Join Early Retirement Today
Reply
 
Thread Tools Search this Thread Display Modes
Old 01-07-2016, 10:33 AM   #41
Recycles dryer sheets
 
Join Date: Jul 2015
Location: Beaverton
Posts: 286
Quote:
Originally Posted by W2R View Post
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.


Very wise caution for us, IMO.

You don't think the George Soros is buying short? He is set to ride the downturn so he wants to stoke fears and make money. The guys is a leech on society.
__________________

__________________
Bir48die is offline   Reply With Quote
Join the #1 Early Retirement and Financial Independence Forum Today - It's Totally Free!

Are you planning to be financially independent as early as possible so you can live life on your own terms? Discuss successful investing strategies, asset allocation models, tax strategies and other related topics in our online forum community. Our members range from young folks just starting their journey to financial independence, military retirees and even multimillionaires. No matter where you fit in you'll find that Early-Retirement.org is a great community to join. Best of all it's totally FREE!

You are currently viewing our boards as a guest so you have limited access to our community. Please take the time to register and you will gain a lot of great new features including; the ability to participate in discussions, network with our members, see fewer ads, upload photographs, create a retirement blog, send private messages and so much, much more!

Old 01-07-2016, 10:34 AM   #42
Give me a museum and I'll fill it. (Picasso)
Give me a forum ...
Mulligan's Avatar
 
Join Date: May 2009
Posts: 7,376
Quote:
Originally Posted by papadad111 View Post
Turn off CNBC...

Corrections are normal and healthy. This bull is old. We've had 1 official 10% correction since 2009 - corrections often renew and refresh the bull. Bulls usually end with a whimper. Was 2015 the whimper? Maybe.

We are only down about 11% from the highs of 2150 SP500. At least another 10% to go before we enter a bear. 1700 is SP500 bear territory.

It's perhaps more painful because 2015 was flat and then finished negative (-1% real return) thus doesn't feel good from a sequence of returns standpoint. And we've been up a lot since 2009

Remember you have to break to rally and rally to break.

Even if we have another 7 years ...but this time it goes down and down not up and up ... we are already a year into it so only 6 to go ! Where she stops, nobody knows...

This is it in a nutshell, Papa.... People only have 2 memories...The unusual calmness of the market the past several years, and the crash itself... The natural historical gyrations of a market are not well remembered.


Sent from my iPad using Tapatalk
__________________

__________________
Mulligan is online now   Reply With Quote
Old 01-07-2016, 10:37 AM   #43
Recycles dryer sheets
 
Join Date: Apr 2011
Location: Castro Valley
Posts: 400
My plan was to roll over my former employer's 403b to a Vanguard IRA at the beginning of the year. Now I'm a little nervous about selling everything and purchasing a new portfolio. I know that in a way it's just re-balancing.
__________________
jkern is offline   Reply With Quote
Old 01-07-2016, 10:49 AM   #44
gone traveling
 
Join Date: Oct 2007
Posts: 1,135
Quote:
Originally Posted by Sittingduck View Post
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.

Don't let it scare you. I too am a recent FIRE. I struggle with money jitters too. It's normal.

I keep reminding myself that having the cash for X number of years of basic expenses will get me through most "correction" and "recession" phases and maybe even a DEPRESSION phase.

That X factor is different for everyone. For some it's a year. For others it's 2-3 years and for yet others it's even more...7 or 8 years in cash not unheard of.

For me I'm about 20 years out from an SS check, and no pension what so ever. Plus hopefully a long many year retirement ... So by comparison I'm on the riskier end of the spectrum.

I like holding on the longer end of basic cash needs.. I hate bonds these days so my bonds are cash ...

But I need equities to offset inflation and best to snap up bargain when the market falls 15-20 percent. History says it pays off most of the time.

Without new money, you can't do that other than reducing cash- so just sit tight.
__________________
papadad111 is offline   Reply With Quote
Old 01-07-2016, 10:54 AM   #45
Recycles dryer sheets
 
Join Date: Jan 2014
Location: Austin
Posts: 495
Now that I'm living off my investments instead of contributing to them, I feel like I just stumbled upon a huge sale and left my billfold at home
__________________
ER'd 6/1/2014 @ age 53. AA=70/30, WR=3%
Looking4Ward is offline   Reply With Quote
Old 01-07-2016, 11:16 AM   #46
Thinks s/he gets paid by the post
 
Join Date: Sep 2006
Posts: 1,689
I think most reactions of the average person are actually understandable, the panic is never at the start of a decline, there is the benefit of being at a top, being able to crow about how good the market is for your portfolio and how all other declines have been erased away and all is good.

