Assessing the Carnage

[Koolau]

I'm down 23% and it is super disappointing. I am putting as much money into the market as I can, but its a balancing act as we are still in the accumulation phase.

I am, have been, and will always be at 100% equities so I need to be used to the dips, and buy them as often as I can.

Heh, heh, if you are 100% equities, with what do you buy on the dips? Enquiring minds want to know. Do you have a printing press in the basement?

 

[Ready-4-ER-at-14]

I though that's the only way to value your assets. What somebody is willing to pay for it now on the open market, and not some wishy washy high values in the future?

Yes I suppose that is the correct way however we all learn to store that information different ways if we never had accounting, and since I originally intended to let all fixed income mature at one time I only kept track of face value at maturity. Now i record both, and use both values in planning.

It worked out well as I under counted the value as rates dropped for years and I sold most of the zero coupon stuff for capital gain. What is left now MOSTLY matures before RMD and will definitely per plan not be sold. The little maturing after RMD will be converted to roth or sold.

I sort of keep double books.. sum of what brokers say I have and values in a listings of holding that carries net worth on a detailed basis.

There probably was a time for most of us when we make our first calculation of net worth on our own and it matured from there. Quite a journey in my case..

I tease that ford motor would like my spreadsheets now.

 

[Rianne]

How to evaluate the VG 10-year gain/loss graph. Assumptions: No WD or additions to either bond funds or equity funds. Overall portfolio 55/35/10. The 10% cash in a MM fund.

Edit: All dividends reivested.

Bond Fund Performance:
10 yr +3.7%
5 yr + 3/4%
3 yr +3.1%
1 yr - 6.3%
YTD - 9%

Stock Fund Performance:
10 yr +8.6%
5 yr + 9.7%
3 yr + 10.1%
1 yr - 3.6%
YTD - 13%

 

[Chuckanut]

What IS painful is knowing my cash-like investments (though still going up, just like clock-work) are worth less everyday due to inflation.

+1

 

[sailor]

Do most people here have VTI as a mutual fund so the dividends are automatically reinvested? I am buying VTI as and ETF and I just have dividends go into my my cash position.

VTI is ETF only - equivalent mutual fund ticker in Admiral Shares is VTSAX.
I have VTI dividends reinvested in my IRAs and 401k, but not in taxable account.
Reinvested dividends in taxable create a hassle when selling because of determining share price. Even if you use "specific lot" method, it adds a lot of lots.

 

[joesxm3]

Good point. I have dividends turned off on my accounts, but maybe it makes sense to reinvest them in the tax deferred accounts.

 

[4legsgood]

If stock market is in a reversion to the mean, I think I'll be okay as long as interest rates also revert. Not buying the dip for awhile.

 

[laurence]

The great recession occurred in when I was 33, I was cavalier on the market crash and just thrilled to be buying in at bargain rates, DCA-ing in with our 401ks etc.

It's a lot more painful when losing much larger amounts much closer to retirement. I'm just here for emotional support, lol. I'm glad we are still working and our mortgage debt is at rock bottom rates. Now to train myself to only look once a month....

 

[W2R]

The great recession occurred in when I was 33, I was cavalier on the market crash and just thrilled to be buying in at bargain rates, DCA-ing in with our 401ks etc.

It's a lot more painful when losing much larger amounts much closer to retirement. I'm just here for emotional support, lol. I'm glad we are still working and our mortgage debt is at rock bottom rates. Now to train myself to only look once a month....

Just keep telling yourself that you have lost nothing except on paper, unless you sell and lock in that loss!

I retired in 2009, and I remember how painful 2008 and early 2009 were for me. I was scared to death that I might have to delay retirement. One forum member said, "that's nothing! You are still working! It's so much harder to experience this type of market after you retire." Guess what, she was wrong, at least in my case. Now that I'm retired, I have Social Security. Lately I just spend a little less and everything goes along smoothly.

 

[kgtest]

Heh, heh, if you are 100% equities, with what do you buy on the dips? Enquiring minds want to know. Do you have a printing press in the basement?

Mostly MGK and AAPL. I have 50% of the folio in MGK, and VIMAX... (MGK is my 401k contribution into my SOLO 401k, and VIMAX is what DW contributes to her 403b) and AAPL is about 20% of our portfolio.

Not super diversified with the 20% AAPL allocation, but I've always thought that was a well run company with many different ways of creating revenue and EPS.

 

[bclover]

Just keep telling yourself that you have lost nothing except on paper, unless you sell and lock in that loss!

