare and education across time periods.

For example, I would rather buy year 2000 quality healthcare in year 2000 dollars, than year 2016 healthcare at year 2016 prices for most things, but not all things. I'd let a year-2000 doctor set my broken arm all day long. I probably wouldn't want him to do advanced oncological testing.

All I'm saying is that I don't think the rate of inflation is a significantly meaningful number for personal financial planning, or some sort of argument-ending fact. Just establishing inflation occurred, doesn't tell you much about whether the return on your investments was meaningful in the sense that they let you buy cool shit or FIRE on your terms.

Also, the other guys are right that you're cherrypicking numbers.
« Last Edit: January 15, 2016, 04:53:00 PM by Fuzz »

Hank Sinatra

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Re: Anyone Else Worried About an Extended Bear Market?
« Reply #37 on: January 15, 2016, 04:53:27 PM »
Quote
I don't think inflation is a meaningful number for personal financial planning, or some sort of argument-ending fact. Just establishing inflation occurred, doesn't tell you much about whether the return on your investments was meaningful.

I hate to tell ya but this is how people fool themselves. Of course you can finesse expenses in your own personal sphere  and make your returns higher than that would be if you spent IAW the real inflation rate, on a relative basis. But the fact remains there is inflation and it is a real thing not a metaphysical thing "happiness" that means different things to different people.  It cannot be wished away or discussed out of the situation.

boarder42

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Re: Anyone Else Worried About an Extended Bear Market?
« Reply #38 on: January 15, 2016, 04:59:08 PM »
how has no one else commented on the 13-18 year  timeline.

not from the bear market premise ..

but dont WORRY about things you cant control.  13-18 years is FOREVER in the FI game.  just invest and move on about your life. 

if you're worried now you're gonna have a LONG LONG LONG 13-18 years regardless of what the market does... live life enjoy it.  you're a long ways away the earth could also be struck by an asteroid in that time and santa clause could come into existance.  worrying isnt a solution its a problem. 

Ferrisbueller

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Re: Anyone Else Worried About an Extended Bear Market?
« Reply #39 on: January 15, 2016, 05:01:57 PM »
Nope.
Switched $200k in 80/20 equity/bond to cash on 5th November 2015. If I hadn't I'd be down about $20k ish now.  Regular monthly savings from October 2015 continue going into 80/20 to benefit from low prices.
Will drip 200k back in monthly from feb/march.


Eric

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Re: Anyone Else Worried About an Extended Bear Market?
« Reply #40 on: January 15, 2016, 05:51:02 PM »
how has no one else commented on the 13-18 year  timeline.

I thought for sure OP was going to say 2, maybe 3 years tops.  When I saw 18 years (!) I laughed about it, then decided not to post.  Does that count?

aFrugalFather

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Re: Anyone Else Worried About an Extended Bear Market?
« Reply #41 on: January 15, 2016, 06:15:31 PM »
We've been in an extended bear market since 2000. Unless "it's different this time" we should be coming out of it fairly soon. And, as usual, nobody will see it coming.

Did you mean bear or bull?

I mean bear. Yogi. Smokey. Big furry over-engineered  creature that eats nuts and berries and occasionally fish in season. Rhymes with pear and care and fair

Like this one?  https://www.youtube.com/watch?v=nU5cMZymSr0

Retire-Canada

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Re: Anyone Else Worried About an Extended Bear Market?
« Reply #42 on: January 16, 2016, 07:10:49 AM »
how has no one else commented on the 13-18 year  timeline.

not from the bear market premise ..

but dont WORRY about things you cant control.  13-18 years is FOREVER in the FI game.  just invest and move on about your life. 

If you aren't retiring for 13-18yrs I would stop worrying. There is far far far too much time between now and then for you to have any idea of what will happen and spend time worrying.

