S-M-G! Stock Market Gyrations

[CCCA]

The last month has been a bit of a roller coaster.  As our portfolio is a large number now, drops of 10-15% are quite large on an absolute basis.  I'm just going to take Jan 1, 2018 as a baseline level

Jan 1 - Baseline
Jan 17 - up $99k from Jan 1
Feb 9 - down $147k from Jan 1
Feb 15 - up $38k from Jan 1

This is a swing of almost $250k in the course of a few weeks.  We are not planning to sell (and even bought a little on the dip), but just note that these numbers can be ridiculously large and swamp the amount of money you may be saving during these gyrations and can be difficult to process psychologically.    However, as long as the future resembles the past (in that corrections or dips are always followed by higher highs) then we'll be in good shape.

[MrGreen]

Swings are normal. There was a swing just like this in early 2016. 2017 was an anomaly, the first year that the market didn't move more than 3% from it's previous close for the entire year.

[HPstache]

Excellent read.

[HipGnosis]

Congratulations.
You made it to where you need to learn to prioritize percentage gains / losses over "absolute basis".

Or are you just humble bragging?

[CCCA]

Congratulations.
You made it to where you need to learn to prioritize percentage gains / losses over "absolute basis".

Or are you just humble bragging?

not sure if this counts as humble bragging.  I think I was just pointing out that as people get closer to, or past the FIRE point, most will have alot of money in the stock market and these swings can be very large. 

I do think of things in % terms but you can't completely ignore the absolute level.  Even if the swing is "only" 10% or so, several hundred thousand dollars is many years worth of spending for a mustachian. It is hard to completely divorce yourself from that fact. 

We aren't aren't in our prime accumulation phase anymore, so corrections and recoveries that are shorter in length (weeks instead of months or years) feels better.  i.e. you don't have a long time to ponder if your strategy is correct before it is proven correct.

[Eric]

Swings are normal.

Swings are definitely normal, but the speed of this one was abnormal.  It was the shortest amount of time ever to hit correction territory (10%+ drop).  (at least, this is what they were talking about on the recent A Wealth of Common Sense podcast, I didn't fact check)

This also should've been a good test of your risk tolerance and asset allocation.  If you were able to witness these swings without panic, then you're probably good.  If you were sweating it, then maybe a few extra bonds wouldn't hurt.  (the general you, not you specifically Mr Green)

[aspiringnomad]

It was the shortest amount of time ever to hit correction territory (10%+ drop).  (at least, this is what they were talking about on the recent A Wealth of Common Sense podcast, I didn't fact check)

On Black Monday in 1987 the market dropped 22% in one day.

[h82goslw]

Congratulations.
You made it to where you need to learn to prioritize percentage gains / losses over "absolute basis".

Or are you just humble bragging?

not sure if this counts as humble bragging.  I think I was just pointing out that as people get closer to, or past the FIRE point, most will have alot of money in the stock market and these swings can be very large. 

I do think of things in % terms but you can't completely ignore the absolute level.  Even if the swing is "only" 10% or so, several hundred thousand dollars is many years worth of spending for a mustachian. It is hard to completely divorce yourself from that fact. 

We aren't aren't in our prime accumulation phase anymore, so corrections and recoveries that are shorter in length (weeks instead of months or years) feels better.  i.e. you don't have a long time to ponder if your strategy is correct before it is proven correct.

If these types of gyrations stress you then your asset allocation is wrong. Write an IPS and stick to it, then these types of swings will be a nonevent.

[johndoe]

Jan 1 - Baseline
Jan 17 - up $99k from Jan 1
Feb 9 - down $147k from Jan 1
Feb 15 - up $38k from Jan 1

Good points in this thread.  I think it's easy to get discouraged when money disappears from an account, especially for cheap-asses like us :) however your values stuck out to me.

Let's say your portfolio was $2.9M on Jan 1.  Your percentages would be:
Jan 1 - Baseline
Jan 17 - up 3.4% from Jan 1
Feb 9 - down 5.1% from Jan 1
Feb 15 - up 1.3% from Jan 1

Whereas my holdings tab in personal capital shows:
Jan 1 - Baseline
Jan 17 - up 3.4% from Jan 1
Feb 9 - down 3.0% from Jan 1
Feb 15 - up 0.4% from Jan 1

I look at this and wonder why the big disparity (Feb 9), especially because you said you're beyond "prime accumulation".  I'm still years from retirement so I would expect my Feb 9 value to be lower than yours.  I feel like I must have computed something wrong here...

