it's the crash of October 2014 all over again

[Sunset]

When I started reading this thread, my wife asked what was so funny?
I told her I was reading about the market crash.
She said "Did we lose all our money?"
Guess I will have to de-sensitize her like other have done.

[bingybear]

tell her yes.. go back to work!... but don't tell my wife.. or I will not be able to RE

[NW-Bound]

Quote:

Originally Posted by Sunset When I started reading this thread, my wife asked what was so funny? I told her I was reading about the market crash. She said "Did we lose all our money?" Guess I will have to de-sensitize her like other have done.

You should have replied "No, not all the money. Just our vacation next year. In addition to your kitchen remodel that we lost the day before".

[NW-Bound]

Quote:

Originally Posted by bingybear crap... not again... another 3 week bust and boom... and I'll likely miss it. if this is another 2008-9... likely worth looking at.

Who says there will be a boom soon after this one? Somebody guarantees that?

But if it happens, I will drink to that. And if it does not happen, damn, I will need even more drinks.

[mathjak107]

Quote:

Originally Posted by tuixiu y2k retirees with 100% of their assets in the stock market, do you think this is common?

not at all but bonds had a real return of zero after inflation for much of that time frame and in fact still do so they didn't effect things to much in a positive way to help pull that 15 year real return average to over 2% for that hypothetical retiree following the 4% rule in 2000..

of course the real world with spending adustments and spending patterns factored in the outcome would have likely been different and they would still be ok.

anything pertaining to the 4% rule can only be hypothetical since spending patterns are a huge factor but are not included in the "rule"

[mathjak107]

the problem with drops is as our portfolios grow larger and larger after a while we tend to relate to things not in percentages but in dollars.


while a 7% drop does not sound like much that is 9 years worth of maxing out my 401k at the catch up level or 15 years worth of my wifes salary.


when we look at it in that perspective that drop is huge.

[daylatedollarshort]

Quote:

Originally Posted by mathjak107 the problem with drops is as our portfolios grow larger and larger after a while we tend to relate to things not in percentages but in dollars. while a 7% drop does not sound like much that is 9 years worth of maxing out my 401k at the catch up level or 15 years worth of my wifes salary. when we look at it in that perspective that drop is huge.

This is how Wade Pfau phrased it in a Marketwatch article

“This is sequence of returns risk,” wrote Pfau. “People are more vulnerable to the returns experienced when their portfolios are larger because a given percentage change has a bigger impact on absolute wealth. A big portfolio drop at the end could possibly wipe out all of the portfolio gains from the first 25 years of one’s career.”

How to avoid sequence-of-return risk - MarketWatch

[Major Tom]

Quote:

Originally Posted by mathjak107 the problem with drops is as our portfolios grow larger and larger after a while we tend to relate to things not in percentages but in dollars. while a 7% drop does not sound like much that is 9 years worth of maxing out my 401k at the catch up level or 15 years worth of my wifes salary.

I always thought it tended to be the other way around, due to the fact that as we age, we gain more experience in the market. I remember friends who were very nervous of equities when they started out. One co-worker was quite bent out of shape, because he'd put a first-time investment of a few hundred dollars into an index fund. A year or two later, he'd lost a significant percentage of that initial investment (must have been during a market crash) and was re-thinking the whole idea of equities.

The absolute dollar amounts are usually much larger when we are older, but we also have been around long enough to know that what goes down eventually comes back up.

At least, that's my perspective. I guess it depends on your psychological make-up/risk tolerance.

[DFW_M5]

Hopefully after today's close, you can forget about big drops for a while.

[Ronstar]

Crash - what crash?

[mathjak107]

Quote:

Originally Posted by Major Tom I always thought it tended to be the other way around, due to the fact that as we age, we gain more experience in the market. I remember friends who were very nervous of equities when they started out. One co-worker was quite bent out of shape, because he'd put a first-time investment of a few hundred dollars into an index fund. A year or two later, he'd lost a significant percentage of that initial investment (must have been during a market crash) and was re-thinking the whole idea of equities. The absolute dollar amounts are usually much larger when we are older, but we also have been around long enough to know that what goes down eventually comes back up. At least, that's my perspective. I guess it depends on your psychological make-up/risk tolerance.

the problem is we do not know when it is coming back or even if it will be in our lifetime.

it can be especially damaging early on in a retirement .

but i think there is not one of us in 2008 -2009 who stayed the course and wondered is this time different.