I retired in 2009, and I remember how painful 2008 and early 2009 were for me. I was scared to death that I might have to delay retirement. One forum member said, "that's nothing! You are still working! It's so much harder to experience this type of market after you retire." Guess what, she was wrong, at least in my case. Now that I'm retired, I have Social Security. Lately I just spend a little less and everything goes along smoothly.

That's pretty much my game plan. I have about 9 months of living expenses in cash so while I don't enjoy watching my portfolio dip like this I'm taking it all in stride

 

[ERD50]

Originally Posted by Koolau View Post
Heh, heh, if you are 100% equities, with what do you buy on the dips? Enquiring minds want to know. Do you have a printing press in the basement?

Mostly MGK and AAPL. I have 50% of the folio in MGK, and VIMAX... (MGK is my 401k contribution into my SOLO 401k, and VIMAX is what DW contributes to her 403b) and AAPL is about 20% of our portfolio.

Not super diversified with the 20% AAPL allocation, but I've always thought that was a well run company with many different ways of creating revenue and EPS.

I think you missed the question. Not "if you are 100% equities, what do you buy on the dips?", but "if you are 100% equities, with what do you buy on the dips?"?

IOW, 100% equities means you have nothing to buy with that isn't equities. Do you have income? And if you've saved it up for the dips, you aren't 100% equities.

We are just curious.


-ERD50

 

[Freedom56]

I am monitoring yields on 2-3 year corporate notes and still see nothing worth buying at this time. I'm pretty confident when we see some real fear and panic selling, we will see 8-9% yields on 2-3 year corporate notes from some strong financial and technology companies as funds become desperate for liquidity.

The world is not ending. Fear just creates opportunity for those who don't let emotions dictate their investing decisions. The bond market has already priced in most of the rate hikes for this year. The issue now is that bond fund yields don't reflect the risk spread for holding them and therefore will be under pressure pushing yields up and creating some buying opportunities for those who invest in individual bonds and corporate notes. As before inflation takes care of itself on it's own as demand drops off sharply. Most of the inflation is due to corporate gouging and eventually consumers will pull back on spending.

 

[Koolau]

Just keep telling yourself that you have lost nothing except on paper, unless you sell and lock in that loss!

I retired in 2009, and I remember how painful 2008 and early 2009 were for me. I was scared to death that I might have to delay retirement. One forum member said, "that's nothing! You are still working! It's so much harder to experience this type of market after you retire." Guess what, she was wrong, at least in my case. Now that I'm retired, I have Social Security. Lately I just spend a little less and everything goes along smoothly.

I retired in '05 and the recession followed just before SS was available to me. Since I had no debt and a fair amount of cash, I wasn't too worried about paper losses BUT it looked like the whole system was on the brink of collapse. Inflation and paper losses at the same time (now) seems more likely to crash the system. THAT is what I worry about but YMMV.

 

[Koolau]

I think you missed the question. Not "if you are 100% equities, what do you buy on the dips?", but "if you are 100% equities, with what do you buy on the dips?"?

IOW, 100% equities means you have nothing to buy with that isn't equities. Do you have income? And if you've saved it up for the dips, you aren't 100% equities.

We are just curious.


-ERD50

Yeah, what ERD50 said.

 

[Koolau]

Most of the inflation is due to corporate gouging and eventually consumers will pull back on spending.

No expert, but while companies have been restrained for many years in raising prices and now they feel freer to do so, I don't consider that "gouging" as such. I think they are taking advantage of the situation but that is what businesses do. Gouging is a pretty loaded word (not well defined) and I think it needs to be used carefully. Gummints go after companies that truly gouge so most companies, while they try to maximize profits for their share holders, do not gouge in the technical sense (whatever that is, technically.) I guess one man's "maximization" is another man's "gouging." It becomes a "value" judgement.

Gouging would be (in today's situation) raising the price of baby formula by 100% on a run of formula sitting in a warehouse. I don't think we're seeing much of that kind of unfair price increases but YMMV.

 

[Bigdawg]

Yeah, what ERD50 said.

I'm not the one you(or ERD50) asked the question to but I'll answer for me. I have about 25k sitting around from some recent estate closures (DM and DS). I also have pension income and drop a few $ in each month regardless. I have been throwing about $1500-$2000/mo into SPY, AAPL, and a few other things that I like for the long term. Just put in an order (10 shares) for Walmart at $120/share. I probably will continue to drop 1-2k into the market each month. We'll see. I will not have to withdraw from the taxable for at least another year. I pull in a bit over 1k/mo officiating sports. Still difficult to see the over all networth drop so much. Oh well.

