Degree of concern now vs 2000-2002

[Grep]

I was just wondering about this very question. I wonder if our present sense that things are worse is real or just a recency phenomena, where we've forgotten how bad it was back then.

I'm deeply in the market now (much to my short-term detriment), while I was out of it during the 2000-2002 debacle. This is both good and bad. Of course, it's bad because I've lost a lot on paper. It's good because, unless things are really different this time, I'll do better in the long run.

Folks, an evil mastermind could not have set up better terms to buy entire markets. First real estate, then banks, then global downturns, then consumers stop spending (what!?!). Wave after wave of bad news. The end of the world has been priced in. Nothing has been spared.

Have heart, people. Sure, things are bad, but by almost any measure, valuations are at reasonable levels. We'll come out of this o.k. in the end. Rebalance or buy more, and a few years from now things will look much better. In the mean time, dividends are at reasonable rates, paying you to stay the course.

Cheers.

 

[Sandman]

Much less concerned back then; I was in my late 40's and in my prime earning years. Now that I am only 8 months away from my planned FIRE date I am concerned that it will take a long time before this market recovers fully. It was easy to understand how the dot.com era spiraled out of control. The problems this time are much more complex and far reaching.

 

[chinaco]

I assume your asking in reference to the financial situation. Even the effect of 9-11 on markets and the economy. (not the terrorism act itself... that threat).


I am more concerned now. Back then I saw it is a bubble that was deflated but had little concern the general economy and overall market would return to past levels.

Right now I am concerned that there are too many problems for a normal recovery like we have seen during typical business cycle downturns.

 

[Free To Canoe]

I am more concerned now. I was more or less concerned back then. I was working then, am ERed now.

I seemed like it took forever for the market to turn around back then. It already feels like that now and it hasn't been that long!

I think the thing that bothers me the most is that I have a dim understanding of why the market (and coming soon, the economy) is going down SO hard.

Working on my resume today. I hate j*b searching. ER was good while it lasted.

Glad I found this forum!

Free to Canoe

 

[MichaelB]

I was more concerned in '02, even though this situation is much more dangerous and my aggregate portfolio decline is slightly greater - so far.

The difference is then I focused excessively on my portfolio decline. Now I focus much more on market opportunities and manage to portfolio sustainability vs absolute value.

Michael

 

[lazygood4nothinbum]

present company excluded, of course, but not so glad i found this forum. not so glad i ever thought i had the money i thought i had. rather i think i was better off before i even had a concept of retirement.

in 2000-2002 i had a secure job and i had my mother. now i have neither. it's different this time.

 

[Nords]

Well I guess if we hear that either you or Mrs Nords has accepted said position will be a clear indication that there is no hope for this market and we should all be looking for jobs. If the Nords capitulate it must be really bad.

Yikes, my apologies, I didn't mean to give the wrong impression. I edited my previous post.

We turned down the job offer. Didn't even research it. Essentially my spouse [-]laughed heartily[/-] politely thanked the shipmate for thinking of us and promised to pass the word. It's a sweet job and it probably pays well but the dissatisfiers are always the show-stopper.

BTW the assets which used to be in our ER portfolio were only there as a volatility buffer, not to enhance our lifestyle. We're only about 10-20% below the portfolio's long-term average. Those dwindled shares gave their value to maximize the portfolio's success rate/survival and they won't be needed for years, if ever. We certainly weren't going to consume more or pass them on to our heir...

 

[rickier55]

It's very difficult to recall levels of emotion like concern. From a distance of a few years, I think our recollections are softened by time. My gut reaction was to vote more concerned now, mainly becasuse I was working and accumulating then, and now I'm not.

But then I started remembering some flashes of looking at my finances and wondering if I was even going to be able to retire when I planned to.

Rick

 

[ziggy29]

Much, MUCH worse now. Not even remotely close. Not only because of the different circumstances, but because those with diversified portfolios did "okay" in 2000-2002 because some equity classes (small caps, REITs, gold miners, et cetera) were quite strongly positive (as was my holding in Berkshire Hathaway) and kept losses to a minimum. There is NO refuge among equity asset classes this time around -- none.

