Your memories of the '09 market bottom?

[steelyman]

There've been more than a few mentions of the upcoming 2-year anniversary of the March '09 market bottom, which is tomorrow.

What are your memories of what was going on with (and in) you at that time? Did it cause any major changes in your attitude towards investing and planning for ER?

In my case, I very much recall being in Boulder, CO (work trip) and having suffered somewhere around a 35% drop in investment value. Thought my ER was set back 5-10 years, and that was no fun. The drop between Sept '08 and Mar '09 was so rapid I was caught flatfooted.

As a result, I didn't change my allocation/investment plans at all. I have, however, been very amazed at the rapidity of the subsequent recovery. I guess I have made one change, and that is to make sure to squirrel away several years of cash/equivalents that will hopefully allow me to ride it out a bit better should another financial earthquake come rolling our way...

 

[Moemg]

I retired in January of 2008 so I remember thinking "O S-it" . It certainly was a test of my portfolio and my asset allocation . The only thing that kept me sane was knowing I had a lot of padding in my plan . I do a straight 4% withdrawal so in 2009 my yearly allocation dropped a lot but because of a pension & SS survivor it was an okay year . I find that since that year even though my portfolio has recovered nicely I am cautious and keep a big cushion.

 

[ejman]

My memory of that time is that I was getting very close to the lower stock allocation range of my AA (55%-65% stocks at that time) and thinking all right I'm currently at 56% stocks, as soon as it hits 55% stocks I have to sell 5% in bonds - what am I going to buy with that money? Since it seems the end of the world as we know it is at hand do I really have the courage to buy stocks? It would have been the first time ever since I started investing in 1987 that I would have sold bonds to buy stocks. Every other reallocation I have done has been in the other direction - sell stocks buy bonds. Just as I was contemplating that, the market turned around - saved by the bell.

 

[freebird5825]

My AA had been 50/50 from my FIRE date in 2Q07 until 4Q08. The market behavior changed that to 45/55 for me. No biggie, I thought to myself.
I went 1 step further and put more than twice my usual DCA into a muni bond fund I was already investing in. The NAV had dropped approx 10% in 4Q08. I carried this on for a few months until it stretched my budget too much.
Net result was a 40/60 AA by the time March 09 rolled around. I made a decision to stick with 40/60 (vs 50/50) because the 25% loss to my portfolio in 4Q08 gave me a reality check on my true [-]aversion to[/-] appetite for risk. A good lesson learned.
In March 09, I jumped on the opportunity to start an account in VHDYX
I had already been watching this relatively new fund for a few months. I went for it! I continued DCA into VHDYX until the market started significantly improving. Now I am letting it simmer. If the market goes south again, I may throw a little more at it.
In essence, I used the turbulence to do some minor adjustments to my DCA levels and a noticable change to my target AA.
The long term outcome is I migrated from a moderately conservative investor to a conservative investor. That stance suits me just fine.

 

[JmfromTx]

I lost my wife in 07 so I kind of sleep walked through it. I didn't do anything or really think about it. Looking back, ignoring it was a good thing for me financially because I would probably have done something really dumb if the situation had been different.

 

[steelyman]

I lost my wife in 07 so I kind of sleep walked through it. I didn't do anything or really think about it. Looking back, ignoring it was a good thing for me financially because I would probably have done something really dumb if the situation had been different.

That must have been really tough. Perhaps it still is. I'd have sleepwalked too, I'm glad you've got some perspective. My sincere sympathies, your loss is far worse than any $$ loss I took.

 

[Arnie]

I recall being glad that I had several occasions to re-balance and buy low ... and wondering if I was ever going to make money from it.

Also remember '09 being the first time in over 30 years with the same megacorp that I was "laid off" - one week off each quarter. Glad the market was coming back some while that was happening.

 

[rockyj]

Being still in accumulation, we had already used up our annual "one time" money (i.e. roth deposits) on the way down earlier in the year. Watching the continued slide was brutal. We kept DCAing into 403B nevertheless, and made a few additional small purchases. Overall we did not change much, just added a sliver of intermediate bonds to the new contribution mix that wasn't there before, but mainly the new contribs were targeting other low spots in allocation mix. So, no, no big changes - but a tough slog to watch the long slide down and some blind faith that new contribs were buying on sale for the long run. It's hard to get excited about buying on sale, though, when the losses in the larger portfolio dwarf the value of any bargains your getting with new contributions. Of course we were concerned about potential effect on ER timing, but there was not much to be done about that and we're pretty much back on track now anyway.

 

[Moemg]

I lost my wife in 07 so I kind of sleep walked through it. I didn't do anything or really think about it. Looking back, ignoring it was a good thing for me financially because I would probably have done something really dumb if the situation had been different.

Sorry for your loss . Losing a spouse is really hard !

 

[Onward]

My clearest memory is the Dow at 6500 and Kramer saying it could fall another 1,000 points. Ever since then he has been claiming that he called the bottom. Somebody play him the video, please.

In spring of 2009 I was still accumulating, so that blunted some of the psychological damage. From history I already knew stocks could crash, so there were no changes to my investment philosophy or portfolio makeup.

