Down Day in the Market !

[NW-Bound]

In 1983, DW and talked about buying a Mercedes 450SEL once I had $100,000 saved in my investment plan at Megacorp. Never did.

We have 3 vehicles now, and you couldn't get $30,000 for the lot of them. s the millionaires next door, we like driving under the radar.

Yesterday, to take my mind off the market I washed my wife's Nissan SUV. It's 2003, but has only 27K miles on the odometer because she has not been driving it much since she ER'ed in 2005. It's been garaged, and the exterior was still darn good. I even waxed it.

I washed my cars about once a year. That car, being garaged, gets washed the least. I needed to clean the garage, so parked it outside for a while and it got rained on.

Anyway, it now looks almost spanking new. It's gonna last me another 20 years.

 

[street]

I'm down a Lamborghini Huracan plus some. That is from February 1st, 2018 closing till February 8th, 2018. I don't like to look at these times but this car thing seemed fun. I'm not a car person and can't tell one car from the other. LOL I do have pickups and like them and they also are get very expensive these days.

 

[MichaelB]

I think rebalancing is something one does to maintain a specific risk profile in the portfolio. It does not feel good, because it involves selling assets that have performed well to buy assets that have not. Behaviorally, it is contrary to one's instincts, so it feels bad, but it is a critical success factor for portfolio survival.

How does it help to continually quantify the current loss in value? Doesn't this just open the door to reacting in some way that is not part of the plan and becoming part of the herd?

 

[NW-Bound]

... I'm not a car person and can't tell one car from the other...

Me neither. I have to see a car's emblem, or at least its distinctive grill design to know what make it is.

However, people like you and me are in the minority. Twice, when I was standing outside with my son and his Audi S4, neighbors asked if I got a new car. Because they were impressed, I had to go look up the price. My son did not want to tell us the price, because he was afraid we would tell him he was wasting money. My wife did not want him to spend that money, but I told her that it would not bankrupt him so just let it be. Now that he has bought a house, he spent more time with that and his car is dirtier than mine.

About the Audi S4, my son fell in love with this car because he drove his cousin's S4. My nephew's car is older and had a V8. My son's is newer and has a turbocharged V6. See how much I learned from him about Audi cars?

Here's a funny thing. One Christmas, I hosted a big family dinner. I have nieces and nephews ranging in age from 40 down to 10. My youngest nephew, upon seeing his older cousin's car, immediately asked whose car that was. How could a kid that young know much more about cars than I do?

 

[scrabbler1]

I am down about 3 Corollas in the last week or so, and back to where I was in September of 2017. I remain well within my AA bands so no rebalancing. I am 46/54 in the IRA and a little more bond-heavy in my taxable account.

 

[NW-Bound]

I think rebalancing is something one does to maintain a specific risk profile in the portfolio. It does not feel good, because it involves selling assets that have performed well to buy assets that have not. Behaviorally, it is contrary to one's instincts, so it feels bad, but it is a critical success factor for portfolio survival.

How does it help to continually quantify the current loss in value? Doesn't this just open the door to reacting in some way that is not part of the plan and becoming part of the herd?

In the long run, stocks have been proven to outperform other assets. So, why not be 100% and call it quit?

Obviously, one needs to have some money set aside for rainy days. But instead of having a certain percentage in cash, how about having a certain dollar amount that is tied to one's needs. Or if one has plenty of assets, there's no need for any cash.

I am thinking of an argument for a higher stock AA, not lower.

PS. There are posters who are not in the accumulation phase yet are 100% in stock.

 

[Another Reader]

I had 80k in 2008 plus pension. I still have pension but have 'lost' 150k this month. Who posted "goes up like an escalator, down like an elevator" ?

FWIW: I did return to work for 3 yrs & invest 6k a yr

That's a good pension. Did you work for CoCo County?

 

[Moemg]

I am also not a car person .In 2008-2009 downturn I lost equivalent to an ocean view condo .I hope that puts this down cycle into perspective .

 

[NW-Bound]

Talk about loss, in 2002 recession, I was down $700K in today's dollars. And my startup business was folding.

Yes. Been there, done that. Still do not want to go through it again, but that's part of the "fun".

PS. Just looked up my diary. It's $704,246 to be exact, from the top at 2000/03/24 to 2002/10/09. Told you I can look up to the dollar how much I had in investable accounts at any time in the past.

