Lessons Learnt from the Corona Bear/Bull V

[vand]

Thought it'd be a good idea to start a thread to discuss lessons and experiences from the last 6 months now that we've completed our V recovery (or US markets have, at least).

How would you grade yourself in how you managed your portfolio? Any big mistakes? Any regrets? Anything you thought you could have done better? Anything you were particularly please with?

How did you feel when the market was so quickly down by 30%?

What did you find out about yourself as an investor?

[Expatriate]

Across the western world economies are expected to have shrunk this year by over 10%, badly affecting ‘normal people’ across industries, yet markets have not been affected.

Shows that financial markets are driven (only) by those with capital, and there’s no correlation whatsoever with the ‘normal economy’.

[Greystache]

I rebalanced near the bottom in March and rebalanced again last week. My portfolio is up for the year. What I have concluded from all of this is that the market has become completely disconnected from the economy. Price and earnings no longer mean anything. They have been overwhelmed by low interest rates and financial stimulus. I used to think that stock prices are over valued, and deep in my gut, I still do, but  as long as we have zero interest rates and the Fed provides endless liquidity, I think it stays that way. Regardless, I will keep to my allocation plan and rebalance when I become overweight or underweight in equities. It's not making me tons of money, but I still have a higher net worth than when I stopped working 5 and a half years ago.

[bthewalls]

I watched March dip obsessively (as normal) and bought at intervals on the way down once it passed - 15ish. I lump sum near bottom but immediately felt it was a mistake and should have waited for a bigger drop..... Was convinced it would go lower and was kicking myself... That was point it started rising.

So summary is my gut was wrong but I 'timed' it right by complete fluke and nothing else.... Confirms I can't time market but I struggle with illusion that it's possible ALL THE TIME LOL.....

[waltworks]

I just kept dumping money in. So I learned... nothing. But then again, this isn't my first rodeo.

-W

[maisymouser]

I am 29 and only started investing a few years ago. I did not sweat it much only because of The Simple Path to Wealth and MMM. My confidence in my "invest it and forget it" strategy has been even further solidified by this experience. I feel grateful to know this as early on as I (hopefully) am in my investing career.

[Buffaloski Boris]

I’m unimpressed at my investing prowess. I think I got it right in deciding that the market was to high so I was mostly out of equities when COVID hit. What I missed was the bottom, and I should’ve known better: the nanosecond the Fed dove in to rescue the elite, I should’ve gone all in. I did go in somewhat, but too late to get the huge gains. Oh well.  I’m sticking to my IPS and bought international gradually and am about where I want to be on equity exposure. I also believe I was right in picking international over domestic, but will probably rotate in the next couple of years back to US. But maybe not. The stupid really burns brightly in the US right now. I hope it’ll change but I’m not betting on it just yet.

 I’d like to have more commodities right now and that’s where I’m focusing my attention.

Overall, my NW is right about where it was when this whole mess started. One positive outcome is that the drama helped me to realize that my investment horizon is pretty much perpetual, and that I should invest accordingly.

[FINate]

This wasn't my first market panic as an investor, but it was my first since FIRE. It has not phased us, and our NW is now higher than before. Not really due to any skill on our part, but rather having a good set of investment principles and sticking to them. First and foremost: Don't invest short-term funds in long-term assets.

For example, we sold off some real estate several years ago and promptly plowed most of the proceeds into aggressive long-term investments. However, this January we modified our plan to relocate out of California into a RE market that was, and still is, very hot. We decided it would be best to make an all cash offer, and to do so before our current residence went on the market. To do this we needed more short-term funds in reserve, so in February we reallocated a large sum from aggressive investments to something very conservative. Thus we accidentally timed the market by sticking to our investment principles.

Later, after everything hit the fan, this wasn't an issue at all for us or even stressful. Of course, I don't like seeing our portfolio drop, but we knew it would eventually recover. And we didn't stress because we maintain a fat emergency fund. Again, this is based on the idea that you shouldn't keep short-term money in long-term investments. Money we need to live for the next 1-2 years is short-term, so we keep a chunk of our portfolio in something more conservative. This deviates from conventional wisdom around here, and I know it's less "efficient" but I don't care :) Sleep and happiness are more important than earning an extra 1%.

After we relocated and sold our former dwelling, we had a chuck of change laying around that we needed to do something with. This was early July when COVID cases were on the rise and the media was pounding the fear mongering drumbeat again. This was difficult to do, but we lump summed it all in the market because we had more than sufficient emergency funds and so this was all designated long-term. Within a couple of weeks it returned enough to more than offset the cost of relocating. Lesson relearned: The media is entirely useless in prognosticating the future (among other things), and investment media in particular is worse than useless as it's all a bunch of charlatans with competing axes to grind.

