Author Topic: 2008 crash - any witnesses who didnt adjust investing?  (Read 8270 times)

SimpleLifer

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Re: 2008 crash - any witnesses who didnt adjust investing?
« Reply #50 on: August 06, 2019, 06:40:11 AM »
2008 winter - 2009 Spring had unusual effects all over the main street. Sometime in that 2008 winter, I once drove down I485 in Pennsylvania for more than 100 miles in the middle of the day and encountered only 2 cars coming from the other direction!! NYC bound Metro north trains suddenly became almost empty during peak office hours.

Frankly, I remember being worried about keeping my job much more than the investment account!!

Whoa. On the other side of the country, the tech market was, if not strong, at least stable. I don't recall any fear of losing a job.

The dot-bomb was of course entirely different. There was probably 20% tech unemployment in the Bay Area ~2003.

I agree; 2008 in the Bay Area, it seemed like everyone was talking, but I didn't personally know anyone who had lost their job.  And I lived through Dot-Bust in the bay area (and working in tech).  Dot-Bust I knew people who lost their jobs, but if I was being honest, all the people that I personally knew, who lost their jobs didn't seem to be in the right job in the first place.  It seemed like anyone who knew how to type was being put in highly technical positions.

wenchsenior

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Re: 2008 crash - any witnesses who didnt adjust investing?
« Reply #51 on: August 06, 2019, 08:14:32 AM »
Set everything up in early 2000s, stuck with it ever since. ETA: It was weirdly entertaining during autumn of 2008...we were working on a Caribbean island that had very little internet connectivity, and as the meltdown news came in drips and drabs every evening as we relaxed at the end of the day, we'd just raise our rum glasses and toast our dropping retirement accounts.  It was a good way to distract ourselves from being too emotionally invested...bust our butts doing hard work in the tropical mountains all day, watch the sunset every night. It reminded us that life goes on and we should just stay the course. And we did.
« Last Edit: August 06, 2019, 08:19:39 AM by wenchsenior »

wenchsenior

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Re: 2008 crash - any witnesses who didnt adjust investing?
« Reply #52 on: August 06, 2019, 08:25:12 AM »
Seen plenty of comments on bogleheads of people who went through either 2000 or 2008 and talked of their experience and it has made them more conservative. Also some threads there of people freaking out.

That's weird.  If anything, 2008 made me determined that if it ever happened again, I would do everything in my power to dig up extra cash to invest.  During 2008, we didn't change anything we were doing in terms of investment strategy, but we happened to have lot of cash tied up purchasing a second house...and it made me CRAZY to not be investing it while the market was crashing.  Talk about bad timing to have to have bought a second house. Ugh, it still pisses me off. We'd also be much closer to our long-term goal right now if we had not had to do that: first b/c a second house was just a big expense, and secondly b/c of the precisely unfortunate timing of when we had to buy it.
« Last Edit: August 06, 2019, 08:33:19 AM by wenchsenior »

wenchsenior

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Re: 2008 crash - any witnesses who didnt adjust investing?
« Reply #53 on: August 06, 2019, 08:27:40 AM »

Do people not consider late 2018 a crash?



No....not even remotely close to a crash

Barely even a blip.

PaulMaxime

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Re: 2008 crash - any witnesses who didnt adjust investing?
« Reply #54 on: August 06, 2019, 08:42:43 AM »
2008 was super lucky timing for me.

I had just started a job that paid much more than my previous one. I really turned up the investing after the crash. 2008-2009 was the best thing that ever happened to me financially.

Things are going on sale!


FIRE 20/20

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Re: 2008 crash - any witnesses who didnt adjust investing?
« Reply #55 on: August 06, 2019, 08:58:17 AM »
Just went and looked at account balances, for fun:

10/12/2007 (top):  100 <-- let's call this 100 to scale the numbers...
3/6/2009 (bottom): 58

I lost more than 50% during this period but I was contributing as well. 

3/6/2010: 100

Took 3 years to regain my previous peak, with continuous investment.  I think I was putting in 10% of my salary with the match during this whole period.

3/12/2013 (S&P back to 10/12/2007 top): 148

Today: 439

Thanks for posting this, @kendallf .  I ran my numbers because I found yours interesting:

12-October 2007 - 100
6-March 2009 (bottom) - 62
12-September 2009 - 102 (first time back over 100)
15-December 2012 - 200
26 April 2019 (FIREd!) - 580
27 July 2019 (personal peak) - 605

To answer the OP, I just stayed the course.  I remember talking to my partner about this (2008) being a once in a lifetime buying opportunity - everything is on sale!  I was much more impacted by the dot com bubble and crash because I was a new investor then.  I remember feeling totally lost and left out as people were making huge amounts of money on stocks like Qualcomm, and I had no idea how to pick stocks before they took off.  Then everything crashed and I didn't know what to make of things.  By the time 2008 rolled around I felt like I had enough of a grasp of things not to freak out and to see it as an opportunity. 

PDXTabs

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Re: 2008 crash - any witnesses who didnt adjust investing?
« Reply #56 on: August 06, 2019, 09:19:16 AM »

Do people not consider late 2018 a crash?

No....not even remotely close to a crash

Big edits:

Colloquially, a crash is a 20% drop in value. While that is no where close to what we saw during the great recession or great depression, that's still the definition.

The Russel 2000 lost ~26% of its value in 2018, the Nasdaq ~22%. But the Dow and SP-500 escaped only losing 16% and 17.5% respectively. (all prices are closing, not intraday and computed by myself by hand while sipping coffee and looking at yahoo finance charts - the reader is encouraged to verify my findings).

