Anyone else hoping for a market plunge?

[in2flyfishing]

When to start buying

If holding cash on the sidelines waiting for this "market plunge" at what point (percent from the high) would you start buying?

 

[NW-Bound]

I would like it if each component (asset class) of my asset allocation would do different things at different times. A plunge could be one of those things. Why? Because that thrashing increases the rebalancing bonus. So if the OP question is a plunge in large cap us equities and the rest of the world and other asset classes are affected less substantially, then I wouldn't mind a dip. Even if it lasted a few years to recover.

International equity and particularly EM have been lousy this year. Have you been rebalancing?

Wait a bit longer, and everything will be equally lousy and the opportunity is lost.

I thought that we were talking about "whoa"s and not "whee"s.

Got my "wh***" last year at around 20% gain on a stock AA of 70%.

This year, international and EM are doing so poorly it's amazing that I am still clinging onto a bit of gain. Hope that it stays, and I am not in the red this year.

 

[easysurfer]

Yes, I am.

 

[mpeirce]

Bingo! When I was w*rking, and accumulating, downturns meant I got more shares for my money.

On a side note, when I was working and nearing retirement (2015) I remember all the young folk cheering the recovery in stock prices. I reminded them that it was good for me, but they should be hoping for the market to stay down for a much longer time.

I recall talking with DD about her retirement account during the last downturn. She was pretty upset with the decline in value. We talked a long time and she eventual came to understand that stocks were in fact on sale and she would be buying more shares when the price was low during the downturn.

It was a huge epiphany for her.

 

[Fedup]

Both of my kids said no stocks for them a few years back. But one of them actually saw how much her account went up since, now she said just buy and forget. Her account has done amazingly well, I think average return is like 14-15%. Small amount of money to start in 2008.

 

[Oz investor]

yes , i am

for two reasons , one is to 'stress test ' my investment strategy and secondly although heavily invested in the markets i do have a little flexibility built in to take some opportunities if they are presented .

there will be a downturn eventually , i think it would be nice if i still had some options and adjustment time left , when it happens

 

[NW-Bound]

"Stress test"? I got stressed out plenty in the past.

From 2000/03/24 to 2002/10/09: down -43.7%, top to bottom
From 2007/10/09 to 2009/03/09: down -36.6%, top to bottom

Got plenty of scars to prove it. Heh heh heh...

 

[audreyh1]

"Stress test"? I got stressed out plenty in the past.

From 2000/03/24 to 2002/10/09: down -43.7%, top to bottom
From 2007/10/09 to 2009/03/09: down -36.6%, top to bottom

Got plenty of scars to prove it. Heh heh heh...

Are the scars really there? Not in your portfolio, I expect. Maybe in your brain though.

 

[NW-Bound]

The scars are still there in the portfolio, though they healed.

It's like a tree getting its top broken off in a storm, and having to grow a new one. If it were not for these amputations that stunted the growth a bit, I would have a lot more money.

So, I can say I still see the scars, like you see in a tree that survives two bad storms.

 

[Oz investor]

"Stress test"? I got stressed out plenty in the past.

From 2000/03/24 to 2002/10/09: down -43.7%, top to bottom
From 2007/10/09 to 2009/03/09: down -36.6%, top to bottom

Got plenty of scars to prove it. Heh heh heh...

i only started very late in 2010 ( apart from the inherited portfolio )

i had to make my strategy on the run , and ( some ) success in a rising market is no indication to the durability of my plan ,
so yes it does need to be tested ( in real time/market conditions ) reading about 2007 and all the way back to the great crash back in the 1920s will only guide me so far .

have my plan stressed when i am 70 ( roughly 2025 ) and no financial ability to adapt it ( if needed ) is not a happy place for me ,

i would rather it sooner rather than when i am a helpless passenger

 

[Beer-man]

I think the sooner it happens the less scarring it will be. If we keep wishing it away or kick the can down the road it will be more painful.
Anyone who retired from 2008-2012 has essentially escaped Sequence Risk and can chillax

 

[audreyh1]

The scars are still there in the portfolio, though they healed.

It's like a tree getting its top broken off in a storm, and having to grow a new one. If it were not for these amputations that stunted the growth a bit, I would have a lot more money.

So, I can say I still see the scars, like you see in a tree that survives two bad storms.

