Honestly, how did we miss this?

[sengsational]

Many of us here on the forum were shaking our heads in disbelief as the markets continued to rally to new highs in the face of this obvious huge threat.

That was me.

But I had 10 years of spending in a stable value fund already.

If I could do it over, I'd write an essay to myself, describing what my thinking was at the time. The reason for writing it down is because memory is not what it seems; it gets us into trouble often because it's imperfect. Part of the essay would imagine the scenario that happened to date, writing down specific percentages and dollar figures. And other scenarios like the market remaining at high levels. Then 'meditate on those scenarios' in the essay, imagining how I would feel in each.

I don't think we're done dropping, so I've just decided, while writing this, that I'm going to break out the quill and start composing.

 

[audreyh1]

That was me.

But I had 10 years of spending in a stable value fund already.

If I could do it over, I'd write an essay to myself, describing what my thinking was at the time. The reason for writing it down is because memory is not what it seems; it gets us into trouble often because it's imperfect. Part of the essay would imagine the scenario that happened to date, writing down specific percentages and dollar figures. And other scenarios like the market remaining at high levels. Then 'meditate on those scenarios' in the essay, imagining how I would feel in each.

I don't think we're done dropping, so I've just decided, while writing this, that I'm going to break out the quill and start composing.

Right, I think that is how many of us reacted. If you already had > 10 years expenses in fixed income including cash, then you are more comfortable staying the course and waiting it out.

Great on the composing! I’ve been working on playing Beethoven sonatas - beyond my skills but doesn’t keep me from learning bits.

 

[Bir48die]

It must be "I told you so" time. Hindsight is 20-20 and the alarm was raised many times in the past without a market downturn resulting. I am not selling, but I am buying more per my Investment Policy Statement. 5% bands are coming pretty fast too. Congrats to those that timed it perfect, but that would not have been me.

I too thank you for this. This could also be the thread of "I'm a genius".

Even with the huge loss in value I'm going with "I'm very lucky to have what I have". Also +1 on I'm a long term investor.

 

[Spock]

Its not "I'm a genius". But there is a definite bias almost to the point of bullying by some on this board against anybody who dares suggest anything other than "buy and hold no matter what is going on in the world". Opposing points of view are routinely shouted down or ridiculed to the point that I rarely post views against the opinions of the heavies (at least rarely vs. the number of times I start to respond before shrugging and just deleting the comment)

Everybody is wired differently for their risk tolerance. Also Fat FIREs can afford more aggressive AAs and also afford hitting air pockets. Lean FIREs have to be more cautious because they have less room for error. Those more risk averse are more focused on return OF capital vs. return ON capital.


So yeah... when somebody read the news and acted on what it did to their blood pressure there is going to be a tendency for them to say so.

 

[brewer12345]

Well said. To those who predicted this particular situation, well done. But there's no possible way anyone can know which of the thousands of naysayers spouting dire warnings every day to believe.

Sure, Monday-morning quarterbacking is fun. We should have noticed this, we should of listened to that. We had the data available, had we researched it, to know something like this was possible. But who can research every possible disruption?

Like the majority here, I saw the news reports. I understood that "this could be it." I was even expecting a downturn. Almost hoping for one.

But the core of my strategy is NOT to jump every time something "could" happen. I'm quite sure anyone who did that will be worse off in the long term.

Thank you for the reminder of board sentiment. I should have known better than to even bother commenting on this thread.

 

[tulak]

Thanks to Fermion and Brewer, I was paying attention. Usually I blow this stuff off and ride it out, but this time around I felt that it could be different. I also thought the market wasn't paying attention to what was happening and numbers for this quarter would be bad. Never did I think we'd go down this far this fast.

I didn't do anything for weeks. I made my move on 2/24 after a down day on the S&P. I didn't see much upside with the S&P at 3200 and would rather lose out on gains than the alternative.

I don't like market timing. I'd prefer to buy and hold. I've bought a couple of times on the way down, but at this point, I'm staying with a low allocation to equities. I might not time the bottom, but that's ok. I'm sure I'll be back in before we hit 3200 again and I still think we have some downside to this market.

Its not "I'm a genius". But there is a definite bias almost to the point of bullying by some on this board against anybody who dares suggest anything other than "buy and hold no matter what is going on in the world". Opposing points of view are routinely shouted down or ridiculed to the point that I rarely post views against the opinions of the heavies (at least rarely vs. the number of times I start to respond before shrugging and just deleting the comment)

Yeah, I've gotten some of that, especially after I dropped equities before the big downturn and posted about it here.