Wikipedia defines a stock market crash as steep double-digit percentage losses in a stock market index over a period of several days. I don't think that we saw that in 2018.
« Last Edit: August 06, 2019, 11:18:47 AM by PDXTabs »

BicycleB

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Re: 2008 crash - any witnesses who didnt adjust investing?
« Reply #57 on: August 06, 2019, 10:19:54 AM »
Re crashes - I didn't think of 2018 as a crash. Too small; I think of a crash as either being bigger (30-35% minimum), longer lasting or both. Fwiw, wikipedia claims that the common thought is that crashes are steep dive, bear markets last longer; arguably, from that viewpoint Nov-Dec '18 might be a crash, contrary to my instinct. That said, the quick dive did make my gut flutter, and panic is a key element of a crash. To me, the panic level at that time was narrow, as a previous poster suggested in other words, rather than the wide spread that would mark a Real Crash. So IMHO, Nov-Dec '18 was a hint of a crash, not the real thing.

Re 2008 - I adjusted twice. Beforehand, in 2007, I suspected something weird and crash-y was brewing, but couldn't figure out what to do. I had just gotten my first professional job, and I was guessing that cash might be the underrated asset of the day, so I mortgaged up on my house with a cashout that summer, which paid off some consumer debt that had paid for grad school groceries, plus gave me 61,000 cash. The 61k sat in the bank while I procrastinated and made payments on 16k of student loans. I knew I should probably invest in stock because the odds were better than anything else, but I'm lazy and hesitant. After some months, I paid off the student loans and began stock investing with 15k. Summer 2008, second 15k. Early Sept (?) '08, the last 15k.

We all know the bear market became a crash in Oct & Nov '08. I figured I didn't have any way to avoid that, so on with the plan. I avoided looking at balances except once every couple of months, though I read news. At one point, the 45k had become 27k though. In early '09, I started a quick series of $1000 investments using all my spare cash from the new job. At the time, my friend at work who liked stocks joined me in feeling that stocks were on sale, and wanting to invest more. My only regret is not automating the investments.

Now FIREd, but could have been quicker.




RelaxedGal

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Re: 2008 crash - any witnesses who didnt adjust investing?
« Reply #58 on: August 06, 2019, 01:47:38 PM »
I don't have numbers, but I remember at one point my retirement account balance was below what I had put in  - all of the gains were wiped out and then some.

My boss sold.  Panicked.  He had 2 kids either in college or about to start and couldn't take the heartburn of watching the market fall. And we were in manufacturing, with layoffs every 12-24 months already.  In 2009 and 2010 we moved to company-wide temporary layoffs of a week at a time, drawing unemployment.  Precarious times.

I remember talking to a coworker about how crazy the boss was for locking in the loss, but it drove home to me that different people have different risk tolerances, and while the boss knew the math said to stay in stocks, his heart couldn't take it.  Coworker and I stayed the course.

fattest_foot

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Re: 2008 crash - any witnesses who didnt adjust investing?
« Reply #59 on: August 06, 2019, 02:04:15 PM »
I don't.

Late 2018 felt completely different than late 2008. 2008 had proverbial blood in the streets with unemployment doubling, massive companies going under, and trillions in house value vanishing trapping people in their homes. While there will always be the fear de jour amongst the pema-bears (e.g., trade war with China is trendy these days) in 2008 it seems that even generally optimistic people had become fearful.

But 2008 was abnormal for a recession. That's why it's called the Great Recession now.

Most recessions don't see people fearing that the entire system will collapse. I'm not saying last December was a recession (since that requires 2 whole quarters), but this expectation people have that every market drop will look like 2008 is ridiculous.
« Last Edit: August 06, 2019, 02:07:03 PM by fattest_foot »

YttriumNitrate

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Re: 2008 crash - any witnesses who didnt adjust investing?
« Reply #60 on: August 06, 2019, 02:43:41 PM »
But 2008 was abnormal for a recession. That's why it's called the Great Recession now.

Most recessions don't see people fearing that the entire system will collapse. I'm not saying last December was a recession (since that requires 2 whole quarters), but this expectation people have that every market drop will look like 2008 is ridiculous.
Since the question was in regards to whether or not 2018 was a "crash" are you saying that you do not consider a severe recession following a drop to be a good indicator that what occurred was a "crash" rather than a "downturn" or "bear market"?

spartana

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Re: 2008 crash - any witnesses who didnt adjust investing?
« Reply #61 on: August 06, 2019, 02:52:41 PM »
I was FIREd in 2008 and lost about half my NW between house and.investments. But I had EXTREMELY low expenses and enough cash in to ride out the recession. So just left things alone and gave up a few discretionary things and did OK. I did some investing but put most of my available cash into buying a foreclosed fixer house in coastal SoCal for approx 1/3rd of it's previous 2008 high (housing market had tanked by 50% here). Everything eventually came back - house and stock values - much higher then previously 2008 levels.

2018 was a tiny blip that I didn't even notice. Nothing at all like 2008 with the investment market, housing market and job market all crashing at the same time. Along with the fear of a total worldwide financial collapse.
« Last Edit: August 06, 2019, 02:58:08 PM by spartana »

fattest_foot

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Re: 2008 crash - any witnesses who didnt adjust investing?
« Reply #62 on: August 06, 2019, 03:15:08 PM »
Since the question was in regards to whether or not 2018 was a "crash" are you saying that you do not consider a severe recession following a drop to be a good indicator that what occurred was a "crash" rather than a "downturn" or "bear market"?

