Anyone Else Terrified of Stock Market Right Now?

[cschx]

Terrified of the stock market since forever. But especially right now. Maybe someone can explain the difference between a Boglehead and a bulltard, the distinction is lost on me.

There's not enough bear porn in here... dropping some Hussman: Hypervaluation and the Option Value of Cash.

Presently, we observe measures of overextension that have been rare outside of market peaks such as March 2000 and November 2007. To the extent that history is a guide, I expect that the initial loss from recent highs will be rather abrupt. As we saw even in late-2018 and early this year, first leg down tends to be steep and disorienting, and it becomes psychologically difficult to sell well below the highs. That’s what keeps many investors holding on as prices decline further. For our part, we’re content to maintain a “locally” neutral outlook, and to let our existing safety nets take care of larger downside risks more or less automatically.

[markbike528CBX]

Terrified of the stock market since forever. But especially right now. Maybe someone can explain the difference between a Boglehead and a bulltard, the distinction is lost on me.

There's not enough bear porn in here... dropping some Hussman: Hypervaluation and the Option Value of Cash.

Presently, we observe measures of overextension that have been rare outside of market peaks such as March 2000 and November 2007. To the extent that history is a guide, I expect that the initial loss from recent highs will be rather abrupt. As we saw even in late-2018 and early this year, first leg down tends to be steep and disorienting, and it becomes psychologically difficult to sell well below the highs. That’s what keeps many investors holding on as prices decline further. For our part, we’re content to maintain a “locally” neutral outlook, and to let our existing safety nets take care of larger downside risks more or less automatically.

Wow, the last sentence was such concentrated bull---t that I'm surprised it didn't collapse on itself and go "Not with a ^bang but a _whimper" *


*https://en.wikipedia.org/wiki/The_Hollow_Men , text effects by me, not the author.

[PDXTabs]

Terrified of the stock market since forever. But especially right now. Maybe someone can explain the difference between a Boglehead and a bulltard, the distinction is lost on me.

There's not enough bear porn in here... dropping some Hussman: Hypervaluation and the Option Value of Cash.

Presently, we observe measures of overextension that have been rare outside of market peaks such as March 2000 and November 2007. To the extent that history is a guide, I expect that the initial loss from recent highs will be rather abrupt. As we saw even in late-2018 and early this year, first leg down tends to be steep and disorienting, and it becomes psychologically difficult to sell well below the highs. That’s what keeps many investors holding on as prices decline further. For our part, we’re content to maintain a “locally” neutral outlook, and to let our existing safety nets take care of larger downside risks more or less automatically.

Wow, the last sentence was such concentrated bull---t that I'm surprised it didn't collapse on itself and go "Not with a ^bang but a _whimper" *


*https://en.wikipedia.org/wiki/The_Hollow_Men , text effects by me, not the author.

Right?!  Maintaining a neutral outlook and letting my existing safety nets take care of larger downside risks is basically my life strategy.

[markbike528CBX]

Terrified of the stock market since forever. But especially right now. Maybe someone can explain the difference between a Boglehead and a bulltard, the distinction is lost on me.

There's not enough bear porn in here... dropping some Hussman: Hypervaluation and the Option Value of Cash.

Presently, we observe measures of overextension that have been rare outside of market peaks such as March 2000 and November 2007. To the extent that history is a guide, I expect that the initial loss from recent highs will be rather abrupt. As we saw even in late-2018 and early this year, first leg down tends to be steep and disorienting, and it becomes psychologically difficult to sell well below the highs. That’s what keeps many investors holding on as prices decline further. For our part, we’re content to maintain a “locally” neutral outlook, and to let our existing safety nets take care of larger downside risks more or less automatically.

Wow, the last sentence was such concentrated bull---t that I'm surprised it didn't collapse on itself and go "Not with a ^bang but a _whimper" *


*https://en.wikipedia.org/wiki/The_Hollow_Men , text effects by me, not the author.

Right?!  Maintaining a neutral outlook and letting my existing safety nets take care of larger downside risks is basically my life strategy.

Actually, when YOU say it it does make sense, and that is pretty much what I do too.   I guess I am hypocrisy writ small or something.

[waltworks]

If I had a nickel for every time Hussman predicted doom...

Note that I'm not saying he's wrong. Sooner or later he's bound to be right. Could be this year!

-W

[Telecaster]

To be fair, over the past 20 years holding cash would be better than owning the flagship Hussman Strategic Growth so cash had some good option value.   

[RWD]

Terrified of the stock market since forever. But especially right now. Maybe someone can explain the difference between a Boglehead and a bulltard, the distinction is lost on me.

Really? "Bulltard"? Classy... Also, Bogleheads tend to be extremely conservative...

There's not enough bear porn in here...

Did you not see the 44 bear threads I linked to on page 1? I think there is plenty of bears already.

[Metalcat]

Terrified of the stock market since forever. But especially right now. Maybe someone can explain the difference between a Boglehead and a bulltard, the distinction is lost on me.