Not of this is really new information for me, but useful affirmation of our general strategy. And a good reminder to ignore the talking heads, turn off the dang news feed, and enjoy life in the real world more.

[Steeze]

Bought at 15, 20, 25, 30 & 35 down. Also thought it was headed for -50, so I only had about 2/3 of my cash & bonds converted to equities. In retrospect I should have gone all in.

I also threw my IPS out the window and allocated heavy into equities which wasn’t the plan, I was supposed to wait and rebalance per my IPS. Worked out, but I got lucky. If we have a second leg down right now I am over exposed to equities.

The crash was consuming - stuck in the apartment with nothing to do except watch. I drew lots of lines on graphs for no reason. Mostly I was concerned about buying the most at the best price - not too worried about the money lost.

Was interesting to see my wife unaffected by the whole thing. I think the experience has given her some faith that “it will come back”. Just kept telling her it was the buying opportunity of the decade and that I was hoping it would be drawn out as long as possible so we could buy more.

In the future I need to be more disciplined with my IPS - stick to the plan and not try to time it. I’m still reluctant to repurchase bonds, haven’t built up my cash again yet, and have been letting my REIT allocation drift lower. At the same time my international and emerging market funds are overweight.

The recovery was especially surprising - I can’t believe how fast it is back at GOAT MOAT. Reinforces that I couldn’t call the bottom and I could predict a recovery. Also - buy the dip!

[GuitarStv]

I just kept dumping money in. So I learned... nothing. But then again, this isn't my first rodeo.

-W

Yep.

After holding steady through 2007/2008, a tiny dip of 30% certainly wasn't going to make me change my strategy.

:P

[Monerexia]

So so awesome Vand! I had serious dry powder and listened to the folks who said "buying opportunity of a lifetime," and Warren Buffett's maxim, "be greedy when others are fearful and be fearful when others are greedy." All told, put about 90K in, bought all the way down and all the way up. Up 21-39% on my March buys.

[MonkeyJenga]

I wished I had any cash to invest, but I'm already FIRE and all-in on stocks. I had to sell a little bit during the dip to cover my expenses.

On the flip side, if I did have any cash to invest at the very bottom, it would've meant I made a mistake back when I was working. Still made more money having my assets in the market for the last 2-3 years, versus holding out for some future drop.

Despite wishing I could invest more, I was a little freaked out in the beginning. Had to talk myself out of selling on the way down. But I'm still concerned about a fall/winter wave and the effect on the economy, so I converted 5% to cash. If the markets keep going up, I'll have more than enough, and if they drop again, I can feel smug about putting my small portion back into stocks.

[vand]

Overall I'd mark myself as a 7/10. I did some things very well and other things less well, but I also didn't make any major mistakes which is probably the most important thing. I think my portfolio bottomed with a £1xx,xxx handle in mid/late March and in the last week has been printing with a £3xx,xxx handle. Of course, some of this is from additional inflows too, so actual time weighted performance isn't as impressive as it sounds.

The biggest criticism that I would have of myself is that I bought the value-orientated markets that were already the weakest (Europe) instead of the momentum markets that were the strongest (Nasdaq), and true to form they have lagged badly in the recovery and remain well off their pre-covid highs.

However, I think it's easy enough to pat yourself on the back and say "I did well to stay the course" in hindsight, but the real question I would ask is: if the markets had not recovered, and lets say Covid have really gotten out of control and the markets had fallen even further with S&P now trading down 50%, would you still be happy with the decisions you took?  As we can't know the future it's important to ask am I happy with my actions had things played out very differently?

Anyway, some observations which weren't really new to me, but interesting to observe once again:

- Experts are just as clueless as everyone else in the face of panic. Don't listen to them.
- Watching TV is probably bad for the psyche.
- The Fed is now the market guarantor. Unwise to directly fight it. There is much political will to push the stock market ever higher.
- It never feels easy buying into a market that is falling so quickly. If it were then everyone would be doing it.
- Time horizons get flattened when volatility spikes. People who say they're investing with a 10yr timeframe suddenly start taking decisions - designed to optimize outcomes for the next 10 days.
- The bottom never feels like the bottom. As they say there is no bell that rings when the market bottoms.
- Most people will doubt the bounce all the way up. Skepticism is a necessary condition of a sustainable recovery.
- Residential real estate once again proves how remarkably resilient it has been to shocks which send stock markets tumbling.

