This time is different!!

[Hopeful]

I remember in the '08 stock market crash thinking "This time is different". But I stayed the course , and was well rewarded. I saw those that pulled out, and missed a lot of the future gains.

Fast forward to today, and I find myself thinking again "This time is different". I am feel confident with my plan, but it is still hard to keep the thoughts of "This time is different" out of my head.

Does anybody else struggle with trying to keep the thoughts of "This time is different" out of their head?

 

[Clone]

Is there a 12 step program around here someplace?

 

[Aggie1999]

Nope. I don't understand the stock market enough to be concerned about such things. Keep plopping money in regardless of market movements.

 

[Hopeful]

Is there a 12 step program around here someplace?

I wish! ER is definitely not for the faint of heart.

 

[Andre1969]

My attitude on it is basically "This time it's different, just like every other time!" Meaning, there are some similarities, there are some differences, but in the end, things will rebound and we will soar on to new highs.

But yeah, it is hard to stay the course. If I'd have the foresight to sell everything off in October 2007, or even the summer of 2008, and then buy back in around November '08, or wait til the official bottom in March '09, that would have been great. But, it's just too hard to predict these things, and just how far they will, or won't, fall.

 

[copyright1997reloaded]

Yes.

But there are lots of cross currents here on ER.org. There are those who try to (in some sense) time the market (I am in that camp but only in a tame way, e.g. I might change my asset allocation by 10-20% max). There are those who have made it and thus an event like this is enough to get them to take their chips off the table.

Let's imagine for a moment that we find out a meteor is going to impact earth, and it is big enough that there is a chance that half of the worlds population is wiped. Surely "this time IS different" and the markets would likely be impacted for a long time.

A similar situation might be true if COVID-19 ends up killing a billion people. However, even with the Spanish Flu of 1918/1919, the results were relatively short lived. The market DID go down (about 25% if I remember correctly), but then after that we entered into the roaring 20's with fantastic stock market appreciations.

So what is the right answer? If you are young, building wealth...just hold on and keep chugging. If this is a wake up call in terms of your ability to handle risk - then realize it, accept it, and create an asset allocation that you can live with.

Me? I've sold a bunch of stuff since late 2019, but still about 55% or so equity (I have to update some spreadsheets to see more precisely where I am). But MOST of my selling is simply to try to time this drop, hoping to buy back in down another 15% or so. Yes, some of it is simply being more defensive as I age (taking some chips off the table). If I'm wrong, oh well. I still have a bunch of equities, and still investing every two weeks with my second career job.

 

[Gallaher]

So, I put $100K into cash this morning. Portfolio value is 2.2 million.
I already have seven years living expense in fixed or bonds.
My idea is get “some benefit” from the market movement. I won’t find the bottom of the market to reinvest. But I don’t want to give all my gains from last year.
This will pass but it’s not containable.

 

[madsquopper]

Same here. Now living off my investments and not particularly happy right now (as opposed to being very happy a week ago), but am staying the course as I have at least 5 years living expenses in safe (or reasonably safe) investments. Between coronavirus and the upcoming election I can see this dip taking a couple of years to recover from, although it could easily take more (or less) time.

 

[vince]

I'd say that it times like this that show whether you've actually chosen the correct AA.
50/50 & two years of expenses in cash.

 

[Scrapr]

I'd say that it times like this that show whether you've actually chosen the correct AA.
50/50 & two years of expenses in cash.

Heh heh...brings to mind my 100% stock position during the Great Recession. Whoo boy that was tough. Esp trying to explain to the pretty wife what was happening. Mostly I tried to ignore it. I had been checking every day. So it took some self control to dial that back. Went to 80-20 in 2014. Then 60-40 after sale of one of our homes. I thought that the 2000 recession was "OK" and I could handle the next one.

 

[Dash man]

While I didn’t cash out any stocks, I just got off the phone moving some stocks from my tIRA to my Roth IRA. May as well make the conversion move while prices aren’t as sky high.

 

[Silver]

20 years ago I worked closely with Jack Templeton in Philadelphia, who is a pediatric surgeon and son of investor/philanthropist John Templeton. Jack has since assumed responsibility for the John Templeton Foundation.

Occasionally Jack would quote his father, and he once included "The four most expensive words in the English language are "This time it's different.""

 

[Toocold]

The stock market went down 5% from its high so I put in 15% of my cash in my AA. I'll wait another 5% to put in another 15%.

 

[kgtest]

My attitude on it is basically "This time it's different, just like every other time!" Meaning, there are some similarities, there are some differences, but in the end, things will rebound and we will soar on to new highs.

But yeah, it is hard to stay the course. If I'd have the foresight to sell everything off in October 2007, or even the summer of 2008, and then buy back in around November '08, or wait til the official bottom in March '09, that would have been great. But, it's just too hard to predict these things, and just how far they will, or won't, fall.

Precisely. I'm always like GEE sure seems like a great time to sell, but when would I buy back in. I can't answer that question factually.

It's basically like catching a falling knife... TWICE! Time it at the top of the market, and time it again at the bottom. Where's that crystal ball?

 

[Car-Guy]

Yes this time is different... Like always.... I've bought-in twice this week and may buy more today.

 

[ShokWaveRider]

Hang on you lot, what is all the panicking about? in 2008 the low was 7449!!!!!! It is now 29,000!!!!! ~400% increase, the Dow can go to ~17k before you should even start to worry.... right?

 

[FLSUnFIRE]

This time is different for me.

