67 % Chance Of A Crash

[IMATERP]

https://finance.yahoo.com/news/goldman-sachs-warns-p-500-131110712.html

Dont these people know that this kind of headline makes me uncomfortable? I know all the stuff about "well if you cant handle a crash you have the wrong Asset Allocation."

I think I can handle it, but it doesn't make me happy. I learned in 1987 selling off was a bad idea. I learned in 2000 individual stock picking was not my strong suit. I learned in 2007-2009, not to look at the mail, and even the word money made me greener than a new dollar bill.

Now they are throwing around the terms crash, plummet, & nosedive. If and when it happens , im going to only look at the threads that have titles like "pictures of my dog & me in a cardboard box, living in my RV with no money for gas to go anywhere, burning my old statements to keep warm, etc. You know the uplifting ones.

Anyone else notice the increase of Doom and Gloom articles?

My excellent indicator....

My SELL signal happens when I get a call from my aging parents asking me to buy MORE stock. Havn't had that call yet...

Conversely, the bottom is usually a day or two after my parents call and ask me to sell everything. Havn't had that call since 2009.

Michael

 

[Red Badger]

The w*rking stiffs at YF have to get their click count or hit the bricks....

On market predictions; FWIW, if my aunt had b@lls, she'd be my uncle.

 

[street]

I've only been investing seriously since the late 90's, so I only have the 2000-02 period and the Great Recession to go by. But, in each case, I was made whole again within about two years. It would have taken longer, but I kept on investing during the bad times, taking advantage of "fire sale" prices.

To put a dollar amount on it, here's how the 2000-02 period played out...
2000: lost $2,483
2001: lost $20,252
2002: lost $15,231
2003: gained $15,710
2004: gained $21,361

Here's how the "Great Recession" went...
2008: lost $175,544
2009: gained $130,871
2010: gained $98,471

I do remember two other quick drops though, that had me worried. The first came in May of 2010. I had probably been "made whole" again by April of that year, from the "Great Recession", but then there was a quick snap back where I dropped about 15%. That had me worried, that we were going to crash again. June and July were also down months, but the bulk of the damage was in May. But then in August it came roaring back, and by September/October I was probably flush again.

The other was in 2011. The market seemed to bounce around a lot early that year. I kept hitting new highs, but then there would be a fairly substantial pullback. Then finally, I peaked out in July, but then lost about 14% in a month. 2011 marked the last year I actually lost money, although it was only $628. By that time I had about $620K invested, so it was hardly noticeable...just annoying after the nice comeback in 2009-10. I'd say I was flush again by Feb/Mar of 2012, which proved to be yet another great year.

WOW. Thanks for the data and history I really appreciated that. I worry some but I also know I should be able to weather the storm. I'm still at 70% equity and is good when things are going well. So I have asked myself if a crash occur will I be able to lose 50%. I would hate to lose 50% but the only hope is that I recover and get back to flush.
Thanks

 

[Blue Collar Guy]

My excellent indicator....

My SELL signal happens when I get a call from my aging parents asking me to buy MORE stock. Havn't had that call yet...

Conversely, the bottom is usually a day or two after my parents call and ask me to sell everything. Havn't had that call since 2009.

Michael

Sir, would you kindly post when they make those calls?
Ty for the laugh.

 

[NW-Bound]

... Knowing you are without a pension and still 1 year from Soc Sec, I had you in mind when I was trying to ward off any down slide. ...

OK, thank you. But don't worry too much about me. I just looked at my situation, using Quicken to get some numbers across our various accounts, and it's better than I thought.

If I take all the dividends and interests I received in the last 12 months and add to that the SS we can get at 62, that's more than what I spent in the last 12 months. In fact, we underspent by 25%.

This means I should not have to count on any capital gain, nor have to spend any principal if I start drawing SS. Halleluyah!

And more than that, I incurred some expenses in the last 12 months that will not be recurring, meaning my expenses will be even lower unless I splurge on something else.

Good deal! If the market crashes, I have enough safety margin to allow myself to buy more stocks. Bring it on!

 

[flintnational]

https://finance.yahoo.com/news/goldman-sachs-warns-p-500-131110712.html

Dont these people know that this kind of headline makes me uncomfortable?

BCG, per your signature line, you are not spending from your portfolio. A decline is only good news for you and folks in a similar situation. Assuming you are reinvesting dividends, you would be purchasing stocks at the post decline sale price. When the market recovers, and it always has, financially you will be better off. If I were BCG, I would pray for a protracted decline every day. Other folks, maybe not so much.

FN

 

[Midpack]

And these aren't isolated stories... I suppose, say it often enough and you'll eventually you'll be right and then ignore how many times you were wrong.