[vand]

Despite wishing I could invest more, I was a little freaked out in the beginning. Had to talk myself out of selling on the way down. But I'm still concerned about a fall/winter wave and the effect on the economy, so I converted 5% to cash. If the markets keep going up, I'll have more than enough, and if they drop again, I can feel smug about putting my small portion back into stocks.

Yes, that's when I was most anxious also, back at the end of Feb and early March when the market started dropping was the few days that I found I was worrying the most. Actually by the time the big falls were happening I had become much more accepting of it as a natural response to a once-a-generation panic and my psyche by that time was simply to hold on for the ride and deploy as much capital as I could get my hands on.

[maisymouser]

Overall I'd mark myself as a 7/10. I did some things very well and other things less well, but I also didn't make any major mistakes which is probably the most important thing. I think my portfolio bottomed with a £1xx,xxx handle in mid/late March and in the last week has been printing with a £3xx,xxx handle. Of course, some of this is from additional inflows too, so actual time weighted performance isn't as impressive as it sounds.

The biggest criticism that I would have of myself is that I bought the value-orientated markets that were already the weakest (Europe) instead of the momentum markets that were the strongest (Nasdaq), and true to form they have lagged badly in the recovery and remain well off their pre-covid highs.

However, I think it's easy enough to pat yourself on the back and say "I did well to stay the course" in hindsight, but the real question I would ask is: if the markets had not recovered, and lets say Covid have really gotten out of control and the markets had fallen even further with S&P now trading down 50%, would you still be happy with the decisions you took?  As we can't know the future it's important to ask am I happy with my actions had things played out very differently?

Anyway, some observations which weren't really new to me, but interesting to observe once again:

- Experts are just as clueless as everyone else in the face of panic. Don't listen to them.
- Watching TV is probably bad for the psyche.
- The Fed is now the market guarantor. Unwise to directly fight it. There is much political will to push the stock market ever higher.
- It never feels easy buying into a market that is falling so quickly. If it were then everyone would be doing it.
- Time horizons get flattened when volatility spikes. People who say they're investing with a 10yr timeframe suddenly start taking decisions - designed to optimize outcomes for the next 10 days.
- The bottom never feels like the bottom. As they say there is no bell that rings when the market bottoms.
- Most people will doubt the bounce all the way up. Skepticism is a necessary condition of a sustainable recovery.
- Residential real estate once again proves how remarkably resilient it has been to shocks which send stock markets tumbling.

Considering the impact COVID has had on other indicators of the economy, what we're seeing now is actually a lot more surprising to me. Wouldn't change a thing about what I did, but:
- I'm MORE worried that the market is as high as it is than I would be if it were down 50%. If stocks were at a 50% discount- now THAT'S a buying opportunity. I don't really understand why or how we're back to where we were pre-COVID with all of what's going down.
- I still have a job, and it seems quite resilient to the pandemic. I've got at least 10 years left of my working life unless a magical unicorn with a decent healthcare system bestows it on the USA. In a situation where stocks plummet that much, I'm be happy to snatch them up while I can.
- This might not be the end... DUN DUN DUN. We might see a recession still, we may see further adjustments or something that disrupts the markets further. I'm no wizard so I will just keep on doing what I've done until it stops working, though.
- My biggest concern in a 50%-down-stocks situation would be how the average Joe would react to that and/or how that situation would impact other people/the economy longer-term. It becomes a more volatile situation. In that respect I guess it's nice that we're back, and I can be happy enough to have ridden the wave.

[YoungInvestor]

I had a certain position in preferred shares that was purchased on margin for 50% of my taxable account's assets. I tried to get a neutral sensitivity to interest rates overall through a mix of perpetuals and short-term rate adjusting prefs, so my perception was that they would act as a form of cash-equivalent earning more money for a bit more risk.

The problem that then happened was that my stock holdings (50% of the assets) went down by a third, brining my margin to more than 65% of the portfolio and nearly exposing me to a margin call in less than favourable conditions (that would have occured at 70%).

The good thing is that the preferreds themselves largely behaved as expected, which is good.

I have since deleveraged the portfolio (essentially through deposits to purchase stocks) so that the margin/prefs position is 25% of the portfolio's value, meaning the stock exposure would need to decrease 66% to expose me to a margin call, which is within my risk tolerance.

[waltworks]

However, I think it's easy enough to pat yourself on the back and say "I did well to stay the course" in hindsight, but the real question I would ask is: if the markets had not recovered, and lets say Covid have really gotten out of control and the markets had fallen even further with S&P now trading down 50%, would you still be happy with the decisions you took?  As we can't know the future it's important to ask am I happy with my actions had things played out very differently?

