How far will you ride the market down ?

Moemg said:
I'm pretty close to capitulation....
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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
 
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!
 
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.
 
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.
 
slazenger said:
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.
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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 .
 
Moemg said:
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 .
Click to expand...
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.
 
DblDoc said:
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...
Click to expand...

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.
 
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
 
Moemg said:
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 .
Click to expand...

I know that you may feel very threatened by this nasty break in the markets.

I have proven to myself and others that I don't know what will happen, I don't even fully understand what has happened already. So I won't be making any suggestions!

But I can point out that the dot com era was different. First, thanks to some very high fliers the S&P was much more overvalued than is is now, and even much more overvalued that it was in Oct 2007.

Second, there were many high flying stocks that never really had a prayer, that were just hope and manipulation.

So although today's economy may appear worse (or not-to anyone living in a high-tech area in th early 21st centruy the economy looked pretty bad), today's valuations based on long term earning power are much lower than the early 2000s.

Ha
 
We have just gone through a decade and a half when it was easier to make money with financial tricks than it was making and selling real stuff. Not just for the banks, either. For lots of companies and people as well.

Most of that’s gone away. It’s not now so easy to just make money out of nothing, and a lot of the wealth generated is either gone or going away.

Right now this is bad – but later it will be good. Kind of like when you say to you kids “you’ll understand this when you are older”

It’s bad right now because income and wealth is being lost and there is economic confusion. That is causing financial hardship. It’s also bad because of the uncertainty and fear that results for the absence of a clear vision of a positive future. More people are affected by uncertainty and fear than financial hardship.

It’s good because businesses and people will now turn away from this artificial financial stuff and get back to making and selling real stuff. The work force will be larger as more people work longer to fund their lifestyle and retirement. This keeps a lid on labor costs and helps keep inflation under control. It also stimulates demand because working people consume more than non-working people.

It’s good for the US because we import much of the real stuff we consume, so the weakening in demand affect others more now and later the strengthening in demand will create more opportunity for US businesses to satisfy.

Businesses that aren’t competitive will fail and be absorbed by their competitors. This will help boost productivity – and also profits. It becomes a whole lot easier to distinguish effective business leadership and management from the mediocrity and rest of the herd.

The relationship between risk and reward becomes clearer and strengthens. That is a very positive thing for equity investors.

This isn’t happening yet, and it may be too soon to be fully exposed to equities, but the writing is on the walls. If the past decade (and a half) is the lost decade, this upcoming decade will be the revitalization of capitalism. And it will be great for investors.
 
I'll probably ride it as low as it goes. But since I only had 30-35% in the market when all this started (that's down to about 20% now), I can still retire on the remaining portion of my investments (CD's, I-bonds and MM)...as long as the banking system doesn't collapse. I will probably not be putting any new money into the market in the future. If the market ever recovers, I'll be pulling more out.
 
daloanboy said:
...
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.
Click to expand...
I wasn't aware that the 1970's were that bad in the UK for stocks. Do you know if small caps did better then large caps then? Are there any free data bases to access for general UK stock info for the 1970's?

In the US my inflation adjusted data shows a partial recovery of the Total Stock Market during 1975-76 and small value stocks made a full recovery back up to the 1973 peak. Large value and TSM lagged in the late 1970's but small value and midcaps did well.
 
MichaelB said:
We have just gone through a decade and a half when it was easier to make money with financial tricks than it was making and selling real stuff. Not just for the banks, either. For lots of companies and people as well.

Most of that’s gone away. It’s not now so easy to just make money out of nothing, and a lot of the wealth generated is either gone or going away.

Right now this is bad – but later it will be good. Kind of like when you say to you kids “you’ll understand this when you are older”

It’s bad right now because income and wealth is being lost and there is economic confusion. That is causing financial hardship. It’s also bad because of the uncertainty and fear that results for the absence of a clear vision of a positive future. More people are affected by uncertainty and fear than financial hardship.

It’s good because businesses and people will now turn away from this artificial financial stuff and get back to making and selling real stuff. The work force will be larger as more people work longer to fund their lifestyle and retirement. This keeps a lid on labor costs and helps keep inflation under control. It also stimulates demand because working people consume more than non-working people.

It’s good for the US because we import much of the real stuff we consume, so the weakening in demand affect others more now and later the strengthening in demand will create more opportunity for US businesses to satisfy.

Businesses that aren’t competitive will fail and be absorbed by their competitors. This will help boost productivity – and also profits. It becomes a whole lot easier to distinguish effective business leadership and management from the mediocrity and rest of the herd.

The relationship between risk and reward becomes clearer and strengthens. That is a very positive thing for equity investors.

This isn’t happening yet, and it may be too soon to be fully exposed to equities, but the writing is on the walls. If the past decade (and a half) is the lost decade, this upcoming decade will be the revitalization of capitalism. And it will be great for investors.
Click to expand...

:clap: :dance:

I feel much better now.:)
 
For all those with doubts

Well, the man has spoken. The one thing Pres Obama had stayed away from 'till now. Hear yourself in his own words Bloomberg.com: Editors' Video Picks

What I am looking for is not the day-to-day gyrations of the stock market... but the long-term
Click to expand...
On the other hand, what you're now seeing is profit and earning ratios are starting to get to the point where buying stocks is potentially a good deal, if you have a long-term perspective on it,
Click to expand...
Clear as always, he leaves no doubt. Which raises many in my mind. And I like the guy...:D
 
Quote:
What I am looking for is not the day-to-day gyrations of the stock market... but the long-term

So he want's is long term gyrations. Perhaps he should have described how big gyrations.

Though in and of itself that statement is meaningless, now if discusses rates and limits.......
 
dex said:
Also, I think there will come a time when the US$ will peak and that would be the time to buy foreign currencies - Australian $, Canadian $, possibly Euro.
Click to expand...

Dex,

How do you actually buy foreign currencies? I've heard of buying foreign equities to take advantage of the gyrations of currencies, but are there funds for specific (or, say, non-US currencies)? I'm sure you can open non-US bank accounts, but I'd think the reporting and reconciling the interest/foreign/US taxes would be a pain.

Would seriously consider shorting the US$ at some point but too ignorant to know how.
 
All the way I guess. I've lost too much to pull whats left out now...
14-18 years till retirement, so I HOPE I have time to recover.

ETA: I'm still putting in 5%, plus match of 4% biweekly.
I just looked, down about 80K from all time highs.
 
Last edited:
Riding it all the way down. :(

Even put a little more in yesterday. :-\

My question is this: If I sell out today, what will I do if the market rallies 20% from here? What then if it rallies another 10% on top of that? (we already had one ~25% bear market rally from November to January). Will I know the real thing from a hoax? Probably not. Will I get pulled back in to the market just in time to see my losses compounded as the bear market continues? Or I could sit on the sidelines locking in these losses while the market starts a real recovery?

Because I don't know, because no one can know, I'm sticking with the plan I started with. At least that has a historically proven track record.
 
I am riding it down, and using the low prices to fill in some sectors that have I have been unwilling to purchase in the past due to high prices (XOP - Oil E&P FTF and GDX - Market Vectors Gold Miners ETF). I now have 2.5% of my equities portfolio in each ETF (5% incease in equity allocation). Oil is not going to stay down.

However, I do not plan on putting any more into equities until the bad news ends, with the possible exception of increasing XOP to 5% of equities if it goes significantly lower than it is today.

YouTube - Europe - The Final Countdown
 
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