Note that if I was way overweight in tech and U.S. large caps back then, my answer might be different.

 

[NW-Bound]

In 2000-2002 everyone rushed into real estate. What can we rush into now? Nada.

You are thinking what the next bubble is going to be.

Well, given that the stock market has been decimated, I am only planning on making money betting that things return to normalcy. It may be a while before I can see my old high of Oct07, but I am only looking to make a bit of money from this ridiculous market low right now.

In a way, it is a bit easier to invest now. Every stock has been taken out and shot, or caned to near death. I have been buying slowly. A bit of mining stocks, not precious metals but coal and commodity metals, a bit of consumer staples, a bit of chemical industry, a bit of utility stocks. Everything is on sale, I have a heck of a time making up my mind. I let Buffet keeps some too. I kept having to tell myself to take it slow. It may take a bit longer than 2001-2003 recession, but we will overcome this.

Remember that every asset class is down, except for paper money. Paper money! Countries around the world are firing up their printing machines! Oh, all that precious paper money. There's more where that comes from.

I'm less concerned. Back then I had a j*b I could loose, not now. Back then I would require a 10% WR, not now. Back then I had many years to live, 6 fewer now. Back then I couldn't get CPP (Cdn SS), not now.

How's the planning for your trip down under? For a man who professed to have lost a 7-figure sum (big money whether in US or Canadian dollars), you still have an upbeat spirit. You da man!

 

[youbet]

I voted 'more concerned' based on being employed then and retired, living solely on my investments now. Big difference.

Me too!

 

[Walt34]

I am less concerned, but perhaps I just don't understand the situation. We have medical insurance, a COLA'd pension and zero debt so all the basics are paid. While I did choose to get a job, I'm working 30-38 hours a week so it's not quite full time and it's almost all play money.

However, the deferred compensation account (similar to 401k) is down 10%. Since others have mentioned being down 40+%, I guess that's not so bad.

 

[d]

i do not (and have not) had the same sense of dispair and foreboding ... but i'm not too sharp.

 

[cardude]

Way more concerned this time around. After 9/11 we sold the heck out of new Chevys and Dodges and made lots of money. Plus, most of my portfolio was in Berkshire back then, and it did nicely while most other stuff tanked.

Now the car business is horrible-- our sales are down 2/3 and for the first time I'm just trying to figure out how to break even, and I'm a really small dealership with only 14 employees and I own my own building, so I can imagine what the bigger stores are going through. Most customers are just totally tapped out now, and I'm afraid it could last a year or two.

Also, I diworsified out of some of my Berkshire last year and put it into things that have done much worse. Plus, this time Berkshire stock is really taking a dive.

 

[ziggy29]

I am less concerned, but perhaps I just don't understand the situation. We have medical insurance, a COLA'd pension and zero debt so all the basics are paid. While I did choose to get a job, I'm working 30-38 hours a week so it's not quite full time and it's almost all play money.

I suspect you're right -- the "maximum fear" situation doesn't seem to apply to you, based on what you described in this paragraph. I suspect I wouldn't be very worried if I were in this situation, either.

 

[Tadpole]

I am at the giddy phase. Told my husband I was going to buy 2000 shares of GM when it passed through $1.

 

[FurBall]

Way more concerned today. Although DH was retired then, I was making too much money and retirement wasn't something I even thought about. Now I'm retired, consulting 3 days a week and considering full retirement.

 

[kjrn]

Worse scenario but better prepared...

<delurk - long time since last post>

I voted "I am not as concerned now as I was then." While the overall situation is worse, -we- are a little better prepared this time around.

2000-2003 went like this:
DH moved us from 100% cash to 100% invested 3/20/2000 (ouch!)
Over 90% equities, heavy on tech...
Had some debt & mortgage
I had a crash course in investing (pun intended)

I have a GREAT DEAL of sympathy for anyone suffering major losses... I went back to w*rk FT for 6 years to help get things back on track. Also spent a lot of time studying investments/retirement planning/asset allocation etc. and relieved DH of having to deal with our investments (which he didn't enjoy and was happy get rid of).