It's unfortunate, because there are a lot of very smart people here that I'm pretty sure consistently beat the market averages, and if not, come close with less volatility. I suspect they don't post as often, because of the buy and hold crowd, whose criticism I don't get. It's not their money, so why should they care? But for the people that post anyways, a big thanks from me. It's definitely both made and saved me money.

This forum has been the best investment I've made by far!

 

[Boose]

We have 3.5 years' expenses in CDs, a cheap mortgage (won't mention the HOA fee ☹), DH has a work from home j*b with Megacorp and I have a public job with a pension that county govt. has just assured us is fully funded. So I don't think selling would have benefitted us, although I was tracking the news out of China (had a customer from China who was stranded here in Cali with her daughter after New Year visits). If the market has melted down for all eternity, then we're going to see big changes across prices for goods, home sales, homelessness, etc., no? Our loss in the market would be one tiny violin concerto among millions.

 

[Retch The Grate]

My expectation was a 25-50% drop in the market, but I didn't feel comfortable trying to time it and my cash reserves would let me get through a year of life. Generally my work doesn't mind recessions (the game industry), though we will see how this goes. In retrospect I'd feel more comfortable with a second year of cash, but I didn't sell that (and would have had a big tax bill if I had that would have been losses too), sooo. I didn't want the long term downside of trying to time getting back in and missing, and most of my money I don't need for a while still.

 

[NW-Bound]

The power of the human mind is incredible (and I mean this seriously). Lots of people myself included were sounding alarm back in February. You are on this forum all the time, I don't recall you telling me I was fear mongering; but maybe you thought it. Think about it...maybe you were thinking people were fear mongering or you heard it on the news and you agreed with that sentiment?

I am astonished that my post was taken in the completely opposite sense.

Me calling anyone fear-mongering? I was following the news all the time on China, and then later on Italy. On Mar 11 or so, I shared the video interview of a European newschannel with Dr. Giacomo Grasselli who headed and coordinated all the ICUs in Lombardy, who told how bad the situation was. It was promptly deleted.

Even recently, when I said one should look at NYC and what Cuomo was saying about building field hospitals, people did not care. But I guess that's human nature. They hear the news about tsunami, earthquakes, hurricanes, tornadoes, and think that it has nothing to do with them. Pandemic is of course different. We are not the only ones who were so blasé. Even in Europe where Italy was suffering greatly, some people in other countries were still having "corona parties".

But it looks like this thread is more about regretting market losses. Yes, I shouldda sold more. I brought my stock AA from 70-80% down to 60% in late December, just because I thought the market was overvalued. But seeing that the pandemic would add a lot more pressure, I should have sold more later.

Now, I have unabashedly called myself a market timer (a clean one who always practices hygiene standards ), so I did not succumb to peer pressures. I always do my own things.

But I did not think the market drop would occurred so fast. The routs of 2000-2003 and 2007-2009 took longer to develop, and I did not appreciate that the virus spreads faster than the previous economy malaise.

Live and learn, as they say. And indeed, my priority now is to stay alive so I can learn. Money is actually not as important, even though I was thinking this would be the 1st time I was going to lose a 7-figure sum. Not there yet.

 

[Markola]

The OP’s premise implies investors SHOULD do something. I invest according to Vanguard’s Principles, so I reject the premise:


Goals
Create clear, appropriate investment goals
An appropriate investment goal should be measureable and attainable. Success should not depend on outsize investment returns or impractical saving or spending requirements.

Defining goals clearly and being realistic about ways to achieve them can help protect investors from common mistakes that derail their progress.


Balance
Develop a suitable asset allocation using broadly diversified funds
A sound investment strategy starts with an asset allocation befitting the portfolio's objective. The allocation should be built upon reasonable expectations for risk and returns and use diversified investments to avoid exposure to unnecessary risks.

Both asset allocation and diversification are rooted in the idea of balance. Because all investments involve risk, investors must manage the balance between risk and potential reward through the choice of portfolio holdings.


Cost
Minimize cost
Markets are unpredictable. Costs are forever. The lower your costs, the greater your share of an investment's return. And research suggests that lower-cost investments have tended to outperform higher-cost alternatives. To hold onto even more of your return, manage for tax efficiency. You can't control the markets, but you can control the bite of costs and taxes.


Discipline
Maintain perspective and long-term discipline
Investing can provoke strong emotions. In the face of market turmoil, some investors may find themselves making impulsive decisions or, conversely, becoming paralyzed, unable to implement an investment strategy or rebalance a portfolio as needed. Discipline and perspective can help them remain committed to a long-term investment program through periods of market uncertainty.

