Did 2008 Recession Spoil You?

[marko]

With the market seemingly taking a 300+ point drop every day of late, my general reaction is 'meh!'.

Having white-knuckled the 2008 Great Recession and survived it quite profitably, I'm wondering if one of the side benefits was for folks to have learned to not over-react to such drops.

So, did anyone else change their view of market drops/corrections after 2008? In addition to now viewing market plummets as buying opportunities, are you more relaxed about a big air pocket than before '08? Did the recession of '08 spoil you or ruin you?

 

[foxfirev5]

I think that while pretty severe the relatively short duration has contributed to complacency. The Great Depression had much longer lasting impression. A long slow rise out of the 1932 bottom, only to get hit again in 1937. However most of those effected are gone.

 

[MichaelB]

There is no bad economic news to accompany current market volatility. Everything is still rosy. When the “sky starts falling” in economic terms, the equity markets may show some real fear and volatility.

 

[RunningBum]

With the market seemingly taking a 300+ point drop every day of late, my general reaction is 'meh!'.

Having white-knuckled the 2008 Great Recession and survived it quite profitably, I'm wondering if one of the side benefits was for folks to have learned to not over-react to such drops.

So, did anyone else change their view of market drops/corrections after 2008? In addition to now viewing market plummets as buying opportunities, are you more relaxed about a big air pocket than before '08? Did the recession of '08 spoil you or ruin you?

I agree with the bolded part. But I'm not clear how that would spoil or ruin me? Spoil/ruin sounds like a bad thing. Not over-reacting is a good thing. ??

 

[Dawg52]

If I have a 'meh' mentality today it's because my allocation to stocks is much lower than 2008.

 

[Maenad]

I've learned to be a bit more philosophical about things that are outside my control. I'm not exactly "meh" about the current correction/potential bear market, but with a 50-year future in the stock market (hopefully!), these things are going to happen and I need to accept it.

I'd be a lot more stressed trying to predict market moves, since I've proven to myself many times that I'm no good at it!

 

[marko]

I agree with the bolded part. But I'm not clear how that would spoil or ruin me? Spoil/ruin sounds like a bad thing. Not over-reacting is a good thing. ??

I meant "spoil" in the sense of "being spoiled" as in a good thing that allowed you to make better decisions. "spoil or ruin" was an 'either/or' question.

 

[justakrusen]

I've been lurking for a long time. I hesitate to stick my neck out sometimes... but here goes. Bring on the guillotines. My wife and I have about 2 years worth of living expenses in our credit union. We have a 401K account at Massmutual which will be rolled over to her new employers 401K where they match up to 4.5%. We are invested big time in VIIIX with a balance that we will never be able to spend it all, in this lifetime anyway.

I don't mean to be wordy on my first post just want to thank you all for the information and the willingness to share all these years. God knows you could be out doing other things than typing of a computer.

We have more than mentioned above. I just didn't want to stay on the computer to long.

 

[njhowie]

There is no bad economic news to accompany current market volatility. Everything is still rosy. When the “sky starts falling” in economic terms, the equity markets may show some real fear and volatility.

How is everything rosy?

There is $20T in national debt, expected to grow by (at least) $1T per year for the next 10 years, interest rates are on the rise, and a global trade war is on the horizon.

Looks more like the perfect storm to me.

 

[4legsgood]

I feel fairly calm about the market, as I have enough cash to live on for quite a few years, oh yeah, depending on HI costs.

I'm thinking, take advantage of the drop and do roth conversion?

 

[exnavynuke]

I've been lurking for a long time. I hesitate to stick my neck out sometimes... but here goes. Bring on the guillotines. My wife and I have about 2 years worth of living expenses in our credit union. We have a 401K account at Massmutual which will be rolled over to her new employers 401K where they match up to 4.5%. We are invested big time in VIIIX with a balance that we will never be able to spend it all, in this lifetime anyway.

I don't mean to be wordy on my first post just want to thank you all for the information and the willingness to share all these years. God knows you could be out doing other things than typing of a computer.

We have more than mentioned above. I just didn't want to stay on the computer to long.

I guess you're wife really likes her job (since you say you two already have more money than you'll ever spend and thus shouldn't have a need to work)?

 

[marko]

How is everything rosy?

There is $20T in national debt, expected to grow by (at least) $1T per year for the next 10 years, interest rates are on the rise, and a global trade war is on the horizon.

Looks more like the perfect storm to me.

But I tend to take a long view. Like 15-20 years out, even though I'll be 80 by then.

I think one of the most underestimated and under used phrases in the market is "over time". IMO, most things people worry about in the short term get sorted out over the long haul.

Downdrafts are not pleasant but for me, it allows me to go "back in time" so-to-speak and take advantage of pricing on good companies that I missed back then. Wouldn't it be nice to go back to 2016 and buy Apple at $92?

 

[harley]

With the market seemingly taking a 300+ point drop every day of late, my general reaction is 'meh!'.

Having white-knuckled the 2008 Great Recession and survived it quite profitably, I'm wondering if one of the side benefits was for folks to have learned to not over-react to such drops.

So, did anyone else change their view of market drops/corrections after 2008? In addition to now viewing market plummets as buying opportunities, are you more relaxed about a big air pocket than before '08? Did the recession of '08 spoil you or ruin you?

