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Learning, Sharing, and Teaching => Investor Alley => Topic started by: Chesleygirl on August 11, 2017, 08:56:48 PM

Title: Getting scared of stock market
Post by: Chesleygirl on August 11, 2017, 08:56:48 PM
Dow went down after these threats on Guam.

I am 75/25 in my IRA right now but feel like putting more money into investment grade bonds. Maybe 50/50 at this point. Not sure. I'm a little heavy on stocks for my age, anyway.
Title: Re: Getting scared of stock market
Post by: Joeko on August 11, 2017, 09:37:53 PM
How far are you away from retirement?  75/25 maybe right for you depending on our date.  I have a few years to go, I'm 70/30.  A bear market, not routing for one, but it would be better to happen before your retire when your in Asset Accumulation stage than when you first retire.
Title: Re: Getting scared of stock market
Post by: Frankies Girl on August 11, 2017, 09:39:31 PM
The only thing to worry about is if you panic easily. The market goes down and yes, crashes every so often. On paper (screen) it will look terrible. The thing to keep reminding yourself is that you still own the same number of shares as before, they're just worth a lot less at the moment.

If you don't panic and sell - thus locking in that loss - then the market eventually starts going back up and those same number of funds will be worth as much if not more than before once the market starts its climb. AND you should be investing all the way down and all the way back up so you get to buy in while the market is on sale!

That's the really fun part - lows and crashes mean super SALES - you should be happy to see things go on sale, right? This is a good thing to happen, especially when you're still in active accumulation phase. Your investments are going to be fine as long as you're not going hard into specific calls and trying to play angles and hot tips.

May take a few days, a month, or even a year, but the market WILL go back up and rise even more than before, and if you took advantage of the lows and bought more at bargain pricing, you'll be even better positioned as it starts regaining value.
Title: Re: Getting scared of stock market
Post by: Chesleygirl on August 11, 2017, 09:45:07 PM
How far are you away from retirement? 

I am about 20  years away from retirement.
Title: Re: Getting scared of stock market
Post by: Chesleygirl on August 11, 2017, 09:46:01 PM
The only thing to worry about is if you panic easily. The market goes down and yes, crashes every so often. On paper (screen) it will look terrible. The thing to keep reminding yourself is that you still own the same number of shares as before, they're just worth a lot less at the moment.

If you don't panic and sell - thus locking in that loss - then the market eventually starts going back up and those same number of stocks will be worth as much if not more than before once the market starts its climb.

Thanks, that puts it into perspective.
Title: Re: Getting scared of stock market
Post by: Joeko on August 11, 2017, 09:56:46 PM
You have a long time horizon.  Stay the course
Title: Re: Getting scared of stock market
Post by: tp_from_ks on August 11, 2017, 10:32:24 PM
Stocks are one thing, maybe you mean index funds? The index funds spread the risk across many stocks, giving lower risk.

For me, I don't look day to day, usually monthly. I have 20+ years left of a healthy body to earn and stache. Sure I'd like FIRE sooner, but my less risky investing strategy with mostly index funds is fine. This less stress lets me enjoy the present rather than worrying about who-knows-what kind of future.
Title: Re: Getting scared of stock market
Post by: MDM on August 11, 2017, 10:36:59 PM
See U.S. stocks in freefall - Bogleheads.org (https://www.bogleheads.org/forum/viewtopic.php?f=10&t=80065) for almost exactly 6 years of discussion on this topic.
Title: Re: Getting scared of stock market
Post by: GuitarStv on August 12, 2017, 03:34:58 AM
How far are you away from retirement? 

I am about 20  years away from retirement.

A crash at this point is only going to help you then.  You should be investing regularly and rooting for financial turmoil.  :P
Title: Re: Getting scared of stock market
Post by: h82goslw on August 12, 2017, 06:50:55 AM
How far are you away from retirement? 

I am about 20  years away from retirement.

That's an incredibly long time horizon.  Look at any 20 year period in the market.....it's always gone up. As long as you're investing in a 3 fund portfolio I'd be 90/10.
Title: Re: Getting scared of stock market
Post by: SwordGuy on August 12, 2017, 07:05:04 AM
The two most successful demographic groups when it comes to stock market investing are (1) dead people and (2) people who bought stock and forgot they had.

That is because neither group panics and sells when the market crashes.

Stock market investing via an index fund - so easy that (literally!) brain dead people can do it well.
Title: Re: Getting scared of stock market
Post by: Cubert on August 12, 2017, 07:09:29 AM
The main thing is to diversify. You might want to look into real estate for example. Different assets offer varying hedges against stocks. Regardless, ignore the real time news and let it ride. The market will go up and down, but over time, you'll add value over the long haul. Best!
Title: Re: Getting scared of stock market
Post by: theolympians on August 12, 2017, 09:59:40 AM
There will always be the "doom and gloom" criers. I went marketwatch today and the lead story was about the "sick" stock market (how much has the market gone up in the last year?). Of course the author was writing about the big crash coming. MW has at least one of those articles  every week.

Just dollar-cost average and forget about it.
Title: Re: Getting scared of stock market
Post by: kenaces on August 12, 2017, 12:05:03 PM
The only thing to worry about is if you panic easily. The market goes down and yes, crashes every so often.

+1

Matching your true risk tolerance to your investing is critical.  It is easy to say on paper 90/10 is what everyone should do but if person is going to screw it up due to normal fear/greed reactions than the "paper studies" are irrelevant.
Title: Re: Getting scared of stock market
Post by: tralfamadorian on August 12, 2017, 02:44:55 PM
The only thing to worry about is if you panic easily. The market goes down and yes, crashes every so often.

+1

+2

You have 20 years; you should be excited that stocks might be going on sale. 
Title: Re: Getting scared of stock market
Post by: Laserjet3051 on August 13, 2017, 11:03:05 AM
If these tiny micro-movements of equity markets scare you, I'd hate to see what your reaction would have been in the 2007/2008 meltdown, where not only did stocks crash, but housing collapsed and mass layoffs were the name of the game. Trifecta!
Title: Re: Getting scared of stock market
Post by: dividendman on August 13, 2017, 12:24:28 PM
If these tiny micro-movements of equity markets scare you, I'd hate to see what your reaction would have been in the 2007/2008 meltdown, where not only did stocks crash, but housing collapsed and mass layoffs were the name of the game. Trifecta!

Yeah.... what's happening now is an amazing bull year for all assets pretty much.... total US market is up over 8% this year. Total US bond market is up over 1.5% this year.... total international market is up over 15% this year.....

If this year is worrying you then I'm afraid that you're doomed when shit actually hits the fan. You might need 50%/50% bonds/equities or even more conservative to not panic when shit goes down.
Title: Re: Getting scared of stock market
Post by: sol on August 13, 2017, 01:53:04 PM
Bucking the trend here, I've started encouraging everyone who is fearful of the stock market to sell and get out.  Not because I think that's a good idea, but because we need irrational sellers to help keep prices down for those of us getting rich by dollar cost averaging. 