But for newly retired with a million dollar portfolio with a 75% stock allocation ----because you have read the academic studies and know stocks are best for the long run and all declines are eventually recovered --- you offset your aggressive posture by only drawing a conservative 3% from it look what happens in a two year bear market of 20% the first year and 50% slide in the second year in a zero rate environment to the investee

Start 750K stocks 250K ST Bonds
Bear Y1 615K Stocks 175K ST Bonds (includes 30K withdrawal) after rebalancing
Bear Y2 307K Stocks 145K St Bonds (before rebalancing)

It is at this point in year 2 that realization hits the retiree that their retirement even with a very conservative withdrawal rate is in severe trouble and has doubts about rebalancing right when the market is probably bottoming. Why because the withdrawal rate is now almost 6.6 percent and they doubt they are going to make it through retirement. This is the reality causing Bernstein to switch to a 20 year cash cushion in his recommendation for retirees. Declines of the year one variety are not that scary as the withdrawal rate doesn't even get to 4 percent and rebalancing is very helpful when the market recovers. Most investors are prepared and easily handle a year one type decline, which are the most common, not the second scenario, which while much rarer is the cause of most portfolio destruction and why average investors don't get market based returns over the long run.

So when I hear on CNBC as they have been stating -- don't panic at the start of a decline, you almost never hear that at the end of a decline because the same people who listened to the academics saying don't panic now have an insufficient amount on which to count on their retirement, which is of course a good cause of concern. Of course this causes the academics, such as Bernstein, to reevaluate their positions to handle the latest data.
__________________
Running_Man is offline   Reply With Quote
Old 01-07-2016, 11:23 AM   #47
Thinks s/he gets paid by the post
 
Join Date: Jan 2008
Posts: 1,495
See this:

https://blog.wealthfront.com/no-need...t-corrections/

Specifically:

Quote:
Individual investors react very poorly to stock market corrections. Many individual investors sell when the market declines out of fear it will never come back. The data, which we will present in this post, actually says the opposite. Not only will the market come back, but it will do so a lot sooner than you might think.
and

Quote:
There is very little about investing that makes intuitive sense. You’re better off investing in a falling market than a rising one. You should sell your winners and buy more of the losers. You can’t time the market. Ignoring market corrections and bear markets is yet another example of an investing best practice that just doesn’t feel right. But just because it doesn’t feel right doesn’t mean you should do the wrong thing. The data is just too clear to ignore.
Emphasis added
__________________
Options is offline   Reply With Quote
Old 01-07-2016, 11:28 AM   #48
Thinks s/he gets paid by the post
 
Join Date: Mar 2010
Posts: 1,648
Everyone has their own comfort level. After 2008, I decided to do a bucket type strategy. What I have in the stock market in equities is there for the long haul, hopefully never having to touch it. It is there is help combat inflation. The rest is outside the market in cash and Certificates of Deposit which equates to 65% of investable assets. Gone are the days of the 5% and 4% CD's of 2008/2009. I still have some of those but those are coming due this November. Luckily I was able to get in on the Pen Fed 3% offer a year or two ago, with 3 or more years left. (Thanks ER forum!!) I just routed another $200K to a 2% 5 year offer by Langley FCU/3 month interest penalty. Was tired of $$ sitting in a bank doing nothing. The way I figure it, in 3 months, if rates go up and there are better CD offers, I will take the penalty and reroute having lost zero.

What is important to me is I have a floor of assets getting "something" that market gyrations can't touch. If I am not mistaken Bernstein talked about "building your floor". Might have to reread "4 Pillars of Investing".

