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Old 08-21-2015, 09:53 PM   #21
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Still, I bet for a newbie who just retired in the past month and isn't living off a pension, must find a sudden drop unnerving. When you are working it isn't as big as a deal, or if it isn't your first rodeo in retirement it is not as troubling. But to get that first punch in the mouth has to sting a bit I would think.


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Watching the "bloodbath" is always a bit unnerving for most folks. The thing to remember right now is the following:

1. No U.S. recession is looming.
2. The economy is growing slightly and steadily.
3. Unemployment is about as low as it can get.
4. Inflation is low.
5. Housing is pretty strong.
6. Commodities are in the toilet (low gas prices, cheap feedstock for plants)
7. No one is starving in the U.S.
8. Interest rates are at historic lows (cheap mortgages, loans, etc).
9. The restaurants are full and a one hour wait is common.
10. Discount Tire is selling tires like crazy.

And my final point is that hedge funds and mutual funds like this push down to make their quarter when they start bidding up stocks again.

Sleep well, my friends....
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Old 08-21-2015, 09:55 PM   #22
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Old 08-21-2015, 10:08 PM   #23
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I too, lost well over $25K.

I was tempted to make a purchase yesterday, as stocks were cheap. It would have been about two weeks ahead of schedule, as I make an after tax purchase monthly. I already maxed out the 401K and after tax IRA. It would have been a mistake.

I decided against it. I will put the order in ~8/5, as always, to buy some additional IVV.

If the market continues to go down, it will be cheaper in a month. That is better (in a twisted sort of way) than buying today.

If the market is making higher highs in a month, this blip doesn't even matter. In the long run, timing doesn't matter, being in the market matters.

So I am relying on 130+ years of market history. (And my regular job and the 24 rentals...)
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Old 08-21-2015, 10:17 PM   #24
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It is a privilege to lose more than $25K today.
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Old 08-21-2015, 10:35 PM   #25
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I too, lost well over $25K.
+1
actual $ amounts are so variable among all the readers/posters due to differing assets and allocations. How about % of annual spending budget. That might give another perspective. This could be a good time to harvest some losses.
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Old 08-21-2015, 10:42 PM   #26
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Did I think it was the same thing as permanently losing a physical item? Of course not. But, again, he knew I wasn't using the term "lost" in the literal, forever sense.
But, of course, your net worth had really changed. If you'd sold out before the dip, you'd have had lots more money. Now it's gone. And yet, your right. It's not like losing a tangible thing.

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I know I feel the hurt from a lost $1-2 from a price mistake at the grocery checkout counter or losing $5-10 from letting an offer expire or misplacing a gift card. If I don't focus on actively forgetting those losses and putting them in context, they can bug me, maybe even the next day.

Today's $25k+ loss in the market? Pssshhhh... It goes up and it goes down.
That's the thing. The loss of a much smaller amount of money in "real life" hurts more than a bigger reduction in the relatively abstract portfolio balance.

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Well, look at it this way. If you mailed in a check to buy $50,000 of stock and then it dropped 50% right after your purchase, would you call it a paper loss if your friend also mailed in $50,000 for the same stock but was delayed because not enough postage on the envelope? I mean, hey, you still have the same shares...but your friend has twice as many now.
It would make me cranky (and I think we've all been there--stocks go on sale shortly after a big purchase). And there's no doubt I'll always own 50% fewer shares than if my letter had been later, which stings But, for whatever reason, it doesn't feel like I "lost" the difference in share value, at least not in the same way as if I'd actually burned the currency.

Between the "abstractness" of account balances and their incessant ups and downs, it's just hard to fixate on a particular point in time and feel that I "lost" money.
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Old 08-21-2015, 10:50 PM   #27
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Markets go up, markets go down. If you have the right AA and you have your needed income streams covered there is nothing to worry about. If you have cash to invest...wait for it...wait for it, then DCA in. Days like today and yesterday I don't even look at losses. Just would bum me out. All I know is I won $55 on the golf course this week so I am feeling good!
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Old 08-21-2015, 11:07 PM   #28
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It all depends on your expectation. Yes, you still have the same number of shares, but for a retiree, the conversion ratio of share/loaf of bread is suddenly cut back.

Some will say "Yes, but I live on only dividends". Those people will do fine. The ones hurting are people who expected 8% portfolio growth in order to make their retirement goal, or counted on that return for living expenses.

Will the market come back? Sure, but it may take a while. It may just linger for a while, meaning several years, bouncing up/down. If one does not expect much, he will be less disappointed.
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Old 08-22-2015, 02:24 AM   #29
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It's absolutely true that paper losses don't feel as bad (nor paper gains as good).