 

[P.S.]

AccountingS,

On my desk is sitting a box of medical N95 masks that a supply guy gifted me just before elective OR cases shut down (obviously box goes back to work when the $HTF). Familiar with different levels of mask/gown/gloves, sometime around Jan 23, I full-on panicked when I saw full-on HAZMAT suits and body bags in hallways coupled w/ the CCP locking down 50 million people and freely shared my panic with whomever would listen, including hospitals’ supply guys who then, since the last week of Jan, were stocking up as much and as fast as their budgets and supply chains allowed. My adrenals were on full squeeze since then, and only let up when stocks went into free fall. Ahh... finally everyone is on the same page.

To dissect out “how did we miss this,” it might be helpful to look at it from the questions of:
1. What was the thought process that led to a final conclusion that this was going to be really bad, and should be acted upon?
2. How does one equip oneself to recognize this in the future?

Obviously this is just my opinion (and complete bunk to buy-and-holders). From a medical side, this virus wasn’t, and still isn’t, completely understood. That is scarey. Studying the JHU gisanddata map closely since Jan 23, and watching the numbers grow... in China... Scandinavia... SE Asia...Germany, Spain, Switzerland, France...US...Middle East. Different numbers in different places didn’t make sense. Still doesn’t -> that’s scarey.
This is not a worse version than the flu. This is not even just a deadlier version than the flu. One can read the case series in the medical literature; this virus is terrifying in what it does to the human body. Add to that the transmission by subterfuge and the long lag time to COVID manifestation.

There is no comparable outbreak in modern medicine. Flu is flu is influenza, whatever the strain. Flu v.__ will be a variant of what has occurred and what is understood. SARS and MERS were deadly, but I think even as those outbreaks were occurring, those viruses were better understood than SARS CoV2 today is three months into an outbreak. On top of what I knew that I didn’t know... there were all kinds of extremely disturbing videos leaked out of China.

And +1 on Brewer, Fermion, and Brat (whose 1 comment of sometimes the goal is to preserve rang loud).

So how does one go about recognizing this in the future? IDK, but I guess I will do what has worked for me. Try to understand as much as I can, try to remain open minded. Understand myself as best as I can (if I can’t sleep, I have to act on it... or else I can’t sleep).
Yeah, I don’t need to amass as much as I possibly can. I just need to know that I did my best, did the best due diligence, and do what I need to so I can sleep well at night.

From a more philosophical view, I think life/God/the universe gives each of us gifts for our particular one life. Maybe my life of reading and my understanding of medicine helped on this One. So for me, maybe this is the one event that I’ll get right. But what does it matter if I saw this coming, but end up dying from this virus that I got intubating someone. From reading your posts I know you have your skills that you are really good at. NWB is wise; the money is not what is most important.

p.s. thanks for the link as reading others’ opinions is always interesting/helpful

 

[Which Roger]

But the core of my strategy is NOT to jump every time something "could" happen. I'm quite sure anyone who did that will be worse off in the long term.

+1 We all missed the big drop, but also I don't think any of us anticipated that today we would see the Dow's biggest single-day point gain ever. I acknowledged a long, long, time ago that the market is smarter than I am.

 

[walkinwood]

How did we miss it indeed!

I am one of those who believes in keeping to my asset allocation. I saw the writing on the wall, but didn't act. But then I see the writing on the wall at least 10 times for each time I should have acted.

I lost a lot of money in the internet meltdown when I thought I was a stock picking genius. At almost the bottom of that market, I sold every individual stock that I owned and moved to widely diversified, low cost mutual funds to assemble a portfolio & decided then to stick to a previously defined AA (IIRC, my AA then was 80/20.) That experience has molded my thinking about investing.

Having said that, I wish I had listened to the discussions I was having with my friends in early February of the wide impact this virus could have on the economy - not to mention the thoughts that Brewer and others were sharing here.

However, as part of my investment plan, I have 2-3 years in near-cash, so I can ride this out.

The real question for me is - will I rebalance regularly to keep my AA?

In 2008, I started rebalancing (as I have this time), but at some point I just couldn't do it & stayed on the sidelines. The result - it took my portfolio longer to return to the pre-crash values.

In 2008, I was calm because I figured I could get back into the workforce without too much of a problem if I needed to (I ER'd in May '08). This time, I have the '08 experience behind me, I'm 12 years older and SS is just around the corner if I absolutely need it. Having said that, it still hurts to see our portfolio crater.

