How did you react to the 2008-09 Stock Crash?

[sheepstache]

Oh I'm not trying to be down on you, BigChrisB.  It just sounded funny.

Partly it sounded funny because it reminded me of the "mustachian problems" talked about in one of the Overheard threads.  A lot of people would be over the moon about 70k because they could buy so much stuff with it.  (You could almost buy a Cadillac ELR!)  Whereas it isn't worth as much to you because you're more concerned about time and stress.

[yahui168]

I got really lucky with the crash. I had just signed up with a financial adviser at Morgan Stanley around April 2008. By Nov 2008, my net worth went from $400k down to $250k and my portfolio was doing worse than the market. I had always managed my own finances prior but thought a financial adviser would do a better job. It's funny now looking back. The adviser actually purchased some Lehman bonds. If the crash didn't happen, I might still be with Morgan Stanley.

My adviser didn't take the breakup very well. Before he got my money, I was his best drinking buddy. When he had my money, I became a distance relative. Finally, when he lost my money, I became his ex-wife. Anyways, it took a month to liquidate and close the Morgan Stanley accounts. By the end of Dec 2008, I was all cash. This was really lucky because the market recovered off the 2008 lows in Dec 2008. I keep all cash thinking the market was heading back down. The gods of market-timing should have smote me but the market reached new lows in Mar 2009. Two weeks after the bottom in March, I reinvested all the cash. I did smarten up and bought broad-based ETFs. Between 2009 to 2013 I put all my savings into the market every month with the exception of buying a house in 2011.

I think what helped me the most was that I started investing in 97 and lived through the dot com bust and Sept 11. If the world hasn't ended after those events, I was fairly certain the market would recover.

[Unionville]

I got really lucky with the crash. I had just signed up with a financial adviser at Morgan Stanley around April 2008. By Nov 2008, my net worth went from $400k down to $250k and my portfolio was doing worse than the market. I had always managed my own finances prior but thought a financial adviser would do a better job. It's funny now looking back. The adviser actually purchased some Lehman bonds. If the crash didn't happen, I might still be with Morgan Stanley.

My adviser didn't take the breakup very well. Before he got my money, I was his best drinking buddy. When he had my money, I became a distance relative. Finally, when he lost my money, I became his ex-wife. Anyways, it took a month to liquidate and close the Morgan Stanley accounts. By the end of Dec 2008, I was all cash. This was really lucky because the market recovered off the 2008 lows in Dec 2008. I keep all cash thinking the market was heading back down. The gods of market-timing should have smote me but the market reached new lows in Mar 2009. Two weeks after the bottom in March, I reinvested all the cash. I did smarten up and bought broad-based ETFs. Between 2009 to 2013 I put all my savings into the market every month with the exception of buying a house in 2011.

I think what helped me the most was that I started investing in 97 and lived through the dot com bust and Sept 11. If the world hasn't ended after those events, I was fairly certain the market would recover.

what a fascinating story.  Loved the part about the friend, distant relative and ex-wife. LOL

[Vjklander]

I started to get out of stocks in mid-2007. I started selling most of my positions, but some I kept a nominal position in. Most of the money I put in 1 year CDs. Remember back then, you could get CDs at 7-8% or up to 10% in some cases!  By the time the DJI went under 12000 in 2008, I was less than 10% in stocks and the rest in CDs and cash. On the way home on 3/9/09, I was listening to to Bahney on C-span giving a speech where he said they were going to re-institute the uptick rule in some form and also put in some fixes on mark-to-market to make it less onerous.  Most of the CDs had expired so I was sitting on cash. So I took off from work on the 3/10/09 and bought stocks left and right. I made well over 100 trades that day. The value of my accounts on 1/1/10 were all at least 4 times their values on 1/1/07 - without having put any anything into them. As a rather snide aside, my brother-in-law objected to my selling the stocks in his IRA and gave his account to a 'professional'.  He never did come close to getting back to his earlier balance, then had to cash it out to pay his mortgage.

[crumbcatcher]

I work for a financial institution, so I stood and watched the ticker with my coworkers in complete, terrified amazement. I knew a little bit about investing at the time but didn't have much in the market so I didn't have an emotional reaction.  The biggest question on my mind was, "will I have a job tomorrow?"

