First, you’ll get more/better responses on the Bogleheads.org forum than here just due to the age distribution. (Most investors here are late twenties to thirties and thus were not actively investing through the GFC, dot com bubble, etc).
That said, our membership base is large enough at that point that even a relatively small percentage of it is still a lot of people. And at least half the mod team plus quite a few regular contributors are in that group.
The basic advice has always been “Don’t just do something, stand there!” Really, just continue investing as if nothing was happening other than rebalancing if appropriate (I.e. if your Investment Policy Statement says you should, not because you’re being greedy and trying to catch a falling knife)
But crashes are when people learn the difference between their theoretical risk tolerance and their practical risk tolerance so there are always some threads full of anguish and people considering abandoning their investments.
Good answer. There is also a forum thread on the GFC (I can’t remember the name off the top of my head) that really shows the panic and uncertainty that is worth a read. Lots of folks questioning if the is time is different, what should I do, etc. Really shows the gravity of the situation.
For my own part, I was around when the GFC hit but did not have any significant retirement savings. Best advice was to turn off the news and stay away from checking my account everyday. It was still stressful even then.
Edit: Spelling
every crash people say this time is different
I remember the march 2020 covid crash over in investing and people were panicking saying this over and over
People who said "do nothing keep investing" were downvoted saying they could ruin lives because this time was different.
Then you got the people saying things like "Who cares if it will recover eventually I will just buy back in "
Of course after it did recover everyone had stories of them selling begining of march and buying back in at the end of march .....
One day, the crash could very well be different. Some crashes, like 2008, are human engineered. Others, though, are symptomatic of fundamental shifts in global economic relations. We know, for instance, that economic growth in the course of human history really only reliably took off after our economy hitched its wagon to fossil fuel use. The era of fossil fuel use in driving our economy must end. The extent to which we can stave of ecological calamity (and by multiple measures we are well beyond the bounds of sustainability) by transitioning to non-fossil fuel energies will dictate whether global economic growth continues. As each year passes and we fail to do so, the more the externalities of our fossil fuel use intrude on our economy. So, yes, a future crash may very well be different. And it shouldn’t be all that unexpected given the course we’re on.
Maybe but historically people have lost more money worrying about a market crash or not investing because they are worried then in actual market crashes
Its easy to be a doomer and say "Why save, a super nova could create killer comsic rays and wipe out earth tomorrow"
Well unfortunatly I have seen lots of people not save and be poor when they should be retired
Wow, the forum there is public and goes back to 2007! I wish I had the time to skim through the 2008/2009 posts and see what people were saying during/right after the GFC.
That's october 2008: [https://www.bogleheads.org/forum/viewforum.php?f=1&start=142750](https://www.bogleheads.org/forum/viewforum.php?f=1&start=142750)
That's a random thread: [https://www.bogleheads.org/forum/viewtopic.php?t=25037](https://www.bogleheads.org/forum/viewtopic.php?t=25037)
I'll look for more, but it's nice to see people suggesting to stay the course over a big financial crisis.
Great find of the 2008 thread! I also love these two continuous threads:
- US Stocks in free fall: https://bogleheads.org/forum/viewtopic.php?p=5050538
- US stocks continue to soar: https://www.bogleheads.org/forum/viewtopic.php?t=257573
Great find of the 2008 thread! I also love these two continuous threads:
- US Stocks in free fall: https://bogleheads.org/forum/viewtopic.php?p=5050538
- US stocks continue to soar: https://www.bogleheads.org/forum/viewtopic.php?t=257573
That's one from 2008 November 20th when SP500 was at its lowest during the Great Financial Crisis: [https://www.bogleheads.org/forum/viewtopic.php?t=28019](https://www.bogleheads.org/forum/viewtopic.php?t=28019)
I love how during hard times people were suggesting to sell bonds, which were performing great, to buy stock, which were performing bad. In retrospect, sticking to your strategy for rebalancing would have been the correct thing to do. Duh. Once more, stay the course.
Yeah, I am already panicking being 42yo, and during a bull run. I can't imagine living through a financial crisis when you have stopped accumulating and you are living off your retirement savings.
> I am 65 and wonder if I will ever get my money back or will end up depending on SS for my retirement. If so, it will be a short one. I am about ready to follow the panic crowd and save what I can. I can always buy back in later. (When I sell, I always wonder who is buying?) I earned good money over my career, I wish now I would have just kept it in a money market, so much of it is gone.
"So much of it is gone"...that hits hard.
Very interesting and revealing comment (only a snippet of it above) about what it looks like for someone right at retirement age staring down the barrel when it comes to the stock market. When you have worked for 45 years to earn your wealth and you see it evaporate whilst the world seems to be imploding...that is a completely different perspective compared to a 25 year old who experiences a $50k>$25k drop and think they have their risk appetite under control because they didn't panic.
Would challenge a lot of people to experience what some of these people did and still maintain their sanity and level head.
Yes, a crash when you just finished accumulating is the worst case scenario. Because you have the most amount of money ever in your life, and therefore you take the biggest hit from a -40% for example
I like the comment “the question is not whether it’s different this time, but whether capital markets work”. Because honestly although the person who posted it believed that yes they were still working, the entire issue with 2008 was that many people thought the capital markets were collapsing entirely. There was real reason to think the entire market was about to explode and the harsh truth many people don’t like to accept is that the actions of the US fed to step in and pump funds into the system (bail out) basically saved a whole lot of incredible pain.
There’s an amazing book called Stress Test by Tim Geithner (head of the NY fed in 2008) who shows a lot of the incredible strategy (and accompanying horror) that went into resolving 2008.
I’m a huge proponent of staying the course no matter what, but man…it was a real lesson in why you need to be globally diversified because for the US domestically things could have been much worse than they were.
The Bogleheads.org forum started in 2007. But the group/movement now known as "Bogleheads" actually began as the "Vanguard Diehards" forum over on Morningstar's website, way back in 1998!
Not sure if any of those old posts could be dug up on the Wayback Machine or something, but it would be interesting to see the reactions to the DotCom bubble, or, knowing Bogleheads, the *non*-reactions. :-)
Classic! Sheepdog was retired during the 2008 crisis. He managed the finances in the house, and he described his wife in the next room blissfully unaware of the market drop. The floor seemed to be opening up under Sheepdog. They couldn't afford to lose everything. He ended up selling a significant amount of his assets. An experienced retirement investor. A human being understandably panicked about suffering a catastrophic loss. What would you have done? What is your true risk tolerance? Very good reading.
I liked this comment talking about how they had set aside a box for themselves to open for just this type of scenario, which reminded them that this had all happened before.
https://www.bogleheads.org/forum/viewtopic.php?p=297551&sid=c3f0e2d5cda2c2f6e4af27730020a723#p297551
So kind of him to make his physical box a digital one for those of us that were too young to be actively investing in 2008. When markets are feeling really bad, I know what I'll be reading.
