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Old 03-18-2012, 07:35 PM   #61
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Hi Independent, isn't that called "collateral damage"?

Something we should all be concerned about.
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Old 03-18-2012, 07:43 PM   #62
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Having seen my portfolio killed in the 1999 crash where several of my stock holdings went belly up, in 2008 I was mostly in mutual funds and my allocation was about 70% in stock funds. As Oct 2008 approached, I saw the numbers dropping and moved a good portion of my money into the money markets. In March 2009 jumped back into the stock arena. However, I went back to stocks and into a bunch of dividend stocks which were some good buys at that point. I am not sure how long it took to recoup but I definitely have.

One change since 2008 is that I shifted my allocation to somewhat less stock, more bonds and cash, 60:20:20. I am still working on how much I want to maintain in individual stocks and how much in mutual funds. Since I am still working, I have no choice in my 401K but to put the money into funds, and limited to the choices that my employer chooses.

Another decision I made in late 2008 was to remain at a job where I was pretty miserable to gain a bit more on the pension I had already accrued. Unfortunately, the misery was never-ending and I finally left in mid 2010 to a less stressful job that only has a 401k. Hence the 2 more years...

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Old 03-18-2012, 07:58 PM   #63
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The crash tossed me out of an extremely lucrative job that was extremely hard on me and my family (not to mention my marriage). It was a blessing in disguise. I found a job after 3 months in limbo and invested aggressively (including borrowing money to invest) near the bottom to recoup my losses. The new job was OK but came with lots of bureaucracy. However, it lead to an opportunity to transfer to a vastly better job in my dream location that I intended to ER in (and they paid for the move). In retrospect, it was a blessing in disguise.

As a result of the crash I keep a much bigger e-fund. I also am more enamored of selectively chosen junk bonds. Those are about the only changes I have made.
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Old 03-18-2012, 08:55 PM   #64
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I retired in Jan.2008 and was ready to pull the trigger on selling several times . I did sell a tiny portion pretty close to the bottom but I held tight with the rest . It was a real test of my sanity . I have re cooped all of my lost money and next time I hope to have the strength to totally ride it out .
One of these days will do a proper introduction. For now, want to send on a thanks to Moemg and E-R generally. This is my story - which is, basically, the story of "Every" man (lady in this case) meeting up with E-R and what then happens financially.

With the security of a coming pension, I was 100 percent in equities until October 2007 when finally managed to adjust the 401K to a "temporary" retirement allocation of 60 percent equities - 40 percent cash equivalents. Doing that took about 30 minutes, which - except for lurking on E-R - seemed like all the time I had to spare back then. Retired in April 2008 with a separate, substantial account of inherited stock to manage.

E-R reading encouraged me to insist - still competing time demands - on devoting a month (June 2008) to get to a point where financial decisions made during the turmoil that I feared lay ahead would be my own. Luck or not, that led me, against "advice," to maintain the 60-40 allocation during the sell-off for the 401K thus "locking" in the profits on the 40 percent converted to cash. The 401K stays at 60-40 today.

About half the inherited stock I sold high wanting greater diversification then held the proceeds in cash as the market plunged. The other half, well, fell. Not happy. One day I saw the post from Moemg about her decision to sell some equities low and it just clicked albeit with E-R caveat that a low sell had to be accompanied by a low buy. So I sold and waited. How long?

The tenor of most articles, guru "advice" by spring 2009 was not positive to say the least. Remember Suze Orman and Jim Cramer in particular saying sell, sell, sell (seemingly for any money that you might need in the next decade).

Based primarily on *my* interpretation of the "general sentiment" here on the forum, I put my money - pun intended - on a sharp uptick. Felt that the composition (i.e., financial sophistication) and size of the forum was such that it might be a reasonable proxy for the decision making by institutions and the like that would drive a stock market recovery. Yes, there was some E-R dissension. One poster whose name I have forgotten - believe he's no longer here - struck me as particularly persuasive.

So that March morning of 2009 when the market first moved up 300 points I cancelled my plans and stayed home. And bought Vanguard equity funds. Was finished by noon. (The remainder of the inheritance trickled in over the next two months.)

