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Learning, Sharing, and Teaching => Investor Alley => Topic started by: ACyclist on November 20, 2018, 08:19:56 PM

Title: Really trying not to panic
Post by: ACyclist on November 20, 2018, 08:19:56 PM
No more repeats of 2008.

So, you people in VTSAX and the like, how do you deal with seeing thousands down?  Tens of thousands down?

It hurts right?
Title: Re: Really trying not to panic
Post by: Steeze on November 20, 2018, 08:24:37 PM
Looking forward to buying more!
Title: Re: Really trying not to panic
Post by: Radagast on November 20, 2018, 08:33:54 PM
You're kidding right? You are walking through the canyon lands and you are scared of a gopher hole? Don't trip, because you haven't gotten to the steep terrain yet.

Maybe now is a good time to reconsider asset allocation. 10%-40% bonds might suit you, and less than half of your total should be in US stocks. Consider international stocks or rental properties perhaps (though the first is likely do go down in concert with US stocks, but might help against prolonged periods of going nowhere). You know, even gold bullion if it keeps you from selling at the wrong time.

Personally, DW just got a full time job starting at near my salary, so our savings will double or more in 2019. Perfect time for a dip! We might also put some towards safer investments for a house in the next couple years.
Title: Re: Really trying not to panic
Post by: Mr. Green on November 20, 2018, 08:36:55 PM
No more repeats of 2008.

So, you people in VTSAX and the like, how do you deal with seeing thousands down?  Tens of thousands down?

It hurts right?
Was down 100k in October. Meh. We live on 40k a year. If the market takes a dump it will have recovered before we can even spend 100k, possibly even half that.
Title: Re: Really trying not to panic
Post by: Frankies Girl on November 20, 2018, 08:45:55 PM
I know it's probably a whole lot of people's first time with a correction or crash, but honestly...

The market does do this occasionally. It isn't the end of times. It will eventually recover. It may take a few months. It might even take a few years. But it will happen eventually.

Corrections and crashes are expected. They are actually healthy; think of them as a nice little reset/pause button. Unless you're going to suddenly need every penny you invested RIGHT THIS MINUTE... just chill out and stop looking at things. Keep investing in your asset allocation.

And for what it's worth, I've lost somewhere in the neighborhood of $125K at this point. Oh darn. My pretty numbers are lower than at the beginning of the year. ~shrugs and wanders back into the kitchen for something to drink~

The attachment is borrowed from a similar thread over on the Bogleheads site...
Title: Re: Really trying not to panic
Post by: MDM on November 20, 2018, 09:06:26 PM
It hurts right?
No.

Unless it was money you expected to withdraw and spend ~immediately.

In which case your asset allocation was inappropriate.

If you aren't expecting to spend it for many years, just enjoy the lower prices on new money and reinvested dividends.
Title: Re: Really trying not to panic
Post by: RWD on November 20, 2018, 09:16:33 PM
The SP500 is still up over the last year. Was 2599 on Nov 21 last year. I remember being pretty impressed with how high it had risen around that time. Why should we be scared of 2642? Let me know when the one year returns with dividends reinvested are negative. Then I'll get excited to be buying at a discount.

I am not 100% equities and my equities are not 100% US stocks.
Title: Re: Really trying not to panic
Post by: the_fixer on November 20, 2018, 09:20:11 PM
Meh...

Started investing in 1999 and have watched it drop so many times that I am pretty numb to it at this point.

I often wondered how people that started investing in the last 10 years will react when / if SHTF because many are ill prepared and have seen such amazing gains in stocks and real estate that they feel invincible.

Sent from my Pixel 2 XL using Tapatalk
Title: Re: Really trying not to panic
Post by: shinn497 on November 20, 2018, 10:01:39 PM
I'm 32 and not looking to FIRE until like 45 if then even. Who care. Just shovel moar in. Ride the roller coaster baybeh!
Title: Re: Really trying not to panic
Post by: PDXTabs on November 20, 2018, 11:45:09 PM
I remember watching the SP 500 get cut in half from the summer of 2007 to summer of 2008. This is nothing.

Also, I welcome stocks on sale. The only thing that makes me fearful is an economy so bad that I won't make enough money to buy more stocks.
Title: Re: Really trying not to panic
Post by: steveo on November 21, 2018, 12:19:08 AM
I just want to stay it hurts but the good thing is that I'm definitely not selling and I'm looking to buy whenever I have money. I'm still in the accumulation phase so I'm buying. The problem is that I want to be buying more.
Title: Re: Really trying not to panic
Post by: elaine amj on November 21, 2018, 12:39:56 AM
I JUST updated our networth tonight and it sure wasn't fun to see that bite taken out of our investment numbers. We're still doing fine though so I'm not hugely worried.

Except that my DH is insisting it is not a good time to buy as this is just the start of the downturn and we should wait to buy until it drops far lower. In fact, he's insisting we sell a little now to "lock in our previous gains" and then we can buy again in a bit since he says the market will surely continue to go down.
Title: Re: Really trying not to panic
Post by: Villanelle on November 21, 2018, 12:42:54 AM
I deal by simply not looking.  It's not time for me to rebalance, so any change I see it not an actionable item.  Therefore, why would I look?  It's information that has no value to me, so I don't even need to have it.  When it's time for y scheduled rebalance, I will look at rebalance according to my plan.  If you don't have a plan (personal investing statement, or whatever people around here call them), get one.  Then, when you feel panicky, you remind yourself that your plan, which was made during an unemotional time, accounted for all this so you need to follow it.
Title: Re: Really trying not to panic
Post by: MustacheAndaHalf on November 21, 2018, 03:08:58 AM
When you're not adding money to your nest egg, it can be disappointing to see it drop.  But it also helps to think of things from a different point of view, not just focus on the fall.

