Join Early Retirement Today
Reply
 
Thread Tools Search this Thread Display Modes
Old 02-08-2018, 01:01 PM   #321
Give me a museum and I'll fill it. (Picasso)
Give me a forum ...
NW-Bound's Avatar
 
Join Date: Jul 2008
Posts: 29,905
We have all been really complacent. The market rout so far is technically not even a correction yet. The S&P is down only about 7.5% since the top in Jan 26, and needs to go another 2.5%.

Compare that to the extreme violent moves in 2008, there were days when the S&P dropped close to 10% in a single day. But it also bounced up the same 10% in a single day.

Ah, that was a truly exciting and scary time.
__________________
"Those Who Can Make You Believe Absurdities Can Make You Commit Atrocities" - Voltaire (1694-1778)
NW-Bound is online now   Reply With Quote
Join the #1 Early Retirement and Financial Independence Forum Today - It's Totally Free!

Are you planning to be financially independent as early as possible so you can live life on your own terms? Discuss successful investing strategies, asset allocation models, tax strategies and other related topics in our online forum community. Our members range from young folks just starting their journey to financial independence, military retirees and even multimillionaires. No matter where you fit in you'll find that Early-Retirement.org is a great community to join. Best of all it's totally FREE!

You are currently viewing our boards as a guest so you have limited access to our community. Please take the time to register and you will gain a lot of great new features including; the ability to participate in discussions, network with our members, see fewer ads, upload photographs, create a retirement blog, send private messages and so much, much more!

Old 02-08-2018, 01:22 PM   #322
Give me a museum and I'll fill it. (Picasso)
Give me a forum ...
 
Join Date: Mar 2011
Posts: 6,472
So, I haven't read through every of the 300+ posts here and this may/may not have come up but here's my question:

The market drop seems to have been a reaction to rising bond rates. Doesn't that mean that those of us with bonds/bond funds will slowly, slowly start to see an increase in our interest payouts? I realize it could take a while (years?) to see an increase; or does this look like a blip on that front?

My HY fund had been paying about 8% back in the day and is now at 5.5%...it would be a welcome change for me!
__________________
Living well is the best revenge!
Retired @ 52 in 2005
marko is offline   Reply With Quote
Old 02-08-2018, 01:26 PM   #323
Thinks s/he gets paid by the post
 
Join Date: Dec 2015
Posts: 2,228
Quote:
Originally Posted by street View Post
I don't believe there is one time over the other which is best time to retire. I had to give one year notice of my retirement and I did. That was 2015 and things were not so good that year. People kept saying you better not retire but in 2016 I did. I had a plan and if I could not make it in these lean years there was no business me retiring any way. Well it all worked good for me and was glad I retired in a down turn and I did know it was going to get better.

I believe retiring in a bear market is very healthy thing to do. It will make you a better in the end. The people here know how to live through the good and bad so retiring shouldn't be a problem any time if you have a plan for good and the bad market times. You need that plan any way.
totally agree. You have to figure that at some point in your retirement life there will be down markets, stagnant markets, etc etc. If your plan only works if those things don't happen, or if you time things perfectly, you probably don't have a good plan.
HadEnuff is offline   Reply With Quote
Old 02-08-2018, 01:39 PM   #324
Give me a museum and I'll fill it. (Picasso)
Give me a forum ...
NW-Bound's Avatar
 
Join Date: Jul 2008
Posts: 29,905
Quote:
Originally Posted by marko View Post
So, I haven't read through every of the 300+ posts here and this may/may not have come up but here's my question:

The market drop seems to have been a reaction to rising bond rates. Doesn't that mean that those of us with bonds/bond funds will slowly, slowly start to see an increase in our interest payouts? I realize it could take a while (years?) to see an increase; or does this look like a blip on that front?

My HY fund had been paying about 8% back in the day and is now at 5.5%...it would be a welcome change for me!
Well, if a $100K in a bond fund pays $5.5K/yr, when it shrinks to $69K, that $5.5K becomes 8%.

