The Money Mustache Community

Learning, Sharing, and Teaching => Investor Alley => Topic started by: mohawkbrah on January 19, 2016, 01:39:10 AM

Title: losing money faster than im putting in
Post by: mohawkbrah on January 19, 2016, 01:39:10 AM
Im investing in US and UK index funds atm and my portfolio is dropping, it's down by about 10% total. i started my investing journey very close to peak prices.



i dint liek dis :'(
Title: Re: losing money faster than im putting in
Post by: dilinger on January 19, 2016, 02:11:57 AM
Every time you buy, you're getting an even better deal than before.

On Vanguard, it tells you the average cost per share of each fund you hold.  I like to play the get-it-below-the-current-price game.  If the price is below the average that I paid, how many more shares do I need to buy before I can bring the average cost down?  If the current price goes down some more, I go into a buying frenzy.  If the price goes up, I get complacent and let money collect in my bank account (and pat myself on the back for having gotten X% in returns so far).
Title: Re: losing money faster than im putting in
Post by: faramund on January 19, 2016, 02:19:11 AM
I think of the share market as a saw, its teeth go up and down, but from the start to the end, it gets higher and higher.

Its always demoralizing to see shares go down, especially when you first get started, but its the nature of the stock market.

Historically, the best think to do when the market goes down, is to buy more.

Hang in there!!!
Title: Re: losing money faster than im putting in
Post by: Retire-Canada on January 19, 2016, 06:14:24 AM
i dint liek dis :'(

Stop looking at it. There is no point checking in on your portfolio frequently.
Title: Re: losing money faster than im putting in
Post by: Sid Hoffman on January 19, 2016, 11:47:18 AM
You're not losing money unless you are selling.  If you are a long term investor, then you shouldn't be selling, thus you aren't realizing any losses at all.  Train your brain to separate paper, unrealized losses from actual, realized losses and it should help you to stay the course more easily.

Alternately, use this as motivation to increase your savings & investing rate by enough to cover the paper declines in value.  This will serve two purposes: first, you'll be buying even more while prices are cheap, and that is a good thing.  Second, you'll be associating market dips with buying opportunities rather than panic selling, and that will ultimately help you over a lifetime.
Title: Re: losing money faster than im putting in
Post by: onlykelsey on January 19, 2016, 11:49:11 AM
Quote
Alternately, use this as motivation to increase your savings & investing rate by enough to cover the paper declines in value.  This will serve two purposes: first, you'll be buying even more while prices are cheap, and that is a good thing.  Second, you'll be associating market dips with buying opportunities rather than panic selling, and that will ultimately help you over a lifetime.


That's simple and brilliant.  I've been maxing out retirement accounts since I started working (I'm 29) but just started in to taxable investing and can't stop looking at my brokerage balance.  I should try to think of them as buying opportunities for newly acquired assets, not drops in the value of my existing assets.   It's harder when you're on a 5 or 10 year horizon for retirement than a 40, though.
Title: Re: losing money faster than im putting in
Post by: PhysicianOnFIRE on January 19, 2016, 11:59:00 AM
Buy on the way down, buy at the bottom, buy on the way back up.  When the market gets back to it was when it started dropping, you'll be far ahead of where you would have been if the market had remained flat the whole time.  The only scenario in which you don't come out ahead is if the markets NEVER recover (highly unlikely) or if you bail too soon and sell before the market eventually recovers (this happens far more often).

I started investing $45k per year into a SEP-IRA in 2006.  The Dow was around 13,000.  I continued putting money in as the Dow lost 50% and continued as it came back.  Best thing that happened to me early in my career.
Title: Re: losing money faster than im putting in
Post by: GoldenNeko on January 19, 2016, 12:08:13 PM
I agree with previous answers. I also started my investing journey at the peak prices (march/may 2015).
But, I see the market drop as a blessing. We can buy for much cheaper now. It's a good opportunity for us in our accumulation journey.
I feel bad though, for the people who are already FIRED, but except a HUGE market drop, this small -20 -10% is something that any portfolio tested with firecalc can easily handle.
Title: Re: losing money faster than im putting in
Post by: tj on January 19, 2016, 12:14:52 PM
A 10% drop is nothing, so if one is concerned about a 10% drop, I'd reconsider how much exposure I want to equities and fixed income. You need to think about it that it isbetter to have drops at the beginning of your career than the end. Stay the course!

I have to keep average 100k invested at Merrill Edge to qualify for a Preferred program with Bank of America, and it's almost like a game forcing myself to transfer more $$$ in to buy shares of VT. In the long run, the buy price is going to be irrelevant because I don't plan on tapping those funds for many years, but I suppose I'll eventually owe more taxes on these lower basis shares.
Title: Re: losing money faster than im putting in
Post by: MustacheAndaHalf on January 19, 2016, 12:25:13 PM
I think of the share market as a saw, its teeth go up and down, but from the start to the end, it gets higher and higher.
Or it's a saw because it hurts a lot when it cuts into your money, but when it rises you're just happy it's not cutting anymore.  :)

Back to OP - Behavioral economics has found the losses hurt twice as much as gains, roughly.  So it's better to guide your investments with a strategy, not with gut emotions.  If you trust your gut, your gut will suggest selling stocks whenever they go down.
Title: Re: losing money faster than im putting in
Post by: I'm a red panda on January 19, 2016, 12:27:07 PM
Im investing in US and UK index funds atm and my portfolio is dropping, it's down by about 10% total. i started my investing journey very close to peak prices.



i dint liek dis :'(

I seem to have started my taxable accounts at the height of the market too.  So I'm doing nothing but losing money. 
Luckily my non-taxable accounts started around 2005, so they've grown a bit.
Title: Re: losing money faster than im putting in
Post by: fmzip on January 19, 2016, 01:02:59 PM
I too invested all my cash of around $500K at what was the market height on June 20, 2014. Was a very difficult thing to do, It's gone up down and sideways since, haven't gained anything. But what I have done is kept pouring more and more in. So $500K is now $700K

https://www.bogleheads.org/forum/viewtopic.php?t=141513

Remember this, "it's time IN the market, you can't time the market "

Just stick to it. At times like this I wish I had more cash to throw in. Nothing like a good sale in my opinion :)



Title: Re: losing money faster than im putting in
Post by: GuitarStv on January 19, 2016, 01:10:10 PM
Im investing in US and UK index funds atm and my portfolio is dropping, it's down by about 10% total. i started my investing journey very close to peak prices.



i dint liek dis :'(


Time to double down!
Title: Re: losing money faster than im putting in
Post by: CorpRaider on January 19, 2016, 01:10:49 PM
Russell 2000 is down > 20% from the most recent high.  It is tough, especially if you're flirting with a big round number that you are trying to overcome.  Maybe focus on the number of shares of whatever you own.  That will still be moving up.
Title: Re: losing money faster than im putting in
Post by: Sailor Sam on January 19, 2016, 01:41:07 PM
Im investing in US and UK index funds atm and my portfolio is dropping, it's down by about 10% total. i started my investing journey very close to peak prices.



i dint liek dis :'(


Time to double down!

Yup! 

Personal NW in July 2015: 300k
Personal NW in Jan 2016: 300K

Cash added July-Jan: 13k

Riding the wave down for all it's worth. Great optimism, here.
Title: Re: losing money faster than im putting in
Post by: dividendman on January 19, 2016, 01:47:22 PM
Note that as your portfolio gets larger this will always be the case. You will gain more and lose more with market fluctuations than you will be adding new funds.

I guess what I'm saying is: suck it up buttercup!
Title: Re: losing money faster than im putting in
Post by: Bracken_Joy on January 19, 2016, 01:49:46 PM
You're young. You should be DELIGHTED that you get to buy when things are on sale. Just think of all those poor suckers who had good economies when they were young- their dollars didn't go nearly so far!

Silver linings my friend =)
Title: Re: losing money faster than im putting in
Post by: soccerluvof4 on January 19, 2016, 02:03:52 PM
Buy the "dips" that mean "sale'' exspecially when below you DCA
Title: Re: losing money faster than im putting in
Post by: ShoulderThingThatGoesUp on January 19, 2016, 02:07:38 PM
Putting in $2000 this week because I have it. Disheartening to see my main account below $200,000 again but it's all alright.
Title: Re: losing money faster than im putting in
Post by: iamlindoro on January 19, 2016, 02:27:36 PM
I totally get what you're saying, it looks like I'm going to have to write my first ever net worth post *decreasing* our current safe withdrawal rate this month (such a bummer!)... but look at it this way, you are going to have a ton more shares!  Last year and ~30K ago, I had the same experience crossing the $100K in VTSAX threshold... For like three months I poured money in, and it kept retreating just enough to stay below $100K!  The great news is that when it *does* recover, you gain that much faster!
Title: Re: losing money faster than im putting in
Post by: Jeremy E. on January 19, 2016, 02:47:58 PM
You shouldn't really care what the stock market does when you are in your accumulation phase, just keep throwing money at your retirement accounts until you're retired. If it helps, when the market is down, think of it as buying on sale.
Title: Re: losing money faster than im putting in
Post by: SwordGuy on January 19, 2016, 03:06:44 PM
Let's take this simple example to learn how the stock market prices work:

You buy a car for $10,000.