What happens after stocks drop sharply?  At some point they recover, and then rise even higher.  So the silver lining on any drop, or any correction, is the market recovering and doing even better afterwards.

Rebalancing can be based on time, or portfolio changes, or both.  So some people use "5% bands", where if the market performance changes their allocation by 5%, then they rebalance.  Other people decide once/year, they rebalance but not before then.  For me, I like to rebalance during market turmoil, so I was busy yesterday.

For market drops, it really helps to learn from the past.  Pick up a book that has decades of stock market history, and look at all the prior times the market dropped.  Even if you look back at the 2008 crisis, since then the U.S. stock market has not only recovered, but more than doubled.
Title: Re: Really trying not to panic
Post by: h82goslw on November 21, 2018, 05:53:40 AM


Except that my DH is insisting it is not a good time to buy as this is just the start of the downturn and we should wait to buy until it drops far lower. In fact, he's insisting we sell a little now to "lock in our previous gains" and then we can buy again in a bit since he says the market will surely continue to go down.

If heís so certain why sell just ďa littleĒ?  Why not sell it all and buy back in when heís sure that weíve hit the bottom? 
Title: Re: Really trying not to panic
Post by: ACyclist on November 21, 2018, 06:56:17 AM
No more repeats of 2008.

So, you people in VTSAX and the like, how do you deal with seeing thousands down?  Tens of thousands down?

It hurts right?
Was down 100k in October. Meh. We live on 40k a year. If the market takes a dump it will have recovered before we can even spend 100k, possibly even half that.
I'm at 35% bonds and cash and the rest equities.  Ther
e is some in Intl. index funds.  The International stuff has taken hits this year.  This money will not be drawn down for ten years, and yes I am still buying. 

We have a taxable trading account. That houses money that we intend to start to draw upon in about 5 years.  It will not be taken out at once, but drawn down over a period of 5 years starting in 2023.  Those funds are placed in a balanced fund.  We are down about $450 for an account around 20K.  That is easier to stomach.

The rental home is under contract.  We close in about 2 weeks.  That home has been a bad rental for us. 

It's an emotional thing.  I guess I need to see red as an opportunity for me as a buyer.
Title: Re: Really trying not to panic
Post by: minimalistgamer on November 21, 2018, 06:56:36 AM
I am nervous, but I still went ahead and purchased $5000 of VTSAX last night. Only god knows if its going to pay off.
Title: Re: Really trying not to panic
Post by: harvestbook on November 21, 2018, 07:24:55 AM
Quite simply, we make money off of stock market drops. Without the risk, loss, and volatility, few people would buy them for the measly 2 percent dividends.

This is where the gains come from.



Except that my DH is insisting it is not a good time to buy as this is just the start of the downturn and we should wait to buy until it drops far lower. In fact, he's insisting we sell a little now to "lock in our previous gains" and then we can buy again in a bit since he says the market will surely continue to go down.

I would do this: Ask him to write down exactly when and how much he wants to sell. Then, in real time, write down the point at which he would buy back in and how much, and with what money. This should all be done in real time as if it's real money, not looking back afterwards. We're all geniuses in hindsight.

The worst that can happen is he gets lucky once and starts to think he knows something instead of just getting lucky.
Title: Re: Really trying not to panic
Post by: 2Birds1Stone on November 21, 2018, 07:30:12 AM
I am nervous, but I still went ahead and purchased $5000 of VTSAX last night. Only god knows if its going to pay off.

I have a limit buy order for VTI @ $130......so only another 3.5% down.

It can be futile trying to catch a falling knife though. I've done that before, and got burned quite a bit.
Title: Re: Really trying not to panic
Post by: minimalistgamer on November 21, 2018, 07:33:38 AM
It can be futile trying to catch a falling knife though. I've done that before, and got burned quite a bit.

I understand. Could you shed some light on how trying to buy low caused you to get burned? Thanks!
Title: Re: Really trying not to panic
Post by: wenchsenior on November 21, 2018, 07:45:11 AM
So, OP, if you are having trouble with some garden-variety corrections, what is your emotional state going to be when the actual next recession happens?  Which it will.



Title: Re: Really trying not to panic
Post by: 2Birds1Stone on November 21, 2018, 07:49:35 AM
Could you shed some light on how trying to buy low caused you to get burned? Thanks!

I was an uneducated investor, who listened to the news and media too much. This was 2012/2013 time frame when we had heavy QE, stocks had rebounded from the 2008 crash, and people were flush. There was a lot of geopolitical risk and the dollar was being devalued.

I listened to a co-worker who convinced me to buy precious metals/mining stocks (because the top was in ;) ), and I did. When it dropped 20%, I bought more, when it got to 50% of my entry point price, I doubled down again.......well, we've been under those levels for the past 4 years, with no end in sight. Had I invested that $30k (in total) in VTI/VXUS/BND, I would have been up 50%, instead I took a 40% loss.


Title: Re: Really trying not to panic
Post by: JAYSLOL on November 21, 2018, 07:57:52 AM
Could you shed some light on how trying to buy low caused you to get burned? Thanks!

I was an uneducated investor, who listened to the news and media too much. This was 2012/2013 time frame when we had heavy QE, stocks had rebounded from the 2008 crash, and people were flush. There was a lot of geopolitical risk and the dollar was being devalued.

