How far will you ride the market down ?

[dessert]

DW and I had the capitulation discussion last weekend. We're staying in.
We might be wrong but we realize that the only way that we can get our totals back up is to remain in equities as we are now. We are still DCAing and believe that we are buying low.

We are fortunate that we have a pension to fall back on so my comments are in some respects, "disqualified" in this discussion.

Pension or not, this is definitely going to affect our retirement. How much, remains to be seen. It is disturbing to see a good part of your savings evaporating on a daily basis but we are so far down now that the only thing to do is to stay in. We're hopeful and believe that it will come back.

This market is so crazy that I predict there will be some 1000 point upswings in a single day, so how many of those does it take before you get back in?
I don't know that answer.

[Dawg52]

Quote:

Originally Posted by CyclingInvestor I am still 100% equities, and plan to stay that way. Dividends - which provide all of my retirement income - are up and seem safe unless the economy gets much worse. Earnings are up - not for every stock I own, but the composite is. Overall, I am not too worried at this point. If a couple of dividends are cut, I can cut spending to match, but at this point I do not expect to.

I need some of your meds.

[hankster]

I'm DCAing my bi-weekly contributions as always. Easy for me to say since I'm still wo*king. No plans to sell now. This past year has definitely caused me to think about the importance of nest egg preservation as I get closer to FIRE. Not to mention staying on the job a few extra years.

[crazy connie]

I was just noodling this over. There was a piece by one of the talking heads explaining that we are down from the fall of 2007 by 52%. I took my current balance and divided it by 48 then multiplied it by 100. The figure I came up with is several hundred K above my all time high. So, I will stay in and keep working it to mitigate the losses. Although I am debating cashing out a good portion and buying something like QQQQ anytime there is a 2 or 3% drop and then turning it back within a few days. I also intentionally did not include my distributions which I am living on now.

The accounts still have enough to take me through my life expectancy at a decent level. In 6 to 8 years I may be eligible for SS and can reduce my draw down then if need be. The home can be downsized for additional funds if needed as well. I have options and feel fortunate. This last 6 months we have seen wide swings in our balances. I want to be in to enjoy some of the upswings ahead of us.

And, if all else fails we can open a commune and plant a big garden again!

[Lsbcal]

I don't have any idea when this will end or where the bottom is. But I just keep picturing a big V shaped market and hope we will get to the upper right of this thing some day soon. Realistically it may be 4 or 5 years in the future and I'll just have to be patient.

P.S. I enjoyed listening to HFWR's link to Jeff Beck music while reading some of the comments here.

[Khan]

Quote:

Originally Posted by RonBoyd YouTube - Riding the bomb

Very good.

Previous entries have included AC/DC (Highway to Hell) and Harry Chapin (Dance Band on the Titanic).

[Moemg]

Quote:

Originally Posted by crazy connie And, if all else fails we can open a commune and plant a big garden again!

Sign me up for the commune !

[Rambler]

I'm still in, and don't plan to get out. I have a pile of fresh money coming (bonus) that will go mostly to muni bonds but some will be piled into deeply discounted stocks. Just bought AA today, and if GE goes down to say $6-6.50 I'll be buying a pile to bring my average cost into line. The thing is that the market prices of so many of these companies are way below tangible equity value. The market price of AA for example is about 50% of tangible equity...crazy prices. Analysts think they will turn a profit in Q1, and we know that Dawg's meds most often come in aluminium cans....so that right there means they'll turn a profit, right?

Anyway, I'm hanging in, and if the dow/S&P continue to go down, I'll keep buying. When they start going back up I'll return to buying bonds when I end up with more than 50% in equities. At the end of the day, I also keep about 3 years of barebones cash on hand, and I'm still w*rking.

R

[slazenger]

I'm starting to wonder if maybe herd mentality with regard to investing is actually the right way to do it. What was the heard doing in 98-00' - buying like mad and in internet stock of course, and even in 1-2 years they doubled their money. If the herd then soon panicked into 2000 and they panicked within a month or two, they missed most of the drop that continued through the end of 02' and sold much sooner than I did (which was never).

I would think more recently "the herd" got spooked a LONG time ago, and has had their money sitting in savings accounts and CDs for some time now. Surely, those still owning stocks by now could only be those people who think they know what they're doing despite mass hysteria on an almost daily basis. Yeah, I'm one of these people who actually went from half to almost 100% stock the past year, but I'm wondering if the jokes' been on me all the time, and that herd is giving me a funny look.

Maybe the best timing is to see what looks to be a trend, time test it a couple of months, then react, not worrying about missing the exact top or bottom.

[ERD50]

Quote:

Originally Posted by Free To Canoe Leave it to HFWR to come up with some good music. Been awhile since I heard some Jeff Beck. Thanks! Free to Canoe

Check out the Crossroads Guitar Festival Concerts with Eric Clapton and friends. Beck is amazing today, just amazing.

-ERD50

[DblDoc]

I found this interesting for those of us still accumulating: Dollar-Cost Averaging Your Way Through the Depression | AllFinancialMatters

Ignoring the comparison of DCA (or periodic investing) vs lump sum the bottom line was investing monthly from sept 1929-sept 1943 resulted in 8% nominal return. As a bonus you were already fully invested when the markets took off...

