So what has your learnt from the past month?

[Meadbh]

Things I've learnt:

1. Beware of gurus without oversight
2. If you can't understand it, it's probably too good to be true
3. If experts can't understand it, it's definitely too good to be true
4. There are some real white collar criminals out there
5. Risk is inherent in the markets even if you do all the right things
6. A little regulation is a beautiful thing
7. I have nerves of steel (or at least alloy)
8. Cash flow is king
9. Gonna be slaving away for a while yet!

 

[WM]

I've learned

- I'm fine with volatility (we're down 30% or so), and DH is ok if he doesn't know the details
- It's important to check what your portfolio's doing more frequently than once a year, just so you know how it behaves
- We're probably going to want extra cash sitting around when we get closer to FIRE
- We may want to make our AA more conservative when we're withdrawing rather than accumulating
- I am definitely not a market timer. I prefer to stay with our DCA/AA plans rather than try for better returns by guessing the bottom

 

[NW-Bound]

and DH is ok if he doesn't know the details

Here, it's my wife who gets scared if I tell her.

Among my friends and family members, it is usually the husband who makes the investment decision (and hides the results ).

Was there a thread about which spouse or sex handles the investment process better?

 

[audreyh1]

There is somewhere, but it might have been more than a year ago. There were quite a few households where the wife manages the investments and the husband was happy not to know any details.

Audrey

 

[retire@40]

And I almost forgot...

I learned that selling all your equities right before a market drop and being 100% in cash is the smart thing to do in the short-term.

 

[Spanky]

What I have learned:
- ignore the mass and experts.
- trust your intuition - if a dark cloud (or a big storm) is in the horizon, be prepare to get out to preserve your capital.
- stop worrying about capital gains -- it's better to pay the 15% long-term capital gain than to see a loss over 40%. It's true that there is not a reliable way to estimate the decline in advance. However, the up side potential was limited toward the end of last year and the down side was almost certain though not to the extent that we have witnessed recently. A buy-and-hold strategy may strive over the long haul, but I do not live forever. It might take a very, very long time just to recover our losses.

 

[Delawaredave5]

I think most people are shocked by the depth of the drop.

But the "real ugly learning" that might remain to be seen could be the duration of a bear market - we could easily go sideways for 5 years.

I think there's a lot of people expect some "snap back" before year end - I wish, but....

 

[joesxm3]

I had not paid attention to my asset allocation after the dot com bubble popped and had a lot more cash than I wanted to when I woke up and took a look.

I had been in the process of ramping up the equity portion while the market was going up so I did not get a chance to reallocate out of equities during the market high period.

I am now reallocating into equities to try to keep my equity portion close to 60%. My "stated" equity target was 60% or 65%.

I think I learned:

1) That you should have a more clearly defined asset allocation statement.
2) That you need to harvest your gains by reallocating out of equities or other categories when they exceed your targets.
3) That I am ok with the risk level maybe because
3a) I still am working at a high paying job.
3b) I spend way less than I make and between cash and I-bonds I have about 7 years expenses, so I sort of figure if all else goes to zero I have a small nest egg to fall back on.
3c) I try to realize that money is not the primary factor in happiness. In fact I watched a ted.com video today that showed a graph of the real income over the past 60 years adjusted for inflation going steadily up, but the percentage of people claiming to be happy running flat at 30% all during that period.
4) That Investors Business Daily predicted to get out of the dot com bubble and also predicted to get out of this one. I did not listen either time. However, I am not sure if they go to cash a lot of other times given their momentum-based strategy - so they may have predicted twelve of the last three crashes.
5) That I can depend on the members of this forum for lots of good advice and help with learning about investing and with guidance on my save money home improvement projects.

 

[ejman]

I learned that Joe Dominguez, author of of Your Money or Your life wasn't as dumb as I thought when he said to put your entire nut in US Treasuries...

 

[harley]

I think most people are shocked by the depth of the drop.

