What was the tone of this forum during the crash?

[dallas27]

Most post around here are pretty positive, peoples accounts are benefiting from the big bull the last few years.

For those of you who been here ~5+ years, how has the daily perspectives changed (or not) since the gloomy recession bottom? Have most people kept a even keel in perspective and attitude? Or are many people's belief's changing with the current good market weather?

 

[W2R]

Most post around here are pretty positive, peoples accounts are benefiting from the big bull the last few years.

For those of you who been here ~5+ years, how has the daily perspectives changed (or not) since the gloomy recession bottom? Have most people kept a even keel in perspective and attitude? Or are many people's belief's changing with the current good market weather?

I think a lot more of our members (especially new or young members) feel they are investing genuises now, than did then. I don't think many of those who were forum members during the crash, are trying to represent themselves that way presently. A few, and surprisingly nobody "calls them on it". I think we all remember what they were saying during the crash, though.

During the crash, several people posted alarming posts about how they were selling everything and getting out of the market. Many of us tried to hold one anothers' hands as we faced new and scarier news about it every day, but it was awful. I have to give credit to REWahoo, who I think was one of the most level headed members here during the crash. Even he decided to take SS at that time, to minimize selling low.

A lot of others who were less level headed freaked out and began talking about how they weren't scared but were selling low simply because they had changed their minds about AA (yeah, right!). At least one person sold everything and consequently had to delay retirement.


You can read the posts from back then and get a flavor of what was going on. The above is how I see it, but may or may not be a good summary! Here's a typical thread from back then:


http://www.early-retirement.org/for...n-or-how-much-more-can-you-stomach-40692.html

 

[ggbutcher]

I wasn't on the forum back then, but my observation is directly related to that absence.

During that time, I was figuring out a new job posting, transitioning my last kid to college, and as a result was pretty ignorant of what my 401k and IRA were doing. Indeed, the IRA was a front-end load vestige of an earlier, even more ignorant youth, and I'd all but forgotten I had it. Fast-forward to now, and both show a roughly 7% rate of return over my history with them. Wow, look how good I did, sleeping through the storm...

So, in a twisted sort of way, I probably benefited from not participating in communities where the current market was discussed; I surely would have been one of the 'lemming' reactionaries. My hat's off to those who have the long-view perspective ingrained such that the knowledge of immediate dire-looking situations rolls off their backs.

I think this perspective is the most important thing to teach our kids growing up into a '401k' world, and probably the single hardest thing for them (or us) to learn...

 

[donheff]

I can't say I carefully chronicled the mood but it felt less catastrophic than I would have anticipated given the gravity of the drop. It seemed to me that most participants followed the advice that was prevalent on the forum before and remains today. Stick to your AA, don't panic, curtail spending to the extent practicable in a bad crunch. A couple of posters who I liked left the forum during the crunch and may have been hit hard. It is disconcerting when a long time regular simply disappears without a word. In one case, I suspect the worst.

 

[MichaelB]

A few more interesting threads from back then

http://www.early-retirement.org/forums/f28/dow-8000-a-33898.html
http://www.early-retirement.org/forums/f28/here-comes-the-recovery-42695.html
http://www.early-retirement.org/forums/f28/how-far-will-you-ride-this-market-up-43352.html
http://www.early-retirement.org/forums/f28/how-far-will-you-ride-the-market-down-42868.html

 

[RonBoyd]

There was a Recession?!?!

 

[Texas Proud]

I think that the tone on the board was pretty muted... like any forum at any time there are wide opinions of what to do... and that is true here...

IMO, I do not think that a big percent of people changed their mind... if you were a buy and hold investor, you stayed a buy and hold investor.... if you were a 'sky is falling and gold is the only way to go' investor, you stayed that way.... if you were a real estate investor, you probably stayed that was (as long as you did not have a cash flow problem)....


IOW, if you were a buy and hold, you did not flip to be a gold investor due to the downturn... not to say you did not do anything, but that your investment thinking did not change...

Now, if you did NOT have any particular investment model, I bet that it did influence your current investments.....

 

[Rustic23]

Nothing scientific here, just how I think it was.

For those that had been retired for a while, HO-HUM seen this and it will pass
For those that just retired. Oh H3ll, did I screw up!
Somewhere in the middle. I have faith in Firecalc, and my allocation.
Those with government pensions, not as concerned

 

[H2ODude]

Just scanned a few of those threads. Ugh. I was still working then, not here. Just rode it all down and then back; do believe it was a few years before that that I finally partitioned some of my stuff into bonds; that helped a bit. Reading the threads is a good refresher and reminder of how things not only were but could be once again. I think the lessons of the tech bubble pop not too many years prior to this helped me to grimace it out. If it happens again I likely will ride it again, but must admit that now retired it would be a lot more painful. It's awfully easy to get real comfortable with the kinds of returns we've been seeing the last few years.