I would say it qualified as both a crash and bear market. It really lasted from about October through January.

My point, however, was that several people said it was just a blip because it didn't compare at all to 2008. But 2008 was an aberration. That's not what a normal recession, bear, or crash looks like.

I'd even almost argue that we had another bear in 2015, although that one was more of a blip than 2018 because it turned around pretty quickly.

markbike528CBX

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Re: 2008 crash - any witnesses who didnt adjust investing?
« Reply #63 on: August 06, 2019, 07:31:55 PM »
All of you can fart more emphatically than the 2018 thingy. I have confidence in all of you.

If you can't handle oct-Dec 2018, than gold guns ect. might be your thing.

Do you remember BREXIT 2016?  No? Same deal.

2008? Yes it was big but didn't last as long as the Trinity study "killer " of 1966 to 1982.

ysette9

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Re: 2008 crash - any witnesses who didnt adjust investing?
« Reply #64 on: August 06, 2019, 10:37:46 PM »
I wouldnít have noticed the end of 2018 if I hadnít been following the Top Is In thread for fun. :)

In 2008 I knew just about nothing about investing except that trying to put as much as you could into 401k was a good thing. When things started going down I just stopped looking and focused on work and school.

Today Iíd like to think that I have armed myself with enough education to ride out another 2008, though I probably wouldnít be able to bury my head in the sand quite as effectively.

ctuser1

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Re: 2008 crash - any witnesses who didnt adjust investing?
« Reply #65 on: August 07, 2019, 07:31:51 AM »
Random thoughts:

As gut-wrenching the 2008 crash or other mini-crashes may be - they are necessary for the efficient functioning of the economic system. Any staid economic system builds up inefficiencies and rent-seeking behavior. Inefficient entities, businesses, individuals hog resources (RE, stock dividends) blocking the entry of more competitive/efficient newcomers. Crashes/recessions/shocks give the much needed jolt to the system to shake off the inefficient entities/individuals from the system such that the overall system remains healthy.

Imagine the scenario where ToysRUs was kept alive, on life support, and occupying the prime real estate in Times Square. It had to die so that a more efficient business can take that over and use that space much more productively and efficiently.

Also imagine the scenario where the stock market never crashes, i.e. they behave like bonds. Well, then they will only give you returns like bonds - i.e. you will lose money to inflation!!

Going off topic and out on a limb, I would also "guess" this applies to "social" systems as well!! Any society that sticks with a single form/brand of idea/ideology keeps accruing all that is bad with it, and becomes non-competitive over time. If you have been socialist for decades, perhaps it is time to veer a bit right as far as the economic systems go (Europe - are you listening?). If you have been right-wing for decades, perhaps it is time to go socialist for a generation or two (America? Anyone?).

Crashes are a "feature", not a bug!

AdrianC

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Re: 2008 crash - any witnesses who didnt adjust investing?
« Reply #66 on: August 07, 2019, 09:05:57 AM »
I stuck to my contributions and stayed fully invested in stocks throughout.  I wasn't thrilled but I had a job, a house, and nothing about those numbers on a screen changed my day to day life.  I have contributed at least 10% of my salary during all of these years, trending up the last few as I found MMM and a more frugal lifestyle.

Just went and looked at account balances, for fun:

10/12/2007 (top):  100 <-- let's call this 100 to scale the numbers...
3/6/2009 (bottom): 58

I lost more than 50% during this period but I was contributing as well. 

3/6/2010: 100

Took 3 years to regain my previous peak, with continuous investment.  I think I was putting in 10% of my salary with the match during this whole period.

3/12/2013 (S&P back to 10/12/2007 top): 148

Today: 439

I just wish I'd been putting in heavier amounts during all of those years.. including the ones on the way down.  I'd be retired now, instead of looking at 3 years from now.

Good way of looking at it.

This was us:
Liquid net worth (not including house equity).
Nov 2007  100  This was enough to FIRE at 4%. With three kids under 5, spouse just laid off and a new business venture underway, FIRE wasn't on our radar at the time.
Feb 2009   54    Kept on putting money in all the way down and back up. Shuffled some things around, but was a net buyer of stocks 2007 till now.
Dec 2010  100   
Dec 2018  226   Been semi-retired for a few years.

It all worked out, but 2008/2009 was very rough. I remember feeling nausea looking at our accounts. I kept re-reading this article from Buffett:

https://www.nytimes.com/2008/10/17/opinion/17buffett.html

He was way early, of course.

GuitarStv

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Re: 2008 crash - any witnesses who didnt adjust investing?
« Reply #67 on: August 07, 2019, 09:09:40 AM »
I didn't adjust anything.  60% equities, 40% bonds.  Although I had only really started investing at the tail end of 2006, so I wasn't losing as much money as some on here did.

EscapeVelocity2020

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Re: 2008 crash - any witnesses who didnt adjust investing?
« Reply #68 on: August 07, 2019, 09:20:25 AM »
10/12/2007 (top):  100 <-- let's call this 100 to scale the numbers...
3/6/2009 (bottom): 58
I lost more than 50% during this period but I was contributing as well. 
3/6/2010: 100

3/12/2013 (S&P back to 10/12/2007 top): 148

Today: 439
This was us:
Liquid net worth (not including house equity).
Nov 2007  100 
Feb 2009   54    Kept on putting money in all the way down and back up. Shuffled some things around, but was a net buyer of stocks 2007 till now.
Dec 2010  100   
Dec 2018  226   Been semi-retired for a few years.

