What was the tone of this forum during the crash?

[Closet_Gamer]

Before my time on this board. On one hand I was in a safe job in a company that kept growing thru the recession, so we were very blessed. On the other hand, I had just moved to a more expensive part of the country and bought a house that cost 2x the one I sold...not because we traded up but just because of COL. Got hammered on the house. Still looking up to see the surface of the water.

The implosion of the kids college funds was what really scared me. We had been so disciplined including putting over $50K into a 529 when I got a severance check in 2000. I remember looking at it one day and realizing that we would have been better if we'd buried it in the backyard. I also remember thinking that my least depreciated asset was my BMW 3 series and chuckling that I should have bought the 5 series.

Overall we were OK on the discipline front but not perfect. After it started to recover (back to Dow 8000) I switched 1/3 of the kids college money into a guaranteed growth fund...obviously that was dumb. Moved the other 1/3 into a more conservative AA...less dumb but still dumb. I fell victim to recency bias and also held onto growing cash for about 2 years expecting another drop that didn't come so I bought higher than I should on the way up. But I didn't panic and sell everything for example.

It did cause me to stare down the "how long could we last unemployed" question even harder and I became much more conservative in how I thought about my balance sheet. Which is probably a great thing. I sleep great (at least on this stuff).

 

[Ronstar]

I was here, and I'm glad I was. This board gave me a sense of calm when I was in panic mode. I didn't take money out of the market, kept maxing out my 401k and eventually got my NW above where it was pre-crash.


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[travelover]

I tax loss harvested all that I could and am still taking $3000 deductions every year. I didn't sell, but then other than reinvested dividends, I didn't buy either.

 

[Alan]

I tax loss harvested all that I could and am still taking $3000 deductions every year. I didn't sell, but then other than reinvested dividends, I didn't buy either.

Showing my ignorance here no doubt, but if you didn't sell anything how come you are still writing off losses 6 years later? I assume that "$3,000 deductions" actually refers to the tax credits against regular income allowed each year for realized capital losses.

 

[Walt34]

I had recently stumbled into a convenient post-retirement job and at the time was only planning to stay two or three years, that turned out to be five before things went south and I quit anyway. But in December 2008 I was confident enough to drop $12k on a motorcycle. It was heavily discounted because it was last year's model and motorcycles don't sell well around here in December.

Admittedly if I hadn't had the job and saved the cash to write a check for it I wouldn't have done that.

 

[Jack_Pine]

That retro link was a great read. Those were challenging times............

 

[travelover]

Showing my ignorance here no doubt, but if you didn't sell anything how come you are still writing off losses 6 years later? I assume that "$3,000 deductions" actually refers to the tax credits against regular income allowed each year for realized capital losses.

Sorry, I wasn't clear. I did what was a legal wash sale. I sold index funds and bought back essentially the same funds in segments. For example, sell Total US stock market index fund and buy back separate large and small cap index funds.

 

[Lsbcal]

I think a lot more of our members (especially new or young members) feel they are investing genuises now, than did then. I don't think many of those who were forum members during the crash, are trying to represent themselves that way presently. A few, and surprisingly nobody "calls them on it". I think we all remember what they were saying during the crash, though.

During the crash, several people posted alarming posts about how they were selling everything and getting out of the market. Many of us tried to hold one anothers' hands as we faced new and scarier news about it every day, but it was awful. ...

I hope I'm not one of those who has forgot his scary boots roots i.e. is now rewriting the past in his head and posts.

I had to look it up but here is something I wrote back in Oct 30, 2008, http://www.early-retirement.org/for...g-when-approaching-er-or-retired-39923-2.html:

I'm taking a slightly different approach to rebalancing. Originally our AA was 55/45 with a max of 60/40 and a min of 50/50. In recent years I did not let the equities get above 55% since it seemed prudent for us to take that off the table. Right now it's at about 45/55. I'm going to do a passive rebalance for now. By that I mean spend from the fixed income portion of the portfolio and so the equity portion rises at a rate of about 0.5 * spending_rate.