Really? "Bulltard"? Classy... Also, Bogleheads tend to be extremely conservative...

There's not enough bear porn in here...

Did you not see the 44 bear threads I linked to on page 1? I think there is plenty of bears already.

I know right?

Like, welcome to the forum and maybe read a bit before jumping to conclusions?

The passive investing philosophy isn't that the market will never crash, it's that it's improbable that an individual investor will be able to predict market crashes in a way that they can realistically harness to increase their gains over time.

Just because I'm not stressing about a market that I cannot control does not mean I'm delusional about its performance.

Bear porn?
Yeesh, I just don't see the point. I see a ton of people angsting endlessly about it, but I don't see the benefit in that, or even the purpose. I don't sit in front of the mirror and cry every day that I'm getting older, and I don't sit in front of the computer chewing my fingernails off because the market will inevitably shit itself in the possibly near future.

Give me one good reason why I should be worried and I'll contemplate worrying about it. Until then, I'll keep focusing on what I consider to be far more important things.

[dividendman]

Terrified of the stock market since forever. But especially right now. Maybe someone can explain the difference between a Boglehead and a bulltard, the distinction is lost on me.

Really? "Bulltard"? Classy... Also, Bogleheads tend to be extremely conservative...

There's not enough bear porn in here...

Did you not see the 44 bear threads I linked to on page 1? I think there is plenty of bears already.

I know right?

Like, welcome to the forum and maybe read a bit before jumping to conclusions?

The passive investing philosophy isn't that the market will never crash, it's that it's improbable that an individual investor will be able to predict market crashes in a way that they can realistically harness to increase their gains over time.

Just because I'm not stressing about a market that I cannot control does not mean I'm delusional about its performance.

Bear porn?
Yeesh, I just don't see the point. I see a ton of people angsting endlessly about it, but I don't see the benefit in that, or even the purpose. I don't sit in front of the mirror and cry every day that I'm getting older, and I don't sit in front of the computer chewing my fingernails off because the market will inevitably shit itself in the possibly near future.

Give me one good reason why I should be worried and I'll contemplate worrying about it. Until then, I'll keep focusing on what I consider to be far more important things.

Haha, exactly. The market tanked 30% just 9 months ago! What did I do then?!oh right... nothing, actually I rebalanced some bonds into stocks because it happened to coincide with my twice yearly rebalancing. But there was no panic selling or anything.

If it tanks 30-50% or more again? Meh, I'll just sigh a bit and continue with life I suppose?

[ChpBstrd]

Don't ever google "bear porn" unless you already know what it is.

[Metalcat]

Terrified of the stock market since forever. But especially right now. Maybe someone can explain the difference between a Boglehead and a bulltard, the distinction is lost on me.

Really? "Bulltard"? Classy... Also, Bogleheads tend to be extremely conservative...

There's not enough bear porn in here...

Did you not see the 44 bear threads I linked to on page 1? I think there is plenty of bears already.

I know right?

Like, welcome to the forum and maybe read a bit before jumping to conclusions?

The passive investing philosophy isn't that the market will never crash, it's that it's improbable that an individual investor will be able to predict market crashes in a way that they can realistically harness to increase their gains over time.

Just because I'm not stressing about a market that I cannot control does not mean I'm delusional about its performance.

Bear porn?
Yeesh, I just don't see the point. I see a ton of people angsting endlessly about it, but I don't see the benefit in that, or even the purpose. I don't sit in front of the mirror and cry every day that I'm getting older, and I don't sit in front of the computer chewing my fingernails off because the market will inevitably shit itself in the possibly near future.

Give me one good reason why I should be worried and I'll contemplate worrying about it. Until then, I'll keep focusing on what I consider to be far more important things.

Haha, exactly. The market tanked 30% just 9 months ago! What did I do then?!oh right... nothing, actually I rebalanced some bonds into stocks because it happened to coincide with my twice yearly rebalancing. But there was no panic selling or anything.

If it tanks 30-50% or more again? Meh, I'll just sigh a bit and continue with life I suppose?

I literally haven't logged into my accounts since 2019. My money is being diverted elsewhere this year, because as I said, I have more important things to worry about at the moment, so I literally have no reason to even login to my investment accounts except for curiosity's sake, of which I have virtually none.

If I were someone contemplating living off of my investments in the near future, then yes, I would care, and I would implement plans to hedge against SORR, but otherwise, I don't get what the fuss is about.

[shinn497]

Thanks yall, you inspired me to make this meme and Clif Asness liked it . My life is complete

[J Boogie]

If anyone is looking for an ideal place to invest right now you could do a lot worse than data center REITs. They have cooled off to a safe entry point and the dividends they generate can give you some semblance of safe haven with minimal FOMO should the bull keep raging.

Specifically I recommend DLR. If you want an ETF they have one called SRVR, but I prefer DLR and CONE.

