Your memories of the '09 market bottom?

[Ally]

I started getting a creepy feeling about our investments in September of that year. We had a choice at work of moving funds into a general savings account that paid 3.5%. I took everything out of indexed funds, equities, etc. and moved it over to that account for a few months. So I think I missed the worst of it.

 

[Onward]

Either this group has selective memory, there's a selection bias in the responders, or we are the most brilliant group of investors the world has ever seen.

I'm guessing it's not #3.

 

[Lisa99]

Most of our investments were still with Ameriprise at the time so we just watched as the dollar value of the account kept dropping.

And at work, my megacorp had been bought by a bigger megacorp and there was a mandatory 15% 'headcount reduction' going on (about 15,000 people in total)

I made it through with my job intact but it was quite a roller coaster of a year.

 

[steelyman]

Either this group has selective memory, there's a selection bias in the responders, or we are the most brilliant group of investors the world has ever seen.

I'm guessing it's not #3.

Well, I'm certainly not going to include myself in the group that was prescient when disaster hit. Not a brilliant investor at all, rather as I said I was caught dead in my tracks in '08.

I only had three things going for me in retrospect: one, I was and am still working (and therefore continuing to dollar-cost average in); two, I'd hit the 50-age mark which allowed larger contributions; three, my employer had opened up a Roth plan which meant that all those low-price purchases went to the tax-free option.

I guess I agree with ha's opinion that this movie is still playing. But next time it happens, I'll likely be in a different situation and hope I might act a bit more intelligently than I did last time. How to do that? I haven't a clue .

 

[easysurfer]

I remember saying..."It's only a paper loss, it will bounce back..It's only a paper loss, it will bounce back...It's only a paper loss, I hope it will bounce back."

 

[M Paquette]

Either this group has selective memory, there's a selection bias in the responders, or we are the most brilliant group of investors the world has ever seen.

I'm guessing it's not #3.

Selection bias. If we were to interview refugees at the end of a long, arduous journey, we might conclude that their people are the hardiest folks on earth, but that would be ignoring the huge population lost in that journey.

The same principle applies here, I think.

 

[CyclingInvestor]

No anxiety or changes in attitude. I retired in Oct 06 at 48 with a 100% individual equity portfolio, and while its market value dropped by about a third from its peak, its dividends (which I live on, no pension/ss) and earnings kept rising, 6-10%/year right through the market gyrations. Dividends and earnings are now about 45% higher than when I retired, with roughly the same stocks. Market value is about the same as when I retired.

 

[bbbamI]

I can barely remember what happened last week....

 

[traineeinvestor]

I remember 2008 Q4 and 2009 Q1 quite well.

In early 2009 I found myself with a lot of cash through of combination of high savings which had not been fully invested for some time and cashing out long service etc payments from my previous firm. [-]Being an exceptionally talented market timer and [/-] believing that equity yields would be better than cash or bonds over the long term even if things continued to deteriorate, I put all of it in the markets over a period of several months and have felt like a genius ever since (conveniently ignoring the fact that I didn't anticipate the crisis). No doubt when I fail to anticipate the next downturn, it will be someone else's fault.

 

[Danmar]

That period changed my life. Up until then it appear I could never run out of money. Our spending and attitude reflected that. During the crisis, my option positions all went underwater and it looked like our portfolio would only be a fraction of what I expected. I retired in late 2006. I felt awful- couldn't sleep. Luckily I didn't do very much and it has all come back. Portfolio is at all time high and options looking great. Still my attitude is different and our spending is much more conservative. I hope I'm a better investor (indeed person) because of the crisis. Time will tell.

 

[clifp]

So I went back and looked at some of my posts from those dark days.

They weren't too bad.
Oct 27, 2008 Dow -203 8,715

James the only thing I can predict with confidence is that market will not be stable for quite sometime certainly for the next six months we will see huge daily swings as stocks go up and down by several percent. The stock market is trying to predict the future economy and as we all know, not only have all the crystal balls stop working, but the lights are off, and we ran out of candles a couple of months ago. A few people are yelling fire and people are starting to panic, the smart people realize the red people see isn't a fire but the emergency lighting system coming back.

Personally, I'd tell him to stick all the money back in the 2020 fund. Imagine a rich friend of his gave him an absurdly expensive bottle of wine, and total him do not open until 2020. Once a year he is allowed to look at the wine perhaps rotate it, but he can't open it.

When the market stops going down and starts going up it is not going to up at a nice steady pace. Rather it is most likely to go in the same crazy fashion it has gone down. But this time instead of big 4 down days and 1 big up day. We are likely to see 3 up days , 1 big down day, and 1 big down day each week. By the time your dad or frankly any of us realize the bear market is finished, we will be up 30-40%. I know this is coming I am just not sure which year.

If the thought of sticking him money back in balanced retirement fund scares him to death,than a reasonable approach would be to take 20% of the money and added back to the 2020 fund each month.

