Comparing the 1987 crash to current one

[NW-Bound]

Even more impressive is the fact that FIRECalc says at my current withdrawal rate my portfolio survival rate would have been 100% - even with that 83% decline.

Me too, assuming bonds and cash still hold value. And I can also draw SS instead of waiting till 70.

But I'd rather see the market not drop that much. I would have less money to count, and I love to count.

 

[Lsbcal]

The Great Depression chart is striking. I never knew it went down 83%

That chart uses monthly data so the declines were actually somewhat worse.

 

[gayl]

I've done some stupid things in this trying time. Sold CCL, did not reinvest CDs, and just sitting on 27% cash + 5% California tax free ETF. I know markets recover and I'm not withdrawing but I can't find a good similar period other than the depression. (2 kids out of work. 1 furloughed, 1's company folded) Tell me something good

Edited to add in cash just sitting in savings account so I could feel better. I'm not really better but I just feel better. Now at 30% cash + 5% California tax free ETF. I have NEVER been this cash heavy but i totally blew this thing (ah well back to Guillmant -- a 'new-to-me classical composer)

 

[Steeler75]

Backing up the truck?

Nice .. adding tons when we get to that -35%

Looks like we are getting to your 35% figure way too fast.

Thanks ERD50 for providing a positive perspective during this shocking period of time. This certainly seems so different than any other bear in my lifetime (starting with 1987). Feel like we are blindly going forward, not knowing if the next step is a turn or a cliff.

Let’s flatten the spike, keep our hospital systems functioning, so we can get the country back to work soon.

Wish everyone calm and health going forward.

 

[easysurfer]

I'm convinced now that this market meltdown will be worse than 1987.

 

[USGrant1962]

The Great Depression chart is striking. I never knew it went down 83%

Yes. And that is in FIRECalc and the 4% rule. Get out from under your chair!

 

[Beachcomber]

I wonder how that chart looks now, after the big bounce!

 

[Lsbcal]

I wonder how that chart looks now, after the big bounce!

The chart is updated but the image posting site is not yet up for use. Patience.

 

[target2019]

Google Sheet would be one-stop shopping...

 

[Lsbcal]

This is updated through March 27:

 

[Maidensong]

We didn't have enough invested in 1987 to matter, but I remember thinking in 2008 that the DH would have to work until he's 70 before he could retire. We used that crash to rethink our retirement strategy and decided not to put all our eggs in the stock market basket. We continued to invest 15% of his income in a tax deferred account all through the down days as we had done since the 1987 downturn, but we also explored new streams of income. We bought and paid for 10 residential units between 2008 and 2015 when he retired early. We'll start SS this year at FRA. Now we think of our money in the IRA and stock account as gravy. Glad it's there, but not totally dependent on it.

Multiple streams of income=the sleep of the just.

 

[Beachcomber]

Interpreting this chart, does this mean we are in for another major dip this week?

 

[USGrant1962]

Interpreting this chart, does this mean we are in for another major dip this week?

It doesn't mean anything. It is financial porn, not that there's anything wrong with that!

 

[DrRoy]

I find the comparisons interesting, but not useful. The economic situation that we are in is unique, and so will be the market's reaction to it.

 

[Lsbcal]

It doesn't mean anything. It is financial porn, not that there's anything wrong with that!

I don't think you should see this as anything but history. It is clearly not predictive but we should know what has happened in the past. It is definitely not porn.

 

[Lsbcal]

I find the comparisons interesting, but not useful. The economic situation that we are in is unique, and so will be the market's reaction to it.

It is useful in a way that knowing history is useful. What is not shown in the chart is the historical context of each decline. That could probably fill a book.

Markets, the US economy, and world dynamics change. Peoples emotional and rational reactions seem less changeable but that is debatable I suppose.

 

[Lsbcal]

I made several changes to the chart:

1) Now showing about 1.5 years of data. This shows more of the 2007-2009 market and the market bottom on March 9 2009.

2) The X-axis is now in terms of the 2007-2009 market dates. Did this since it is more familiar to those of us who remember that period.

3) Corrected the 1929 data. The markets in those days were open on Saturdays (6 days a week). So I had to throw out the Saturday data points. I did not extend the data for 1.5 years but it got a lot worse then 2009.

4) The 2020 data (red) goes up to April 3rd.

5) CAVEAT: This data is not predictive of future market trends.

 

[pacergal]

Thank your keeping this updated. Very interesting info to follow.

 

[Beachcomber]

If you superimpose each major dip on top of each other, it looks to me like they all re-test the bottom.

That is the similarity I take out of the chart (thanks!). I think we are going lower (from here) because there's just too much uncertainty.

I know you can't time the market, but I am going to buy some BA between here ($124) and $100. Was thinking AA, too, or RCI, but some businesses will have more trouble returning to previous highs. Also, who knows who will file for bankruptcy?

 

[audreyh1]

If you superimpose each major dip on top of each other, it looks to me like they all re-test the bottom.

That has been my experience with the bear markets since I retired.

 

[mickeyd]

I recall being crushed in 1987 but LEARNED how quickly it can bounce back. I was in my early 40's. I learned (self taught) a ton about time horizon and AA.


Now that I am invested in a correct AA, I know that it will bounce back, but I have no immediate use for the assets, and I am cash heavy.

 

[Closet_Gamer]

This continues to be a great chart...keep going!

 

[Mickslick]

In 1987 I was two years into my career out of college and had about 15k in the company's 401k plan. I remember that day vividly, riding home on the bus seeing the bold headlines and sensing the panic in the "older" folks at the time. I really didn't have a concern at all due to limited dollars invested, youthful naivete and not all that concerned that with a little time our economy and markets would prevail.


This time is "way" different than anything I, or I believe our economy and markets have ever experienced. Never in the past has the economy been put on hold, overnight, the world over. Uncharted waters for sure. With that said, I don't think there is much to do but hold on and don't do anything stupid like start moving large sums of money around.

 

[DrRoy]

It is useful in a way that knowing history is useful. What is not shown in the chart is the historical context of each decline. That could probably fill a book.

Markets, the US economy, and world dynamics change. Peoples emotional and rational reactions seem less changeable but that is debatable I suppose.

I meant useful in the specific sense of being able to trade from it, not from an overall informational standpoint.

 

[Lsbcal]

Updated chart through April 17 with the complete 1929 line (green) :