[ChpBstrd]

If anyone is looking for an ideal place to invest right now you could do a lot worse than data center REITs. They have cooled off to a safe entry point and the dividends they generate can give you some semblance of safe haven with minimal FOMO should the bull keep raging.

Specifically I recommend DLR. If you want an ETF they have one called SRVR, but I prefer DLR and CONE.

I've always wondered how these relatively small operators will fare against Amazon, Alibaba, and Microsoft. Seems at least as risky as office and retail REITs.

[J Boogie]

If anyone is looking for an ideal place to invest right now you could do a lot worse than data center REITs. They have cooled off to a safe entry point and the dividends they generate can give you some semblance of safe haven with minimal FOMO should the bull keep raging.

Specifically I recommend DLR. If you want an ETF they have one called SRVR, but I prefer DLR and CONE.

I've always wondered how these relatively small operators will fare against Amazon, Alibaba, and Microsoft. Seems at least as risky as office and retail REITs.

That's a pretty good observation. CONE is smaller but DLR is pretty big. Regardless, DLR's size still cannot insulate it from the increase in purchasing power that outfits like AWS and Azure are increasingly able to flex on them. My understanding is that in some ways AWS and Azure are acting as middlemen, housing the information on behalf of their many customers who might have previously held leases directly with REITs like DLR at higher rates.

Growth in FFO (funds from operations, the most relevant REIT metric) for data center REITs has lagged over the past few years due to this phenomenon. So the bear case is that the the glory days are over and their valuation will need to come back in line with the rest of REITs. The bull case is that industry consolidation (M&A) can somewhat remedy this power imbalance and data center REITs will continue growing as the world increasingly becomes more digital, with 5G, blockchain and IOT coming to fruition.

So I'm under no impression that DLR and their peers can reverse the downward pressure on their pricing overnight, but I don't view the trend as inevitable and something that can make the land that DLR owns less valuable. Regarding the land value, I'll paste this snippet from a SA article:

The value of each data center is largely a function of its position along the internet backbone, the physical fiber-optic network that links every connected-device across the world. Properties within the backbone, or more precisely at the "intersection" of various networks, are able to provide higher-value network-based colocation and interconnection services, which command higher rent-per-MW and generally have significantly higher barriers to entry due to the inherent "network effects."

DLR owns many of these backbone locations, whereas CONE does not. However I am partially bullish on CONE because I am bullish on Texas.  (about half of CONE's data centers are in TX) I think the California exodus is not simply a clickbait celebrity trend - companies are moving, friends of mine are moving, and I think CONE's TX properties will become more valuable as data demand increases there.

[3toesloth]

I was in the same boat as Nihilist back in 2018. Been out of ETFs since and don't regret it at all even with the gains. A large portion of companies were not profitable before Covid and are even worse now. My portfolio consisted of Bond ETFs and some gold for most of the last two years. Now I'm running out of powder to by all the great cheap value stocks and keep finding more every day. When a company cannot make money during the "good" times (2019 and before) I don't think they will make money going forward when things get back to normal or even if they get bad. With valuations this insane, huge unemployment, zombie companies, and the like, I wouldn't be surprised by a 60-70% correction over the next few years. Since my retirement is soonish and my expenses low I'm not touching broad stock funds but could live off bond yields for a few years if I need to. Bonds may tank also but they tend to move less than stocks and recover quicker.

My advice is to check out Vanguard Equity-Income fund for a possible stock ETF or do some research into individual stocks. Bonds yield very little, but if you have enough of them. And of coarse everything depends on your time horizon, If I was 10 years or more out I would stick with 50/50 and just hammer money in.

[dividendman]

S&P 500 will be 4500 by the end of next year.

Predictions like this make me Terrified of the Stock Market Right Now (tm).

But why? Looks like I was right... for now :)

[LightStache]

I needed to read this thread everyday for the past year. After outperforming in 2020 (yay!) I let fear push me to the sidelines in 2021 (boo!). Went to mostly cash and sold my last rental, paying the tax bill because I didn't want to buy a replacement property. Overall I probably lost out on $175K in 2021 by letting fear irrationally dictate my investments.

I'm still terrified, but now I have FOMO and so I'm forcing myself to DCA back in. It'll add insult to injury if the markets decide to "adjust" right when I finish my DCA in February.

Why do I have to "reeducate" myself like this?

[Retire-Canada]

Why do I have to "reeducate" myself like this?

I think most [all?] of us have been there in some shape or form. If the psychology of investing was easy everyone would be killing it. I made plenty of investing mistakes myself back before I found the MMM blog. I don't want to think about how much money I missed out on or how much earlier I could have FIREd. The important thing is going forward use these lessons to make better decisions and then they will have had some significant value.

[simonsez]

Why do I have to "reeducate" myself like this?

I think most [all?] of us have been there in some shape or form. If the psychology of investing was easy everyone would be killing it. I made plenty of investing mistakes myself back before I found the MMM blog. I don't want to think about how much money I missed out on or how much earlier I could have FIREd. The important thing is going forward use these lessons to make better decisions and then they will have had some significant value.