Are you kidding? I'd be ecstatic if the markets went down 50% and stayed there for a while. I'm actually pretty unhappy with my investing options now that we're back to CAPE 30 or whatever it is. I guess more VXUS for a while, but even that is getting pricey.

-W

[Dancin'Dog]

While I made some mistakes, I also learned that VTSAX recovered a lot slower than many other funds did.  That really opened my eyes to looking at better options for investing in the future.

[Wintergreen78]

I retired at the end of January 2018. I pull cash out every three months to top up my checking account. That is also when I re-balance if necessary. Until now I’ve never had to re-balance, I’ve just pulled cash from whichever asset is over my target allocation. At the beginning of March the drop was big enough that I did re-balance by shifting from my conservative part of my portfolio to buy more Of my S&P 500 index fund. When I re-balanced in July it had swung far enough back the other way that I sold some of my index funds to shift them back into more conservative investments. It was interesting to see that work out.

Overall, even with the very first year of my retirement being a down year for the S&P 500 and this year being unusual, I’m basically even with where I was when I retired. I’m 42 and funding my living expenses solely through investments. So my takeaway is to continue to ignore the news, keep an asset allocation I can live with, and get on with the rest of my life.

[Monerexia]

However, I think it's easy enough to pat yourself on the back and say "I did well to stay the course" in hindsight, but the real question I would ask is: if the markets had not recovered, and lets say Covid have really gotten out of control and the markets had fallen even further with S&P now trading down 50%, would you still be happy with the decisions you took?  As we can't know the future it's important to ask am I happy with my actions had things played out very differently?

Are you kidding? I'd be ecstatic if the markets went down 50% and stayed there for a while. I'm actually pretty unhappy with my investing options now that we're back to CAPE 30 or whatever it is. I guess more VXUS for a while, but even that is getting pricey.

-W

This. In acquisition it's been delightful to learn to celebrate both ups and downs.

[GuitarStv]

However, I think it's easy enough to pat yourself on the back and say "I did well to stay the course" in hindsight, but the real question I would ask is: if the markets had not recovered, and lets say Covid have really gotten out of control and the markets had fallen even further with S&P now trading down 50%, would you still be happy with the decisions you took?  As we can't know the future it's important to ask am I happy with my actions had things played out very differently?

Are you kidding? I'd be ecstatic if the markets went down 50% and stayed there for a while. I'm actually pretty unhappy with my investing options now that we're back to CAPE 30 or whatever it is. I guess more VXUS for a while, but even that is getting pricey.

-W

If the markets were down 50%, it wouldn't be a big deal at all for me . . . I'd rebalance since bonds would be overweighted in my portfolio and carry on.  Same as when the housing crisis caused the recession several years back.

If a little 30% market dip freaks you out, you have the wrong asset allocation.

[LWYRUP]

I was really stressed about the virus in mid February, so much so that I took a day off work in late February to stock up at Costco etc. a few weeks before the panic hit everyone else.  My coworkers thought I was crazy.  The only reason I didn't touch anything in the market was because I had been trained by bogleheads not to and I was too stressed out to worry about it.

I expected the market to fall but was surprised by the speed and amount of the fall and was kicking myself for not pulling out earlier.  But I decided I was not going to lock in losses and so what I did was (1) sell stock in taxable for tax loss harvesting for emergency funds and (2) aggressively sell bonds and move into stock in retirement accounts.  I actually went up from 85/15 to 90/10 and got tax loss harvesting gains that will sustain me for many years if I can just continue to roll them over and deduct them against income.  I randomly managed to time one adjustment on the lowest day of the market.  So I ended up slightly outperforming the market. 

I did put some of my money into individual stocks.  I chose things that I thought might proposer in a pandemic (medical companies, industrial companies).  It turns out that tech has done the best, not what I chose, but I decided I am going to hold for a year and see.  I don't think I have some special investing prowess so it probably wasn't really worth time from an ROI perspective though who knows as a learning experience.

So I learned that I DO lose sleep when the market crashes, but I also retained enough wits to avoid panic and to navigate it.  So I'm keeping my relatively aggressive asset allocation.  In theory I'd like to go back down to 85/15 but bond yields are so terrible right now it feels like a waste of money.  If we push up any higher on CAPE though I think I will.   

Next crash, I hope to do better at managing my emotions, and to resist the urge to do anything other than rebalance / scoop up easy tax gains / ignore the noise.  I think the pandemic itself was most of the stress, but that's to be expected -- usually markets are falling because other real world bad stuff is going on.  (A normal dip like the 20% selloff in December 2018 I barely noticed other than a little grousing to my wife about how I was losing more in the market than I was making at work.) 

