Bear Market

[AdrianC]

Depending on where you look.

Seriously, gang—could there possibly be a more appropriate film up for Best Picture this year than The Revenant?

The protagonist has his body ripped apart by a bear and then spends the next two hours trying to heal himself and survive extreme hunger and cold. How apropos of what’s going on in the global economy and the US stock market! It’s like we’ve been sucked in to Leonardo DiCaprio’s world on screen.

http://fortune.com/2016/01/28/leonardo-dicaprio-bear-market/

We're down 8% year to date.

[nereo]

We're down 8% year to date.

Hadn't noticed until you posted it, and this seriously shouldn't matter to (almost) anyone on this site.  -8% is a complete yawn.  We had 7 consecutive years of positive returns, 4 of which were +15% or better.

[AdrianC]

We're down 8% year to date - the point being I'm not seeing a bear (defined as down 20%) in what I own.

Interesting article, though. Especially if one is invested mainly in mega-caps (e.g. VTI).

[MVal]

I know in the long run it doesn't matter that we're in such a big bear right now, but it's still a psychological bummer. I'm front loading my 401K this year and it's not very satisfying to watch my whole paycheck go into my 401K and the balance doesn't budge at all. Waaah.

[Capsu78]

Definitions from Vanguard:
From their high on May 21, 2015, global stock prices lost about 19% of their value through January 20, 2016. The setback qualifies as a "correction," which is conventionally defined as a decline of 10% or more. The term "bear market" typically refers to a decline of 20% or more lasting at least two months.

Corrections are common

Stock market downturns—corrections and bear markets—are relatively common. Since 1980, the global stock market* has experienced 12 corrections and 7 bear markets—on average, an attention-grabbing downturn every 2 years or so. Over the past 36 years, stock prices have spent almost 30% of the trading days in corrections or bear markets.

https://personal.vanguard.com/us/insights/article/market-correction-vanguard-perspective-012016

[nereo]

I know in the long run it doesn't matter that we're in such a big bear right now, but it's still a psychological bummer. I'm front loading my 401K this year and it's not very satisfying to watch my whole paycheck go into my 401K and the balance doesn't budge at all. Waaah.

Count the number of shares you own instead; then you can feel like you're still making progress (because you are!).

[MVal]

I know in the long run it doesn't matter that we're in such a big bear right now, but it's still a psychological bummer. I'm front loading my 401K this year and it's not very satisfying to watch my whole paycheck go into my 401K and the balance doesn't budge at all. Waaah.

Count the number of shares you own instead; then you can feel like you're still making progress (because you are!).

I know, I try to keep remembering that. I know I'm buying tons of shares and when the economy comes back up, my balance is going to really explode.

[Geekenstein]

I know in the long run it doesn't matter that we're in such a big bear right now, but it's still a psychological bummer. I'm front loading my 401K this year and it's not very satisfying to watch my whole paycheck go into my 401K and the balance doesn't budge at all. Waaah.

But, you want to buy as many shares as you can get if you are going to hold them for a long time, right?  The market has to go down for you to take advantage of the "buy low" part of the maxim.  If you are in this for a long time, you are going to be really disappointed you couldn't buy more when prices were so low.

The whole time I was investing in my 401k (25 years) I just threw the statements in a box.  I knew if I looked at them I would want to change something.  I'm really happy I did.

I know, I try to keep remembering that. I know I'm buying tons of shares and when the economy comes back up, my balance is going to really explode.

Exactly!

[dandarc]

Definitions from Vanguard:
From their high on May 21, 2015, global stock prices lost about 19% of their value through January 20, 2016. The setback qualifies as a "correction," which is conventionally defined as a decline of 10% or more. The term "bear market" typically refers to a decline of 20% or more lasting at least two months.

Corrections are common

Stock market downturns—corrections and bear markets—are relatively common. Since 1980, the global stock market* has experienced 12 corrections and 7 bear markets—on average, an attention-grabbing downturn every 2 years or so. Over the past 36 years, stock prices have spent almost 30% of the trading days in corrections or bear markets.

https://personal.vanguard.com/us/insights/article/market-correction-vanguard-perspective-012016

A key quote: (Note: This analysis considers price returns only. In a total return analysis, returns would be higher, and recoveries quicker, because of reinvested dividends.)

[Fire2025]

The thing I find important right now, is not what my accounts are doing, but how I'm feeling. 

I'm new to investing and I have always assumed I would be fine with market volatility, mostly because I need to be.  I'm old by MMM standards, so I need to be aggressive with my investments.  85% stocks here.  And may go t 100%.  But I have never been tested. 

And honestly, I just wish I had more to invest, so I feel very lucky that my assumption and my needs are aligned.

I hope the OP is young, because this is a great time to know that you are extremely risk adverse.  If an 8% correction makes you feel like your...

...body ripped apart by a bear and then spends the next two hours trying to heal himself and survive extreme hunger and cold. How apropos of what’s going on in the global economy and the US stock market! It’s like we’ve been sucked in to Leonardo DiCaprio’s world on screen.

I don't know enough about anything to give advice.  But I'm grateful that I'm feeling comfort with this buying opportunity.

[use2betrix]

I know in the long run it doesn't matter that we're in such a big bear right now, but it's still a psychological bummer. I'm front loading my 401K this year and it's not very satisfying to watch my whole paycheck go into my 401K and the balance doesn't budge at all. Waaah.

Really? I feel way better investing in a market that's 8% down right now instead of the stale market we had last year. I'm front loading my 401k as well, I'll only be disappointed if it crashes right after I get done lol.