 

[Bestwifeever]

A lot of people vowed to get out of or reduce their equity holdings at some point of eventual recovery. Overall tone was pretty shaken, not a lot of advice offered, just shared misery. We re'd in August 08 and it was scary.

Interesting to me is the time before things started to go to hell, when new posters, no matter what their portfolios were, would often be advised to ER right away. The "Don't worry, be happy" years. So compared to that era, I think the tone today is more cautious to new posters, and fewer people seem to be sure they know best when it comes to giving specific advice. Except of course psssst.... Wellesley

 

[Hamlet]

That downturn did convince me that I will own some bonds in retirement.

I've always been a stocks only kinda guy, but as I get close I will start moving more to an 80/20 allocation. I think it would have been really painful to deal with that downturn in retirement, rather than in the accumulation phase.

 

[steelyman]

I wasn't on E-R then, but I remember sitting in an all-staff meeting where they were announcing funding cuts and layoffs (it didn't help that it was January and a billion degrees below zero) and thinking, "crap, I'm going to have to work till I'm 70".

 

[Midpack]

I joined in Jan 2008 when the big slide had just begun and I was still working. Most (not all) members here were understandably concerned, but relatively level headed, cautiously optimistic that a recovery would follow the downturn as has always been the case for generations. I assume most members historic perspective was helpful to all, IOW members helped each other maintain resolve and courage maybe, to avoid panicking and locking in losses.

 

[daylatedollarshort]

I wasn't here but we reduced our percent of stocks early on and never went back to a very high percent. I told my husband I would rather work to make up what we had lost by working more, which I did.

We just have a retirement plan that works with current TIPS or equivalent type returns and we are okay with that. Neither one of us has a very high risk tolerance and we feel like we can have a comfortable retirement with the current plan so that is what we are sticking with. We're okay with less growth in favor of more stability and not having to worry about what the stock market is or isn't doing in a given day or year.

 

[lemming]

We should do a roll call on the people who posted on that thread and see "where they are today" if they are willing to share.
I was here then, still working, started cancer treatment in Oct 2008 and surgery and last day at work in 2009. Took some money out in July 2009 when my car was stolen, sigh. Then police recovered my car.
I didn't change much=went all to Wellington in my 401k which was a decent decision(S&P would have been better) in my only chance to reallocate my 401k. It all worked out in the end because the worst was over.

 

[dallas27]

Just for a little perspective, if you bought VTI at the very very very (let's do one more) very tip of the pre-bust peak (on 12 OCT 07) today you would have a 58.22% gain, 6.66% annualized. Not inflation adjusted.


Stock Return Calculator Results

 

[Sunset]

I was not here, but I felt the pain of the drop as I was basically all stocks.
While it hurt and was scary, I was working so day to day was not affected.

I figured it would come up someday like it always did.
So I maxed out 401K, roth, and regular stock accnt buying, even borrowed 65K to buy more stock.
I've paid back the 65K, and my only regret is not holding on to some of the really low ones I bought for longer.

My fear at the time was what if it had been like 1929, and the recovery took decades ?

 

[Lakewood90712]

Most post around here are pretty positive, peoples accounts are benefiting from the big bull the last few years.

For those of you who been here ~5+ years, how has the daily perspectives changed (or not) since the gloomy recession bottom? Have most people kept a even keel in perspective and attitude? Or are many people's belief's changing with the current good market weather?

It was all over the dartboard , from eminent apocalypse , to "No big deal , just hunker down"

I will paraphrase about the main lesson I leaned from one of Buffet's books: "If you can't stomach seeing your investment portfolio go down 50% for up to 10 years, you have no business being in equities" . This is as true today as ever, I have had aquantenances think being invested in mutual funds somehow protect you from this Just look at the NASDAQ composite from 1999 to present.

 

[Gumby]

At the peak of the last bull, in October 2007, I looked carefully at my account balances and decided that I could leave my big firm private law practice and do a little public service before I retired for good. My new position is substantially more fun, and more useful to society, but it required me to take a 77% pay cut. The giant slalom of 2008 really tested my commitment to the move. My old firm kept calling, begging me to come back (I was a bankruptcy lawyer) and by early 2009, I was giving it serious consideration. But I stayed the course. I did sell my position in DODBX that January, but immediately invested all of the proceeds into OAKBX, where it remains to this day. That gave me some substantial capital loss to carryover until 2013. Other than that, the young wife and I kept buying equities through our 403b plans every two weeks.