On Monday, I see your sweet new ride and say, I'll offer you $10,100 for that car.  You decline to sell, it's not worth spending another afternoon with sleazy car salesmen for $100.  But wow!  You made $100!

On Tuesday, I offer $11,000 for the car.   You're hoping to get laid tonight in your brand new car, so you decline to sell.  But, gosh!  You've made $1000 in just 2 days!

On Wednesday, I offer you $9000 for the car.   You get all depressed because you've lost $2000!  So you sell the car.

Do you see anything wrong with this?

I do.

First of all, you did not make $100 on Monday when I offered to buy the car from you for $10100.   You made nothing because - drum roll please - you did not sell the car.

Second, you did not make $1000 on Tuesday when I offered to buy the car for $11000, and for the same reason.

Third, you did not lose $2000 (11000 - 9000) on Wednesday when I offered to buy the car for $9000.

You lost it because you sold it for $9000, which was a darn fool thing to do.

Stock ownership is no different in this regard.

Where stock ownership is better than car ownership is that stocks sometimes pay dividends in cash.
Title: Re: losing money faster than im putting in
Post by: Jeremy E. on January 19, 2016, 03:24:57 PM
Let's take this simple example to learn how the stock market prices work:

You buy a car for $10,000.

On Monday, I see your sweet new ride and say, I'll offer you $10,100 for that car.  You decline to sell, it's not worth spending another afternoon with sleazy car salesmen for $100.  But wow!  You made $100!

On Tuesday, I offer $11,000 for the car.   You're hoping to get laid tonight in your brand new car, so you decline to sell.  But, gosh!  You've made $1000 in just 2 days!

On Wednesday, I offer you $9000 for the car.   You get all depressed because you've lost $2000!  So you sell the car.

Do you see anything wrong with this?

I do.

First of all, you did not make $100 on Monday when I offered to buy the car from you for $10100.   You made nothing because - drum roll please - you did not sell the car.

Second, you did not make $1000 on Tuesday when I offered to buy the car for $11000, and for the same reason.

Third, you did not lose $2000 (11000 - 9000) on Wednesday when I offered to buy the car for $9000.

You lost it because you sold it for $9000, which was a darn fool thing to do.

Stock ownership is no different in this regard.

Where stock ownership is better than car ownership is that stocks sometimes pay dividends in cash.
Another area that stock ownership is better than car ownership, historically the value of the stock market rises while the value of cars... declines
Title: Re: losing money faster than im putting in
Post by: acorn on January 19, 2016, 04:21:31 PM
Maybe focus on the number of shares of whatever you own.  That will still be moving up.

I like this way of thinking.
Title: Re: losing money faster than im putting in
Post by: faramund on January 19, 2016, 04:32:46 PM
Maybe focus on the number of shares of whatever you own.  That will still be moving up.

I like this way of thinking.

I take this, to non-recommended extremes. For each company I own, I track what they own, what fraction of the company I own, and thus what I own. So for example, part of what I own is 14 square meters of retail space -- somewhere.

But, its the same thing as the number of shares, it doesn't matter what the share price does, I still just own those 14 square meters, the only way it changes, is if the companies I own build or buy more floor space, or if I buy more shares.

And if I buy more shares, I want the price to be lower. Before the most recent downturn, it probably cost $3000 for me to buy a square meter, now it probably only costs me $2700 - so that's all good.

But the key point, is that shares are a proportional ownership of certain companies. Even if you don't know the details, what you own of those companies doesn't change, as the market goes up and down. The only thing is, when the market goes down, you get more, for less.
Title: Re: losing money faster than im putting in
Post by: BarkyardBQ on January 19, 2016, 04:40:04 PM
I'm always impressed when the market has decided to challenge our NW and drop it more than we can contribute in the month. We have had 1 negative (total less than previous) NW month in the last year, this will likely be number 2.

Keep stacking.
Title: Re: losing money faster than im putting in
Post by: Bracken_Joy on January 19, 2016, 05:10:31 PM
Maybe focus on the number of shares of whatever you own.  That will still be moving up.

I like this way of thinking.

I take this, to non-recommended extremes. For each company I own, I track what they own, what fraction of the company I own, and thus what I own. So for example, part of what I own is 14 square meters of retail space -- somewhere.

But, its the same thing as the number of shares, it doesn't matter what the share price does, I still just own those 14 square meters, the only way it changes, is if the companies I own build or buy more floor space, or if I buy more shares.

And if I buy more shares, I want the price to be lower. Before the most recent downturn, it probably cost $3000 for me to buy a square meter, now it probably only costs me $2700 - so that's all good.

But the key point, is that shares are a proportional ownership of certain companies. Even if you don't know the details, what you own of those companies doesn't change, as the market goes up and down. The only thing is, when the market goes down, you get more, for less.

I love this approach. So tangible!
Title: Re: losing money faster than im putting in
Post by: mrpercentage on January 19, 2016, 07:00:06 PM
A couple of people I know are pulling everything out of the market. Advice be damned-- its their money.

The alarming thing is I know of a couple doing it. How many more are doing it without saying so. Then again I look at the market and see the evidence right there. Its not vaporizing into thin air.

The Fibonacci Queen says if we do stop at key support areas then its down to a 1350 S&P500 before the bounce. They just covered it at the end of Mad Money.

Lesson: DCA boys DCA don't try to lump sum in this nonsense. Im still investing and driving on my weekends to do more. If it is in vain then so-be-it. I have a wife, two kids, food on the table, money in the bank, a new car, and a grass yard.

Murica F#$% Yeah!
Title: Re: losing money faster than im putting in
Post by: okits on January 19, 2016, 07:10:49 PM
Im investing in US and UK index funds atm and my portfolio is dropping, it's down by about 10% total. i started my investing journey very close to peak prices.



i dint liek dis :'(

Perhaps reading the article linked in this thread's OP (or reading the threads listed in the replies) will help?

http://forum.mrmoneymustache.com/investor-alley/answer-to-doubts-about-investing-in-high-markets/

Don't panic.
Keep investing.
Stop checking your portfolio value if it makes you feel bad or makes you want to stop investing.
Title: Re: losing money faster than im putting in
Post by: Jeremy E. on January 20, 2016, 09:43:26 AM
A couple of people I know are pulling everything out of the market. Advice be damned-- its their money.

The alarming thing is I know of a couple doing it. How many more are doing it without saying so. Then again I look at the market and see the evidence right there. Its not vaporizing into thin air.

The Fibonacci Queen says if we do stop at key support areas then its down to a 1350 S&P500 before the bounce. They just covered it at the end of Mad Money.

Lesson: DCA boys DCA don't try to lump sum in this nonsense. Im still investing and driving on my weekends to do more. If it is in vain then so-be-it. I have a wife, two kids, food on the table, money in the bank, a new car, and a grass yard.

Murica F#$% Yeah!
if I came across $100,000 tomorrow, I would lump sum it into VTSAX. In my opinion it doesn't matter what the market is doing, the best time to invest is now. Historically the market always goes up over time and lump sum has historically given better returns than DCA.
Title: Re: losing money faster than im putting in
Post by: capitalninja on January 20, 2016, 10:13:30 AM
Annnnnd securities on sale again today. :-) Time to put more $$$ to work.
Title: Re: losing money faster than im putting in
Post by: mpg350 on January 20, 2016, 10:26:22 AM
If this is the start of a bear market and its very possible this is nothing we have way more further to go down.
So if your freaking out now you might want to shut the computer off for awhile.

Title: Re: losing money faster than im putting in
Post by: FIRE47 on January 20, 2016, 10:58:50 AM
Join the club - I dont hold exclusively US stocks like many posters here so I'm already down in the negative 25-30% region in my Canadian and International stocks and we should all expect at some point that will happen to our US stocks as well maybe now, maybe later. If you're just holding US stocks consider yourself lucky becuase at some point youre going to have to experience losses 3-4 times the most recent blip.

