Why do folk complain so much when the Stock Market goes down a "Little"?

[Spock]

Oh, I think we all are victims of this fallacy from time to time. Nothing to be ashamed of.

True Story: I am on the investment committee for a nonprofit and the investment guy for the firm running the money has been reluctant to sell some donated Class A mutual funds because a big front-end load fee aka sunk cost was paid for them. The funds are dogs. After 6 months of waffling with us waiting for him to grasp the obvious, we finally just directed him to sell. He is a former CPA and has these initials on his bio: CFA, CFP, CPWA. I think he is really not too bright but has real talent for passing multiple choice tests.

I was treasurer on BoD of a local charity.
One of the board members had a resume of Branch Manager at 2 of the big name brokerages plus starting up his own firm and several "Outstanding Advisor of the year" awards... He believed that since we were a "non-profit", we could not end the year with more money than we started with....

 

[jazz4cash]

The wheel that sqeaks get the grease. Complaining has been proven to be effective.

The wheel that squeaks gets greased first but the others get greased too!

 

[steveark]

Understandable

The market isn't down 2%. We are in a full fledged bear market that has some of us down several hundred thousand dollars since earlier this year. That is big news, period! I won't sell a share myself and I'm not the least worried. If I didn't have a big cushion I would not have retired early. But acting like this is a speed bump is not rational either. This is a historically bad plunge that could continue, or not. It is not scary to old hands, but for younger investors who haven't seen it before it's monumental.

 

[street]

because we can have more then most and have it to good. We have nothing else to complain about but the market. LOL

 

[HadEnuff]

There is a tendency, basic human nature I suppose, to look at the highest point as the "value" of an investment. Hence any deviation downward from that point is a "loss".

Case in point: I have friends who own a very nice property in Cape Coral, Fl. At the height of the bubble in 2007, similar properties were selling for almost 500K. Hence, their property was "worth" 500K, never mind that 500K represented approximately a 200K run-up over a period of 3 years. "It's worth 500K".... One year later their neighbors were trying to unload that same property, and weren't getting any buyers at $250K...but in my friends' minds, their property was still "worth" 500K...
Same with the stock markets. Once the S&P hits a certain high, that becomes the benchmark. No matter how irrational that valuation may have been.

 

[JoeWras]

The market isn't down 2%. We are in a full fledged bear market that has some of us down several hundred thousand dollars since earlier this year. That is big news, period! I won't sell a share myself and I'm not the least worried. If I didn't have a big cushion I would not have retired early. But acting like this is a speed bump is not rational either. This is a historically bad plunge that could continue, or not. It is not scary to old hands, but for younger investors who haven't seen it before it's monumental.

True. The best thing that happened to me was 1987. I started my big investments just 1 year before that drop. Gave me some scar tissue.

It was also big news last year, when, in the last half of the year, nothing could stop the dow/s&p/faang from going up every day. There was some talk here, but not enough screaming (by Kelly or whomever) about the irrational gains. A lot of young investors have come on line in the last few years and that was seeming to be normal to them. They may be finding the recent drops to be somewhat surprising.

 

[JustCurious]

I don’t know! However, have you stayed at a Holiday Inn lately?

I think you mean Holiday Inn Express.

 

[audreyh1]

Well, you can’t say the market is down just a little now.

 

[Jeb-NY]

Not panicking here. Down a bit over the peak but still about 50% above where I was when I retired 13 years ago and I lived off it exclusively till this year when I started drawing SS at 70. Through great financial insite (dumb luck) I decided rebalance to my AA early and over several months, close to this years peak because I was getting to far off from my 50:50 allocation. So now I'm about 46:54 with the drop and have to decide when to start rebalancing again. Currently I have more than 4 years of living funds in MM and CD ladders which seem access with the buying opportunity.

 

[Bunker]

Don't feel so bad. My portfolio, one major holding in particular, bought at its all time high, then it's continued to fall ever since (2014), down 25% before all this, about $80-$100,000. Sold some at the bottom (a month ago), financial advisor put proceeds into other like things, and then this big correction right afterward. I just turned 50. Haven't worked in 6 years. I feel like I'm in pretty bad shape.