 

[dixonge]

Actually, I posted here on ER.org in early Feb that I was buying puts on the market...you need to pay more attention to the stock threads.

Yes you did, you said that the market might 'pull back a tad over the next week or two' - then you sold them the next day and bought some more.

All credit to you for having some foresight, but even you weren't envisioning a 35% pullback at that time.

Also, most of us who buy and hold don't read stock threads. I have them set to ignore generally. That won't be changing either...

 

[Badger]

I missed this until it was a little too late to do anything about it. However, what I didn't miss was the uneasy feeling three years ago that the market had been going up for quite awhile. We had accumulated a comfortable nest egg on our modest income and we didn't need to take chances with as we entered our 70s. So at that time I stopped any reinvesting in the market and set up for having all dividends placed in MM accounts. We did the same with my wife's inheritance as well as our RMD. Now we have enough in cash to ride out the rest of our life without tapping into the stock investments. That will be for the children. The plan now is to survive Covid-19 and die peacefully in our sleep of old age. We will see but you know how the "best laid plans" work out. For now hunkered down.



Cheers!

 

[tdv2]

How did we miss it indeed!

I am one of those who believes in keeping to my asset allocation. I saw the writing on the wall, but didn't act. But then I see the writing on the wall at least 10 times for each time I should have acted.

I lost a lot of money in the internet meltdown when I thought I was a stock picking genius. At almost the bottom of that market, I sold every individual stock that I owned and moved to widely diversified, low cost mutual funds to assemble a portfolio & decided then to stick to a previously defined AA (IIRC, my AA then was 80/20.) That experience has molded my thinking about investing.

Having said that, I wish I had listened to the discussions I was having with my friends in early February of the wide impact this virus could have on the economy - not to mention the thoughts that Brewer and others were sharing here.

However, as part of my investment plan, I have 2-3 years in near-cash, so I can ride this out.

The real question for me is - will I rebalance regularly to keep my AA?

In 2008, I started rebalancing (as I have this time), but at some point I just couldn't do it & stayed on the sidelines. The result - it took my portfolio longer to return to the pre-crash values.

In 2008, I was calm because I figured I could get back into the workforce without too much of a problem if I needed to (I ER'd in May '08). This time, I have the '08 experience behind me, I'm 12 years older and SS is just around the corner if I absolutely need it. Having said that, it still hurts to see our portfolio crater.

I could have written this post verbatim. I made a lot of money in the tech bubble only to give most of it back. It did change me from a stock picker to an asset allocater. Fortunately, I preserved enough and saved enough to meet my long term plan of pulling the plug in my 50's. I viewed the 08 crisis as an event that got me to the finish line quicker because I was saving like mad through that period.

 

[sheehs1]

But the core of my strategy is NOT to jump every time something "could" happen. I'm quite sure anyone who did that will be worse off in the long term.

I do not think anyone can predict whether others "who jumped" will be worse off or not. As we all know, "jumping" is an individual decision, relative to age and whether it's possible to recoup with the years remaining. We are used to financial disruptions, recessions, etc. However this time we are in unchartered waters with a pandemic added to it as well as an economic "shut down". For me, this significant economic shut down has been the other half of the black swan. The foreseeable future is much harder to predict than before.

I did not miss the signs but boy when it started, it sure happened fast. It took three years for this to happen in 1929 rather than the short three weeks this time. (read that somewhere).

For full disclosure, while I had significant cash on the sides (over 20 years worth) and should have been comfortable riding this out, I liquidated my accounts but not before loosing most all unrealized gains on the books. Why did I do this?

1) I am 64
2) As I rode the market down, I was willing to loose the unrealized gains to see if this thing would correct. I was not willing to loose "principle". We all have to have "our line in the sand" moment.
3) The markets were shrugging off the Fed announcements of asset buying, zero interest rates, etc.
4) Wish I had listened to my gut and sold when the niggles started In January much like when I sold Boeing at 375.
5) I can live with the decision and can always get back in when things settle.

Sometimes it is about preserving your wealth.

 

[audreyh1]

How did we miss it indeed!

I am one of those who believes in keeping to my asset allocation. I saw the writing on the wall, but didn't act. But then I see the writing on the wall at least 10 times for each time I should have acted.

Having said that, I wish I had listened to the discussions I was having with my friends in early February of the wide impact this virus could have on the economy - not to mention the thoughts that Brewer and others were sharing here.