Part of the reason I'm doing this is because we are just at the beginning of a recession. It would be kind of unusual if equities rose in a recession. Of course, we do not have a lot of post-war recessions to go on. From the start of a recession until an SP500 bottom has been anywhere from 3 to 19 months long. If I'm wrong (actually hope I'm wrong) and equities take off then all I've missed is the rebalance bonus. If I'm right then eventually spending from FI will get me back to 55/45.

It's a conservative approach but I think it's prudent since I'm not going back to work.

Wow, I found this posted right about at the bottom of the stock market decline on March 11, 2009, http://www.early-retirement.org/for...own-market-and-long-term-effects-43020-3.html

A few comments that may not have been mentioned:

1) If you are spending from fixed income while retired then you will slowly be rebalancing by default. So you could perhaps justify doing nothing.

2) I've decided to rebalance to some extent based on a market timing methodology. That way, I will not be doing things based on my feelings about the market. It is completely mechanical based on past market history. It's an approach that is fairly complex and I would not recommend it to anyone else. A fairly simple approach is to pick a buy in point based on something like a 50-200 day exponential moving average or even a 200 day moving average. Yahoo charts make this pretty easy to do.

3) Even mechanical trend following approaches can be wrong for some time. In 1932 there was a big up move in the market for around 2 months and then a major fall back to previous lows. At that point the market moved up big time until the next recession in 1937.

3) Coming out of previous major downturns (1933, 1975) small value stocks did better then the general market and even large value.

4) I'll be value tilting my portfolio but only when the trend starts up as measured by past fairly reliable price indicators.

5) There is some comfort in having a plan which has worked in the past.
It could all be different this time, of course.

Right now we are at 65/35 so yes, I've gotten more optimistic over recent years (not months). I've also gone semi-Bogleheadish. I did a lot of soul searching and research in early 2009. Came to the conclusion that for me some very modest market timing might be necessary in the future. But the conditions are fairly precisely defined and not anywhere near present right now.

 

[Bikerdude]

As I recall several posters due to concentrated portfolio's (financial) left and returned to w*rk.

"Only when the tide goes out do you discover who's been swimming naked."

Warren Buffett

I survived, but when the tide went out I was wearing speedo's.

 

[clifp]

A few more interesting threads from back then

http://www.early-retirement.org/forums/f28/dow-8000-a-33898.html
http://www.early-retirement.org/forums/f28/here-comes-the-recovery-42695.html
http://www.early-retirement.org/forums/f28/how-far-will-you-ride-this-market-up-43352.html
http://www.early-retirement.org/forums/f28/how-far-will-you-ride-the-market-down-42868.html

In addition to the good links Michael posted here some other selected highlights.

I was pretty optimistic about the long term prospects of stocks starting in Oct of 2008, and while I was discourage by March 2009, i was still a bull in general and very bullish on certain blue chips like Berkshire Hathaway and GE, and Apple.

for a 12/28/2008 thread

I expect market returns going forward to exceed 10% for the next decade or so.
Given that it is relatively easy to find dividend yields in the 5-7% it doesn't take a lot of share price growth to hit that goal. It isn't all rosy I think the systemic problems revealed over the last year, mean that overall earnings growth will probably barely cover population growth when measure from 2007 to 2017.

Of course, I've been playing an economist online for more than 20 years and my track record is nothing to brag about

71 months latter VTI is up 14.5% annually so even though I was more optimistic than most the market needs to go up only 3.8%/year over the next 4+ years to hit the 10% market. Which is basically dividends plus 2%.

Here is great post by HaHa 11/08 in response to a bear.

It is always wise to be skeptical of others. For the most part I too feel that what is said here or anywhere else should be taken with a grain of salt. But that leaves you with two choices- either work out your own framework for investing, or stick to a very conservative allocation and never change it, or only change it only on some age-related schedule that you work out in advance of stress. What you probably should not do is change to a more conservative plan because equity quotes are down. I guess one exception might be if you know you could still survive on whatever you still have, and you have no faith that you could hang on until your networth recovers. I would do almost anything to avoid being caught in this position.

I want to be very clear. I am not sure that I am right to currently have a constructive posture toward the equity markets. What I am sure of is that based on past history the odds now favor investment in equities, rather than dis-investment. If you want to say past history may not count, I have to admit that you are right in this statement.