At this point even though I started seriously investing about 3-4 years ago I havn't made a cent and if I did the math am probably slightly negative overall after today and much worse off than even just having used a savings account or GICs.

Title: Re: losing money faster than im putting in
Post by: pbnjpeg on January 20, 2016, 12:21:01 PM
I feel the same way as the OP. I'm a young Mustachian who only really started reducing spending and actively investing in April of last year. I'm pretty sure my portfolio climbed up by about 0.5% in April and then it's been all downhill since then, to -10% to -14% give or take.

HOWEVER, I'm staying the course and trying my best to buy lots of shares while the market is down. I figure in the long run this can only be a good thing. Yes, my initial investment is not currently doing too hot, but I'm not going to be spending any of that money any time soon, am I? And secondly, once the market starts to climb again, all these shares I'm getting at discounted prices will grow disproportionately fast!

Or so I'm told. It's tough to enter the market and then only see your money decrease in value for an extended period. But once it starts to grow... watch out!
Title: Re: losing money faster than im putting in
Post by: zz_marcello on January 20, 2016, 12:34:17 PM
That's the problem with high market valuations.
Even after this drop, Shiller CAPE is still around 23.
http://www.multpl.com/shiller-pe/ (http://www.multpl.com/shiller-pe/)
...Which was more or less the multi decade high in 1902 (1930) and in 1966.
(those years where a 4% withdrawal rate was nicely depleting an account in the following ~15-20 years).

Maybe US Shiller CAPE is going to 50 next year but its not that we currently are"cheap" or having "good value"
For someone in his early saving period that's no problem, just keep adding monthly.
But for someone just retired there is a risk and its higher than those often communicated 5%.

That being said statistically we are close to a technical low in the markets now and a rebound is very likely in the coming days.

Have a nice week!
Title: Re: losing money faster than im putting in
Post by: FIRE47 on January 20, 2016, 12:53:56 PM
That's the problem with high market valuations.
Even after this drop, Shiller CAPE is still around 23.
http://www.multpl.com/shiller-pe/ (http://www.multpl.com/shiller-pe/)
...Which was more or less the multi decade high in 1902 (1930) and in 1966.
(those years where a 4% withdrawal rate was nicely depleting an account in the following ~15-20 years).

Maybe US Shiller CAPE is going to 50 next year but its not that we currently are"cheap" or having "good value"
For someone in his early saving period that's no problem, just keep adding monthly.
But for someone just retired there is a risk and its higher than those often communicated 5%.

That being said statistically we are close to a technical low in the markets now and a rebound is very likely in the coming days.

Have a nice week!

Would you be so kind to perform this same analysis on various international equity markets?
Title: Re: losing money faster than im putting in
Post by: StockBeard on January 20, 2016, 12:59:53 PM
At this point even though I started seriously investing about 3-4 years ago I havn't made a cent and if I did the math am probably slightly negative overall after today and much worse off than even just having used a savings account or GICs.
Kinda similar here. I feel it's more heart breaking when you're getting really close to the FI goal. The goal gets much further all of a sudden, and your monthly investments don't cover the drop, at all.
I'll require a year of savings to cover the hole that was made over the past 2 weeks.


but as others said: buying opportunity. Stay in, and it will come back.
Title: Re: losing money faster than im putting in
Post by: CorpRaider on January 20, 2016, 01:01:37 PM
This is a psychological upside to the investing "methods" focused on the dividends or growth thereof.  They usually change much less rapidly than do quoted publicly traded stock prices.  Also, good opportunity to really evaluate your risk tolerance.  You can do 60-40, 50-50 etc...IEF (an intermediate treasuries etf) is up like 3% ytd.
Title: Re: losing money faster than im putting in
Post by: Yankuba on January 20, 2016, 01:04:18 PM
At this point even though I started seriously investing about 3-4 years ago I havn't made a cent and if I did the math am probably slightly negative overall after today and much worse off than even just having used a savings account or GICs.
Kinda similar here. I feel it's more heart breaking when you're getting really close to the FI goal. The goal gets much further all of a sudden, and your monthly investments don't cover the drop, at all.
I'll require a year of savings to cover the hole that was made over the past 2 weeks.


but as others said: buying opportunity. Stay in, and it will come back.

I'm with you Wololo - I think as of now I need an entire year of saving to cover the 2.5 weeks of 2016 losses. No fun!
Title: Re: losing money faster than im putting in
Post by: dilinger on January 20, 2016, 01:37:34 PM
For folks near retirement who are concerned about the recent market drop - you should have more bonds.  VBTLX is up 1% since the beginning of the year.  If you were retiring (or retired) and actually needing money, you wouldn't sell your stocks while they're down, you'd sell your bonds and wait for stocks to appreciate.

Here's where balancing is helpful.  You might aim for a 70/30 stock/bond mix.  The market craters, and suddenly your portfolio is 60% stocks and 40% bonds.  Sell those overpriced bonds and buy those on-sale stocks!  When the market comes roaring back, sell some of those overpriced stocks to fund your retirement (and maybe pick up some bonds, too, if they're cheap).
Title: Re: losing money faster than im putting in
Post by: tj on January 20, 2016, 02:05:33 PM
For folks near retirement who are concerned about the recent market drop - you should have more bonds.  VBTLX is up 1% since the beginning of the year.  If you were retiring (or retired) and actually needing money, you wouldn't sell your stocks while they're down, you'd sell your bonds and wait for stocks to appreciate.

Here's where balancing is helpful.  You might aim for a 70/30 stock/bond mix.  The market craters, and suddenly your portfolio is 60% stocks and 40% bonds.  Sell those overpriced bonds and buy those on-sale stocks!  When the market comes roaring back, sell some of those overpriced stocks to fund your retirement (and maybe pick up some bonds, too, if they're cheap).

This is why balanced funds are appealing despite the slightly higher cost and potentially taxes. They do all this for you behind the scenes.
Title: Re: losing money faster than im putting in
Post by: Jeremy E. on January 20, 2016, 06:03:00 PM
For folks near retirement who are concerned about the recent market drop - you should have more bonds.  VBTLX is up 1% since the beginning of the year.  If you were retiring (or retired) and actually needing money, you wouldn't sell your stocks while they're down, you'd sell your bonds and wait for stocks to appreciate.

Here's where balancing is helpful.  You might aim for a 70/30 stock/bond mix.  The market craters, and suddenly your portfolio is 60% stocks and 40% bonds.  Sell those overpriced bonds and buy those on-sale stocks!  When the market comes roaring back, sell some of those overpriced stocks to fund your retirement (and maybe pick up some bonds, too, if they're cheap).
Alternatively for those that don't like bonds, assuming you are "financially independent"(able to live on 4% of your portfolio), if you have 100% of your portfolio in VTSAX, you will get at least half of your income from dividends. To make up the rest, on up years you take out a little more than you need, on down years you take out enough.
Title: Re: losing money faster than im putting in
Post by: tj on January 20, 2016, 06:45:38 PM
For folks near retirement who are concerned about the recent market drop - you should have more bonds.  VBTLX is up 1% since the beginning of the year.  If you were retiring (or retired) and actually needing money, you wouldn't sell your stocks while they're down, you'd sell your bonds and wait for stocks to appreciate.

Here's where balancing is helpful.  You might aim for a 70/30 stock/bond mix.  The market craters, and suddenly your portfolio is 60% stocks and 40% bonds.  Sell those overpriced bonds and buy those on-sale stocks!  When the market comes roaring back, sell some of those overpriced stocks to fund your retirement (and maybe pick up some bonds, too, if they're cheap).
Alternatively for those that don't like bonds, assuming you are "financially independent"(able to live on 4% of your portfolio), if you have 100% of your portfolio in VTSAX, you will get at least half of your income from dividends. To make up the rest, on up years you take out a little more than you need, on down years you take out enough.

Another option would be keeping a few years worth of expenses in cash. That way you don't have to deplete as much of your stock assets if you have a bear market during the first few years of retirement.
Title: Re: losing money faster than im putting in
Post by: whodidntante on January 20, 2016, 06:58:59 PM
Im investing in US and UK index funds atm and my portfolio is dropping, it's down by about 10% total. i started my investing journey very close to peak prices.



i dint liek dis :'(

I picked up some ITOT near today's bottom.  It's very nice.  Who knows?  Maybe it'll be worth something someday. 
Title: Re: losing money faster than im putting in
Post by: Retire-Canada on January 20, 2016, 07:00:40 PM
This is why balanced funds are appealing despite the slightly higher cost and potentially taxes. They do all this for you behind the scenes.

