$1 vs. $50,000

[just_hatched]

I've read the mental accounting paper and I have also been intrigued about the perceived value of monetary amounts.

The other day I was wondering if the perceived value could sometimes be correlated with one's net worth.

For example, what about an amount of .01% of net worth? Sounds very small. So for someone with $1 million, then this would be $100.

How much would a millionaire "care" if he or she lost $100 even if his or her portfolio fluctuated up or down by $1000 that day.

What does the perceived value of $100 mean to someone who has $1000 in the bank versus someone who has $1 million or $10 million?

For me personally, as my net worth has grown year to year, the occasional $200 car repair seems less and less impacting each year.

 

[old woman]

I lost over 8K today in my brokerage accounts but made 52 cents interest on checking. The 8K isn't real it comes and goes I can't really spend my invested money because then I would be even worse off so I didn't give up a vehicle or vacation or something because I lost money. The 52 cents a day is real in 2 days it is enough to buy something from the vending machine, it feels like something for nothing, over $15 a month I could go to MCD of course MCD went down to 48.50 today so I lost hundreds on it today but I paid 27.55 for it so I still have some profit. I like my 52 cents a day of spendable profit it cheers me up to go look to see what I got today.

 

[haha]

On Tuesday, my portfolio took a $50,000 hit.
How insane is that? If anyone could explain me to me, I'd be grateful.
There's gotta be some explanation.....

Easy. Denial.

Ha

 

[haha]

While the bottom isn't going to just fall out of the stock market,

Speaking as an old dummy without your confidence, how do you know this?

Ha

 

[yona]

Down about 4% today in HK. This is about 8 months of salary.
Does it mean I am underpaid?

 

[Spanky]

Down about 4% today in HK. This is about 8 months of salary.
Does it mean I am underpaid?

Underpaid relative to who?

 

[Webzter]

Down 4% across all accounts as of last night. No major reallocation shift.. bonds are a larger relative piece of the pie now, but not enough to want me to rebalance yet.

Basically, so far we've only wiped out half of our earnings for the year.

 

[me_no_boss]

Perhaps you felt the Netflx change was unjustified and not part of what you'd expect when you signed the contract. But the stock market fluctuation was expected if you are in it long enough.
After yesterday's stock plunge, I felt a little foolish about fretting over a $10 rebate the night before.
Have to keep reminding myself, I am still way ahead YTD.

 

[NinjaPigeon]

Speaking as an old dummy without your confidence, how do you know this?

Ha

Nobody knows if it's true. But if it does happen, does it matter? It's like worrying about death. If it happens, there's not a thing you can do about it but hop in the soup line with the other former millionaires

 

[FinallyRetired]

I've got ten years of cash assets, so this week is a nonevent for me.

 

[cute fuzzy bunny]

I am still way ahead YTD.

I'm way ahead LTD.

 

[deserat]

You could save another $16.99 and use the library for your DVDs - that would save you ~$200/yr which could reduce your required portfolio by $5K Just practicing my math.....

 

[Sam]

Your math is fine, but your assumption could be off. What if the OP's swr is only 2%? ;-)

 

[tangomonster]

May I retract this post? The first $50,000 on one day didn't faze me, but $120,000 over three days does!

Bongo, the mental accounting link was interesting. Fascinating how we play mind games with money.

 

[haha]

May I retract this post? The first $50,000 on one day didn't faze me, but $120,000 over three days does!

Obviously you are quite well off, or you have heavily invested in calls. If a 5% fallback costs you $120,000, 20% would cost $480,000. So if you are experiencing run of the market results, you have an equity portfolio of $2.5 million or so. If you have another million in fixed income, or a good pension you are still in very good shape.

But if you don't have a pension, and you are fully invested in equities, I hope you will keep posting your reactions if stocks should continue down from here.

Personally, I have no clue what might happen. But I know that I would notice going from $2 1/2 mm down to $2mm. And of course if that should happen there is no way to know or to have confidence that the bottom will have been reached.

I have observed much greater drawdowns in the years that I have been investing.

Good luck and good management to you!

Ha

 

[tangomonster]

No calls, no pension. Portfolio is just as you intuited. So it's okay. I know it would be foolish to do anything but sit tight. I didn't make it to this point by attempting to market time! But I am definitely glad that this correction happened after one full year of RE, rather than right at the beginning (would have interpreted as an ominous sign that the money gods thought I was being presumptous in retiring too early and wanted to punish me!).

 

[megacorp-firee]

Question

Has anyone credible actually labeled the current pull back a 'correction'?

 

[NinjaPigeon]

I've lost a month's salary. While that's no $120k, it's a pretty big loss for me. I have decided that to keep my nerves, I should spend a few hundred dollars on toys to make me feel rich. After all, a month's salary is no big loss to a rich guy, right?

I just ordered a new set of MAME ROMs since mine is out of date. Should keep me occupied long enough that I won't log into Vanguard until the market bounces back

 

[Moemg]

I logged into Vanguard yesterday .I lost more than the price of my first house .Luckily I bought that house in 1970 .Hope things get better !

 

[Andre1969]

I haven't checked yet to see how much I've "lost". I had a gut feeling that things were going to fall though, mainly because my portfolio hit a new milestone about a month ago, breaking the $400K barrier. Last time I added everything up, I was up to around $413K, but that was before the market started slipping.

When we had that little hiccup back in February, I think it put me down about 8-9% for a moment, but it bounced back pretty quickly. That didn't even faze me. When we had that little correction last summer though, it was a bit more disturbing. Mainly because I co-signed on a car loan for a good friend of mine, and I swear, within a month, he became deathly ill and the market started to tank. I was more worried about him dying than the market going down or the possibility of getting stuck with a dead man's car payment, but everything just sort of compounded, and made the situation worse.

Thankfully, my buddy recovered and got out of the hospital. Oddly, he got out about the same time as the market recovered to where it had been before the start of him getting sick/the "correction".

This time around, I'm not sweating it. In fact, I just upped some of my automatic monthly investments, in the hopes of taking advantage of it.