This is an interesting thing to look at, so I ran my numbers.  Home equity not included, just investments.  I was FI in 2007 so I reduced equity exposure that year, but bought back in to the market too early.  Turns out I could've ER'ed in 2009, equity gains have been much more significant to NW gains than contributions.  Really considered ER in 2015 when ACA became law.

2007     100
2008     90
2009     125
2010     145
2018     351
« Last Edit: August 07, 2019, 09:22:06 AM by EscapeVelocity2020 »

ysette9

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Re: 2008 crash - any witnesses who didnt adjust investing?
« Reply #69 on: August 07, 2019, 09:31:56 AM »
I stuck to my contributions and stayed fully invested in stocks throughout.  I wasn't thrilled but I had a job, a house, and nothing about those numbers on a screen changed my day to day life.  I have contributed at least 10% of my salary during all of these years, trending up the last few as I found MMM and a more frugal lifestyle.

Just went and looked at account balances, for fun:

10/12/2007 (top):  100 <-- let's call this 100 to scale the numbers...
3/6/2009 (bottom): 58

I lost more than 50% during this period but I was contributing as well. 

3/6/2010: 100

Took 3 years to regain my previous peak, with continuous investment.  I think I was putting in 10% of my salary with the match during this whole period.

3/12/2013 (S&P back to 10/12/2007 top): 148

Today: 439

I just wish I'd been putting in heavier amounts during all of those years.. including the ones on the way down.  I'd be retired now, instead of looking at 3 years from now.

Good way of looking at it.

This was us:
Liquid net worth (not including house equity).
Nov 2007  100  This was enough to FIRE at 4%. With three kids under 5, spouse just laid off and a new business venture underway, FIRE wasn't on our radar at the time.
Feb 2009   54    Kept on putting money in all the way down and back up. Shuffled some things around, but was a net buyer of stocks 2007 till now.
Dec 2010  100   
Dec 2018  226   Been semi-retired for a few years.

It all worked out, but 2008/2009 was very rough. I remember feeling nausea looking at our accounts. I kept re-reading this article from Buffett:

https://www.nytimes.com/2008/10/17/opinion/17buffett.html

He was way early, of course.
Great article. Iíve bookmarked it to refer to for the next downturn.

BECABECA

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Re: 2008 crash - any witnesses who didnt adjust investing?
« Reply #70 on: August 07, 2019, 10:29:05 AM »
In November 2007 after graduating and working for 5 years I had finally had saved enough money for a down payment on the cheapest single family home within reasonable commute distance to work in the SF Bay Area. It cost about a half a million dollars. I had $25K leftover that I had decided to dip my toe into investing with, and put into a Vanguard fund. Then the crash happened and both my house and the index fund were suddenly worth half of what Iíd just paid for them a few months earlier.

I freaked out. I didnít sell anything but I didnít put any more into Vanguard. Luckily my 401k just continued to chug along on autopilot because I had set that up so long ago that I didnít really think about it as investing... it was just in target date retirement fund and stayed that way with the max contribution getting added to it each paycheck. My after-tax savings went to extra payments on the mortgage, which was at 6% interest. I was too scared to put it towards buying more Vanguard funds.

Fast forward to 2015 when I sold the house for 50% more than I had bought it for. Thatís when I checked the balance on the Vanguard account and saw that it had gone up a lot more than 50% in value from what Iíd originally bought in at. Plain old Vanguard index funds had outperformed one of the hottest real estate markets in the US. Thatís how I learned for myself the truth of ďthe market always goes upĒ and I have felt very confident at dumping everything into more Vanguard and not paying extra on my mortgages anymore. Iím not stressed about another recession.

kendallf

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Re: 2008 crash - any witnesses who didnt adjust investing?
« Reply #71 on: August 07, 2019, 01:22:35 PM »
10/12/2007 (top):  100 <-- let's call this 100 to scale the numbers...
3/6/2009 (bottom): 58
I lost more than 50% during this period but I was contributing as well. 
3/6/2010: 100

3/12/2013 (S&P back to 10/12/2007 top): 148

Today: 439
This was us:
Liquid net worth (not including house equity).
Nov 2007  100 
Feb 2009   54    Kept on putting money in all the way down and back up. Shuffled some things around, but was a net buyer of stocks 2007 till now.
Dec 2010  100   
Dec 2018  226   Been semi-retired for a few years.

This is an interesting thing to look at, so I ran my numbers.  Home equity not included, just investments.  I was FI in 2007 so I reduced equity exposure that year, but bought back in to the market too early.  Turns out I could've ER'ed in 2009, equity gains have been much more significant to NW gains than contributions.  Really considered ER in 2015 when ACA became law.

2007     100
2008     90
2009     125
2010     145
2018     351

All of us who basically sat around should be good validation for younger investors.. yes, we all saw precipitous drops but recovered well.  EV2020's numbers may be a good example of the tradeoff between volatility and terminal value over a long period, also.  Reduced equity exposure means they lost less but also had lower gains in the long term.

begood

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Re: 2008 crash - any witnesses who didnt adjust investing?
« Reply #72 on: August 07, 2019, 01:32:50 PM »
I was oblivious to the nuances in 2008, though I do remember feeling like the sky was falling and worried about the long-term health of the country. We didn't make any changes then, though since that time we have always kept anticipated expenses in a high yield savings account up to four years in advance. I have to admit the idea of a big old crash makes me much more nervous now that I'm 55 than it did when I was 44 (and hadn't found MMM or handled any of our family finances at that point). This is why we still have a financial advisor. His job is to help us keep our cool under that pressure.

h82goslw

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Re: 2008 crash - any witnesses who didnt adjust investing?
« Reply #73 on: August 07, 2019, 04:16:59 PM »
I was oblivious to the nuances in 2008, though I do remember feeling like the sky was falling and worried about the long-term health of the country. We didn't make any changes then, though since that time we have always kept anticipated expenses in a high yield savings account up to four years in advance. I have to admit the idea of a big old crash makes me much more nervous now that I'm 55 than it did when I was 44 (and hadn't found MMM or handled any of our family finances at that point). This is why we still have a financial advisor. His job is to help us keep our cool under that pressure.