Ego, arrogance, greed?

Isn't everyone killing it for the past 12+ years though?  There are millions of people with 6-figure and 7-figure net worths who have not experienced 1987, 2000, 2008, etc.  2020 was pretty bumpy but the recovery was so upwardly steep I already almost forgot about it but obviously there were many who were reacting.  The S&P 500 is more than double what it was during its March 2020 nadir, insanity*!

I probably have plenty of ego, arrogance, and greed myself but these qualities just don't manifest themselves when it comes to active investing.  I think the mechanics behind getting to FI even with a boring allocation of mainly broad coverage index funds and some bonds is plenty quick enough for someone in the US and in many parts of the world.  I have zero interest in selling prior to retirement (to either take advantage of a dip or because I didn't plan well enough and have to withdraw for living expenses) nor do I care about individual companies or if the market is "overpriced" or some other metric.  Therefore I'll just keep accumulating and act in accordance with my IPS.

I find the psychology of investing not something I think about at all.  I just do what I've been doing.  Aside from updating my net worth numbers on the first of each month and maybe a couple rebalances per year, I don't really pay much attention to if things are good or bad market-wise.  I do expect in retirement it will be a weird mental transition to go from only accumulating and being strict about it to all of a sudden taking money out but that's a separate issue.

* - It's because of market insanity that I, coupled with my laziness and the fact that index funds tend to have the lowest fees, decided before I ever had a real job that I just wouldn't be one of those people that traded, speculated, sold, timed the market, etc.  I would do the slow and steady slog because it works and I don't trust myself to be smarter than those that are in the active investing world as a profession.  I really like the gamification of everything so it's not like this is something I wouldn't enjoy - it's just that I realize there is insanity and irrationality in there and I don't have the bandwidth to figure that out, even if that's possible because we're not talking about a game, we're talking about people's future livelihoods so I resign myself to not let ego, arrogance, and greed interfere with a tried-and-true passive approach. 

I do like hearing about other's experiments and those that do dip a toe or go whole hog into active investing and other instruments with which I do not have enough knowledge - I'm rooting for you!  Plenty of paths to get to the Promised Land of FI!

[Retire-Canada]

Isn't everyone killing it for the past 12+ years though? 

Everyone? No. Just read these forums and there are plenty of examples of people that made poor financial/investing decisions. I know lots more in real life. Some people actually hurt themselves and others are doing fine, but left a lot of money on the table thereby extending their working lives.

It would be fair to say everyone with a reasonable income had the opportunity to "kill it" over the past 12 years, but as with so many things in life people find a wide variety of ways to fail despite the opportunities to succeed.

[SwordGuy]

« on: November 24, 2020, 09:39:17 AM »

Date/time stamp of original post in this thread, almost a year ago.   The S&P could drop about 21.5% and we would be back to where we were when this thread started.

Oh, the horrors!   

We would be cast into the pits of despair, where the situation was, to quote, "Just about everything is at all-time highs ..."

Meh.   

The market will drop and it will rise.   The historical trend is upwards.   If that stops happening, I suspect there will be bigger problems to face than my retirement savings.

[simonsez]

Isn't everyone killing it for the past 12+ years though? 

Everyone? No. Just read these forums and there are plenty of examples of people that made poor financial/investing decisions. I know lots more in real life. Some people actually hurt themselves and others are doing fine, but left a lot of money on the table thereby extending their working lives.

It would be fair to say everyone with a reasonable income had the opportunity to "kill it" over the past 12 years, but as with so many things in life people find a wide variety of ways to fail despite the opportunities to succeed.

Yes, I was being hyperbolic in response to your assertion that perhaps all had made obvious investing mistakes or had regrets or in the least felt the need to re-educate themselves on how to invest as I am a n=1 example of someone that hasn't changed or felt regrets with investing during the long bull run.  It's muddled in that it's subjective to what one considers a mistake with respect to investing.  I did not make any money off of squeezing GME or from purchasing TSLA or AAPL or AMZN individually at the opportune time but I don't consider those investing mistakes on my part.  Maybe most adults on this forum have made what they consider investing mistakes but it's not all.  My position is a lot like Swordguy's - the market will do its thing and long-term it is extremely likely to be higher than it is today and if it's not, we likely have bigger problems than the amount of leisure I can afford in retirement being reduced.  Thus, it doesn't matter if the market is high or not, it doesn't change my behavior one iota.  Maybe that's a rare position to take and also stick to the process throughout one's working career, but it does exist.  Personal finance is...personal!

[Travis]

I needed to read this thread everyday for the past year. After outperforming in 2020 (yay!) I let fear push me to the sidelines in 2021 (boo!). Went to mostly cash and sold my last rental, paying the tax bill because I didn't want to buy a replacement property. Overall I probably lost out on $175K in 2021 by letting fear irrationally dictate my investments.

I'm still terrified, but now I have FOMO and so I'm forcing myself to DCA back in. It'll add insult to injury if the markets decide to "adjust" right when I finish my DCA in February.