[hubcity]

@johndoe : If you assume the original poster was talking about the intra-day low on Feb 9 (and not the closing price) then these number don't look so far off.  For an account with 2.3 million fully invested in the S&P500, the numbers are:

Jan 1 - 2.3 million
Jan 17 - up 110k [+ 4.8%]
Feb 9 - down 120k [- 5.2%] (this is at the intraday low, at the closing bell it was down "only" 46k [-2%])
Feb 15 -  up 48k [+2.1%]

(*) My numbers are from markets.wsj.com.

These numbers don't exactly match the original post, but they are in the same ballpark.  We don't know the original posters asset allocation, but it is not too hard to imagine a portfolio with the swings he mentioned.

[CCCA]

Congratulations.
You made it to where you need to learn to prioritize percentage gains / losses over "absolute basis".

Or are you just humble bragging?

not sure if this counts as humble bragging.  I think I was just pointing out that as people get closer to, or past the FIRE point, most will have alot of money in the stock market and these swings can be very large. 

I do think of things in % terms but you can't completely ignore the absolute level.  Even if the swing is "only" 10% or so, several hundred thousand dollars is many years worth of spending for a mustachian. It is hard to completely divorce yourself from that fact. 

We aren't aren't in our prime accumulation phase anymore, so corrections and recoveries that are shorter in length (weeks instead of months or years) feels better.  i.e. you don't have a long time to ponder if your strategy is correct before it is proven correct.

If these types of gyrations stress you then your asset allocation is wrong. Write an IPS and stick to it, then these types of swings will be a nonevent.

I didn’t say this stressed me out, just noting that one would have to get used to swing like these as your Stache increases in size.
Anyway ‘nonevent’ is a bit of an overstatement as I think it would be a little disconcerting for anyone to see hundreds of thousands disappear regardless of their AA, and your ability to stick to it.
My asset allocation probably needs some adjustment but there are tax implications that we’re trying to minimize so it’ll take a few years.

[MrGreen]

Congratulations.
You made it to where you need to learn to prioritize percentage gains / losses over "absolute basis".

Or are you just humble bragging?

not sure if this counts as humble bragging.  I think I was just pointing out that as people get closer to, or past the FIRE point, most will have alot of money in the stock market and these swings can be very large. 

I do think of things in % terms but you can't completely ignore the absolute level.  Even if the swing is "only" 10% or so, several hundred thousand dollars is many years worth of spending for a mustachian. It is hard to completely divorce yourself from that fact. 

We aren't aren't in our prime accumulation phase anymore, so corrections and recoveries that are shorter in length (weeks instead of months or years) feels better.  i.e. you don't have a long time to ponder if your strategy is correct before it is proven correct.

If these types of gyrations stress you then your asset allocation is wrong. Write an IPS and stick to it, then these types of swings will be a nonevent.

I didn’t say this stressed me out, just noting that one would have to get used to swing like these as your Stache increases in size.
Anyway ‘nonevent’ is a bit of an overstatement as I think it would be a little disconcerting for anyone to see hundreds of thousands disappear regardless of their AA, and your ability to stick to it.
My asset allocation probably needs some adjustment but there are tax implications that we’re trying to minimize so it’ll take a few years.

This is why it's good practice to set your AA and stop checking your balance all the time. If you know the plan and only check in periodically the market gyrations are less noticeable. You don't care about the ups and downs much anyway as long as you're focused long term and the trend is up. Everything in between is just noise.

[CCCA]

@johndoe : If you assume the original poster was talking about the intra-day low on Feb 9 (and not the closing price) then these number don't look so far off.  For an account with 2.3 million fully invested in the S&P500, the numbers are:

Jan 1 - 2.3 million
Jan 17 - up 110k [+ 4.8%]
Feb 9 - down 120k [- 5.2%] (this is at the intraday low, at the closing bell it was down "only" 46k [-2%])
Feb 15 -  up 48k [+2.1%]

(*) My numbers are from markets.wsj.com.

These numbers don't exactly match the original post, but they are in the same ballpark.  We don't know the original posters asset allocation, but it is not too hard to imagine a portfolio with the swings he mentioned.