 

[RobLJ]

Well, you can’t say the market is down just a little now.

Just posted similar on a different thread--"just" 10.5 this month, so far.

Good thing I wasn't 100% equities, but I did about 20% of the rebalance on the 23rd!

 

[Closet_Gamer]

I find there is an element of MARKET DROPPED 2% OMG ARMAGEDDON IS UPON US emotion in the way it is reported. The stories on the drops all mention how the markets are down this year, for the first time in several years - but never point out that they are still up from 2008-2009, or even from 2015.

...

Edited to add: In sum, bad news sells. Good news does not, so folks tend to look for any bad within the good. Human nature.

While there is some greedy manipulation of reporting to drive viewer interest for sure, I think sometimes we're just giving them too much credit.

There is an old joke that "those who can't do teach, and those that can't teach consult."

I offer an addendum: "those that can't consult report"

It would be fascinating for everyone in the financial news media to have to disclose their own investments, savings rate, and financial moves. I suspect these people would by-and-large have horrid financial situations due to both human frailty (the usual problem of not saving enough) and being so close to the news cycles that they try to market time everything.

Throw in their own confirmation bias -- we all want to be right -- and you get a recipe for a feedback loop in the financial news media.

Negative begets negative actions by news employees begets negative confirmation bias reporting more negative news.

Positive beget positive actions actions by news employees begets positive confirmation bias reporting more positive news.

I watch CNBC every day because I find it interesting, but I don't take any actions based on opinions I hear there.

 

[Chuckanut]

However, somebody who is a year from retirement is also in the accumulations phase, but any benefits of a "sale" will be dwarfed by the losses from what's already been invested.

Yes, but....

For some of us we can buffer the sadness of the losses by doing the old re-balancing trick to buy more stocks and telling ourselves "This to shall Pass" and when it does we will be even better off than before. Granted, there are no guarantees, but for many folks, the historical odds seem favorable.

IMHO, this is not the time for the average investor to go All-In or totally Bailout.

 

[Chuckanut]

True Story: I am on the investment committee for a nonprofit and the investment guy for the firm running the money has been reluctant to sell some donated Class A mutual funds because a big front-end load fee aka sunk cost was paid for them. The funds are dogs. After 6 months of waffling with us waiting for him to grasp the obvious, we finally just directed him to sell. He is a former CPA and has these initials on his bio: CFA, CFP, CPWA. I think he is really not too bright but has real talent for passing multiple choice tests.

An investment guy who doesn't understand 'sunk costs' should be torpedoed.

We also need to understand that the current media circus is all about getting people worked up and upset. They have monetized outrage, fear and anger, and they realize nobody is going to watch, click and buy if they give a calm rational perspective.

Those 'investors' who will soon be plucked are getting worked up about the President maybe firing the Chairman of the FRB. The smart guys and gals are considering re-balancing their AA early so as to get a better deal on their investments.

My 2¢, take what you wish and leave the rest.

 

[meleana]

People- like me- worry. Not complaining. We don't have pensions and will have to live on our money in another year or so. We were hoping to postpone taking SS and if stocks go down we probably won't be able to, living in a high tax state and trying to sell our home and move.

 

[RIGM]

"Humans may be hardwired to be loss averse due to asymmetric evolutionary pressure on losses and gains: for an organism operating close to the edge of survival, the loss of a day's food could cause death, whereas the gain of an extra day's food would not cause an extra day of life (unless the food could be easily and effectively stored)."

https://en.wikipedia.org/wiki/Loss_aversion

Daniel Kahneman won a Nobel prize for research on this topic. “Prospect Theory” and supporting research showed that people value a gain much less than they fear (value avoiding) an equivalent loss. Economists for centuries had based their science on the “rational man” model ($1 gained is equal to a $1 loss avoided), which Prospect Theory refutes. Google either Kahneman or Prospect Theory for more information.

 

[Al18]

I'm retiring shortly. I have a 50/50 stock/bond & CD allocation and a 40 year retirement plan. Or said another way, in a down stock market, I can live off the bonds & CDs for 20 years before I need to sell any stocks. History has shown that down stock markets only last a few years.


It's a little unnerving seeing the down stock market, but not enough to postpone my retirement!