I listened to a co-worker who convinced me to buy precious metals/mining stocks (because the top was in ;) ), and I did. When it dropped 20%, I bought more, when it got to 50% of my entry point price, I doubled down again.......well, we've been under those levels for the past 4 years, with no end in sight. Had I invested that $30k (in total) in VTI/VXUS/BND, I would have been up 50%, instead I took a 40% loss.

So did you actually take the loss or are still riding it out?
Title: Re: Really trying not to panic
Post by: Brother Esau on November 21, 2018, 08:07:30 AM
I've been invested through the 2000 dot.com bubble and the 2008 crash. Stash went down about 30% and 50% through those respectively. This is normal.
Title: Re: Really trying not to panic
Post by: FIRE 20/20 on November 21, 2018, 08:32:55 AM
It's an emotional thing.  I guess I need to see red as an opportunity for me as a buyer.

ACyclist, while I agree with all the other posters who have responded, I just wanted to jump in and say that the near panic and pain you reference are normal.  The question is what are you going to do about it?  It's easy for all of us random strangers on the internet to blow off your concerns, but that doesn't make them go away.  We can tell you 100 times that this is a minor, normal, totally expected drop.  I don't mean expected in that anyone knew exactly when it was coming or how big it would be, but things like this happen all the time.  We can tell you that the last 10 years have been the aberration - this fall is the normal state of things.  However, my experience is that internet strangers telling you that flying is really safe doesn't make you feel any better getting on a plane if you have a fear of flying. 
If you're feeling panicked now, I suggest you do a couple of things.  First, revisit your IPS when you're in a good mental state.  Of course if you don't have an IPS, create one yesterday!  You don't want to update your IPS when you're feeling panicked, but if you can recognize the feeling and decide to update it when things look a little better I recommend doing so.  Make sure it has clear instructions on what to do *when* (not if - when) the next drop occurs.  Second, make sure your asset allocation is appropriate.  You said that you have 35% is in bonds; maybe you need more.  This will objectively harm your long term returns, but that's better than panicking and selling at the bottom.  Third, I would spend some time reading more about market drops, long-term performance of the markets, etc.  JLCollinsNH's stock series is very good.  I'd read it, then re-read it, then read it again. 
Ultimately, you're just going to have to live through this, come out the other side, and realize that it was totally ok.  I was getting into investing right before the dot com bubble burst.  I lost hundreds of thousands of dollars in 2008.  Both sucked.  Fortunately I didn't do anything stupid, and now these minor bumps don't even register.  If I'm down hundreds of thousands of dollars, it truly doesn't bother me - but I needed to live through something much worse and see it come back with my own eyes to get to that point. 
Title: Re: Really trying not to panic
Post by: 2Birds1Stone on November 21, 2018, 08:38:16 AM
@JAYSLOL , I still hold those PM's.

I bought physical, and I love having it. It represents less than 5% of my portfolio these days, and serves as an important lesson.
Title: Re: Really trying not to panic
Post by: JAYSLOL on November 21, 2018, 08:50:39 AM
@JAYSLOL , I still hold those PM's.

I bought physical, and I love having it. It represents less than 5% of my portfolio these days, and serves as an important lesson.

Curious because I did the exact same (albeit with less invested) in 2012/13, and also held on to them as some diversification/an emergency fund and they now sit as 6% of my stache.  It did at least help me learn the difference the hard way between an asset that creates value and one that merely "stores" value.  Also got me to learn how to spot real gold/silver well and helped me pick up some screaming deals on coins and jewelry at garage sales. 
Title: Re: Really trying not to panic
Post by: Eric222 on November 21, 2018, 08:59:29 AM
I'm surprised I don't care more.... I'm trying to hit an imaginary NW0, which is getting pushed out a tiny bit. I find that I lack the energy to care enough to check more than once a month. It's all on autopilot at this point, and I just keep shoving money in. I've got other stuff to worry about.

I am glad the house down payment money is in a savings account though...
Title: Re: Really trying not to panic
Post by: Maenad on November 21, 2018, 09:16:06 AM
Ultimately, you're just going to have to live through this, come out the other side, and realize that it was totally ok.  ... I needed to live through something much worse and see it come back with my own eyes to get to that point.

Same here.
Title: Re: Really trying not to panic
Post by: tooqk4u22 on November 21, 2018, 09:30:17 AM
No need to panic, but it can be stressful especially if you have only been investing the last decade - it helps to also think about all the gains that you have had over the last decade and more like house money. 

I know this is completely normal, and personally think S&P has to get to 2400-2500 for things to wash out and settle down, but I don't like it one bit.  I don't like seeing my NW target getting further away.  I don't like my WR rate target going up. 

But you know what, I am ok with it bc I have planned for it.   I have a conservative allocation 65/35, targeting a WR of 3.0-3.5%, rebalance with 5% moves, and should the markets drop by 40% then most of 35% bonds will be reallocated to equities.  That's my plan and that's how I sleep at night. 

Title: Re: Really trying not to panic
Post by: BicycleB on November 21, 2018, 09:45:42 AM
Sorry, I was procrastinating. Did something happen?  :)

(Googles "S&P 500". 2667...)

Stock benchmark down a couple percent this year, then. When I sell some stock to cover upcoming expenses, I will have to sell a couple percent more than I would have. But I only sell a couple percent of my portfolio at a time, covering months' worth of expenses, so the difference is a percent of a percent. Small!  Also doesn't hurt because that was part of the plan, just didn't know when.

@ACyclist, what is the pain about?