Why do I have to "reeducate" myself like this?

How often are you watching the markets? It's difficult to be scared of something if you're not paying any attention to it.

[dougules]

Why do I have to "reeducate" myself like this?

I think most [all?] of us have been there in some shape or form. If the psychology of investing was easy everyone would be killing it. I made plenty of investing mistakes myself back before I found the MMM blog. I don't want to think about how much money I missed out on or how much earlier I could have FIREd. The important thing is going forward use these lessons to make better decisions and then they will have had some significant value.

Ego, arrogance, greed?

Isn't everyone killing it for the past 12+ years though?  There are millions of people with 6-figure and 7-figure net worths who have not experienced 1987, 2000, 2008, etc.  2020 was pretty bumpy but the recovery was so upwardly steep I already almost forgot about it but obviously there were many who were reacting.  The S&P 500 is more than double what it was during its March 2020 nadir, insanity*!

While you're right that a lot of people don't have any personal experience with crashes other than COVID, watching the market skyrocket can be every bit as psychologically taxing as a big crash.  Plenty of people reading this have plenty of experience with that.  It's just a constant mental litany of "it can't go any higher", "surely it's going to crash any day", "these valuations are just out of touch with reality", "I need to wait until it goes back down to buy in".  It's just as bad as getting caught up in the idea that the sky is falling when there is a crisis that makes the market crash. 

[simonsez]

Why do I have to "reeducate" myself like this?

I think most [all?] of us have been there in some shape or form. If the psychology of investing was easy everyone would be killing it. I made plenty of investing mistakes myself back before I found the MMM blog. I don't want to think about how much money I missed out on or how much earlier I could have FIREd. The important thing is going forward use these lessons to make better decisions and then they will have had some significant value.

Ego, arrogance, greed?

Isn't everyone killing it for the past 12+ years though?  There are millions of people with 6-figure and 7-figure net worths who have not experienced 1987, 2000, 2008, etc.  2020 was pretty bumpy but the recovery was so upwardly steep I already almost forgot about it but obviously there were many who were reacting.  The S&P 500 is more than double what it was during its March 2020 nadir, insanity*!

While you're right that a lot of people don't have any personal experience with crashes other than COVID, watching the market skyrocket can be every bit as psychologically taxing as a big crash.  Plenty of people reading this have plenty of experience with that.  It's just a constant mental litany of "it can't go any higher", "surely it's going to crash any day", "these valuations are just out of touch with reality", "I need to wait until it goes back down to buy in".  It's just as bad as getting caught up in the idea that the sky is falling when there is a crisis that makes the market crash.

Don't pay attention then if that's what it does to that particular type of individual?  If you're the type of person who gets stressed out by the whims of the markets which are totally out of an individual's control, then maybe their allocation doesn't suit their needs to allow them to sleep comfortably at night?  You trust that your plan works based on the research that led to your plan in the first place.  And sure, if you need to make some tweaks to your IPS to be more reactive and easier to stomach in the long term, then do whatever works.  To me, life is far too short to have my neurons occupied by something like the direction of the market.  My plan is based on over 100+ years of research conducted by people far smarter than I am - why would I waste energy worrying?

Reminds me of my uncle's medical advice when I was a young kid after I had fallen or run into something and was in temporary pain.  "It hurts when I do this (I showed him the movement that caused me pain)!"  His reply after quickly assessing I did not require urgent medical attention was "Okay, then don't move it like that.  Go play and you'll forget all about it."

[ChpBstrd]

* - It's because of market insanity that I, coupled with my laziness and the fact that index funds tend to have the lowest fees, decided before I ever had a real job that I just wouldn't be one of those people that traded, speculated, sold, timed the market, etc.  I would do the slow and steady slog because it works and I don't trust myself to be smarter than those that are in the active investing world as a profession.  I really like the gamification of everything so it's not like this is something I wouldn't enjoy - it's just that I realize there is insanity and irrationality in there and I don't have the bandwidth to figure that out, even if that's possible because we're not talking about a game, we're talking about people's future livelihoods so I resign myself to not let ego, arrogance, and greed interfere with a tried-and-true passive approach. 

The paradox is that although the markets are rational, it does little good to analyze them rationally. That is, the next move in the stock market will have nothing to do with the information or logical perspectives we already have - it'll be caused by some new influence we had not considered. And maybe this new influence is as stupid as "the market ran out of buyers or sellers" or the inherent instability of chaotic systems. It's a trap, really, for people who have used rationality and skepticism to be successful in every other aspect of their lives. The move towards index funds instead of stock-picking was a first step in the realization that past information and rationality cannot predict the future very well. The move from trading to buy-and-hold indexing was a similar admission. As hard as it is to believe, the B&H indexers have been outperforming the vast majority of stock-pickers and active traders for decades.

I did not make any money off of squeezing GME or from purchasing TSLA or AAPL or AMZN individually at the opportune time but I don't consider those investing mistakes on my part. 