My wife is the ultimate zen investor though.  She doesn't really know much other than I've converted her to the bogleheads / index church.  I could tell her "we lost $500k last month" and she'd frown and then ask what we were going to do for dinner. 

[Wintergreen78]

I was really stressed about the virus in mid February, so much so that I took a day off work in late February to stock up at Costco etc. a few weeks before the panic hit everyone else.  My coworkers thought I was crazy.  The only reason I didn't touch anything in the market was because I had been trained by bogleheads not to and I was too stressed out to worry about it.

I expected the market to fall but was surprised by the speed and amount of the fall and was kicking myself for not pulling out earlier.  But I decided I was not going to lock in losses and so what I did was (1) sell stock in taxable for tax loss harvesting for emergency funds and (2) aggressively sell bonds and move into stock in retirement accounts.  I actually went up from 85/15 to 90/10 and got tax loss harvesting gains that will sustain me for many years if I can just continue to roll them over and deduct them against income.  I randomly managed to time one adjustment on the lowest day of the market.  So I ended up slightly outperforming the market. 

I did put some of my money into individual stocks.  I chose things that I thought might proposer in a pandemic (medical companies, industrial companies).  It turns out that tech has done the best, not what I chose, but I decided I am going to hold for a year and see.  I don't think I have some special investing prowess so it probably wasn't really worth time from an ROI perspective though who knows as a learning experience.

So I learned that I DO lose sleep when the market crashes, but I also retained enough wits to avoid panic and to navigate it.  So I'm keeping my relatively aggressive asset allocation.  In theory I'd like to go back down to 85/15 but bond yields are so terrible right now it feels like a waste of money.  If we push up any higher on CAPE though I think I will.   

Next crash, I hope to do better at managing my emotions, and to resist the urge to do anything other than rebalance / scoop up easy tax gains / ignore the noise.  I think the pandemic itself was most of the stress, but that's to be expected -- usually markets are falling because other real world bad stuff is going on.  (A normal dip like the 20% selloff in December 2018 I barely noticed other than a little grousing to my wife about how I was losing more in the market than I was making at work.) 

My wife is the ultimate zen investor though.  She doesn't really know much other than I've converted her to the bogleheads / index church.  I could tell her "we lost $500k last month" and she'd frown and then ask what we were going to do for dinner.

That reminds me - I thought about doing some tax-loss harvesting in March, then decided to wait until later. Looks like I missed my chance!

[MrThatsDifferent]

Well, I learned that I felt more vulnerable than I probably am because I don’t keep any real emergency cash. Also, I don’t own a home and that made me a bit nervous, although as I reflect, there’s no reason why. I just want more security. So I kept investing in my retirement account, stopped adding money to my non-retirement account and put that in a HISA for a place next year possibly. So I’m going to miss out on 1 year of gains. But considering how I’m doing a better job at saving with this goal, I think I’ll end up ahead. So I learned I wasn’t as confident in my financial security as I thought, but I’m getting there.

[Abe]

My wife was furloughed from her work, and my job (1 year training) barely covers the rent + bills.  At that point, which was a month after the crash, I cashed out enough to cover our entire budget for 6 months (until my new job would start). Then, the hiring process for my new job (which pays far more than we can spend) was on hold for several months. That, and occasional work for my wife, has been tiding us over until my new job can start in October. In the end we came out a bit ahead: +10% on returns YTD, but spent -5%.

Main things I learned:
1) Our strategy for emergency savings (2 months in bank, >1 year in bond funds) worked well. I probably didn't need to cash out a full 6 months at once, as we didn't use it.
2) I was really not worried about the stocks tanking since I never believed they were related to much other than investor sentiment. Also their usefulness to us is about 20 years out, so who cares what happens in the next few years? Our allocation will remain 80/20, maybe go up to 90/10 once we have 2-3 years of savings in bond funds.
3) No jobs are stable (not even physicians' during a pandemic), so we will be increasing our cash to 6 months in bank, then contribute after that to our non-mandatory accounts. This will take us about 6 months (50% savings rate independent of required max-out of 401k and pension contributions). If another crisis hits and takes more than 6 months to resolve, we'd use the bond allocation in our non-retirement account as a backstop.
4) My wife completely trusts me with managing this stuff, and is on the same page regarding emergency plans and allocation. We planned on something like this happening, but didn't think it'd happen so soon. 

[Heckler]

I learned I'm good at doing nothing to funds that are on a course.  I didn't change anything that was already invested to plan.

