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Old 10-16-2007, 01:14 PM   #41
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I would like to think that I would deploy some of my cash to scoop up the bargains, but I would probably do what I did in 1987 -- nothing. I didn't sell what I had and I didn't buy more.
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Old 10-16-2007, 02:04 PM   #42
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Originally Posted by NinjaPigeon View Post
Is this what you watched? MSNBC - October '87: Crash and Comeback - Home Front Page

If so I suppose I'll have to try to catch it, as I'm pretty fascinated with how I'd handle it. Just for kicks, I did like you and calculated what the DJIA would be if it had a 22% drop. Scary stuff.

For those of you who say you would stay the course, how would your DWs or DHs feel? Would they defer to your judgment or would this put pressure on your relationship? I know my fiance was not that happy with the 8% dip earlier this year, and that was at least spread out over a couple weeks. But we stayed the course and all was well. I'd have had a bigger problem on my hands convincing her not to worry if the drop was more pronounced.
Yes, that was the show. I thought it was riveting, though it might bore some of the more sophisticated analysts here. The emphasis was on the human aspects and what it was really like to live through the events surrounding Black Monday, 1987.

And as for me, I have no DH to affect my financial decisions. Frank (my S.O.) is a German engineer and very logical, as some are. He might give me input, but he would never try to pressure me on something like this. We keep our money separate.
Already we are boldly launched upon the deep; but soon we shall be lost in its unshored, harbourless immensities. - - H. Melville, 1851.

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Old 10-16-2007, 02:33 PM   #43
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As an energetic clog (not a mis-spelling ) in the gears of Megacorp, I was nose to the grindstone during this time. I had max contributions to my employee stock plan (10%) and by then, I think they had the 401K plan, so I probably had the max contribution to my 401k. I just left all those things ride. So in essence I dollar cost averaged more into my investments over the period. Not because I am a brilliant investor ... but because my eyes were glued on the grindstone (I was still enamored about career aspirations at that time). My thoughts were that the employee stock plan and 401k were part of my kids college and my (eventual) retirement funds. Worked out well until 2001 and I had another 'come to Jesus' moment. Luckily, I had seen this happen (big drops) a few times and once again did not panic (by design this time) and did not 'dump' and kept DCAing into the 401k throughout.

Dumb luck Excellent Planning of this nature has gotten me to FIRE (3 1/2 months and counting).
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Old 10-16-2007, 07:06 PM   #44
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Originally Posted by twaddle View Post
How do they view the market? Does anybody view it as something that always goes up?

I like Bogle's view on market returns. He breaks it down into returns due to earnings growth, dividend yield, and speculative yield (P/E growth).

Generally, you get to keep the returns due to earnings growth and dividend yield, but the market tends to take back returns due to speculative growth (unless you sell to realize those returns).
The market has been out-growing the economy for a long time now. I would say that many unsophisticated investors implicitly assume that is the way things are 'sposed to be. Many others realize that it can't last, but don't want to leave the bus until they are sure it is out of gas. Interesting times for sure.

The 70s were a time when the economy outgrew the market. To rebalance from the 60s, when for the most part the market outgrew the enconomy.

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Old 10-16-2007, 10:44 PM   #45
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Originally Posted by FIREdreamer View Post

I was too young when the 87 crash happened and I don't remember much about it. Then when the smoke clears, hopefully I will have the guts to start buying while the market is low. When the tech bubble burst in 2000 I did not panic and kept buying into the market but the decline was orderly. In a 1929 or 1987 type scenario with an abrupt collapse of the stock market, I really don't know how I would ultimately react...

The problem is: you really can't tell if or when the smoke has really cleared. At least, I never have been able to do so.
Uh, is it still smokey now, or can someone give the "all clear signal?" If it's all clear, could you IM me as soon as possible (I'd like to get a jump on this before the word gets out).
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Old 10-16-2007, 10:48 PM   #46
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Originally Posted by haha View Post
The market has been out-growing the economy for a long time now.
Yup, for more than two decades:

The 70s were a time when the economy outgrew the market. To rebalance from the 60s, when for the most part the market outgrew the enconomy.
I was an infant during the 60's tech bubble. And I think it had already imploded by the time I was in elementary school. Tell us about the go-go years, Uncle Ha.
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Old 10-18-2007, 11:41 AM   #47
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Originally Posted by twaddle View Post
I was an infant during the 60's tech bubble. And I think it had already imploded by the time I was in elementary school. Tell us about the go-go years, Uncle Ha.
I'm not Uncle Ha, but I was in equity funds during the go-go years. All I can do is remind myself of John Kenneth Gallbraith's comments on the brevity of financial memory. I vaguely remember the '70s were slow going, dividend-wise, and after some years in the market, I was very surprised to get my first capital gains distribution, wow, it was $4.+ per share. At that point I became much more interested in the market.
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Old 10-19-2007, 09:45 PM   #48
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Lived thru 1987 and subsequent crashes and just sat it out and bought more. What hurt us more were the crazy speculators who led to the tech bust. We held out as long as we could and then bought some tech stocks just before the bust. Otherwise we have had only two slightly negative years since 1986 and one year was +30%. Overall we are pretty happy.

Now to satisfy me, we have a huge CD ladder so that if we lost alot in the market, we hopefully would have some aside. Debt is gone too.
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