Here's a MarketWatch article titled "Here are the five dumbest ways you could have gotten rich in 2021". These dumb trades involve jumping on social media bandwagons and selling at the right time. These five trades at $20k apiece would have turned 100k into $2,334,969.

https://www.marketwatch.com/story/here-are-the-five-dumbest-ways-you-could-have-gotten-rich-in-2021-11635851930

Obviously, the article omits the 5 million dumbest ways to wipe out your portfolio in 2021. More to the point though, if you were irrational enough to get into these trades in the first place, how would you have had the foresight to exit at the correct time? And if you were irrational enough to get into these trades, how would you have avoided more dumb trades that were wipeouts? How does an "ape" with a cell phone brokerage app actually make a living, other than by pure luck and a mantra of always going long (which looks genius in a bull market)? The term "mistake" should be applicable to both winning and losing trades, just as the term "dumb luck" should be applicable to winning and losing trades.

[LightStache]

I needed to read this thread everyday for the past year. After outperforming in 2020 (yay!) I let fear push me to the sidelines in 2021 (boo!). Went to mostly cash and sold my last rental, paying the tax bill because I didn't want to buy a replacement property. Overall I probably lost out on $175K in 2021 by letting fear irrationally dictate my investments.

I'm still terrified, but now I have FOMO and so I'm forcing myself to DCA back in. It'll add insult to injury if the markets decide to "adjust" right when I finish my DCA in February.

Why do I have to "reeducate" myself like this?

How often are you watching the markets? It's difficult to be scared of something if you're not paying any attention to it.

All the time. It's also 50% of the convo with some of my friends. If I'm not going to pay attention to an aspect of my financials can it pleassseee be my spending? :D

[dougules]

While you're right that a lot of people don't have any personal experience with crashes other than COVID, watching the market skyrocket can be every bit as psychologically taxing as a big crash.  Plenty of people reading this have plenty of experience with that.  It's just a constant mental litany of "it can't go any higher", "surely it's going to crash any day", "these valuations are just out of touch with reality", "I need to wait until it goes back down to buy in".  It's just as bad as getting caught up in the idea that the sky is falling when there is a crisis that makes the market crash.

Don't pay attention then if that's what it does to that particular type of individual?  If you're the type of person who gets stressed out by the whims of the markets which are totally out of an individual's control, then maybe their allocation doesn't suit their needs to allow them to sleep comfortably at night?  You trust that your plan works based on the research that led to your plan in the first place.  And sure, if you need to make some tweaks to your IPS to be more reactive and easier to stomach in the long term, then do whatever works.  To me, life is far too short to have my neurons occupied by something like the direction of the market.  My plan is based on over 100+ years of research conducted by people far smarter than I am - why would I waste energy worrying?

Reminds me of my uncle's medical advice when I was a young kid after I had fallen or run into something and was in temporary pain.  "It hurts when I do this (I showed him the movement that caused me pain)!"  His reply after quickly assessing I did not require urgent medical attention was "Okay, then don't move it like that.  Go play and you'll forget all about it."

I completely agree, but I was countering the argument that crashes are the only thing that provoke a strong desire to buy or sell irrationally. 

[Travis]

I needed to read this thread everyday for the past year. After outperforming in 2020 (yay!) I let fear push me to the sidelines in 2021 (boo!). Went to mostly cash and sold my last rental, paying the tax bill because I didn't want to buy a replacement property. Overall I probably lost out on $175K in 2021 by letting fear irrationally dictate my investments.

I'm still terrified, but now I have FOMO and so I'm forcing myself to DCA back in. It'll add insult to injury if the markets decide to "adjust" right when I finish my DCA in February.

Why do I have to "reeducate" myself like this?

How often are you watching the markets? It's difficult to be scared of something if you're not paying any attention to it.

All the time. It's also 50% of the convo with some of my friends. If I'm not going to pay attention to an aspect of my financials can it pleassseee be my spending? :D

Yep, you definitely need to find something else to do with your time. The market will do its thing whether you're staring at it or not.  Five minutes a month is all that is required.

[Retire-Canada]

All the time. It's also 50% of the convo with some of my friends.

I check every 3 months when dividends drop. It's a lot less stressful that way.

[PDXTabs]

All the time. It's also 50% of the convo with some of my friends.

I check every 3 months when dividends drop. It's a lot less stressful that way.

I check the markets multiple times per day. I find them entertaining. But I'm still 99% VT and will be for years to come.

[JAYSLOL]

All the time. It's also 50% of the convo with some of my friends.

I check every 3 months when dividends drop. It's a lot less stressful that way.

I check the markets multiple times per day. I find them entertaining. But I'm still 99% VT and will be for years to come.

Same here, how else am I supposed to know when there’s going to be good content in the Top Is In thread?

[dougules]

I check the markets multiple times per day. I find them entertaining. But I'm still 99% VT and will be for years to come.

