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What would you buy if another 2008 happened?
Old 01-07-2016, 07:44 AM   #1
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What would you buy if another 2008 happened?

I read in another thread about possibility of having another 2008 (What is happening in China is a bit scary).

If the market goes down to that level or somewhere near it, would you invest more money in the stock market? Would you even take some money out of your cash reserves and buy more equity? What would you buy?
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Old 01-07-2016, 08:42 AM   #2
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I would do exactly like I did in 2008: Rebalance from bonds to equities while also tax-loss harvesting. I don't have any cash reserves and I didn't in 2008. I had to exchange from bond funds to stock funds.

Isn't that what everybody does -- maintain their asset allocation?
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Old 01-07-2016, 08:43 AM   #3
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I am going to rely on 130+ years of market history, and keep buying. Mostly US equities. It may be different this time, but i doubt it.

Structurally the economy is solid. We have deflationary pressures. The low oil prices help ~85% of all companies and nearly 100% of US Consumers.

I worry more about the Fed continuing to raise rates to support bankers profits, rather than worry about the low wages.
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Old 01-07-2016, 08:44 AM   #4
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I'm moving away from individual stocks after I got my Medicare card. Currently have several buy orders in for either preferreds (see the preferred discussion this forum: Preferred Stock Investing-The Good , The Bad and The In Between - Page 14 - Early Retirement & Financial Independence Community) and for buying VTI, Total Stock ETF, at various price points if market has (hopefully small) pull backs. Have a fair amount of dry powder as have considered market a bit high recently.
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Old 01-07-2016, 08:44 AM   #5
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Old 01-07-2016, 08:52 AM   #6
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I read in another thread about possibility of having another 2008 (What is happening in China is a bit scary).



If the market goes down to that level or somewhere near it, would you invest more money in the stock market? Would you even take some money out of your cash reserves and buy more equity? What would you buy?

China stock market is irrelevant. It's a new financial system and rules are being made up as they go. They just now suspended the circuit breakers after a week in place.

Think newbie capitalists ... Difficult for the communist party to figure out and we are also overlaying our USA history and capability and market as if it's the same. It's not.

The rmb Currency and slow down of the broad China economy is a bigger concern. I lived in China for the last 8 years. GDP there is already likely down to 4.5 percent (though not officially reported) and they have 12-24 more months to work through this pain. To the extent USA equities are tied to China consumption it is reason for pause but not at all the catalyst or sole contributor to our market slide.

I'm not yet buying but that's because I think the USA Fed cycle and the impending election and the fact we are in year 7 of an expansion says we are due for pause. 1950 and then 1850 are my trigger buy number with 3% to add ..
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Old 01-07-2016, 08:54 AM   #7
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What would you buy if another 2008 happened?
Old 01-07-2016, 08:58 AM   #8
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What would you buy if another 2008 happened?

I'd wait until my portfolio needed rebalancing according to the rebalancing criteria that I have written down and try to stick to.

Then I'd buy whatever I need to buy, in order to balance it. This would probably mean spending cash to buy equity index funds, since I would probably need a lower percentage of cash and a higher percentage of equity funds. I might need to buy bond index funds too, depending on what happened to my bond fund percentages.

Dull, boring, worked for me in 2008-2009. Choices made on logic instead of emotion work best for me during 2008 type conditions. This is why I strive to stick to my written financial plan meticulously, especially during financial melt downs.
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Old 01-07-2016, 09:01 AM   #9
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My baseline AA right about now is 55/45. If my AA gets down to 50/50, I'm buying to get back up to 60/40 because I'm more willing to have a somewhat more aggressive allocation when stocks become a lot cheaper.
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Old 01-07-2016, 09:04 AM   #10
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Mortgage my house and buy call options.
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Old 01-07-2016, 09:39 AM   #11
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Old 01-07-2016, 09:45 AM   #12
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I'll just be buying more of Vanguard Target Retirement 2040 VFORX using current income. The fund has started the move from 90/10 AA but it seems the transition will be fairly slow for now (80/20 by 2020). Either way, 80-90% stocks is plenty aggressive enough for me.

And maybe a smattering of VHT.
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Old 01-07-2016, 09:50 AM   #13
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actually, at this point I'm considering frontloading my 2016 401k contributions
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Old 01-07-2016, 09:52 AM   #14
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I would buy equities since that is the plan. It's what I'm continuing to do as we drop.

I put in my notice on the 4th to retire at the end of the month (good timing, huh?), but I went in with a 45% equity position vs. the 60% that I plan as a baseline in three years. I know a rising glidepath only outperforms in a very limited number of cases, but after the run we had I thought this might be one of them. I just sold a house and will downsize so I have some excess cash.

Or maybe I'll just put it all on red and let the wheel decide my fate.
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Old 01-07-2016, 09:55 AM   #15
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actually, at this point I'm considering frontloading my 2016 401k contributions
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Old 01-07-2016, 10:01 AM   #16
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actually, at this point I'm considering frontloading my 2016 401k contributions
I was "lucky" in 2008: although they had been allowed earlier, my employer didn't offer a Roth 403(b) variant until spring 2008. When they did, I stopped all future monthly contributions to the traditional 403(b) in favor of the Roth. So I ended up dollar-cost-averaging as always but into the Roth. My take-home pay was less for a while, of course, but I'm glad it worked out that way (it had zero to do with any market "expertise").
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Old 01-07-2016, 10:21 AM   #17
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If we have another 2008 I'll probably put money into vanguards high div yield indx and their div appreciation indx.

I'd also look at individual stocks although I think the best time to buy those are when the indexes are not at lows. The best time to favor indexes is when the market as a whole is down.

If you are wishing you had a 2008 to take advantage of just invest in oil anything... even downstream companies are going down with the price of oil....

Another area to look at is mortgage reits which have not recovered from 2008.
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Old 01-07-2016, 10:55 AM   #18
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Just continue to do what I've done since ER 13 years ago. Nominal 50/50 equities/bonds within 10% rebalance band. Valuations get outside the band? - rebalance. Valuations still within band? - do nothing. Rinse and repeat.

Just turn off the noise. Nobody knows nothin' just wild a$$ guesses...
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Old 01-07-2016, 11:26 AM   #19
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I read in another thread about possibility of having another 2008 (What is happening in China is a bit scary).

If the market goes down to that level or somewhere near it, would you invest more money in the stock market? Would you even take some money out of your cash reserves and buy more equity? What would you buy?
If it goes down to 2008 levels, I'd be out of surplus cash long before it hit those numbers. I have bought stocks every day (all in the Dow 30) so far this year. I have a lot of spare cash just waiting for bigger dips. The bigger the drops, the more I seem to buy. So by the time it got to 2008 levels I'd be out of my surplus that I've set aside for buying opportunities. Of course if I really thought we'd see those levels again, I'd wait.
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Old 01-07-2016, 12:20 PM   #20
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