Dude....if youíre smart enough to keep 4 years of expenses as an emergency fund youíre smart enough to dump the financial advisor whoís milking you of at least 1% (probably more) PER YEAR. 
At the very least, if you really feel you need a FA, go to vanguard PAS as they only charge 30 basis points.

HappyCheerE

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Re: 2008 crash - any witnesses who didnt adjust investing?
« Reply #74 on: August 07, 2019, 05:27:47 PM »

By March 2009, my last cash got me one share BRK.B, EXACTLY at the bottom.

Me too! Not sure it was the exact bottom - 3/31/2009. It's gone up about 3.5x. We didn't change anything in 2008/2009 except for that purchase, which was a lot of money for us at the time - I had heard of Berkshire Hathaway for years and finally though "OMG it's on sale!" Even had an order in later to buy more if it dropped enough, but it never did. I've tracked our NW since 1991 and now that period is just a little dip, barely noticeable. Our AA was actually way more conservative back then (influence of reading Your Money or Your Life in the late 80s) but it was still pretty stomach-churning to go through. I still check our NW almost every day. The fluctuations help cement "welp, market's gonna market" and a detachment from what the numbers actually "mean." That NW graph is pretty flat for the first decade and then wowza. Zooming out is very helpful - overall trend is up, just like all those images in Top is In.

dayzero

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Re: 2008 crash - any witnesses who didnt adjust investing?
« Reply #75 on: August 07, 2019, 05:51:32 PM »
2008 was scary. People were talking about tent cities, real grapes of wrath type stuff. End of days.

In summer 2009 I sold my car, an Audi A3, to free up cash to buy stocks. I still have those shares, could probably buy an R8 with them now. :-)

moof

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Re: 2008 crash - any witnesses who didnt adjust investing?
« Reply #76 on: August 07, 2019, 09:30:00 PM »
I did not make any changes, but I was down to 10% 401k contributions from being house poor and my wife being back in school.  I bought at the absolute peak of the housing market in 2006.  Then my company got bought by unsavory sorts that made life miserable.

So I was stuck with an underwater house working for awful new overlords, but at least I didnít move anything around or completely shutoff the spigot.

davisgang90

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Re: 2008 crash - any witnesses who didnt adjust investing?
« Reply #77 on: August 08, 2019, 05:39:20 AM »
No adjustment.  Just ignored the crash and kept investing.

StarBright

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Re: 2008 crash - any witnesses who didnt adjust investing?
« Reply #78 on: August 08, 2019, 07:30:35 AM »
Another one who ignored the markets, but I'd only been working for about a year and half then. I had about 10k.  I'm really curious how I'll handle a big drop when I have multiples of that in the market. We shall see :)

jeroly

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Re: 2008 crash - any witnesses who didnt adjust investing?
« Reply #79 on: August 08, 2019, 08:22:49 AM »
I got lucky in that life intruded to such a degree that I didnít really have the time to consider doing anything other than riding it out.

I was basically 70% stocks and 30% real estate and the stocks and the real estate each dropped about 50% (half in central Florida, the epicenter of the real estate bubble, half in NYC). 

By 2013 the stocks had recovered but it took until about 2015 for the real estate overall to make it back to where it was at the start of 2007.

YttriumNitrate

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Re: 2008 crash - any witnesses who didnt adjust investing?
« Reply #80 on: August 08, 2019, 09:06:35 AM »
Another one who ignored the markets, but I'd only been working for about a year and half then. I had about 10k.  I'm really curious how I'll handle a big drop when I have multiples of that in the market. We shall see :)
I'm curious to the same thing as well. In terms of absolute numbers, I lost twice as much in the market dip of April 2019 than the Great Recession, and so far so go. By coincidence, both of these drops also worked out to be about half a year's pay. It will be interesting to see how things play out where there's a 20-30% drop.
« Last Edit: August 08, 2019, 09:08:42 AM by YttriumNitrate »

Villanelle

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Re: 2008 crash - any witnesses who didnt adjust investing?
« Reply #81 on: August 08, 2019, 10:41:17 AM »
Did people really think that 2008 might be the end of the world economy and financial markets as we know them?  I've seen that mentioned here several times.  I had zero sense of that during the time (and yes, I was a working, investing adult).

I had a few friends lose jobs and a family member lose his house (though he likely would have lost it regardless, as there was no job loss; it was just a lot of bad financial decisions including too much house and an adjustable rate mortgage on which they paid the NEGATIVE amortization payment from day 1).   So I definitely saw the difficulties around me, but it never once occurred to me, nor did anyone mention around me, that this might be a paradigm shift in the way the US or the world did money. 

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Re: 2008 crash - any witnesses who didnt adjust investing?
« Reply #82 on: August 08, 2019, 11:01:08 AM »
I can't speak for anyone else, but to me in one sense it WAS the end of financial markets as I knew them.

Previously for decades and I thought forever, interest on loans was positive - if you lent money, you were supposed to get more back. Now we have many cases where interest is negative, at least compared to inflation. Zero and negative rates are common now, but never existed before, I thought.

