2008 Recession End Date? Advice for next one?

[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.

 

[SnowballCamper]

I read a few `taking profits now' posts several months ago. I'd have missed several thousand in gains had I taken profits several months ago. The way I manage for the next downturn is with the asset allocation (where some of it is in govt. securities). By sticking to the allocation, I sell some stock gains when they are high, and I have the resources to buy into stock funds when the price drops. No matter what the market does I get the advantage of selling high and buying low.

 

[RetiredAt55.5]

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.

That's unfortunate, you would've made more money keeping the money invested since 2014.

My point - no one can predict (accurately) what the market is going to do and when.

 

[Andre1969]

I don't know when the Great Recession was officially over, but the official bottom for it was March 9, 2009.

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%, once you factor in additional investments over that timeframe.
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.

I don't know if you'd call it another after shock, or an event that stood solely on its own, but from July to August 2011, I took a ~15% hit.

Anyway, that's my memory of it. Others' will vary, depending on their own personal experience, and how they were invested.

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.

Also, it's impossible to predict when a recession will start, because I believe the definition of a recession is two consecutive quarters of negative growth. So usually, we don't know we're in a recession, until 6 months in! Although I'll admit, back in October 2007, I could sort of smell it coming. I know that sounds strange, but something seemed to be brewing...I could just feel it, somehow.

 

[Chuckanut]

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.

There is nothing bad about taking a profit. I do it from time to time myself. In a good year, I have been known to take out next year's estimated expenses when the market is bumping up around new highs.

But, I am not sure why you regret not doing so in 2008. Those who stayed in the market, have gotten it all back and a big bunch more (how's that for precise math?). So, in this case, patience paid off.

That said, if you have won the game, taking some chips off the table is not a bad idea. There should be no regrets for making sure you don't bet the farm and then lost it.

 

[mckittri2000]

Stay diversified. It will all work out in the end.

 

[REWahoo]

How long did the 2008 recession last; and what were your lessons learned to weather the next one?

According to https://www.lastrecession.com/table.php the last recession began in December 2007 and ended in June 2009 - lasting a total of 18 months.

I learned my 2007 AA was close to matching my risk tolerance but having 10-15% less in equities would have improved the quality of my sleep. I also learned that holding on and riding out the downturn held great future rewards which I am now enjoying.

 

[Fleur58]

I should have said I regretted not taking profits at the time in 2008. Now I realize I made out much better by staying invested. In 2014, when I used the money to pay off my house, It turned out to be a good move for me because I stopped working unexpectedly 2 years later. 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, but I was still in a position to early retire in 2016.

I own a lot of funds. What I have been doing this year is selling off some long time funds with expense ratios over 0.6%; and consolidating and replacing them with a low cost Index fund and also have added funds to the few managed funds I want to keep with expense ratios less than 0.5%.

I do agree that staying within my asset allocation is important to rest easy. I'm 60 equity /40 bonds right now and moving towards 50/50.

 

[Montecfo]

AA and demeanor are key

The important thing is to be ready regardless of timing. Be comfortable with your AA. Then don't worry

Resist temptation to sell/go to cash because market is "too high".

The three most important words in investing, IMHO, are:

Stay Fully Invested

 

[Andre1969]

FWIW, I remember the market peaking, for me at least, around the summer of 2014. From there it just sort stalled, and came down a bit. I still managed a return of around 5.6% for the year as a whole, but that was still a letdown compared to how well 2012 and 2013 did.

2015 was a flat year for me. I made around 1.2% or 1.6% or something like that. Basically, inflation, at best. And then in early 2016 there was a bit of a correction, and I think there was a 10% drop in there. It bounced back pretty quickly though, and by late summer/early fall, it seemed like the market was finally taking off again.

If I had a crystal ball, I could have sold everything off in the summer of 2014, and bought it all back in early 2016, and made out pretty well. But, it's hard to predict the market like that. Honestly, at the time, I was expecting the economy to tank, because it just seemed like we were over-due for another recession. And usually, right about the time we get a new President, it seems like the economy is in the crapper, or about to be.

Still, if you cashed out and paid off a mortgage, at least you put the money to some good use, and bought peace-of-mind from it. So it's not a total loss.

 

[Digger1000]

There use to be articles out there that said if you missed even a few of the best days in the market you would have negative returns overall. Dont know if thats still the case anymore or not. But I use to see those articles for years.

 

[OldShooter]

How long did the 2008 recession last ...

I don't know and I don't care.

... 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.

 

[W2R]

I learned my 2007 AA was close to matching my risk tolerance but having 10-15% less in equities would have improved the quality of my sleep. I also learned that holding on and riding out the downturn held great future rewards which I am now enjoying.