Does that really seem worth the cost to save yourself 30mins a few times a year???
Title: Re: losing money faster than im putting in
Post by: onlykelsey on January 20, 2016, 07:01:43 PM
Quote
Does that really seem worth the cost to save yourself 30mins a few times a year???

I think he/she is saying the opposite.  That they may be worth the slightly higher cost to avoid the emotional ride of checking in on your investments yourself. 
Title: Re: losing money faster than im putting in
Post by: TheOldestYoungMan on January 20, 2016, 08:53:12 PM
Sell! Sell! Sell!

Sell your car, sell your sofa, sell your books and your craft!  Sell anything you can get anyone to buy!  Mow the neighbor's yard for a twenty, watch your sister's kids for a five!  Grandma's jewelry you can pawn!  File taxes early for that return!

And then Buy! Buy! Buy! them discounted shares.
Title: Re: losing money faster than im putting in
Post by: tj on January 20, 2016, 10:52:39 PM
Quote
Does that really seem worth the cost to save yourself 30mins a few times a year???

I think he/she is saying the opposite.  That they may be worth the slightly higher cost to avoid the emotional ride of checking in on your investments yourself.

EXACTLY. A lot of people do get overwhelmed by investments and feel as if they have to go to some fancypants adviser, or at the very least, a robo-adviser. They'd be better off setting and forgetting it in a balanced fund or a couple of balanced funds. Regardless of how much "time it saves", it masks the individual asset volatility and if it lets people sleep better, that's a good thing IMO.
Title: Re: losing money faster than im putting in
Post by: frugledoc on January 21, 2016, 12:49:25 AM
It gets worse as your portfolio gets larger and drops in a day what you earn from working for one to several months.  Fortunately by that time you're hopefully experienced enough to hunker down in the happy place in your mind and just keep imvesting
Title: Re: losing money faster than im putting in
Post by: OvertheRainbow on January 21, 2016, 01:12:49 AM
Yeah...my portfolio is down almost 10%. You are not alone! It is disheartening to look at, but if history repeats itself, we will see a surge and profit soon.
Title: Re: losing money faster than im putting in
Post by: webcat86 on January 21, 2016, 01:26:36 AM
So are most people 100% equities? What about those already FI? I wonder how affected any mustachians were in 2008
Title: Re: losing money faster than im putting in
Post by: faramund on January 21, 2016, 02:30:21 AM
Well, in 2008 many of my shares took a big hit to their prices, probably around 40-50%, but their dividends, which is what I most focus on, barely changed, and those that did reduce them, pretty much recovered over the next couple of years.

So what did I do, well nothing with the shares I had, I just left them to recover in the years that followed. But after the crash, I invested a lot of money in the next 2 years (well I multiplied my share holdings by 20), and they've done very, very well.

So my approach was, ignore the dips, and then try to buy as much as possible after the dip.
Title: Re: losing money faster than im putting in
Post by: MsRichLife on January 21, 2016, 02:40:45 AM
So are most people 100% equities? What about those already FI? I wonder how affected any mustachians were in 2008

In 2008 I suffered badly. I learnt a valuable lesson and I'm now far more diversified.

I'm 38, 6 months from FIRE and aim for a portfolio that somewhat resembles the Golden Butterfly: http://portfoliocharts.com/portfolio/golden-butterfly/

So far I'm fairing ok in this market as I've diversified into hedges against market downturns.
Title: Re: losing money faster than im putting in
Post by: webcat86 on January 21, 2016, 02:48:31 AM

So are most people 100% equities? What about those already FI? I wonder how affected any mustachians were in 2008

In 2008 I suffered badly. I learnt a valuable lesson and I'm now far more diversified.

I'm 38, 6 months from FIRE and aim for a portfolio that somewhat resembles the Golden Butterfly: http://portfoliocharts.com/portfolio/golden-butterfly/

So far I'm fairing ok in this market as I've diversified into hedges against market downturns.

Did your investments recover after 2008? Would you go into your current portfolio if you were just starting out or is it because you're close to FI?
Title: Re: losing money faster than im putting in
Post by: MsRichLife on January 21, 2016, 03:16:09 AM

So are most people 100% equities? What about those already FI? I wonder how affected any mustachians were in 2008

In 2008 I suffered badly. I learnt a valuable lesson and I'm now far more diversified.

I'm 38, 6 months from FIRE and aim for a portfolio that somewhat resembles the Golden Butterfly: http://portfoliocharts.com/portfolio/golden-butterfly/

So far I'm fairing ok in this market as I've diversified into hedges against market downturns.

Did your investments recover after 2008? Would you go into your current portfolio if you were just starting out or is it because you're close to FI?

No, my investments didn't recover. I actually made the best decision for me at the time, and that was to sell all my stocks.

At a ~50% loss, I realised I needed a 100% gain to break even again: http://www.investopedia.com/articles/02/022002.asp (http://www.investopedia.com/articles/02/022002.asp) I thought a 100% gain would probably be a long time coming and worked out that I could put what remained of those funds to better use in the meantime. I set out to pay down over $1M of debt on my real estate portfolio instead.

As it stands, the Australian Stock Market never regained those highs of late 2007, and if I'd held on I would probably not be in the same position I am today. My lesson is: to remain flexible to changing circumstances and don't assume the future will be the same as the past.

These days I have part of my stock portfolio that is purely for yield (earning ~9% p.a.), some speculation with 20% stop losses in place and some hedges to offset the loss of value of my 'yield' portfolio. I'm also diversified into property, cash and gold. I have very few bonds as they haven't been a good buy for a while.

It's difficult to say whether I would go into my current strategy if I was just starting out. I guess if I knew then what I know now, I'd like to say yes. But...when I was younger and felt invincible I thought my risk tolerance was much higher than it actually is.
Title: Re: losing money faster than im putting in
Post by: SondraF on January 21, 2016, 03:39:25 AM
For those who just started out (like us - we only started doing independent investing in October), look at it this way - you've already spent the time and money to learn how to play the game and use the tools and can now effectively take advantage of this down market or dip.  In 2008 I hadn't done that, always meant to, never did, and missed out on huge, huge potential gains through to 2014 (outside of 401k investing).  Not this time.

I believe we are currently down about 2%, but thats ok - I was already nervous when we started that we were buying at the top of the market.  We have to stay a bit more liquid the next few months due to moving expenses, but intend to keep a small amount for investing and then use the bulk once we are through April for either debt pay down or stock purchases, depending on the situation at that time.  Either way we come out on top!
Title: Re: losing money faster than im putting in
Post by: faramund on January 21, 2016, 04:22:56 AM
I've also become very aware, that the people who seem to be posting the most worried comments on this forum, are those who've started investing in the last two years, primarily in the last one.

If any new investor is worrying, they should think about this. There are many people on this site, who have been investing for many years, and who really, largely, are ignoring this downturn.

Now those people have had just the same drops as the new people, but they ignore it. So if you think about it, why is that so?

Its because once you've been in the share market for a while, you know it goes up and down, and the best strategy, is just to ignore it.

So if your feeling worried, what do you want to do? Act like a newbie? or act like someone with experience.

Title: Re: losing money faster than im putting in
Post by: webcat86 on January 21, 2016, 04:55:02 AM


So are most people 100% equities? What about those already FI? I wonder how affected any mustachians were in 2008

In 2008 I suffered badly. I learnt a valuable lesson and I'm now far more diversified.

I'm 38, 6 months from FIRE and aim for a portfolio that somewhat resembles the Golden Butterfly: http://portfoliocharts.com/portfolio/golden-butterfly/

So far I'm fairing ok in this market as I've diversified into hedges against market downturns.

Did your investments recover after 2008? Would you go into your current portfolio if you were just starting out or is it because you're close to FI?

No, my investments didn't recover. I actually made the best decision for me at the time, and that was to sell all my stocks.

At a ~50% loss, I realised I needed a 100% gain to break even again: http://www.investopedia.com/articles/02/022002.asp (http://www.investopedia.com/articles/02/022002.asp) I thought a 100% gain would probably be a long time coming and worked out that I could put what remained of those funds to better use in the meantime. I set out to pay down over $1M of debt on my real estate portfolio instead.

As it stands, the Australian Stock Market never regained those highs of late 2007, and if I'd held on I would probably not be in the same position I am today. My lesson is: to remain flexible to changing circumstances and don't assume the future will be the same as the past.

These days I have part of my stock portfolio that is purely for yield (earning ~9% p.a.), some speculation with 20% stop losses in place and some hedges to offset the loss of value of my 'yield' portfolio. I'm also diversified into property, cash and gold. I have very few bonds as they haven't been a good buy for a while.