[AdrianC]

I hope the OP is young, because this is a great time to know that you are extremely risk adverse.  If an 8% correction makes you feel like your...

...body ripped apart by a bear and then spends the next two hours trying to heal himself and survive extreme hunger and cold. How apropos of what’s going on in the global economy and the US stock market! It’s like we’ve been sucked in to Leonardo DiCaprio’s world on screen.

I don't know enough about anything to give advice.  But I'm grateful that I'm feeling comfort with this buying opportunity.

A misunderstanding. I (the OP) was quoting from the linked Fortune magazine article. The Fortune article claims we are in a bear. I'm not seeing it in my holdings (after today now down 6% year to date). 6% is nothing. A wiggle. I think we need a bear right now. A 20+% drawdown for the S&P 500 would be healthy and good. All you young accumulators should be hoping and praying for it.

I have been tested. Down 40% of net worth in 2008/2009. The only selling I did was to raise funds to buy stuff that was even cheaper. Every dollar we made was put into stocks. I'm not going to be caught like that next time though. I have dry powder ready. Been a net seller since late 2014.

[MVal]

I know in the long run it doesn't matter that we're in such a big bear right now, but it's still a psychological bummer. I'm front loading my 401K this year and it's not very satisfying to watch my whole paycheck go into my 401K and the balance doesn't budge at all. Waaah.

Really? I feel way better investing in a market that's 8% down right now instead of the stale market we had last year. I'm front loading my 401k as well, I'll only be disappointed if it crashes right after I get done lol.

Yes, exactly. What I meant was though my knowledge is that this is a joyful event because I'm getting everything at a super discount and someday it will be worth many times over what I paid, the immediate emotional response is less gratifying, as I used to really enjoy the visual experience of checking my 401K the day before payday and then looking at it ON payday and getting a kick out of seeing the balance a few hundred dollars higher than it was yesterday. There's no such visual stimulus with this experience, but my head knows this is supremely awesome. The delayed gratification is a slower burning high than the hit of instant gratification.

[Fire2025]

A misunderstanding. I (the OP) was quoting from the linked Fortune magazine article. The Fortune article claims we are in a bear. I'm not seeing it in my holdings (after today now down 6% year to date). 6% is nothing. A wiggle. I think we need a bear right now. A 20+% drawdown for the S&P 500 would be healthy and good. All you young accumulators should be hoping and praying for it.

I have been tested. Down 40% of net worth in 2008/2009. The only selling I did was to raise funds to buy stuff that was even cheaper. Every dollar we made was put into stocks. I'm not going to be caught like that next time though. I have dry powder ready. Been a net seller since late 2014.

Sorry for the misunderstanding.  See I know nothing about nothing.

Yes I love the buying power.  I really wish I had more to add.  I'm doing 41% into my 401k, but my salaries not that high, so that's not very impressive. 

[dividendman]

The S&P 500 is down 5% YTD. Is that even a notable event at all?

Maybe I'm confused.

[AdrianC]

The S&P 500 is down 5% YTD. Is that even a notable event at all?

Maybe I'm confused.

Read the Fortune article.

[nereo]

The S&P 500 is down 5% YTD. Is that even a notable event at all?

Maybe I'm confused.

Read the Fortune article.

I read the article.  ::shrug::  Seems like pretty generic  an vague advice, and the author has cleverly hitched it to a popular movie to generate clicks.   Is there something specific in the article you wish to discuss?

[Spork]

While I don't particularly worry about a correction... I am a little bummed.  I am newly FIRE'd, so I am actually not in a place to really buy funds (other than trading one fund for another here and there).  During the 2008 downturn I was taking a few years off to "pretire"... and missed out on all the bargains those years made, too.

[AdrianC]

I read the article.  ::shrug::  Seems like pretty generic  an vague advice, and the author has cleverly hitched it to a popular movie to generate clicks.   Is there something specific in the article you wish to discuss?

Just thought it interesting that most stocks and most sectors are in a bear, that is they are down 20% from peak. The S&P 500 is being held up by just a few mega cap stocks. This too shall pass.

[nereo]

I read the article.  ::shrug::  Seems like pretty generic  an vague advice, and the author has cleverly hitched it to a popular movie to generate clicks.   Is there something specific in the article you wish to discuss?

Just thought it interesting that most stocks and most sectors are in a bear, that is they are down 20% from peak. The S&P 500 is being held up by just a few mega cap stocks. This too shall pass.

Ah, I see what you are saying now.  Curious, when you said "this too shall pass" were you referring to the mega-cap stocks holding up the SP500, or the other sectors that are dragging it down?  ... could be viewed either way.

[AdrianC]

If I had to guess I'd say the mega caps will join the rest at some point. The S&P500 is clearly in an overvaluation situation by historical standards.

[nobodyspecial]

In the immortal words "the market is the not the economy and the economy is not the market" perhaps we need the "market is not Apple and Apple is not the market" - except that it is.

If a weak quarter by Apple, ie only making $7.5Bn profit instead of $8Bn profit, can shift the SP500 enough to make it a market downturn - whatever the market is doing then perhaps we need a better defn of correction

[marty998]

I thought the profit was US$17.5 billion for the quarter? The largest quarterly profit in the history of capitalism....

[Kaspian]

"Deteriorating market internals screamed..."?    "Bear market rallies, also known as face-rippers..."?

Here's an article (I posted elsewhere on MMM) that doesn't have the melodramatic, teen action-movie spin to it:

http://www.reuters.com/article/us-global-markets-bears-idUSKCN0V51QW