Poll:Given the past 3 years, what do you think of stocks?

[firewhen]

These are the facts:

By March 2009, the US stock market (and most of the world markets) lost over half its value. Less than 2 years later, almost all of that has been made up.

Does this make you feel better about the stock market (it always comes back) or

Worse given the volatility (less dependable asset class)

Given a long retirement, stocks will be a necessity, I am just not sure how to view the past 3 years.

 

[yakers]

Better, but not great and not as good as many years ago when PEs were lower.

 

[Westernskies]

I'm up 75% since Oct 26, 2008...
( However, some of the other snapshots don't look so good..)

 

[haha]

These are the facts:

By March 2009, the US stock market (and most of the world markets) lost over half its value. Less than 2 years later, almost all of that has been made up.

Does this make you feel better about the stock market (it always comes back) or

Worse given the volatility (less dependable asset class)

Given a long retirement, stocks will be a necessity, I am just not sure how to view the past 3 years.

Neither (essentially irrelevant data).

Ha

 

[REWahoo]

None of the above.

How I "feel" about stocks given the past three years makes no difference to the market and doesn't impact what I do - at least not very much. My allocation plan, based on my age (64) and my status (retired), says I should be somewhere around 35-40% equities and I am.

 

[inquisitive]

There have been many stock market crashes/depressions in the past, eg, 2000, 87, etc. This event should not have changed anyone's mind about it, the question is strategies for dealing with it. I think we also found out that diversification might not be a safeguard to this since there was a very high correlation between many other investments including commodities, real estate, world stock markets, etc. But even this has been the case in the past, high correlations during declines which are not present in bull markets.

 

[aaronc879]

I don't really like the stock market. After 10 years of investing, I don't think I have any more money than what I put in plus a small portion of what my employer put in. Over the last 10 years I would've been better off in CD's. I don't have detailed records to prove this but it seems to be the case for me.

I don't know if I heard it here or somewhere else but this is perfect for me: "I don't care about the return on my money, I care about the return of my money.

 

[dex]

These are the facts:

By March 2009, the US stock market (and most of the world markets) lost over half its value. Less than 2 years later, almost all of that has been made up.

Does this make you feel better about the stock market (it always comes back) or

Worse given the volatility (less dependable asset class)

Given a long retirement, stocks will be a necessity, I am just not sure how to view the past 3 years.

What would you question have been if this was Dec 1999?

 

[W2R]

None of the above.

How I "feel" about stocks given the past three years makes no difference to the market and doesn't impact what I do - at least not very much. My allocation plan, based on my age (64) and my status (retired), says I should be somewhere around 35-40% equities and I am.

I agree completely, but even though what I feel about stocks doesn't change my investing strategy, I still feel what I feel. And in my case, that's just great because I voted "Better, always comes back".

I feel more confident in my asset allocation and stronger should we have another market crash.

My net worth today is the highest it has ever been. Wow! What a surprise. Granted, I was still funneling money into my portfolio until I retired in November of 2009, but still I feel really good about the way my investments bounced back from then until now.

 

[kyounge1956]

These are the facts:

By March 2009, the US stock market (and most of the world markets) lost over half its value. Less than 2 years later, almost all of that has been made up.(snip).

Say what? Using the S&P 500 as a proxy for "the US stock market", the high was 1557.59 in the week of 10/1/07. From there it fell to a low of 683.38 the week of 3/2/09, a loss of 875.21 points, which, as you say, was more than half its value. But the index currently stands at 1259.78, so it is still only 80% of its high, and has made up 576.4 of the 874.21 points it lost. I'd call that a recovery of about 2/3 of what was lost, not almost all.

 

[CyclingInvestor]

Although I keep 100% in individual stocks, the market price swings of the past 3 years (or any other period) are of no importance to me. Much more important is that the stocks I invest in keep consistently growing their earnings and dividends, and keep allocating capital well (IMO).

The collapse of some sectors business model (banks, mortgage lenders) serves as a reminder to watch the companies you invest in, and to depart them when they become non-analyzable.

 

[novaman]

I don't really like the stock market. After 10 years of investing, I don't think I have any more money than what I put in plus a small portion of what my employer put in. Over the last 10 years I would've been better off in CD's. I don't have detailed records to prove this but it seems to be the case for me.

I don't know if I heard it here or somewhere else but this is perfect for me: "I don't care about the return on my money, I care about the return of my money.

You are right about the past decade, but I'm keeping my nose to the grindstone. Historically stocks have done a LOT better than that.

 

[bbbamI]

Hmmm...during many years of investing I didn't pay that much attention to the stock market as I knew it would go up and down. I just kept pluggin' along...staying the course.

When the stock market took the big dip I was rather concerned since DH would be retiring soon...but I didn't panic. When the portfolio 'came back', I realized we did not need such a large percentage of stock and changed our allocation.