My point is that this post is being written by a someone who post-kid had long since developing stopped much in the way of financial acumen and just dumped money into equities within a 401K. Even the 2000-2002 dip barely registered. The primary determinant of my Great Recession decision making was what I read and digested here.

You all done me good.
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Old 03-18-2012, 09:00 PM   #65
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It was horrible. In February 2009 I was forced to rebalance, AND I had to do tax loss harvesting. My personal investment plan required this. (OK, what I'm really saying is that having a written plan, drawn up outside of a potentially emotional, if not frightening crisis, is a really good idea.)

The good news is that I doubt I'll ever have to pay capital gains taxes, with that loss booked.
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Old 03-18-2012, 09:38 PM   #66
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I got lucky - I changed jobs in January 2009. A combination of holding more cash than usual due to the uncertainty surrounding the move and cashing in entitlements from the old job left me with a lot of cash reasonably close to the bottom and I invested just about all of it in equities in the first half of 2009.

The 2008 crash was painful at the time but, with the benefit of hindsight, a very good thing for my finances.
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Old 03-18-2012, 09:44 PM   #67
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The 2008 crash was painful at the time but, with the benefit of hindsight, a very good thing for my finances.
Same here. In retrospect, the 2008/2009 blue light special allowed us to reach financial independence much, much sooner than originally planned. At the time, though, it felt pretty darn scary.
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Old 03-18-2012, 10:03 PM   #68
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Same here. In retrospect, the 2008/2009 blue light special allowed us to reach financial independence much, much sooner than originally planned. At the time, though, it felt pretty darn scary.
Buffet made the point (as have a number of others) that people who are net buyers of equities are better off with lower stock prices than higher ones.
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Old 03-18-2012, 10:10 PM   #69
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To track my investment moves (I usually own more than 100 positions in individual stocks and MFs), I kept two records to allow me to look back at a glance. One is a daily total of portfolio. The other is a monthly record of cash position vs. equities (I have only a few % in bonds).

Just now, when I looked back at the monthly record, from Nov 2008 to Feb 2009, I threw $400K from cash into stocks. Yep, I did all the right thing. In hindsight that is, as the market did not bottom until March 09. All that money was just sucked into the whirlpool... They would bounce back just as fast, a couple of months later, but who would know then?

But then, as I explained earlier, I started to sell too soon in later 2009. I had those stocks at excellent prices, and I let some of them go too early for mere 20-50% profits. Many eventually bounced back to where they were in 2007, and in the case of stocks like Caterpillar, even higher. Nope, I do not own CAT anymore, selling it way too soon.

Oh well! I still currently have more than I had in Oct 2007, when the Dow was at 14,000, despite having been withdrawing some money for living expenses. It could be a lot worse, that's for sure.

Just did my 2011 tax, and found that I have used up all my cap loss carry-over, and start to pay cap gain tax again.
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Old 03-18-2012, 10:30 PM   #70
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I retired 1.5 years ahead of schedule in Oct 2006.

While the market value of my portfolio declined as you would expect a 100% stock allocation to (down a bit over a third), dividends and earnings kept rising right through it, making it more of an interesting show than a source of worry.
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Old 03-18-2012, 10:53 PM   #71
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A drop of 30% for a portfolio of 100% stock is impressive. It beat many balanced funds that had bonds in the mix. But we have talked about this in some other threads. I will look to get out of some cyclical stocks I have, and to shift into the stalwarts that are more stable. But of course, I am still susceptible to the syndrome of "just a few more %".
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Old 03-18-2012, 11:46 PM   #72
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The recession of 2008 actually caused me to quit my JOB much sooner than anticipated for these reasons.

1. I got excited during the crash and threw as much money as I could find into equities.
2. Since I worked for a company that is famous for layoffs, I increased my savings rates. When the company cut the 401k match, I increased my contributions to more that off set the loss.
3. The recession had an effect on the Mega-Corp I worked for. They started squeezing the employees more and more. Of course there were furloughs and 10% reduction in pay periods and benefit reductions, but what really got to me were all the bean counters that went crazy and started counting beans in so many different directions it was impossible to satisfy them all.

