Bear Markets...Just so you know

[danm]

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Originally Posted by dessert I know that everyone says to ignore this as "noise", but won't someone please come in here and put all of this in perspective for us?

I tried the past year or two but was called a tin hat foil wearer, so didn't stick around much. Stocks were apparently on a tear and nobody would hear any different, but I believed the stock runup was illusory and due to a credit bubble. In the meantime contrarian investing has done well.

Well it's all little late now, best to stick with your plans.

[dessert]

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Originally Posted by innova Well.. if you're retired and 60/40 or 50/50 you didn't lose half your value. Not to mention, a slice 'n dice portfolio containing small caps, reits, and a healthy dose of international fared quite well over that span. One 'lazy' portfolio I based my AA on looked like the following (yearly returns): 2000 10.67% 2001 1.12% 2002 -0.65% 2003 23.88% 2004 14.72% 2005 8.16% 2006 13.83% This is a 60/40 allocation, tilted to small and value, with some reits and substantial international allocation (40% of equities). The S/P is a poor bogey for this portfolio. *note: I'm not 60/40, I'm 80/20 and I didn't have this allocation over this time span. Still, its illustrative.

I realize what you have shown and I can't say that I was even paying much attention to mine during 2001-2002 because I was not thinking about retirement at that time. It's different now and just this past 4 weeks or so my 401K has gone down by quite a bit. In fact one more week like the one we just had and my total will be what it was in January of 2007 meaning that all of last years totals have vanished. Last year I was up 12.1%. Do I just need to "lighten up" and realize that we have 11 1/2 months to rebound in 2008?

I once posted "what me worry"?.....and now I am. I guess I have been watching too much TV because they "Love those Bears" and get their ratings up with gloom and doom. You would swear that we will all be in soup lines next week according to them. And we aren't even in a recession. Mob behavior always bothers me and that's what I see. Ok, I'll lighten up now.

[REWahoo]

Quote:

Originally Posted by dessert I know that everyone says to ignore this as "noise", but won't someone please come in here and put all of this in perspective for us?

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Originally Posted by danm I tried the past year or two but was called a tin hat foil wearer, so didn't stick around much.

Danm, in the interest of accuracy and full disclosure, I went back to find evidence that you'd "called the market" and been ignored. Looks like you were correct in predicting a market downturn...just two years early. From January of 2006:

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Originally Posted by danm After the ramp up into Jan I moved everything to bonds. With those market expectations I believed that, after last year, earnings this year wouldn't be able to keep pace with the poor consumer response during Christmas. Also Iran (and the upcoming bourse) would put pressure on oil, which would do same to stocks. Unexpectedly Bin Ladin threats and the Niger kidnappings just added to the stew. This all occured earlier than I thought, but so far so good. Monday? who knows and who cares? Going into March when the bourse opens I exepect Iran to stay in the news and to supress stocks. Closer in we should see better, but around that time I expect the reality of the housing market will become better known. A combination of the Fed and sentiment will invert the Yield curve out to 30 years, likely, and regardless we'll move into recession probably by summer. For 2006 I don't see any positives for stock indicies. Anybody?

I believe the S&P 500 increased 13.8% in 2006...and 6.1% in 2007.

Timing is everything...or nothing.

[unclemick]

Well - speaking handgrenade wise - I had roughly 200k in financial assets when I was canned in 93 time passed and one quarter during the last bear my portfolio was down 250k or more than I ER'd with.

There is more to the story - but some rookies might have considered that a reason to get excited.

I've seen a few chewy markets since 1966 and successfully made about every investment mistake in the book over forty years.

Having paid for my education - I try to put it to use.

heh heh heh - Target Retirement for real money and a few dividend stocks for lagniappe.

[Jbird]

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Originally Posted by mark500 Most of us were not investors through the Papa Bear market of 1973-1974. It took 7 1/2 years to get your money back from that one.

Can someone explain to me what we mean by "it took 7 1/2 years to get your money back.."? Does that just account for previous earnings?

[Running_Man]

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Originally Posted by Jbird Can someone explain to me what we mean by "it took 7 1/2 years to get your money back.."? Does that just account for previous earnings?

In other words if you invested 100K portfolio at the start of the bear market it was 7 and 1/2 years before the portfolio ended at 100K again.

[al_bundy]

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Originally Posted by innova Again, I don't get it. Are you upset when markets are roaring because you DCA'd instead of betting it all on the previous bottom? Statements like: Make no sense to me. How many non-retired investors (heh) invested in such a manner than their last investment was at the peak and they didn't 'regain' until years later? NONE. When you are in the accumulation phase, these types of statements are irrelevant. You can't look at published yearly returns - they bear no resemblance at all to what you earned - for that you'd have to calculate your personal IRR (internal rate of return). Now for you retired folks living off investments, different story entirely. Thats why you set your allocation more to bonds, obviously

no, the point is that markets have very long stretches where it's a sideways market. what if you started working in 1981 and the second half of your working life is a bear market when it should be the time of most gains?

[Jbird]

Hypothetically if someone started to invest in 1973 and continued on investing through the 7 1/2 year recovery (using dollar-cost averaging) onward to retirement 30 years later would they have timed the market nicely b/c they bought in low early in their investment career?