As I've said in other threads, we have a non-trivial amount of AAPL in our portfolio, which is the cause of the differences you note.  It fell more than the market as a whole, due in part to the overreaction to their latest earnings report, but has since recovered fairly robustly.     

[CCCA]

The last month has been a bit of a roller coaster.  As our portfolio is a large number now, drops of 10-15% are quite large on an absolute basis.  I'm just going to take Jan 1, 2018 as a baseline level

Jan 1 - Baseline
Jan 17 - up $99k from Jan 1
Feb 9 - down $147k from Jan 1
Feb 15 - up $38k from Jan 1

This is a swing of almost $250k in the course of a few weeks.  We are not planning to sell (and even bought a little on the dip), but just note that these numbers can be ridiculously large and swamp the amount of money you may be saving during these gyrations and can be difficult to process psychologically.    However, as long as the future resembles the past (in that corrections or dips are always followed by higher highs) then we'll be in good shape.

Update from the last few weeks:   It's been more of the same, up and down.

Jan 1 - Baseline
Jan 17 - up $99k from Jan 1
Feb 9 - down $147k from Jan 1
Feb 15 - up $38k from Jan 1
Apr 27 - down $31k from Jan 1
May 9 - up $161k from Jan 1

The swings are maybe a little larger than if I were fully invested in index funds because of a large amount AAPL stock that I'm slowly selling out of my portfolio over time (to minimize taxes).  But on the + side, AAPL is at an all time high, so I can't complain too much. 

[jlcnuke]

The last month has been a bit of a roller coaster.  As our portfolio is a large number now, drops of 10-15% are quite large on an absolute basis.  I'm just going to take Jan 1, 2018 as a baseline level

Jan 1 - Baseline
Jan 17 - up $99k from Jan 1
Feb 9 - down $147k from Jan 1
Feb 15 - up $38k from Jan 1

This is a swing of almost $250k in the course of a few weeks.  We are not planning to sell (and even bought a little on the dip), but just note that these numbers can be ridiculously large and swamp the amount of money you may be saving during these gyrations and can be difficult to process psychologically.    However, as long as the future resembles the past (in that corrections or dips are always followed by higher highs) then we'll be in good shape.

Update from the last few weeks:   It's been more of the same, up and down.

Jan 1 - Baseline
Jan 17 - up $99k from Jan 1
Feb 9 - down $147k from Jan 1
Feb 15 - up $38k from Jan 1
Apr 27 - down $31k from Jan 1
May 9 - up $161k from Jan 1

The swings are maybe a little larger than if I were fully invested in index funds because of a large amount AAPL stock that I'm slowly selling out of my portfolio over time (to minimize taxes).  But on the + side, AAPL is at an all time high, so I can't complain too much. 

I'm pretty sure the basics of the markets since... well, the beginning of our markets.. consist of "more of the same, up and down".... it really shouldn't be news to anyone.

[CCCA]

The last month has been a bit of a roller coaster.  As our portfolio is a large number now, drops of 10-15% are quite large on an absolute basis.  I'm just going to take Jan 1, 2018 as a baseline level

Jan 1 - Baseline
Jan 17 - up $99k from Jan 1
Feb 9 - down $147k from Jan 1
Feb 15 - up $38k from Jan 1

This is a swing of almost $250k in the course of a few weeks.  We are not planning to sell (and even bought a little on the dip), but just note that these numbers can be ridiculously large and swamp the amount of money you may be saving during these gyrations and can be difficult to process psychologically.    However, as long as the future resembles the past (in that corrections or dips are always followed by higher highs) then we'll be in good shape.

Update from the last few weeks:   It's been more of the same, up and down.

Jan 1 - Baseline
Jan 17 - up $99k from Jan 1
Feb 9 - down $147k from Jan 1
Feb 15 - up $38k from Jan 1
Apr 27 - down $31k from Jan 1
May 9 - up $161k from Jan 1

The swings are maybe a little larger than if I were fully invested in index funds because of a large amount AAPL stock that I'm slowly selling out of my portfolio over time (to minimize taxes).  But on the + side, AAPL is at an all time high, so I can't complain too much. 

I'm pretty sure the basics of the markets since... well, the beginning of our markets.. consist of "more of the same, up and down".... it really shouldn't be news to anyone.

True but I thought it was worth pointing out that sometimes the normal swings can mean 100k+ swings in the span of a week or two. That’s like 2yrs of annual net spending for many/most on the board.