Stock market fears over the past 10 years

[Markola]

None of this is ethical, or conducive to facilitating real price discovery. The bastardized and manipulated centrally planned system we have now is not what regular functioning free markets in a healthy economy should be.

From my read of history, the severe and frequent economic boom and bust cycles and the brutal wealth inequality that led to public demand for central banking, income taxes and social programs was not a period that I’d want to live through. If one is going to complain about our system, I think one has to make the libertarian case for how life would be better for a majority of voters in an unmanaged, unfettered free market that is also a democracy. I don’t think it can be done.

 

[GTFan]

Yeah the problem with saying that the free market should take care of everything ignores the huge downside of financial markets collapsing and the world economy going into chaos, barring central bank/gov intervention. It's way more than folks like us losing our investments.

Not to mention that there's no such thing as a 'free market' anyway given inherent advantages to insiders and investment firms. A free market implies equal knowledge and access to everyone and that's never been the case.

 

[ERD50]

Originally Posted by MarieIG View Post

That being said, past performance is no guarantee of future results . . .

nd yet everyone one this board uses Firecalc which does exactly that?

Bzzzzt!!!!! Wrong! -ERD50

 

[teejayevans]

Bzzzzt!!!!! Wrong! -ERD50

Huh?!

You’re the one that’s wrong, from the FAQ:

How does FIRECalc work?
As Jonathan Clements in The Wall Street Journal put it, FIRECalc "analyzes what would have happened if you retired in 1871, in 1872, in 1873 and so on. It then calculates how often your strategy would have panned out historically."

 

[Dtail]

Huh?!

You’re the one that’s wrong, from the FAQ:

How does FIRECalc work?
As Jonathan Clements in The Wall Street Journal put it, FIRECalc "analyzes what would have happened if you retired in 1871, in 1872, in 1873 and so on. It then calculates how often your strategy would have panned out historically."

True but it is not stating any guarantees that the past performance means the future performance will look the same. It is just an historical referencing of sequential results.

 

[NW-Bound]

True but it is not stating any guarantees that the past performance means the future performance will look the same. It is just an historical referencing of sequential results.

+1. No guarantee promised.

FIRECalc only shows the range of outcomes as happened in the past. Extrapolation to the future is the responsibility of the tool user.

 

[ERD50]

Originally Posted by teejayevans View Post

Originally Posted by MarieIG View Post

That being said, past performance is no guarantee of future results . . .

nd yet everyone one this board uses Firecalc which does exactly that?

Bzzzzt!!!!! Wrong! -ERD50

Huh?!

You’re the one that’s wrong, from the FAQ:

How does FIRECalc work?
As Jonathan Clements in The Wall Street Journal put it, FIRECalc "analyzes what would have happened if you retired in 1871, in 1872, in 1873 and so on. It then calculates how often your strategy would have panned out historically."

Bzzzzt!!!!! Bzzzzt!!!!! Double Wrong! You should stop digging.

Where is the word "future" in that quote?

-ERD50

 

[REWahoo]

Huh?!

You’re the one that’s wrong, from the FAQ:

How does FIRECalc work?
As Jonathan Clements in The Wall Street Journal put it, FIRECalc "analyzes what would have happened if you retired in 1871, in 1872, in 1873 and so on. It then calculates how often your strategy would have panned out historically."

Sorry, FIRECalc only predicts the past.

It makes no claims to know squat about the future.

 

[teejayevans]

Bzzzzt!!!!! Bzzzzt!!!!! Double Wrong! You should stop digging.

Where is the word "future" in that quote?

-ERD50

Seriously?

Everyone uses Firecalc hoping it predicts future success.

 

[Midpack]

Seriously?

Everyone uses Firecalc hoping it predicts future success.

Wrong again. In almost 15 years you haven’t even read the first page (see below)?

A few misguided souls may, but you’re mistaken if you think most here consider FIRECALC a predictor of the future or any sort of guarantee. We’re not “hoping” anything...

How can FIRECalc predict future returns from past performance?

It can't. And it doesn't try. In fact, it tries to predict what will not happen. This might sound confusing, but it's really simple.

Consider an analogy: Suppose you are building a house in Honolulu. No one could predict the temperature for any given future date during the decades the house will be used. But if you know that it has never been under 52° in that location in all of recorded history, you could make an intelligent judgment about how much heating capacity is enough.

Planning for an Anchorage-style winter would be a true waste of money that could be better used elsewhere.

FIRECalc works the same way, using stock market history and your portfolio and spending plan instead of weather history and furnace capacity, to give you the information to judge if your savings, combined with your Social Security, pensions, and other resources, are sufficient to handle the winter.

 

[MichaelB]

Everyone uses Firecalc hoping it predicts future success.