Back to the OP's concern. The above is what helps me sleep at night and put blinders on to what is now going on in the market.
__________________
sheehs1 is offline   Reply With Quote
Old 01-07-2016, 11:38 AM   #49
Administrator
W2R's Avatar
 
Join Date: Jan 2007
Location: New Orleans
Posts: 38,846
Quote:
Originally Posted by sheehs1 View Post
If I am not mistaken Bernstein talked about "building your floor". Might have to reread "4 Pillars of Investing".
Despite being more than just a little bit tedious, I managed to carefully plow through read every word of the "4 Pillars of Investing" not just once, but twice some years ago. This book did me a tremendous amount of good.
__________________
Already we are boldly launched upon the deep; but soon we shall be lost in its unshored, harbourless immensities.

- - H. Melville, 1851
W2R is offline   Reply With Quote
Old 01-07-2016, 12:00 PM   #50
Recycles dryer sheets
Christine's Avatar
 
Join Date: Dec 2014
Posts: 155
It's Popcorn Time. Entertaining to read all the news stories. I placed a small buy order yesterday. Will place another a bit larger in a few weeks if the red numbers continue.
__________________
Christine is offline   Reply With Quote
Old 01-07-2016, 12:01 PM   #51
Full time employment: Posting here.
 
Join Date: Aug 2013
Location: North
Posts: 709
I rolled over an old 401k to my VG account and had it sitting in MM. Glad I did that back at S&P2050. I will disperse it against my AA as soon as tomorrow.

I made the mistake of pushing to bonds in 2008 and it hindered some growth, but at least I was still in the game. This (and every future downturn) I will be sticking to AA.
__________________
AA (Stock/Bond/Cash ): 99/0/1% MIX (Small/Mid/Large): 50/25/25% BLEND(US/Foreign): 100/0%, (Value/Growth/Blend): X/X/X% REIT (Real Estate Equity): 50% of Assets

FIRE in 2031 @ 50yrs old (+/- 2yrs) w/ a hypothetical $2.5mil portfolio, 3 appreciated homes worth $1.0mil and rental income to fund my gap years until RMD. Assets will go to an inherited IRA where I plan on watching the investments grow until I die or the trust gets executed.
kgtest is offline   Reply With Quote
Old 01-07-2016, 12:03 PM   #52
Give me a museum and I'll fill it. (Picasso)
Give me a forum ...
Mulligan's Avatar
 
Join Date: May 2009
Posts: 7,376
Quote:
Originally Posted by Christine View Post
It's Popcorn Time. Entertaining to read all the news stories. I placed a small buy order yesterday. Will place another a bit larger in a few weeks if the red numbers continue.

How can you sit there all relaxed when "eternal optimist" Marc Faber just said today S&P is going to drop 20-40% in next 6 months...Sell, sell, sell.


Sent from my iPad using Tapatalk
__________________
Mulligan is online now   Reply With Quote
Old 01-07-2016, 12:17 PM   #53
gone traveling
 
Join Date: Oct 2011
Posts: 156
Farber is awful!


Sent from my iPhone using Early Retirement Forum
__________________
Moneygrubber is offline   Reply With Quote
Old 01-07-2016, 12:31 PM   #54
Recycles dryer sheets
 
Join Date: Aug 2015
Posts: 340
I am sitting tight, it may lead to more losses but selling at panic will mean to accept the loss. Mark Faber and Peter Schiff has always predicted DOOM. When markets are down (it happens every few years in cycles, sometimes the cycles are prolonged) they point out: see I WAS RIGHT.
__________________
VFK57 is offline   Reply With Quote
Old 01-07-2016, 01:08 PM   #55
Recycles dryer sheets
Christine's Avatar
 
Join Date: Dec 2014
Posts: 155
Quote:
Originally Posted by Mulligan View Post
How can you sit there all relaxed when "eternal optimist" Marc Faber just said today S&P is going to drop 20-40% in next 6 months...Sell, sell, sell.
By all means - let Mr Farber sell all he wants!

I'm not that relaxed either - struggling with some big issues - like hot chocolate or tea with my afternoon snack?
__________________
Christine is offline   Reply With Quote
Old 01-07-2016, 01:36 PM   #56
Thinks s/he gets paid by the post
Lisa99's Avatar
 
Join Date: Aug 2010
Location: The Villages
Posts: 1,327
I volunteered to be laid off and that is happening on Monday.