Well, it will not be as bad, but the principal is going to shrink some to help the yield go up.
__________________
"Those Who Can Make You Believe Absurdities Can Make You Commit Atrocities" - Voltaire (1694-1778)
NW-Bound is online now   Reply With Quote
Old 02-08-2018, 01:48 PM   #325
Thinks s/he gets paid by the post
 
Join Date: Aug 2006
Posts: 1,525
Quote:
Originally Posted by NW-Bound View Post
We have all been really complacent. The market rout so far is technically not even a correction yet. The S&P is down only about 7.5% since the top in Jan 26, and needs to go another 2.5%.

Compare that to the extreme violent moves in 2008, there were days when the S&P dropped close to 10% in a single day. But it also bounced up the same 10% in a single day.

Ah, that was a truly exciting and scary time.
Be patient, we'll get there.
Hamlet is offline   Reply With Quote
Old 02-08-2018, 01:49 PM   #326
Thinks s/he gets paid by the post
 
Join Date: Feb 2014
Posts: 2,055
This is all because Janet Y. forgot to show the new guy the rigging machine.
jim584672 is offline   Reply With Quote
Old 02-08-2018, 01:53 PM   #327
Give me a museum and I'll fill it. (Picasso) Give me a forum ...
REWahoo's Avatar
 
Join Date: Jun 2002
Location: Texas: No Country for Old Men
Posts: 48,179
Quote:
Originally Posted by jim584672 View Post
This is all because Janet Y. forgot to show the new guy the rigging machine.
And how to activate the Plunge Protection Team.
__________________
Numbers is hard

Retired in 2005 at age 58, no pension
REWahoo is offline   Reply With Quote
Helps if You Own the Bonds and Hold to Maturity
Old 02-08-2018, 01:54 PM   #328
Recycles dryer sheets
 
Join Date: Jan 2017
Posts: 87
Helps if You Own the Bonds and Hold to Maturity

Quote:
Originally Posted by marko View Post
So, I haven't read through every of the 300+ posts here and this may/may not have come up but here's my question:

The market drop seems to have been a reaction to rising bond rates. Doesn't that mean that those of us with bonds/bond funds will slowly, slowly start to see an increase in our interest payouts? I realize it could take a while (years?) to see an increase; or does this look like a blip on that front?

Bond funds will generally suffer with rising bond rates, particularly the medium to long term funds. This is because 1) Bonds purchased today and in the near future likely pay higher rates as rates rise 2) Bonds held by any fund, particularly medium to long term bonds, lose their value as their relative interest rate advantage versus new bonds lessens 3) Funds must sell these lower valued bonds to payoff fund member withdrawals. Hence, the fund value per "share" decreases.

If you instead are purchasing government or corporate bonds outright, with the intent of holding them to maturity, rates you receive today are better than the recent past, and will improve in months/years to come.

We are coming out of the lowest interest rate cycle in history - rates have nowhere to go but up, in my opinion, and the cycles are very long generally, often rising or falling for 5-10 years or more.

Bottom line is when one talks about bonds increasing or decreasing returns, it is very different for bond funds vs. individual bonds. Right now, bond funds look like they may back off in either rate paid or principle value. Bonds themselves should offer much better interest returns for some years to come.

I am NOT in any way a financial professional, so I welcome any clarification or corrections to what I stated above.
mcbraemer is offline   Reply With Quote
Old 02-08-2018, 02:00 PM   #329
Thinks s/he gets paid by the post
 
Join Date: Aug 2006
Posts: 1,525
Quote:
Originally Posted by NW-Bound View Post
One has to define "handle". What does it mean?

Yes, I survived the 2000-2001 and 2008-2009 tough times, but did not have enough to lose a Rimac. If I do now, even if it's the same percentage as before, oh man, it's a lot of money.

I would not jump out of the window, or eat cat food. But it would hurt like the dickens.
I side-stepped some of the 2000-2001 decline because the valuations were so ridiculous that I couldn't justify holding onto some of the stuff. So I went into that decline with a fairly high percentage of cash on hand.

I entered the decline of 2008-2009 fully invested. It was an unpleasant drop, but my net worth was about quarter of what mine is now.

With the bigger dollar amounts at stake, and being a decade older, and now having young kids, I've been trimming back my stock allocation a little for the last couple of years. I didn't want to go through another huge decline without some cash on hand again.

So we were 70/30 when this started last week instead of 100% stocks, which was always my more natural inclination.