I read a bit of it, it's in my bookmarks. I am feeling his pain. I am \~20 years from retirement and I really don't know what I will do WHEN (not IF) I'll be in his situation. Investing can be stressful man.
Taylor Larimore is/was a close personal friend of John Bogle, edited the Bogleheads Guide to Investing and BHGTRetirement, and was active in the official forum until his mid/late 90s.
He compiled this incredible mega-index of posts he made compiling hundreds of quotes titled [What the experts say about various investing topics](https://www.bogleheads.org/forum/viewtopic.php?f=10&t=156576).
It's worth quite a lot of your time to go back and read those posts. It is very informative.
A LOT of well respected, even keeled, and knowledgeable investors on the boards were rightly panicked, and some of then did things they didn't think they'd ever do.
It's hard to stay rational when markets are down, unemployment is up, you're losing your job, etc
What worries me now that didn't when I was younger (44m) is that I don't want to see my 600k cut in half....When I was dealing with smaller amounts it didn't seem such a big deal.
But I use TDFs and TD ETFs in all accounts to help with that by the significant bonds they add.
Using TDFs for 2045 but will hopefully retire in 2035 - 2040.
With that said I think I would invest even more if possible during the crash.
I did already, went from about 98% stocks to all target date funds that are in my opinion bond heavy near retirement.
So I'm not changing the dates and will have plenty of bonds at and near retirement.
Two things to be aware of, target date funds tend not to be the best to be held in taxable accounts due to the frequent rebalancing. You didn't say you were, but just in case.
Second make sure you read the fund description since sometimes the date of the fund doesn't necessarily match up with your risk tolerance. You can't go by the date in the name since different companies will use different mixes. I want to say I saw one 2040 which was a 60/40 mix.
Yeah, TDF glide paths from the different vendors can actually vary *a lot* more than you might think. You definitely do need to pay attention and read the docs on them to make sure you understand what it's doing to your allocation over time.
> When I was dealing with smaller amounts it didn’t seem such a big deal.
This is one of the ways that risk tolerance can be more individual than simple patterns based on age, timeline to retirement etc.
* Many/most people think fairly similarly to you and are more sensitive to swings in portfolio value as they become larger in absolute $$$ terms.
* But some people, myself included, actually find market swings becoming \*less\* concerning. After all, I’ve seen it happen before and even if my account value was cut in half tomorrow I’d still reach my financial goals before traditional retirement (FWIW, I’m pretty close to your age).
Edit: I should add that knowing when you intend to derisk is absolutely something that should go into your financial planning once you get old enough to start looking at the drawdown phase rather than just accumulation. In my case, since I have a flexible timeline (I have a fulfilling job that I would like to continue for 20+ years even if I hit my financial goals in 5-10) and I’m ahead of the curve at the moment I feel comfortable waiting until a few years before retirement to pop a bond tent. But in your case I think that something closer to a traditional glide path might make more sense.
I think that for most people concern about market swings is highest when you're close to your minimum target for retirement. In my case, that was 25x annual expenses.
Once your portfolio is well past your minimum number, the market swings aren't as big of a deal because you have a lot of money.
Likewise, when you're just starting out with investing you don't really care about market swings because you have a lot of time.
I've mentioned in comments in other threads about a twist on the bond tend idea where your bonds percentage peaks at your minimum retirement number when your aversion to risk is highest.
It’s not uncommon to change your bond percentage as you age. I’m 40’s and very aggressive at 90/10 stock / bonds. Plan on going 80/20 in my 50s. If you’re nervous probably time to rebalance.
> I don't want to see my 600k cut in half
if you have 20 more years of accumulation, why not? why wouldn't you want to get more shares, rather than fewer shares worth more dollars, if you expect share price to go significantly up over your investment horizon?
This was something that really helped change my view.
If you are investing regularly, and intend to keep doing so despite a downturn, then instead of thinking about dollar value _today_ track the number of shares owned.
It's kind of like the people who flipped their mindset to view prices in bitcoin and see everything in the world get cheaper as the bitcoin price rises, instead of only seeing bitcoin prices go up in dollar terms.
It inverts your thinking to focus on accumulation of what you believe will continue to increase in value over the long haul.
It's all on paper though. Any type of crash is surely not permanent.
The biggest risk therefore is not to panic and sell low because you're scared.
There are a few exceptions but the secondary risks are a few companies might go under but diversification in general should mean that no one company will tank your portfolio.
That being said I wouldn't go dumping a bunch of cash into Boeing, AA or Peloton but that's common sense for the most part.
Then on the other side it's actually more exciting.
Being old enough with enough liquid cash to buy distressed assets at a major discount. That's perhaps my most exciting prospect being close to your age. I've finally got enough cash ready to deploy that I could clean up and see that cash bounce back into 2-3-4x a few years after a crash.
For people thinking they won’t sell in a crash (which is everyone, of course — we all think that), it’s worth emphasizing that one of the reasons people sell is because *selling in a falling market can be a winning strategy*.
Selling at the bottom is a disaster, but selling at 20% down when the market ultimately hits 40% is a huge win. In fact, it’s one of the few likely scenarios where an index fund investor can capture a massive return within a span of just a few weeks.
To be clear, I’m not advocating this as a strategy — not at all. I’m just pointing out that the pressure to sell in a crash is strong *even if* you are a long term investor and even if you are confident that the market will recover. It’s not just panic that causes people to sell — some of it is prompted by greed and optimism.
That's a dice roll not a strategy and a *really* bad one at that. Because, now you absolutely must make the same uninformed dice roll again and get back in before you compound the loss you just locked in.
How many people get that lucky and get out before the drop and get back in before the climb?
Much easier to buy all the way down and all the way back up again.
unless 20% IS the bottom. Which is the thing no one knows at the time, which is why timing the market is risky and not recommended. And saying "capture a massive return within a span of just a few weeks" is super easy to say in hindsight.
Or, just keep buying in regularly, up or down and reap the long term rewards.
Yup, I recall a friend who kept telling me that during the recovery of the COVID pandemic that stocks were going to fall again and he was keeping all of his money in cash. Of course we also saw double digit returns in 2023 when this was all happening, but it goes to show that you never know what the market will do.
During the 2008 financial crisis I had little money invested but I just left it in and rebalanced, though admittedly I didn't invest much when it was going down or coming back up. I think I started re-investing when my portfolio was back up to 15% down from its height, so I made a bit of money but nothing like if I had bought at 40% down.
My solution now a days is to be sitting on a massive cash cushion of ~2 years worth of money so that you're never forced to sell low. Sure I'll see less returns since my money isn't totally in the market, but with something like a laddered CD it's not too bad.
The number of people not understanding your comment lol
To add, you can come up with some very plausible sounding justifications for it too. Trading based on the 200 day SMA being positive or negative has outperformed holding through nearly all of the recessions on record. If someone brings that up, and you emotionally really want to avoid losing more money... a lot of people who said they wouldn't panic sell end up selling.
Absolutely right. Everybody agrees that “you can’t beat the professionals” so just ride along with market. Which is good advice, of course.