IMO, there can be a difference in the 'tude' when you're young/working....and when you're older/retired.

 

[albundyz]

<<None of the above.

How I "feel" about stocks given the past three years makes no difference to the market and doesn't impact what I do....>>

I agree with this completely. Volitility is part of the stock market.

Nevertheless, it's very unfair for me to pontificate because I was able to "ride out" the 50% decrease in s/p 500. I'm sure some investors were either forced to get out of stocks due to a financial crisis or simply could not stand the pain any more.

Everyone has his/her breaking point. A better question would be "How close did you come to your breaking point?" How close did you come to bailing out?

 

[traineeinvestor]

I agree completely, but even though what I feel about stocks doesn't change my investing strategy, I still feel what I feel. And in my case, that's just great because I voted "Better, always comes back".

I feel more confident in my asset allocation and stronger should we have another market crash.

My net worth today is the highest it has ever been. Wow! What a surprise. Granted, I was still funneling money into my portfolio until I retired in November of 2009, but still I feel really good about the way my investments bounced back from then until now.

Likewise, it has not changed my views on the market - bear markets/crashes are buying opportunities. I'm old enough to have lived through the 1987 crash, the Asian crisis (1997 -2003), the tech bubble bursting (2000), SARS (2003) and the Great Financial Crisis (2007-8). All of these presented wonderful buying opportunities (although I successfully mismanaged some of them).

If another crash happens again, I hope I will have the discipline to take advantage of it rather than panic and sell out.

However, I do recognise the potential for a very long term decline in equity markets (e.g. Japan) and do not automatically assume that every decline will be followed by a recovery within a similar time period to what we experienced over the last few years. Our local Hang Seng Index is still well below it's pre-crisis levels in absolute terms and is also below its long term trailing and forecast earnings multiples.

 

[rescueme]

Three years is just under 10% of the time that DW/me have been investing for retirement (started in 1982).

Three years or a decade does not matter for folks that are long term investors, IMHO.

Looking at the period of 1/1/90 (the time I set up the IRA spreadsheet, even though investing years earlier) through yesterday's market close shows a gain over the 20+ year period of +8.90% for me, +8.06% for DW (she is more conservative).

This does not include annual contributions and it is just for our TIRA/Roth IRA accounts. Our respective 401(k) accounts had too much flux over the years due to different employer account managers and matching contributions. That makes it a bit more difficult to do an IRR when contributions include your own, the company's match (at different rates) and market return. All I know is we have much, much more than we had in actual contributions over the years.

Since 1990, we had three negative return years (2001,02,08). All others were positive; some more, some less.

We have never had an equity position of less than 50% (90/10 Equity/Bond-Cash in our accumulation years, 60/40 when I retired, to 50/50 today).

Just some info, from my personal tracking...

 

[haha]

Three years is just under 10% of the time that DW/me have been investing for retirement (started in 1982).

Three years or a decade does not matter for folks that are long term investors, IMHO.

It can matter quite a lot if you need to make regular withdrawals from the portfolio.

Ha

 

[rescueme]

It can matter quite a lot if you need to make regular withdrawals from the portfolio.

Ha

True. I've been retired since May 2007 and have been taking most my income from my portfolio (including taxes due), along with a small VA disability check (tax free) each month.

Looking at DW/my portfolio's as one (what is hers is hers - what mine is hers ) we are at a return of just over +1% since that time, even though drawing my income (including taxes) during that time, along with a car purchase (for my volunteer work).

Positive factors were her contributions to her 401(k) during that time (we stopped IRA contributions after 2008), along with the market uptick of just over the last year.

Negative factors were of course the downturn of 2008 and the big one being my funding my retirement expenses directly from my portfolio (not drawing SS till I'm 70, another 8 years).

Since our retirement expenses (calculated for both of us, since DW expects to retire early in 2011) come out to 66% me/33% DW, I've been spending the bulk of the expense money, since I cover all expenses related to our home/vehicles (e.g. insurance, taxes, upkeep, etc). DW uses her income primarily for travel (our highest expense item). She has no responsibility for any other expenses other than travel and personal items (e.g. clothes, gifts, etc.) When my DW starts hitting her portfolio next year, that will start drawing down our total joint portfolio, but will soon end when she gets two small pensions at age 65, her SS at age 66, me claiming 50% spousal SS benefit at age 66 (we're the same age), and of course my SS at age 70.

My graphs (using Fidelity's RIP tool) show the slight dip from ages 59 to 65, flatten out, and then start growing for the remainder of our retirement as our other income sources come on-line (at a 95 C.I.) Yes, I ran it through FIRECalc, and have no periods of failure (if you were wondering).