After some pretty tense months, I was assured that 1) my bank wasn't going under and 2) I wasn't going to get laid off. I felt pretty fortunate to have weathered the storm and started getting more serious about saving. Not serious enough, but still, I was going in a more positive direction and started avoiding consumer debt like the plague.

Also, the crash had an unlikely positive:  I tried selling my condo just before the crash (against all logic I allowed myself to believe the broker who assured us the housing market wasn't really going down the flusher), but it didn't sell.  If it had, I would have overpaid for a bigger home.  As it is now, the principal on my recent refinance isn't too high and I have some good equity.  (Even after I buy out the ex -- argh.)

[Cheddar Stacker]

Also, it lead me to discover this which lead to endless amusement:

http://sadguysontradingfloors.tumblr.com/archive

You'll notice October, 2008 had quite a bit of activity, and I think it's actually what spawned the idea for the website.

[happy]

I have to say I was as cool as a cucumber, didn't flinch, and continued to invest every month all the way through. And all those things are true, but actually all that happened was that I continued my regular and compulsory contributions to my retirement fund. I was as cool as a cucumber and didn't lose a nights sleep because I had no clue and not much interest.  Think I probably grunted with irritation when my annual statement came and the return was not good. To be honest I grew up on good ole Aussie property and was terrified of the share market: sticking my head in the sand was the only way I knew how to deal with it. 
O so ignorant! The polar opposite to BigChrisB.

[jfer_rose]

I didn't notice the crash on any personal level. I wasn't checking my accounts very often and I just kept contributing as usual. In hindsight it might be interesting to go over my old statements just to see the changing balances during the crash and recovery.

I do wonder how it will go for me during the next crash now that I am in the habit of checking my accounts much more frequently. I think I understand the logic/facts well enough to avoid doing anything stupid (i.e., anything other than staying the course), but it might be harder than the 2008-09 crash if I'm more aware of my plummeting account balances.

[MDM]

Wished I had free cash but it was pretty much all invested so I left things alone.  Kept investing with salary cash flow but otherwise rode the dip down and then back up.

[DarioEM]

Personal reaction: There was a stock market crash?

[clarkfan1979]

I sold 95% of my stock in March 2007 and bought a house in May 2007. The timing of selling the stock was at an all-time high and luck on my part. However, I purposely bought a house in an anti-bubble market, meaning that there wasn't any crazy appreciation during 2004-2006. Appreciation has been 2.5% every year over the past 7 years.

Even though I had very little stock left, I still remember watching the television when it was near the bottom. The fear of the financial people on television was so contagious. A field of Social Psychology studies the influence of emotion on others. I think it's called "Emotional Contagion" I really wanted to buy stock when it was near the bottom but didn't really have any money. I was still in the process of needing money for repairs on my house. I can't imagine how emotional I would have been if all of my savings was still in the market.   

Lastly, there was fear of a bubble housing market in Colorado even though Colorado didn't have crazy appreciation. As a result, I had very little competition when buying the house. When people find out that I bought in 2007 they often say, "I'm so sorry, are you still underwater?" I politely respond,  "No, it was a foreclosure and I was never underwater" They are often confused because everything on television tells them that 2007 was the worst time to buy. All housing markets are local.

[Rickk]

I sold my stocks and mostly held cash *oops!*

+1
It was a great education though - I am much smarter now - not doing that again!

[KBecks]

I froze and put new money into cash.  Doh!  I held and did not sell.  Next time, I hope to have cash on hand and be a choosy buyer.

[hodedofome]

I had no idea what I was doing. Any stock I bought before the crash was quickly halved. And when they came back to my buy price a few years later, I sold. V, BRK.B, and others have done well since I sold but lesson learned. Obviously I watched my retirement accounts lose 50%. I did take any extra money I had and poured it into stocks that were down the most that didn't appear to go into bankruptcy. I bought a lot of chinese and commodity stocks. Within a year or two all those buys were up 100-200% or more. I guess I wish I had bought more.

That experience did force me to look into investing more. I realized I had no clue what I was doing and I needed to do my homework. It's what set the foundation for my trading these days. Knowing that the future in unknowable, and anything can happen, turned me from traditional investing into trading. I don't recommend everyone do it, but it works for me.