Approximately how much will my investment portfolio decline when bull market ends?

[audreyh1]

I've seen these charts of past history several times, just one example...answers for everyone!

That chart is showing annualized returns - just so folks realize.

For example, the worst 3 year period for 80/20 portfolio was -10.5% per year. You have to compound them together to get the total loss over that 3 year period. So it will be worse than -31.5% over those 3 years.

 

[Gatordoc50]

I never hear anyone talk about the 9/11 crash. Not only was it devastating to equities and the economy but the policies enacted to right the ship can be directly linked to the 2008 crash. Is it because we don't want to give credit to the terrorists for nearly collapsing the entire world economy? 12 years later and we are still reeling. I guess it goes to show how Wall Street is the framework of our entire economy. Scary stuff.

 

[Midpack]

Approximately how much will my investment portfolio decline when bull market ...

That chart is showing annualized returns - just so folks realize.

For example, the worst 3 year period for 80/20 portfolio was -10.5% per year. You have to compound them together to get the total loss over that 3 year period. So it will be worse than -31.5% over those 3 years.

Good clarification, thanks. I've edited the post accordingly.

 

[Gumby]

Not correct. Cash did fine, and Treasuries gained in value. High quality bond funds like VBISX did well.

It's a good example of not ignoring cash as an asset class which I note the newsletter omitted. 2008 was a great example of how having cash gives you money to rebalance with when a bunch of your other assets have been clobbered.

To my mind, diversification always meant that you would own some things go up when others go down. Not that they would just suck less by comparison. Being in a last row seat in a crashing airplane is scarcely better than being in the first row.

Cash is unique. Yes, you're protected to the downside, but you also have no upside when times are good. But you are right about Treasuries - they are the "flight to safety" asset. Tell me when the next crash will occur and I'll stock up on them.

P.S. -- I don't endorse the newsletter. It just had the charts I wanted to post and I was too lazy to find them elsewhere.

 

[RetireAge50]

Just a note to previous comments. A 10.5% loss each year for 3 years is is a 28.31% total loss (not 31.5%)

 

[Lsbcal]

Well, there are bad markets and then there are really bad markets.

 

[ERsoonihope]

Blah blah blah....it's still 28.3 - quit wasting your time reading all this.

 

[ESRwannabe]

With an 80/20 split I wouldn't be shocked to see your principal decline by 50% at some point.

I have an 80/20 split as well although not really on purpose. Its just happens to balance out that way for now.

I keep one year of living expenses in cash and I fill my 401k up with a bond fund. Roth IRA has REITs. Taxable account has stocks.