A stock market with a shortage of sellers gets too expensive as the abundance of buyers compete for fewer and fewer opportunities.  I'm a perpetual buyer, and I believe in the long term future of the US economy, so by all means please dump your shares at a discount during the next crash so that I can buy them from you.  Your loss is my gain.

Most folks here have learned the lesson that we don't hold stocks because of their current market value.  We hold them for the string of dividends they produce, and for the opportunity to exchange them for cash at some future time.  Today's prices are pretty damn irrelevant, in that context, because all that matters is future prices when you intend to sell (and of course the current cashflow).  The US stock market has never lost money over a 15 year period, so if your time horizon is 15 years or more, you shouldn't lose money by buying today.  Even on the day you retire, if you intend to live 40 more years and sell it all over that time, your average time until sale is still 20 years.

You've heard Buffet's story about the neighbor shouting prices over the fence?
Quote
Buffett compared the stock market to a moody neighbor who stood at the fence each day shouting out offers to either buy the farm or sell his own at various prices. Most people can own a profitable farm or apartment building for decades without being tempted into panic selling.

“Owners of stocks, however, too often let the capricious and often irrational behavior of their fellow owners cause them to behave irrationally as well.”
Title: Re: Getting scared of stock market
Post by: runewell on August 13, 2017, 07:36:44 PM
Today's prices are pretty damn irrelevant, in that context, because all that matters is future prices when you intend to sell (and of course the current cashflow). 
The US stock market has never lost money over a 15 year period, so if your time horizon is 15 years or more, you shouldn't lose money by buying today. 

Just because you don't lose money, that doesn't mean you will get a good return on your investment.  You can still buy high and live to regret it.  Excluding dividends, anyone putting their money in the S&P in January 2000 still had a loss as of October 2012.
Title: Re: Getting scared of stock market
Post by: sol on August 13, 2017, 07:51:44 PM
Excluding dividends, anyone putting their money in the S&P in January 2000 still had a loss as of October 2012.

Is that more than 15 years?  Let me do the math real quick...   Nope, not more than 15 years.  I stand by my original statement.

And since when are dividends not real money? 
Title: Re: Getting scared of stock market
Post by: MrSal on August 13, 2017, 08:04:05 PM
Excluding dividends, anyone putting their money in the S&P in January 2000 still had a loss as of October 2012.

Is that more than 15 years?  Let me do the math real quick...   Nope, not more than 15 years.  I stand by my original statement.

And since when are dividends not real money?

not just that but he's also considering that someone invested in 2000 and never again put money... calculating with DCA in mind gives amuch better return into 2012... actually it was about 11% if i remember correctly.
Title: Re: Getting scared of stock market
Post by: mxt0133 on August 13, 2017, 08:11:58 PM
Just because you don't lose money, that doesn't mean you will get a good return on your investment.  You can still buy high and live to regret it.  Excluding dividends, anyone putting their money in the S&P in January 2000 still had a loss as of October 2012.

Not according to this chart.  Money invested in Jan 2000 in the S&P recovered by April 2007, excluding dividends.

https://finance.yahoo.com/chart/%5EGSPC#eyJtdWx0aUNvbG9yTGluZSI6ZmFsc2UsImJvbGxpbmdlclVwcGVyQ29sb3IiOiIjZTIwMDgxIiwiYm9sbGluZ2VyTG93ZXJDb2xvciI6IiM5NTUyZmYiLCJtZmlMaW5lQ29sb3IiOiIjNDVlM2ZmIiwibWFjZERpdmVyZ2VuY2VDb2xvciI6IiNmZjdiMTIiLCJtYWNkTWFjZENvbG9yIjoiIzc4N2Q4MiIsIm1hY2RTaWduYWxDb2xvciI6IiMwMDAwMDAiLCJyc2lMaW5lQ29sb3IiOiIjZmZiNzAwIiwic3RvY2hLTGluZUNvbG9yIjoiI2ZmYjcwMCIsInN0b2NoRExpbmVDb2xvciI6IiM0NWUzZmYiLCJyYW5nZSI6Im1heCJ9
Title: Re: Getting scared of stock market
Post by: mxt0133 on August 13, 2017, 08:32:16 PM
Just to jump on the band wagon.  Since I'm still only about half way to FI, I'm looking for a down turn so I can do some tax loss harvesting.  I could then sell appreciated shares and offsetting those gains with shares that have losses.  Which I would put into a different fund that has a high correlation to the original fun, I.E. VTSAX to something like VFIAX*, but still meets the IRS criteria that does not trigger the wash rule.

In the end I would have less capital gains to pay taxes on my taxable accounts.

*https://finance.yahoo.com/chart/VTSAX#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 (https://finance.yahoo.com/chart/VTSAX#eyJjb21wYXJpc29ucyI6IlZGSUFYLFZUU0FYIiwiY29tcGFyaXNvbnNDb2xvcnMiOiIjMWFjNTY3LCNmMDEyNmYiLCJjb21wYXJpc29uc0dob3N0aW5nIjoiMCwwIiwiY29tcGFyaXNvbnNXaWR0aHMiOiIxLDEiLCJtdWx0aUNvbG9yTGluZSI6ZmFsc2UsImJvbGxpbmdlclVwcGVyQ29sb3IiOiIjZTIwMDgxIiwiYm9sbGluZ2VyTG93ZXJDb2xvciI6IiM5NTUyZmYiLCJtZmlMaW5lQ29sb3IiOiIjNDVlM2ZmIiwibWFjZERpdmVyZ2VuY2VDb2xvciI6IiNmZjdiMTIiLCJtYWNkTWFjZENvbG9yIjoiIzc4N2Q4MiIsIm1hY2RTaWduYWxDb2xvciI6IiMwMDAwMDAiLCJyc2lMaW5lQ29sb3IiOiIjZmZiNzAwIiwic3RvY2hLTGluZUNvbG9yIjoiI2ZmYjcwMCIsInN0b2NoRExpbmVDb2xvciI6IiM0NWUzZmYiLCJyYW5nZSI6IjEweSJ9)
Title: Re: Getting scared of stock market
Post by: runewell on August 14, 2017, 06:10:00 AM
Excluding dividends, anyone putting their money in the S&P in January 2000 still had a loss as of October 2012.

Is that more than 15 years?  Let me do the math real quick...   Nope, not more than 15 years.  I stand by my original statement.

And since when are dividends not real money?

That's why I didn't disagree with your factual statements.  It doesn't negate the fact that the annualized return over that time period was a disappointment.
Title: Re: Getting scared of stock market
Post by: runewell on August 14, 2017, 06:12:56 AM

Not according to this chart.  Money invested in Jan 2000 in the S&P recovered by April 2007, excluding dividends.