In 2008, I was playing a lot of poker and generally doing quite well at the same time the market was crashing. My rule of thumb was that a real dollar lose or gain was roughly equal to 25x paper gain. So losing or winning $400 (fairly common) made feel about the same as $10K down day in the market and $1,000 lose or gain in poker (fairly rare.), about the same as $25k day. I distinctly remember having an awful $40K loss in my portfolio and winning $2,500 a terrific day playing poker, and going to bed feeling happy.
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Old 08-22-2015, 03:02 AM   #30
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But, of course, your net worth had really changed. If you'd sold out before the dip, you'd have had lots more money. Now it's gone. And yet, your right. It's not like losing a tangible thing.
Every Friday in YNAB I record my new portfolio balances. I do it weekly. And, then YNAB has on the page my net worth at any given time. So, yes, today when I recorded I have to admit that I did wince a bit when I saw the reduction in net worth. I know that it wasn't that huge in terms of a percentage basis, but I do remember thinking to myself something about losing a car....
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Old 08-22-2015, 04:51 AM   #31
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I am doing a month consulting gig right now, the money (25k) from that assignment is just enough to offset my 'losses'.

In the beginning of the year it was the inverse: went on a month long trip abroad, came back a lot wealthier.

Maybe I should take more long trips ...
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Old 08-22-2015, 06:50 AM   #32
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Quicken says, Ms.G will still have a quarter of a million at age 95. Me I will be pushing up roses,
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Old 08-22-2015, 06:56 AM   #33
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This is a good discussion, and an important one to have.

We have a lot of newbies here, or people who are at least new to paying attention. Sharing our experiences can help. It is nice to exude your confidence, but have a heart, people! For the INTJs, try to find a little "P".

For the INTJs this is nothing. Intellectually, it is part of the normal way of things, and probably a good chance to buy. For those with a little more "S" and "P" in them, this could be a bit scary.

I'm one of those ISTJs. Intellectually, this is not freaking me out. But I do feel something. And I'm sensing some panic out there, which I have to fend off from my own feelings.

So, yeah, I "know how you feel", but no worries. Don't let it get to you. This may be a blip, or perhaps a multi year thing. We're in this for the distance, right? Don't panic. Most of us have seen similar or worse in '87, '90, '97, '02 and the dreaded '08+. We survived. I was brand new to investing in '87 and one of my good INTJ friends told me to not panic and hold on. I thank him to this day. It was a lesson well learned.

By the way, last year I had a thread about the opposite. I.E. feeling too much confidence on those good days. The old, "I just made 15k today, so I think I'll buy that stupid item." This is something I also have to resist. It works both ways, you know.
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Old 08-22-2015, 06:57 AM   #34
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It's only on paper.
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Old 08-22-2015, 07:03 AM   #35
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I think we're somewhere between 5 and 6...
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Old 08-22-2015, 07:14 AM   #36
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I think we're somewhere between 5 and 6...
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Old 08-22-2015, 07:22 AM   #37
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If I'm not selling and don't 'need' to sell, what do I care if the collective of buyers is not "doing it's job"? The price is like a thermometer measuring the heat of the (irrational) buyers.

As long as you stay away from the step 11 / step 19 pitfall, live long enough to get through the cycle, and don't absolutely "need to sell" between about 7 and 17, you're golden.
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Old 08-22-2015, 07:27 AM   #38
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If I'm not selling and don't 'need' to sell, what do I care if the collective of buyers is not "doing it's job"? The price is like a thermometer measuring the heat of the (irrational) buyers.

As long as you stay away from the step 11 / step 19 pitfall, live long enough to get through the cycle, and don't absolutely "need to sell" between about 7 and 17, you're golden.
Agree, and the chart is alarming accurate. I saw all of this from one of my coworkers in the '08-09 mess. He literally sold it all on the absolute bottom and put it into CDs and has not returned since. Man, what a loss he took. Haven't seen him in a while, but I can imagine that yesterday he was saying "Told you so!"
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Old 08-22-2015, 07:29 AM   #39
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By the way, last year I had a thread about the opposite. I.E. feeling too much confidence on those good days. The old, "I just made 15k today, so I think I'll buy that stupid item." This is something I also have to resist. It works both ways, you know.
Good point. If one has a predisposition toward it, the daily/weekly ups and downs can prompt some poor decisions and be tough emotionally. Since the daily portfolio balances are loaded with noise undecipherable from "signal", I can't see much value in actively tracking them, and I think doing so can discourage some people ("I just lost all the money I scrimped and saved over the last 6 months! I definitely should have used the money to take that snowboarding trip instead. No more of this for me!"). I don't encourage new investors to check their dollar balances frequently, because both the ups and the downs are false "uppers" and "downers."
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Old 08-22-2015, 07:42 AM   #40
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For the week I lost the equivalent of a little more than a years planned withdrawal from my accounts. If things stay the same and I live to 114, I'm still okay, but if I live to 115, I'm in trouble.
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