March 2, 2009 6736 Dow -320

Every year Warren Buffett writes a much anticipated shareholder letter. Since his company Berkshire Hathaway (BRKA) is my largest stock position I (along with every stock market pundit and wanta be pundit) read it with great interest. I won't comment much on the letter, but I will try to analysis the stock compared to historical levels based on the annual report.

On Feb 28, 1999 BRKA stock closed at $71,100 a share, ten years latter it closed at $78,600 a 10% gain over 10 years. Hardly a way to get rich, albeit a much better than an investment in the S&P 500 over the same period. The obvious question is BRKA a good buy now. The answer is I don't know for sure.


In fact, I should warn any FB friends that while in theory I know a fair amount about investment, my track record for the last year or two has been as bad as anybody else's down 28% in 2008 and 2009 is starting off horrible. Or to put it another way doing the opposite of what I did last year would be a pretty great way of become rich ....
[Lengthy analysis of Berkshire arguing it was severely undervalued]
...
Still I can state that Berkshire Hathaway is a heck of a lot better investment today than 10 years ago, and I think that is true of most stocks. Now this is pretty much a duh, but as the late Paul Harvey said here is the rest of the story...

I am perfectly happy to take the risk that an investment in company like Berkshire will pay off in the long run, better than loaning my money to Uncle Sam or a bank at couple of percent. I wouldn't be surprised to see another 25% drop in the market, and I am mindful that market can remain irrational longer than you can remain insolvent, but eventually sanity will prevail

March 10,2009 Dow +379 6,926.49

from the Call the bottom thread. Dow 12,200 looks brilliant even if it is 1 year late

Running man what is the second number after our predictions? For example I am listed at 5500 [My bottom call]

FWIW, I really hope I am wrong in this poll, and right in the one I started a few months ago. Dow 12,200 at the end of the year.

I hope today puts some fear into the bears. If you try and time the market, and somehow we string two or three days like today in the week you could miss a 20% move.

 

[Arnie]

Selection bias. If we were to interview refugees at the end of a long, arduous journey, we might conclude that their people are the hardiest folks on earth, but that would be ignoring the huge population lost in that journey.

+1. Or why members of a chess club are better at chess than the general population.

 

[clifp]

Either this group has selective memory, there's a selection bias in the responders, or we are the most brilliant group of investors the world has ever seen.

I'm guessing it's not #3.

Well you joined in July 2009.
I went back and looked at all of my posts from 9/2008 to 3/2009 with the word market. Pretty much without exception. I said things will probably get worse before they get better, but in a few years they will be a lot better.

There were many others in the stock and FIRE and Money forums saying basically the same thing. Then you add a couple of smart poster warning about the coming bank/real estate problems in late 2007, early 2008, and I am voting #4,and group who is uncommonly wise about money.

 

[rescueme]

I followed my investment plan and did nothing.

Since I retired in early 2007 and as part of my plan set up tax deferred MM accounts to equal 3-4 years in gross income for retirement. I simply drew from those accounts during the downturn.

When things started getting better, I harvested gains to add back into my MM accounts.

Tracking my/DW's IRA returns since 1982 and including YTD 2011, we show three negative return years. That's a 10% failure rate over a 30-year period (including YTD as a full year ).

Nothing was sold or repositioned, as was also the case in the 1987 or 2001-02 dowturns. Of course, during those years I was still wo*king and had another primary income source - not like today, which is done by my investments.

I hate to use the term "stay the course" as used in another forum, but that's what we did, and continue to do...

 

[donheff]

I just sat tight all the way down and sat tight all the way up. If I learned anything in 2000/2002 and 2008/2009 it was that I can tolerate a fair amount of volatility. I worry that HaHa may be right and the next time may be different (negatively). But I don't see any sensible alternatives to what I am doing as the future approaches.

 

[brewer12345]

I got crushed in the latter half of 2008 and lost my job at the same time in what quickly became a "no bid" labor market. After finding a secure job in December 2008 and ultimately being down roughly 50%, I started buying with both hands. I sold anything that had held up reasonably well and bought big positions in longshots, highly levered firms, even borrowed money to buy bonds trading at crazy yields. I knew I was making an all or nothing bet and did so through the first half of 2009.

By the time of the bottom I was working like a gravedigger (late nights, weekends, etc.) on a big project to Save The Modern World For Capitalism. In return for the project essentially succeeding and all my hard work, I got a t shirt I cannot wear in public (for fear of being stoned to death) and a certificate that was autosigned by people who I would much preferred to have an actual autograph from. Ah well. I figure it was atoning for my sins (which must have been whoppers, whatever they were).

Lessons learned? I keep much better track of my investments, asset allocation, etc. than I used to. I have firm sell prices on my investments and stick to them. I keep more cash around than I used to. I still have some excessive concentrated positions in my portfolio that I will sell down over time to ensure more diversity. I am more motivated to kill the mortgage. And I have decided that I will pursue ESR sooner rather than full ER later.