I missed my IPS plan of moving my work accumulation account February 1 that had built up to 40k, supposed to transfer it to Vanguard annually, (1 free transfer out per year).  Ironically, we were in epicenter Italy January-March and I didn't want to send a fax (I usually have my brokerage fax a letter from the bank branch).  Since I didn't send a fax, I missed out "timing the market" - I should have moved out in February and got back in once funds were moved.  Well, due to lack of fax, and travel to NZ backcountry in March, I just let it sit through the commotion until the market started showing a semblance of stability.

Nothing else got moved, but I did panic reduce my 40% contributions when my wife lost her job and our Italian plant closed the doors.  Took contributions down to 5% unfortunately during the big drop, but I think it was a good move, building our e-fund from 16k to now 24k. 

Then the government swooped in and started issuing cheques (checks) to my out of work wife, and my work was reduced to 80% pay, but we stuck with the plan of 100% of my wifes' income being invested in a taxable account.  Is it patriotic to take the government cheque and invest it in your home country?  I think so!

"The number" has more than recovered since March 1 and her new job income is 100% invested still going forward.  We have a healthy e-fund that we didn't spend a penny from that I've stopped building (for now).

I do wish I'd sent that fax from Italy on January 31 though...  We were sleeping in a tent in the bush for the first three weeks of the big crash so I barely knew it was happening!

[Gatzbie]

1.) My accounts were not prepared to Tax-Loss-Harvest at all.  401k accounts were auto-buying total stock market fund & taxable account was buying total stock market fund. Due to being substantially identical, was not able to harvest $5k.

2.) My job was safer than I thought. My company was deemed essential.

Any spare money I had I dumped in while it was low & kept buying weekly. Think I handled first big drop well.

[hodedofome]

Events like this year are a really good time to go through the voices you listen to. Who was convinced they were right but were dead wrong? Who was level headed and objective? Who got it right, and were they just lucky or were they skilled?

I started getting optimistic about the future in March and turned off every negative voice around me. It appeared the more liberal and intelligent the person the more fearful they were so they were out. I also had to shut out most of my medical friends as well as they were pretty scared of Covid. The strategy worked this time. I went all in tech stocks the first week of April and am amazed at the recovery. Nobody said a V recovery was possible, but here we are.

[LWYRUP]

Events like this year are a really good time to go through the voices you listen to. Who was convinced they were right but were dead wrong? Who was level headed and objective? Who got it right, and were they just lucky or were they skilled?

I started getting optimistic about the future in March and turned off every negative voice around me. It appeared the more liberal and intelligent the person the more fearful they were so they were out. I also had to shut out most of my medical friends as well as they were pretty scared of Covid. The strategy worked this time. I went all in tech stocks the first week of April and am amazed at the recovery. Nobody said a V recovery was possible, but here we are.

This is a weird analysis.  Markets are reacting to the "Fed put," not shrugging off the virus itself (which has killed quite a lot of people) or the economic fallout in the real economy (see tens of millions out of work). 

So if the lesson is you think your medical friends don't know shit about the Federal Reserve, then ok.  If you think you should tune out medical advice because it's not optimistic enough, I think that would be unwise. 

[Abe]

Events like this year are a really good time to go through the voices you listen to. Who was convinced they were right but were dead wrong? Who was level headed and objective? Who got it right, and were they just lucky or were they skilled?

I started getting optimistic about the future in March and turned off every negative voice around me. It appeared the more liberal and intelligent the person the more fearful they were so they were out. I also had to shut out most of my medical friends as well as they were pretty scared of Covid. The strategy worked this time. I went all in tech stocks the first week of April and am amazed at the recovery. Nobody said a V recovery was possible, but here we are.

This is a weird analysis.  Markets are reacting to the "Fed put," not shrugging off the virus itself (which has killed quite a lot of people) or the economic fallout in the real economy (see tens of millions out of work). 

So if the lesson is you think your medical friends don't know shit about the Federal Reserve, then ok.  If you think you should tune out medical advice because it's not optimistic enough, I think that would be unwise.

Second this. As a physician, I would not take my own advice on the Federal Reserve or anything else dealing with finances that isn't directly related to my simple, set-and-forget plan. Also, we were (and are) worried for a reason. However, as we have all learned this year, it appears that short-term, reversible problems don't necessarily sway the market much if there's some backup plan from the Reserve.

Also I wouldn't rule out a W recovery, a squiggly one like us physicians write when we sign. Starts out nice and sharp, then drags out.

[vand]

I hate to say it, but don't fight the Fed - its obvious to long term observers that over the last 2-3 decades their role has changed from "cleaning up the mess" to "proactive management" of the markets.

This is what caught out Warren Buffett in the meltdown - he wasn't able to deploy his cashpile because \he underestimated the action of the most important player in the market - the Fed, who have an unlimited warchest and are willing to step in and provide capital to distressed entities before the market gets to a price that Buffett and many others on the sidelines would truly like to see.