It's difficult to say whether I would go into my current strategy if I was just starting out. I guess if I knew then what I know now, I'd like to say yes. But...when I was younger and felt invincible I thought my risk tolerance was much higher than it actually is.

I'm very new to this so apologies for the questions but would you need a 100% increase if you were still buying stocks at the cheaper price in the dip?
Title: Re: losing money faster than im putting in
Post by: I'm a red panda on January 21, 2016, 07:00:08 AM
So are most people 100% equities? What about those already FI? I wonder how affected any mustachians were in 2008

My guess is "most people" are not 100% equities, though perhaps some vocal posters are which makes it seem like "most people".
Title: Re: losing money faster than im putting in
Post by: ender on January 21, 2016, 07:20:01 AM
I picked a good month and a good year (so far..) to be off work and holding off on IRAs until April when we have a better idea of our 2016 finances :)
Title: Re: losing money faster than im putting in
Post by: matchewed on January 21, 2016, 07:31:00 AM
Weren't you planning on FIREing on <1000/year?

If you can't handle small volatility like this while you're accumulating and don't need to live off the investments then your plan doesn't fit you. Either change your plan or change your view. I'd recommend both.
Title: Re: losing money faster than im putting in
Post by: ender on January 21, 2016, 07:47:38 AM
Weren't you planning on FIREing on <1000/year?

If you can't handle small volatility like this while you're accumulating and don't need to live off the investments then your plan doesn't fit you. Either change your plan or change your view. I'd recommend both.

From their signature:

Quote
current Portfolio (20/9/15) = 3600
Title: Re: losing money faster than im putting in
Post by: matchewed on January 21, 2016, 07:50:24 AM
Weren't you planning on FIREing on <1000/year?

If you can't handle small volatility like this while you're accumulating and don't need to live off the investments then your plan doesn't fit you. Either change your plan or change your view. I'd recommend both.

From their signature:

Quote
current Portfolio (20/9/15) = 3600

Sorry I'm not seeing your point.
Title: Re: losing money faster than im putting in
Post by: zephyr911 on January 21, 2016, 07:52:03 AM
Im investing in US and UK index funds atm and my portfolio is dropping, it's down by about 10% total. i started my investing journey very close to peak prices.



i dint liek dis :'(
When my shares decline, I get excited and start dredging up extra cash to buy more.

If you believe you're buying a fundamentally good investment, a lower price during your accumulation phase is 100% positive. The more it drops, the more cheaply you are procuring your future financial freedom.
Title: Re: losing money faster than im putting in
Post by: ender on January 21, 2016, 08:00:10 AM
Weren't you planning on FIREing on <1000/year?

If you can't handle small volatility like this while you're accumulating and don't need to live off the investments then your plan doesn't fit you. Either change your plan or change your view. I'd recommend both.

From their signature:

Quote
current Portfolio (20/9/15) = 3600

Sorry I'm not seeing your point.

It makes your point even more important because the portfolio balance is so low, anyways.  10% of 3600 is only a month worth of savings for most people - if a month worth of savings fluctuation in the market is going to make/break your will for retirement... that's not a good sign for how someone might feel about ER.
Title: Re: losing money faster than im putting in
Post by: matchewed on January 21, 2016, 08:01:38 AM
Weren't you planning on FIREing on <1000/year?

If you can't handle small volatility like this while you're accumulating and don't need to live off the investments then your plan doesn't fit you. Either change your plan or change your view. I'd recommend both.

From their signature:

Quote
current Portfolio (20/9/15) = 3600

Sorry I'm not seeing your point.

It makes your point even more important because the portfolio balance is so low, anyways.  10% of 3600 is only a month worth of savings for most people - if a month worth of savings fluctuation in the market is going to make/break your will for retirement... that's not a good sign for how someone might feel about ER.

Ah gotcha, thanks :)
Title: Re: losing money faster than im putting in
Post by: charis on January 21, 2016, 08:16:01 AM
Thank you for this thread.  We are years from retirement.  I have finally stopped looking at my investment portfolio as "losing money."  Up until today, I would log into Mint and see our accounts "losing money" and our NW dropping, which is a huge bummer. 

After reading this thread, I went in and hide our investments from updates and will from now on manually add the money that we contribute.  That way I have a general idea of our NW, but without the dramatic lows and highs of the market.  Because they don't mean anything right now! Light bulb moment for this newbie.
Title: Re: losing money faster than im putting in
Post by: cerat0n1a on January 21, 2016, 08:39:58 AM
I'm very new to this so apologies for the questions but would you need a 100% increase if you were still buying stocks at the cheaper price in the dip?

I don't think there's any startling insight - it's just trivial arithmetic.

If a share price is $10 and goes to $5, it's lost 50% of its value. If it's at $5, it needs to increase by 100% to get back to $10.

If you're buying a stock at $5 then (obviously) you get twice as many of them compared with buying them at $10.
Title: Re: losing money faster than im putting in
Post by: tj on January 21, 2016, 08:56:55 AM
It gets worse as your portfolio gets larger and drops in a day what you earn from working for one to several months.  Fortunately by that time you're hopefully experienced enough to hunker down in the happy place in your mind and just keep imvesting

The daily movements up and down are often higher than my bi-weekly paycheck. I feel like this is a good position to be in.
Title: Re: losing money faster than im putting in
Post by: dude on January 21, 2016, 08:57:13 AM
meh. I finished 2014 with $482k in my account, and despite plowing $31k in this past year (2015), I'm only sitting at $490k.  In August, when stocks dropped 12%, I shifted 5% from bonds to stocks.  Small caps are down 13% already this year, so I shifted 3% from bonds to small caps.  Buying opportunities. Sooner or later, the market will rebound, and in most cases it's usually sooner.
Title: Re: losing money faster than im putting in
Post by: zephyr911 on January 21, 2016, 09:30:57 AM
I neglected to answer the actual question. *kicks self*
So are most people 100% equities? What about those already FI? I wonder how affected any mustachians were in 2008
My tax-deferred accounts are 100% stocks and may always be, but that includes a substantial allocation to dividend stocks. That, and all my taxable holdings are in real estate, which is 40% of my NW now but growing faster than the rest (it gets ~2/3 of my new investment, and is earning higher returns). Between that, having side work that I enjoy and will continue in FIRE, and being eligible for pensions after 60, I'll always be pretty risk-tolerant with securities.

I was working in Iraq in 2008 so I maxed out 401k contributions and ignored the bloodbath. In retrospect, I wish I'd paid slightly more attention just for the learning experience. Regardless, if it happened all over again, the only way it'd change my plans is if I suddenly got greedy and decided to maintain high income just to buy more. But market returns are just a means to an end, and that end is nearly in sight regardless, so I'd have to see how I felt when the time came.

There are many ways to build in the level of safety margin that will let you sleep at night. This is a good place to learn about them. :)
Title: Re: losing money faster than im putting in
Post by: webcat86 on January 21, 2016, 09:54:12 AM

I neglected to answer the actual question. *kicks self*
So are most people 100% equities? What about those already FI? I wonder how affected any mustachians were in 2008
My tax-deferred accounts are 100% stocks and may always be, but that includes a substantial allocation to dividend stocks. That, and all my taxable holdings are in real estate, which is 40% of my NW now but growing faster than the rest (it gets ~2/3 of my new investment, and is earning higher returns). Between that, having side work that I enjoy and will continue in FIRE, and being eligible for pensions after 60, I'll always be pretty risk-tolerant with securities.

I was working in Iraq in 2008 so I maxed out 401k contributions and ignored the bloodbath. In retrospect, I wish I'd paid slightly more attention just for the learning experience. Regardless, if it happened all over again, the only way it'd change my plans is if I suddenly got greedy and decided to maintain high income just to buy more. But market returns are just a means to an end, and that end is nearly in sight regardless, so I'd have to see how I felt when the time came.

There are many ways to build in the level of safety margin that will let you sleep at night. This is a good place to learn about them. :)

Is your property investment rental units or REIT? I'd like to do property but recent changes mean in the UK being a small landlord is not inviting, and can mean paying more in tax than you actually profited
Title: Re: losing money faster than im putting in
Post by: zephyr911 on January 21, 2016, 01:28:18 PM
Is your property investment rental units or REIT? I'd like to do property but recent changes mean in the UK being a small landlord is not inviting, and can mean paying more in tax than you actually profited
They're two SFRs (my previous homes, rented out after leaving) and within a 3-person partnership, two duplexes.
It works out well in Alabama. Property is cheap and taxes low. I plan to double the portfolio this year at a minimum.
Title: Re: losing money faster than im putting in
Post by: webcat86 on January 21, 2016, 01:29:39 PM

Is your property investment rental units or REIT? I'd like to do property but recent changes mean in the UK being a small landlord is not inviting, and can mean paying more in tax than you actually profited
They're two SFRs (my previous homes, rented out after leaving) and within a 3-person partnership, two duplexes.
It works out well in Alabama. Property is cheap and taxes low. I plan to double the portfolio this year at a minimum.