But I am a practical person and I have to work with what I have, so I am pretty much all in. What I can do now if I want to increase exposure is trade speculative bonds for stocks, but I probably won't. My committment to equities may be excessive, but I doubt that my timing will turn out to be wrong given a little time.

I know for sure that if I ever was willing to be close to 100% invested, now would likely be a good time. And prior to this recent meltdown, I haven't been willing to be 100% invested since 2004 or 2005. So far this time around I made one clear mistake- I underestimated how far down many excellent companies might go.

If anyone is interested, I have commented on stocks and investments from time to time. It's all here. I am definitely not a perma-bull, at least with regard to investing.

Ha

In Feb 2009, Running Man increased his exposure to equities from 15-25%.

This thread from Feb 09 "Are there any bulls left", in fact found plenty of bulls with way more people buying than selling.

Finally here is my novella length post explaining why buying Berkshire Hathaway is a good idea 03/02/09 just days before hit its lows.

One thing I did notice is that most of the sky is falling bears from that time are no longer active members while most of the bulls are..

 

[audreyh1]

A few more interesting threads from back then

http://www.early-retirement.org/forums/f28/dow-8000-a-33898.html
http://www.early-retirement.org/forums/f28/here-comes-the-recovery-42695.html
http://www.early-retirement.org/forums/f28/how-far-will-you-ride-this-market-up-43352.html
http://www.early-retirement.org/forums/f28/how-far-will-you-ride-the-market-down-42868.html

I don't think Moemg got out in Mar 2009 after all, did she? I hope not, as that turned out to be the bottom of the terrible bear market.

That last link has some good soul searching!

Were all Dawg's at this point. Some just won't admit it.

To answer Moemg question, I'm prepared to go to zero. I can't see riding it from 14k to where it is now and bailing.

Yeah, what he said!

Audrey

I remember catching the falling knife four times during that episode (late 2008, early 2009). It sure felt like I was bleeding plenty. Ouch!

I thereafter increased my rebalance trigger bands , but otherwise hung in there!

 

[Alan]

Sorry, I wasn't clear. I did what was a legal wash sale. I sold index funds and bought back essentially the same funds in segments. For example, sell Total US stock market index fund and buy back separate large and small cap index funds.

Cool, nice moves

 

[Texas Proud]

Just as an aside to the OP.... I actually did not sell back in 2008 and kept investing... and I was 90% equity....

But since then have been laid off, have been working some long term temp jobs and sometimes part time (which I actually like)... the recent 'correction' (not quite since it did not make 10%) was more concern to me than the 40% way back when.... I did sell to get my stock AA down into the high 70s%.. it 'cost' me since it bounced back so quickly, but I really do not care... I now have a few years of money and am not as aggressive in stocks...

Happier with the current AA, but would like a bit more yield in the bonds...

 

[Rick_Head]

Funny, no one mentioned this thread: http://www.early-retirement.org/for...-join-the-lost-over-a-million-club-40765.html

 

[REWahoo]

Funny, no one mentioned this thread: http://www.early-retirement.org/for...-join-the-lost-over-a-million-club-40765.html

Several of the posters on that thread haven't been around for years. Wonder what happened to them?

 

[Dd852]

This was a really useful look back. I wasn't on the board at that time as I was in my hard charging young exec mode (blech). I withstood the downturn well because my paper losses were balanced by savings and bonuses and a well-timed maturing of company stock -- when I look at my records I see net worth in 2008 ended down only 1%. The next time around, since I am now out and free, it won't be so easy to stay calm, I am sure! But I do think shared wisdom and company can help us all through the decisions we will need to take - even if that decision is to do absolutely nothing and wait it out. I have a stress test built into my basic spreadsheet and I feel confident at 25% or even 30% down - but modelling it is different from living it!


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[unclemick]

I love to take credit in hindsight. Investing since 1966 becoming a Boglehead along the way - I can brag about staying the course with my consolidation into VG Target Retirement in 2006.