Same here, how else am I supposed to know when there’s going to be good content in the Top Is In thread?

There's going to be good content in the Top Is In thread at some point? :)

[talltexan]

I never expected this kind of bounce-back. Grateful that laziness kept me from selling when I wanted to. Grateful for this community of smart people who are a source of constant reminders to stay the course.

[JAYSLOL]

I check the markets multiple times per day. I find them entertaining. But I'm still 99% VT and will be for years to come.

Same here, how else am I supposed to know when there’s going to be good content in the Top Is In thread?

There's going to be good content in the Top Is In thread at some point? :)

Absolutely, by good, I of course mean stupid, and by content, I of course mean memes.  :)

[aceyou]

I haven't read through the whole thread, but to answer the OP, no, I am not terrified of the stock market right now.  Actually, I am more bullish than I've been in a long time. 

The US is almost 30 trillion in debt.  Whether we agree or disagree about the politics of how we got to this point, that's where we are at.  Now that we are at this point, the Fed pretty much has to keep printing money indefinitely or some super bad shit happens.  The downside is that US dollars will lose value even faster than they did in the past.  The upside is that with more dollars floating around, the price of assets will rise as well as the price of things like food/health care.  As long as dollar bills keep flying off the printing press, there will be more dollars flowing into VTSAX, pushing the price higher. 

This doesn't mean there won't be ups and downs still, but it does mean that there will be upward pressure on stock prices...and let's face it, the price of most everything else as well. 

My pension, however, will likely suffer greatly from this money printing deal.  Thats because once I retire, my pension will increase by a fixed amount each year...a really small amount.  So, as inflation rises, a 50k/year pension could easily turn into the equivalent of a 25k/year pension...or worse. 

My two cents is that if inflation keeps up, then stocks=good and fixed income pensions=bad.

Interested in whether others agree or disagree, and why?

[talltexan]

I don't understand why people think that inflation will be good for the stock market. Some businesses have an ability to pass price increases along to their customers, and some don't. If you believe inflation is coming--and I think @aceyou and I are on different sides of that debate--then you can pick sectors within the SPDRs to trade that.

Personally, I am an inflation skeptic, but I also trade $VTI and don't go into the sectors.

[ChpBstrd]

Here's an interesting read for anyone concerned about rising rates / withdraw of QE:

https://www.marketwatch.com/story/why-a-fed-rate-hike-could-be-just-the-medicine-stocks-need-to-keep-this-bull-market-going-11635955739

[Telecaster]

I haven't read through the whole thread, but to answer the OP, no, I am not terrified of the stock market right now.  Actually, I am more bullish than I've been in a long time. 

The US is almost 30 trillion in debt.  Whether we agree or disagree about the politics of how we got to this point, that's where we are at.  Now that we are at this point, the Fed pretty much has to keep printing money indefinitely or some super bad shit happens.  The downside is that US dollars will lose value even faster than they did in the past.  The upside is that with more dollars floating around, the price of assets will rise as well as the price of things like food/health care.  As long as dollar bills keep flying off the printing press, there will be more dollars flowing into VTSAX, pushing the price higher. 

This doesn't mean there won't be ups and downs still, but it does mean that there will be upward pressure on stock prices...and let's face it, the price of most everything else as well. 

My pension, however, will likely suffer greatly from this money printing deal.  Thats because once I retire, my pension will increase by a fixed amount each year...a really small amount.  So, as inflation rises, a 50k/year pension could easily turn into the equivalent of a 25k/year pension...or worse. 

My two cents is that if inflation keeps up, then stocks=good and fixed income pensions=bad.

Interested in whether others agree or disagree, and why?

It doesn't work like that for a few reasons.  Long term, stock prices are ultimately tied to corporate profits.  In times of high inflation, because of price stickiness and other reasons, companies have a hard time passing along all of the increased costs to consumers, so that leads to lower profits, and ultimately lower stock prices.  So no, inflation is not good for stock prices.

Another thing is that while the debt is large, the cost of debt service, as compared to GDP is fairly small.   It was much higher in the 1990s, which is a decade remembered for economic prosperity and low inflation.   So again, while large, the cost of debt service is not a large problem compared to recent history. 

As an aside, while the Fed can print money, the Treasury Dept. and Congress are the real actors here.   If Congress authorizes say, purchase of a new air craft carrier, the debt is created as soon as the Treasury cuts the check (assuming the cost is larger than available funds, which is most of the time).   The Fed doesn't play a role in that.   

[effigy98]

All in... leverage up.. YOLO 100%. The money printing is not going to stop. They have to tax people without being able to vote for tax increases to pay off sovereign debt. How do they do that? Inflation, and lots of it. They will keep lying over and over and over again saying its supply issues, transitory, wage slaves fault for being selfish and demanding more or not going to work, energy, etc etc... At the end of the day it is the central banks inflation machine that will not stop anytime soon. Sure there may be a quick crash or two, but that is just so they have an excuse to cause even MORE inflation. Hedge for sure, but you pretty much have to ignore the CAPE now. Focus on oil price (higher the better), 10 year yield (lower the better), and the dollar (lower the better). If those things are all in check, you basically have UNLIMMITED upside potential in most asset classes. Watch bitcoin, tech stocks, commodities, etc run wild.