That is true, I carefully attempted to word my statement to be correct.  Had you sold around that time, you would have gotten out around break even.  Had you not, the wait would have been another five years.  Anyone that still held the money through 2012 not have seen a gain until the end of the year.
Title: Re: Getting scared of stock market
Post by: ChpBstrd on August 15, 2017, 12:31:25 PM
There are other possible ways to reduce anxiety and market risk while staying in the market. Look up "protected put" or "options collar".
Title: Re: Getting scared of stock market
Post by: runewell on August 15, 2017, 01:20:00 PM

You have 20 years; you should be excited that stocks might be going on sale.

But they haven't gone on sale yet...

Also, just because stocks may have always been up in 20-yr periods, but some periods were much better than others.  If we are near the top and you buy in now, how good do you think your returns will be?  Not advocating being completely on the sidelines, but some caution might be warranted.
Title: Re: Getting scared of stock market
Post by: Eric on August 15, 2017, 01:38:43 PM

You have 20 years; you should be excited that stocks might be going on sale.

But they haven't gone on sale yet...

Also, just because stocks may have always been up in 20-yr periods, but some periods were much better than others.  If we are near the top and you buy in now, how good do you think your returns will be?  Not advocating being completely on the sidelines, but some caution might be warranted.

But of course it's impossible to know if we're "near the top" or if this is a top at all.  Your speculation will cost you money in the long run.  If anyone ever needed proof that market timing is a fool's game, read this:

https://forum.mrmoneymustache.com/investor-alley/here-it-comes-red-dow/
Title: Re: Getting scared of stock market
Post by: Mr Mark on August 15, 2017, 01:46:38 PM

You have 20 years; you should be excited that stocks might be going on sale.

But they haven't gone on sale yet...

Also, just because stocks may have always been up in 20-yr periods, but some periods were much better than others.  If we are near the top and you buy in now, how good do you think your returns will be?  Not advocating being completely on the sidelines, but some caution might be warranted.

Oh ffs.  Having a really hard time believing you are an "actuary" and "45"

What you are is giving bad advice and cherry picking bad data. Excluding reinvested dividends for long term buy and hold index investment is just a super stupid thing to do. Pretending one invests everything at one point and then sells soon after a crash is super stupid.

OP
Please try reading jhcollins stock series of posts, or many of MMM's posts on this. Or bogleheads.

Keep saving into an asset allocation of low cost index funds. Reinvest dividends. Don't sell. It will be fine.

Ignore the financial press. They want you to sell and hold cash (or crap  like gold coins).
Title: Re: Getting scared of stock market
Post by: tralfamadorian on August 15, 2017, 02:04:54 PM

You have 20 years; you should be excited that stocks might be going on sale.

But they haven't gone on sale yet...

Also, just because stocks may have always been up in 20-yr periods, but some periods were much better than others.  If we are near the top and you buy in now, how good do you think your returns will be?  Not advocating being completely on the sidelines, but some caution might be warranted.

Challenge accepted.  Let's come back in 10 years and see who has better returns, those of us who hold and continued to invest a steady percentage of our income in our predetermined asset allocation until FIRE or those who sell to be "cautious". 
Title: Re: Getting scared of stock market
Post by: Radagast on August 15, 2017, 02:13:57 PM

You have 20 years; you should be excited that stocks might be going on sale.

But they haven't gone on sale yet...

Also, just because stocks may have always been up in 20-yr periods, but some periods were much better than others.  If we are near the top and you buy in now, how good do you think your returns will be?  Not advocating being completely on the sidelines, but some caution might be warranted.
Runewell, now that you are an expert on investing you should give concrete suggestions instead of saying people should be afraid for fear's sake. For example, I recommend a US investor who may be concerned about an upcoming crash be 45% US stocks, 30% international stocks, and 25% bonds and rebalance either once per year, or according to predetermined bands. What is your suggestion? What does "caution might be warranted" mean?
Title: Re: Getting scared of stock market
Post by: runewell on August 15, 2017, 02:26:25 PM

Runewell, now that you are an expert on investing you should give concrete suggestions instead of saying people should be afraid for fear's sake. For example, I recommend a US investor who may be concerned about an upcoming crash be 45% US stocks, 30% international stocks, and 25% bonds and rebalance either once per year, or according to predetermined bands. What is your suggestion? What does "caution might be warranted" mean?

Not sure why you are calling me an expert, I am just entitled to my opinion on this board like everyone else.

I recommend a diversified portfolio: 40% Elvis memorabilia, 30% snow domes, 20% Beanie Babies, and 10% under the mattress in case a good flea market comes to town, you want to be able to snap up a good buy.

It looks like your recommended allocation suffers from less home-country bias than other suggestions on this forum.
Title: Re: Getting scared of stock market
Post by: Eric on August 15, 2017, 02:32:59 PM

Runewell, now that you are an expert on investing you should give concrete suggestions instead of saying people should be afraid for fear's sake. For example, I recommend a US investor who may be concerned about an upcoming crash be 45% US stocks, 30% international stocks, and 25% bonds and rebalance either once per year, or according to predetermined bands. What is your suggestion? What does "caution might be warranted" mean?

Not sure why you are calling me an expert, I am just entitled to my opinion on this board like everyone else.

I recommend a diversified portfolio: 40% Elvis memorabilia, 30% snow domes, 20% Beanie Babies, and 10% under the mattress in case a good flea market comes to town, you want to be able to snap up a good buy.

It looks like your recommended allocation suffers from less home-country bias than other suggestions on this forum.

You're entitled to your opinion, but you're not entitled to give shitty advice.  At least not without being called out on it, which you seem to relish for some reason.
Title: Re: Getting scared of stock market
Post by: seattlecyclone on August 15, 2017, 02:42:49 PM
Excluding dividends, anyone putting their money in the S&P in January 2000 still had a loss as of October 2012.

Is that more than 15 years?  Let me do the math real quick...   Nope, not more than 15 years.  I stand by my original statement.

And since when are dividends not real money?

That's why I didn't disagree with your factual statements.  It doesn't negate the fact that the annualized return over that time period was a disappointment.

A disappointment compared to what, though? Vanguard's Total Bond Index is up less than 1% annually since 2000, again excluding dividends. The lines crossed briefly in 2007, and again in 2013 (https://www.google.com/finance?chdnp=1&chdd=1&chds=1&chdv=1&chvs=maximized&chdeh=0&chfdeh=0&chdet=1502829448485&chddm=1746206&cmpto=MUTF:VIIIX&cmptdms=0&q=MUTF:VBMFX&&ei=hVuTWZnRDMKSjAHe3rzABQ).

But why cherry-pick 2000? Looking only at that year is only relevant if you had a bunch of cash to invest right at that moment and never earned another cent before or since. For most of us with jobs that provide us a steady trickle of income, the performance starting any one year just doesn't matter that much. Yes, you would have been behind for a while on your year 2000 shares, but your year 1999 and 2002 and 2005 shares would have been in positive territory much longer.
Title: Re: Getting scared of stock market
Post by: Retire-Canada on August 15, 2017, 02:47:42 PM
Excluding dividends, anyone putting their money in the S&P in January 2000 still had a loss as of October 2012.