1. Does it feel the future is disappearing, and hope is lost?
2. That people who were skeptical about your stock investing are proven right, you are proven stupid and they will laugh at you?
3. Same as 2, but it's family, so Thanksgiving will suck?
4. Falling price means your effort is failing, the disappointment saps the energy you need to get out of bed and earn more money to invest?
5. Some other variation?

I felt variations of 1 through 4 at some point in the past, so these are honest questions. No shame, for sure. I ask them because in each case, the emotional impact was only a little related to the stock market, it was a mostly related to the meaning that investment had in my personal perspective at the time.

What does stock market investing mean to you? If it hurts to see a 2% drop or 10% drop, and you plan to work 13 more years, it's worth analyzing the emotions somehow. You have a lot of living in front of you - I hope you can learn to enjoy most of it! Hopefully doing so will also make wise behavior (such as steady investing) easier too. Anyway, congrats on staying the course so far.

Fwiw, 35% cash/bonds for an earner/investor with low risk tolerance sounds like a good balance. It's not aggressive for your life situation, but is aggressive for your risk tolerance, so more or less balanced. Good job.
Title: Re: Really trying not to panic
Post by: FIRE 20/20 on November 21, 2018, 10:30:34 AM
Fwiw, 35% cash/bonds for an earner/investor with low risk tolerance sounds like a good balance. It's not aggressive for your life situation, but is aggressive for your risk tolerance, so more or less balanced. Good job.

Good point - I like that perspective on asset allocation. 
Title: Re: Really trying not to panic
Post by: frugalecon on November 21, 2018, 11:09:04 AM
You might want to go on Youtube and watch the episodes of Wall Street Week with Louis Rukeyser that aired after the 1987 crash. Stocks were wildly volatile, shedding 20% in one day, but with big upswings too. Then take a look at a 40 year dividends-reinvested S&P 500 chart, and notice how insignificant that looks in the broad sweep of things.
Title: Re: Really trying not to panic
Post by: CorpRaider on November 21, 2018, 12:08:44 PM
"I think it's in the nature of long-term shareholding, of the normal vicissitudes in worldly outcomes and in markets, that the long-term holder has the quoted value of his stocks go down by say...fifty percent . In fact, you can argue that if you're not willing to react with equanimity to a market price decline of fifty percent, two or three times a century, you're not fit to be a common shareholder, and you deserve the mediocre results you are going to get, compared to the people who do have the temperament, who can be more philosophical about these market fluctuations."

- Charles T. Munger

But yeah, a lot of people will freak out in the next legitimate bear, especially people who think they are going to be rational about historical returns are the decision to be 100% VTSAX or VTI, but have not personally experienced a big drawdown.  If you are already freaking out, you might consider adding some bonds to your portfolio and rebalancing.

The psychology is why dividend investing is "not stupid" in my opinion.
Title: Re: Really trying not to panic
Post by: Dicey on November 21, 2018, 12:22:25 PM
Oh yes, I'm dying, man. It's just killing me not to throw money in while the market's On Sale. We're flipping a house in big number territory and I want to have plenty of cash on hand to pay for the rest of the renovations. We're at least 60 days from completion, probably more, so this opportunity could be long gone by then. Boo-hoo, first world problems ;-)
Title: Re: Really trying not to panic
Post by: Financial.Velociraptor on November 21, 2018, 01:17:23 PM
No more repeats of 2008.

So, you people in VTSAX and the like, how do you deal with seeing thousands down?  Tens of thousands down?

It hurts right?

Corrections of 10% or more have happened about every 7 months on average.  This is perfectly normal.  If you are squeamish on just a normal correction, it is highly likely your asset allocation is out of whack.  Everyone thinks they have an iron stomach on up days and insists they want to be 100% equity for maximum returns because they can "handle it".  Personally, I like 40% or more fixed income.  I'm not hurting at all as a result.  And my passive dividends, distributions, and interest cover my annual budget in FIRE by about 120%.  I can ride out a 50% correction without breaking a sweat as a result.

Learn from this and set yourself up for long term rational thinking by respecting your tolerance for risk!
Title: Re: Really trying not to panic
Post by: ACyclist on November 21, 2018, 03:54:08 PM
No more repeats of 2008.

So, you people in VTSAX and the like, how do you deal with seeing thousands down?  Tens of thousands down?

It hurts right?

Corrections of 10% or more have happened about every 7 months on average.  This is perfectly normal.  If you are squeamish on just a normal correction, it is highly likely your asset allocation is out of whack.  Everyone thinks they have an iron stomach on up days and insists they want to be 100% equity for maximum returns because they can "handle it".  Personally, I like 40% or more fixed income.  I'm not hurting at all as a result.  And my passive dividends, distributions, and interest cover my annual budget in FIRE by about 120%.  I can ride out a 50% correction without breaking a sweat as a result.

Learn from this and set yourself up for long term rational thinking by respecting your tolerance for risk!

Thank you to everyone that has responded.  I appreciate all the helpful advice. 

I was trying to just stay a tad more conservative than the asset location for a target date fund.  I think those are too aggressive. 
Yes, I am a newer investor.  Well, I've been investing for a while, on a smaller scale.  Found this place last year, and stepped it up.


We are selling the rental in a few short weeks. <digits crossed>  This money is to build a new home in MTB mecca.  Not sure how to invest that either.  Like 50/50, but I was leaning towards CDs. It's safe.  he home we live in now, can be a rental or be sold later.  The market on homes popped up here and that home has turned out to be terrible due to a bad neighbor situation.  People you just do not want next door to a rental.  Bah.


