Did 2008 Recession Spoil You?

[audreyh1]

audreyh1, What is that style, please? I’m curious. I think I recall elsewhere that you use a fixed withdrawal % and park excess cash for use in the down years. What else makes you bullet-proof?

Did I say I was bullet-proof? No, I’m just a passive investor. Boring.

I just picked an AA I thought I could stick with during ups and downs and I rebalance usually just once a year at the beginning of the year when I take my withdrawal. That’s it.

I consider this a very low-maintenance mostly hands off approach. I’m not interested in tracking any economic data and acting on it or trolling for a quickie opportunity or in doing technical analysis. I didn’t want any system that required me to watch anything or guess the future.

My goal was to be able to ignore the markets all the time if I wanted to. To be able to take off on a long trip and be blissfully ignorant of market happenings.

 

[unclemick]

Market investor since 1966. Full auto 2006 via Target Retirement as as in computor asset balance and re balance. AND since 2013 (70 1/2) full auto RMD into MM, FED and state tax deduct. Auto direct deposit dribble out to my local bank for spending cash.

Ignore and diddly bop on?

heh heh heh - nope. Still watch Mr Market and feel that little twinge in big moves. BUT so far 'hurry up just stand there' ala Mr Bogle. 'This time it's different' hasn't got me yet.

 

[DEC-1982]

But, as the OP, the real question is if the aftermath of 2008 emboldened you.

No. My circumstances are different, both financial and mental.

 

[Markola]

Did I say I was bullet-proof? No, I’m just a passive investor. Boring.



I just picked an AA I thought I could stick with during ups and downs and I rebalance usually just once a year at the beginning of the year when I take my withdrawal. That’s it.



I consider this a very low-maintenance mostly hands off approach. I’m not interested in tracking any economic data and acting on it or trolling for a quickie opportunity or in doing technical analysis. I didn’t want any system that required me to watch anything or guess the future.



My goal was to be able to ignore the markets all the time if I wanted to. To be able to take off on a long trip and be blissfully ignorant of market happenings.

Thanks for sharing. That appeals to me too.

 

[haha]

Did the recession of '08 spoil you or ruin you?

Is none of the above allowed?

 

[copyright1997reloaded]

I originally bought AAPL at (split adjusted)$.79/share. Over the years I sold all of it, at incredible profit levels. I sold when I had plenty of AGI room to get the 0% CG tax break. Since I won't be seeing those opportunities again (too much income), if I still owned it I would just keep it and let it pass on to DD after DW and I die, so she would get the cost basis step up. Now that I think about it, I'm in the same boat with BRK.B. I don't need the money from it, and don't want to pay the taxes. Luckily over the years I've moved the majority of my gambling account into a Roth IRA so I don't have to worry about these little issues.

The step up in basis and the ability to (better) control that is an advantage of single stock holdings that is frequently overlooked. I have some lots that have tremendous profit %'s, e.g.
some ADI w/purchase price $0.56, current price $89.53
some AAPL w/purchase price $1.40, current price $176.21
some EW w/purchase price $2.02, current price $134.56
and others.

Since I have a child, I am hoping that these investments remain wise and throw off enough dividend income such that I never have to sell them and DC will eventually receive them with a huge step up in basis. (These are not in tax-deferred accounts). So my income (when needed) will come from tax-deferred accounts (non Roth) which will come out as ordinary income regardless if it is to me or to DC via a beneficiary IRA.

Sometimes this strategy doesn't work out. If an investment starts to develop fundamental issues that cause me to question keeping it, I will need to sell it and deal with the lost basis opportunity. I also had a major holding (LLTC) with a very low cost basis get bought for mostly cash (by ADI in the list above), which generated a capital gain which I am dealing with on my 2017 taxes....so no step up on basis on that one.

 

[daylatedollarshort]

I learned from 2008 that the only activities I want to white knuckle from now on are at Six Flags, so we lowered our stock allocation.

 

[HadEnuff]

I'm more concerned about a 10 year span like 2000-2010. It worked out for me, because similar to others here, I was still accumulating.

 

[scrabbler1]

With the market seemingly taking a 300+ point drop every day of late, my general reaction is 'meh!'.

Having white-knuckled the 2008 Great Recession and survived it quite profitably, I'm wondering if one of the side benefits was for folks to have learned to not over-react to such drops.

So, did anyone else change their view of market drops/corrections after 2008? In addition to now viewing market plummets as buying opportunities, are you more relaxed about a big air pocket than before '08? Did the recession of '08 spoil you or ruin you?

I ERed in late 2008, when the markets were crashing. It greatly helped my ER because I was able to buy 20-25% more shares of my chosen bond fund at rock-bottom prices.

As for the stock side of my portfolio, the overall rise in the market has caused me to repeatedly rebalance away from stocks so many times that I have in my rollover IRA actually transferred out a little more than the original amount I bought into it back in late 2008. This means I am playing with the house's money, and that money has doubled (along with the bond side, mainly due to the influx of rebalancing money).

The recent bumps in the market have not fazed me, not even made a dent in my AA, so no rebalancing moves. It would take a lot more of a decline to cause me to even make a rebalancing move. And to frighten me to a degree even close to what happened in late 2008 I would need to see additional negative events like those we saw in 2008 such as rising unemployment and some big business failures. These days, it's just noise.

 

[Cayman]

"Where's the bottom?"