Truth told the drop did get a tad chewy and my Ho Hum was sometimes thru gritted teeth.

heh heh heh - with Mr Market back up I'm a HERO in hindsight and can deny any fleeting thoughts of 'this time it's different'. Steely eyed investor.

But emotions is emotions - yell at tv during football games and shed a tear when the Royals lost game 7 even though I rarely watch baseball.

 

[REWahoo]

I have a stress test built into my basic spreadsheet and I feel confident at 25% or even 30% down - but modelling it is different from living it!

That was a huge lesson learned for those of us who were retired and living through it. Many who were sure they knew their risk tolerance discovered they really had no clue.

 

[audreyh1]

I have a stress test built into my basic spreadsheet and I feel confident at 25% or even 30% down - but modelling it is different from living it!

Quite a few folks saw their net worth almost cut in half in late 2008 early 2009. You really have to prepare to weather 40% down.

At least that cut in half didn't last much longer. But next time? You never know!

 

[urn2bfree]

It was all over the dartboard , from eminent apocalypse , to "No big deal , just hunker down"

I will paraphrase about the main lesson I leaned from one of Buffet's books: "If you can't stomach seeing your investment portfolio go down 50% for up to 10 years, you have no business being in equities" . This is as true today as ever, I have had aquantenances think being invested in mutual funds somehow protect you from this Just look at the NASDAQ composite from 1999 to present.

Mmm- that seems a bit extreme...has there ever been a market that went down 50% for 10 years? Even during the long slumps of the Great Depression and modern day Japan there have been ups and downs and dividends, so while I am sure such a gloomy scenario is possible--anything is--that seems to be asteroid planning to me...


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[Bestwifeever]

Mmm- that seems a bit extreme...has there ever been a market that went down 50% for 10 years? Even during the long slumps of the Great Depression and modern day Japan there have been ups and downs and dividends, so while I am sure such a gloomy scenario is possible--anything is--that seems to be asteroid planning to me...

Lakewoods's paraphrase is close. I found what apparently is the actual quote (no mention of length of downturn) here in a Forbes's list of Buffett quotes: Top 40 Buffett-isms: Inspiration To Become A Better Investor - Forbes

“Unless you can watch your stock holding decline by 50% without becoming panic-stricken, you should not be in the stock market.”

 

[Bikerdude]

That was a huge lesson learned for those of us who were retired and living through it. Many who were sure they knew their risk tolerance discovered they really had no clue.

+1

 

[Lsbcal]

Mmm- that seems a bit extreme...has there ever been a market that went down 50% for 10 years? Even during the long slumps of the Great Depression and modern day Japan there have been ups and downs and dividends, so while I am sure such a gloomy scenario is possible--anything is--that seems to be asteroid planning to me...

If you are down -40%, it is not going to seem out of the question that a further nasty drop is just around the corner. Animal instincts can take over. The Great Depression was incredibly volatile in equities. More like September and October 2008 for a few years running. Try monthly declines of -10% or -15% with +10% other months. Do this for a few years and many would just pop a gasket here.

Here are some monthly returns from the 1930's to show what I mean. I'm sure many were blown away well before this stuff even took place:

 

[daylatedollarshort]

Good for you guys with a higher risk tolerance, but I read things like the article in the link below and know I could never stomach this at the ages DH and I are at now:

"Between October 2007 and March 2009, the Standard & Poor's 500 lost 55 percent of its value. An investor with a $1 million exposure to an S&P 500 fund would have lost $550,000 in the span of 17 months. Unfortunately, many investors' retirement accounts were top-heavy in equities and, as a result, suffered significant losses in the recent crash. Nearly one in four investors ages 56 to 65 had more than 90 percent of their account balances in equities going into 2008, and more than two in five had more than 70 percent in stocks, according to the Employee Benefit Research Institute."

Source: Do stocks make sense for the 50-plus crowd?

Our plan for retirement is just to have a pleasant life with low overhead and continue to grow our nest egg with continued savings and maybe part-time work, and not mainly stock market returns.
​

 

[Major Tom]

Several of the posters on that thread haven't been around for years. Wonder what happened to them?

Perhaps we should call them up at work and ask them

Sorry, that was kind of uncalled for, especially as I've been thinking of looking for a part-time job recently.