Was that the quickest correction or what ?

[Spanky]

Shift only a small portion of cash into equity about a week ago, pondering why I did not do more. We have too much cash on the sideline.

[StickInTheMud]

Rarely do I have much cash sitting in my Roth IRA, but I was building up for a regular purchase of the VFINX (Vanguard S&P 500 Index) throughout the Summer that I usually dollar cost average into my account. Well, the downturn began and I did my best to monitor the situation and I bought at the closing price on 8/15, which as I understand it was the bottom of the correction.

I'm up almost 8% on that order in just two weeks. A little bit of planning and a lot of luck I suppose.

[Aeowyn]

That was fun! I didn’t think I’d see a return so quick.

I’ve been selling a little here/there all year as the market was going up from funds that I was over allocated in.

During the dip, I bought funds that I was under allocated in all the way down and part of the way back up. Of course not all $$ was put in at the bottom – most was put in before hitting the bottom. The market has been so stingy with it’s pull backs this year I was a little eager to pull the trigger. But due to the possibility that it may continue dropping – I just buy a little at a time. I was ready to buy more if it continued down.

One fund that I’m over allocated in is back up to a lifetime high and I’ve already started selling again.

A cool thing about the recovery is not everything is recovered. So some funds are at a point that I am selling and others are at a point that I’m buying. For the most part US large cap equities are more than recovered. Most of my US small cap funds still have a little way to go yet. My international funds still have quite a bit of ground to make up from the dip (I’m still adding to some of those).

I’ve recently (this year) added some specialty funds (small % of portfolio) for diversification (something other than bonds that might not go the same way as the rest of the market). The equity specialties I currently have are energy, utility, REIT (US), REIT (global), and Precious Metals.

The shining star through the dip was the utility play. It didn’t really participate on the down side at all, but it has soared upward during the recovery.

The REITs also provided some assistance during the dip – they didn’t follow all the way down – they started recovering sooner than the rest of the market and are well above were they were before the “correction”.

My energy fund tanked hard. It was already down 10% before the US market correction started. I’ve added to that fund 4 times during it’s decent including at the bottom (23% off peak). It has started to push back up a little, but it has a long way to go.

Precious metals started the downhill slide early and is still tanking. I sold a little in August around this year’s high and have bought 4 times on the way down (may buy more if it keeps trending down). May or may not be the right move, but it is currently down 26% from where I sold and I can’t help myself (do I need to call the GA hotline?). If it recovers, I’ll sell some of it because I probably have more in it than I’d like (currently a little over 1% of total portfolio value). I’m definitely not a “gold bug” – never owned a fund like this until this year. Of all the funds I own, I might need to call this fund gambling instead of investing (I don’t know the rational of why it does what it does except for emotion or maybe the roll of the dice). The volatility it has shown this year is fun, so I’ll keep it for the sheer entertainment value. It didn’t help at all for this dip, but I still think it offers a diversification potential for upward movement if (make that when) something happens to really rattle the markets.

[ejman]

Given my 10% rebalance band (45 _ 55 % for equities) it was kind of heart tumping to watch it meander from about 53.5 to 52 and back up again over the last few weeks. Talk about sweaty palms!

[dallas27]

I got both our roths funded for '14 and bought pretty darn close to the bottom.


Sent from my iPhone using Early Retirement Forum

[LOL!]

Quote:

Originally Posted by Aeowyn …. The shining star through the dip was the utility play. It didn’t really participate on the down side at all, but it has soared upward during the recovery.

Utilities buy energy, so if their costs go down, their profits can go up.

[REorDie]

I went from being FI to not being FI to being FI again. I plan to RE next year but this makes me think that maybe I need a 10% or so cushion before RE.

[Aeowyn]

Quote:

Originally Posted by REorDie I went from being FI to not being FI to being FI again. I plan to RE next year but this makes me think that maybe I need a 10% or so cushion before RE.

To take the edge off market volatility, I like to look at the lowest value my portfolio has been in the last 18 months (this includes contributions - withdrawals + growth). I mostly use it for determining what my withdrawal rate should be. I don't care for the standard 4% of whatever your balance is when you start and increase every year for inflation regardless of what your portfolio did for the year.

Instead of 4% I use 6%. But it is not a starting 6% that automatically gets adjusted upward every year. I keep track of my portfolio value at the end of every month (I also subtract non-mortgage debt if applicable). I take 6% (divided by 12 for monthly allocation) of the lowest portfolio value for the prior 18 months. I didn't want my draws to change wildly every month, and of course I wanted to minimize the chances of having to decrease the magnitude of my draw. I back tested my portfolio mix a bit and found that 18 months looked like a good time period to bring the stabilization I was looking for.