Now:
Allocation as of spring 08 - 40/40/20 cash
No mortgage
No debt

I've been on 'trial retirement' for 18 mos. If absolutely necessary, that could be changed on a few days notice. DH still runs his own company from here at home. Our portfolio is bruised but hasn't reached a level that changes retirement plans.

Honestly, I'm almost glad (okay, maybe that's a little extreme) for having weathered 2000-2003, as it was a driving force that led us to being better prepared this time around.

I *am* starting to trickle some of that cash back into the market. I'm not clever enough to call the bottom, but I have a gut feeling the Dow won't be at 8200 in 5-10 years.

Kay/TX

Interesting to see the different perspectives on this subject -- glad you posted it!

<lurk mode on>

 

[barbarus]

I'm vastly better off financially now. Makes no difference on my vote.

The fundamentals, globally, are horrible. This is going to be a major disaster.
Politicians and bureaucrats are typically trying to looking after themselves and their wealthy friends, but all they can accomplish is to make a dreadful situation much worse.

No person, group, country or even counties acting as a group can stop this untergang.

If I sound like a "doom and gloomer" it is just because I'm holding back on this public forum out of politeness and not stating how bad I think things are really going to get.

To end on a positive note, it will NOT be as degenerated as a "Mad Max" movie scenario.
Just an excruciatingly miserable life of want and shattered dreams for most of us.

 

[haha]

Just an excruciatingly miserable life of want and shattered dreams for most of us.

Amen Brother!


YouTube - Johnny Hates Jazz - Shattered Dreams (UK Version)

 

[Notmuchlonger]

I'm vastly better off financially now. Makes no difference on my vote.

The fundamentals, globally, are horrible. This is going to be a major disaster.
Politicians and bureaucrats are typically trying to looking after themselves and their wealthy friends, but all they can accomplish is to make a dreadful situation much worse.

No person, group, country or even counties acting as a group can stop this untergang.

If I sound like a "doom and gloomer" it is just because I'm holding back on this public forum out of politeness and not stating how bad I think things are really going to get.

To end on a positive note, it will NOT be as degenerated as a "Mad Max" movie scenario.
Just an excruciatingly miserable life of want and shattered dreams for most of us.

Oh please dont hold back. I would love to read your views on how it will all end.

 

[Grep]

Holy cow. And I thought that, at worst, theater popcorn would go up another quarter!

 

[CyclingInvestor]

Slightly less concern - a bit in 2000-2002, very little now.

I missed the 2000-2002 decline (100% REITs for years), but was not FI until 2004 and my job was at risk those years (several rounds of layoffs). I could get another pretty easily, but still there was some stress.

Now I am retired and living on dividends (which have held up well so far - no REITs, no financials except GE) with a paid-off mortgage, but the economy is in worse shape, with even solid, well-run companies having credit troubles. Still, overall I don't feel uncomfortable even with 100% in individual equities. If PG / JNJ / KO lower their dividends, then I will start feeling stressed.

 

[Geoffrey]

I'm much more concerned this time around. During 2000-2002 I believed we were faced with a serious stock market bubble, but I also believed that everything would sort itself out in due course when stock prices came back down to earth. This time problems are significantly more complex and I see no simple solution. Simply put, the American Consumer is the engine that moves the economy. In 2000-2002 this miraculous engine lifted the economy out of a recession, supercharged by the housing bubble. This time, however, the American Consumer is completely tapped out and on life support. There's no housing ATM, and few lenders are inclined to extend any more credit to the moribund American Consumer (and for good reason). I believe this time we are going to have to dig ourselves out of the hole the old fashioned way -- by tightening our belts and paying down debt until it reaches a manageable level. This is not going to happen overnight. I wouldn't be surprised if it took several years. Those that are looking for a quick recovery in the equity markets -- good luck. I believe we'll get through this . . . but I also believe that the "gotta have it now" generation is going to be disappointed in terms of how long the recovery will take.

 

[haha]

2000-2002 didn't bother me much as I had almost entirely "old economy" stocks which did quite well.

I'm enough older now that I have seen some real trouble. This time I am getting my $ss handed to me, but it doesn't bother me too much because at least I don't have some horrible disease.

YouTube - Let the Goodtimes Roll - Shirley & Lee

ha