[audreyh1]

Thanks for the info! I was much more interested in how long the bear markets took to hit bottom, not how long it took to recover to previous highs.

The 2000-2002 bear market was a particularly long and drawn out one. Two years of gradual declines, and only THEN hammered by really nasty selloffs in 2002. Yuck! I remember it so well.....

And sure enough, it shows as the longest duration on your list.

Here's hoping the current one (if we get to the down 20%+) is a nice shorter one since we already had to go through one of the longest once just a few years ago!

Audrey

[FinanceDude]

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Originally Posted by audreyh1 Thanks for the info! I was much more interested in how long the bear markets took to hit bottom, not how long it took to recover to previous highs. The 2000-2002 bear market was a particularly long and drawn out one. Two years of gradual declines, and only THEN hammered by really nasty selloffs in 2002. Yuck! I remember it so well..... And sure enough, it shows as the longest duration on your list. Here's hoping the current one (if we get to the down 20%+) is a nice shorter one since we already had to go through one of the longest once just a few years ago! Audrey

The most I ever was down in 2000-2002 was 16%. I guess my portfolio is like a 70 year old man's........

[tricky88]

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Originally Posted by Running_Man In other words if you invested 100K portfolio at the start of the bear market it was 7 and 1/2 years before the portfolio ended at 100K again.

But that's a pretty big "if," right? I'm not trying to downplay the effect of the previous bear markets - or the one we may be heading into - but these numbers are counting from the very highest peak. I got creamed in 2000 as well, but it wasn't like I was investing a huge lump sum into the market right at the top. Most people just don't invest that way. I invested on the way up, maybe a very small amount (by percentage) near the very top, and then again a lot more back down and coming back up. Sure, if you're looking at your own net worth from the peak down to the bottom, it will look grim, but hopefully the reality is that you won't be THAT far in the hole from where you originally bought your shares. If the markets don't shoot up tomorrow, I'll probably be buying a chunk myself.

[innova]

Tricky you have it exactly right.

Such remarks as those you mention do nothing but sell magazines and ads for CNBC. Truth be told, as far as I'm concerned, the more people panic the better the bargain I get!

[audreyh1]

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Originally Posted by FinanceDude The most I ever was down in 2000-2002 was 16%. I guess my portfolio is like a 70 year old man's........

The most I was ever down was 7% in 2002. It was still unpleasant. Even though my portfolio did not do that bad, the endless bad news and market selloffs were very discouraging.

Audrey

[eridanus]

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Originally Posted by wowprox thanks for your information its very helpful to me i got good profit by it thank you

Can we get a mod to nix this spammer's account?

[jIMOh]

Has the bear from 2000-2002 really ended?

2000-2008 might turn out to be flat, even though there was a peak in the middle, that peak could possibly come way back down below 2000 levels.

I am still buying. Not going to retire in 7 years, so may as well stay invested and stay the course.

I have not even looked at my accounts since Jan 1 (did 2 trades that day). Don't want to either until June (when I rebalance). Helps me stay the course

[jazz4cash]

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Originally Posted by eridanus Can we get a mod to nix this spammer's account?

sounds right to me...........

[Bestwifeever]

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Originally Posted by jIMOh I have not even looked at my accounts since Jan 1 (did 2 trades that day). Don't want to either until June (when I rebalance). Helps me stay the course

This is the most helpful statement for me personally--thanks for reminding me not to make myself crazy and to stay the course!!! Like marriage, the value of a plan is the ability to hang in there through the tough times, not the good times....

[al_bundy]

OP missed one, 1998

Nasdaq was down by 50% from it's peak. forgot how much the Dow and SP500 dropped that year

and the nasdaq was down by like 25% in 1996

[TickTock]

Quote:

Originally Posted by innova One 'lazy' portfolio I based my AA on looked like the following (yearly returns): 2000 10.67% 2001 1.12% 2002 -0.65% 2003 23.88% 2004 14.72% 2005 8.16% 2006 13.83% This is a 60/40 allocation, tilted to small and value, with some reits and substantial international allocation (40% of equities). The S/P is a poor bogey for this portfolio.

innova,

Would you mind posting the AA?

[clifp]

Quote:

Originally Posted by FinanceDude The most I ever was down in 2000-2002 was 16%. I guess my portfolio is like a 70 year old man's........

I was down just over 30% from the summer of 1999 till the end of 2002.
It would have been more if hadn't sold tech stocks in Jan 2000.

Honestly this market doesn't seem anything like the market in 1999-2000.
The stocks back then were clearly overvalued and part of the reason I wasn't bother by the decline is because I knew the values were inflated.

Valuations in 2007, were reasonable by most metrics P/E, P/S, even dividend yields weren't outrages, especially compared to T-bill yields.

Here is one interesting comparison. In 2000, the dividend yield of GE dropped blow 1%. This is for a stock which for generations has a yield of between 2-4% and increased dividends by 8% a year also for generations. It is currently trading at PE of 15 and yield of 3.6%, even after yet another year of growing earnings. Now I don't know if GE is a buy or not but I do think that is a good indication that the market sell of is excessive.