Market is up today.  That is hopeful. I'm not selling.  We save as much as we can towards purchasing. 


Title: Re: Really trying not to panic
Post by: dandypandys on November 21, 2018, 05:19:05 PM
@JAYSLOL , I still hold those PM's.

I bought physical, and I love having it. It represents less than 5% of my portfolio these days, and serves as an important lesson.

Curious because I did the exact same (albeit with less invested) in 2012/13, and also held on to them as some diversification/an emergency fund and they now sit as 6% of my stache.  It did at least help me learn the difference the hard way between an asset that creates value and one that merely "stores" value.  Also got me to learn how to spot real gold/silver well and helped me pick up some screaming deals on coins and jewelry at garage sales.

Us too. I sold half at about the same I bought it for back in 2008 but still own enough, 7% of our portfolio.
I don't mind though, I consider it a life lesson too.
Title: Re: Really trying not to panic
Post by: Radagast on November 21, 2018, 06:02:54 PM
After reading your additional info I agree to keep the house money in very safe investments. Other than that I think you need to come to terms with the reality that everything will work out just fine for you financially  ;).
Title: Re: Really trying not to panic
Post by: wenchsenior on November 21, 2018, 07:17:46 PM
No more repeats of 2008.

So, you people in VTSAX and the like, how do you deal with seeing thousands down?  Tens of thousands down?

It hurts right?

Corrections of 10% or more have happened about every 7 months on average.  This is perfectly normal.  If you are squeamish on just a normal correction, it is highly likely your asset allocation is out of whack.  Everyone thinks they have an iron stomach on up days and insists they want to be 100% equity for maximum returns because they can "handle it".  Personally, I like 40% or more fixed income.  I'm not hurting at all as a result.  And my passive dividends, distributions, and interest cover my annual budget in FIRE by about 120%.  I can ride out a 50% correction without breaking a sweat as a result.

Learn from this and set yourself up for long term rational thinking by respecting your tolerance for risk!

Thank you to everyone that has responded.  I appreciate all the helpful advice. 

I was trying to just stay a tad more conservative than the asset location for a target date fund.  I think those are too aggressive. 
Yes, I am a newer investor.  Well, I've been investing for a while, on a smaller scale.  Found this place last year, and stepped it up.


We are selling the rental in a few short weeks. <digits crossed>  This money is to build a new home in MTB mecca.  Not sure how to invest that either.  Like 50/50, but I was leaning towards CDs. It's safe.  he home we live in now, can be a rental or be sold later.  The market on homes popped up here and that home has turned out to be terrible due to a bad neighbor situation.  People you just do not want next door to a rental.  Bah.


Market is up today.  That is hopeful. I'm not selling. We save as much as we can towards purchasing.

I will repeat my question.  I'm not being mean or snarky. What are you going to do and feel, when the inevitable next recession and bear market happens?  When the market is down for months and the economy is contracting and the talking heads are spreading gloom and doom daily? Money that you plan to use the next year or two probably shouldn't be in the market. But what about your long term investments?
Title: Re: Really trying not to panic
Post by: DreamFIRE on November 21, 2018, 07:50:23 PM
No more repeats of 2008.

So, you people in VTSAX and the like, how do you deal with seeing thousands down?  Tens of thousands down?

It hurts right?

I moved from 80% to 60% equities a while back when my investments recovered fully from the first 10% correction.  I'm only 60% equities now, and I still lost 10's of thousands from my stash.  Depending whether I go OMY, I may be closing in on 6 months to FIRE, so I'm glad I made the change when I did.  It doesn't really hurt at this point.  I've got several months left to make the big decision.
Title: Re: Really trying not to panic
Post by: ACyclist on November 21, 2018, 08:26:01 PM
No more repeats of 2008.

So, you people in VTSAX and the like, how do you deal with seeing thousands down?  Tens of thousands down?

It hurts right?

Corrections of 10% or more have happened about every 7 months on average.  This is perfectly normal.  If you are squeamish on just a normal correction, it is highly likely your asset allocation is out of whack.  Everyone thinks they have an iron stomach on up days and insists they want to be 100% equity for maximum returns because they can "handle it".  Personally, I like 40% or more fixed income.  I'm not hurting at all as a result.  And my passive dividends, distributions, and interest cover my annual budget in FIRE by about 120%.  I can ride out a 50% correction without breaking a sweat as a result.

Learn from this and set yourself up for long term rational thinking by respecting your tolerance for risk!

Thank you to everyone that has responded.  I appreciate all the helpful advice. 

I was trying to just stay a tad more conservative than the asset location for a target date fund.  I think those are too aggressive. 
Yes, I am a newer investor.  Well, I've been investing for a while, on a smaller scale.  Found this place last year, and stepped it up.


We are selling the rental in a few short weeks. <digits crossed>  This money is to build a new home in MTB mecca.  Not sure how to invest that either.  Like 50/50, but I was leaning towards CDs. It's safe.  he home we live in now, can be a rental or be sold later.  The market on homes popped up here and that home has turned out to be terrible due to a bad neighbor situation.  People you just do not want next door to a rental.  Bah.


Market is up today.  That is hopeful. I'm not selling. We save as much as we can towards purchasing.

I will repeat my question.  I'm not being mean or snarky. What are you going to do and feel, when the inevitable next recession and bear market happens?  When the market is down for months and the economy is contracting and the talking heads are spreading gloom and doom daily? Money that you plan to use the next year or two probably shouldn't be in the market. But what about your long term investments?