I would say that the Fed's increasing role in the markets is the biggest change that has happened in my lifetime of investing, but one that is less visible and underappreciated by investors who don't always see the big picture. Whether you agree or disagree with this, it's unwise to fight an entity that has an unlimited war chest and the backing of Congress.. there are smarter ways to play it.

[hodedofome]

Events like this year are a really good time to go through the voices you listen to. Who was convinced they were right but were dead wrong? Who was level headed and objective? Who got it right, and were they just lucky or were they skilled?

I started getting optimistic about the future in March and turned off every negative voice around me. It appeared the more liberal and intelligent the person the more fearful they were so they were out. I also had to shut out most of my medical friends as well as they were pretty scared of Covid. The strategy worked this time. I went all in tech stocks the first week of April and am amazed at the recovery. Nobody said a V recovery was possible, but here we are.

This is a weird analysis.  Markets are reacting to the "Fed put," not shrugging off the virus itself (which has killed quite a lot of people) or the economic fallout in the real economy (see tens of millions out of work). 

So if the lesson is you think your medical friends don't know shit about the Federal Reserve, then ok.  If you think you should tune out medical advice because it's not optimistic enough, I think that would be unwise.

I was referring to the stock market recovery, not necessarily Covid disappearing. I got optimistic in early April that it was not going to be as bad as the market thought, and the market was going to recover. So I had to shut out all voices around me that might cause me to become fearful and not buy all in. I can remember mid April really struggling with my thoughts, thinking we were going down again. But I held on, and have done well as a result of it.

Don't worry - I wear a mask and wash my hands. I've taken the Japanese approach to the virus - make life as normal as before, but just wear a mask and wash your hands. I'm only 40 and healthy, so I'm in a low risk group. If I was older or unhealthy, I would be staying at home for the most part.

[nereo]

Completed?
Huh.

[GoCubsGo]

I found I traded A LOT more than normal which I honestly enjoyed as it gave me something to focus on.  I had more time to research ideas and hit a few grand slams that have juiced my returns quite a bit.  Could have gone bad but I was pretty nimble and I stuck to my main principals and was rewarded for it.  I'm dialing back some of my equity exposure as I don't want to get too greedy.

Honestly the ability to focus on my investments and almost obsess over them was great for my overall mental health as we locked down pretty hard in my family.  I was pretty aggressive investor during the 2008 recession and apparently I still am. Time to figure out the next stage of my investment plan.  This was a fun run for an active investor but I don't want to fool myself into thinking I can repeat this year after year.

[JohnnyZ]

 As a novice investor, my biggest lesson is that I was able to go through a crash (short as it has-so far-been) without panicking. Sure, it was no fun to lose like 5% every day, but it never even occurred to me to sell, even when my stache had shrunk to significantly less than the amount I invested (I only started investing in early 2019). It is shocking to me that I have integrated the "stay the course" model, I just scrapped around for any money I could find, sold some ETF that I wanted to dump anyway, and bought more VWRL.
 Obviously my biggest regret is not having sold everything in early March then gone all-in on Tesla a few weeks later, but I know that's not the lesson I should take away from this :)

[Full_Beard]

I think it may be premature to identify lessons learned from something that isn't over. In my opinion, it will be interesting to ask this question in 8-16 months from now. Back in April, the pundits said the second quarter GDP would be the worst and the third would be the best. The second was the worst. Anyone really think the third will be the best?

I'm bearish and am sitting on the sidelines, 70 percent bonds and cash waiting for either reality to set in or evidence that the economy is on solid footing before I return to equities. We may not see either until the pandemic is under control. My rate of return for the last 12 months has been 5%. Paltry, but I'm fine with that and have saved enough to retire when that time feels right, so I'm behaving uber conservatively.

[nereo]

It’s not over?
Huh.

[Full_Beard]

Right, in my view, the effects from the coronavirus on markets and economies are ongoing.

[GuitarStv]

I'm bearish and am sitting on the sidelines, 70 percent bonds and cash waiting for either reality to set in or evidence that the economy is on solid footing before I return to equities. We may not see either until the pandemic is under control. My rate of return for the last 12 months has been 5%.

What combination of bonds and cash is giving you a 5% return?

[nereo]

I'm bearish and am sitting on the sidelines, 70 percent bonds and cash waiting for either reality to set in or evidence that the economy is on solid footing before I return to equities. We may not see either until the pandemic is under control. My rate of return for the last 12 months has been 5%.

What combination of bonds and cash is giving you a 5% return?

49% bonds and 55% cash.