But the "real ugly learning" that might remain to be seen could be the duration of a bear market - we could easily go sideways for 5 years.

I think there's a lot of people expect some "snap back" before year end - I wish, but....

This brings up a point I've been wondering about - do the large group of people on this forum really think that this crisis is unbearable and unmanageable? Or is this just the whining of some fairly spoiled brats who have had things going their way for too long? I mean, bear markets happen, financial meltdowns happen, people lose money (on paper and real) and homes, and basically, bad stuff happens.

But things recover. Eventually, sooner or later. I'm not that old (52), but I remember some pretty hard times, and definitely remember hearing depression stories from grandparents and other relatives. I guess I don't understand this "end of the world" attitude. Things suck right now. They've sucked before. Sometimes things are great. Now they aren't. If you use common sense and have a little intestinal fortitude you'll get through it, however long it takes. And I'm saying this as a ER with no pension who retired into the these bad times.

William Bernstein, in the 4 Pillars of Investing talks over and over about the big bad that comes along every generation or so. This appears to be ours. And I'm including the tech bubble, the housing bubble, and the current financial system ef-up as all part of our crisis. I'm not surprised at the MSM, the man on the street, the political pandering. However, I'm a little surprised that the people on this board, who I thought were head and shoulders above the crowd regarding investing and saving and LBTM are throwing out statements like "AA doesn't work", "zeo tolerance for loss", "30 years to recover", things like that. I understand the angst, but not the total desertion of the principals that were so strongly espoused just a few years ago, whether those principals were long term buy and hold, timing, cash, whatever.

Sorry for the rant, but this is all beginning to sound like the 9th grade after a pop quiz was announced. Life is still out there. Roll on.

 

[Spanky]

Sorry for the rant, but this is all beginning to sound like the 9th grade after a pop quiz was announced. Life is still out there. Roll on.

Harley,

Keep up the good spirit.

Spanky

 

[Dawg52]

Sorry for the rant, but this is all beginning to sound like the 9th grade after a pop quiz was announced. Life is still out there. Roll on.

Being down a few hundred thousand gives me a reason to bitch, IMO. I don't like it, and never will. But that's just me, I guess.

 

[Dog]

Trust my instincts. Back in 1999 and early 2000, wondered how friends and coworkers could get rich on tech stocks and day trading. I kept wondering how the stock prices could keep going up and up (yes, I had my etrade account with Cisco and Nortel stock too). Guess what - they don't!
Fast forward to the 2004 - 2008, how can so people afford the big homes, luxury cars, designer purses/clothing and exoctic vacations? Guess what - they can't!
Third times a charm - Next bubble I'll pay attention to my gut and adjust accordingly.

 

[Delawaredave5]

Life is still out there. Roll on.

Saw a great Harley Davidson bumper sticker today:

"Screw it, let's ride"...........

 

[P.S.]

do the large group of people on this forum really think that this crisis is unbearable and unmanageable?
Or is this just the whining of some fairly spoiled brats who have had things going their way for too long?

But things recover. Eventually, sooner or later.

However, I'm a little surprised that the people on this board, who I thought were head and shoulders above the crowd regarding investing and saving and LBTM are throwing out statements like "AA doesn't work", "zeo tolerance for loss", "30 years to recover", things like that. I understand the angst, but not the total desertion of the principals that were so strongly espoused just a few years ago, whether those principals were long term buy and hold, timing, cash, whatever.

I didn't get the impression from anyone's post that this downturn is either unbearable or unmanageable. I think it is clear from the posts that some thought they saw this coming and would have preferred to trust their instincts, what is called by the other camp as dirty market timing.

Whining and fairly spoiled brats are just opinions that you can freely apply as you wish; of the internet. In the world perspective, am I spoiled? heck yeah. i routinely read about the holocaust, poverty, abuse, and world demographics just to remember how good i have it.

Although i don't not think the AA works, I personally don't think any one thing works 100% of the time. And that includes AA. So I'm coming out of my financial closet. Works for me. Saved me alot of potential loss since 10/07.