I would try to leave them as is, and just keep buying.  Try not to look right?
Title: Re: Really trying not to panic
Post by: Abe on November 22, 2018, 12:04:16 AM
Itís not so much keep shoveling money and donít look as donít worry thereís nothing to look at. The money is only lost if you withdraw, which doesnít need to be done at this point. Yes youíre assuming that the value right now is not the highest value of whatever fund youíre invested in for the next ___ years, and at some point in the future it will be worth more than it is now. Unless youíre heavily weighted to specific companies or sectors, thatís a safe assumption. If you think that is unlikely, then you probably shouldnít invest in that fund. With a broad portfolio, youíre basically assuming that this is not the all-time peak of the market for the next several decades.
Title: Re: Really trying not to panic
Post by: WynnDuffy73 on November 22, 2018, 06:51:34 AM
This is how I mentally perceive my portfolio. 

Letís say you have a $1 million dollar portfolio.  Conceptually I view these 3 scenarios as being the same net worth.

$1.2 million value with historically high PE ratio.
$1 million value with historically normal PE ratio.
$800k value with historically low PE ratio.

I think of my portfolio as always being in within this band so when we move from the first scenario to the second scenario it doesnít feel like Iíve actually lost anything.  In fact it makes me feel better knowing that new contributions are going in at more reasonable prices. 
Title: Re: Really trying not to panic
Post by: ACyclist on November 22, 2018, 08:47:05 AM
Maybe panic is too extreme of a word.  Fret might be more accurate.  Sorry to be dramatic. 
So, in March we came down about 10 grand.  I believe we came down about the same amount this time, only there is a lot more money in there.  Strange. 

The asset allocation of 75/35 feels right I guess.  I would probably fret if I dropped the retirement funds too low in equities.  Then, I would worry about not being aggressive enough.  :)

All I was trying to convey is that seeing the numbers go down, when you work so hard to build them up. 

Currently, ALL of my salary is being saved.  I don't quite make enough to max catch up 403b and do my medical ins stuff.  Out of my partners salary, we save half of his.  Actually, it is probably more, as I don't count the amount our companies give us in retirement.  My math was quick and dirty.


So, you set a number of what you think you need to leave work.  If you reach that, and the stock market tanks...I guess you end up working longer?
Title: Re: Really trying not to panic
Post by: PoutineLover on November 22, 2018, 08:54:58 AM
So, you set a number of what you think you need to leave work.  If you reach that, and the stock market tanks...I guess you end up working longer?
Not necessarily. If you are approaching retirement, you might start to shift some funds into more secure, cash type accounts, on certain intervals. Like 3 years out, put 1 year of expenses into a CD with a guaranteed return, do the same every year, so that even if your main investment tanks, you have 3 years of staggered living costs available while the rest of your portfolio has time to recover. If you never have to take out more than 4 percent in a year, or if you can slightly adjust your spending to account for the market position when you are withdrawing funds, then your portfolio should last. Look up sequence of returns risk for more info.
But in the accumulation phase, just keep shoveling it in. This is my first dip, and my loss is only in the 4 figures, so much smaller than many people here, but it doesn't matter because I still have my emergency fund in high interest savings accounts, and I won't be locking in any losses by selling, so to me everything is on sale and I just need to stick with my plan.
Title: Re: Really trying not to panic
Post by: wenchsenior on November 22, 2018, 08:55:40 AM
No more repeats of 2008.

So, you people in VTSAX and the like, how do you deal with seeing thousands down?  Tens of thousands down?

It hurts right?

Corrections of 10% or more have happened about every 7 months on average.  This is perfectly normal.  If you are squeamish on just a normal correction, it is highly likely your asset allocation is out of whack.  Everyone thinks they have an iron stomach on up days and insists they want to be 100% equity for maximum returns because they can "handle it".  Personally, I like 40% or more fixed income.  I'm not hurting at all as a result.  And my passive dividends, distributions, and interest cover my annual budget in FIRE by about 120%.  I can ride out a 50% correction without breaking a sweat as a result.

Learn from this and set yourself up for long term rational thinking by respecting your tolerance for risk!

Thank you to everyone that has responded.  I appreciate all the helpful advice. 

I was trying to just stay a tad more conservative than the asset location for a target date fund.  I think those are too aggressive. 
Yes, I am a newer investor.  Well, I've been investing for a while, on a smaller scale.  Found this place last year, and stepped it up.


We are selling the rental in a few short weeks. <digits crossed>  This money is to build a new home in MTB mecca.  Not sure how to invest that either.  Like 50/50, but I was leaning towards CDs. It's safe.  he home we live in now, can be a rental or be sold later.  The market on homes popped up here and that home has turned out to be terrible due to a bad neighbor situation.  People you just do not want next door to a rental.  Bah.


Market is up today.  That is hopeful. I'm not selling. We save as much as we can towards purchasing.

I will repeat my question.  I'm not being mean or snarky. What are you going to do and feel, when the inevitable next recession and bear market happens?  When the market is down for months and the economy is contracting and the talking heads are spreading gloom and doom daily? Money that you plan to use the next year or two probably shouldn't be in the market. But what about your long term investments?

I would try to leave them as is, and just keep buying.  Try not to look right?

Yes, and the next step beyond trying not to look is learning not to care enough to bother to look.
Title: Re: Really trying not to panic
Post by: Kl285528 on November 22, 2018, 09:14:36 AM
I always think Of this story when I get uptight about what is going on in the market. Hopefully gives you a little comfort! https://awealthofcommonsense.com/2014/02/worlds-worst-market-timer/
Title: Re: Really trying not to panic
Post by: RWD on November 22, 2018, 09:37:14 AM
The asset allocation of 75/35 feels right I guess.