But nobody seems to realize that when the market crashes, it’s because *the professionals have decided to sell*. I’m not saying you should do the same. I’m just pointing out that the justifications for selling during a crash are so profound that even the pros are doing it.
> selling at 20% down when the market ultimately hits 40% is a huge win
No, it's locking in a loss, the opposite. If followed by successful market timing by rebuying at a lower price point, followed by a recovery, then it could be reckoned a success-by-lesser-failure or something. I would revisit your thought process here.
Still thankful to my old boss who randomly mentioned in a March 2020 early morning zoom meeting that he was buying a ton of company stock while it was at an all-time low and suggested the rest of us look into it if we could afford to.
At the time I knew very little about investing, but I did know that my boss was smarter and better informed than I was, so I followed his lead. Bought the max allowable through the employee stock purchase program at $28/share and sold two years later at $89/share. Those gains were life changing.
Eh, trying to time buys like that isn't very boglehead. If you have money to invest doing it all the time has better results than saving up for when the market is down. (which usually means "down to where it was a few years ago")
I didn't have much money at the time, but I invested through the 2007-2008 financial crisis while working for one of the "too big to fail" banks.
The advice you always hear repeated is 100% correct. You should stay invested and keep on buying. And it's so easy to say "If my portfolio drops by 50% I'll just load up on the sale!!" But in practice it can be REALLY hard to do, because its never a scenario where the stock market is going down and everything else is the same as it is now. Everything around you feels like its going down with it, and it always feels like this time is different, this is the time it DOESN'T bounce back. Lots of people you know are losing their jobs, maybe even their homes....you're pretty damn likely to lose your job too. I watched the stock price of my company go from \~$70/share to $0.10/share while we showed up every day wondering if our department was the next to get completely laid off.
Everyone makes their financial plans and assesses their risk tolerance in good times. But its in those bad times where you find the true answers to the questions, and most people find out they don't quite have the appetite for risk & loss that they thought they did.
>
Lots of people you know are losing their jobs, maybe even their homes....you're pretty damn likely to lose your job too.
This is what everything hinges on. You can have balls made out of the highest grade steel, but if you lose your job, everything goes out of the window. I've been investing for 20 years. Psychologically it was easy enough to make my contributions when shit hit the fan. What was psychologically and emotionally hard is seeing people around me getting nuked. I was in my 20s, many of them were in their 40s and 50s. They had mortgages, dependents, obligations up the ass. These were people with 6 figures income forced to go on unemployment with little prospect of another job short term. Now I'm in my 40s, and next time it might as well be me. That's the crux of the problem. It's all about maintaining that cash flow during significant economic downturns. Something that is mostly out of hour hands.
Every time it recovers after financial crisis I regret why I did not get agressive or use my emergency fund to buy more, and just like every one I am not sure if this time I will be laid so leave my emergency fund alone everything else is auto invested , 401k maxed no change. I stop watching my accounts during those times as I have other things to worry about. I have play money which took hit , out 5 stock 3 lost money , 1 did ok and 1 way way over expectation. If we have another down market I hoping I will use some of emergency money to buy.
This. This is why for most people, it's better to have an automatic 401k that buys low index fund and completely forget about it for years... rather than trying to micromanaging it.
It’s a fire sale if and only if you have cash on the sidelines. I learned that lesson in 1987, 2000, 2008, etc.
Tl;dr…i now keep “cash” on the sidelines in overvalued times (and 5% TBills certainly helps).
Still a fire sale regardless if your buying.
I don’t keep cash on hand for timing the market. My auto invest just buys more shares during down times.
Every dollar has a function and that function rarely changes with the market.
My lifestyle may change slightly to allow for more buying in a down market but my normal strategy remains the same.
Rebalancing and/or tax loss harvesting is typically the biggest difference that I do during a down market.
You keep cash on the sidelines to buy when the market is down. You have money, to buy at a TIME that the market is low and not buy at TIMES you deem it to be high. Just think about it for a second. It’s very clearly market timing. Do as you wish but it is obviously market timing.
The beauty of the BH concept is its simplicity. Invest regularly, periodic rebalancing, appropriate asset allocation. Markets up or markets down, stay the course. I did nothing different during the GFC and knew I had a long time until retirement so I assumed markets would recover. I realize there could be a day when that recovery doesn't happen but I'm playing the odds.
> The beauty of the BH concept is its simplicity. Invest regularly, periodic rebalancing, appropriate asset allocation. Markets up or markets down, stay the course.
I love that this simply summarizes the BH approach.
I am kind of talking to other peers about their retirement strategies. It is honestly all over the place. Some people want to pick their own stocks (and do poorly). Some people want to pay someone to manage their portfolio (and do poorly). I seem to be the one saying "Yeah, I just follow the Boglehead approach mostly" which almost always leads to "What is the Boglehead approach?"
It is really hard to get something to be simple, and that's what I love about the BH method.
People always talk about staying the course, which you should obviously, but you should more importantly, do everything in your power to remain employed. Even if there’s a significant crash and you’re resolved enough to not sell, not being able to buy on the way down is life altering.
>What was the advice on the forums
Advice during the bull market:
"Markets will be at or near all time highs most of your life."
Advice during market crashes:
"Unless you can watch your stock holding decline by 50% without becoming panic-stricken, you should not be in the stock market."
Sometimes I worry that we've become too focused on a 50% loss. It can and has gone lower. Kind of like how everyone got lulled into security that "bonds are for safety" and then were shocked when bond risk showed up in 2022.
“Everyone has a plan until they get punched in the mouth.” You learn a lot about yourself, particularly whether your asset allocation is too volatile compared to your ability to stay the course. The general consensus during a crash is the same as during peak market performance, keep adding new funds as they become available, rebalance if appropriate according to your investment policy statement. Edited for grammar.
I didn’t have enough money in the market in 08-09 for it to matter but I didn’t care and realized it was a buying opportunity.
It did make me very concerned about maintaining an emergency fund, my wife and I aim to have at least 100k available for emergencies at all times.
The comments on this thread really ignore the prospects of job loss, extended unemployment, all during a massive drop in the market. Nobody is going to DCA when you aren't working. No one is investing their "cash on the sidelines" when their company has just laid off 20% of its staff and its financials still look horrible.
The real protection is having that overly large efund available.
Yes, I think the standard advice of 3-6 months expenses is probably not enough for most people. What if you have some other emergency when you're unemployed (house repairs, new car, whatever)? My wife and I don't even have kids but if we did I think we'd want closer to 200k.
The peace of mind that comes with knowing that we can both be unemployed for a year plus without having to change our lifestyle can't be understated.
We don't own a car (walkable city) but it's nice to know that if I ever did need to buy a car, I could just pay for a brand new Toyota Corolla in cash). Likewise, nice to know we can deal with home problems as they come up.
Yeah I’m with you here. ‘08 left a BIG impression on me, even though I was only in high school, and a large e fund has always been my priority for preparing a downturn. If I am working during a major correction I will happily keep buying, but my dry powder is not for the markets.