I probably asked myself that 100 times in 2008-09. I didn't sell and was 80% equities. I was anxious though! Even with years of living expenses in cash and plenty of work income. Future recessions won't be any easier for me mentally, and we're RE now, but I'll stick to my AA. And hope my cash reserves hold out.

Another BIG concern - access to quality, affordable health insurance after 2018.

 

[Dtail]

Another BIG concern - access to quality, affordable health insurance after 2018.[/QUOTE]

I am fully dependent on ACA currently, so have these yearly concerns for 6 more years.

 

[harllee]

In 2008 I did not have enough cash. I had many sleepless nights. But I held on and came out OK in the end after a lot of belt tightening. Now I have much more cash (probably too much) but I want to sleep at night. So I would say 2008 made me more cautious and conservative.

 

[MarieIG]

If I had to pick one or the other, I would go with spoil.

 

[RenoJay]

If I have a 'meh' mentality today it's because my allocation to stocks is much lower than 2008.

+1

And for the record, I don’t consider a 3-10% drop from record highs after a decade long bull market to be a buying opportunity. When markets plummet 30% +, and people everywhere are freaking out the world is ending, that’s when I’ll be a buyer.

 

[Cayman]

+1

And for the record, I don’t consider a 3-10% drop from record highs after a decade long bull market to be a buying opportunity. When markets plummet 30% +, and people everywhere are freaking out the world is ending, that’s when I’ll be a buyer.

Right on. I'll be a conservative buyer (money that isn't needed for continued FI) and I'll buy only after a 25%+ drop.

 

[NW-Bound]

...And for the record, I don’t consider a 3-10% drop from record highs after a decade long bull market to be a buying opportunity. When markets plummet 30% +, and people everywhere are freaking out the world is ending, that’s when I’ll be a buyer.

I bought during the recent market rout. Just to increase my stock AA back to where it was in early Jan before I sold. Been working to reduce the AA back. Will not get rich or anything if I am successful with the maneuver, but something to do for fun. If I am wrong, won't bankrupt me either.

Yes, I play short-term market movements too. Big market drops like the Great Recession in 2008 do not come by very often (or one hopes so).

 

[Lsbcal]

With the market seemingly taking a 300+ point drop every day of late, my general reaction is 'meh!'.

Having white-knuckled the 2008 Great Recession and survived it quite profitably, I'm wondering if one of the side benefits was for folks to have learned to not over-react to such drops.

So, did anyone else change their view of market drops/corrections after 2008? In addition to now viewing market plummets as buying opportunities, are you more relaxed about a big air pocket than before '08? Did the recession of '08 spoil you or ruin you?

Short answer: I radically changed my investing style after the market bottom and into the rise in June 2009. I rode out that decline though in true buy-hold fashion. I will not buy stocks into a declining market and will sell stocks into a rising market to maintain max equity percentage.

I changed methods in 2009 after a lot of time researching various timing methods. I won't go into details but the goal is to avoid a 1930's style many years bear market. The 2008-2009 decline was not of that duration or magnitude. But it might have been had events been otherwise. I'm not trying to time those 10% drops either. I've been fully invested since 2009 after my rebalance higher in stocks.

This last week in the markets shows how unexpected future events can shape our markets. Some commentators have said that they did not expect such protectionist measures and were surprised by the announcements. This is not a political pont. The point is that future unknowns will drive our markets and well, we just don't know.

 

[audreyh1]

+1

And for the record, I don’t consider a 3-10% drop from record highs after a decade long bull market to be a buying opportunity. When markets plummet 30% +, and people everywhere are freaking out the world is ending, that’s when I’ll be a buyer.

Same here! I can’t get excited about a 10% correction when markets are way overextended.

 

[hesperus]

It spoiled me in a way not many people normally think of. The recession brought development in our beautiful area to a screeching halt. It also allowed us to get a fantastic price on a home. Things were quieter, with less tourism. That was very nice. Now, with the economy chugging away and all sorts of new developments building out, more traffic, and density increasing, all have me kind of wishing for another recession. My (selfish) two cents.

 

[NW-Bound]

Yes, the riff-raff now also have money, and they are surrounding you.

Perhaps that's why people keep moving up, to get away from the crowd.

 

[HFWR]

Not spoiled, but starting to smell funny...

 

[unclemick]

Three teeth pulled this week and DW's Doc making suggestions about a future knee replacement we are more worried about ER rot than a Mr Market rout.

Spend that AA and boogie while we can.

heh heh heh - Coming up on 25 years of ER, more worried about the hour glass running out of sand than Mr Market doing us in. A good thing. I think?

 

[Lsbcal]

Unclemick thanks, good reminder to not forget to live it up.

Today we made reservations for a trip to Zion and Capital Reef for mid-May.

 

[W2R]

Three teeth pulled this week and DW's Doc making suggestions about a future knee replacement we are more worried about ER rot than a Mr Market rout.

Spend that AA and boogie while we can.

heh heh heh - Coming up on 25 years of ER, more worried about the hour glass running out of sand than Mr Market doing us in. A good thing. I think?

Ouch! So sorry that you two are going through this right now.

 

[RenoJay]

It spoiled me in a way not many people normally think of. The recession brought development in our beautiful area to a screeching halt. It also allowed us to get a fantastic price on a home. Things were quieter, with less tourism. That was very nice. Now, with the economy chugging away and all sorts of new developments building out, more traffic, and density increasing, all have me kind of wishing for another recession. My two cents.

The way I rationalize increased traffic, crowds, etc. is that it's adding to my home value. Otherwise it'd be too annoying.