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Utilities buy energy, so if their costs go down, their profits can go up.
Was that the quickest correction or what ?
- Thread starter frayne
- Start date
Aeowyn
Recycles dryer sheets
To take the edge off market volatility, I like to look at the lowest value my portfolio has been in the last 18 months (this includes contributions - withdrawals + growth). I mostly use it for determining what my withdrawal rate should be. I don't care for the standard 4% of whatever your balance is when you start and increase every year for inflation regardless of what your portfolio did for the year.
Instead of 4% I use 6%. But it is not a starting 6% that automatically gets adjusted upward every year. I keep track of my portfolio value at the end of every month (I also subtract non-mortgage debt if applicable). I take 6% (divided by 12 for monthly allocation) of the lowest portfolio value for the prior 18 months. I didn't want my draws to change wildly every month, and of course I wanted to minimize the chances of having to decrease the magnitude of my draw. I back tested my portfolio mix a bit and found that 18 months looked like a good time period to bring the stabilization I was looking for.
So to apply this to what you have chosen for your FI number -- IF your FI number is Y, then when you can look back 18 months and the lowest your portfolio value is is Y, you are FI.
Just a thought. I sometimes think of things a little differently so take it for what it is worth.
I have a fairly aggressive portfolio with mostly equities and a decent allocation to small caps and emerging markets. A more conservative portfolio may be better off decreasing the draw rate and may only need to look back 6-12 months (instead of 18) to smooth things over.
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Major Tom
Thinks s/he gets paid by the post
It didn't feel like a correction to me, as the S&P500 returned to it's previous level very swiftly. It felt more like extreme volatility. As I began portfolio withdrawals in 2011, I have not yet had the experience of going through a downturn while in the withdrawal phase. I quite enjoyed this little excursion, as it felt like a bit of gentle training for whenever an extended downturn, or a real correction actually does occur.
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I sold one fund for reasons unrelated to the market conditions. (I don't brook with market timing, so the fact that it had fallen 10% from its recent high was not supposed to affect my plan to sell it.) It is a little bit of a concern that it has now recovered about a third of that, but it was the time that sale was planned, for other reasons.
Maenad
Recycles dryer sheets
Our monthly Vanguard purchase happened on Oct 20th, just off the bottom a bit, so we had a purchase at a lower price. I'm sure it had a small effect on our bottom line, so 
. Other than that, I was just annoyed at the "traders" that were obviously overreacting and driving this little event (as opposed to "investors" who don't panic at the drop of a hat).
. Other than that, I was just annoyed at the "traders" that were obviously overreacting and driving this little event (as opposed to "investors" who don't panic at the drop of a hat).
heeyy_joe
Thinks s/he gets paid by the post
Stood pat on 99.5% of portfolio. Made money on short term trades in CREE and LUMBER LIQUIDATORS. Added PALL and EPD to retirement portfolio. Maintaining a 20% cash position overall.
donheff
Give me a museum and I'll fill it. (Picasso) Give me a forum ...
+1 I don't know how long a downturn needs to extend to make it feel like a correction but that wasn't enough. On Friday I converted some equities to cash for next year's withdrawals. Hoping we get a bit more upside before I liquidate the rest of the year's funds. Sooner or later we will take a hit that knocks the whole year down and I will feel like I am seeing a correction.
Andre1969
Thinks s/he gets paid by the post
I didn't keep track of peak-to-trough, and only keep final-day financial data for each month on my spreadsheet, but as of Friday's close, I'm down about 1.3% from my 8/29/14 peak, which incidentally, was a new high.
On 9/30/14, I was down about 2.7%. I think there was a point somewhere in early October where I was down about 7-8% off that peak, but that data's gone now.
The last time I really had a correction worth whining about was from March-May 2012. That took me down about 6.7%. And I didn't fully recover until August.
