Worst case scenario?

[imoldernu]

No ulterior motive... Just the longer question...
Serious and realistic. Not far out "worst ever" or 1% possibilities.

What do you think "could be" the worst case for investment loss based on current or historical factors.

Yes, this could be one of those "need more details" questions. Infinite variables. But... without getting into the weeds, this Wiki article analyzes all of the US Depression/Recessions going back to the 1700's. Many factors compared, but the more recent details, use as one factor... the drop in the GDP.
...So lets use this as a comparison factor. FWIW, here are some of the more recent major disruptions. Gross Domestic Product percentage drops from peak to trough.

https://www.wikiwand.com/en/List_of_..._United_States

1929-1933 -26.7%
1937-1938 -18.2%
1945 8 mo. -12.7%
2007-2009 -5.1

Lots more in between, with different factors, but based on this, how about a "gut feeling percentage", based on that one factor...

Further... into a different set of weeds... how about a dollar drop for the Dow. As of this morning $25790.

Numbers to the next "LOWS".

As an economics "know nothing"... Here's my guess:
in 2 years:
GDP.... -5%
Dow... new low $15,000.

[LOL!]

In Venezuela or the USA?

[corn18]

I have a worst case and most likely case. I would like to retire @ 55 in 3 years. Base expenses are $75k. Desired income is $150k.

Worst: $110,387 income before taxes

0% nominal growth between now and retirement
40% equity hit the year I retire
25% decrease in SS at age 70
no bonuses

Most likely: $146,060 income before taxes

4% nominal growth between now and retirement
0% equity hit the year I retire
0% decrease in SS at age 70
full bonuses

If I believe the worst case might happen or does happen then I can work another year or 2 and be just fine. Or cut back on expenses as I have a lot of discretionary between $75k and $150k.

[l2ridehd]

First off, I would not use the DOW as the measurement factor. Maybe the S&P 500, but more accurate might be the Russell 2000 or a Total stock market index fund. The DOW can drop 20% and take the market down 40%. Or just the opposite, DOW down 20% and the market down 10%. It is just to few stocks to be an accurate indicator of the "market".

However to plan only for a worst case market, I use a 25% drop in portfolio value to set my AA. And I base that on having a 60/40 asset allocation and a worst case total market decline of 40%.

That would take a GDP drop of 8.5% and a DOW drop of around best guess of 35%

[Dtail]

Quote:

Originally Posted by l2ridehd First off, I would not use the DOW as the measurement factor. Maybe the S&P 500, but more accurate might be the Russell 2000 or a Total stock market index fund. The DOW can drop 20% and take the market down 40%. Or just the opposite, DOW down 20% and the market down 10%. It is just to few stocks to be an accurate indicator of the "market". However to plan only for a worst case market, I use a 25% drop in portfolio value to set my AA. And I base that on having a 60/40 asset allocation and a worst case total market decline of 40%. That would take a GDP drop of 8.5% and a DOW drop of around best guess of 35%

I am 55/45 AA, but effectively use similar ratios to you.

[LOL!]

I wonder if the most "investment loss" will come from inflation which is relatively tame nowadays, but could rear its ugly head when deficit spending comes home to roost.