^^^ post #4 ;)
« Last Edit: January 16, 2016, 07:13:11 AM by Retire-Canada »

Murse

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Re: Anyone Else Worried About an Extended Bear Market?
« Reply #43 on: January 17, 2016, 05:05:50 PM »
Everyone is worried but what I try to keep in mind is everyone is always worried, and always has been. We look back in the past and say "oh, I wish I was able to invest in 2009!" But in actuality people were worried then too. Because we can see how well the market has done we like to believe that it was always a for sure thing. Truth is, it wasn't and never has been. The people that hang on get the pay off.
« Last Edit: January 18, 2016, 07:42:23 AM by Murse »

Retire-Canada

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Re: Anyone Else Worried About an Extended Bear Market?
« Reply #44 on: January 17, 2016, 08:30:48 PM »
Everyone is worried but what I try to keep in mind is everyone is always worried, and always has been. We look back in the past and so "oh, I wish I was able to invest in 2009!" But in actuality people were worried then to. Because we can see how well the market has done we like to believe that it was always a for sure thing. Truth is, it wasn't and never has been. The people that hang on get the pay off.

^^^ yup.

There is almost an unlimited amount of fear available all the time if you are open to it.

kaposzta

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Re: Anyone Else Worried About an Extended Bear Market?
« Reply #45 on: January 18, 2016, 07:10:26 AM »
I'm expecting a collapse* in the next 3 years, this is why I have a 50% bond / 35% REIT / 15% stock portfolio now. I'm waiting for lower stock prices :) Of course, I don't know the future, there's a chance that no serious crash will happen in the next 10 years, and I'll have to settle with 2-6% after inflation (which would delay my FIRE by a 1-2 years, but it's okay).

* there are too many bad omens: China, Russia, Brazil, oil prices, car manufacturers, crisis in the EU, big companies running out of ideas and potential growth (see Apple), etc.

Exflyboy

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Re: Anyone Else Worried About an Extended Bear Market?
« Reply #46 on: January 18, 2016, 11:17:58 AM »
Everyone is worried but what I try to keep in mind is everyone is always worried, and always has been. We look back in the past and say "oh, I wish I was able to invest in 2009!" But in actuality people were worried then too. Because we can see how well the market has done we like to believe that it was always a for sure thing. Truth is, it wasn't and never has been. The people that hang on get the pay off.

yeah I have to laugh, the current drop also happened in 2011.. I barely remember that now.. I know I bought some more stock at the time..:)

Currently I am (sort of) hoping for another 10% leg down, then I'll rebalance and move some currently sidelined cash to stocks.

Hank Sinatra

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Re: Anyone Else Worried About an Extended Bear Market?
« Reply #47 on: January 18, 2016, 11:39:07 AM »
Clean this up right now.

The S&P 500 will continue to flag  until it reaches somewhere in the vicinity of 1529. It's old pre- Bear high point. Then it will go up for a long time. (with the usual zigs and zags) That is, supposedly, the history of these secular cycles.

I must say, it certainly seems to be happening on schedule.

We'll see how well this works out in a year or so.
« Last Edit: January 18, 2016, 02:06:42 PM by Hank Sinatra »

Easye418

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Re: Anyone Else Worried About an Extended Bear Market?
« Reply #48 on: January 18, 2016, 11:44:47 AM »
I wish I had more money to throw into the market with this sale.

That being said, I am only 26 so I got a lot of time left to dump money.  100% Equities.

I have already decided that I am not going to switch my AA so it doesn't matter what happens.  Talk to me in 10 years, we will all have a good laugh.
« Last Edit: January 18, 2016, 11:50:51 AM by Easye418 »

tj

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Re: Anyone Else Worried About an Extended Bear Market?
« Reply #49 on: January 18, 2016, 01:13:25 PM »
I'm expecting a collapse* in the next 3 years, this is why I have a 50% bond / 35% REIT / 15% stock portfolio now. I'm waiting for lower stock prices :) Of course, I don't know the future, there's a chance that no serious crash will happen in the next 10 years, and I'll have to settle with 2-6% after inflation (which would delay my FIRE by a 1-2 years, but it's okay).

* there are too many bad omens: China, Russia, Brazil, oil prices, car manufacturers, crisis in the EU, big companies running out of ideas and potential growth (see Apple), etc.
You're expecting 2%-6% after inflation with only 15% stocks? Incredibly unlikely IMO