Nobody invests for retirement by putting all their money into the market on one specific date and nobody invests for retirement and ignores dividends. You have to make up some really bat shit crazy assumptions to try and prove your incorrect point.
Title: Re: Getting scared of stock market
Post by: MDM on August 15, 2017, 05:45:44 PM
I recommend a diversified portfolio: 40% Elvis memorabilia, 30% snow domes, 20% Beanie Babies, and 10% under the mattress in case a good flea market comes to town, you want to be able to snap up a good buy.
Finally we have a suggestion from you.  It will be good to refer to this on other threads, so others may factor this into judgement.
Title: Re: Getting scared of stock market
Post by: GenXbiker on August 15, 2017, 07:42:23 PM
Dow went down after these threats on Guam.

I am 75/25 in my IRA right now but feel like putting more money into investment grade bonds. Maybe 50/50 at this point. Not sure. I'm a little heavy on stocks for my age, anyway.
With 20 years to go, I was 100% stocks.  I think you should be more weighted towards stocks, not bonds.

I wouldn't mind seeing a nice temporary dip in the market, much larger than the blip we just had.  I'm heavy cash right now, and I could go for a good stock sale.
Title: Re: Getting scared of stock market
Post by: runewell on August 15, 2017, 08:57:02 PM
Excluding dividends, anyone putting their money in the S&P in January 2000 still had a loss as of October 2012.

Nobody invests for retirement by putting all their money into the market on one specific date and nobody invests for retirement and ignores dividends. You have to make up some really bat shit crazy assumptions to try and prove your incorrect point.

The only reason I exclude the dividends is because I can't easily say what the return would have been with dividends, not because I think they should be ignored - of course they should be considered.   The dividend yield at the time.

I recommend a diversified portfolio: 40% Elvis memorabilia, 30% snow domes, 20% Beanie Babies, and 10% under the mattress in case a good flea market comes to town, you want to be able to snap up a good buy.
Finally we have a suggestion from you.  It will be good to refer to this on other threads, so others may factor this into judgement.

Good idea, then they'll know someone who can't stand a little humor?
Title: Re: Getting scared of stock market
Post by: DavidAnnArbor on August 15, 2017, 09:01:16 PM
I recommend a diversified portfolio: 40% Elvis memorabilia, 30% snow domes, 20% Beanie Babies, and 10% under the mattress in case a good flea market comes to town, you want to be able to snap up a good buy.
Finally we have a suggestion from you.  It will be good to refer to this on other threads, so others may factor this into judgement.

Good idea, then they'll know someone who can't stand a little humor?

I have to agree with Runewell on this one, I thought it was funny.
Title: Re: Getting scared of stock market
Post by: runewell on August 15, 2017, 09:02:18 PM
Nobody invests for retirement by putting all their money into the market on one specific date

Why shouldn't they?  Otherwise, that would be market timing right?  If the market is headed up then all dollar cost averaging does is lose you money.   

If there was one set-it-and-forget-it-for-20-years decision to make right now, 100% stocks probably would be ideal.
Title: Re: Getting scared of stock market
Post by: seattlecyclone on August 15, 2017, 09:05:08 PM
Nobody invests for retirement by putting all their money into the market on one specific date

Why shouldn't they?  Otherwise, that would be market timing right?  If the market is headed up then all dollar cost averaging does is lose you money.   

If you start out with a pile of cash on Day 1, sure, but most people don't acquire all of their investable assets on one day. Instead, the more common thing is for a person to have a little bit extra to save from various paychecks over a period of a decade or more.
Title: Re: Getting scared of stock market
Post by: Retire-Canada on August 15, 2017, 09:07:26 PM
Why shouldn't they?

Excepting trust funders and lottery winners nobody earns $1M+ on one day and invests it the next day. I haven't run into anyone like that on these forums.
Title: Re: Getting scared of stock market
Post by: MDM on August 15, 2017, 09:15:35 PM
I recommend a diversified portfolio: 40% Elvis memorabilia, 30% snow domes, 20% Beanie Babies, and 10% under the mattress in case a good flea market comes to town, you want to be able to snap up a good buy.
Finally we have a suggestion from you.  It will be good to refer to this on other threads, so others may factor this into judgement.

Good idea, then they'll know someone who can't stand a little humor?

I have to agree with Runewell on this one, I thought it was funny.

Yes, it would have been, had runewell taken a serious, positive position on something at another time.  Then it would have been a fine joke.  Unfortunately, we have yet to see runewell do that.
Title: Re: Getting scared of stock market
Post by: runewell on August 15, 2017, 09:26:16 PM

If you start out with a pile of cash on Day 1, sure, but most people don't acquire all of their investable assets on one day. Instead, the more common thing is for a person to have a little bit extra to save from various paychecks over a period of a decade or more.

Fair enough, I don't think of that as active DCA but rather as investing when I get my hands on the money every two weeks.  If I could get my hands on the entire paycheck on January 1, I would invest in January 1.
Title: Re: Getting scared of stock market
Post by: CanuckExpat on August 15, 2017, 09:35:45 PM
That's an incredibly long time horizon.  Look at any 20 year period in the market.....it's always gone up. As long as you're investing in a 3 fund portfolio I'd be 90/10.

For fun, here's a total return chart (http://bit.ly/2fIT9g5) of the last 20 years for each of the constituents:
(http://i.imgur.com/J19632O.png)

If you had invested $10,000 in each of a US total bond fund, US total stock market fund, and International Total Stock Market fund  on one day, exactly 20 years ago (give or take a day) and reinvested dividends, at yesterdays closing you would have $92,767.27. More then tripling your money (in nominal dollars, roughly doubling in real dollars) even with the tech crash and great recession. Not the best 20 year period ever, but probably beat sitting on cash.
Title: Re: Getting scared of stock market
Post by: DavidAnnArbor on August 16, 2017, 08:41:39 AM

"China's huge debt pile could be the trigger for the next financial crisis as borrowing reaches unsustainable levels, according to a study from the International Monetary Fund (IMF). "

http://www.businessinsider.com/imf-chinese-economy-debt-dangerous-growth-2017-8

Bottom line: You have to embrace the volatility. Think of them like a churning ocean, but the long-term trend is upward.
Title: Re: Getting scared of stock market
Post by: dividendman on August 16, 2017, 09:39:41 AM

"China's huge debt pile could be the trigger for the next financial crisis as borrowing reaches unsustainable levels, according to a study from the International Monetary Fund (IMF). "

http://www.businessinsider.com/imf-chinese-economy-debt-dangerous-growth-2017-8

Bottom line: You have to embrace the volatility. Think of them like a churning ocean, but the long-term trend is upward.

Good analogy. Especially because the oceans' long term trend is upward as well.
Title: Re: Getting scared of stock market
Post by: prognastat on August 16, 2017, 09:47:35 AM

"China's huge debt pile could be the trigger for the next financial crisis as borrowing reaches unsustainable levels, according to a study from the International Monetary Fund (IMF). "

http://www.businessinsider.com/imf-chinese-economy-debt-dangerous-growth-2017-8

Bottom line: You have to embrace the volatility. Think of them like a churning ocean, but the long-term trend is upward.