 

[kcowan]

I would like to see how many Honda Accords I could of bought with what I lost so far but my numbers aren't all in yet. I don't expect everything tonight yet.

On an earlier post I did on this thread, I meant to say February 1st, 2018 was the date I went from. I believe I said Jan. 2018 for the high but I meant February 1st, 2018. I'm not sure Feb. 1st was actually the high for this year so far but that was the date I compared my losses from to the present time.

January 18th for me, although it bounced around that amount for several days. Down 3x Honda Accords so far.

 

[Bigdawg]

400+ Posts!
Let me just say this:
If I hadn't found this forum 12 years ago I'd be "***** bricks" right now.
I would have sold everything in 2008, just gotten up the nerve to get back in last year and by now I'd be out looking for a job! Or at least ordering a case of Pepto and buying CDs

I've learned so much from you folks and hope that (despite some idiotic posts from time to time on my part) I've helped others here too.

Everyone here --myself included--is rightfully calm during this recent downdraft thanks to what I've learned here.

Just wanted to once again, recognize the "wisdom of the crowd".

+1

I'll be looking for an entery at 23000 or so DOW

 

[haha]

400+ Posts!

Everyone here --myself included--is rightfully calm during this recent downdraft thanks to what I've learned here.

Calm is good, complacency can be dangerous.

A few days ago I posted to a thread that was celebrating stocks "being on sale". I posted that it really depends on what one means by "on sale". Cheaper than days before definitely, but CHEAP? that is TBD and will remain such for a while. The OP got mildly on my case about this opinion.

I have no idea what will happen, but stocks on sale? Not to this cheap-ass shopper. I do have dry powder, but not for deployment here or anywhere near to here.

Ha

 

[Another Reader]

My rentals have gone up in value over the last 30 days, now that we are in the spring buying market. There is no inventory in most of the Phoenix area. If I marked to market in Personal Capital, I would be net up for 2018.

That won't last, of course. Once deals start falling apart because of the stock market and buyers get cold feet, the real estate market will stall and, if the stock market stays down or drops further, decline.

On the paper side, in the inherited IRA, I'm down the cost of a fully loaded Lexus RX 450h. Which is now a grossly overpriced vehicle anyway. Maybe the RMD will go down for 2019.

 

[NW-Bound]

Calm is good, complacency can be dangerous.

A few days ago I posted to a thread that was celebrating stocks "being on sale". I posted that it really depends on what one means by "on sale". Cheaper than days before definitely, but CHEAP? that is TBD and will remain such for a while. The OP got mildly on my case about this opinion.

I have no idea what will happen, but stocks on sale? Not to this cheap-ass shopper. I do have dry powder, but not for deployment here or anywhere near to here.

Ha

With interest rate and inflation rising, say hello to P/E contraction. Shiller and Bogle will say "Told ya so".

PS. I am somewhat a risk taker, so may play a bit for the bounce. Or not.

 

[redduck]

I differ. This is a lot more exciting than the Superbowl yesterday...

How can that be?--there's so much more at stake in a Superbowl game.

 

[Chuckanut]

I have no idea what will happen, but stocks on sale? Not to this cheap-ass shopper. I do have dry powder, but not for deployment here or anywhere near to here.

Agreed. It's as though we were paying the full MSRP for an item, and suddenly some renegade company starts selling it for 5-10% under MSRP. A better price, but certainly no deal. I may nibble when I can at least get a Costco price or, even better, a "we made far to many of these things and the inventory costs are killing us" price.

 

[copyright1997reloaded]

In the long run, stocks have been proven to outperform other assets. So, why not be 100% and call it quit?

Obviously, one needs to have some money set aside for rainy days. But instead of having a certain percentage in cash, how about having a certain dollar amount that is tied to one's needs. Or if one has plenty of assets, there's no need for any cash.

I am thinking of an argument for a higher stock AA, not lower.

PS. There are posters who are not in the accumulation phase yet are 100% in stock.

Interesting thought, and I've been pondering this over the last six months. Once one has a certain amount in cash/bonds that can produce a certain income flow, why have more? That is, if you have enough income from the fixed income specified term investments, let the rest ride in equities. For me, that realization came when my pension plus 4% from cash/fixed plus social security was enough (if needed) to satisfy a budget (if I were to actually have one).

