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How I handle a market downturn
Old 01-07-2016, 08:35 AM   #21
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How I handle a market downturn

I continue to look at my accounts, because that is what I always do every day the market is open.

There is no danger of me listening to CNBC any more, especially since I cut the cable so I can't.

I do remind myself of 2008-2009, when things looked awful to me. For a while, some of the talking heads even said the market could go to zero. Many of us did pretty well investing during that time.

If when the market really bombs (which I don't think it has yet), I compute how much I could spend if recovery never happens or if it bombs even more. I think about ways to cut my spending. This calms me down because I realize that I can still survive and enjoy life, even if maybe I will want to cut back a little on all those non-essential doo-dads that I get from Amazon and so on.

It helps that I have no mortgage, no other loans except a CC that I pay off every month, SS, a tiny pension, the TSP "G Fund", and cash. So it's not like I will be totally broke if the market crashes. This set-up was intentional because I am a worry-wart so I think about things like this decades in advance.

When things get really bad, bargains abound. This is true not only in investments, but when the economy is bad enough there are bargains to be found IRL.

Some of us forum members have been there, done that, when it comes to market crashes and we know they have not led to the end of the world thus far. We can view the claims of "This time, it's different" with a more skeptical eye. We know that the biggest mistake is to sell low, so we try not to do that.
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Old 01-07-2016, 08:38 AM   #22
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Originally Posted by Lakedog View Post
Since I have a pension that covers expenses, I admit to being somewhat of a market timer. I tend to increase my allocation to equities as the market drops. In 2008, I was close to 100% equities a bit before the bottom. Today I am at 50% equities but plan to increase that % as the market drops.
+1. DW=COLA'd pension. Me=COLA'd pension. I am about 90% equities now. I will move to 95% and add, add, add as much as I can. If I get the 2009-2013 returns following this coming (maybe it is here already) downturn like I did after 2008 then yippee. If not, we have our pensions.
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How I handle a market downturn
Old 01-07-2016, 08:40 AM   #23
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How I handle a market downturn

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Originally Posted by papadad111 View Post
Turn off CNBC...

What Ignore market timing??
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Old 01-07-2016, 08:40 AM   #24
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Yeah - Bummer to see big drops right after rebalancing. But I'll have to ignore things and go on with my life.

With this huge build up in negative international and market news, the market often defies everyone and "climbs a wall of worry". So I wouldn't be surprised if we don't have a bear market this year.
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Old 01-07-2016, 09:05 AM   #25
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This drop is really bothering me.

I plan on RE on April 1st. The BS bucket just overflowed.

I have my asset allocation the way I want it, a small non cola pension that will pay about 1/3 of my needs, and only two years to go until 62 when DW and I will both take early SS which will cover another 1/3 of what we need. 100% with FircCalc on investments to cover the rest while maintaining our current life style which we are happy with.

Have about 3 years of cash to cover market downturns like this. The problem I have is switching out of the accumulation phase to retirement phase. I was always a dollar cost averager but would add extra to the monthly check if the market was declining. Did that for 30 years. To keep buying more during some declining markets when you can not see the bottom was nerve racking, but after seeing the long term results - it gets kind of addicting. I have an almost irresistible urge to move some of my safety cash into equities. It is hard to break old habits!

Buying more on drops was an oversimplified system but seemed to work for us. It is allowing a sales guy and a waitress to retire early when a lot of our friends in our socio-economic level are struggling. Just finding it hard to switch to a new plan.
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Old 01-07-2016, 09:15 AM   #26
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Dividends look fine to me.
Looking forward to the $41000 SS to start when I turn 70 later this year.
Also have to start taking RMD's next year.
By then the problem will be paying taxes and spending the rest.
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Old 01-07-2016, 09:45 AM   #27
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OK, on the *this time it might be different* front : Watercooler talk has been that the *too big to fails* will not be bailed out this time, but will be *bailed in* with depositors' money (whatever forms that takes I don't know). And if the depositors have been smart enough to extract their money before the downturn, and there isn't enough of it to satisfy the *too bigs*, where do the *too bigs* go to rip off more money, to survive? Are they allowed to implode?
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Old 01-07-2016, 09:47 AM   #28
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Turn off CNBC...Corrections are normal and healthy.
And finance.yahoo.com Be aware that fear sells.
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Old 01-07-2016, 09:48 AM   #29
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Some of us forum members have been there, done that, when it comes to market crashes and we know they have not led to the end of the world thus far. We can view the claims of "This time, it's different" with a more skeptical eye. We know that the biggest mistake is to sell low, so we try not to do that.
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Originally Posted by John Galt III View Post
OK, on the *this time it might be different* front : Watercooler talk has been that the *too big to fails* will not be bailed out this time, but will be *bailed in* with depositors' money (whatever forms that takes I don't know). And if the depositors have been smart enough to extract their money before the downturn, and there isn't enough of it to satisfy the *too bigs*, where do the *too bigs* go to rip off more money, to survive? Are they allowed to implode?
I'd use a different watercooler and just relax about all this. Nothing that bad has happened yet, and as Audreyh1 said, there might not even be a bear market this year.

