2008 Recession End Date? Advice for next one?

[jollystomper]

I was fortunate to have invested through the 1987 crash, 1990 recession, and 2000 dot-com bubble to not panicked during 2007-2009. As others mentioned, managing your AA is the best way to deal with it. You will really find out what AA you are comfortable with. Since we were still in the accumulation phase and I did not lose my job, it was easy to continue to invest and re-balance. Now that we are in the "spend down" phase, I evaluate my AA holdings and model what they would look like if the market fell as it did in 2008-2009, and I am comfortable with that.

Taking some profits does not mean taking *all* profits. I have taken some in January as a "celebration" of last years results, but it was only around 1% of my holdings. Which the market has more than made up for. Sure I would have had more, but there comes a time to enjoy the fruits of ones labor and not be a hoarder.

[Andre1969]

It's interesting too, how that chart shows the Great Recession as being worse than the 2000-2002 downturn. For me personally, the 2000-2002 period was worse. I lost money three years in a row, and at the bottom had suffered about a 50% loss. I did recover pretty quickly. However, the amount I had invested was much smaller then; I think in 2000 my peak was around $62K. So each additional investment carried a lot more sway, than with a larger amount.

In comparison, with the Great Recession, I only lost money in 2008, and most of it in the course of three months. In 2009 I got most of it back. Also, I started 2008 with around $415K, a much larger amount than in 2000, so each additional investment didn't sway the totals as much.

Also interesting that they show two back-to-back recessions in the early 80's. I always looked at that whole period, from late 1979 until sometime in 1983, as one big recession. I was just a kid at the time, but I don't remember it being exactly remember it being the most prosperous of times. That chart also has me wondering...how do they make the distinction between two back to back recessions, and one "double dip" recession?

[target2019]

Quote:

Originally Posted by Andre1969 It's interesting too, how that chart shows the Great Recession as being worse than the 2000-2002 downturn. For me personally, the 2000-2002 period was worse. I lost money three years in a row, and at the bottom had suffered about a 50% loss. I did recover pretty quickly. However, the amount I had invested was much smaller then; I think in 2000 my peak was around $62K. So each additional investment carried a lot more sway, than with a larger amount. In comparison, with the Great Recession, I only lost money in 2008, and most of it in the course of three months. In 2009 I got most of it back. Also, I started 2008 with around $415K, a much larger amount than in 2000, so each additional investment didn't sway the totals as much. Also interesting that they show two back-to-back recessions in the early 80's. I always looked at that whole period, from late 1979 until sometime in 1983, as one big recession. I was just a kid at the time, but I don't remember it being exactly remember it being the most prosperous of times. That chart also has me wondering...how do they make the distinction between two back to back recessions, and one "double dip" recession?

This shows Real GDP plotted, with recessions as grey bars. Different look and feel...

https://fred.stlouisfed.org/series/GDPC1

Have been through 10 recessions, and had no idea what was happening for 8 of those. The last two were OMG events for us.

[Andre1969]

Quote:

Originally Posted by target2019 Have been through 10 recessions, and had no idea what was happening for 8 of those. The last two were OMG events for us.

I've been through 7 of those, although I was born in 1970, so I'm too young to remember that one. I'm also too young to remember the late '73 oil embargo.


with that whole '79-83 timeframe, I just remember it being rough in general, with gas getting expensive, and stations running out of it. It was enough that it prompted Mom to get a more fuel efficient car, going from a '75 LeMans with a 350, to an '80 Malibu with a 229. She was actually considering a Chevy Monza, even, but was raised on bigger cars, so that was a bit *too* small for her.

Most of my family had fairly secure jobs though, and the retirees had pensions, so maybe as a result of that, those recessions felt a bit less scary, than more recent ones.

In 1990-91, I was in college and concentrating on that, so the recession wasn't in my mind. Although I do remember gasoline prices spiking during Desert Storm. That was a bit rough on a college kid.

To be honest, the 2000-2002 period and the Great Recession really didn't put me in any real danger, I guess. I was never in danger of losing my job, nor the roof over my head. I was 30-32 during the first period, and 38 when the Great Recession hit, so the only thing that was really in jeopardy was my chances of early retirement, if I did anything dumb like cash out when the market was low. Still, it was scary times.

Even though we've always recovered, eventually, I guess sometimes there is the fear that next time it WILL be different.

[GravitySucks]

I took two things away from the last recession:

Duration is more important than depth. I was still working so AA was 95/5. When layoffs rolled through I was spared but that huge 'loss' was scary.

Bargains will be found. I'm holding a good amount of Treasuries hoping to take advantage of RV, Classic Car, Vacation or possibly real estate deals. In 08 I bought a used Caddy for 2/3 of book. 09 we don't $35 a night for 3 weeks on St. Pete Beach. The same place is over $230 a night for the same weeks this year.

[Aerides]

Quote:

Originally Posted by GravitySucks Bargains will be found.

My MC stock hit single digits for the first and only time right at the low point. Warren Buffet even commented at the time it was a great bargain. But I also remember being paralyzed...what if this wasn't the bottom, what if it's going to get worse? "What if that thing that was $40 and is now $9 isn't really a bargain because next month it's 0 and folds?" That sort of thinking gets most of us...