I guess I don't see any scars in my portfolio even though I experienced a dramatic drop during 2007-2009. Rebalancing at the bottom, and then during recovery took care of it. There is no "memory" in my portfolio and I'm currently well ahead of inflation (knock on wood) - so how would a dip and recovery be any different than a period of slower steady growth?

 

[NW-Bound]

... how would a dip and recovery be any different than a period of slower steady growth?

A slow steady growth would not cause the extreme human emotions of exuberance followed by despair.

I am trying to remember the painful past to deal with future market upheavals better. Maybe I can get wiser to profit more?

 

[Oz investor]

in the inheritance was some share certificates for this company ( and several others that have since failed)

https://en.wikipedia.org/wiki/Poseidon_bubble

and this company

https://en.wikipedia.org/wiki/Ansett_Australia

yes companies can fail ( big and small )

i would be naive to think history would never again repeat in my lifetime

and yes i realize i must embrace the risk but also not ignore the increased ( financial ) danger i must face , if i am to resist the ravages of inflation .

one thing i have learned is that greed is very hard to control ( even in myself )

 

[GravitySucks]

I have my eye on a couple of toys that will be affordable in the next recession.

 

[audreyh1]

A slow steady growth would not cause the extreme human emotions of exuberance followed by despair.

I am trying to remember the painful past to deal with future market upheavals better. Maybe I can get wiser to profit more?

That’s why I understand psychological scars from the experience, but not portfolio scars.

 

[Helen]

For my spouse and I, I would love a major drop. We have a low seven figures in capital gains. I really want to sell our individual stocks and move it all to stock index funds. Plus I would love to move a roll over IRA to a Roth IRA.

For most other people, a drop would probably not be a good thing, so I don't wish it for them.

 

[Oz investor]

i don't think wishes can alter fate , and the financial universe from trying to correct after extreme deviations .

but heck this time it could be different

good luck everyone

 

[NW-Bound]

That’s why I understand psychological scars from the experience, but not portfolio scars.

OK. You remember the pain and the gnashing of teeth. Many don't.

As for me, I also recorded the total portfolio value in a diary. The portfolio scars show up there. They would also show up on Quicken, but up until 2010 I used the now-defunct Microsoft Money.

The portfolio total is just a number, and so its scars are also abstract. Not too different than psychological scars which only exist in one's mind.

 

[marko]

What's all this talk about scars from '08? Whatever scars I had from then have healed up quite nicely in the past 10 years! Quite nicely indeed.

 

[Oz investor]

in Australia , we were partly protected by the mining ( investment ) boom at the time ( 2007/2008 )

the chances are the next downturn will occur during a mining consolidation phase , locally ( for me ) this could easily worse than the global average.

 

[RunningBum]

so yes it does need to be tested ( in real time/market conditions ) reading about 2007 and all the way back to the great crash back in the 1920s will only guide me so far .

have my plan stressed when i am 70 ( roughly 2025 ) and no financial ability to adapt it ( if needed ) is not a happy place for me ,

i would rather it sooner rather than when i am a helpless passenger

I don't get that at all. You can't just write down lower numbers in your spreadsheet and take a day or a week to decide what you'd do if that drop really happens? Why would it have to be real time? Will you also set your house on fire to see if you're carrying enough insurance?

 

[limeyx]

International equity and particularly EM have been lousy this year. Have you been rebalancing?

Wait a bit longer, and everything will be equally lousy and the opportunity is lost.



Got my "wh***" last year at around 20% gain on a stock AA of 70%.

This year, international and EM are doing so poorly it's amazing that I am still clinging onto a bit of gain. Hope that it stays, and I am not in the red this year.

Yup. Watched almost all my last years EM and international gains disappear .. oh well

 

[sengsational]

Yup. Watched almost all my last years EM and international gains disappear .. oh well

International equity and particularly EM have been lousy this year. Have you been rebalancing?

Yeah, actually, I have been. Not due to any special skill, or timing, just that whenever I do any shifting of stuff, rebalancing comes along for the ride.

 

[audreyh1]

OK. You remember the pain and the gnashing of teeth. Many don't.

As for me, I also recorded the total portfolio value in a diary. The portfolio scars show up there. They would also show up on Quicken, but up until 2010 I used the now-defunct Microsoft Money.

The portfolio total is just a number, and so its scars are also abstract. Not too different than psychological scars which only exist in one's mind.

Remembering the pain - that’s psychological. My portfolio looks completely healed to me until the next train wreck.