What are SFRs?

I envy your position. I'd love to do it but it's just not viable here now.
Title: Re: losing money faster than im putting in
Post by: tj on January 21, 2016, 02:20:47 PM

Is your property investment rental units or REIT? I'd like to do property but recent changes mean in the UK being a small landlord is not inviting, and can mean paying more in tax than you actually profited
They're two SFRs (my previous homes, rented out after leaving) and within a 3-person partnership, two duplexes.
It works out well in Alabama. Property is cheap and taxes low. I plan to double the portfolio this year at a minimum.

What are SFRs?

I envy your position. I'd love to do it but it's just not viable here now.

single family homes (residences)
Title: Re: losing money faster than im putting in
Post by: Kaspian on January 21, 2016, 03:08:32 PM
So are most people 100% equities? What about those already FI? I wonder how affected any mustachians were in 2008

My guess is "most people" are not 100% equities, though perhaps some vocal posters are which makes it seem like "most people".

^^ THIS.  I'm 40% bonds.  When I began my index portfolio (around 2009) the banks called my 60% equity/40% bond mix "too aggressive".  Then a few years later they called it "balanced".  Last year they called it "too conservative".  I find it hilarious that their attitudes about allocation change depending on what's doing well at the time.  I just keep doin' what I'm doing and rebalance in January and July.

And definitely agree on the "vocal posters" bit.  Saying a 40% bond allocation might be prudent (for some people based on their risk tolerance) was likely to get you a bullet in the face around here during last year's bull run.
Title: Re: losing money faster than im putting in
Post by: webcat86 on January 21, 2016, 03:10:03 PM

So are most people 100% equities? What about those already FI? I wonder how affected any mustachians were in 2008

My guess is "most people" are not 100% equities, though perhaps some vocal posters are which makes it seem like "most people".

^^ THIS.  I'm 40% bonds.  When I began my index portfolio (around 2009) the banks called my 60% equity/40% bond mix "too aggressive".  Then a few years later they called it "balanced".  Last year they called it "too conservative".  I find it hilarious that their attitudes about allocation change depending on what's doing well at the time.  I just keep doin' what I'm doing and rebalance in January and July.

And definitely agree on the "vocal posters" bit.  Saying a 40% bond allocation might be prudent (for some people based on their risk tolerance) was likely to get you a bullet in the face around here during last year's bull run.

Surely it depends on your age to be aggressive or not? I would certainly consider it conservative for someone in their 20s or 30s
Title: Re: losing money faster than im putting in
Post by: Kaspian on January 21, 2016, 03:19:14 PM

So are most people 100% equities? What about those already FI? I wonder how affected any mustachians were in 2008

My guess is "most people" are not 100% equities, though perhaps some vocal posters are which makes it seem like "most people".

^^ THIS.  I'm 40% bonds.  When I began my index portfolio (around 2009) the banks called my 60% equity/40% bond mix "too aggressive".  Then a few years later they called it "balanced".  Last year they called it "too conservative".  I find it hilarious that their attitudes about allocation change depending on what's doing well at the time.  I just keep doin' what I'm doing and rebalance in January and July.

And definitely agree on the "vocal posters" bit.  Saying a 40% bond allocation might be prudent (for some people based on their risk tolerance) was likely to get you a bullet in the face around here during last year's bull run.

Surely it depends on your age to be aggressive or not? I would certainly consider it conservative for someone in their 20s or 30s

Not necessarily...  There has been an attitude, "he/she is young--they're just starting investing so can go 100% equities no problem!"  Here's the thing:  a new investor who sees a giant drop in their portfolio will possibly freak the hell out because they've never been through a downturn before.  I think it's way better that they have some diversification so a plop isn't as dramatic.  It's better to lower (possible) returns from an 8% expectation to 6% rather than having a newbie freak out, sell at the bottom, and then  not get back in the game until things start to rage again.  ....But that's what the majority do, right?  The worst enemy for any investor is not their bond allocation, it's their own behaviour.  It's also the reason the majority of passive index investors fail to match the actual indexes.
Title: Re: losing money faster than im putting in
Post by: webcat86 on January 21, 2016, 03:22:13 PM


So are most people 100% equities? What about those already FI? I wonder how affected any mustachians were in 2008

My guess is "most people" are not 100% equities, though perhaps some vocal posters are which makes it seem like "most people".

^^ THIS.  I'm 40% bonds.  When I began my index portfolio (around 2009) the banks called my 60% equity/40% bond mix "too aggressive".  Then a few years later they called it "balanced".  Last year they called it "too conservative".  I find it hilarious that their attitudes about allocation change depending on what's doing well at the time.  I just keep doin' what I'm doing and rebalance in January and July.

And definitely agree on the "vocal posters" bit.  Saying a 40% bond allocation might be prudent (for some people based on their risk tolerance) was likely to get you a bullet in the face around here during last year's bull run.

Surely it depends on your age to be aggressive or not? I would certainly consider it conservative for someone in their 20s or 30s

Not necessarily...  There has been an attitude, "he/she is young--they're just starting investing so can go 100% equities no problem!"  Here's the thing:  a new investor who sees a giant drop in their portfolio will possibly freak the hell out because they've never been through a downturn before.  I think it's way better that they have some diversification so a plop isn't as dramatic.  It's better to lower (possible) returns from an 8% expectation to 6% rather than having a newbie freak out, sell at the bottom, and then  not get back in the game until things start to rage again.  ....But that's what the majority do, right?  The worst enemy for any investor is not their bond allocation, it's their own behaviour.

True, but that's risk assessment
Title: Re: losing money faster than im putting in
Post by: Kaspian on January 21, 2016, 03:27:32 PM


So are most people 100% equities? What about those already FI? I wonder how affected any mustachians were in 2008

My guess is "most people" are not 100% equities, though perhaps some vocal posters are which makes it seem like "most people".

^^ THIS.  I'm 40% bonds.  When I began my index portfolio (around 2009) the banks called my 60% equity/40% bond mix "too aggressive".  Then a few years later they called it "balanced".  Last year they called it "too conservative".  I find it hilarious that their attitudes about allocation change depending on what's doing well at the time.  I just keep doin' what I'm doing and rebalance in January and July.

And definitely agree on the "vocal posters" bit.  Saying a 40% bond allocation might be prudent (for some people based on their risk tolerance) was likely to get you a bullet in the face around here during last year's bull run.

Surely it depends on your age to be aggressive or not? I would certainly consider it conservative for someone in their 20s or 30s

Not necessarily...  There has been an attitude, "he/she is young--they're just starting investing so can go 100% equities no problem!"  Here's the thing:  a new investor who sees a giant drop in their portfolio will possibly freak the hell out because they've never been through a downturn before.  I think it's way better that they have some diversification so a plop isn't as dramatic.  It's better to lower (possible) returns from an 8% expectation to 6% rather than having a newbie freak out, sell at the bottom, and then  not get back in the game until things start to rage again.  ....But that's what the majority do, right?  The worst enemy for any investor is not their bond allocation, it's their own behaviour.

True, but that's risk assessment

And someone who's new to investing is supposed to understand their own risk tolerance?  ;)  Very much like giving a kid who just got a motorcycle license a new Harley and saying, "it's the best bike," while not considering that they're probably gonna drop it.  Everyone is brave when things are going well.
Title: Re: losing money faster than im putting in
Post by: tj on January 21, 2016, 03:35:02 PM

So are most people 100% equities? What about those already FI? I wonder how affected any mustachians were in 2008

My guess is "most people" are not 100% equities, though perhaps some vocal posters are which makes it seem like "most people".

^^ THIS.  I'm 40% bonds.  When I began my index portfolio (around 2009) the banks called my 60% equity/40% bond mix "too aggressive".  Then a few years later they called it "balanced".  Last year they called it "too conservative".  I find it hilarious that their attitudes about allocation change depending on what's doing well at the time.  I just keep doin' what I'm doing and rebalance in January and July.

And definitely agree on the "vocal posters" bit.  Saying a 40% bond allocation might be prudent (for some people based on their risk tolerance) was likely to get you a bullet in the face around here during last year's bull run.

