Market timing is always impossible, but I was starting to get scared about housing in '06 and more in '07 (I experienced the Southwest Savings and Loan crash in the 80's and Cali in the late 80's which had a lot to do with this and, more importantly, I was getting close to 50 with 90%+ in equities). So I scaled back the equity allocation through late '06 through mid '08, gradually while buying intermediate Treasury funds and TIP funds (and a few other bond funds).
An important lesson, since I think the peak of the loss was 25% at the nadir in March '09, but the rebound was substantial and almost unbelievably quick. Had the crash happened earlier, I would have been burned much more significantly given the earlier equity allocation.
I also was rebalancing into equities in late '08 and early '09 as the crash accelerated--and thinking I didn't know what the hell I was doing.
As a note, I also sold some of the equity gains in '11 and early '12, which scaled back the rocket boost back, although I kept largely within my targets established in '08. This is not to note my genius, more to indicate the wisdom of establishing an appropriate Asset Allocation and largely sticking to it. Had I not been approaching 50 in '06 (well 48), things might have gone very differently, but I was aware that 90% equities might not be very appropriate.
DW was also affected by the Enron crash in '01, which a year or two earlier at the time, I had wished I could have hedged the run up (she worked for Dynegy, not Enron). I had run as far as I could in other assets from energy, since so much of an increase was in Dynegy stock--and at that point, unfortunately, the company match was required to be in Dynegy stock. Allocating the rest of assets outside of energy helped a lot.
Just to illustrate a few market horrors. Despite that, we have emerged all right in the end. In fact, very well. So far.
The top of the S&P on 10/31/2007 was 1565, and the bottom on 3/9/2009 was 677. That's a drop to 43% of the top, or a loss of 57%!
The market drop in 2009 was indeed scary, but somehow people forgot that just a few years earlier the tech stock and dotcom meltdown plus the effect of 9/11 was just as terrifying.
The S&P top of 1527 was reached on 3/23/2000. Its bottom on 10/9/2002 was 777. That's a drop to 51% of the top (loss of 49%).