 

[Freedom56]

No expert, but while companies have been restrained for many years in raising prices and now they feel freer to do so, I don't consider that "gouging" as such. I think they are taking advantage of the situation but that is what businesses do. Gouging is a pretty loaded word (not well defined) and I think it needs to be used carefully. Gummints go after companies that truly gouge so most companies, while they try to maximize profits for their share holders, do not gouge in the technical sense (whatever that is, technically.) I guess one man's "maximization" is another man's "gouging." It becomes a "value" judgement.

Gouging would be (in today's situation) raising the price of baby formula by 100% on a run of formula sitting in a warehouse. I don't think we're seeing much of that kind of unfair price increases but YMMV.

Look what was going on in the technology sector and GPU pricing. They restricted supply and took advantage of a market that normally sees price erosion rather than 300% price increases. Manufacturers raised MSRP prices to keep up with scalpers. Now there is an oversupply and lower demand and prices are collapsing. Mega cap names like NVIDA have collapsed by over 50% along with retailers like Best Buy who played along with their gouging game. Price gouging has been going on with generic drugs for years with little to no consequences. The situation we have now is other sectors have joined in to the price gouging game.

 

[daylatedollarshort]

We have a defensive portfolio so this year hasn't been too bad for us so far. I sold off all the bond funds in the beginning of the year, sold off the international stocks and switched the remaining stock allocation to a Vanguard dividend fund that is only at -3.49% YTD. We have a high allocation to individual TIPS bonds that average around a 1% real yield so they have a current return higher than 0% real yield I-bonds. We're looking forward to the real yield on TIPS going up later in the year and will buy more. In the meantime I have the cash from the international stocks and and bond funds in a short term Treasury ladder.

 

[24601NoMore]

Most of the inflation is due to corporate gouging and eventually consumers will pull back on spending.

Most of the inflation is due to the pumping of over $5 TRILLION into the economy at the same time production was largely shut down due to COVID - all in the form of "free stuff" (direct stimulus checks to households; pausing student loan payments; pausing mortgage payments; child tax credits, etc).

ECON 101: Inflation is "too many dollars chasing too few goods and services", which is precisely what has happened.

As we all know, there is no such thing as "free". There's a cost - and the cost is what we are now paying in terms of the inflation that resulted from horribly misguided public policy.

If you look at PPI, it clearly shows there is no "corporate gouging". Producer input costs are actually running hotter than Consumer price increases. If, on the other hand, PPI was flat or decreasing, then you'd have a case to make for "corporate gouging".

 

[NW-Bound]

US PPI was 11% year-over-year in April 2022. That's low compared to Spain PPI which was almost 50%. Yikes!

There's no wonder that corporations are having profits curtailed. No surprise that stock prices go down.

Meanwhile, my children and their cousins reported decent wage increases. Just as what they say, inflation hurts investors and savers more than workers.

 

[Out of Steam]

As indicated by my considering whether it's time to rebalance the retirement accounts after today, I seem to be passing the "sleep at night" test I failed in 2020.

 

[milford]

Look what was going on in the technology sector and GPU pricing. They restricted supply and took advantage of a market that normally sees price erosion rather than 300% price increases. Manufacturers raised MSRP prices to keep up with scalpers. Now there is an oversupply and lower demand and prices are collapsing. Mega cap names like NVIDA have collapsed by over 50% along with retailers like Best Buy who played along with their gouging game. Price gouging has been going on with generic drugs for years with little to no consequences. The situation we have now is other sectors have joined in to the price gouging game.

Your description of "price gouging" is called supply and demand in a free market. When the demand for something is higher than what the supply allows, it is natural that the price of the product/service will go up. Also keep in mind corporations are in the business to turn a profit, not to keep prices as low as possible.

 

[Fermion]

Market really makes me want to gift ibonds out to 2038 or something There is very little safe out there.

 

[Koolau]

Look what was going on in the technology sector and GPU pricing. They restricted supply and took advantage of a market that normally sees price erosion rather than 300% price increases. Manufacturers raised MSRP prices to keep up with scalpers. Now there is an oversupply and lower demand and prices are collapsing. Mega cap names like NVIDA have collapsed by over 50% along with retailers like Best Buy who played along with their gouging game. Price gouging has been going on with generic drugs for years with little to no consequences. The situation we have now is other sectors have joined in to the price gouging game.

I guess you would have to define price gouging. No one likes to pay higher prices (and I would tend to agree that generics took a big jump in price without the excuse that they actually develop the drugs.) But, in general, prices have been suppressed for a long time by global competition. Given the chance to grab a little extra profit, most companies will do so. Not saying I like it but I don't call it gouging. YMMV