+1. At any given time there are ALWAYS doom and gloom stories AND rosy buy-buy-buy stories with "evidence" to support them. None of them know, and someone has to be right in spite of themselves. For the past 140 years, you can either have steady modest returns that probably won't keep up with inflation, or choppy but superior long term returns that have historically kept up with or exceeded inflation - take your pick.

 

[Dash man]

+1. At any given time there are ALWAYS doom and gloom stories AND rosy buy-buy-buy stories with "evidence" to support them. None of them know, and someone has to be right in spite of themselves. For the past 140 years, you can either have steady modest returns, or choppy but superior returns over the long term - take your pick.

And those that publicized their forecast and get it right out of lucky timing, not because of their expertise, will get book deals and get to appear on all the talking head shows for a few months. Maybe a few speaking gigs at conferences for financial advisors and lots of free drinks.

 

[Blue Collar Guy]

BCG, per your signature line, you are not spending from your portfolio. A decline is only good news for you and folks in a similar situation. Assuming you are reinvesting dividends, you would be purchasing stocks at the post decline sale price. When the market recovers, and it always has, financially you will be better off. If I were BCG, I would pray for a protracted decline every day. Other folks, maybe not so much.

FN

Yes you are correct on all points. I think its the thought of what next months statement will look like that sets me on edge.
But your right, I should root for a downturn as long as Im reinvesting . I sort of like the steady climb up,

I would have been thrilled with the statements Bernie Madoff sent out, never a down month in all those years. Well, we know how that ended. I guess the up and downs are just the way it is, and strongly worded headlines is still how they catch my attention.

Thanks for the positive energy.

 

[Bruceski44]

What has GS done to all of a sudden be credible? And relevant?

Goldman Sachs Finally Admits it Defrauded Investors In 2008 Crisis | Fortune.com

 

[jollystomper]

This from the article had me ROTFLMAO (yes, you can Google that )... talk about using big words and double speak:

So in light of all the evidence of an imminent correction, what is Goldman’s advice to clients? Why, do nothing of course.

Our US equity strategists recently argued against an imminent correction, and our global equity strategist sees low risk of a bear market starting. And while most of the recent central bank meetings (ECB, BoE, Fed) all pointed to tightening policy, we think risky assets should be able to digest higher yields as long as the growth backdrop remains supportive, which we expect.

 

[kgtest]

There is a 100% chance that the world will come to an end. I just don't know when.

Yet their is not a 100% chance of existence. The fact our univierse exists is really an off of 1 out of 100...which isn't that bad. Imagine the other 99 universes of aliens that never were tho

 

[Blue Collar Guy]

What has GS done to all of a sudden be credible? And relevant?

Goldman Sachs Finally Admits it Defrauded Investors In 2008 Crisis | Fortune.com

I thought these guys were on the up and up, I always hear about them being on a pedestal, didn't know they were defrauders.

 

[David1961]

I'd say there is a 100% chance of the market at some point being down 25% from some previous high. I'm betting that 25 years from now, the market will be higher than it is today.

 

[BeachOrCity]

I actually think the original chart from Goldman was helpful. We ARE Iin an expensive market for equities and there economy is in a very long running expansion. Prudence for AA is in order and I think mid pack wrote a nice piece on that in another thread.

 

[marko]

The average bull market lasts around 4 years and average bear market (20% drop from peak to trough) lasts around 18 months. Regarding "time to get back to break even", I'm not sure.

So, I'd only have 18 months to scoop up bargains that would carry me the next four years?

 

[David1961]

The average bull market lasts around 4 years and average bear market (20% drop from peak to trough) lasts around 18 months. Regarding "time to get back to break even", I'm not sure.

I think for the great depression, you did not break even until the late 1940s or early 1950s.

 

[teejayevans]

I think for the great depression, you did not break even until the late 1940s or early 1950s.

Actually it was 1936.

To get to 1950s you have to not include:
Deflation that occurred
Dividends
Only consider the Dow stocks.

Not to mention they removed IBM, and added them back in 1979...talk about selling low and buying high!

 

[David1961]

Thanks for the clarification. Did not know deflation had that much effect.

I think for the great depression, you would not have broken even until the late 1940s or early 1950s.

Actually it was 1936.

To get to 1950s you have to not include:
Deflation that occurred
Dividends
Only consider the Dow stocks.

Not to mention they removed IBM, and added them back in 1979...talk about selling low and buying high!

 

[NW-Bound]

Stock dividends of the S&P is less than 2% now, and that is because of the high P/E. The dividends used to be much higher, and more than 5% in many years after the Great Depression. More recently, the average dividend yield between 1970 and 1990 was 4.03%.