[mathjak107]

Quote:

Originally Posted by daylatedollarshort This is how Wade Pfau phrased it in a Marketwatch article “This is sequence of returns risk,” wrote Pfau. “People are more vulnerable to the returns experienced when their portfolios are larger because a given percentage change has a bigger impact on absolute wealth. A big portfolio drop at the end could possibly wipe out all of the portfolio gains from the first 25 years of one’s career.” How to avoid sequence-of-return risk - MarketWatch

so true. one session today in the upmarket we had was 2 years income for my wife.

[NW-Bound]

Everyday I compare my portfolio percentage change with the indices, meaning the Dow, S&P500, and the NASDAQ, to see how I fare. And I also look at percentage change for longer-term performance tracking.

I know not to look at the change in dollar terms, but man, when I was younger I would not think there would be a time when I would see a drop of $80K in a single day, or a gain of $50K (it always drops more and faster in a day than it does going up), and still acted cool.

Well, the market movement still hurts or makes me feel a bit happier, but I know that's the nature of the beast. And it's only money.

Quote:

Originally Posted by mathjak107 so true. one session today in the upmarket we had was 2 years income for my wife.

Being in the distribution and not the accumulation phase, I look at the dollar amount fluctuation in terms of how many months of living expenses that equates to. So, 2% today is roughly 6-7 months of expenses.

[NW-Bound]

Quote:

Originally Posted by Major Tom The absolute dollar amounts are usually much larger when we are older, but we also have been around long enough to know that what goes down eventually comes back up...

... except that the portion that a retiree has converted into consumables is flushed down the toilet (literally!), and has no chance of coming back up.

[ejman]

Quote:

Originally Posted by NW-Bound ... except that the portion that a retiree has converted into consumables is flushed down the toilet (literally!), and has no chance of coming back up.

You hope it doesn't come back up!

Unfortunately, living out in the bunnies with septic systems I can tell you from personal experience it ain't necessarily so!

[haha]

Quote:

Originally Posted by Major Tom The absolute dollar amounts are usually much larger when we are older, but we also have been around long enough to know that what goes down eventually comes back up.

If you don't mind having that "comes back up" part questioned, sometime read Triumph of the Optimists by Elroy Dimson and others.

The title is perhaps misleading. IMO a better one might be Triumph of the Lucky.

Ha

[NW-Bound]

Quote:

Originally Posted by ejman You hope it doesn't come back up! Unfortunately, living out in the bunnies with septic systems I can tell you from personal experience it ain't necessarily so!

Uh, I was thinking the same, but did not want to use too graphic terms. While I do have a septic tank in my other boonies home, it is underutilized and I hope to never have the problem.

Don't you have a high water table where you live? That would cause a big problem when it rains dogs and cats. Like it has been doing.

[NW-Bound]

Quote:

Originally Posted by haha If you don't mind having that "comes back up" part questioned, sometime read Triumph of the Optimists by Elroy Dimson and others. The title is perhaps misleading. IMO a better one might be Triumph of the Lucky. Ha

This is a book that I knew about and would love to read. However, it is only available as an expensive hard cover, and the local library has it in the Reference section and will not allow it to be checked out.

[ejman]

Quote:

Originally Posted by NW-Bound Uh, I was thinking the same, but did not want to use too graphic terms. While I do have a septic tank in my other boonies home, it is underutilized and I hope to never have the problem. Don't you have a high water table where you live? That would cause a big problem when it rains dogs and cats. Like it has been doing.

Fortunately no, my house and septic system are on a small hill about 250 ft above the area where the water pump is located. The water table is about 70 ft lower than that.

[MRG]

Quote:

Originally Posted by ejman You hope it doesn't come back up! Unfortunately, living out in the bunnies with septic systems I can tell you from personal experience it ain't necessarily so!

You have some really smart bunnies. Ours know nothing about septic systems.

Sorry too good to pass up.:confused:

Sent from my SAMSUNG-SGH-I337 using Early Retirement Forum mobile app