I started my quest for FIRE in 1998 and rode the market through the dot-bomb and 2008 (harvested a bunch of losses to carry forward). I always was excited about big drops as my next transaction was always a purchase. Now that I plan to quit my job this year, my next significant transaction may not be a buy (short term will as I continue to pay off a 401K loan and contribute enough to get my full match. I'll have enough cash and post-quitting earned income to get me through a year and a half or so and established a HELOC I can borrow against for expenses if prices are too cheap.

A drop sometime wasn't unexpected so this is more interesting than scary to me at the moment. Actually, I'll feel better after a correction since I won't have the nagging question of when is it going to happen! I just don't want it to go too low too fast so I don't get scared to make the leap!

 

[Hopeful]

This time is different for me.

I started my quest for FIRE in 1998 and rode the market through the dot-bomb and 2008 (harvested a bunch of losses to carry forward). I always was excited about big drops as my next transaction was always a purchase. Now that I plan to quit my job this year, my next significant transaction may not be a buy (short term will as I continue to pay off a 401K loan and contribute enough to get my full match. I'll have enough cash and post-quitting earned income to get me through a year and a half or so and established a HELOC I can borrow against for expenses if prices are too cheap.

A drop sometime wasn't unexpected so this is more interesting than scary to me at the moment. Actually, I'll feel better after a correction since I won't have the nagging question of when is it going to happen! I just don't want it to go too low too fast so I don't get scared to make the leap!

I guess in a way this truly is different for me as well, and perhaps why I made the post. In 2008 we were still a ways off from retiring, and in the accumulation phase. Now we are a couple years from retiring, and are no longer accumulating at that same rate. Whether irrational or not, I think the fear is a little more this time or that reason. But to be honest I should be glad this happened now, vs immediately after we retired.

 

[OldShooter]

In my investment class I recommend that students check their portfolios every year or two, but if they hear that the market has gone down then skip checking for two or three years.

 

[Athena61]

I’m holding steady. Not smart enough to time the market so riding out this one as well. I’ve been in the market since the mid 90’s. My funds are all the balanced kind so the fund managers are keeping things in line for me and my allocation is about 53% stocks the rest in bonds including 2 years of expenses in cash. What I’m not doing is looking at my accounts. Much less stressful for me.

 

[copyright1997reloaded]

I guess in a way this truly is different for me as well, and perhaps why I made the post. In 2008 we were still a ways off from retiring, and in the accumulation phase. Now we are a couple years from retiring, and are no longer accumulating at that same rate. Whether irrational or not, I think the fear is a little more this time or that reason. But to be honest I should be glad this happened now, vs immediately after we retired.

I retired in May of 2009...just about at the depth of the great recession stock market plunge. Yes, it was stressful given what the market had been doing (with no end in sight). Looking at an old spreadsheet, I was 56% equities, and that was down due to the shellacking in the market.

I didn't cash out. Even though I gave up my mega-corp job, had a child (8 years old at the time), later bought property and a bunch of equipment (e.g. tractor, trailer), bought an RV, and saved enough for my child's college (in a 529)...not counting any of those expenditures my net worth (not counting my home, which is now paid off) is over 2X what it was at the end of May 2009 (even with the downturn to date).

I'm not saying this to humble brag - what I am saying is that you hopefully have a long long time to go before you depart this world. This too shall pass. So it keeps coming back to being able to make rationale decisions. With me, it was 56% equities in the storm. I was able to do that (and sleep) because a) I had a pension that could provide some/most of a really tight lifestyle budget and b) My house was almost paid off and c) the 45% fixed included a decent slug of cash/cash equivalent that I could draw on for a while if needed. Those things allowed me comfort - enough to know that it was OK to go and that I could let the 56% ride.

 

[WyomingLife]

In my investment class I recommend that students check their portfolios every year or two, but if they hear that the market has gone down then skip checking for two or three years.

That makes sense.

I do think the OP, via a subsequent post, makes a good point, however: it matters where you are in the investment journey.

If I was a 24 year old grad student, I'd stop looking at my statements, too.

If I was 60 and on final approach, I'm not sure what I would do.

I thought this article was informative in terms of putting these matters in historical perspective regarding what one might expect vis-a-vis recovery times: https://www.cnbc.com/2020/02/27/her...orrections-last-and-how-bad-they-can-get.html.

 

[copyright1997reloaded]

That makes sense.

I do think the OP, via a subsequent post, makes a good point, however: it matters where you are in the investment journey.

If I was a 24 year old grad student, I'd stop looking at my statements, too.

If I was 60 and on final approach, I'm not sure what I would do.

A 60 year old on average has 25 years to go. That's a long time for things not only to recover but also to move much higher.

The thing is, it isn't a binary decision. One doesn't have to be all in or all out.

 

[WyomingLife]

A 60 year old on average has 25 years to go. That's a long time for things not only to recover but also to move much higher.

The thing is, it isn't a binary decision. One doesn't have to be all in or all out.

+1

I don't disagree.

The psychological aspects of being older are potentially more challenging, I guess. Those remaining 25 years presumably will be without significant wage income, as well as involving ever-escalating risks such as deteriorating health. Watching one's portfolio go through the ringer in such an age bracket could be more stress inducing.

I think much of this is psychological. The psychological aspects of investing are fascinating.

 

[Chuckanut]

Presumably, many of us have picked a certain Asset Allocation with the idea that there will be great times, bad times and lots of middle times. Unless you have found your reasoning for that AA to be defective, just stick to the AA.