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Be aware that fear sells.
Very wise caution for us, IMO.
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Old 01-07-2016, 09:49 AM   #30
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About 7 weeks ago we decided if VTI dropped about 5% from our average purchase price we would buy some. Got to the end of the year and re-upped our 60 day purchase order at $101 and sumanagum - it filled! That's ... good? We shall discuss a new target purchase point today. It helps a whole bunch that we have the rentals perking along and some property loans paying. OTOH, no pensions, tiny social security checks, checking the market daily, and being very aware that cash in banks did better than our "stock portfolio" make further stock purchases more difficult. Will be an entertaining discussion.
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Old 01-07-2016, 09:50 AM   #31
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I'm just waiting for the "no mo whoa" signal from W2R, to know it's over. ETA: no mo WHEE, not whoa!
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Old 01-07-2016, 09:54 AM   #32
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Same way as market ups. two or three times a year I look at my totals.
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Old 01-07-2016, 09:56 AM   #33
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I ended up buying some AAPL, AFL and SO today. If the market keeps dropping I'll find some more dividend stocks to buy.


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Old 01-07-2016, 09:58 AM   #34
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... being very aware that cash in banks did better than our "stock portfolio" make further stock purchases more difficult. Will be an entertaining discussion.
Yes, buying low is very tough after seeing what was low becomes lower.

So, I spread it out and nibble here and there. Currently sitting on 32% cash, not as much as I had at the bottom in 2008.

In early 2009, I went from 60% cash to 40% cash at the market bottom. Could not go all in, as I was too chicken. Would do very well otherwise. But eventually I went back to my usual 20% cash (75% stock, 5% bond).

Currently, 61% stock, 7% bond, 32% cash.
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Old 01-07-2016, 09:59 AM   #35
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The way I stay calm is by drilling down into the investments I own to see how the companies are actually doing. I listen to the quarterly webcasts, read the 10-Ks, and follow the industry journals/websites.

What's going on in the market is not necessarily reflective of what's going on at the actual companies (huge understatement...).

It doesn't bother me if a company is doing badly if I can understand why that is happening. From there I can form an opinion on whether or not I should be buying, holding, or selling shares.

One of the things I don't like about funds/etfs/cefs and so on is that they can separate you from understanding what you actually own. I think if people actually understood what they owned they would not necessarily care about volatility.

Volatility is not necessarily a bad thing. It can be an opportunity.
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Old 01-07-2016, 10:00 AM   #36
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I'm just waiting for the "no mo whoa" signal from W2R, to know it's over. ETA: no mo WHEE, not whoa!
Yes Whoa. Whoa is a signal to buy.
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Old 01-07-2016, 10:01 AM   #37
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I have been fluctuating from about 90% cash to 90% equities for several years. ( went to cash mid December).For 2016, I will no longer buy these dips, but will sell any rallies as bear market rallies can be rather powerful.
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Old 01-07-2016, 10:07 AM   #38
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So what is up with China. Their market falling and driving our market
down.


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Old 01-07-2016, 10:22 AM   #39
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Why are these people investing in the stock market? if 3% drop in a couple of days is going to make them panic then they shouldn't be invested in equities.

Also shouldn't this advisor talk them out of the market if they can't handle volatility?
+1. Kind of like going to a Thai restaurant and being afraid that you'll get spicy food.
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Old 01-07-2016, 10:26 AM   #40
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So what is up with China. Their market falling and driving our market down.
It's the Yang which normally follows a period of Ying.
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