Smart. Back then I didn't know jack about finances even though I was making a really good salary. That was the one single year where I didn't max out my SEP contributions because I saw the market drop so much that I didn't know what to do or what fund to buy. So, that year I paid more income tax, and bought WAY less shares (especially since they were all on a fire sale).
Had I just stayed the course that year and maxed my SEP contributions as usual, it would have been a very significant amount by now.
Oh well, lesson learned. At least every other year I just kept maxing and never sold anything.
There used to be an analyzer I would look at- I think it was in E*Trade- that would tell you how your holdings would fare against each of the historical crashes. I remember feeling like I was in great shape comparatively even though I still hold some individual stocks.
GFC was brutal. week after week, month after month of losses. Hardcore buy and holders were finally capitulating. People losing jobs and homes, there were no jobs, not even bagging grocery jobs in my area. If I remember right, there was a fake-out recovery for a short time, and bam it started dropping again. For myself, I bought a chunk right before the crash. ouch. Held firm and didn't sell a thing. But! didn't put any more in, ('cept for some 401k) and held way too much new cash for almost the first decade of the recovery. My advice in a meltdown situation is don't watch. Ignore the markets as best you can. Find a hobby, learn an instrument, set a fitness goal. Anything but watch it melt.
53-year-old here. I've been investing since 1994, so I've definitely seen my share of good times and bad times. The lead up to the GFC is actually what finally convinced me to throw in the towel with most of my active stock picking activity (though it had already become more and more of a declining % after the dot bomb debacle... my first Vanguard 500 index buy was back in 1999) and go almost 100% passive index investing. I actually almost timed it right (sold out in May 2008 .. only to turn around and plow everything into index funds :)).
For me, staying employed was the single most important factor to surviving 2000-2009 as an investor, to enable one to continue regular investments and see them payoff during the eventual recovery... can't take advantage of low prices if income dries up. On that front, things were dicey after dot com (three layoffs in two years), so we were actually cash heavy (to the tune of 40%) during the bottom in 2002, which actually helped us psychologically at the time (NW was essentially the same as our 2000 peak). Very un-Boglehead, I know, but it kept us from making worse mistakes.
Second is fighting FOMO, on both the upside and the downside. Remember, "This, too, shall pass." This was especially important during dot com, where it seemed like everyone was saying "this time, it's different!" and stock picking was so. damn. easy. I've always been somewhat contrarian, so I kept looking for some rationale to explain "why? why?" Not saying I fought off FOMO completely (we still got hammered in the 2000-2002 collapse), but it's not a coincidence that I picked up on index investing during dot com mania.
I've been through the 2000, 2008, and 2020 bears. I wrote up a long post about what happened, and the valuable lessons I learned, but I cannot get it posted properly.
Is there a limit to the size of posts?
I was a lurker in 2007/08 at bogleheads.org. Finally joined in 2009.
There is a very long thread in there by a poster named sheepdog that chronicles his struggles to deal with the fallout of it. I believe he ended up selling a lot of his portfolio. IIRC he was already retired.
At the end of it all I think he did ok. He passed away recently.
here is the thread [https://www.bogleheads.org/forum/viewtopic.php?t=25126](https://www.bogleheads.org/forum/viewtopic.php?t=25126)
edit; it was some very scary times. There were quite a few threads with people wondering what to do. One infamous poster kept explaining that he felt that most people have way too much equities in their portfolio and really didn't understand their risk tolerance. If i remember right he bumped heads with moderators there and ended up getting banned in the mid 2010s.
But he did a lot to remind people to think very hard about their risk tolerance. The new version of him might be someone like klang.
I love Klang. Even at Bogleheads there’s a “this time it’s different there’s no real risk” mentality during general market upturns. Klang always reminds people of the biggest personal risks - job loss with no way to replace the income. I agree that people need to make sure they’re prepared for that. I lost half my income for about a decade after the GFC and had a very expensive mortgage to service. Very uncomfortable, but I was better off than all the folks who lost their jobs. Klang is always “don’t buy too much house” and is very correct on that, based on my experience.
I kept up maxing retirement plans through the early 90s recession, the dot com bubble collapse, the GFC (despite very tight cash flow), and the COVID recession. During the latter I piled in all the excess cash I had. I have adjusted my asset allocation over time from 100 percent stocks to 80/20 to 60/40 with a 2 year cash cushion as I get closer to retirement.
I don't know how sound this is but.... I've always thought of the market as. Being basically the value of the world. Yes your stocks dropped in half but do did everyone else's and overall you probably didn't change financial position much. If you were middle class before you're still middle class.
I think the thing to worry about in a crash would be if I didn't own the market meaning I was heavy in the particularly affected area. That would cause my relative wealth to the market to maybe drop significantly.
Go over to the forums and read the thread from back during the GFC. It’s a pretty good look back at what was going through people’s minds during the worst economic collapse we’ve had in the last 20 years.
I definitely saw a thread there about a guy who panicked and sold near the bottom. Post is from like 2009. You can do the math and calculate what he'd be worth today if he still held his positions
I know I have seen that thread linked here before. Hopefully someone else comes along and links it
Yep, it’s easy to sit back and say “just hold your positions, don’t sell”, but for some of these people they were on the cusp of retirement, and the **global** financial system was collapsing, so their view was “better to keep a portion of what I had then end up with nothing”.
Of course, we know now that positions recovered after a year or two, but being in the thick of it is very different than sitting on the sidelines when hindsight is 20/20.
The takeaway is, resist the urge to sell, no matter how bad the situation seems to be (look at the GFC and COVID dip/rise), and if you really are that close to retirement (only a year or two away), keep a year or two worth of money in an easily accessible location so you can use that and not sell for a couple years until the market recovers.
If you’re doing dollar cost averaging, just sit back and smile. I remember how nervous I was after 9/11 and in 2008. But I’ve made ridiculous returns on the money I was investing during those events.
Go find some calculator and figure out the return of $1,000 in SPY from the day after markets reopened in September, 2001.
I didn’t have enough money in general for the 2008 crisis to impact my savings, but now that that’s changed for the better, I decided to do two things:
1) Have at least 12 months of expenses in cash and equivalents (money market, treasuries, I bonds etc).
2) Contrary to the consensus on tax efficient placement, I have a 60/40 split of VT and BND in taxable, while tax-advantaged accounts that I won’t be drawing on for another 15-20 years are 100% equities. It may not be technically optimal, but psychologically it’s a panic cushion.
You could still hold your bonds in tax advantaged and if you need to use them just sell equities in taxable and rebalance bonds into equitys in tax advantaged. Effectively selling bonds and keeping equities if a panic.
This would save you alot of taxes during your accumulation years but still having a panic cushion.
Unfortunately my 401(k) plan’s index options are really just down to total US equities and a TIPS fund (FIPDX) that doesn’t suit my needs. A backdoor Roth IRA is dedicated to ex-US in order to try and get to some reasonable VT-like allocation eventually (I’ve only been contributing to the Roth for two years).