 

[Meadbh]

I was here, and was working at peak busyness and income. I could not avoid a daily peek at my shrinking portfolio, a stomach-churning experience. With plenty of cash flow coming in, I bought four leveraged income properties between late 2007 and 2009 and I dumped $50K into equities when the markets showed signs of life. I took on close to half a million in mortgage debt, serviced by cash flow from the investment properties. That steady rental income was the only bright spot on my balance sheets. It was a reassuring reminder that people still needed a place to live and that there would always be an economy. I was also reassured by voices of reason such as MichaelB, W2R, audreyh1 and REWahoo. Thank you all! I was never tempted to sell equities. I did feel guilt that I had potentially lost most of the inheritance that my LBYM parents had spent decades building.

I am so thankful that this happened while I was working. Without a pension, I could not have put in place the defensive measures that I did, and would have had to tap into a shrinking portfolio. That's why I built up about 6 years of expenses in cash and fixed income before RE. Meanwhile, 75% of that debt has been repaid and WR is ~3%. I really, really don't want to go back to work!

 

[eytonxav]

If I recall correctly, there were quite a few devoted buy and hold types that suddenly became market timing clairvoyants and got out before big drops occured and after the fact they let the rest of us know of their wisdom.

As for me, I held tight and didn't sell anything, and then started buying in March 2009 with some of my remaining cash. I will say that experience did make me pull in my horns quite a bit after a nice run up, while I should have just stayed the course.

 

[Car-Guy]

I
I will paraphrase about the main lesson I leaned from one of Buffet's books: "If you can't stomach seeing your investment portfolio go down 50% for up to 10 years, you have no business being in equities" . This is as true today as ever,

If I were 84 years old and worth over 60 billion I think I could stomach seeing my portfolio drop 50%... It's making it for another 10 years that would concern me. However, I'm a good 20 years younger than that and I don't measure my net worth in billions.

When I was working, I was very heavy in equities and lived through a number of ups and downs over the years but I didn't worry about it (the downs) too much. I knew I could just keep on working if needed. Retirement is a different story.

 

[REWahoo]

I think the following PM exchange between yours truly and a now departed forum member is a good example of what was transpiring here at the time. This took place on March 5, 2009, four days before the S&P 500 bottomed out after a decline of more than 50%.

Well, I didn't think I'd see this unless I lived to be 85 but my account is now under 800K.

I think Ricky Ricardo said it best: "Lucy, we're escrewed!"

I came clean and told DW tonight and she is really pissed at me. She wants everything out of the markets and in the bank, now!

I'm torn as I'm at the end of my rope with this. I swore at [Dow] 7K I'd be out but it just got away from me.

OK, I'm 60 years old with no education and soon no money. This is another mess I've gotten myself into.

I've kept DW pretty much in the loop all the way down. She's not happy of course, but knows the only way we have any chance to recover some of our losses is to stay in the market and hold on for the long term. But I'm not at all sure her thinking won't change if the blood loss continues.

And it sure looks like it's going to do just that.

From the charts that I've seen this is the second worst down turn in market history. Has all the momentum of becoming #1. I'm going out in the AM to find a good safe underpass before someone gets there first.

To his credit, he hung in there, didn't sell and is now far better off financially than he was prior to the crash, as are most of us who did the same. But it wasn't pretty...

 

[Animorph]

I got caught with quite a bit of cash in 2007 since I was leery of being 100% equities as I started retirement. I reinvested it about 20% at a time for every 5% the market went down, starting at 20% down. I was just about out of cash at the bottom. So I had it pretty easy, but I did put my cash on the line.


One thing that struck me was people who were not reinvesting distributions or rebalancing when they should have. Sort of buy and hold. They didn't sell. But their AA was probably pretty far off target and wasn't getting rebalanced.

 

[Alan]

One thing I recall about this site during that period were a number of members who turned out to brag about how well they were doing in cash and how thankful they were that they had shunned the market. Pretty insensitive in some cases.

I was very fortunate to be still working for a company that had to shut down 2 thirds of its manufacturing but kept on all its employees in the belief that when the recovery came they would need all that experience.

I maintained our AA of 35/65 and all turned out well, with ER in 2010. Not sure how confident I would have been had I already been retired and in the withdrawal phase.