 

[NW-Bound]

In my case, last year's expenses were 2.5% WR. That is just a bit more than the S&P dividend. If I draw SS early, between SS and dividend I would not need to sell principal at all. I could be OK with 100% in stocks.

The portfolio volatility would be a lot higher. But for a Lamborghini that you lose in bad years, you gain a Rimac in good years. You still need a strong stomach.

But then, you do not have the fun of trying to sell high/buy low, er, rebalancing.

I dunno. Something seems or feels wrong.

 

[donheff]

I have no idea what will happen, but stocks on sale? Not to this cheap-ass shopper. I do have dry powder, but not for deployment here or anywhere near to here.

Ha

I might start buying in dribs and drabs when we hit -20%. I suspect that won’t happen in this round so I will just sit tight.

 

[gayl]

That's a good pension. Did you work for CoCo County?

yeah but maybe I was misunderstood? My 457 was 80k in 2008. My pension just hit $33,935.80 last year (2017) so although it gives plenty to live on, it's not exactly one of the more lush ones out of Coco County. Still enables me to save / invest 1250 month bc I left after paying off house.

Are you another Coco Co retiree?

 

[Mdlerth]

Huh?

I just saw a segment on CNBC they went outside and asked random people on the street what they thought, not differnt passerbys said
1) It always goes up in the long term so I am not worried
2) It was a bubble everyone knows the stock market was in a bubble so it will go down but it will come back it always does.
3) you must think of the long term it’s what Warren Buffet always says
4) the majority of people don’t think long term, I do and will not sell

The level of complacency is so high this is going to be a bad downfall, I change my forecast to at least a 50% decline based on the antedotical evidence I see

I don't follow this reasoning at all. Your four excerpts all seemed like mature assessments; isn't this how you would want people to react?

In the long past, market declines and liquidity shortages used to trigger crazy behaviors which would cause the very catastrophes they wished to avoid. That's why they called them "Panics". (The term "Depression" was coined because our leaders were trying to avoid the word "panic", fearing it would lead to civil unrest.)

When most people do NOT panic, why isn't that an encouraging sign?

 

[Running_Man]

I don't follow this reasoning at all. Your four excerpts all seemed like mature assessments; isn't this how you would want people to react?

In the long past, market declines and liquidity shortages used to trigger crazy behaviors which would cause the very catastrophes they wished to avoid. That's why they called them "Panics". (The term "Depression" was coined because our leaders were trying to avoid the word "panic", fearing it would lead to civil unrest.)

When most people do NOT panic, why isn't that an encouraging sign?

First of all depression was used centuries ago to accurately call a downturn in the economy as a depression - it was only after 1930's that politicians feared a depression would signal upcoming despair that recession was born. Panics were always used to call short term sharp drops in the market.

If no one is afraid of drops and the stock market drops anyway, that means a level of selling by weak hands has actually not yet begun. Eventually levels get hit where confidence is eroded and people feel all the years of saving is going down the tube and sell to keep something. At the point where everyone "knows" the stock market is too risky stocks are a very good buy. It is easier to pick these points out over tops but the action I see means this was a very big top requiring a big drop to shake overwhelming complacency out of the market.

 

[W2R]

HOLY COW, said tongue in cheek. It is kind of funny and we all expected it but I have to laugh at the talking heads on the boob tube trying to explain away the reason for reversion to the mean.

Yes, Holy Cow indeed!!! And OMG, here we go again today - - the Dow is already down over 300 points this morning. Pass the popcorn. This is amazing to watch.

 

[Rickt]

Now NASD is also in the correction territory <10.1%>
Looks like we are heading down some more.........

 

[HadEnuff]

I think rebalancing is something one does to maintain a specific risk profile in the portfolio. It does not feel good, because it involves selling assets that have performed well to buy assets that have not. Behaviorally, it is contrary to one's instincts, so it feels bad, but it is a critical success factor for portfolio survival.

How does it help to continually quantify the current loss in value? Doesn't this just open the door to reacting in some way that is not part of the plan and becoming part of the herd?

I think for some of us it has just the opposite effect. Joking about stuff we wouldn't buy anyway, and sharing the joke with others, whose investment savvy I've come to respect, helps me to stay the course.
I knew this was coming, but not when. I have had a plan in place for years for this occurrence. Now that the sh!t is hitting the fan, I have to trust the plan.
I wasn't going to ever buy that Porsche anyway.