Market correction anxiety

[jazz4cash]

Sometimes we have experiences that affect our outlook over the long term. Life and death experiences probably affect us most of all, but there are other things that can form our attitudes.

In my case, the decision to avoid the stock market was influenced by the experience of a very close friend. It was late 2008, when my best friend Jim, retired from AT&T @ 58, with a total of $800,000 as a nest egg. He moved with his wife to my over 55 Park in Florida to snowbird... happy and confident in the future.
By March or April in 2009, we watched as the market changed, to see the upset, near to panic... knowing that there was no job to go back to. This made a lasting impression on us.

The market did recover, and Jim was okay, but those interim months are etched in my memory.

Do you happen to know what your friends AA was at the time? Many didn’t know until it was too late that their equity exposure was uncomfortably high. The folks that lost in the long run were the ones that sold in panic. My takeaway is your friends were OK because they held on until the market came back. He likely also had a good DB pension so that helps tremendously.

 

[ERD50]

Sometimes we have experiences that affect our outlook over the long term. Life and death experiences probably affect us most of all, but there are other things that can form our attitudes.

In my case, the decision to avoid the stock market was influenced by the experience of a very close friend. It was late 2008, when my best friend Jim, retired from AT&T @ 58, with a total of $800,000 as a nest egg. He moved with his wife to my over 55 Park in Florida to snowbird... happy and confident in the future.
By March or April in 2009, we watched as the market changed, to see the upset, near to panic... knowing that there was no job to go back to. This made a lasting impression on us.

The market did recover, and Jim was okay, but those interim months are etched in my memory.

Etched in my memory as well. Like many others, we lived through this. And like many others, I did not adjust my spending one iota. I had an AA I was comfortable with, and a conservative WR, future pension/SS, and history showed 'there would be days like this'. I could have been scared and cut back, or sold at the bottom out of fear, and all those things would have had a seriously negative impact on my quality of life.

Anyone near panic was not prepared. That's not a reason to avoid the stock market.

-ERD50

 

[marko]

Etched in my memory as well. Like many others, we lived through this. And like many others, I did not adjust my spending one iota. I had an AA I was comfortable with, and a conservative WR, future pension/SS, and history showed 'there would be days like this'. I could have been scared and cut back, or sold at the bottom out of fear, and all those things would have had a seriously negative impact on my quality of life.

Anyone near panic was not prepared. That's not a reason to avoid the stock market.

-ERD50

Agreed on all points! However, while not 'near panic' I was starting to get a little jittery by early February; but we held the course.

If there was any bad news in '08 is that the subsequent recovery has made me near fearless, which likewise is not always a good thing.

 

[marko]

Do you happen to know what your friends AA was at the time? Many didn’t know until it was too late that their equity exposure was uncomfortably high. The folks that lost in the long run were the ones that sold in panic. My takeaway is your friends were OK because they held on until the market came back. .

I've mentioned a few times about my smarter-than-you neighbor who proudly announced that she 'sold everything' on the last Friday of February '09.

Those that held the course were well rewarded. Unless one sold, AA and equity exposure was pretty much irrelevant; there was little time to do anything but hold on, batten down the hatches and wait the storm out.

 

[Dtail]

All the anxiety must be gone now. New record highs by turkey day.

This I would like to see.

 

[imoldernu]

I don't think we knew about SWR, or AA or the kinds of money management that we see here on ER. What was obvious was that his $800K went down to less than $400K and that was scary.

What if he had gone to cash @ $700K and bought back in, in June. Lucky? or wise move?

When there's no way to know where the bottom is going to be, it takes a great deal of courage to rely on history when you're too old to earn money.

https://ei.marketwatch.com/Multimed...png?uuid=dc21ed9a-1003-11e7-9078-001cc448aede

 

[pb4uski]

Bumping this thread... surprised that given the dive the market took today that I haven't seen any posts on it.

I was doing other things and was totally oblivious about it until I got home... looks like stocks are going to be on sale!

 

[HadEnuff]

Bumping this thread... surprised that given the dive the market took today that I haven't seen any posts on it.

I was doing other things and was totally oblivious about it until I got home... looks like stocks are going to be on sale!

well it's hard too get to excited about this up and down thing, when it's been going on for the last 10 months or so. When we break some new ground in either direction, especially if we go downward much beyond the 52 week low, the conversation will pick up, I'm sure.

 

[W2R]

Bumping this thread... surprised that given the dive the market took today that I haven't seen any posts on it.

I was doing other things and was totally oblivious about it until I got home... looks like stocks are going to be on sale!

You didn't read enough! I posted on it here, an hour and a half before the markets closed. Probably should have posted on this thread, instead, oh well.

Thanks for reminding me, though. I should go and see how my personal investments did.

 

[laurence]

I was in my early 30s during the start of the Great Recession. It was much easier to be cavalier when I had so much less money in the market! In a way I’d rather have it now than five years from now when I’m planning my exit. At least I’m (DW and I double 401k max plus company match) buying.