And i don't think you have to be a card carrying proselyte of the 4 pillars to be a member and post on this board.
there are many ways to reach one's financial goal.
And even the goal can change. I first discovered this board when I was a new mom, a few weeks post partum, working. What normal mom relishes working at the first few weeks post partum time frame? Fast forward a few years, now i can't imagine ever not working, at least part time. And since my line of work pays well enough to live comfortably on PT pay, the goal is no longer super duper retire early but asset maintenance.

The pop quiz analogy is good. i would give myself maybe a 90% on this one. I hated B's in school. An A is best. And preferably 96-100%. So to me the argument of - if you're holding it's ok b/c in 30 y it will all work out, is like grading on the curve.
I don't care about the curve.

ETA: wait a second. 90% is too high, since I obviously fessed up to not following through. So change that to 80%.

 

[youbet]

Being down a few hundred thousand gives me a reason to bitch, IMO. I don't like it, and never will. But that's just me, I guess.

I'm with ya Dawg! This past few months has given me an outlook on things I just never quite experienced before!

 

[volga]

I learned I am a hero when the market is up, and a coward when the market is down. I am a yellow dog coward when a "black swan" event such as the hedge fund induced panic selling of the last few months turns every stock that has liquidity on the market into a nothing more than fodder for pawn without any reflection of intrinsic value. I am moving into a 10% stock 80% bond/cd and 10% real estate (REIT) position over the next twelve months, selling on market ralleys with the goal to get about even and stay there!

 

[hankster]

I've learned a lot of things about myself and what works for me.

Having very little debt, plus a good emergency fund, has been instrumental in my ability to sleep at night. I vow to make debt elimination a high priority going forward.

The best things in my life are mine to enjoy whether I am able to retire early or not.

Reducing the equities portion of my AA as retirement approaches will be an important part of my plan.

The "Panic of '08" will cause me to be ultra-cautious when planning SWR and cash reserves in retirement.

 

[Bestwifeever]

Harley, this board is about the only place that has any optimists (rearranging the deck chairs on the Titanic comes to mind)--in real life? Hah. I'm watching real people lose their jobs and their savings and struggle to get through and hearing real people from lots of different walks of life saying they hate the bailout but it was absolutely imperative. And I'm older than you, but if this is a pop quiz God help us when we have to take the final.

 

[NW-Bound]

if this is a pop quiz God help us when we have to take the final.

That's it. I am dropping the course and settle for an Incomplete.

But do I have to take it again? Do I have another chance (hint: something that the Hindu believe in)?

Seriously, I am hanging in there, trying to get a C. Yesterday, it looked like there's a chance I might get even a B-.

FireDreamer made a well-written post yesterday in "Other Topics" forum, that conveyed much of what I wanted to say.

 

[Sarah in SC]

Optimists rule! Because, hey, the alternative is gloom and doom, and heck, I can get that any time I pick up the phone at work!

 

[Bestwifeever]

I've always been an optimist to a fault, but have been having trouble keeping my chin up lately. I miss my optimism!!!

 

[haha]

I really don't think that much can be learned from any of this, other than the limits to reality are very wide. But this will once again be hard to remember when the herd is thundering upward.

Also, I guess you can learn to lighten up exposure if you feel that you are over your head. Beyond that, maybe "always keep some dry powder".

Whatever particulars we might learn from this, we will likely need to unlearn to deal well with the next situation. In my lifetime of investing, I thought I had learned to buy a security whenever it looked right-priced. But this lesson has turned out to be costly this time around. I'm not much for dithering, and this time that has worked against me.

I think it's much like the generals and the last war. Reality is a joker.

But God willing, we'll all feel fine before very long.

Ha

 

[newporttony]

1. always have cash as dry pwder
2. I am more willing to accept declines than I had thought
3. NOBODY can predict the future

 

[youbet]

. I miss my optimism!!!

I miss my money!