To this day, we have this weird situation. Even when a central bank gets out of rates that are officially zero, as the US has done, they remain in the available toolkit. It's not clear to me that negative rates are sustainable. Maybe they are and the new normal will last forever, but maybe this period will end in some scenario where overdoing the negative interest leads to a new and different sort of crash - perhaps even one where markets do freeze and waves of bankruptcies occur, or riots cause changes in property ownership by force. We might then look back and say 2008 was the beginning of the end.

Obviously, markets themselves returned to functioning instead of remaining in the may-not-work-at-all state that some of them were in. But it was at a price that in my mind is still unkown and could be paid later.
« Last Edit: August 08, 2019, 11:03:29 AM by BicycleB »

YttriumNitrate

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Re: 2008 crash - any witnesses who didnt adjust investing?
« Reply #83 on: August 08, 2019, 11:13:02 AM »
Did people really think that 2008 might be the end of the world economy and financial markets as we know them?  I've seen that mentioned here several times.  I had zero sense of that during the time (and yes, I was a working, investing adult).

I don't know of anyone who thought we were going to have a Doomsday Prepper type situation, but a repeat of the Great Depression wasn't that unreasonable. Unemployment doubled in a year. If it had doubled again we would have been close to the unemployment rates during the Great Depression.

Fru-Gal

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Re: 2008 crash - any witnesses who didnt adjust investing?
« Reply #84 on: August 08, 2019, 11:28:41 AM »
Did people really think that 2008 might be the end of the world economy and financial markets as we know them?  I've seen that mentioned here several times.  I had zero sense of that during the time (and yes, I was a working, investing adult).

I don't know of anyone who thought we were going to have a Doomsday Prepper type situation, but a repeat of the Great Depression wasn't that unreasonable. Unemployment doubled in a year. If it had doubled again we would have been close to the unemployment rates during the Great Depression.

Husband and I both lost our jobs & couldn't get new ones, siblings lost houses, husband's blue-collar industry went into prolonged recession and he had to change to different trade; my industry was one of the first to be eliminated by the internet. I spent every last cent of our savings to keep the family afloat. We had no health insurance and had small children. Everyone around me was struggling. It was very bad. This is why when people say they want a recession to knock costs down in our HCOL area, I say no thank you. However hopefully we are in a better position to survive, now that I have found FIRE.

Imma

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Re: 2008 crash - any witnesses who didnt adjust investing?
« Reply #85 on: August 08, 2019, 12:23:47 PM »
In my environment people were very scared of the collapse of capitalism or the collapse of the European Union. Everyone felt those were real threats. Many companies went bankrupt (we weren't together then but my partner and I both went through an employer bankruptcy) two of the biggest banks in the country collapsed, many well known chainstores went bankrupt, half of the shops on the high street was empty. Many people suddenly had to take several low paid 0 hours jobs to make up for the loss of their one steady job. And I know lots of people in my parents' generation (born in the 50s) who never again got a job as good as the one they lost back then. The housing market also completely collapsed leaving people with massive debts - I've heard that in the US you can just hand in your keys to the bank and you don't have to pay the mortgage anymore, but in my country you still have to pay the remaining debt even when the house is sold at auction by the bank.

The reason why a next recession scares me is because this time we don't have the remedies that we had 10 years ago: we can't possibly lower interest further than this. And the EU is not going to survive a second big political crisis either.

ctuser1

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Re: 2008 crash - any witnesses who didnt adjust investing?
« Reply #86 on: August 08, 2019, 01:18:45 PM »
I've heard that in the US you can just hand in your keys to the bank and you don't have to pay the mortgage anymore, but in my country you still have to pay the remaining debt even when the house is sold at auction by the bank.

That is only true for 12 US states:
Alaska, Arizona, California, Connecticut, Hawaii Idaho, Minnesota, North Carolina, North Dakota, Texas, Utah, and Washington

There are 38 recourse states where the lender can still pursue you. It is a different matter, however, that the lender may decide you are so broke it is better to cut the loss and write off the loan. However, if you have a good steady job or some other reason why banks feel they can extract the money from you then they will chase you.

Source: https://www.legalmatch.com/law-library/article/what-is-a-recourse-state.html

The reason why a next recession scares me is because this time we don't have the remedies that we had 10 years ago: we can't possibly lower interest further than this. And the EU is not going to survive a second big political crisis either.

Europe's problem is not tools, it is demographics.

Economic Output = # of working age people X productivity.

The above formula is an accounting truth, not an opinion.

Most European countries have a shrinking population. That is a headwind that no amount of economic tools can help!! UK, being the most immigrant friendly, probably stands the best chance of returning good economic growth - brexit or not - in the next couple of decades!!

I can relate with this because I live in a state (Connecticut) in US that is battling the same macro issue. Immigrants don't really settle in CT - they go to either NYC or Boston. So we had the population shrink in CT for the past 10 years. It is showing signs of reversing only in the last year or so.

I'm hopeful that the current phase of Victor Orban's will pass and EU countries can become immigrant friendly someday.

never give up

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Re: 2008 crash - any witnesses who didnt adjust investing?
« Reply #87 on: August 08, 2019, 02:32:11 PM »
Yep 2008 was scary. I was up for redundancy twice and thankfully survived both times.

I had been trying to buy my first property when all hell broke loose. I soon stopped any ideas of that for a couple of years. I was terrified of losing my deposit though. From never ever having considered banks going bust before, I rushed panic stricken to spread it around four or five UK institutions, terrified that I was in the one place that could end up collapsing. No other recession has made me feel like I did during this period.