So far, plan is working as forecast at time of my retirement a bit over 3.5 years ago. That's all I can expect. If things change, so will we. BTW, the reason the downturn did not affect us was that we set up our respective retirement cash buckets (including forecast expenses and taxes due) and did not sell any fund holdings during the downturn. The shares were there to take advantage of the market rise - same as when they were there during the market fall. We don't sell during down periods - that's why the cash buckets were formed (with a 3-4 year level of cash needed, and added to during up years or superior returns - as GMNA was this past year). No need to be forced to sell at a bad time just because the market has a cold. And if we reach an extended period of time when the cash is used up? We still have our non-equity (e.g. bond) holdings as backup. Of course, the greatest risk to us is over the next two years - until Medicare, SS, and DW's pensions kick in.

 

[Texas Proud]

These are the facts:

By March 2009, the US stock market (and most of the world markets) lost over half its value. Less than 2 years later, almost all of that has been made up.

Does this make you feel better about the stock market (it always comes back) or

Worse given the volatility (less dependable asset class)

Given a long retirement, stocks will be a necessity, I am just not sure how to view the past 3 years.

You forgot "neither"....

 

[firewhen]

I guess the better question would have been will this recent experience change your asset allocation? We are about 90% equity, and during the worst of the crisis, I was thinking that RE was dead, or at least delayed an extra 10 years. I remember saying that if the market ever recovered I would take some money off the table. Now that it is recovering so fast, I am not sure if I will make any changes. If I do, it will probably be small and I am not sure when. I voted for better, and despite the huge drop, the Dow gaining 5,000 points in less than 2 years is reassuring to me.

 

[inquisitive]

Likewise, it has not changed my views on the market - bear markets/crashes are buying opportunities. I'm old enough to have lived through the 1987 crash, the Asian crisis (1997 -2003), the tech bubble bursting (2000), SARS (2003) and the Great Financial Crisis (2007-8). All of these presented wonderful buying opportunities (although I successfully mismanaged some of them).

If another crash happens again, I hope I will have the discipline to take advantage of it rather than panic and sell out.

However, I do recognise the potential for a very long term decline in equity markets (e.g. Japan) and do not automatically assume that every decline will be followed by a recovery within a similar time period to what we experienced over the last few years. Our local Hang Seng Index is still well below it's pre-crisis levels in absolute terms and is also below its long term trailing and forecast earnings multiples.

How can you take advantage of it? I you mean buying at the bottom one never knows when it is going to stop, and if you were invested before, then all of your funds are in the market when it dropped, right?

 

[DblDoc]

No change. I now know stocks can fall 50%, before it was just an intellectual exercise. I am at ~74% equities and will continue to dial down as I approach retirement.

DD

 

[DeborahB]

I'm really not afraid of what the stock market is doing. I think it will be higher in a year than it is now. Meanwhile my investment portfolio keeps growing so I must be doing something right... for me.

I hung on - perhaps too long - while the market went down. By the time I regretted that, I felt it was too late to sell out. I was a couple of years from planned retirement. So I rode it out... sigh.

As the market moved up, I came up with some cash and made some investments, took some risk and made out very well over all.

I was not happy with how the mutual funds recovered and have now sold almost all. I inherited some bond funds that are yielding 6%+ so I'm hanging onto them for now. The stock funds have been replaced with dividend paying stocks. So far it's working.

I'm not really worried about the stock market. I like having individual stocks and managing them myself with my broker doing some background checking for me. I also like buying bonds on the secondary market, that are investment grade but just barely - so they sell at a big discount. So far I haven't gotten burned. I only buy bonds that are maturing in 1 - 5 years.

So far I am not comfortable with options - I just can't get my head around them despite trying - so I don't invest that way. I'm in a buy and hold and collect the dividends mode.

I am definitely someone who isn't afraid of risk, as long as it's a calculated risk. For a while I was day trading tech stocks and some other stocks (before the crash) but after being VERY burned a couple of times, I felt that I had learned a lot and moved on......

I treat investing as a learning experience. I enjoy it. I know a lot of people don't but I do. I don't worry about asset allocation. I am careful to stay diversified in terms of industry or sector. I just bought BMY and T today because they represented some areas I didn't own (or not much of). They pay dividends and I think they'll rise over the next year. If they go down past some point I'll know when I see it - I'll sell them and move on.

So - that's what I think of stocks!

 

[Alan]

No change - sticking with my AA plan which now has me at 35% equities.

I've only been saving and tracking the returns since '95 and everything I had read said there would be big swings, but living through them is a real test of your faith in the wisdom that history sort of repeats itself, but not in a predicable way (at least not to this poor mind).

As for my personal situation, the first 5 years were very positive returns, then 3 years of losses, followed by 5 years of gains followed by the single worst loss I've had and now 2 years of very good gains.

I'm pleased to be at only 35% equities these days (retired) with a big enough cushion to ride out losing streaks and still believe in the long term future for equities.

 

[packrat44]

Over the last several years I wish I had been in the accumulation rather than the withdrawal stage of life.

When the dip occurred I halted withdrawals. At the present withdrawals are limited to what is needed to cover taxes.