DD

[Linney]

Quote:

Originally Posted by Moemg I'm pretty close to capitulation....

Today one of my work colleagues hit his capitulation point. I ran into him in the hall on the way to the cafeteria. He said "That's it. I can't take any more loses. I sold everything and went to an all cash position today. I should have gotten out 2 months ago, but oh well. It is what it is".

He's not just a colleague, he's a good friend and we have spent many a lunch discussing saving and investing.

I'm still all in and don't have a "sell point" in mind so I guess that means I'll ride the market all the way down if that is what happens.

I spent a lot of the day thinking about our respective choices. We won't know who made the better choice for quite some time, methinks....

--Linney

[deserat]

We're maintaining our asset allocation - saving less because I'm working less, but still investing. We do have pensions in our future, however our after-tax position (and of course the tax deferred position) have taken some hits. With the pensions we could afford to be more risky in our investing - only thing we don't risk is roof and food money.

Sure hope the up part of the V comes soon, though :-)

Oh, GPond - AWESOME on the Ventures - I love their music - pure beach!

[shotgunner]

I think many us have a decision or capitulation point. I would say for me I can ride this down to about S&P 350 or 50% off where we currently are. At that point I would think about securing my remaining assets to make it to normal retirement age or go back to work. If the S&P should go to 350 I doubt the ability to go back to work would be immediatley viable.

[Lusitan]

This captain is going down with the ship!

I won't take my retirement money out of the stock market no matter how low it falls, because in theory I can wait 30 years for a recovery before I hit traditional retirement age.

For the rest of my savings/investments (which at this point, are mostly tied up elsewhere) I would probably shy away from a heavy stock allocation, however. This market has taught me the importance of making sure you have a long investment horizon if you're going to be heavy into stocks.

[Moemg]

Quote:

Originally Posted by slazenger I'm starting to wonder if maybe herd mentality with regard to investing is actually the right way to do it. What was the heard doing in 98-00' - buying like mad and in internet stock of course, and even in 1-2 years they doubled their money. If the herd then soon panicked into 2000 and they panicked within a month or two, they missed most of the drop that continued through the end of 02' and sold much sooner than I did (which was never). I would think more recently "the herd" got spooked a LONG time ago, and has had their money sitting in savings accounts and CDs for some time now. Surely, those still owning stocks by now could only be those people who think they know what they're doing despite mass hysteria on an almost daily basis. Yeah, I'm one of these people who actually went from half to almost 100% stock the past year, but I'm wondering if the jokes' been on me all the time, and that herd is giving me a funny look. Maybe the best timing is to see what looks to be a trend, time test it a couple of months, then react, not worrying about missing the exact top or bottom.

I also remember the tech boom and some of my friends hung in there until their investments were almost worthless . I did fine because I got out when I got spooked by the craziness . Maybe this time I should have gotten spooked and sat on the sidelines for awhile . I am going to ride it down just a little farther and then I'm getting out until there is some sense of sanity .

[ziggy29]

Quote:

Originally Posted by Moemg I also remember the tech boom and some of my friends hung in there until their investments were almost worthless . I did fine because I got out when I got spooked by the craziness . Maybe this time I should have gotten spooked and sat on the sidelines for awhile . I am going to ride it down just a little farther and then I'm getting out until there is some sense of sanity .

In the tech bust, people who were strongly diversified including small cap, value stocks and REITs (among other things such as gold miners) didn't get hurt too badly as these asset classes all *rose* while techs and large cap U.S. stocks got hammered. I think I lost less than 8% in 2001 and 2002 combined.

This time there *is* no refuge in the equities arena; everything stinks.

[kumquat]

Quote:

Originally Posted by Lusitan This captain is going down with the ship!

Better change your name to Lusitania!

[FUEGO]

Quote:

Originally Posted by DblDoc I found this interesting for those of us still accumulating: Dollar-Cost Averaging Your Way Through the Depression | AllFinancialMatters Ignoring the comparison of DCA (or periodic investing) vs lump sum the bottom line was investing monthly from sept 1929-sept 1943 resulted in 8% nominal return. As a bonus you were already fully invested when the markets took off...

I'll take 8% nominal returns against a backdrop of 0.3% average annual inflation from 1929 to 1945 (CPI = 17.1 in 1929 and 18.0 in 1945). I expect there's a decent chance we will see something on the order of 8% nominal returns for the 16 year period that started in October 2007 at the peak of the market.

[daloanboy]

No more new money is going into my equity pot. I am DCAing dividends and interest only and will do so until the markets return to 2007 levels, not withdrawing any.

Luckily my COLA pension provides for our basics, cash on deposit covers some luxuries and the wifes COLA'd pension kicks in in 5 years when we're both 65.

We've been retired 6 years now. Thank God we've got those pensions.

I'm in the UK. We avoided most of the great depression compared to USA, but our nemesis was the '70s - our UK stock index dropped 90% - NOMINAL!. Think about it that's an 80% drop and then a further decline of 50%. We had three day working weeks enforced, and power cuts several times a week.

Apart from the inflation it feels about as bad as it did in the '70s. (Then only 1 or 2 banks went under, not several hundred). Like i say i'll be drip feeding in with dividends and interest until recovery.

Scared witless, by this