[waltworks]

I'm bearish and am sitting on the sidelines, 70 percent bonds and cash waiting for either reality to set in or evidence that the economy is on solid footing before I return to equities. We may not see either until the pandemic is under control. My rate of return for the last 12 months has been 5%.

What combination of bonds and cash is giving you a 5% return?

49% bonds and 55% cash.

LOL. Good one.

-W

[GuitarStv]

I'm bearish and am sitting on the sidelines, 70 percent bonds and cash waiting for either reality to set in or evidence that the economy is on solid footing before I return to equities. We may not see either until the pandemic is under control. My rate of return for the last 12 months has been 5%.

What combination of bonds and cash is giving you a 5% return?

49% bonds and 55% cash.

LOL. Good one.

-W

lol

[vand]

Right, in my view, the effects from the coronavirus on markets and economies are ongoing.

Evidently one key lesson that still needs constant learning is the one that says markets are forward rather than backward looking.

[nereo]

Right, in my view, the effects from the coronavirus on markets and economies are ongoing.

Evidently one key lesson that still needs constant learning is the one that says markets are forward rather than backward looking.

Looking forward, what does your crystal ball and current economic data tell you @vand?

[vand]

Right, in my view, the effects from the coronavirus on markets and economies are ongoing.

Evidently one key lesson that still needs constant learning is the one that says markets are forward rather than backward looking.

Looking forward, what does your crystal ball and current economic data tell you @vand?

I don't have a crystal ball, I only have insights into human nature.

[frugalnacho]

I learned that I am completely fine with market fluctuations.  The old adage that everyone sleeps soundly in a bull market, but you just don't know how you'll react when shit drops 30% is false.  I was pretty sure I would be completely unphased and just roll with it, as has been drilled into my head by MMM and every investment book I've read, and I was.  I drained my emergency fund of $10k from my savings account and threw it into the market near the bottom in March, and then continued to plow money as per usual.

I also learned that you can't time the market.  A big drop seemed like a good time to toss more money.  I didn't know if it was going to drop more, or go up, but I figured decades into the future it would go up, so buying at a 30% discount relative to last month was a good idea.  But I certainly can't predict which way the market is going to move in the short to medium term.  I thought it was going to go down even more, and we were going to have a very slow recovery while the virus ravaged the population and the economy, but I wasn't willing to deviate from my plan of staying the course and dumping more money into it.  Glad I didn't pull money out and try to time the market. 

[Paper Chaser]

The only change that I made was increasing my 401k contribution percentage to offset reduced pay. I watched the value drop like everybody else, but didn't really feel a thing about it. A large E fund probably helped with that.

[Full_Beard]

Right, in my view, the effects from the coronavirus on markets and economies are ongoing.

Evidently one key lesson that still needs constant learning is the one that says markets are forward rather than backward looking.

That's a pretty obtuse reply. So, the next 1-3 years looks the same today as it did on Jan. 1, 2020? The "markets" seem to say so.

I'm bearish and am sitting on the sidelines, 70 percent bonds and cash waiting for either reality to set in or evidence that the economy is on solid footing before I return to equities. We may not see either until the pandemic is under control. My rate of return for the last 12 months has been 5%.

What combination of bonds and cash is giving you a 5% return?

49% bonds and 55% cash.

This place is becoming an echo chamber of stupidity.

https://finance.yahoo.com/quote/agg/performance/

[waltworks]

Sure, but your total rate of return isn't that, since you said you had 70% "bonds and cash" (without breaking down how much of either one). What's the other 30%, and how does the cash/bonds split break down?

FYI, June 2019 to June 2020 (latest numbers I can get) a boring S&P 500 fund would have returned you 9.7%. If you were plugging in money the whole time/still in accumulation, you'd have done much better, of course.

-W

[Full_Beard]

Sure, but your total rate of return isn't that, since you said you had 70% "bonds and cash" (without breaking down how much of either one). What's the other 30%, and how does the cash/bonds split break down?

FYI, June 2019 to June 2020 (latest numbers I can get) a boring S&P 500 fund would have returned you 9.7%. If you were plugging in money the whole time/still in accumulation, you'd have done much better, of course.

-W

If 70% of my worth is in the U.S. Aggregate Bond Index and that returned 8.9% over the last year, the math is straightforward. I was merely pointing to bond fund where I or anyone could have returned 5-6% over the last year in a mix of bonds and cash. What's the niggling point here?

Yes, my lost opportunity is probably around 20% (or higher if you give me hindsigh investing power). But as I've said repeatedly, I'm personally uncomfortable with anything else right now. In short, it's my loss, and I'm willing to suffer it right now. I'm not on the sidelines forever.