 

[audreyh1]

Bumping this thread... surprised that given the dive the market took today that I haven't seen any posts on it.

I was doing other things and was totally oblivious about it until I got home... looks like stocks are going to be on sale!

That was a particularly dramatic drop today.

It seems that the equity markets are going through a series of lower highs and lower lows. Not a good pattern.....

 

[NW-Bound]

All the stock market anxiety has evaporated. Seems the storm is over. Back to regularly scheduled programs.

Or is it that market correction anxiety now replaced by bear market fear?

 

[Running_Man]

Or is it that market correction anxiety now replaced by bear market fear?

There is no bear market fear as there are not many common people selling. So much money is in index funds that the major mover of stocks now is based on the algorithm set up by managed index funds, usually at reasonable fees. As their allocation models drop they are selling stocks. I do not think average investors have changed their stock allocations much at all.

Valuations are so high from continual investment and increases in stock allocation of the average investor in the United States that when you start to see actual selling as a result of index investors actually lessening their exposure to stocks it will become very obvious.

No doubt if the selling were to become intense there will be severe pushback against algorithmic trading, as it is much easier to blame an unseen machine over faulty valuation metrics, but since algos are up to about 60% of all stock market activity (in 2007 it was estimated to be 30%- of course in 2007 the biggest algorithmic trade was in baskets of mortgages rated AAA) most stock market activity is driven by algorithmic and only 10% is from individual trading (per JP Morgan global head of macro investing Marko Kolovanic) it will be interesting to see how this “passive investing” cycle plays out.

There is angst obvious amongst the financial media that this decline was not expected, even as most people are oblivious to this— really go to Walmart and ask 30 people what their view on the stock market is — they are not worried about it ----- and coming right after the good news on China trade and interest rates that perhaps earnings growth of 10 percent next year aren’t so solid next year after all, CNBC was actively talking about how actually reporting on the stock market decline could be damaging to the US economy and the cause of an economic decline from computer and media induced hysteria. Funny there was no worry when the market has the longest uptrend in history!?

In the background the protector of the S&P500, the Federal Reserve, will be there to provide index support as needed at crucial times to cushion the blows, but they have a lot to balance at the present time. It would seem if they wanted to they could dump all the 10 year treasuries to un-invert the curve and cause algos to buy stocks, I wonder why they don’t do that in the name of return to normalcy?

 

[daylatedollarshort]

I don't think we knew about SWR, or AA or the kinds of money management that we see here on ER. What was obvious was that his $800K went down to less than $400K and that was scary.

What if he had gone to cash @ $700K and bought back in, in June. Lucky? or wise move?

When there's no way to know where the bottom is going to be, it takes a great deal of courage to rely on history when you're too old to earn money.

https://ei.marketwatch.com/Multimed...png?uuid=dc21ed9a-1003-11e7-9078-001cc448aede

Interesting chart on the recovery times. Thanks for posting. I don't have any courage and while I am probably not too old to get some kind of job at my age, I've gotten very fond of sleeping in when I want to.

 

[marko]

even as most people are oblivious to this— really go to Walmart and ask 30 people what their view on the stock market is — they are not worried about it -----

Neither are the people at my yacht club. But I suspect for entirely different reasons.

 

[Dtail]

There is Bull market long in the tooth anxiety. Perhaps we need to just touch bear market territory of 20% and there can be a grandiose announcement of the end of the bull market and we can up from there and it removes one of the psychological negatives.

 

[frayne]

The market hates uncertainty and the current political climate is driving that bus right now. Lets just hope it stays between the lines and away from any cliffs.

 

[Scrapr]

I checked my home page today. The market was down big.....AGAIN!!!

then i remembered...the market is closed today. whew.

 

[HadEnuff]

I checked my home page today. The market was down big.....AGAIN!!!

then i remembered...the market is closed today. whew.

Funny! I did the same thing, exactly.

 

[RAE]

S&P Futures are way down for thursday........

 

[Momcpa]

I felt a little foolish when I checked the markets today and did an "internal panic" for a second. Guess I'm not the only one who mistook yesterday's decline for another decline today. But who's to say what tomorrow will bring !!??

 

[Dtail]

DJ Futures 300 down already.

 

[mamadogmamacat]

The reason, perhaps, arrest of Chinese exec in Canada for extradition to US for trading with Iran in violation of sanctions. Dow futures down 1.31% as of 9:10 pm

https://www.thestreet.com/technology/futures-fall-on-arrest-of-chinese-tech-executive-14802075

 

[W2R]

S&P Futures are way down for thursday........

DJ Futures 300 down already.

I'm ready (as you can tell from my battle-ready, snuggly little kitty avatar and the attached photo below). Anyway, bring it on.

 

[target2019]

Today we get to review the importance of World events, as well as holding buckets of cash in banks...