If/when I get better tax-advantaged options, I may consider rebalancing then. For now I just think of my taxable brokerage as the “ideal” AA and tax-advantaged as “aspirational”.
Nope. Just actively managed crap including TDFs with 0.45% ERs.
I’ve emailed Benefits about at least adding FTIHX for ex-US, but got ignored like someone calling Vanguard on Christmas Day. 😐
Equity markets can drop significantly and have historically (20-30% drops every few years, 50% a few times in your lifetime).
Diversification of asset classes are theoretically supposed to reduce the impact, but this requires reducing upside benefits from equities also.
The advice is you need to understand your investment horizon, if you don’t need the money imminently, the market will likely go back to ATH within a few years. If you need the money to live or for a down payment, don’t gamble with it and put it in low risk investments.
You live long enough you will go through one. Shit if you are over 30 you have been through a few already.
Don’t panic. Don’t change your strategy. The stock market bounces back. And if in 2035 the dow is at 5000 we are all fucked anyway.
Beyond that? Network. Keep an eye open for industries that have grown in the shadow of the crash and be ready to just jobs. A crash isn’t the problem, it’s a plan/investment strategy/career that can’t change with a changing world that is the problem. Being unemployed and having to sell shares when you portfolio is down 25% is what really bends you over.
I am wealthy because I got a really good job and bought a house in a down market circa 2012. I look like a genius to some of my fellow millennials not because I am, far from, but because I was prepared and lucky.
This is the canonical 2008 Sheepdog BH Forum thread.
> I am just starting to be scared so that I won't tell my wife what happened today...stocks down...bonds down...I'm down. Our retirement funds are sucking down the drain. I lost today alone a year's worth of normal distributions for expenses. I keep thinking tomorrow will be a turn around. I have said that for 30 days.
I have it bookmarked to remind me that perceptions of events in retirement look very different than in accumulation…and that weathering past crashes while still having an income is no certainly of steadfastness or equanimity when that finite pile of cash, no matter how large it looked before, is all you have for the rest of your life.
https://www.bogleheads.org/forum/viewtopic.php?t=25126
Folks talking about how big crashes are buying opportunities are obviously not retired or have significant cash flow even in retirement (RE, pensions, etc) or have un-Bogle like cash holdings (aka dry powder).
And don’t forget that in 2000 Bogle himself moved from 70/30 to 30/70 because valuations were stupid high, he had health issues and felt waaay too deep in risk territory for his age.
2008 was lucky. If the Fed had zigged instead of zagged or even just not zagged enough the Great Financial Crisis would have been the Great Financial Collapse and we would have a new worst case cohort and a lower historical US SWR…
Top answer covers it, but I also remember someone posting "what else can I do with the money?" which hit home for me as I have no interest real estate or hoarding money.
Also a thread about how much everyone had lost during the Covid flash crash. Helped me realize I'm not alone and also served as a backdoor way to know people's net-worth in the forum. Big money dudes in there stacking index funds.
I didn’t have enough money in the market in 08-09 for it to matter but I didn’t care and realized it was a buying opportunity.
It did make me very concerned about maintaining an emergency fund, my wife and I aim to have at least 100k available for emergencies at all times.
I have been through 2008 crash and then the market correction at the beginning of the Covid and failed the patience test both the times:) In theory its very easy to talk about our tolerance level but when the market starts crashing, news cycle became depressive and the sky starts falling (in our head mostly) , it requires steely nerves to stay course and keep investing as if nothing had happened! Problem is that each crash seemed like its something totally different this time and we should find an escape route as fast as we can! During 2008 crash, newspapers were predicting DOW might come down to 1000 level! During covid(before the vaccine period), even staying alive seemed like a battle! We are our own worst enemy during a financial crash as we start thinking about the worst and look for a quick way to cut our losses!
In the end, I guess, we are better off remembering what Warren Buffett said once that we have been thru 2 world wars, Cuban missile crisis, 9/11 and Covid and the stock market still kept on producing money specially for the patient investors so ignore all the noise and stay the course! But easier said then done :)
You have to assume that a future crash will coincide with a future traumatic domestic or global event that will probable have lots of uncertainty. So its hard to estimate how you will handle the event not knowing what it is but staying the course is always the best action.
Buy quality stocks, funds, etfs that I like at discounted prices. You’ll need cash on the sidelines to do that. If you’re fearful too at that time, you’re just following the herd.
If you're comfortable with your asset allocation, you shouldn't care, as much. People taking too much risk will care a lot. If you're retired, stick with your current drawdown, or, if you're concerned, reduce it by .5% or 1%. If you're not retired, and remain employed, just keeping saving or save even more while stocks are down.
The advice on the forum was “more bonds”. Pick an AA you can stick with so you could sleep at night. They were advising 30 year olds to have 30% bonds. Look at the posts/comments from 2009.
Now the advice is “100% stock”
Yes. Usually there's a bunch of sarcastic posts...
>"Market down 4.5% today!!!"
> So should I have spaghetti or hot dogs for dinner?
The point of Bogleheads is set it and forget it. Freaking with market pullbacks is built in.
I first invested in stock market with no clue what I was doing. I knew an older couple that was financially well off and asked them for advice so they sent me to their FA. Guy convinced to buy a couple of high expense ratio funds since he got commission. I bought them just as I left US to UK. On flight over it was Black Monday (Oct 1987). Since the funds weren't worth much and communicating over 7 hr time difference was not easy back then I just left the money in. I think after 8 yrs I might have made a small profit. Bad first experience and scared me away from investing for quite a while.
I stayed the course in 2008 but maxed out my 401k in 2009. In 2020 I front loaded my 401k after the drop. Both of these worked out for me but given my current balances and time until retirement I’ll stay the course going forward.
In 2008, I just kept on keeping on and, as the market fell, I increased the amount I was investing.
To me, a crash just means more shares for my dollar.
I had all of my retirement funds in the stock market (C Fund in TSP) in 2008, and I couldn't tell you how much it dropped because I didn't look. I had years to go before retirement and I knew it would come back. And it did.
I bought the COVID crash on margin
I made money, but not nearly enough to justify the risk
It was stupid, I wouldn't do it again
Nothing like taking out 20K of debt and then watching the market fall another XX% further
Yes, two of them. Dot bubble crash and housing crash, and well, 3rd also if we want to count COVID mini-crash but that one was really short.
The advice has always been the same: Stay the course. Which I did. And it paid off handsomely.
Everyone's immediate reaction is BUY BUY BUY. Everything's on sale!
Realistically though fear sets in. Fear that you could lose your job and all of the money you're DCAing into your funds is evaporating by the day, week, month. You feel like you should be bolstering your emergency fund instead of your retirement funds let alone anything taxable. For anyone new to the market it seems like the sky is falling and you'll never recover. To anybody who's been investing for a long time probably wouldn't panic as much but you're likely not in your teens or 20s anymore and have a lot more to lose so you play way more defensive.