I'm not seeing anything I'm particularly excited about buying yet.
Hamlet is offline   Reply With Quote
Old 02-08-2018, 02:05 PM   #330
Give me a museum and I'll fill it. (Picasso)
Give me a forum ...
audreyh1's Avatar
 
Join Date: Jan 2006
Location: Rio Grande Valley
Posts: 30,476
Quote:
Originally Posted by gcgang View Post
Pretty easy to laugh off when you're playing with house money.

Most big mistakes aren't made until real pain sets in.

Kudos to all who rebalanced and super kud's to those who "won the game" and adopted a more conservative AA
It stopped being house money when I retired to live off my investments.

Even if my triggers were tighter, there is no way I’m that nimble.

And here we are dropping big again. Was the recent low taken out? Looks close.
__________________
Retired since summer 1999.
audreyh1 is offline   Reply With Quote
Old 02-08-2018, 02:07 PM   #331
Give me a museum and I'll fill it. (Picasso)
Give me a forum ...
audreyh1's Avatar
 
Join Date: Jan 2006
Location: Rio Grande Valley
Posts: 30,476
Quote:
Originally Posted by foxfirev5 View Post
I just heard on CNBC that someone lost their life savings on one of those 8X VIX inverse whatevers. I guessing they're about 25 years old with $3500.00 invested.
Those ETNs have been the culprit. The market would have sold off anyway due to higher interest rates and fears of increasing inflation. But those crazy investment vehicles made it much more sudden and painful.
__________________
Retired since summer 1999.
audreyh1 is offline   Reply With Quote
Old 02-08-2018, 02:15 PM   #332
Give me a museum and I'll fill it. (Picasso)
Give me a forum ...
audreyh1's Avatar
 
Join Date: Jan 2006
Location: Rio Grande Valley
Posts: 30,476
Quote:
Originally Posted by marko View Post
So, I haven't read through every of the 300+ posts here and this may/may not have come up but here's my question:

The market drop seems to have been a reaction to rising bond rates. Doesn't that mean that those of us with bonds/bond funds will slowly, slowly start to see an increase in our interest payouts? I realize it could take a while (years?) to see an increase; or does this look like a blip on that front?

My HY fund had been paying about 8% back in the day and is now at 5.5%...it would be a welcome change for me!
Ironically, if the equity market drops enough, bonds will rally = interest rates drop.

That happened on Monday, but then i Teresa rates resumed their climb and now pressuring stocks again.

So I expect see-saws for a while.

A big part of the last 14 months of big US rally has been the dollar weakening and persistent low interest rates. Now the game has changed.
__________________
Retired since summer 1999.
audreyh1 is offline   Reply With Quote
Old 02-08-2018, 02:20 PM   #333
Full time employment: Posting here.
 
Join Date: Dec 2013
Posts: 549
New York central banker Dudley says stock market is small potatoes. You can always tell who has skin in the game & who doesn't by what they say.
Free bird is offline   Reply With Quote
Old 02-08-2018, 02:21 PM   #334
Thinks s/he gets paid by the post
DrRoy's Avatar
 
Join Date: Dec 2015
Location: Michigan
Posts: 3,659
Quote:
We have all been really complacent. The market rout so far is technically not even a correction yet. The S&P is down only about 7.5% since the top in Jan 26, and needs to go another 2.5%.

Compare that to the extreme violent moves in 2008, there were days when the S&P dropped close to 10% in a single day. But it also bounced up the same 10% in a single day.

Ah, that was a truly exciting and scary time.
The S&P 500 since the last election set an all time record for going w/o a 3% drop. People get used to such things as “normal” and then freak out over typical market moves like this.
DrRoy is offline   Reply With Quote
Old 02-08-2018, 02:21 PM   #335
Give me a museum and I'll fill it. (Picasso)
Give me a forum ...
JoeWras's Avatar
 
Join Date: Sep 2012
Posts: 7,320
I've been thinking about the drop lately, and the one thing that comes to mind is:

"Sawtooth Curve"

So many things in life go by the sawtooth. Yet in our minds, we want them all to be nice, clean, smooth sine waves. Not so with the market. I think that is what makes it so unsettling.

The most damaging things in life and death are like this. Heart disease. Drug use. Car accidents.