I will say that the best investment I made in the bad times was an inexpensive travel trailer. All those trips into the woods (and gallons of box wine) kept me sane, plus I suppose I knew that if I lost the house and everything turned to cinders we could live in the trailer...

 

[Spanky]

I will say that the best investment I made in the bad times was an inexpensive travel trailer. All those trips into the woods (and gallons of box wine) kept me sane, plus I suppose I knew that if I lost the house and everything turned to cinders we could live in the trailer...

it's a healthy way to look at the situation.

 

[Rustic23]

Wahoo, agreed, but it was still my reaction. It is similar to the increase in gas prices. I know things are going up in price, I also know/believe my plans are OK for the foreseeable future, i.e. until I am dead. So even there it is still a yawn.

 

[DeborahB]

I think that was around the time I started moving old 401K accounts to a self-directed IRA, because I did a lot of buying - not at the bottom, but on the way up.

I bought some financial corporate bonds on the secondary market at a deep discount. My risk tolerance is high. No regrets, no real defaults - one bond changed its payout dates, but eventually it's paying back the money and meanwhile I moved it into a ROTH IRA so all the capital gain and 7% interest is tax free.

I mostly rode it down and up but I took advantage of some major buying opportunities as they came along when I had the cash to do it.

I hated my current 401K options and discovered when I turned 59 1/2 I could take all the money out as long as the new money went into it. As a result of all these activities, I retired at 62. I don't know if I could have, if I didn't have this strange set of circumstances to take advantage of.

 

[ziggy29]

I can recall "I hope the bleeding stops soon, because there's no way I'm selling down here."

 

[Alan]

In 2008 and 09 we were very fortunate market-wise. We were still working and piling in lots of money into our AA of 40/60. Over those 2 years we DCA'ed $158k into our funds. As we were retiring in 2010 I did let the AA slip to 35/65 where I had planned to have it during our retirement years.

I'll remember 2009 more for the loss of my father and MIL than for the movements in the markets. The market rose back up, our parents didn't.

 

[RetirementColdHardTruth]

Me, as we were at Dow 7700 on the way down, I just started selling $2000 in bonds every other day and buying the s&p500. I also scraped every dollar I could get my hands on and buying the ETF SPY.

I saw a sale that I never thought I would see. I didn't rebalanced to my ideal 60/40 split until the DOW was back over 10500. It worked for me, but I am also very young and knew I had plenty of time for it to come back if it didn't recover. I was thinking it was going to be 5-7 years before we would hit DOW10k again, but it recovered to that point super quick in my opinion.

This worked for me. But had I been closer to retirement, I would have never deviated from my ideal allocation.

 

[youbet]

No anxiety or changes in attitude. I retired in Oct 06 at 48 with a 100% individual equity portfolio, and while its market value dropped by about a third from its peak, its dividends (which I live on, no pension/ss) and earnings kept rising, 6-10%/year right through the market gyrations. Dividends and earnings are now about 45% higher than when I retired, with roughly the same stocks. Market value is about the same as when I retired.

Are your dividends actually 45% higher in dollars or are they 45% higher as a percentage of your portfolio value?

 

[jayc]

Buying GE @ 7.50, FITB @ 1.41, WFC @ 8. I was on contract at a conservative insurance company and remember the outrage by management that AIG got a bailout.

 

[youbet]

I had been FIRE'd approximately 2 yrs when the recession went into overdrive....... We wound up not changing our strategy at all. Whether that was due to being smart or due to being paralyzed with fear, I'll never know. But it worked out.

1. We neither bought or sold investments other than minor selling to cover our budget. While we didn't benefit from buying low, we also didn't lose out by selling low. We just stood our ground. Our AA drifted from 50 - 50 closer to 40 - 60. Selling to cover expenses turned out to not be difficult. We do have a teacher's pension, some deferred compensation (at the beginning) and SS (now) which covers some of the budget. Divs and int covers some more. And, for the balance, it seemed that despite the extremely depressed equity values, I always had something where I could harvest a few bucks without "selling low." Now our AA has returned to near 50 - 50 (without rebalancing) and our total portfolio has returned to its pre-recession real value.

2. We generally continued our spending plans with only some small reprioritizations. In hindsight, the scariest part of the recession was how close we came to canceling some plans and sitting "on idle" for 2 years while time continued to pass by.


Going forward, I'm more concerned about inflation as a portfolio buster than market crashes. A few years of 6% - 8% - 10% inflation, as we had just a few decades ago, coupled with a portfolio performance level that substantially loses ground to that level of inflation would be a killer. FireCalc bears this out. Inflation never has a recovery such as we're currently enjoying in the equity markets. Once prices are up they're seldom, if ever, offset by periods of deflation.