Investing 110%, a bold strategy!
Title: Re: Really trying not to panic
Post by: JAYSLOL on November 22, 2018, 11:44:57 AM
The asset allocation of 75/35 feels right I guess.

Investing 110%, a bold strategy!

I agree 110%!
Title: Re: Really trying not to panic
Post by: ACyclist on November 22, 2018, 11:53:58 AM
HAHA.  I meant 65/35

LOL
Title: Re: Really trying not to panic
Post by: clifp on November 22, 2018, 03:44:37 PM
Maybe panic is too extreme of a word.  Fret might be more accurate.  Sorry to be dramatic. 
So, in March we came down about 10 grand.  I believe we came down about the same amount this time, only there is a lot more money in there.  Strange. 

The asset allocation of 75/35 feels right I guess.  I would probably fret if I dropped the retirement funds too low in equities.  Then, I would worry about not being aggressive enough.  :)

All I was trying to convey is that seeing the numbers go down, when you work so hard to build them up. 

Currently, ALL of my salary is being saved.  I don't quite make enough to max catch up 403b and do my medical ins stuff.  Out of my partners salary, we save half of his.  Actually, it is probably more, as I don't count the amount our companies give us in retirement.  My math was quick and dirty.

So, you set a number of what you think you need to leave work.  If you reach that, and the stock market tanks...I guess you end up working longer?

You're doing a great job saving, better than I did.  65/35 is perfectly fine AA for both the accumulation and also in retirement.  The one disadvantage of getting a substantial nest is the paper loss suddenly seem more important.   If you only have 20K saved a week or a month where your portfolio drops 5% or 10% is only 1,000-2,000, a week or two salary when you have $200K it is 10-20K paper loss that months of work, and when you have $2 million that's a $100-$200K that's a year or two.  In reality, more savings is obviously better than less and you should worry less.

. When I was working I viewed these perfectly normal dips as buying opportunities. But that's not how many people are wired.  I will say that once you are retired, market dips are more nerve wracking and the bear market of 2008/9 was downright scary. Since there isn't a way of rationalizing it. "Damn, I'll just have to work an extra year.".   So the one thing you may seriously want to consider in retirement is a different AA.  If you are nervous now while still working, you might need a more conservative AA like 50/50 in retirement. Which does mean you'll probably want to work and extra year or two.
Title: Re: Really trying not to panic
Post by: sol on November 22, 2018, 05:12:28 PM
I often wondered how people that started investing in the last 10 years will react when / if SHTF because many are ill prepared and have seen such amazing gains in stocks and real estate that they feel invincible.

Not only did I start investing in the last ten years, I just retired right before the current dip.  I should really be the poster child for MMM forum members who are freaking out right now.

Instead, I've been checking the market a whole lot less than I used to.  It's all just noise, at this point.  Our account balances fluctuate every day by an amount that is months of our normal spending.  I only need my assets to last approximately 20 years, so even if they were to average zero percent return for the next two decades I could still pull roughly 5% per year and survive it. 

Basically, if you're following the 4% rule in retirement, any year that the markets return more than 0% is just bonus money.  Over decades, the CAGR has always been positive, no exceptions.  It will all work itself out eventually, so why stress?
Title: Re: Really trying not to panic
Post by: Exflyboy on November 23, 2018, 09:10:40 AM
My only issue is I have to raise cash before the end of the year to set our MAGI where we need it to be ($30K).

I'd rather not do that when the market is tanking.. But if it is I will simply pull the money from Bond funds rather than stocks.
Title: Re: Really trying not to panic
Post by: terran on November 23, 2018, 09:20:50 AM
My only issue is I have to raise cash before the end of the year to set our MAGI where we need it to be ($30K).

I'd rather not do that when the market is tanking.. But if it is I will simply pull the money from Bond funds rather than stocks.

If all you're trying to do it raise your MAGI and not spend the money you can just capital gain harvest by selling investments with capital gains and immediately buy the same investments back again. There's no waiting period for capital gains harvesting like there is for capital loss harvesting. The brokerage may have rules against this with certain mutual funds (I know Fidelity won't let you sell within 30 days of buying their funds in the same account, not sure about the reverse) but ETFs wouldn't have this issue.
Title: Re: Really trying not to panic
Post by: Exflyboy on November 23, 2018, 09:24:12 AM
My only issue is I have to raise cash before the end of the year to set our MAGI where we need it to be ($30K).

I'd rather not do that when the market is tanking.. But if it is I will simply pull the money from Bond funds rather than stocks.

If all you're trying to do it raise your MAGI and not spend the money you can just capital gain harvest by selling investments with capital gains and immediately buy the same investments back again. There's no waiting period for capital gains harvesting like there is for capital loss harvesting. The brokerage may have rules against this with certain mutual funds (I know Fidelity won't let you sell within 30 days of buying their funds in the same account, not sure about the reverse) but ETFs wouldn't have this issue.

Agreed.. What I should have explained was that I also need to top up our cash fund by about $25k. Selling 25k's worth of VTSAX in our taxable account will generate about $11k in AGI... This brings our MAGI up to $30k.
Title: Re: Really trying not to panic
Post by: markbike528CBX on November 23, 2018, 09:25:13 AM
Maybe panic is too extreme of a word.  Fret might be more accurate.  Sorry to be dramatic. 
....snip...