[OldShooter]

Quote:

Originally Posted by Aerides ... "What if that thing that was $40 and is now $9 isn't really a bargain because next month it's 0 and folds?" That sort of thinking gets most of us...

Yes. There are any number of "risk tolerance" questionnaires on the internet. IMO they are totally useless. There is the old joke about life being like school, except that first you get the test, then you get the lesson. The test is the market drop; the lesson is what your risk tolerance really is. The tuition can be costly.

[travelover]

I did tax loss harvesting by selling general index funds and buying it back immediately by buying its component sub-funds. I'm still writing off losses.

[ERD50]

Quote:

Originally Posted by OldShooter Quote: Originally Posted by Fleur58 View Post How long did the 2008 recession last ... I don't know and I don't care. Quote: Originally Posted by Fleur58 View Post ... what were your lessons learned to weather the next one? ... Doing nothing is a good strategy. It also worked for us in 1987 and for all the various dips that have occurred since 1987. Re your advisor, he simply guessed right. Other advisors guessed wrong. None of them, right or wrong, were doing anything but guessing. I will repeat advice I have posted here before: Read Nate Silver's "the signal and the noise," at least the chapter on economic forecasting.

Agree with all of OldShooter's comments above.

Quote:

Originally Posted by Fleur58 ... I was so happy not to have a mortgage hanging over my head. I do agree I would be much better off had those funds stayed in invested from 2014 ....

Arghhhhh! I long for the day when we don't see these comments on this forum.

There is no rationale to fear that your "mortgage is hanging over your head" for someone who had the funds to pay it off. In most cases, having that money liquid, and available for any use at all, is far more valuable than having all your money sunk in your home.

You still need to pay insurance, utilities, property tax, maintenance, etc. A mortgage isn't the only expense associated with a home. If you lose your job, having say $100,000 available for all those bills is far better than the reduction of the mortgage payment. In round numbers (look it up if you want accurate specifics), a $100,000 mortgage might be costing you ~ $5,000 a year. You could be unemployed for 20 years and simply use your stash to pay the mortgage. And use that money to pay other bills for a more reasonable period of time.

But if you paid off the mortgage, what about all those other bills?

You have it completely backwards.

-ERD50

[Midpack]

Quote:

Originally Posted by Fleur58 How long did the 2008 recession last; and what were your lessons learned to weather the next one? Right before the recession in Fall 2007, an adviser told me to sell and take some of my profits, and I didn't listen.I regretted it. I stayed invested in mutual funds and didn't sell anything. I'm not sure when the recession actually was considered ended but I started investing again outside of my 401K in 2010. I had enough in profits by 2014 to sell some investments and used the money to pay off my house. The "take your profits now" advice was ringing in my ears. Starting to hear it again.

“Taking profits” is market timing, and there’s no way to always get it right, and being wrong is costly. Like OldShooter I don’t know or care. I rode out ‘87, ‘00 and ‘08-09 and I will ride out ones ahead too. You choose an asset allocation you’re comfortable with come what may, and rebalancing takes some profits off the table for you. Anything more is market timing, history is littered with pros who got market timing right once or twice, and wrong many more times. An amateur has no chance to be right consistently, and again being wrong is costly.

[audreyh1]

Right, my annual withdrawal and then rebalancing to my target AA as needed is my way of “taking profits”.

[DrRoy]

Quote:

Originally Posted by Andre1969 Looking back on my own personal experience, here's a rough timeline... October 31, 2007: Investible Assets hit an all time high December 31, 2007: down about 2-3% from that high. Sometime over the summer of 2008: almost back to the 12/31/07 total, although that was partly because of additional investments. August 2008: down about 12% from that 10/31/07 high. Actual rate-of-return loss was a bit worse, because of additional investments. Sept/Oct/Nov 2008: Nothing but downward slide, bottoming out around Thanksgiving, maybe 44% off of that August number. About 50% of the 10/31/07 peak. Probably down more like 53-55%, return only. 12/31/08: finished the year with a bounce back of about 23% off of that November low. January 2009: at some point during the month, peaked out about 30% off that November low. 3/9/09: knocked back down to that November low. From there, it was nothing but up. By November 2009, my investible assets were at a new all-time high. Once you factor in additional investments during that period, I'd say I was "made whole" sometime in early 2010. However, at some point in 2010, the market did have a bit of an aftershock. I seem to recall February 2010 being a bad month, and most of the summer of 2010 was bad. But then, in the fall the market took off again. FWIW, as the market strains to new highs now, I am cashing out a little bit, here and there. Nothing huge. Now, if my asset allocation got too out of whack, I might rebalance, but so far it's fairly on course.

This is fairly close to my recollection as well. I have old records with the details, but only went to to see that I recovered my Oct. 2007 high by Feb. 2011.

When I retired early 2017, I had a 62/38 AA. I created a scale based on potentially rising NW where I would reduce the AA as I hit a series of target NW values. With the market since then, I have withdrawn 4 years of spending, am still up 23% after that, and have reduced the AA to 58/42.