I had a ~14% correction from July to August, back in 2011. That one seemed pretty scary, as I saw about $90K evaporate in just one month. That was the most money I had ever "lost" in a single month, and a good lesson to focus more on percentages, rather than dollar amounts!
I lost more money, percentage wise and $ amount, in the "Great Recession", but, that was dragged out over a longer time span. And for comparison, back during the tech bubble burst, 9/11 tragedy, and following recession, I didn't even have $90K to lose!
On 9/30/14, I was down about 2.7%. I think there was a point somewhere in early October where I was down about 7-8% off that peak, but that data's gone now.
The last time I really had a correction worth whining about was from March-May 2012. That took me down about 6.7%. And I didn't fully recover until August.
I had a ~14% correction from July to August, back in 2011. That one seemed pretty scary, as I saw about $90K evaporate in just one month. That was the most money I had ever "lost" in a single month, and a good lesson to focus more on percentages, rather than dollar amounts!
I lost more money, percentage wise and $ amount, in the "Great Recession", but, that was dragged out over a longer time span. And for comparison, back during the tech bubble burst, 9/11 tragedy, and following recession, I didn't even have $90K to lose!
Sunset
Give me a museum and I'll fill it. (Picasso) Give me a forum ...
Same here, bought about 40K worth, as it was coming back from the bottom. But had hoped/planned for a 15% drop, so had pre-set orders that I left in place so I still have more for the next drop.
Disappointed with how fast it was, definitely did not feel like a correction, so I missed funding my 401K due to transfer times of the $$
RockyMtn
Thinks s/he gets paid by the post
I did nothing and am glad.
Do you think the speed of corrections is shortened these days as a result of all of the computerized trading programs the big guys use? Face it the retail investor is not moving markets, it's the big boys and there computers. Maybe as a result corrections will be quicker than what we have seen in the past?
Do you think the speed of corrections is shortened these days as a result of all of the computerized trading programs the big guys use? Face it the retail investor is not moving markets, it's the big boys and there computers. Maybe as a result corrections will be quicker than what we have seen in the past?
Thanks for posting this. Nice way to smooth volatility and gives me food for thought.
audreyh1
Give me a museum and I'll fill it. (Picasso) Give me a forum ...
No. What drove the correction had nothing to do with computerized trading. It was big guy (oil price) trades gone bad which forced them to sell a lot of other things to cover, topped with a little ebola panic. Then when the big guys were done selling, in the absence of sellers it popped right back up.
Computerized trading glitches cause flash crashes, and those are more likely to occur during a correction, but they don't drive the speed of corrections.
I'm now a few % above the previous high in my index tracking account, in euro's though.
This correction lasted shorter than my mother's vacation. Guess she'll have a merry christmas when she's back in a few weeks.
This correction lasted shorter than my mother's vacation. Guess she'll have a merry christmas when she's back in a few weeks.
I made some money - bought equities on 10/15 even though my AA was still fine. I'll be selling them in a couple weeks, assuming markets don't tank again.
That makes me 2 for 2 on market timing this year (also bought on Feb 3rd). Maybe I should quit my job and become a trader.
audreyh1
Give me a museum and I'll fill it. (Picasso) Give me a forum ...
Anyone who doubts the correction is over - new closing highs yesterday and today, new intraday highs too. If we "correct" from here, it will be a completely separate one!
This happened way too fast for me to do anything.
This happened way too fast for me to do anything.
ReadySkiDaddy
Dryer sheet aficionado
Not me. CD's pay 1%, everyone is worried about the "bond bubble", and governments are printing money like crazy. That is all good news for stocks.
I've read that 2-3% is just ripple or minor waves, 10% is expected, every now and then, and 20% is a real correction. Well, 30-35% drop is a bad one especially for a retired person."
In the long term a bad correction may be followed by a "bear market".
In the long term a bad correction may be followed by a "bear market".
Al in Ohio
Thinks s/he gets paid by the post
I heard it wasn't a correction at all. Just a return to volatility that we had been absent from for an extended period.
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