It was a scary time. I was a nervous investor before this and I probably overdosed on news during this time. I was so scared I became a mortgage over-payer and invested nothing additional into the markets. My company pension went in every month and that was it. These are all reasons I still have to work today.

If there was a recession soon it is unlikely to be as bad as 2008 (but could be) but I would hope the experience of 2008 would lead me to do three things:

1. Keep investing
2. Stay away from the news
3. Be grateful I found this place a couple of years ago, have learnt about investing, have a sensible asset allocation and now have expenses below the minimum wage.


ctuser1

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Re: 2008 crash - any witnesses who didnt adjust investing?
« Reply #88 on: August 08, 2019, 03:07:50 PM »
Did people really think that 2008 might be the end of the world economy and financial markets as we know them?  I've seen that mentioned here several times.  I had zero sense of that during the time (and yes, I was a working, investing adult).

Banking system was much closer to collapsing than most people realized.

Banks were levered up to 30X.

What does it mean? Well, they only had $1 in capital for every $30 in obligations they had outstanding!! Much of this leverage was hidden from everyone, in complex derivatives that are impossible to properly mark, in obscure SPVs that did not show up in their yearly financial reports! If there was a run on these highly levered banks - they would collapse in no time!!

Net result - nobody knew which of the big banks were dancing naked all this time!!

Right after Lehman collapsed, banks stopped lending to one another. This is a big problem!! Much of the money in the world economic system is no longer based on anything physical!! If everyone lost "trust" on the institutions - the so called "money" would disappear overnight.

Yes, there is an alternative where we would be living in a bartering-based economy today.

2008 was NOT a vanilla recession! Systemic crisis of this kind are a different beast from the run-of-the-mill recessions that repeat every decade or so.

stoaX

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Re: 2008 crash - any witnesses who didnt adjust investing?
« Reply #89 on: August 08, 2019, 03:08:59 PM »
I didn't do anything.  Didn't sell my index fund holdings nor did I increase my regular 401k contributions.   Part of the reason why was because I was so busy at that time with work and other stuff.   Another part of the reason is that I had already heard the Boglehead "stay the course" mantra.  Finally, the first crash I had to live through as an investor was 1986 when I was 26 years old - that and all the subsequent crashes kept me from being alarmed.  (But if I had known in 2008 just how bad it was I might have been alarmed!)

mtnrider

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Re: 2008 crash - any witnesses who didnt adjust investing?
« Reply #90 on: August 08, 2019, 08:39:55 PM »
I was 80:20 in 2008.  I rebalanced in early 2009 on the buy signal from President Obama (also as per my written investment strategy - so not really an adjustment).  It was much harder than I had thought it would be.

https://www.politico.com/story/2009/03/obama-buy-stocks-now-019567


ysette9

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Re: 2008 crash - any witnesses who didnt adjust investing?
« Reply #91 on: August 08, 2019, 08:55:05 PM »
I was 80:20 in 2008.  I rebalanced in early 2009 on the buy signal from President Obama (also as per my written investment strategy - so not really an adjustment).  It was much harder than I had thought it would be.

https://www.politico.com/story/2009/03/obama-buy-stocks-now-019567
Thanks, Obama!

PDXTabs

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Re: 2008 crash - any witnesses who didnt adjust investing?
« Reply #92 on: August 08, 2019, 10:54:47 PM »
I've heard that in the US you can just hand in your keys to the bank and you don't have to pay the mortgage anymore, but in my country you still have to pay the remaining debt even when the house is sold at auction by the bank.

That is only true for 12 US states:
Alaska, Arizona, California, Connecticut, Hawaii Idaho, Minnesota, North Carolina, North Dakota, Texas, Utah, and Washington

There are 38 recourse states where the lender can still pursue you. It is a different matter, however, that the lender may decide you are so broke it is better to cut the loss and write off the loan. However, if you have a good steady job or some other reason why banks feel they can extract the money from you then they will chase you.

Given that there are many cases in Oregon (where I was in 2008 when my house was foreclosed) where there is no recourse, I'm not sure how much I trust your count.

marty998

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Re: 2008 crash - any witnesses who didnt adjust investing?
« Reply #93 on: August 09, 2019, 02:27:19 AM »
I am one of those too embarrassed to post. But I am posting now anyway after being prompted to by that comment a few posts back about survivorship bias.

I was almost wiped out by the start of 2009 with leverage. I then went and bought realestate in 2010 and missed the recovery in stocks, but did well out of the property.

It took me a couple more years to dip my toe back into the waters with respect to equities... soon as I did in 2012 the market started falling again (it was a down year in Australia).

It wasn't until 2014 that I started "trusting" the market again and invested in earnest. In the meantime I paid off my mortgage.

I've done alright since.

BicycleB

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Re: 2008 crash - any witnesses who didnt adjust investing?
« Reply #94 on: August 09, 2019, 04:19:59 AM »
I've heard that in the US you can just hand in your keys to the bank and you don't have to pay the mortgage anymore, but in my country you still have to pay the remaining debt even when the house is sold at auction by the bank.

That is only true for 12 US states:
Alaska, Arizona, California, Connecticut, Hawaii Idaho, Minnesota, North Carolina, North Dakota, Texas, Utah, and Washington

There are 38 recourse states where the lender can still pursue you. It is a different matter, however, that the lender may decide you are so broke it is better to cut the loss and write off the loan. However, if you have a good steady job or some other reason why banks feel they can extract the money from you then they will chase you.

Given that there are many cases in Oregon (where I was in 2008 when my house was foreclosed) where there is no recourse, I'm not sure how much I trust your count.