However, as part of my investment plan, I have 2-3 years in near-cash, so I can ride this out.

So, if you had known then what you know now, you would have gone ahead and sold more stocks, so you could have say 6-7 years in near cash? Or would you have sold all hoping to get in after a market crash? What exactly are you regretting?

This is probably a good time to evaluate what amount in cash and other fixed income one is really comfortable with to “ride out” such a situation.

Of course it’s no where near over yet.

 

[Elbata]

I didn't think what was going on in China would affect us in US. At least on the scale that we're looking at now, and what we will be looking at soon. I pooh-poohed what was happening, probably thinking in the back of my mind, it will be localized like many of the past viruses. I had no idea on the "novel" part of it, it's ability to spread without showing symptoms, etc. Besides, if one watches the media, on a daily basis, it's nothing more than than fear-mongering.

The reason I got out of the market (Feb) was that I believed the virus was created in China's only Level 4 Bio facility. I believe I've been proven wrong on that, but still I'm not so sure.

 

[Fermion]

Yes you did, you said that the market might 'pull back a tad over the next week or two' - then you sold them the next day and bought some more.

All credit to you for having some foresight, but even you weren't envisioning a 35% pullback at that time.

Also, most of us who buy and hold don't read stock threads. I have them set to ignore generally. That won't be changing either...

No, I totally messed up in my guess as to how this would play out. I thought it would be more contained in Asia and the market would react with a serious of small dips and drops as we headed into April and May earnings. My plan was to walk the market down with puts. It started off great, but the $30,000 in puts I once owned are now worth $1.1 million and I only managed to grab about $45,000 of that in total. Major screw up.

I also did not convince my wife any of this was real and her 401K is down like $300,000 so net I am probably losing more than most on here.

 

[sengsational]

The real question for me is - will I rebalance regularly to keep my AA?

I could have written this post verbatim.

Maybe not verbatim from me, but close enough for a forum post, hehe! I thought pretty hard about reducing equity exposure before the market tanked, but decide not to act.

I thought more about reducing equity exposure now that the market has tanked and came to the conclusion that if I sold and somehow I miss out on a recovery, not only would I have gone against my principles, I would have been out a bunch of money too. This is the scenario I don't want to have to live with. I wouldn't mind going against my principles and winning, but losing, no, that would cause me too much strife. So I stuck to the plan, and will stick to the plan, no matter how painful it becomes.

So now, it's about when to rebalance. If one says (as I did before the market tanked), I have 10 years of spending in the SVF, if I rebalance, that number would go down, of course. Maybe I could justify reducing that duration to 7 years. But the timing and scenarios for rebalancing, although in the written plan, don't feel like they're hard and fast principles that, if not followed, will cause me strife. I always knew of this problem of 'if the SHTF, you'd need to raid your spending cash to rebalance' problem. My plan was to wait for CAPE-10 to be 18 before switching my allocation from the inflated 80 year old to the actual 60 year old. I realized and realize that may never happen, so was willing to stay with the 80 AA 'forever'. Now I'm thinking we might see 18 and I'd need to have the courage to act on my plan.

 

[Which Roger]

I don't want to jinx anything, but the Dow is up 15% in the last day-and-a-half of trading. We don't know what will happen going forward, but I can say for certain that I didn't anticipate this any more than I anticipated the virus developments causing it to drop so much so fast. So let's not kick ourselves for not seeing what nobody could be expected to see.

 

[BeachOrCity]

I don't want to jinx anything, but the Dow is up 15% in the last day-and-a-half of trading. We don't know what will happen going forward, but I can say for certain that I didn't anticipate this any more than I anticipated the virus developments causing it to drop so much so fast. So let's not kick ourselves for not seeing what nobody could be expected to see.

Am I the only one buying a few SPY puts at this afternoons pricing?

 

[Toocold]

For those who decided to go cash, are you going back-in to the market now that the S&P is up two days in a row? With what we know at this time, and without the magic of 20-20 hindsight, at what point are you going to invest?

 

[Ready-4-ER-at-14]

Am I the only one buying a few SPY puts at this afternoons pricing?

I priced them earlier and found them to be around 10% out just a month or two.

My decision was to hold my nose and sell of a bit more of the last of my non cash down side protection and see if the sp500 can get back to 3000ish before repurchasing puts. I still have a number of way out of the money leap calls that could pay off if it gets that high or higher.

Volatility is still way high still. My belief is unless the death toll is beat into our heads over and over like 911 was by the media the market could come back at least one more time short term.