Good analogy. Especially because the oceans' long term trend is upward as well.

And both due to industrialization.
Title: Re: Getting scared of stock market
Post by: DarthCreationist on August 18, 2017, 05:26:39 AM
We should not be afraid of a crash. We want to buy stocks, we prefer lower prices. It's common sense.

If we wanted to sell stocks, things would be the other way round. But we don't. In fact, we should never stop buying, even in retirement.
Title: Re: Getting scared of stock market
Post by: Aggie1999 on August 18, 2017, 08:32:16 AM
We should not be afraid of a crash. We want to buy stocks, we prefer lower prices. It's common sense.

If we wanted to sell stocks, things would be the other way round. But we don't. In fact, we should never stop buying, even in retirement.

I see this sentiment posted often around here. It confuses me though. This forum is all about getting investments to a point where one can live off the gains. If they are truly doing that how are these people going to continue to buy in retirement?
Title: Re: Getting scared of stock market
Post by: MDM on August 18, 2017, 09:13:26 AM
We should not be afraid of a crash. We want to buy stocks, we prefer lower prices. It's common sense.

If we wanted to sell stocks, things would be the other way round. But we don't. In fact, we should never stop buying, even in retirement.

I see this sentiment posted often around here. It confuses me though. This forum is all about getting investments to a point where one can live off the gains. If they are truly doing that how are these people going to continue to buy in retirement?
It should confuse you because, taken literally, it is not correct.

Presumably there is an expectation that prices will recover.  For those just starting retirement, however, being forced to sell in a severely depressed market is not good.  E.g., see Understanding Sequence Of Return Risk & Safe Withdrawal Rates (https://www.kitces.com/blog/understanding-sequence-of-return-risk-safe-withdrawal-rates-bear-market-crashes-and-bad-decades/).  As that article indicates, a year or two of negative returns is not the end of the world (or one's retirement dreams), but it's not something one would prefer.
Title: Re: Getting scared of stock market
Post by: GuitarStv on August 18, 2017, 10:14:44 AM
Typically an asset allocation isn't 100% stocks.  This gives you the freedom to sell either the stocks or the bonds when you need to withdraw money.  This means that when the stocks tank you can live off the bonds and wait out the recovery.  When the stocks do great you can replenish your bonds.
Title: Re: Getting scared of stock market
Post by: sol on August 18, 2017, 10:44:53 AM
Typically an asset allocation isn't 100% stocks.  This gives you the freedom to sell either the stocks or the bonds when you need to withdraw money.  This means that when the stocks tank you can live off the bonds and wait out the recovery.  When the stocks do great you can replenish your bonds.

The down side of this proposed strategy, of course, is that stocks can continue to go down long after you've depleted all of your bonds.  At that point you'd be forced to sell stocks at an even greater loss, and you would have been better off selling the stocks early in the downturn, and then selling the bonds later.  Selling bonds when the stock market tanks is the opposite of sound portfolio management.  That's rebalancing in reverse.

Any strategy that recommends selling stocks vs bonds at particular points in the business cycle is, by definition, market timing of some sort.

A more MMM-friendly strategy is to maintain your asset allocation all through the cycle.  When stocks tank, your losses will be mitigated by your bond holdings and you'll automatically be buying more stocks as you rebalance.  When stocks explode, you'll still get the benefit of the extra stocks you bought while they were down, but your rebalancing will put your new money more into bonds to protect you against the next downturn. 

Holding your asset allocation constant all through economic cycles, as you continue to DCA into the market while working, is the safest and most conservative play available, and it also happens to be the easiest to execute.  You don't need to forecast the market.  You don't need to get the timing or the severity of the business cycle right.  Just keep investing while keeping your chosen percentages constant, and focus on earning more and saving more instead of trying to game the system.  You've already found the winningest strategy by doing as little as possible, so why risk anything else?
Title: Re: Getting scared of stock market
Post by: ChpBstrd on August 18, 2017, 11:29:50 AM
Typically an asset allocation isn't 100% stocks.  This gives you the freedom to sell either the stocks or the bonds when you need to withdraw money.  This means that when the stocks tank you can live off the bonds and wait out the recovery.  When the stocks do great you can replenish your bonds.

The down side of this proposed strategy, of course, is that stocks can continue to go down long after you've depleted all of your bonds.  At that point you'd be forced to sell stocks at an even greater loss, and you would have been better off selling the stocks early in the downturn, and then selling the bonds later.  Selling bonds when the stock market tanks is the opposite of sound portfolio management.  That's rebalancing in reverse.

Any strategy that recommends selling stocks vs bonds at particular points in the business cycle is, by definition, market timing of some sort.

A more MMM-friendly strategy is to maintain your asset allocation all through the cycle.  When stocks tank, your losses will be mitigated by your bond holdings and you'll automatically be buying more stocks as you rebalance.  When stocks explode, you'll still get the benefit of the extra stocks you bought while they were down, but your rebalancing will put your new money more into bonds to protect you against the next downturn. 

Holding your asset allocation constant all through economic cycles, as you continue to DCA into the market while working, is the safest and most conservative play available, and it also happens to be the easiest to execute.  You don't need to forecast the market.  You don't need to get the timing or the severity of the business cycle right.  Just keep investing while keeping your chosen percentages constant, and focus on earning more and saving more instead of trying to game the system.  You've already found the winningest strategy by doing as little as possible, so why risk anything else?
Is it market timing to load up on, say, oats when they go on sale?
Title: Re: Getting scared of stock market
Post by: MDM on August 18, 2017, 11:34:47 AM
Typically an asset allocation isn't 100% stocks.  This gives you the freedom to sell either the stocks or the bonds when you need to withdraw money.  This means that when the stocks tank you can live off the bonds and wait out the recovery.  When the stocks do great you can replenish your bonds.
If one maintains a given asset allocation, not only would one need to sell bonds for living expenses but also sell more bonds to buy stocks.

Easy to use hindsight and say "no problem", especially for short V-shaped drops and recoveries.  Also relatively easy when one has wage income at the time, as sol notes.

But when stocks are dropping and there's no income other than selling investments - that's a different story.

Selling bonds when the stock market tanks is the opposite of sound portfolio management.  That's rebalancing in reverse.
...
A more MMM-friendly strategy is to maintain your asset allocation all through the cycle.  When stocks tank, your losses will be mitigated by your bond holdings and you'll automatically be buying more stocks as you rebalance.
In order to maintain one's asset allocation (when there is no wage income), one would have to sell bonds when the stock market tanks.