I know that the market isn't doing great but I'm not reading the paper or watching the accounts any more than normal.

Knowing that I was leaving we've been stockpiling cash. We have about 1.5 years in cash so we shouldn't have to sell anything in the near future.
__________________
Lisa99 is offline   Reply With Quote
Old 01-07-2016, 01:48 PM   #57
Recycles dryer sheets
lem1955's Avatar
 
Join Date: Mar 2007
Posts: 124
Send a message via Yahoo to lem1955
Just retired last week and I would have preferred to see the market tick up instead of down. But I know better than to panic. I have 2.5 years of expenses in cash and CD's. I had planned to buy another CD for 2018 this week, but I'm thinking I'll sit tight for a little while. Maybe CD rates will bounce up a little in a few months! I have another small 403(b) to move to Vanguard at the end of the month. I plan to stick to my AA 60/40 stock/bonds&cash and use that to rebalance. Glad you guys are all here to provide moral support.
__________________
Retired 12/16/2015 at 60.
lem1955 is offline   Reply With Quote
Old 01-07-2016, 01:49 PM   #58
Recycles dryer sheets
 
Join Date: Mar 2013
Posts: 260
About all I do is not check balances on accounts as much. I am now officially in my final year. My job is being excessed 12/31/2016. A bad thing? No, I was planning on retiring 2/1/2017 and now they are going to pay me a healthy severance to retire a month earlier than I planned to. Worst case, I think of this bonus severance as a huge cushion to soften a (potential) fall. Best case, it is some Caribbean travel and maybe a sports car.... and boost to the balances. I agree with most. Like a roller coaster, shut your eyes, hold on time, scream if you want to, but just hang on for the ride....
__________________
doneat54 is offline   Reply With Quote
Old 01-07-2016, 02:09 PM   #59
Thinks s/he gets paid by the post
robnplunder's Avatar
 
Join Date: Nov 2013
Location: Bay Area
Posts: 2,124
I have 1+ year of cash to dip into, and 8 year worth of bond funds I can dip into before I panic sell my stock investments. SS kicks in after the 8th year of stock market downturn. Me, worry? Nah.
__________________
Pura Vida
robnplunder is offline   Reply With Quote
Old 01-07-2016, 02:10 PM   #60
Full time employment: Posting here.
hesperus's Avatar
 
Join Date: Aug 2013
Location: colorado
Posts: 520
I am fortunate in that my portfolio size allows me to keep my allocation above 75% equities, and this still generates more than enough income from S&P dividends (2%) to cover all our expenses, with leftover cashflow that I continue to reinvest. I also still hold almost 8x annual expenses in cash (GE Capital @ 1%) that I have been averaging into the market since 2015. As I average into these pullbacks, I feel comfortable stopping when our cash reserve hit 4x annual expenses. The tipping point for me was when the portfolio got substantial enough to never have to draw down principal, while still being able to reinvest most dividends. So when these pullbacks happen, yeah, I don't like seeing it, but I start to look forward to putting more cash to work and increasing that cash flow.
__________________

__________________
hesperus is offline   Reply With Quote
Reply


Currently Active Users Viewing This Thread: 1 (0 members and 1 guests)
 
Thread Tools Search this Thread
Search this Thread:

Advanced Search
Display Modes

Posting Rules
You may not post new threads
You may not post replies
You may not post attachments
You may not edit your posts

BB code is On
Smilies are On
[IMG] code is On
HTML code is Off
Trackbacks are Off
Pingbacks are Off
Refbacks are Off


Similar Threads
Thread Thread Starter Forum Replies Last Post
Your behavior during latest market downturn ? frayne FIRE and Money 96 11-07-2014 11:53 AM
Has the downturn stopped anyone from ER nun FIRE and Money 44 01-23-2008 06:47 AM
Cash is king in the real estate downturn Orchidflower FIRE and Money 19 01-17-2008 10:07 PM
Japan - Their 20 year Downturn and their Investors............. Cut-Throat FIRE and Money 30 10-31-2005 04:13 AM

 

 
All times are GMT -6. The time now is 07:23 AM.
 
Powered by vBulletin® Version 3.8.8 Beta 1
Copyright ©2000 - 2017, vBulletin Solutions, Inc.