Surely it depends on your age to be aggressive or not? I would certainly consider it conservative for someone in their 20s or 30s

Not necessarily...  There has been an attitude, "he/she is young--they're just starting investing so can go 100% equities no problem!"  Here's the thing:  a new investor who sees a giant drop in their portfolio will possibly freak the hell out because they've never been through a downturn before.  I think it's way better that they have some diversification so a plop isn't as dramatic.  It's better to lower (possible) returns from an 8% expectation to 6% rather than having a newbie freak out, sell at the bottom, and then  not get back in the game until things start to rage again.  ....But that's what the majority do, right?  The worst enemy for any investor is not their bond allocation, it's their own behaviour.  It's also the reason the majority of passive index investors fail to match the actual indexes.

This is why I suggest balanced funds to my friends and family who ask.
Title: Re: losing money faster than im putting in
Post by: v8rx7guy on January 21, 2016, 03:40:19 PM
I am beginning to realize that many people on this forum are going to have a rude awakening when they face their first major downturn.  Seems like a lot of people here have only experienced 2010-2015 and have no idea what a 2007-2009 feels like.
Title: Re: losing money faster than im putting in
Post by: webcat86 on January 21, 2016, 03:40:51 PM



So are most people 100% equities? What about those already FI? I wonder how affected any mustachians were in 2008

My guess is "most people" are not 100% equities, though perhaps some vocal posters are which makes it seem like "most people".

^^ THIS.  I'm 40% bonds.  When I began my index portfolio (around 2009) the banks called my 60% equity/40% bond mix "too aggressive".  Then a few years later they called it "balanced".  Last year they called it "too conservative".  I find it hilarious that their attitudes about allocation change depending on what's doing well at the time.  I just keep doin' what I'm doing and rebalance in January and July.

And definitely agree on the "vocal posters" bit.  Saying a 40% bond allocation might be prudent (for some people based on their risk tolerance) was likely to get you a bullet in the face around here during last year's bull run.

Surely it depends on your age to be aggressive or not? I would certainly consider it conservative for someone in their 20s or 30s

Not necessarily...  There has been an attitude, "he/she is young--they're just starting investing so can go 100% equities no problem!"  Here's the thing:  a new investor who sees a giant drop in their portfolio will possibly freak the hell out because they've never been through a downturn before.  I think it's way better that they have some diversification so a plop isn't as dramatic.  It's better to lower (possible) returns from an 8% expectation to 6% rather than having a newbie freak out, sell at the bottom, and then  not get back in the game until things start to rage again.  ....But that's what the majority do, right?  The worst enemy for any investor is not their bond allocation, it's their own behaviour.

True, but that's risk assessment

And someone who's new to investing is supposed to understand their own risk tolerance?  ;)  Very much like giving a kid who just got a motorcycle license a new Harley and saying, "it's the best bike," while not considering that they're probably gonna drop it.  Everyone is brave when things are going well.

Sure, all I meant was what's conservative and aggressive is situation dependent, including individual appetite for risk and loss.
Title: Re: losing money faster than im putting in
Post by: urbanista on January 21, 2016, 04:26:21 PM
I thought a 100% gain would probably be a long time coming ...

As it stands, the Australian Stock Market never regained those highs of late 2007...

It is not true that ASX never regained those highs of late 2007.

ASX200 Accumulation Index December 2007: 40241
ASX200 Accumulation Index March 2015:       52000
ASX200 Accumulation Index December 2015:  48346

Just need to reinvest all dividends.

If someone bought all their portfolio at the very high price in 2007, reinvested the dividends and sold in December 2015, he/she would have made about 2.5% nominal return. In fact, the return would have been higher due to imputation.

If someone bought all their portfolio at the very high price in 2007, reinvested the dividends and kept adding a healthy amount, that person would have done well even with the latest market drop.

Title: Re: losing money faster than im putting in
Post by: Ambergris on January 21, 2016, 04:38:37 PM
I am beginning to realize that many people on this forum are going to have a rude awakening when they face their first major downturn.  Seems like a lot of people here have only experienced 2010-2015 and have no idea what a 2007-2009 feels like.

Or for that matter, 2001-02. I started investing in 1999. Think about what my investing life looks like! I'm currently roughly 75/25 (110-age in stocks in 5% increments down every 5 years). I managed not to sell during the worst parts of 2002 or 2009, even when everyone was convinced this really was the big one and we were all doomed (in fact I increased my inputs). But the little bit of bonds helped me get through the worst of it. And despite a relatively low income (and really only getting seriously started in 2003) I'm now looking at close to 500k. I should like to add this:

I made most of my money via the investments I made during those stock market crashes.

Title: Re: losing money faster than im putting in
Post by: dilinger on January 21, 2016, 04:50:17 PM
I am beginning to realize that many people on this forum are going to have a rude awakening when they face their first major downturn.  Seems like a lot of people here have only experienced 2010-2015 and have no idea what a 2007-2009 feels like.

Some of us experienced 2007-2009 with horror and did the wrong thing.  With this latest downturn, despite having *more* in the market than I did in 2007, I'm watching it with glee.  I'm accumulating shares, not losing money.  It's all about perspective, and sometimes it takes lived experience to have the proper perspective.

Title: Re: losing money faster than im putting in
Post by: mrpercentage on January 21, 2016, 05:41:35 PM
A couple of people I know are pulling everything out of the market. Advice be damned-- its their money.

The alarming thing is I know of a couple doing it. How many more are doing it without saying so. Then again I look at the market and see the evidence right there. Its not vaporizing into thin air.

The Fibonacci Queen says if we do stop at key support areas then its down to a 1350 S&P500 before the bounce. They just covered it at the end of Mad Money.

Lesson: DCA boys DCA don't try to lump sum in this nonsense. Im still investing and driving on my weekends to do more. If it is in vain then so-be-it. I have a wife, two kids, food on the table, money in the bank, a new car, and a grass yard.

Murica F#$% Yeah!
if I came across $100,000 tomorrow, I would lump sum it into VTSAX. In my opinion it doesn't matter what the market is doing, the best time to invest is now. Historically the market always goes up over time and lump sum has historically given better returns than DCA.

Unfortunately I just got an inheritance. It's not lump summing in. Especially into a general index when we really might go into a bear market. Its sitting in JP Morgan where it will stay while I dollar cost into some companies I plan on keeping forever. It's easy to say just throw it in when a large sum of real cash is not sitting in the bank account. I don't plan on putting all of it in either. I will keep throwing in what was already planned and keep doing a little driving for Uber to add more (although I have thought about quitting because I really don't need to). You might want to buy some Home Depot because in the real world when people get a good chunk of money they fix the house first.
Title: Re: losing money faster than im putting in
Post by: Psychstache on January 21, 2016, 06:00:49 PM
A couple of people I know are pulling everything out of the market. Advice be damned-- its their money.

The alarming thing is I know of a couple doing it. How many more are doing it without saying so. Then again I look at the market and see the evidence right there. Its not vaporizing into thin air.

The Fibonacci Queen says if we do stop at key support areas then its down to a 1350 S&P500 before the bounce. They just covered it at the end of Mad Money.

Lesson: DCA boys DCA don't try to lump sum in this nonsense. Im still investing and driving on my weekends to do more. If it is in vain then so-be-it. I have a wife, two kids, food on the table, money in the bank, a new car, and a grass yard.

Murica F#$% Yeah!
if I came across $100,000 tomorrow, I would lump sum it into VTSAX. In my opinion it doesn't matter what the market is doing, the best time to invest is now. Historically the market always goes up over time and lump sum has historically given better returns than DCA.

Unfortunately I just got an inheritance. It's not lump summing in. Especially into a general index when we really might go into a bear market. Its sitting in JP Morgan where it will stay while I dollar cost into some companies I plan on keeping forever. It's easy to say just throw it in when a large sum of real cash is not sitting in the bank account. I don't plan on putting all of it in either. I will keep throwing in what was already planned and keep doing a little driving for Uber to add more (although I have thought about quitting because I really don't need to). You might want to buy some Home Depot because in the real world when people get a good chunk of money they fix the house first.

Do you not live in the real world?
Title: Re: losing money faster than im putting in
Post by: tj on January 21, 2016, 06:04:41 PM
A couple of people I know are pulling everything out of the market. Advice be damned-- its their money.

The alarming thing is I know of a couple doing it. How many more are doing it without saying so. Then again I look at the market and see the evidence right there. Its not vaporizing into thin air.

The Fibonacci Queen says if we do stop at key support areas then its down to a 1350 S&P500 before the bounce. They just covered it at the end of Mad Money.