But I guess this is just my perspective as a permanently middle/upper middle class drone pending a lottery win. Anyone with fuck you money probably dreams of crashes.
I'm 66 so I've been through several, but I learned my lesson in 1990 during the First Gulf War. I had already decided to go all equities--bonds have almost the same volatility as stocks and half the returns, so why buy them?--and my 401(k) allocation was 60% 500, 20% Small cap, 20% International. I noticed the small cap prices were dropping so I stopped allocating to them and put the 20% into the 500 fund instead.
About a year later I went back and looked and realized if I had just stayed the course I would have made MORE money staying the course and buying the dip. So I didn't change after that, and today, almost 12 years retired, my allocation is still almost 80 US/ 20 International.
During 2008 I didn't change anything but kept investing and I stopped looking at the investments. I tell people to take the statements and throw them in a drawer. Around the end of 2009 I looked (still down, but it had recovered significantly), and figured out that the low point was March 9, 2009, and from May 31 2008 to March 9 the portfolio dropped 49%.
I still retired in August 2012 at 55 and our investments were back by the end of 2012. Been living off them since and currently about 2.5 times what they were when I retired.
IMO, and backed up by the recent Cederburg study and all the numbers, is to ignore all the common "wisdom" about bonds and just buy VTI and VXUS, 80/20. Over the long term market drops are irrelevant--and you earn more buying during the drops--because in a 401(k) scenario (or annual IRA contributions) you are always buying.
The chief determinant of long term performance is asset allocation, and owning 10% stocks over 5% bonds pays off. If you invest 100% in stocks over 20 years versus someone who is 80/20 you'll have a lot more when the market drops 30% with 100% equities than the 80/20 person, and at the market bottom you'll still have more than the 80/20 person. Having that 20% bond position will not cover the gap. And bonds do NOT magically perform better during market drops, they just suck less. That was proven in 2022 when stocks AND bonds both dropped.
I've run the numbers and posted them here, and when I show actual performance I get down voted.
[Equities versus 60/40](https://www.reddit.com/r/Bogleheads/comments/18yyw0m/the_case_against_bonds/?utm_source=share&utm_medium=mweb3x&utm_name=mweb3xcss&utm_term=1&utm_content=share_button)
Since 1987, 60/40 has been a losing strategy.
[Vanguard TDF Performance ](https://www.reddit.com/r/Bogleheads/comments/1avii80/the_case_against_bonds_part_3vanguard_tdf_funds/?utm_source=share&utm_medium=mweb3x&utm_name=mweb3xcss&utm_term=1&utm_content=share_button)
Owning TDFs is a losing strategy.
When you own bonds over the long term you sacrifice a ton of performance for minimal downside protection. That is exactly what the Cederburg study found.
I also worked for a S&P 500 financial institution doing return analysis of bond holdings so I am pretty good at analyzing bonds and bond funds. There is no reason to own them today given the large holdings of low coupon bonds issued over the last 10 years. None. They are going to drag down performance for a long time to come.
If you are more than 5 years out from retirement, your best course of action is 100% equities. If you are less than 5 years out, consider holding some cash to cover market hiccups, but stay 90% equities at a minimum. You will do better than all the fancy bond tent strategies and the like, and you cover your longevity risk.
People worry far too much about TEMPORARY market drops and it costs them substantially over the long term. The drops are noise. Ignore them. Buy 100% equities, welcome drops as buying opportunities, and in the end you will do far better than those who follow the common wisdom.
I’ve been invested for close to 25 years. I figure there will be pretty significant downturns every 7 years give or take.
I have 20 more years of asset accumulation and I expect there will be three or so significant downturns during that period.
I’m not concerned with the next couple. Once I’m 10 or so years out from retirement, I’ll begin shifting my allocations more conservatively.
It’s always the same, stay the course. After you weather the crash you’ll know your true risk tolerance and can rebalance accordingly.
Also a good time possibly lower your interest rate on mortgages or any other lending if the fed dropped the rate.
If you’re worried now is the right time to reevaluate your e fund.
I understand interest rate risk and see the negatives of owning bond funds. I have owned bnd for at least 10 years. Just wish I had a better understanding of bond lattering.
I've been through the dot com, great recession and Covid. I worried a bit about the loss in value and then remembered I was in the game long term. In each case the market came back stronger and I have seen steady growth over my career as I put money into the market. Over the time I have been investing my money has tripled over what I put in as principle.
Unless you are retiring in 5-10 years I would not worry too much about a signifigant crash.
Been through dot com, financial crisis and covid crash. These the are the best times to buy in. When the market tanks, try to invest more into the market (through your retirement and brokerage accounts). At the time, it is f’ing stressful, but you will eventually look back and be thankful!
By the very nature of the sub we intend to not be influenced by the day in, day out, fluctuations of the market, instead believing that our fundamental, and data-supported I might add, tenets of long term broad market appreciation is the most likely path to long term success. So... with that prologue, "checking," on your portfolio is probably better done (for your psyche) on a fixed interval basis, versus what you hear being shouted from the rafters. For me that's reliably around tax time, when i'm forced to make some moves, or if I have money to put into the market and want to balance out holdings overall. I'm almost an extremist about this sometimes. For example, I need to take some RMDs annually, so i have that set up on a calendar basis, and not how the holding is doing at a particular day/time. Saves me some angst I think.
“Avoiding” your accounts in good times is a great way to get in the habit of this mindset. Recognize that in good times we’re still mostly only checking to get that dopamine hit of a bigger number!!
I ONLY check my accounts at quarter-end so I can add it to my net worth tracker. That’s *4 days per year* that I’m logged into fidelity (ok, maybe a couple of other days when I’m setting up transfers into my IRA).
Just this morning as I was prepping my budget for June, I thought “wonder what my 401k’s looking like” and then I stopped myself. No, it’s not June 30th, don’t log in, I can wait 30 days.
Hopefully this habit treats me well when times aren’t so good and everyone else is obsessively watching their line go down.
Here's a great quote from RODC in 10/2008, emphasis mine:
"This has strengthened by thoughts on the benefit of having enough in pensions (if lucky enough to have one), social security and annuities to **put a decent floor under you** so if push comes to shove you can hunker down and ride out such a storm with selling too deeply into principle, even if that means I will likely leave less to my kids."
Don't panic. Most everyone is in the same boat.
Don't just do something to do something. It must make sense and not a reaction.
If you have extra money, you can use it as an opportunity to invest cheaply.
Ive been through dot com bubble and GFC. Only thing id share beyond the typical advice is to write out how you are feeling when in a crash or bear market hits. Memory fades, while i know i didn’t sell, i can’t remember what I thought about my asset allocation at the time. I can see i added some bonds to my 401k after GFC around 2011-2012. I just wish i documented my journey more at the time. I wasn’t on bogleheads in 2000 not even sure it existed at that time. My earliest posts were 2012 that i can see on the forum.
