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Old 03-18-2012, 02:51 PM   #41
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From being so happy that we no longer have to watch our friends on the board freaking out, selling all, going to cash, and returning to work? I just love the fact that for once we can all be happy and not worry so much. We know the market goes down as well as up, but this respite can hopefully allow us to renew our strength and come back stronger during the next dip.
Very good point W2R! Maybe I'll quit cringing when you "wheeee....".

Audrey
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Old 03-18-2012, 02:53 PM   #42
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2008-2009 was a great time to be still working or receiving an unexpected windfall not so great for we recent retirees but we all bounced back and are enjoying retirement . !
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Old 03-18-2012, 03:12 PM   #43
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Very good point W2R! Maybe I'll quit cringing when you "wheeee....".

Audrey
Thanks, Audrey.
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Old 03-18-2012, 03:13 PM   #44
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Based on my personal experience I suspect you are correct. My gut and my mind were severely conflicted during those dark days but I knew the only chance I had of not being like one of those folks in the article was to ride it out.
I can't imagine what it must have been like retiring shortly before 2008!

I remember too well retiring in 1999. By some miracle, I had decided to average my investment sum into the market for 2 years starting in 2000, being quite nervous about the 1999 levels (1 year is usually the max recommended). This kind of got stretched out as the market kept dropping 2001-2002. I hadn't lost money in 2000 or 2001, but by 2002 my portfolio was dropping. Oct of 2002 is when I had my last chunk to invest, and it took all my teeth gritting and determination to just do it. I did. And what a relief when everything started to turn around in 2003. Whew!

By 2008, my portfolio had grown a great deal since 2000, so getting whacked - even though harder than in 2000-2002 - didn't seem nearly so bad, because I was starting from much higher levels.

Still - I ended up rebalancing 3 times as the market dropped though 2008. Ouch! Talk about catching falling knives! By the end of 2008/March 2009 I couldn't rebalance anymore because I had reached my "limit" in terms of min cash+bonds amount I felt I had to hold in my portfolio in case things stayed down for a long time. Again - that last rebalance felt like squeezing blood from a stone - it was so hard to do!

Afterwards, I was rewarded. I did widen my rebalance tolerance limits though - I don't like to rebalance often.

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Old 03-18-2012, 03:23 PM   #45
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Still - I ended up rebalancing 3 times as the market dropped though 2008. Ouch! Talk about catching falling knives! By the end of 2008/March 2009 I couldn't rebalance anymore because I had reached my "limit" in terms of min cash+bonds amount I felt I had to hold in my portfolio in case things stayed down for a long time. Again - that last rebalance felt like squeezing blood from a stone - it was so hard to do!
(emphasis mine) That's for sure! I bought equity funds three times in late 2008 but then by March 2009 I was emotionally exhausted - - all I could bring myself to do, was stay unbalanced and use some cash to buy bond funds. Even those turned out to be a worthwhile move, though.

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Afterwards, I was rewarded. I did widen my rebalance tolerance limits though - I don't like to rebalance often.
For me, part of the reason why I rebalanced three times in Oct-Dec 2008 was that I was too scared to do it all in one step. I'd buy as much as I dared, thinking I had made great progress in rebalancing and then the market would drop more. I wasn't completely rebalanced until after the third one.
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Old 03-18-2012, 03:36 PM   #46
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This is an interesting premise. If someone went from $1,000,000 to $600,000 this means they had a 40% loss. To get a 40% loss would mean they held at least 80% equities. If one is just about ready to pull the plug, what are the chances they held 80% in equities?
Easily done without having 80% equities! From Oct 2007 to March 2009, Wellesley went down 27%, and Wellington down 40%. Dodge and Cox Balanced Fund, a fund spoken well by Bogle himself, went down 55%.

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...but the folks who did not, do not have regrets or they are not telling.
Yes, I regret not going all in at the bottom.

At least, I regret selling some stocks I bought at the bottom too soon, way too soon.

Still, before we pat ourselves on the back and claim how courageous we were, we need to remember that history often repeats, and we may be tested again before we get interred. My hope is at that time, I will be older and may not care as much if I get poorer.
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Old 03-18-2012, 03:40 PM   #47
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Retired on schedule in March 2009. I don't invest in equities though.
+1, only I retired August 2009.
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Old 03-18-2012, 03:59 PM   #48
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Easily done without having 80% equities! From Oct 2007 to March 2009, Wellesley went down 27%, and Wellington down 40%. Dodge and Cox Balanced Fund, a fund spoken well by Bogle himself, went down 55%.
That's true - bond funds got hit hard too. DODBX had eschewed US treasuries in 2008, in favor of corporate bonds. Ooops! The only assets that were unscathed were cash, US Treasuries and US Government-backed bonds. But fortunately the fixed income side of the equation recovered very quickly! Whew!

DODBX was down 33.6% in 2008, and up 28.4% in 2009 (which means at end of 2009 is was down 15% from end of 2007. By end of 2010, it was down 4% from end of 2010. It really doesn't do much good to look at peak and trough, although obviously people do it all the time. But that's super selective and really doesn't help with investing. Unless people went all into the market in October of 2007, they shouldn't use that as their benchmark!!!!!!!

Anyway - I think the people talking as if the 40% loss was permanent are people who cashed out at the bottom.

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Old 03-18-2012, 04:05 PM   #49
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Anyway - I think the people talking as if the 40% loss was permanent are people who cashed out at the bottom.
I guess it was for them. It breaks my heart to hear these stories.
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Old 03-18-2012, 04:09 PM   #50
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It really doesn't do much good to look at peak and trough, although obviously people do it all the time...
I look at my portfolio every day. Some people do not, either because they are afraid, or because they don't care. I do look, because I care and also because I want to see the market bottom so that I can time it rebalance.