@PDXTabs, do you mean the homeowner has no recourse against their home being foreclosed? Because I think ctuser means that the lender's recourse in the event of nonpayment is limited to repossessing the house through foreclosure. Recourse loans are a lending term which means that the lender has recourse (repossession/foreclosure rights) in the event of the borrower not paying, but in exchange they can only use the stated recourse (foreclosure) and therefore they can't pursue the borrower beyond that. Consequently, the homeowner who decides foreclosure is better for them than making payments can indeed hand in the keys.

PS. If you're the one whose house was foreclosed on, my condolences!
« Last Edit: August 09, 2019, 04:23:33 AM by BicycleB »

ctuser1

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Re: 2008 crash - any witnesses who didnt adjust investing?
« Reply #95 on: August 09, 2019, 06:22:58 AM »
I've heard that in the US you can just hand in your keys to the bank and you don't have to pay the mortgage anymore, but in my country you still have to pay the remaining debt even when the house is sold at auction by the bank.

That is only true for 12 US states:
Alaska, Arizona, California, Connecticut, Hawaii Idaho, Minnesota, North Carolina, North Dakota, Texas, Utah, and Washington

There are 38 recourse states where the lender can still pursue you. It is a different matter, however, that the lender may decide you are so broke it is better to cut the loss and write off the loan. However, if you have a good steady job or some other reason why banks feel they can extract the money from you then they will chase you.

Given that there are many cases in Oregon (where I was in 2008 when my house was foreclosed) where there is no recourse, I'm not sure how much I trust your count.

@PDXTabs, do you mean the homeowner has no recourse against their home being foreclosed? Because I think ctuser means that the lender's recourse in the event of nonpayment is limited to repossessing the house through foreclosure. Recourse loans are a lending term which means that the lender has recourse (repossession/foreclosure rights) in the event of the borrower not paying, but in exchange they can only use the stated recourse (foreclosure) and therefore they can't pursue the borrower beyond that. Consequently, the homeowner who decides foreclosure is better for them than making payments can indeed hand in the keys.

PS. If you're the one whose house was foreclosed on, my condolences!
Thx BicycleB for clarifying.

To get even more specific to Oragon, look at: http://www.foreclosurelaw.org/Oregon_Foreclosure_Law.htm

It says: "A deficiency judgment cannot be obtained through a non-judicial foreclosure, but may be pursued when other foreclosure methods are used."

i.e. Lender has a choice. If they choose the lengthy judicial foreclosure, then they can obtain deficiency judgement and can pursue you further. i.e. they have recourse.
If they choose the quick-fix foreclosure (i.e. non-judicial one), then it acts like a non-recourse state!!

Since the choice rests with the lender, it is a considered a recourse state from the legal perspective. Lender has recourse in case of shortfall if they choose to avail of that.

I am not a lawyer, and never even taken a single course on law in college. So take the above with a boatload of salt, and I'll stand corrected if an expert comes along correcting me.

PDXTabs

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Re: 2008 crash - any witnesses who didnt adjust investing?
« Reply #96 on: August 09, 2019, 07:53:42 AM »
OR (at least in 2008 when my house was foreclosed) also has no recourse for "residential trust deeds":
https://www.oregonlaws.org/ors/2009/86.770

Basically, if you used 100% of the loan to buy a house that you lived in, there is no recourse. If you took cash out or purchased an investment property, there is recourse. In my case, I purchased my house to live in and did not take cash out, so even with a judicial foreclosure there was no recourse possible.

My bigger point was that in OR it is pretty complicated whether or not there is recourse, I wouldn't be surprised if there were more states like OR.

effigy98

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Re: 2008 crash - any witnesses who didnt adjust investing?
« Reply #97 on: August 09, 2019, 08:47:40 AM »
Nearly everyone I know who did not touch investments and let it ride are now retired. Most people I know who panicked sold and are still working.

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Re: 2008 crash - any witnesses who didnt adjust investing?
« Reply #98 on: August 09, 2019, 08:56:32 AM »
I was late 20's, had a couple hundred k but thinking of retiring wasn't even on my radar so just plowed ahead never thinking about it. Our 401k brokerage even went bust and I barely noticed. We were swamped with work all through this period so I didn't really understand what the big deal was. Turned out to be lucky timing!

Dicey

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Re: 2008 crash - any witnesses who didnt adjust investing?
« Reply #99 on: August 09, 2019, 09:18:02 AM »
In April-May, 2008, I took a super budget friendly trip to Hawaii for 12 days. On Lei Day, I ran into an old neighbor at Queen Kapiolani Park. We made plans to go hiking with some other friends of hers. The friends turned out to be FIRE. She had worked for TIAA-CREF, and was well versed in matters financial. We hiked together a good way and discussed many things. At the end of the trip, I resolved to ratchet up my 401k contributions significantly. I saved until it hurt. it was fortuitous timing. When the markets recovered, my investments started earning more than I did. I hit FIRE four years later and never looked back.

We've been flipping a house for about a year, and it's on the market now. When it closes, between return of cash invested and profit, we will have close to a half a million to decide what to do with. Most of it will go back into the market, some will be seed money if we find another project we want to do. I confess, it will be much easier to plow the money back into the market if the economy decides to take a dip. I'm kinda looking forward to it.

At the same time, I had a 90 year old tenant in one of my rentals. He was wealthy, but invested in single stocks. You know, Lehman Brothers, Ford, and other Blue Chip stocks. He was devastated by his losses and did not live to see their recovery. Lesson learned.