Based on history it would be the right thing to do.  But it would not likely be fun while doing so.
Title: Re: Getting scared of stock market
Post by: GuitarStv on August 18, 2017, 11:36:38 AM
Typically an asset allocation isn't 100% stocks.  This gives you the freedom to sell either the stocks or the bonds when you need to withdraw money.  This means that when the stocks tank you can live off the bonds and wait out the recovery.  When the stocks do great you can replenish your bonds.

The down side of this proposed strategy, of course, is that stocks can continue to go down long after you've depleted all of your bonds.  At that point you'd be forced to sell stocks at an even greater loss, and you would have been better off selling the stocks early in the downturn, and then selling the bonds later.  Selling bonds when the stock market tanks is the opposite of sound portfolio management.  That's rebalancing in reverse.

Any strategy that recommends selling stocks vs bonds at particular points in the business cycle is, by definition, market timing of some sort.

A more MMM-friendly strategy is to maintain your asset allocation all through the cycle.  When stocks tank, your losses will be mitigated by your bond holdings and you'll automatically be buying more stocks as you rebalance.  When stocks explode, you'll still get the benefit of the extra stocks you bought while they were down, but your rebalancing will put your new money more into bonds to protect you against the next downturn. 

Holding your asset allocation constant all through economic cycles, as you continue to DCA into the market while working, is the safest and most conservative play available, and it also happens to be the easiest to execute.  You don't need to forecast the market.  You don't need to get the timing or the severity of the business cycle right.  Just keep investing while keeping your chosen percentages constant, and focus on earning more and saving more instead of trying to game the system.  You've already found the winningest strategy by doing as little as possible, so why risk anything else?

That's what I was (apparently poorly) describing.  If your stocks have tanked, then you would take money out of your bonds when you need to take money out, and vice versa.  You determine if something is tanking by looking at your asset allocation to see if it's out of whack or not.  When you sell the thing that's doing well you're (slightly) re-balancing.





Is it market timing to load up on, say, oats when they go on sale?

Has the oat market produced reliable returns over any given 20 year period?  :D
Title: Re: Getting scared of stock market
Post by: DarthCreationist on August 18, 2017, 11:48:15 AM
We should not be afraid of a crash. We want to buy stocks, we prefer lower prices. It's common sense.

If we wanted to sell stocks, things would be the other way round. But we don't. In fact, we should never stop buying, even in retirement.

I see this sentiment posted often around here. It confuses me though. This forum is all about getting investments to a point where one can live off the gains. If they are truly doing that how are these people going to continue to buy in retirement?
Sure, you should be able to live off your investments. But do you plan to cut absolutely close, so that in your normal expected case, you use 100% of your returns for your living cost?

I would argue you should have some safety margin, and whenever you don't need it, you invest it also and increase your standard of living.
Title: Re: Getting scared of stock market
Post by: JAYSLOL on August 18, 2017, 12:01:25 PM

Is it market timing to load up on, say, oats when they go on sale?

Yes, it's supermarket timing :)

Title: Re: Getting scared of stock market
Post by: Eric on August 18, 2017, 12:10:32 PM
We should not be afraid of a crash. We want to buy stocks, we prefer lower prices. It's common sense.

If we wanted to sell stocks, things would be the other way round. But we don't. In fact, we should never stop buying, even in retirement.

I see this sentiment posted often around here. It confuses me though. This forum is all about getting investments to a point where one can live off the gains. If they are truly doing that how are these people going to continue to buy in retirement?
Sure, you should be able to live off your investments. But do you plan to cut absolutely close, so that in your normal expected case, you use 100% of your returns for your living cost?

I would argue you should have some safety margin, and whenever you don't need it, you invest it also and increase your standard of living.

But how are you going to continue to buy in retirement?  It makes no sense, unless your version of retirement involves continuing to work.

I will sure as shit not be buying any stocks in retirement.  The WHOLE POINT of buying them now is so that I can sell them and not work.
Title: Re: Getting scared of stock market
Post by: Aggie1999 on August 18, 2017, 12:19:50 PM
We should not be afraid of a crash. We want to buy stocks, we prefer lower prices. It's common sense.

If we wanted to sell stocks, things would be the other way round. But we don't. In fact, we should never stop buying, even in retirement.

I see this sentiment posted often around here. It confuses me though. This forum is all about getting investments to a point where one can live off the gains. If they are truly doing that how are these people going to continue to buy in retirement?
Sure, you should be able to live off your investments. But do you plan to cut absolutely close, so that in your normal expected case, you use 100% of your returns for your living cost?

I would argue you should have some safety margin, and whenever you don't need it, you invest it also and increase your standard of living.

I agree on the safety margin but it you are living off the ~2% dividends of the typical 3 fund portfolio there is no additional money to buy more shares. I guess over time as the stock price increases the dividends increase, correct? That would give extra money to buy investments assuming one is sticking to the fixed withdraw rate scheme.
Title: Re: Getting scared of stock market
Post by: VoteCthulu on August 18, 2017, 01:52:01 PM
We should not be afraid of a crash. We want to buy stocks, we prefer lower prices. It's common sense.

If we wanted to sell stocks, things would be the other way round. But we don't. In fact, we should never stop buying, even in retirement.

I see this sentiment posted often around here. It confuses me though. This forum is all about getting investments to a point where one can live off the gains. If they are truly doing that how are these people going to continue to buy in retirement?
Sure, you should be able to live off your investments. But do you plan to cut absolutely close, so that in your normal expected case, you use 100% of your returns for your living cost?

I would argue you should have some safety margin, and whenever you don't need it, you invest it also and increase your standard of living.

But how are you going to continue to buy in retirement?  It makes no sense, unless your version of retirement involves continuing to work.

I will sure as shit not be buying any stocks in retirement.  The WHOLE POINT of buying them now is so that I can sell them and not work.
Because part of the 4% rule includes getting 6+% actual returns, and reinvesting the part you don't spend in order to keep up with inflation.

Also, budgets should include repairs and maintenance that occur less than annually, which means that money continues to get reinvested until needed.
Title: Re: Getting scared of stock market
Post by: Eric on August 18, 2017, 01:57:11 PM
We should not be afraid of a crash. We want to buy stocks, we prefer lower prices. It's common sense.

If we wanted to sell stocks, things would be the other way round. But we don't. In fact, we should never stop buying, even in retirement.

I see this sentiment posted often around here. It confuses me though. This forum is all about getting investments to a point where one can live off the gains. If they are truly doing that how are these people going to continue to buy in retirement?
Sure, you should be able to live off your investments. But do you plan to cut absolutely close, so that in your normal expected case, you use 100% of your returns for your living cost?

I would argue you should have some safety margin, and whenever you don't need it, you invest it also and increase your standard of living.

But how are you going to continue to buy in retirement?  It makes no sense, unless your version of retirement involves continuing to work.

I will sure as shit not be buying any stocks in retirement.  The WHOLE POINT of buying them now is so that I can sell them and not work.
Because part of the 4% rule includes getting 6+% actual returns, and reinvesting the part you don't spend in order to keep up with inflation.

Also, budgets should include repairs and maintenance that occur less than annually, which means that money continues to get reinvested until needed.