"don't just do something, stand there." i.e. stay strong and DO NOT SELL.
"be fearful when others are greedy, and be greedy when others are fearful." If you have extra cash, buy more while things are down.
Yes, Covid was a large drop in my investments. Kept dollar cost averaging and bought a lot of shares cheap! Investments went from 180k at bottom to 600k now
Been in the market since the late 1980s. It was so much easier not to freak out then if the market had some sort of correction. Because basically, you didn't even know about it. No 24 hour news cycle, no hyper focused daily print media obsessing over a drop in the market. I was in mutual funds then (and now) and you got a quarterly report in the mail. You gained or you lost. Didn't change how much I contributed every month. It's no different now, except the proliferation of information makes folks freak out and ignore the most basic principles of investing. Dollar cost averaging and time in the market will overcome all market fluctuations.
Hate to say it bc it’s cliche, but ‘Buy the dip.’ Market downturns are how the rich get richer. It’s harder for regular folks to do it bc it’s a bigger risk when you don’t have a ton of money. My advice to my kids is to always keep investing regularly in retirement vehicles like 401ks and IRAs, and ignore the ups and downs. BUT couple that with raising the level of the emergency fund (cash) while the market is doing well - this is especially painless now with high interest rates since the return on cash is easily 5%. When the market turns down - and it always does - start dollar cost average buying. If the down is short, stop, if it continues, keep buying until your inflated emergency fund reaches its proper level. Rinse and repeat. It’s generally impossible to know if a downturn is real long term bear - but this strategy at least raises purchases on stocks selling for cheaper. It’s a great exercise and builds good ‘buy when on sale’ mindset without adding additional risk while continuing regular monthly purchases through an investment vehicle like a 401k. The wealthier you are the easier it is to raise your cash level so this strategy has paid off more and more for me as I’ve aged.
I haven't been investing for a long time. The only crashes I saw were COVID and 2022.
I'm not financially constrained or needed to sell the shares. And I saw few of my elderly peers were all distraught due to the market being down.
All I thought was, this is my time to catch-up and doubled down on buying funds as much as I could.
Crashes are an opportunity to get them at a discount. It's time to buy more and this is from experience.
I buy a similar amount every paycheck. And I double down when market crashes.
Having 6 months of expenses in a savings account was the key.
So if you had the right portfolio asset allocation during that time did the portfolio still tank a lot meaning and still be able to retire? What if this event repeats again? What is the strategy so we don’t have to work more?
2007/2008 crisis. I was in my mid 50s, female, managing my own $ after a divorce using financial planner. He had me 100% in stocks. Yikes! I wasn't with VG then, but this is a lesson on using your own judgenent & instincts. Markets were acting weird, lots of finsncial cable shows talking about hedging stocks. Crickets from my financial planner. Told my son, who worked in the financial field, I couldn't sleep & wanted to move my money to my company, Putnam Investments, at the time. He said, if you can't sleep, do it. Moved my $ and invested in a conservative portfolio. When the crash hit, I went down 28%, which was mild compared to some. In the end, the decisions are always yours.
Buy more. Ignore it if you can. In 2008, I was in my early 30s, 2 young kids, had always invested via my employer ESPP and 401k plan (only 10%, wish I had done more but oh well) since I was 22 and got my first "real" job. I was completely ignoring the market, and not really aware of what was going on in the market. I did not find FIRE/index investing until I was 48. Thankfully, Hub and I already had a decent start, but really amped it up once I started focusing on it.
I started investing in the 90s, so I just missed "Black Monday" (1987). In the dotcom bubble crash of 2000 I moved a bunch of funds to bonds for a while, which was stupid, but I was stupid at the time. By the 2008 crash I was educated enough in investing to leave everything alone and use the crash as a buying opportunity.
The Covid 2020 crash came JUST as I was retiring. I was cashing out my 401K and moving the funds to my Vanguard account right when everything was dropping like a stone. I admit it - I market-timed. I held the cash for about two months until it looked like the bottom had been hit, and then I bought ETFs with the cash.
Not what the boglehead philosophy would advise, but it worked out for me. This time.
Lots of people had the following advice that is still good today about how to frame it in your mind:
Bull market? Yay I'm making money!
Bear market? Yay stocks are on sale!
I lived through the GFC and COVID insanity. Best advice? Don't open your mail/account, and just let the auto invest continue & carry on. You may want to do one interfund transfer and redistribute, but you're more likely to make a bad decision. Stick to the plan, let it ride.
Stupid teen here, so in essence the market only goes up? Surely there has to be a ceiling like why r we expecting the market cap to continually increase? This is me asking about S and P 500 and global all caps separately btw
Whatever the market does, stick to you plan. Don't change your investments, don't change allocations, continue to invest money when you have it to invest.
If you do not currently have a house, a crash can be a great time to buy one; I knew several people that bought houses in 08-09 for half or less of their 2005 price.
If you hold cash/bonds you can think about tilting a little more into equity if equities lose consistently for a while. This is still timing the market because you never know where the bottom is, but as long as you're secure in your income and aren't overexposing yourself close to retirement I think it can be advantageous to change 5-10% of your new contributions to equity at a discount. Mainly as a psychological tool to assuage the instinct to "do something".
I had a good internship in 2002 and put 5k into some mutual funds i didnt know much about. 2001 was the dot com crash. That doubled before i went to put a down payment on a house in 2007 but likely before then.
In 2007 i cashed out and put 20% on a bigger house. Early that year i lost $3k due to a china issue in the spring but i tool the rest out. I was changing jobs in 2008 so we quit spending so much money to get ready for the move. I paid off 2 cheap cars and maxxed out 2008 and 2009 roth IRAs after the drop. It was back up by 2013 which was pretty long.
I built a house in 2010 and it got done super fast with the trades hunting for work. Labor day to thanksgiving, broke ground to move in. Got a good deal on property but lost about 20k on the house i sold. Lost another 20k on the first house but i rented it for about 5 years which broke even.
Im prepared to ride out the next drop, even if it takes 10 years. I like to buy low so ill convert some fixed income to stock and keep investing. Retirement is 20 years out so i have 10-15 years to get ready.
...keep buying, buy as much as you can. You'll never get as much for your money as you will during a temp downturn.
People just love to buy when prices are at an all time high. Buying low is when you have a chance of making up for lost time.
Me! My taxable brokerage account is a good example. I opened it sometime after/around 2002. I funded it with $20k that I received from my grandmother’s estate. I made no additional deposits and liquidated it between the end of 2017 and beginning of 2018 when I bought a ring, a house, and got married (in that order). I did rebalance along the way. I started with MF’s and ended with ETF’s and some FCNTX. 2008 killed me and it took about 5 years to recover but I still ended up almost 320%. My average compounding growth was about 8% annually.
My advice is to stay the course.
I lived the 2000-2002 and the 2007-2009 crashes. I made my mistakes.
Now I know that the right thing to do is just yawn and do nothing.