+1

For me, the recession was a great test of my AA. Naturally I was very concerned, but with my 45:55 AA I was somehow able to hold on to the belief that I would not lose everything, that the market would recover, and that I would be OK. I forced myself to not sell low and even buy low a little bit, as much as I could bear anyway. I am SO GLAD that like you, I held on and rode out the downturn (or, alternately bought low), never selling low, because it made all the difference.

As for how long the 2008-2009 downturn lasted, well, from my (VERY untrained, inexperienced, subjective) point of view at that time, it lasted about 15 months or so, maybe?

When did it begin? The Great Recession became pretty obvious even to me by the fall of 2008. Before that I thought it was just a normal downturn, but in retrospect I guess that was part of the recession. By October of 2008 I felt like the forum was freaking out, except for a few steady folks who I tried to emulate.

Several forum members were posting about moving to Mexico since they couldn't afford to retire in the US. Others planned to delay their retirement plans. At least one or more announced that they were going to sell everything immediately and go strictly cash. I was trying to hang on like a pit bull and wait to see what happened. I really didn't know what else to do. Either this "buy and hold" approach was going to work, or it wasn't, but I bet the farm (as the saying goes) that it would work. And it did - - eventually the market began to recover.

When did it end? My portfolio hit its low on 3/9/2009, when it was just 49% of what it is now. If the Dow had dropped to zero and stayed there forever, as some doom-n-gloomers on financial websites predicted, I'd have been up a creek, but it didn't.

By the time I retired on 11/7/2009, the recession was over although at the time, I didn't know that it was over and financial analysts online were saying the worst was yet to come. But instead the market has surged upwards pretty steadily since then, with only a few comparatively minor blips.

 

[Andre1969]

My portfolio hit its low on 3/9/2009, when it was just 49% of what it is now. If the Dow had dropped to zero and stayed there forever, as some doom-n-gloomers on financial websites predicted, I'd have been up a creek, but it didn't.

That made me think about some Thanksgiving-day conversation that occurred, in 2008. Most of my relatives are afraid of the stock market, so they'd tend to invest conservatively. Or, if they ever did try and dabble in it, the second it dropped they'd sell at a loss.

I remember one of my relatives asking me if I was going to sell and get out, and I said no. I said that hell, it's already fallen by about 50%, so it's probably not going to go much lower. And if it did, even if it fell another 50%, that's 50% of a smaller number, so the losses wouldn't be that bad. I remember someone else, some in-law relation that I didn't know, of a cousin, repeating what I said, sarcastically, and mocking it, like I was stupid and didn't know what I was talking about.

But, the next Thanksgiving, in 2009, I noticed nobody was talking about the stock market, economy, or whatever. So one of two things happened...either they all did great, like I did, but didn't feel the need to brag. Or, they missed out on the ride back up, and decided to just shut up about it. I'm not a gambling man, but I'm betting on #2.

 

[audreyh1]

According to https://www.lastrecession.com/table.php the last recession began in December 2007 and ended in June 2009 - lasting a total of 18 months.

Right, so the recession started 2 months after the market peaked, and ended 2 months after the final market bottom.

 

[Montecfo]

I also remember buying stocks in Feb/Mar 2009. Boy was that good timing. Wish I had bought more but I recall how scary it was, and that I did not invest all of the cash at ok nice.

Of course I was still working then and was trustee of the 401k. So I had a lot of people coming up to me asking what to do.

If you sell you lock in losses!

But I know it must have been a lot harder to have been retired then. At least my job could distract me from thinking about it.

In '87 I don't think I did anything but keep investing. Was mainly my 401k then.

 

[Dtail]

I didn't sell anything in 2008 either, but was wrapped up in my career and also starting a divorce process.
So too distracted on various levels.

 

[target2019]

Many of the FRED charts show recessions as grey areas. This one shows the inferred periods of recession from GDP data.
https://fred.stlouisfed.org/series/JHDUSRGDPBR

The last recession was a great time to ramp up the old Model 401K...

 

[Markola]

Many of the FRED charts show recessions as grey areas. This one shows the inferred periods of recession from GDP data.
https://fred.stlouisfed.org/series/JHDUSRGDPBR

The last recession was a great time to ramp up the old Model 401K...

That’s an interesting chart and puts recessions in perspective, i.e. that they are brief. If they aren’t even official until after two quarters of negative growth, then lots of people panic and sell, they are liquidating just before the recession ends.

 

[audreyh1]

The recession may be brief, lasting less than two years, but it takes far longer to recover back the pre-recession economic output.

And recessions aren’t usually called until a year after they start. So yes, it would be foolish for someone to sell because a recession has been announced. Way late, and better to hold on.

 

[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]

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]

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.