Things build slow and unwind fast. Been around enough in the market, and it just is the way it goes.
JoeWras is offline   Reply With Quote
Old 02-08-2018, 02:51 PM   #336
Give me a museum and I'll fill it. (Picasso)
Give me a forum ...
 
Join Date: Nov 2009
Posts: 6,010
Quote:
Originally Posted by marko View Post
So, I haven't read through every of the 300+ posts here and this may/may not have come up but here's my question:

The market drop seems to have been a reaction to rising bond rates. Doesn't that mean that those of us with bonds/bond funds will slowly, slowly start to see an increase in our interest payouts? I realize it could take a while (years?) to see an increase; or does this look like a blip on that front?

My HY fund had been paying about 8% back in the day and is now at 5.5%...it would be a welcome change for me!
I pay more attention to the monthly cents-per-share dividend my bond fund pays out, not so much how its NAV changes. Back in late 2008, when I began investing in the borderline investment-grade corporate bond fund, it paid out 5 cents per share per month. That has eroded slowly in the last 9 years down to around 3 cents per share per month, or 60% of what it had been paying before. I have about 50% more shares than I did then, so taken together I get about 90% (0.60 x 1.5) of what I was getting in monthly dividends back in late 2008.

I would welcome a return to 5 cents per share per month, even 4 cents per share per month would be nice; the NAV has been pretty steady as the dividends have dropped.
__________________
Retired in late 2008 at age 45. Cashed in company stock, bought a lot of shares in a big bond fund and am living nicely off its dividends. IRA, SS, and a pension await me at age 60 and later. No kids, no debts.

"I want my money working for me instead of me working for my money!"
scrabbler1 is offline   Reply With Quote
Old 02-08-2018, 02:54 PM   #337
Full time employment: Posting here.
FIREmenow's Avatar
 
Join Date: May 2013
Posts: 756
Dow -3.6%.....
__________________
Believe me, my young friend, there is nothing - absolutely nothing - half so much worth doing as simply messing about in boats.” ― Kenneth Grahame, The Wind in the Willows
FIREmenow is offline   Reply With Quote
Old 02-08-2018, 03:04 PM   #338
Recycles dryer sheets
 
Join Date: Jan 2012
Posts: 378
We are now officially in a "Correction" in S&P 500. <10.1%>
and also in DJIA <10.3%>

Only NASD remains above the correction territory at <8.96%>
Rickt is offline   Reply With Quote
Old 02-08-2018, 03:07 PM   #339
Thinks s/he gets paid by the post
 
Join Date: Feb 2007
Location: Upstate
Posts: 1,746
Nibble: Buying $10K in Large Cap Value at EOD in my 401k.
copyright1997reloaded is offline   Reply With Quote
Old 02-08-2018, 03:14 PM   #340
Give me a museum and I'll fill it. (Picasso)
Give me a forum ...
JoeWras's Avatar
 
Join Date: Sep 2012
Posts: 7,320
Who is going to start the "Dow 20k by April 1" thread?
JoeWras is offline   Reply With Quote
Reply


Currently Active Users Viewing This Thread: 1 (0 members and 1 guests)
 
Thread Tools Search this Thread
Search this Thread:

Advanced Search
Display Modes

Posting Rules
You may not post new threads
You may not post replies
You may not post attachments
You may not edit your posts

BB code is On
Smilies are On
[IMG] code is On
HTML code is Off
Trackbacks are Off
Pingbacks are Off
Refbacks are Off


Similar Threads
Thread Thread Starter Forum Replies Last Post
T-Theory - Secular Bear Market - Market down into June/July? dex FIRE and Money 8 08-26-2010 06:48 PM
Pay down existing mortgage or save up for big down payment? Andre1969 Young Dreamers 13 04-29-2010 10:05 AM
Housing prices down; Stock Market down; Economy slowing; & the benefits dex FIRE and Money 32 03-16-2007 04:46 PM
How do you deal with a down market day like today? dante60093 FIRE and Money 31 07-17-2004 01:17 PM
Buy House Now w/Low Down or Save Bigger Down? BigMoneyJim Young Dreamers 11 07-14-2004 04:23 PM

» Quick Links

 
All times are GMT -6. The time now is 11:24 PM.
 
Powered by vBulletin® Version 3.8.8 Beta 1
Copyright ©2000 - 2021, vBulletin Solutions, Inc.