If one owns DODBX and happens to look, it is a rare soul to say that he/she wasn't scared by the 55% drop.


PS. I own a bit of DODBX, and did not even know that it dropped that much until later. Why? I was too busy watching other individual stocks dropping much much more. Caterpillar went from 80 to the low 20s! Yes, a much more severe and insane drop. Well, CAT is at 110+ now. Dupont went from 50+ to below 20. Dow Chemical went from 40+ to 7. Boeing, from 100+ to 40+, etc...

PPS. Most of the above have rebounded. The real losers were of course the previous high-flying financials, many of which got wiped off the map. Gone!
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Old 03-18-2012, 04:15 PM   #51
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The only change I made was to change my portfolio from a 70/30 AA to something closer to 60/40... but didn't do so until I recovered most of the losses.
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Old 03-18-2012, 04:22 PM   #52
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I look at my portfolio every day. Some people do not, either because they are afraid, or because they don't care. I do look, because I care and also because I want to see the market bottom so that I can time it rebalance.

If one owns DODBX and happens to look, it is a rare soul to say that he/she wasn't scared by the 55% drop.


PS. I own a bit of DODBX, and did not even know that it dropped that much until later.
M* says DODBX total return (sic) dropped only 50%, so maybe there was 5% of dividends in there if the NAV dropped 55%. Some solace, but not much.
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Old 03-18-2012, 04:42 PM   #53
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I look at my portfolio every day. Some people do not, either because they are afraid, or because they don't care. I do look, because I care and also because I want to see the market bottom so that I can time it rebalance.

If one owns DODBX and happens to look, it is a rare soul to say that he/she wasn't scared by the 55% drop.
Sure, people look at their portfolio everyday. But to ONLY compare it to Oct 2007, so that you get the absolute worst comparison - that's dumb IMO, unless you went from cash to a DODBX purchase or other another investment precisely in Oct 2007 and no other time.

And if you are looking at your portfolio everyday, you would realize that it had recovered, unless you were still sitting in cash after you sold out at the end of 2008 or in March of 2009.

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Old 03-18-2012, 05:07 PM   #54
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BEFORE 2008: had 55/45 with buy-hold plan and some active funds, sold no equities in decline

AFTER 2008 debacle:
1) recognize I was really the almost always buy-hold type
2) rebalanced to fill up on stocks in July 2009 using index ETF's only
3) moved to 65/35 AA (more equity)
4) plan is fully spreadsheet driven, no gut instinct calls, clear buy/sell criteria
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Old 03-18-2012, 05:16 PM   #55
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IIRC I was 100% stocks in my 401k before, during and after 2008. At that time I was sort of planning to retire at 58 or 59. In early 2011 I changed my AA to 60/40 then FIRE'd at 55.

I, too, reached an all time high recently in my 401k.

I remember watching the 401k go down and thinking "bummer" then I watched it go back and said "wheeee!". Ignorance was bliss. Not sure how I will do next time, now that I know more.
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Old 03-18-2012, 06:11 PM   #56
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The market gives, and then the market takes the next day. Whether one looks at his portfolio everyday or not, to keep cool in order to avoid fear at market bottoms, one must also try not to rejoice too much at market highs. But how many of us can keep from doing that?

People who can still post here to brag about our performance tend to be the type to have survived from the debacle of 2008-2009 (I have also more now than at the previous market high in 2007). But we also have a collective short memory to not remember how we were shaking in our boots back then. Makes me almost wish the market would tank to see how people would react again.
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Old 03-18-2012, 06:14 PM   #57
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All of this talk about net worth setting new highs makes me very nervous. When investors start thinking the good times are finally here is when the market seems to correct itself.

In every other downturn I have pretty much watched passively as the market plunged. In 2008-2009 I had some cash in my accounts standing by that I moved from stocks because the market was so hot. I bought index funds three times going down. I remember thinking that the market won't continue going down much further than this. But it did. Of course it did come back. But I should have been more patient about putting more money in in retrospect.

My wife has a cousin that, I kid you not, got out near the bottom. Said something about not being able to afford to live if all his investments went to zero. I need to call him soon to see when he intends to get back into the market. That will be the time to get out.
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Old 03-18-2012, 06:18 PM   #58
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I remember all too well that sicky feeling in late 2008. That's why I try to have a preplanned buy and sell discipline -- 2008 reminded me about the sell side.
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Old 03-18-2012, 06:42 PM   #59
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All of this talk about net worth setting new highs makes me very nervous. When investors start thinking the good times are finally here is when the market seems to correct itself.
My theory is that there are some folks "upstairs" with the lab coats and clipboards peering at the "experiment" and saying something like "hmm they are getting giddy again, Sam - turn that knob a little to the left will ya?"
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Old 03-18-2012, 07:31 PM   #60
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I retired in 2006. The stock crash was a non-issue for our assets because we were so conservatively invested. However,

... the big drop gave my former employer the cover to drop retiree health insurance subsidies. We got the letter when my wife was on chemo. That cost us $50-$100k.

... the terrible job market plus serious health problems hit multiple family members. We've ended up helping people that we expected to be self-supporting.

OTOH,

... I had a non-COLA'd pension. Lower than expected inflation rates have been good to it.

... a former colleague called and asked if I was interested in a short term consulting job. That was an ego booster, and it paid for the money lost on health care.

The moral here is that you can have the assets all set up to weather the storm, but stuff happens anyway.
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