I side with ERD on this. Some people may believe FIREcalc predicts the future, but most discussions I’ve seen here (and there have been many) show members are aware it’s not a prediction.

 

[Aerides]

Shoot, if it was a real predictor it would not be free. That would be magical.

 

[twaddle]

Threads like this one are the best predictors, IME.

 

[unclemick]

Yeahbut one of these days...

Grin. 1966 out of college. Dow was 'never' gonna go above 1000. Do real estate - rentals and raw land, gold , silver, coins, guns etc. I remember the ad's in the Wall Street Journal - you could by a share in unaged Scotch and profit over time.

My Dean Witter broker was recommending individual stocks to shoot for long term(1 yr.) gains.

Those were the days.

Heh heh heh - Yogi Berra - 'Predictions is hard, especially about the future'.

 

[target2019]

Seriously?

Everyone uses Firecalc hoping it predicts future success.

Posting to social media can be entertaining. And then it's frustrating.

I did understand the intent of your comment. But generalizing usually gets a lot of negative responses.

 

[Time2]

If you sit and think about it, that seems like an eminently reasonable assertion...

One Mar 1 2020 we did have a 20% decline over Pandemic fears.
It didn't last long.

 

[Spanky]

I remember way back when we used to think a pandemic would cause a market crash.

It did but then quickly recovered due to aggressive monetary policy.

 

[mickeyd]

"Stocks have reached what looks like a permanently high plateau.” Irving Fisher, Professor of Economics, Yale University (1929)

 

[UnrealizedPotential]

Is there ever a time when investing in the stock market isn't at least somewhat scary? I mean when things are going well in the stock market there are plenty who say it can't last, stocks are expensive, and when things are bad there are those who say the market has good reason to be down due to.... inflation, pe ratios, economy, etc.

So what's the solution? I don't have one. But I certainly do not read the headlines that much as it is impossible to tell how the market will perceive information beforehand. Come up with an AA that suits you and go on with life.

 

[disneysteve]

So what's the solution?

The solution is to invest regularly over time, in good markets and bad, up or down, recession or boom, for the several decades of your working years. And then sit back and enjoy the results in retirement.

 

[UnrealizedPotential]

The solution is to invest regularly over time, in good markets and bad, up or down, recession or boom, for the several decades of your working years. And then sit back and enjoy the results in retirement.

Yes, but a lot of people have trouble doing that. Maybe not on the forum, but investors in general. Fear oftentimes gets the best of investors . It's easier said than done for a lot of investors.

 

[disneysteve]

Yes, but a lot of people have trouble doing that. Maybe not on the forum, but investors in general. Fear oftentimes gets the best of investors . It's easier said than done for a lot of investors.

Absolutely. I think the key is to automate it. We started investing in 1992 right after we got married. I set up an automatic investment plan for $50/month. As our situation improved, that increased to $100/mo, then $200/mo, then a couple of funds, then our IRAs and enrolling in work plans. Before we knew it, we had tens of thousands saved, then hundreds of thousands, now nearly $2 million. And we've been through a few big drops along the way but we just stuck with the program.


I think the hardest part is starting. Once you get started, I think it's easier to keep at it. And making it automatic takes some of the emotion and thought out of it.

 

[WestUniversity]

Yes, but a lot of people have trouble doing that. Maybe not on the forum, but investors in general. Fear oftentimes gets the best of investors . It's easier said than done for a lot of investors.

That’s true but recognize the fact that since 1871 the S&P 500 has grown at an average annual rate of about 10.8%. That includes the Great Depression, two world wars, the dot com bust and the sub prime meltdown to name just a few. It’s performed like that despite any of those events or anyone’s fears...

 

[W2R]

I remember way back when we used to think a pandemic would cause a market crash.

I sure thought it would! But I stuck with my financial plan, AA, etc, which got me through 2008-2009, and guess what?

As of the market close last night, the sum of my portfolio and bank accounts is the largest that it has ever been in my entire life! I feel like I am living in some sort of crazy delusional fantasy, but there it is.

Despite my super conservative AA, this sum is 168% of what it was on the day I retired back in 2009. When corrected for inflation it has still risen by 150% even though I have used it to live on. OK that was more the case before I started getting SS, but still. I am simply floored. So much for the market crash that I was absolutely SURE would happen last year.

If any other Bogleheads have not been checking your portfolio lately, today is a good time to check it. Looks like a miracle to me and the Dow closed at 33,527 .

 

[twaddle]

As of the market close last night, the sum of my portfolio and bank accounts is the largest that it has ever been in my entire life! I feel like I am living in some sort of crazy delusional fantasy, but there it is.

That's it, folks. The moment we've been waiting for. W2R's "Whee!"

https://www.early-retirement.org/forums/f28/record-dow-whee-30317.html