Yeah, that's not how it works.  There's nothing to "reinvest".  Even if your portfolio increases 30% and you withdrawal only 2%, you're still not buying more stocks.  It's the ones that you already own that appreciated.
Title: Re: Getting scared of stock market
Post by: solon on August 18, 2017, 01:59:35 PM
We should not be afraid of a crash. We want to buy stocks, we prefer lower prices. It's common sense.

If we wanted to sell stocks, things would be the other way round. But we don't. In fact, we should never stop buying, even in retirement.

I see this sentiment posted often around here. It confuses me though. This forum is all about getting investments to a point where one can live off the gains. If they are truly doing that how are these people going to continue to buy in retirement?
Sure, you should be able to live off your investments. But do you plan to cut absolutely close, so that in your normal expected case, you use 100% of your returns for your living cost?

I would argue you should have some safety margin, and whenever you don't need it, you invest it also and increase your standard of living.

But how are you going to continue to buy in retirement?  It makes no sense, unless your version of retirement involves continuing to work.

I will sure as shit not be buying any stocks in retirement.  The WHOLE POINT of buying them now is so that I can sell them and not work.
Because part of the 4% rule includes getting 6+% actual returns, and reinvesting the part you don't spend in order to keep up with inflation.

Also, budgets should include repairs and maintenance that occur less than annually, which means that money continues to get reinvested until needed.

Yeah, that's not how it works.  There's nothing to "reinvest".  Even if your portfolio increases 30% and you withdrawal only 2%, you're still not buying more stocks.  It's the ones that you already own that appreciated.

If your dividends are more than your living expenses, then you could be buying more.
Title: Re: Getting scared of stock market
Post by: Eric on August 18, 2017, 02:02:45 PM
If your dividends are more than your living expenses, then you could be buying more.

Sure, but then the original suggestion would imply that you shouldn't retire without a less than 2% WR, which itself is equally ludicrous.
Title: Re: Getting scared of stock market
Post by: martyconlonontherun on August 18, 2017, 02:52:39 PM
Dave Ramnsey one time said something along the lines that if you had invested right before the worst crashes in the last 40 years (aka you only put in money at the worst possible time) you still would've had a great return. Anyone here of a study or analysis like this? I tried searching on the web and couldn't verify it.
Title: Re: Getting scared of stock market
Post by: dandarc on August 18, 2017, 03:13:10 PM
Dave Ramnsey one time said something along the lines that if you had invested right before the worst crashes in the last 40 years (aka you only put in money at the worst possible time) you still would've had a great return. Anyone here of a study or analysis like this? I tried searching on the web and couldn't verify it.
http://awealthofcommonsense.com/2014/02/worlds-worst-market-timer/ (http://awealthofcommonsense.com/2014/02/worlds-worst-market-timer/)
Title: Re: Getting scared of stock market
Post by: martyconlonontherun on August 18, 2017, 05:45:30 PM
Dave Ramnsey one time said something along the lines that if you had invested right before the worst crashes in the last 40 years (aka you only put in money at the worst possible time) you still would've had a great return. Anyone here of a study or analysis like this? I tried searching on the web and couldn't verify it.
http://awealthofcommonsense.com/2014/02/worlds-worst-market-timer/ (http://awealthofcommonsense.com/2014/02/worlds-worst-market-timer/)

Thanks!!! Been looking online for it since I hear the podcast a year ago!
Title: Re: Getting scared of stock market
Post by: Indexer on August 18, 2017, 08:55:26 PM
@Chelseygirl:

You have a lot of opinions here, most of them saying don't sell. I agree with that. It is the logical answer.

The emotional answer: have a portfolio you are comfortable holding onto no matter what is happening. The little blip in the markets caused by NK shouldn't worry you. If that worries you then how will you feel in a time like early March 2009 when the markets have been dropping for nearly two years, they are down over 50%, and the news media has been in doom and gloom mode for that whole time? If you aren't comfortable with your 75/25 right now, how will you feel then?

No, you shouldn't sell because of what is happening right now. However, you should have a portfolio going forward that you are comfortable holding onto no matter what happens. Just don't go to conservative. You don't want the fear of short term drops to scare you away from the returns you need to meet your goals.
Title: Re: Getting scared of stock market
Post by: grettman on August 19, 2017, 06:03:57 AM
If these tiny micro-movements of equity markets scare you, I'd hate to see what your reaction would have been in the 2007/2008 meltdown, where not only did stocks crash, but housing collapsed and mass layoffs were the name of the game. Trifecta!

Spot on. 

OP:  Do this -- if you are tracking your investments in a spreadsheet, change the number so that it shows you are down 30-45 percent.  Stare at that number and then close your eyes and imagine that number is real (I know this is hard to do).....  now think to yourself how you feel.  This is important because this can happen to you.  Everyone has enjoyed a ver nice ride that will eventually come to an end (or maybe not).
Title: Re: Getting scared of stock market
Post by: lifeminimalized on August 20, 2017, 06:40:41 AM
Here is some perspective.

There have been (2) days the month of August thus far that the S&P 500 has closed the bell <-1% and on each of those days I contributed more than I have all year.

Stay the course, buy the dips. I have 34 years to retirement, so I'm a little younger than you however 20 years is plenty of time.
Title: Re: Getting scared of stock market
Post by: Kaspian on August 22, 2017, 01:48:09 PM
Dow went down after these threats on Guam.

I am 75/25 in my IRA right now but feel like putting more money into investment grade bonds. Maybe 50/50 at this point. Not sure. I'm a little heavy on stocks for my age, anyway.

Does your Personal Investment Policy, (you know--the one you wrote to formalize the plan), say anything in it about "Guam"?  If not, continue as usual.

This guy.  Don't be this guy.  https://forum.mrmoneymustache.com/investor-alley/sat-out-the-trump-rally-advice-on-jumping-back-in/ (https://forum.mrmoneymustache.com/investor-alley/sat-out-the-trump-rally-advice-on-jumping-back-in/)
Title: Re: Getting scared of stock market
Post by: DarkandStormy on August 22, 2017, 02:43:56 PM
I have 34 years to retirement

Planned retirement or when society says you can retire?
Title: Re: Getting scared of stock market
Post by: DarkandStormy on August 22, 2017, 02:52:29 PM
Also, just because stocks may have always been up in 20-yr periods, but some periods were much better than others.  If we are near the top and you buy in now, how good do you think your returns will be?  Not advocating being completely on the sidelines, but some caution might be warranted.

The worst 20-year return of the S&P 500 is 6.4% annually.
Title: Re: Getting scared of stock market
Post by: sol on August 22, 2017, 03:43:37 PM
The worst 20-year return of the S&P 500 is 6.4% annually.

But I thought runewell had shown us all the absolute necessity of the 2% SWR!