 

[pb4uski]

I stayed the course and in fact did rebalance a bit. I'm not sure why, but for some unknown reason I believed in the power of AA and was confident that things would ultimately rebound, which they have to a large degree.

One couple I know panicked and sold all their equities. They have a huge capital loss carry forward that will be used 3k a year for a long time to come and I'm sure some regrets. Other I know who did not stay the course have regreted it as well.

Not sure if I was smart or ignorant, but in any event, thankfully it worked out for me.

 

[73ss454]

I retired in Dec of 06 and when the mess hit I decided to get a PT job to weather the storm. I found a job working 3 days a week for 1 1/2 years and I'm happily retired again. Next month I'll have the crutch of being able to take SS as I'll be 62. Not that I'm happy about being 62 ya know.

 

[Dawg52]

I don't remember.

 

[rockyj]

One couple I know panicked and sold all their equities. They have a huge capital loss carry forward that will be used 3k a year for a long time to come and I'm sure some regrets.

One thing I *do* think about differently now, in retrospect, is the opportunity for tax loss harvesting that any similar future profound dips may present. Woulda, coulda, shoulda had lots of 3K carry forwards, without the regrets. Live and learn.

 

[Rustic23]

yawn! It was not the first and it won't be the last.

 

[REWahoo]

yawn!

Not the case for those of us who were living solely on our nest egg at the time - no pension, no SS.

 

[Gone4Good]

I recall being more optimistic about future equity returns in March of '09, than I am now.

Many of us have been planning on below average stock returns because of high valuations. Well, those below average returns have already been realized and are now in the rear-view mirror. It's time to start raising your expectations for future returns.

 

[haha]

It was difficult. I turned over maybe 50% of my portfolio, both to nail down losses and to increase quality. I went heavier into stocks, but no more crap issues. This made me more comfortable, and worked out OK, but really the rally since the bottom has been for the most part a rally of crap.

Nevertheless, I reported LTCG each and every year, and my holdings all are sitting with unrealized gains right now. I paid back my SS, supported myself for an additional 3 1/2 years, and have a somewhat higher net worth now than before the crash began. (Only somewhat, nothing to write home about.)

I do believe that any "lessons" we think we learned from this crash may turn out to be specific to this crash, at this time, with this government etc., or at best to credit implosions rather than the more typical inflation -> PE compression & credit tightening. From my POV the movie is still playing.

Ha

 

[Bestwifeever]

I was still in shock from October 2008 when we were in Europe and watching the somber anchors on the European financial news stations; our financial stuff was in a weird transition as DH had retired in August 2008 and didn't take too big of a hit but just worry worry worry for everyone's future.

I don't even remember the first half of 2009; I think we were money zombies then.

 

[JmfromTx]

I do believe that any "lessons" we think we learned from this crash may turn out to be specific to this crash, at this time, with this government etc., or at best to credit implosions rather than the more typical inflation -> PR compression & credit tightening. From my POV the movie is still playing.

Ha

Thank you for putting into words what I could not.

 

[Moemg]

I don't remember.

Let me refresh your memory !

 

[M Paquette]

Heh. I made a little set of observations on March 7, 2009 and posted this on a private stock trading board.

Musings on the S&P 500, financials, and Where We Are At.

If one took the value of all banks and other financials in the S&P 500 (SPX) to zero, (share value of zero) the SPX would be at about 620 today. (Close was at 683.38) Yes, there would probably be a panic associated with that, but it would have some trouble driving the price down much further. The financial sector of the S&P 500 has already dropped some 80%.

Currently healthcare is up to 17% of the SPX, and technology stocks are the second largest area at just under 17%. All financials make up just 9.2% of the SPX.

The Shiller 10 year averaged earnings figure (E10) is probably the best number to use in figuring P/E valuations during a recession, as earnings are unpredictable with recession effects like one-time writedowns. Call it about $58 a year over the last 10 years.

The current index 'price' to 10 year average earnings ratio (P/E10) is pretty well correlated to market bottoms and subsequent long term rates of return. (Today's P/E10 is about 11.8) Over at Bob's Files, Odds and Ends, Bob has put some neat charts together to show the value of P/E10 over time, and real returns in the market over subsequent periods.

[charts elided...]

P/E10 doesn't dip below 10 very often. The most notable case, where it reached 5, was during the Panic of 1917 and the Great Pandemic of 1918-1919, where city centers were abandoned, businesses went bankrupt, and life insurance claims skyrocketed.

 

[FIREd]

Given how I greatly benefited from the recovery, I am sure that my memories of the 2009 market crash have been tinted with a few shades of rose. However, reviewing some of my posts from early 2009 reveals how uneasy I felt at the time. Yet my Quicken records show that I kept buying equities throughout the crisis.

 

[ERhoosier]

Not retired but remember thinking this could be a HUGE buying opportunity. If not, better stockpile food, gold, even arms . I bought a few solid dividend-paying stocks but not nearly as much as I could have. Still- even with the recovery over past 2 yrs stocks have been flat for WAY too long.

 

[GregLee]

For the first time in a long time I had some cash to invest, so I was pleased to find the market so low. I started a new IRA for myself.