[effigy98]

Long term, stock prices are ultimately tied to corporate profits. 

This is just not true anymore. Cheap money, easy credit, share buybacks... that has nothing to do with profit. Some of the highest gains in the market are from companies with ZERO profit.

[dougules]

Long term, stock prices are ultimately tied to corporate profits. 

This is just not true anymore. Cheap money, easy credit, share buybacks... that has nothing to do with profit. Some of the highest gains in the market are from companies with ZERO profit.

It very much still is long term.  The companies with zero profit are gaining because they are expected to have high earnings at some point in the future.  That expectation may or may not be reasonable, but that's what the high gains mean.  If those high earnings don't materialize in the -long term-, the price for shares of those companies will eventually drop like they did in the tech crash in 2000.  Also even though the market's expectations may not be reasonable, I personally am not going to think I can outguess that many people. 

[jeroly]

Long term, stock prices are ultimately tied to corporate profits. 

This is just not true anymore. Cheap money, easy credit, share buybacks... that has nothing to do with profit. Some of the highest gains in the market are from companies with ZERO profit.

It very much still is long term.  The companies with zero profit are gaining because they are expected to have high earnings at some point in the future.  That expectation may or may not be reasonable, but that's what the high gains mean.  If those high earnings don't materialize in the -long term-, the price for shares of those companies will eventually drop like they did in the tech crash in 2000.  Also even though the market's expectations may not be reasonable, I personally am not going to think I can outguess that many people.

They’re tied to the present value of expected future profits.
So a company like Tesla can be fairly valued at its high current P/E provided that future profits grow spectacularly (not saying they will, mind you).
A money losing company like GameStop might be fairly valued if its business plan can turn it around to high profitability (pretty sure it won’t).

[vand]

Yeah.. I am increasingly terrified now.

I think we've entered the blowoff top phase.

Don't know how high it will go, but the ensuing crash could easily be worse than 2008/9 in terms of peak/trough drawdown (what, 58% or so?)

[markbike528CBX]

Yeah.. I am increasingly terrified now.

I think we've entered the blowoff top phase.

Don't know how high it will go, but the ensuing crash could easily be worse than 2008/9 in terms of peak/trough drawdown (what, 58% or so?)

I don't think it will be bad in terms of nominal dollars, but purchasing power? Maybe.

[JoePublic3.14]

Yeah.. I am increasingly terrified now.

I think we've entered the blowoff top phase.

Don't know how high it will go, but the ensuing crash could easily be worse than 2008/9 in terms of peak/trough drawdown (what, 58% or so?)

And just as easily, it could be 10%. I don’t know, you don’t know.

[clarkfan1979]

The stock market doesn't scare me. However, I know that it does scare some older people who have been traditionally been "savers" that like to buy bonds and CD's. Because they emotionally can't handle the stock market, they really shouldn't do it. They won't be able to sleep at night and it's not worth it. However, I empathize with them because they are going to get crushed by inflation over the next 5 years. 

[MustacheAndaHalf]

The three worst crashes (by stock market drawdown) in the past 50 years (Portfolio Visualizer data) are:
The great financial crisis, 2007-2009, 51% drawdown
The dot com crash, 44% drawdown
The oil embargo, 1973-1974, 41% drawdown

What I also don't see in historical data is a crash one year, followed immediately by another.  It could happen, but historical evidence suggests it's unlikely.

I think we've entered the blowoff top phase.

Don't know how high it will go, but the ensuing crash could easily be worse than 2008/9 in terms of peak/trough drawdown (what, 58% or so?)

No, there hasn't been a 58% drawdown in the past 50 years.  If you can't even predict the past, how can you expect to predict the future?

[clarkfan1979]

The three worst crashes (by stock market drawdown) in the past 50 years (Portfolio Visualizer data) are:
The great financial crisis, 2007-2009, 51% drawdown
The dot com crash, 44% drawdown
The oil embargo, 1973-1974, 41% drawdown

What I also don't see in historical data is a crash one year, followed immediately by another.  It could happen, but historical evidence suggests it's unlikely.

I think we've entered the blowoff top phase.

Don't know how high it will go, but the ensuing crash could easily be worse than 2008/9 in terms of peak/trough drawdown (what, 58% or so?)

No, there hasn't been a 58% drawdown in the past 50 years.  If you can't even predict the past, how can you expect to predict the future?

At a theoretical level, no one knows what will happen in the future with 100% certainty. However, you can make accurate predictions by using logic.

Many of us on this forum invest in the stock market because historically it goes up more than it goes down. Is it a 100% guarantee going forward? No, it's not. However, when you want more certainty, you will get a reduced return. I like to embrace the uncertainty and collect the higher return.