I don't think it's being spoiled or complacent, it's just that at the value of the market today a 300 point drop is a much smaller percentage than it was in 2008. I don't care one way or the other about a 1-2% change in either direction. And I certainly don't see something like that as a buying opportunity. If it was a buying opportunity today I would have bought 3 days ago when it was a high. But I doubt you'll be seeing much complacency if we start getting 20-30% drops over a period of a few months. I'm hoping that I would see that as a buying opportunity, but I might just see it as a time to hunker down and keep my fingers crossed. I'm pretty sure I wouldn't panic and sell, and that's what the 2008 recession taught me.

 

[Dtail]

Even though I was fully invested in 2008, I didn't really follow it religiously like I do now. So effectively, this is new for me, but trusting my AA and the myriad of calculators used.

 

[RAE]

How is everything rosy?

There is $20T in national debt, expected to grow by (at least) $1T per year for the next 10 years, interest rates are on the rise, and a global trade war is on the horizon.

Looks more like the perfect storm to me.

I agree. And to add to that, the Fed has only barely started to unwind its $4.5 trillion balance sheet from the last recession. When the next recession hits (and it will at some point), what tools do they have left to deal with it?

 

[Which Roger]

With our 20/20 hindsight, it's easy to look back at 2008-09 and conclude that all dips are temporary and the market always recovers. But a lot of bad things were happening back then, and many were saying that "this time is different". And if there had just been one more shock to the system, it may well have been.

 

[dtbach]

I agree. And to add to that, the Fed has only barely started to unwind its $4.5 trillion balance sheet from the last recession. When the next recession hits (and it will at some point), what tools do they have left to deal with it?

THAT!

 

[Pilot2013]

I would be a lot more worried if I were in the class of 2019 or maybe 2020....

As it is, I am just watching with curiosity, and trying to figure out when I will increase my contribution to my plan (of course, observing my planned AA).

 

[Tallman4123]

In 2008-09 I had (i thought) 15 years of w*rk and saving in front of me, so while it hit me hard, beneath the barely suppressed panic I knew I had time to recover.

Ten years later, having just retired, I have concerns about sequence risk. So I suspect my white-knuckle moments will be amplified when the next BIG downturn occurs. The current volatility has my attention.

 

[audreyh1]

And to add to that, the Fed has only barely started to unwind its $4.5 trillion balance sheet from the last recession. When the next recession hits (and it will at some point), what tools do they have left to deal with it?

I believe that is why they are moving fairly aggressively now.

 

[audreyh1]

With the market seemingly taking a 300+ point drop every day of late, my general reaction is 'meh!'.

Having white-knuckled the 2008 Great Recession and survived it quite profitably, I'm wondering if one of the side benefits was for folks to have learned to not over-react to such drops.

So, did anyone else change their view of market drops/corrections after 2008? In addition to now viewing market plummets as buying opportunities, are you more relaxed about a big air pocket than before '08? Did the recession of '08 spoil you or ruin you?

I think that while pretty severe the relatively short duration has contributed to complacency. The Great Depression had much longer lasting impression. A long slow rise out of the 1932 bottom, only to get hit again in 1937. However most of those effected are gone.

The OP are taking about stock market behavior.

Recessions are a different thing.

The Great Recession was a huge economic event regardless of what happened in the markets. Unemployment went way up - higher than it had been in a long time, and took a very long time to get back to “normal” range. Layoffs and foreclosures were everywhere. Credit is still tight.

And it did take several years for the markets to regain the old highs, while the economy was stuck in a slow growth environment.

I think people have short memories.

But yes - at these lofty levels a 10% stock market correction means nothing to me.

Get us back to early 2016 levels and I might start paying attention.

 

[ponyboy]

How is everything rosy?

There is $20T in national debt, expected to grow by (at least) $1T per year for the next 10 years, interest rates are on the rise, and a global trade war is on the horizon.

Looks more like the perfect storm to me.

You do realize the "national debt" is completely made up? It has absolutely no meaning. Its simply a talking point that politicians like to throw around to make themselves look good and others bad.

The federal reserve (private company) prints its own money at will. The USD is no longer backed by anything. If our government needs more money they just print more.

If someone can point me in the direction where the national debt is id like to know. If you're going to direct me to a spreadsheet that shows a negative balance...skip it. Again...we print our own money...national debt is a joke. the government does not pay back loans they take from private companies.

 

[Free bird]

The 9 year run up has spoiled people more than any recession. ZIRP & negative rates have given the impression that holding risk assets isn't risky. QE was not a known tool until the fed became desperate. The rich get richer & the poor get poorer. In the calculator we trust. Looks like a retest of the lows is underway. If a long shallow bear market emerges & all the pulling growth forward strategy starts to fizzle the massive debt might start to drag us down. Hey I've been on the computer too long. Bring on the snarkie remarks .

 

[NW-Bound]

...I think people have short memories.

But yes - at these lofty levels a 10% stock market correction means nothing to me.

Get us back to early 2016 levels and I might start paying attention.

Yes, people do have short memories.

I pay attention everyday, even without a market correction, market up or down, even though I do not trade every day. Gotta keep my eyes peeled for opportunities.

 

[easysurfer]

Held on tight in 2008-2009. Survived the recession by not doing any panic selling or rushing out to buy.

Found confidence in survived then and can do so now.

Big ups and down swings in markets are great theater, but not something to throw me away from my AA strategy.