Lesson: DCA boys DCA don't try to lump sum in this nonsense. Im still investing and driving on my weekends to do more. If it is in vain then so-be-it. I have a wife, two kids, food on the table, money in the bank, a new car, and a grass yard.

Murica F#$% Yeah!
if I came across $100,000 tomorrow, I would lump sum it into VTSAX. In my opinion it doesn't matter what the market is doing, the best time to invest is now. Historically the market always goes up over time and lump sum has historically given better returns than DCA.

Unfortunately I just got an inheritance. It's not lump summing in. Especially into a general index when we really might go into a bear market. Its sitting in JP Morgan where it will stay while I dollar cost into some companies I plan on keeping forever. It's easy to say just throw it in when a large sum of real cash is not sitting in the bank account. I don't plan on putting all of it in either. I will keep throwing in what was already planned and keep doing a little driving for Uber to add more (although I have thought about quitting because I really don't need to). You might want to buy some Home Depot because in the real world when people get a good chunk of money they fix the house first.

When I sold my rental real estate, I immediately lump summed the 6 figures in. I don't know that we "really might go into a bear market", but even if we did, the odds of it recovering before I need to access it (a few decades from now) are very likely. It all depends on your time horizon. And if your inheritance is enough that you don't need the growth, by all means put it in a balanced mix of stocks and bonds, index or otherwise, but DCA is typically an emotional decision rather than a logical one.
Title: Re: losing money faster than im putting in
Post by: faramund on January 21, 2016, 06:13:26 PM
I've had all my non-super investments in shares since 2000, and I don't see any reason to change. After the 2008 crash, I swapped my superannuation investments to 100% shares, and likewise, I'm keeping it there.

I'm in in Australia, and track an index called the AllOrds,
In 2000 (when I started) it was 3208.
Since then in 2002 it dropped by 9.5%
in 2008 it dropped by 45.7
In 2011 it dropped by 12.4
So far this year its dropped by 7.4

When I just checked the ASX it was 4972. That's 6.25% growth per year, and I should add in another 3-4% of dividends.

So why exactly, shouldn't I stay 100% in shares, and why should I care anymore about this years drop, in comparison to the last 4?

Would I have been wiser to sell out at the bottom of each previous drop? I don't think so.

Time is a wonderful perspective when looking at the share market.

Title: Re: losing money faster than im putting in
Post by: Sid Hoffman on January 21, 2016, 10:06:29 PM
The worst enemy for any investor is not their bond allocation, it's their own behaviour.  It's also the reason the majority of passive index investors fail to match the actual indexes.

By passive, do you mean people who are passive up until there's a major downturn, then they sell?  Either way, I agree and think you state it quite elegantly where the greatest enemy of the personal investor lies.  I've seen a number of articles posted over the years demonstrating this is absolutely true, often with an analysis showing that women are less likely to actively make changes and thus tend to outperform men because of their reluctance to change things up during a downturn.
Title: Re: losing money faster than im putting in
Post by: Kaspian on January 21, 2016, 11:58:51 PM
The worst enemy for any investor is not their bond allocation, it's their own behaviour.  It's also the reason the majority of passive index investors fail to match the actual indexes.

By passive, do you mean people who are passive up until there's a major downturn, then they sell? 

Hahaha... Yes, I guess you could say that!  :)  One of the primary reasons Bogle wanted index funds is so that people can just "set it and forget it".  By the time you're ready to retire the dollar-cost-averaging, diversification, low fees, and rebalancing will have done its job 100% of the time.  But people tinker with it all the time--upping recent "winners" (performance chasing) or they lose their fucking heads and sell an underperformer at its bottom.

"Passive management (also called passive investing) is an investing strategy that tracks a market-weighted index or portfolio."   

...It also means "don't fuck around all the time for Godssakes!!"
Title: Re: losing money faster than im putting in
Post by: Villanelle on January 22, 2016, 01:02:18 AM
I have no idea if my portfolio is down, though I'd guess it is based on the overall market.  But I simply don't care how much it is down because that number has zero relevance to my decision making.  I don't do market timing, for either buying or selling.  I don't sell or invest less when the market is down, but nor do I invest more usually, because that's market timing of a different flavor.  Maybe when I'm 2-3 year away from FIRE I'll start paying slightly more attention, but likely even then I will more or less follow a set schedule of moving money to bonds based on my overall plan. 

No muss, no fuss.  And no worry or stress.
Title: Re: losing money faster than im putting in
Post by: mrpercentage on January 22, 2016, 01:32:59 AM
A couple of people I know are pulling everything out of the market. Advice be damned-- its their money.

The alarming thing is I know of a couple doing it. How many more are doing it without saying so. Then again I look at the market and see the evidence right there. Its not vaporizing into thin air.

The Fibonacci Queen says if we do stop at key support areas then its down to a 1350 S&P500 before the bounce. They just covered it at the end of Mad Money.

Lesson: DCA boys DCA don't try to lump sum in this nonsense. Im still investing and driving on my weekends to do more. If it is in vain then so-be-it. I have a wife, two kids, food on the table, money in the bank, a new car, and a grass yard.

Murica F#$% Yeah!
if I came across $100,000 tomorrow, I would lump sum it into VTSAX. In my opinion it doesn't matter what the market is doing, the best time to invest is now. Historically the market always goes up over time and lump sum has historically given better returns than DCA.

Unfortunately I just got an inheritance. It's not lump summing in. Especially into a general index when we really might go into a bear market. Its sitting in JP Morgan where it will stay while I dollar cost into some companies I plan on keeping forever. It's easy to say just throw it in when a large sum of real cash is not sitting in the bank account. I don't plan on putting all of it in either. I will keep throwing in what was already planned and keep doing a little driving for Uber to add more (although I have thought about quitting because I really don't need to). You might want to buy some Home Depot because in the real world when people get a good chunk of money they fix the house first.

Do you not live in the real world?

Yeah. I just told you what I'm doing with it. I am fixing the house first-- that is stucco, paint, new energy efficient windows, and a new AC/gas furnance. The rest is going into companies I like stated above, in a very methodical way, and into aristocrats that will send me dividends by check with my name on it or by direct deposit. I still also invest in my 457. What I'm holding I'm holding-- including Conoco despite the brutal decline and possible cut of dividends later this year--- I don't need that investment money because I have a real fully funded emergency fund now. What I'm not going to do in a market like this is throw it all in. That is hubris 
Title: Re: losing money faster than im putting in
Post by: webcat86 on January 22, 2016, 05:30:28 AM
As far as diversification goes, who here is in bonds because they don't have other investments?

I'm going 100% equities in my vanguard LifeStrategy, so my diversification is cash (a 7000 emergency fund in high interest accounts), and my house. Unfortunately buying multiple homes in the UK is now unattractive due to new legislation.

Given I can't physically get another property, what about investing in a property fund?
Title: Re: losing money faster than im putting in
Post by: dude on January 22, 2016, 07:11:47 AM
For the first 8 years or so of investing, I was 100% equities.  When you are young and have a long time horizon, that's a reasonable thing to do. I did not panic in 2000 or in 2008, I just let it ride. I began to dial back my risk exposure in Q2 2005 (to 90/10).  I was 90/10 in Q1 2007, then dialed it back to 75/25 in Q2 2007, where I remained during and after the 2008 downturn (though I dropped to as low as 64/34 as a result of the market crash before rebalancing)..  I'm 3 years from FIRE and plan to be somewhere between 70/30 - 75/25 from now until I expire.
Title: Re: losing money faster than im putting in
Post by: NumberCruncher on January 22, 2016, 07:20:46 AM
i dint liek dis :'(

Stop looking at it. There is no point checking in on your portfolio frequently.

I personally find it kind of amusing.

"Oh, honey, apparently we're down $10k today."
"Oh? That's nice."
"Want some tea?"
"Why yes, thank you."

On paper using basic assumptions, we're 3-5 years away from financial independence, so I'd much rather have a downturn now than right before we retire.
Title: Re: losing money faster than im putting in
Post by: Kaspian on January 22, 2016, 08:13:27 AM
Totally!   And, I mean, we've recently had such a fantastic run there's no use in panicking.  I set my expectations for FIRE around a 7% average annual return--which is conservative to some but pretty damn ambitious compared to most of the neighbours/friends we all have who make 1% in a savings account.  Mint says I'm currently "2 years 1 month" ahead on my plan.  Holy crap--I'll take that!  It's all due to the great streak we've had the past few years.  We could have 3 or 4 sucky years in a row and I'd still probably be ahead on the plan.
Title: Re: losing money faster than im putting in
Post by: webcat86 on January 22, 2016, 10:40:02 AM
Ok throwing my first sum into the LifeStrategy 100% now!