So to apply this to what you have chosen for your FI number -- IF your FI number is Y, then when you can look back 18 months and the lowest your portfolio value is is Y, you are FI.

Just a thought. I sometimes think of things a little differently so take it for what it is worth.

I have a fairly aggressive portfolio with mostly equities and a decent allocation to small caps and emerging markets. A more conservative portfolio may be better off decreasing the draw rate and may only need to look back 6-12 months (instead of 18) to smooth things over.

[Rickt]

Stayed 100% invested in individual stocks thru this quick correction and am back to the pre-correction levels. Did buy some new REIT fund from Schwab on October 21st.

[bob boag]

Out on July 29, back in on October 20



Yes, luck favors the simple-minded

[Major Tom]

It didn't feel like a correction to me, as the S&P500 returned to it's previous level very swiftly. It felt more like extreme volatility. As I began portfolio withdrawals in 2011, I have not yet had the experience of going through a downturn while in the withdrawal phase. I quite enjoyed this little excursion, as it felt like a bit of gentle training for whenever an extended downturn, or a real correction actually does occur.

[bUU]

I sold one fund for reasons unrelated to the market conditions. (I don't brook with market timing, so the fact that it had fallen 10% from its recent high was not supposed to affect my plan to sell it.) It is a little bit of a concern that it has now recovered about a third of that, but it was the time that sale was planned, for other reasons.

[Maenad]

Our monthly Vanguard purchase happened on Oct 20th, just off the bottom a bit, so we had a purchase at a lower price. I'm sure it had a small effect on our bottom line, so . Other than that, I was just annoyed at the "traders" that were obviously overreacting and driving this little event (as opposed to "investors" who don't panic at the drop of a hat).

[heeyy_joe]

Stood pat on 99.5% of portfolio. Made money on short term trades in CREE and LUMBER LIQUIDATORS. Added PALL and EPD to retirement portfolio. Maintaining a 20% cash position overall.

[donheff]

Quote:

Originally Posted by Major Tom It didn't feel like a correction to me, as the S&P500 returned to it's previous level very swiftly. It felt more like extreme volatility.

+1 I don't know how long a downturn needs to extend to make it feel like a correction but that wasn't enough. On Friday I converted some equities to cash for next year's withdrawals. Hoping we get a bit more upside before I liquidate the rest of the year's funds. Sooner or later we will take a hit that knocks the whole year down and I will feel like I am seeing a correction.

[zedd]

Sold a small percentage of stocks just before the dip using the cash to fund a deal on real estate. No thought given to timing, just dumb luck on both transactions.

[Andre1969]

I didn't keep track of peak-to-trough, and only keep final-day financial data for each month on my spreadsheet, but as of Friday's close, I'm down about 1.3% from my 8/29/14 peak, which incidentally, was a new high.

On 9/30/14, I was down about 2.7%. I think there was a point somewhere in early October where I was down about 7-8% off that peak, but that data's gone now.

The last time I really had a correction worth whining about was from March-May 2012. That took me down about 6.7%. And I didn't fully recover until August.

I had a ~14% correction from July to August, back in 2011. That one seemed pretty scary, as I saw about $90K evaporate in just one month. That was the most money I had ever "lost" in a single month, and a good lesson to focus more on percentages, rather than dollar amounts!

I lost more money, percentage wise and $ amount, in the "Great Recession", but, that was dragged out over a longer time span. And for comparison, back during the tech bubble burst, 9/11 tragedy, and following recession, I didn't even have $90K to lose!

[eytonxav]

Added a little to VTI as it dipped. Still have dry powder, so was hoping for a larger downturn.

[sheehs1]

I sold 2 bond funds but otherwise nothing else. When the market acts like this, I don't look at my accounts. Just 2K shy of mid Sept levels. Should have added but I didn't.

[Sunset]

Quote:

Originally Posted by DFW_M5 Added a little to VTI as it dipped. Still have dry powder, so was hoping for a larger downturn.

Same here, bought about 40K worth, as it was coming back from the bottom. But had hoped/planned for a 15% drop, so had pre-set orders that I left in place so I still have more for the next drop.

Disappointed with how fast it was, definitely did not feel like a correction, so I missed funding my 401K due to transfer times of the $$