Between the savings I achieved from 1 & 2 and the squeeze from the company, I started hoping they would lay me off. Then I decided their new tactic was instead laying people off and giving them a severance package and unemployment benefits, their new tactic was too make the job so untenable that people would quit. They succeeded. I felt like the only control I had in the situation was to quit.
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Old 03-18-2012, 11:50 PM   #73
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I have a 457 plan which I am no longer eligible to fund since 2004. I have not removed any money nor have I made any changes yet I am not up to its original highs. I am close though. Since the financial crisis I have been in a dysfunctional asset allocation nightmare. Paralyze. Way too much in cash/. No courage.
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Old 03-19-2012, 12:05 AM   #74
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The 2008 crash was painful at the time but, with the benefit of hindsight, a very good thing for my finances.
While not terribly painful but a bit nerve-wracking, th 2008 crash was a big benefit to my ER plan because I was able to buy 25%-30% more shares of the big bond fund I have been using to provide me with investment income to cover my expenses. Those share prices were at bargain basement prices and I made terrific use of that.

A key part of my ER plan was to not have to sell any shares of my stock mutual funds at a loss (other than liquidating my 401(k) but then buying two similar funds in similar proportions in my new IRA, as I mentioned in my earlier post here). I have also been able to reinvest the dividends from those stock funds back into the stock funds at similar bargain basement prices.

The stock fund values have bounced back nicely.
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Old 03-19-2012, 12:46 AM   #75
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I sold of some stocks (primarily financials) but purchased others at the low prices. I basically hung in there. I am just about back to where I was 3 or 4 years ago. I kept my semi retirement job a couple of years longer as it paid my health benefits and it provided a good distraction from the dismal economic news of the times.
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Old 03-19-2012, 02:48 AM   #76
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Suffered a 30% portfolio loss in both the after tax and IRA accounts in 2008.

The only fortunate thing was that we purchased farm property in 2007, largely from the brokerage account, so the impact was not as bad as it could have been.

Fast forward to 2012 and we are back to paying capital gains taxes on our holdings, I.e. the carry over loss from 2008 has been fully recovered and we are up 13% YTD on 2012. The farm property valuation never lost that much in the crash and while farms are a rather illiquid investment, we could sell today for more than we bought in 2007.

So all in all the market crash has really had no impact on retirement plans other than some additional stress.
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Old 03-19-2012, 10:21 AM   #77
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One of the "good" things of a market crash is that in the taxable portion of one's portfolio it allows to sell a mutual fund, gather a tax loss and immediately reinvest in a similar fund at a new cost basis so that one's AA is not substantially changed. When properly managed it provides a nice source of tax losses for covering future income taxes. Of course, I'd rather have magnificent ongoing gains as in a market like the 1990's but at least it's something.
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Old 03-19-2012, 10:58 AM   #78
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We have had to make a big change in our plans. We have done so well in the recovery that we need to spend more money. I am having trouble understanding why so many people sold in the dropping market and why so many people on this forum were nervous. There were plenty of us on the forum telling you that it would come back like it always has.
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Old 03-19-2012, 11:18 AM   #79
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We have had to make a big change in our plans. We have done so well in the recovery that we need to spend more money. I am having trouble understanding why so many people sold in the dropping market and why so many people on this forum were nervous. There were plenty of us on the forum telling you that it would come back like it always has.
The reason everything was plunging is because everyone was selling. Can't have the one without the other. So there must have been a lot of idiots people who sold at very low prices.
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Old 03-19-2012, 11:45 AM   #80
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The reason everything was plunging is because everyone was selling. Can't have the one without the other. So there must have been a lot of idiots people who sold at very low prices.
I did not sell but did not buy until some months from the low. People who sold were, of course, matched by people who bought. Prices weakened because people who sold were highly motivated to do so, I guess.

Anyway, I'm sure some are kicking themselves for selling at lows. But they were just acting rationally -- rationally in most other forms of human activity. Normal human emotions do not mix well with investing. So you have to be realistic about your AA and planning up front. But few had experienced such a massively bad market as we saw in 2008 ... a learning experience for sure.
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