What would you buy if another 2008 happened?

T

tmm99

Give me a museum and I'll fill it. (Picasso) Give me a forum ...
Joined
May 15, 2008
Messages
5,324
I read in another thread about possibility of having another 2008 (What is happening in China is a bit scary).

If the market goes down to that level or somewhere near it, would you invest more money in the stock market? Would you even take some money out of your cash reserves and buy more equity? What would you buy?
 
I would do exactly like I did in 2008: Rebalance from bonds to equities while also tax-loss harvesting. I don't have any cash reserves and I didn't in 2008. I had to exchange from bond funds to stock funds.

Isn't that what everybody does -- maintain their asset allocation?
 
I am going to rely on 130+ years of market history, and keep buying. Mostly US equities. It may be different this time, but i doubt it.

Structurally the economy is solid. We have deflationary pressures. The low oil prices help ~85% of all companies and nearly 100% of US Consumers.

I worry more about the Fed continuing to raise rates to support bankers profits, rather than worry about the low wages.
 
tmm99 said:
I read in another thread about possibility of having another 2008 (What is happening in China is a bit scary).



If the market goes down to that level or somewhere near it, would you invest more money in the stock market? Would you even take some money out of your cash reserves and buy more equity? What would you buy?
Click to expand...


China stock market is irrelevant. It's a new financial system and rules are being made up as they go. They just now suspended the circuit breakers after a week in place.

Think newbie capitalists ... Difficult for the communist party to figure out and we are also overlaying our USA history and capability and market as if it's the same. It's not.

The rmb Currency and slow down of the broad China economy is a bigger concern. I lived in China for the last 8 years. GDP there is already likely down to 4.5 percent (though not officially reported) and they have 12-24 more months to work through this pain. To the extent USA equities are tied to China consumption it is reason for pause but not at all the catalyst or sole contributor to our market slide.

I'm not yet buying but that's because I think the USA Fed cycle and the impending election and the fact we are in year 7 of an expansion says we are due for pause. 1950 and then 1850 are my trigger buy number with 3% to add ..
 
I'd wait until my portfolio needed rebalancing according to the rebalancing criteria that I have written down and try to stick to.

Then I'd buy whatever I need to buy, in order to balance it. This would probably mean spending cash to buy equity index funds, since I would probably need a lower percentage of cash and a higher percentage of equity funds. I might need to buy bond index funds too, depending on what happened to my bond fund percentages.

Dull, boring, worked for me in 2008-2009. Choices made on logic instead of emotion work best for me during 2008 type conditions. This is why I strive to stick to my written financial plan meticulously, especially during financial melt downs.
 
Last edited:
My baseline AA right about now is 55/45. If my AA gets down to 50/50, I'm buying to get back up to 60/40 because I'm more willing to have a somewhat more aggressive allocation when stocks become a lot cheaper.
 
I'll just be buying more of Vanguard Target Retirement 2040 VFORX using current income. The fund has started the move from 90/10 AA but it seems the transition will be fairly slow for now (80/20 by 2020). Either way, 80-90% stocks is plenty aggressive enough for me.

And maybe a smattering of VHT.
 
actually, at this point I'm considering frontloading my 2016 401k contributions
 
I would buy equities since that is the plan. It's what I'm continuing to do as we drop.

I put in my notice on the 4th to retire at the end of the month (good timing, huh?), but I went in with a 45% equity position vs. the 60% that I plan as a baseline in three years. I know a rising glidepath only outperforms in a very limited number of cases, but after the run we had I thought this might be one of them. I just sold a house and will downsize so I have some excess cash.

Or maybe I'll just put it all on red and let the wheel decide my fate.
 
Big_Hitter said:
actually, at this point I'm considering frontloading my 2016 401k contributions
Click to expand...

I was "lucky" in 2008: although they had been allowed earlier, my employer didn't offer a Roth 403(b) variant until spring 2008. When they did, I stopped all future monthly contributions to the traditional 403(b) in favor of the Roth. So I ended up dollar-cost-averaging as always but into the Roth. My take-home pay was less for a while, of course, but I'm glad it worked out that way (it had zero to do with any market "expertise").
 
If we have another 2008 I'll probably put money into vanguards high div yield indx and their div appreciation indx.

I'd also look at individual stocks although I think the best time to buy those are when the indexes are not at lows. The best time to favor indexes is when the market as a whole is down.

If you are wishing you had a 2008 to take advantage of just invest in oil anything... even downstream companies are going down with the price of oil....

Another area to look at is mortgage reits which have not recovered from 2008.
 
Just continue to do what I've done since ER 13 years ago. Nominal 50/50 equities/bonds within 10% rebalance band. Valuations get outside the band? - rebalance. Valuations still within band? - do nothing. Rinse and repeat.

Just turn off the noise. Nobody knows nothin' just wild a$$ guesses...
 
tmm99 said:
I read in another thread about possibility of having another 2008 (What is happening in China is a bit scary).

If the market goes down to that level or somewhere near it, would you invest more money in the stock market? Would you even take some money out of your cash reserves and buy more equity? What would you buy?
Click to expand...

If it goes down to 2008 levels, I'd be out of surplus cash long before it hit those numbers. I have bought stocks every day (all in the Dow 30) so far this year. :) I have a lot of spare cash just waiting for bigger dips. The bigger the drops, the more I seem to buy. So by the time it got to 2008 levels I'd be out of my surplus that I've set aside for buying opportunities. Of course if I really thought we'd see those levels again, I'd wait.
 
Last edited:
Diapers.
 
I hope I have the nerve to buy in. I didn't buy in 2008 drop, I finally joined in 2010.


Sent from my iPad using Early Retirement Forum
 
I'm feeling a lot better. With all the threads talking about 2016 bear markets, 2008 repeats, etc., I think we're much less likely to actually experience one this year.
 
audreyh1 said:
I'm feeling a lot better. With all the threads talking about 2016 bear markets, 2008 repeats, etc., I think we're much less likely to actually experience one this year.
Click to expand...
+1

If this were a real crash or buying opportunity, people would be talking about the end of days and looking for a place to throw up, not discuss what to buy. :)
 
ziggy29 said:
My baseline AA right about now is 55/45. If my AA gets down to 50/50, I'm buying to get back up to 60/40 because I'm more willing to have a somewhat more aggressive allocation when stocks become a lot cheaper.
Click to expand...
That sounds like a very sensible proposition. My target allocation is 65/32/3 and I think that if a correction/drop/crash were to take the equities portion down to ~55, I might well rebalance to bring it back up.

As Senator said, let's see what we do when it actually happens :D
 
You must log in or register to reply here.

Similar threads

M
Money used to buy a house vs putting in investments: what would you do?
2
Route246
Route246
S
If I had 100k
2 3 4
twirler
T
street
With markets higher than any time in history
4 5 6
PlayinwithFIRE
P
X
Does anyone here actively manage their nest egg
2
TheWizard
TheWizard
A
What if?
Sue J
S

Latest posts

Back
Top Bottom