It's easy to skew these numbers with bad assumptions.  A surprising number of people with a woeful misunderstanding of the SWR literature like to post doom and gloom scenarios on this forum as if they were retirement experts.  6.4% you say?  They'll counter that by looking only at market returns you're ignoring inflation adjustments, which of course should be modeled as monte carlo runs (even though they don't understand that either) because that generates more worse case scenarios.  And of course everyone needs to pay a 1% management fee.  And you're analysis includes dividends, which (you'll hear argued here) aren't guaranteed money and should be excluded.  Suddenly we've turned 6.4 into 4.5 into 3.5 into 2%. 

And then comes my personal favorite retort, "the future is inherently unknowable so you can never retire."
Title: Re: Getting scared of stock market
Post by: Chairman on August 22, 2017, 09:00:35 PM
Just because something has happened in the past (even if it has always happened in the past), doesn't mean that it will happen in the future. Just ask Japan, still waiting for its recovery. Too many people think stocks can't go wrong. They can. If it were certain, investing wouldn't entail risk.
Title: Re: Getting scared of stock market
Post by: GenXbiker on August 22, 2017, 09:41:59 PM

Historical rolling periods returns for the S&P 500 and adjusted for inflation can be gotten here:

https://dqydj.com/sp-500-historical-return-calculator/
Title: Re: Getting scared of stock market
Post by: Chairman on August 23, 2017, 10:08:44 AM
Good analysis on current valuations here: http://www.etf.com/sections/index-investor-corner/swedroe-wait-youll-likely-miss-out?nopaging=1

A reminder that international diversification is important.
Title: Re: Getting scared of stock market
Post by: DavidAnnArbor on August 24, 2017, 06:23:36 PM
Just because something has happened in the past (even if it has always happened in the past), doesn't mean that it will happen in the future. Just ask Japan, still waiting for its recovery. Too many people think stocks can't go wrong. They can. If it were certain, investing wouldn't entail risk.

I definitely agree about international diversification to mitigate the Japan style risk.
But how many stock markets ever experienced that Japan style leap and drop and never recovered even after close to 30 years ?
Title: Re: Getting scared of stock market
Post by: DarkandStormy on September 01, 2017, 08:53:09 AM
Still scared?
Title: Re: Getting scared of stock market
Post by: talltexan on September 01, 2017, 12:18:01 PM
If you're scared at SPY of $24.4, you should be terrified at SPY of $24.7
Title: Re: Getting scared of stock market
Post by: Full Beard on September 04, 2017, 04:35:49 PM

Is it market timing to load up on, say, oats when they go on sale?

Yes, it's supermarket timing :)

Haha, that was a good one.
Title: Re: Getting scared of stock market
Post by: martyconlonontherun on September 07, 2017, 01:24:43 PM
Just because something has happened in the past (even if it has always happened in the past), doesn't mean that it will happen in the future. Just ask Japan, still waiting for its recovery. Too many people think stocks can't go wrong. They can. If it were certain, investing wouldn't entail risk.

I definitely agree about international diversification to mitigate the Japan style risk.
But how many stock markets ever experienced that Japan style leap and drop and never recovered even after close to 30 years ?

I'm not scared of the market but I think it is hubris to think it is fail proof. The market as we know, where the average person can buy and sell, isn't that old. The first composite indexes were from 1923, or less than a 100 years ago. There are 20 yo's on this site and are investing for the next 60-70 years. I don't think you can just talk about modern stock markets that don't have a long term history. If you include stock markets from hundreds of years ago, I'm sure there are plenty that never recovered due to war, etc.
Title: Re: Getting scared of stock market
Post by: acroy on September 07, 2017, 01:37:26 PM

Is it market timing to load up on, say, oats when they go on sale?

Yes, it's supermarket timing :)

Haha, that was a good one.

Actually, interesting factoid: commodities are pretty darn cheap right now.
https://us.spindices.com/indices/commodities/dow-jones-commodity-index

Compared to equities, they are super cheap.
I bought some commodity index recently. Mr Market says it's 'on sale'.
Title: Re: Getting scared of stock market
Post by: JohnSteed on September 11, 2017, 02:02:45 PM
The worst 20-year return of the S&P 500 is 6.4% annually.

But I thought runewell had shown us all the absolute necessity of the 2% SWR!

Quit exaggerating.  At no point did runewell advocate a 2% SWR.  He simply noted that it could go below 4% when starting out retirement with an expensive market that might have less upside than usual.
Title: Re: Getting scared of stock market
Post by: RWD on September 11, 2017, 02:10:55 PM
The worst 20-year return of the S&P 500 is 6.4% annually.

But I thought runewell had shown us all the absolute necessity of the 2% SWR!

Quit exaggerating.  At no point did runewell advocate a 2% SWR.  He simply noted that it could go below 4% when starting out retirement with an expensive market that might have less upside than usual.

Are you runewell? You seem to be quite confident in your knowledge of his posts despite only being on the forum for less than a month. Your registered date is within 24 hours of runewell's last active time. And you say you are 45 years old (https://forum.mrmoneymustache.com/welcome-to-the-forum/people-start-hating-their-jobs-at-age-35/msg1673989/#msg1673989), which matches with runewell's profile.
Title: Re: Getting scared of stock market
Post by: sol on September 11, 2017, 05:35:09 PM
Quit exaggerating.  At no point did runewell advocate a 2% SWR. 

That only appears to be true, because you've scrubbed your post history.  That 4% SWR thread is full of links to runewell's posts that no longer exist, like, for example this one (https://forum.mrmoneymustache.com/investor-alley/stop-worrying-about-the-4-rule/msg1647426/#msg1647426).

If your horizon is instead 40-50 years Now you need a 2.0%-2.5% SWR. 
Title: Re: Getting scared of stock market
Post by: Mighty-Dollar on September 11, 2017, 10:06:06 PM
Dow went down after these threats on Guam.

I am 75/25 in my IRA right now but feel like putting more money into investment grade bonds. Maybe 50/50 at this point. Not sure. I'm a little heavy on stocks for my age, anyway.
Generally your stock allocation should be about 120 minus your age. With rising interest rates possibly being on the way, having MORE exposure to stocks makes sense if history is any guide. From 1966 onward, 100% stocks was the best allocation ratio. No bonds. That's for both people drawing out 4% and people just letting their money grow and compound.
Title: Re: Getting scared of stock market
Post by: Mr Mark on September 12, 2017, 01:53:36 AM
The worst 20-year return of the S&P 500 is 6.4% annually.

But I thought runewell had shown us all the absolute necessity of the 2% SWR!

Quit exaggerating.  At no point did runewell advocate a 2% SWR.  He simply noted that it could go below 4% when starting out retirement with an expensive market that might have less upside than usual.

Are you runewell? You seem to be quite confident in your knowledge of his posts despite only being on the forum for less than a month. Your registered date is within 24 hours of runewell's last active time. And you say you are 45 years old (https://forum.mrmoneymustache.com/welcome-to-the-forum/people-start-hating-their-jobs-at-age-35/msg1673989/#msg1673989), which matches with runewell's profile.

LMAO! Well spotted team.