All I was trying to convey is that seeing the numbers go down, when you work so hard to build them up. 
....snip...
Look on the bright side, your click-baity thread title drew out lots of responses from forum old-timers who have been where you’re at now.   
Yep, it’s irritating to be down on your investments, but nothing more than that in the accumulation phase.
Title: Re: Really trying not to panic
Post by: nihilism122 on November 23, 2018, 12:54:26 PM
Why would you panic?  The SP 500 is basically flat over the past 12 months.  Keep buying. 
Title: Re: Really trying not to panic
Post by: Reader on November 24, 2018, 01:55:15 AM
I only need my assets to last approximately 20 years, so even if they were to average zero percent return for the next two decades I could still pull roughly 5% per year and survive it. 
i'm curious.. your profile says you're 41 and you need your assets to last for only 20 years? how does that work out?
Title: Re: Really trying not to panic
Post by: smoghat on November 24, 2018, 08:20:05 AM
I put some money in bonds in 2016 simply because everyone told me to. It was dumb. I donít see how I will ever get that money back.

Iím actually pretty happy now because I put about 1/4 of my stash into consumer staples instead of VTSAX, figuring that the recession would start in 2017. Well I was wrong. Consumer staples have been doing pretty badly, part of what Morgan Stanley and early leader in the ďrolling sectoral bear market.Ē Now they are doing significantly better, finally delivering real gains. Every correction is unique. It may be that this one will happen in stages. If so, then my strategy will have paid off. If not, oh well, Iím still FIREíd and my spend will have to go down.
Title: Re: Really trying not to panic
Post by: sol on November 24, 2018, 09:27:32 AM
i'm curious.. your profile says you're 41 and you need your assets to last for only 20 years? how does that work out?

I'm almost 42, and my spouse is a little older than I am.  In approximately 2038, we will have access to social security and pension income that equals our anticipated inflation adjusted expenses.  This biggest chunk of that income actually starts in 2033, with other smaller pieces showing up later.  I have a spreadsheet.
Title: Re: Really trying not to panic
Post by: AdrianC on November 24, 2018, 10:38:53 AM
I put some money in bonds in 2016 simply because everyone told me to. It was dumb. I donít see how I will ever get that money back.

Putting money in bonds wasn't the dumb part.

Having some money in bonds is just fine, especially if you're FIRE. It's in our plan to have X years expenses in stable assets. No regrets. I remember 08/09. We were down 50% of net worth. It was brutal.
Title: Re: Really trying not to panic
Post by: Texconsin on November 24, 2018, 01:05:46 PM
The asset allocation of 75/35 feels right I guess.

Investing 110%, a bold strategy!

I like it when I'm teamed with a co-worker who gives 110%, requiring me to give just 90.
Title: Re: Really trying not to panic
Post by: Texconsin on November 24, 2018, 01:35:04 PM
I'm not a big fan of bonds...they seem zero-sum to me.  Right now, I'm finding 12 month 3.0% APY CDs attractive, until rates go even higher.  Also, I just sold my old home, have the new (to me) one at 3.25% for 30 (could have done 2.75% for 15, but 3.25% is cheap money and the flexibility is priceless) and I parked $150K of the sales proceeds into a 60-day deal with Capital One that pays 2.0% interest plus $1K bonus, giving me over 6%, short-term and time to find the next deal out there.  I expect to have a lot of time [and a decent cash-out of my 80/20 401(k)] in my upcoming retirement to play the banks (for a change) for safe returns, until P/E ratios get real again.  I'm not rich and I won't get rich in fixed instruments, but I'm not going to let FOMO derail my retirement...if only the market can hold out for 6 more months, until I'm out of the 401(k)!!!
Title: Re: Really trying not to panic
Post by: John Galt incarnate! on November 28, 2018, 01:15:45 PM
No more repeats of 2008.

So, you people in VTSAX and the like, how do you deal with seeing thousands down?  Tens of thousands down?

It hurts right?

I used to deal with a volatile stock  market by looking at a poster as described below.

I don't worry about  stock-market volatility anymore because as  a seasoned investor I know the market's   zigs and zags, its fluctuations,  are  inevitable.

I advise  jittery investors (friends and family members) to get a  graph  of historical stock-market returns, one  with a regression line, and have it enlarged.

I tell them 1,2, and 3.

1. Make it a big poster.

2, Pin it to the wall of your office, workshop, bedroom, etc.

3. Pay attention to the regression line's positive slope to ease the jitters.

HAPPY INVE$TING!
Title: Re: Really trying not to panic
Post by: Exflyboy on November 28, 2018, 03:28:55 PM
Looks like it "zigged" pretty good today.

of course thats because I sold $35k's worth of VTASX 2 days ago...:)
Title: Re: Really trying not to panic
Post by: Mighty-Dollar on November 28, 2018, 08:21:29 PM
DOW up 617 points today. This is looking more and more like the head fake of 2015 - 2016 and the head fake of early 2018. Like Lucy pulling the football away from Charlie Brown. The suckers sell. Selling after it has already dropped 10% is a fool's game. You're suppose to sell into strength if you're going to sell. Buy low, sell high.
Title: Re: Really trying not to panic
Post by: Exflyboy on November 28, 2018, 10:29:09 PM
DOW up 617 points today. This is looking more and more like the head fake of 2015 - 2016 and the head fake of early 2018. Like Lucy pulling the football away from Charlie Brown. The suckers sell. Selling after it has already dropped 10% is a fool's game. You're suppose to sell into strength if you're going to sell. Buy low, sell high.

Or when you need to top up your cash reserves as in my case