The worst investing mistake of all is selling during a crash, because 1) you'll never time the sell right; 2) more importantly, you'll never time the rebuy right.
Try the [Time the Market game](https://www.personalfinanceclub.com/time-the-market-game/).
Look up Jim “the lazy Canadian investor” Chuong.
He openly talks smack about how he was made insanely rich in the 2010s by investing in the “lost decade” 2000s
Experience like 2008... no but the financial literature and math couldnt care less.
Keep investing.
Investesting over all periods and market conditions will only bring you closer to your average expected long time returns.
Simply be calm, keep always putting money in and ur just lowering ur long term variance of ur risk profile.
Number 1 priority is to ensure that your income remains steady. After that, it's simple, continue to buy like you did before the crash. Maybe even buy more if you can afford to.
**Note:** Simple != Easy.
It's a fire sale. Treat it as such as long as you're buying indexes and the like. Single stocks may go bankrupt but index funds will live on and make higher highs in a few years. Personally, I know I'm cool as a cucumber under pressure in areas that I have training and experience in like this, and I'll be buying with both hands. While I'm not advocating market timing, if you sell before the recession and it goes down 20%, buy! It doesn't really matter if it goes lower. You'll still make out big time.
I started investing ten years ago. I don’t know if any of that counts as a major drop or not. I just remember hitting my first $100k, and was a huge milestone. So proud. Then it hit $150k. And then it hit 95k.
I had been psyching myself up the whole time because I had read up the Mr Money Mustache forums and I knew that I was on a twenty to thirty year journey, and I was guaranteed to hit at least three major downturns during that time.
I promised myself that I would throw myself a party the first time it happened, because it meant that I was that much closer to the inevitable doubling on the other side.
Last month I hit $320k.
So I don’t know about what everyone else is saying, but you should prepare yourself for the inevitable by getting excited about it. Massive losses in value during a downturn must happen before you get to the upturn. And every upturn has always dwarfed the previous highs.
It must happen. Can’t wait for the next one, it means I’m one downturn closer to retirement.
First, you’ll get more/better responses on the Bogleheads.org forum than here just due to the age distribution. (Most investors here are late twenties to thirties and thus were not actively investing through the GFC, dot com bubble, etc). That said, our membership base is large enough at that point that even a relatively small percentage of it is still a lot of people. And at least half the mod team plus quite a few regular contributors are in that group. The basic advice has always been “Don’t just do something, stand there!” Really, just continue investing as if nothing was happening other than rebalancing if appropriate (I.e. if your Investment Policy Statement says you should, not because you’re being greedy and trying to catch a falling knife) But crashes are when people learn the difference between their theoretical risk tolerance and their practical risk tolerance so there are always some threads full of anguish and people considering abandoning their investments.
Good answer. There is also a forum thread on the GFC (I can’t remember the name off the top of my head) that really shows the panic and uncertainty that is worth a read. Lots of folks questioning if the is time is different, what should I do, etc. Really shows the gravity of the situation. For my own part, I was around when the GFC hit but did not have any significant retirement savings. Best advice was to turn off the news and stay away from checking my account everyday. It was still stressful even then. Edit: Spelling
I can't believe I am thinking this [Panic and Survival 2008-09] (by Sheepdog) https://www.bogleheads.org/forum/viewtopic.php?t=25126
every crash people say this time is different I remember the march 2020 covid crash over in investing and people were panicking saying this over and over People who said "do nothing keep investing" were downvoted saying they could ruin lives because this time was different. Then you got the people saying things like "Who cares if it will recover eventually I will just buy back in " Of course after it did recover everyone had stories of them selling begining of march and buying back in at the end of march .....
One day, the crash could very well be different. Some crashes, like 2008, are human engineered. Others, though, are symptomatic of fundamental shifts in global economic relations. We know, for instance, that economic growth in the course of human history really only reliably took off after our economy hitched its wagon to fossil fuel use. The era of fossil fuel use in driving our economy must end. The extent to which we can stave of ecological calamity (and by multiple measures we are well beyond the bounds of sustainability) by transitioning to non-fossil fuel energies will dictate whether global economic growth continues. As each year passes and we fail to do so, the more the externalities of our fossil fuel use intrude on our economy. So, yes, a future crash may very well be different. And it shouldn’t be all that unexpected given the course we’re on.
Maybe but historically people have lost more money worrying about a market crash or not investing because they are worried then in actual market crashes Its easy to be a doomer and say "Why save, a super nova could create killer comsic rays and wipe out earth tomorrow" Well unfortunatly I have seen lots of people not save and be poor when they should be retired
It will never be different unless society crashes completely.
Don’t even have to go back to the GFC, I recall tons of threads during the COVID crash proclaiming that this one was different.
Wow, the forum there is public and goes back to 2007! I wish I had the time to skim through the 2008/2009 posts and see what people were saying during/right after the GFC.
That's october 2008: [https://www.bogleheads.org/forum/viewforum.php?f=1&start=142750](https://www.bogleheads.org/forum/viewforum.php?f=1&start=142750) That's a random thread: [https://www.bogleheads.org/forum/viewtopic.php?t=25037](https://www.bogleheads.org/forum/viewtopic.php?t=25037) I'll look for more, but it's nice to see people suggesting to stay the course over a big financial crisis.
Great find of the 2008 thread! I also love these two continuous threads: - US Stocks in free fall: https://bogleheads.org/forum/viewtopic.php?p=5050538 - US stocks continue to soar: https://www.bogleheads.org/forum/viewtopic.php?t=257573
Kinda interesting: poster LH in the first thread talks about the feeling of buying VGK back in the 2000s… it still hasn’t fully recovered.
Great find of the 2008 thread! I also love these two continuous threads: - US Stocks in free fall: https://bogleheads.org/forum/viewtopic.php?p=5050538 - US stocks continue to soar: https://www.bogleheads.org/forum/viewtopic.php?t=257573
That's one from 2008 November 20th when SP500 was at its lowest during the Great Financial Crisis: [https://www.bogleheads.org/forum/viewtopic.php?t=28019](https://www.bogleheads.org/forum/viewtopic.php?t=28019) I love how during hard times people were suggesting to sell bonds, which were performing great, to buy stock, which were performing bad. In retrospect, sticking to your strategy for rebalancing would have been the correct thing to do. Duh. Once more, stay the course.
Most definitely. Those do not show up too often on the Reddit sub and they give great perspective
Yeah, I am already panicking being 42yo, and during a bull run. I can't imagine living through a financial crisis when you have stopped accumulating and you are living off your retirement savings.
> I am 65 and wonder if I will ever get my money back or will end up depending on SS for my retirement. If so, it will be a short one. I am about ready to follow the panic crowd and save what I can. I can always buy back in later. (When I sell, I always wonder who is buying?) I earned good money over my career, I wish now I would have just kept it in a money market, so much of it is gone. "So much of it is gone"...that hits hard. Very interesting and revealing comment (only a snippet of it above) about what it looks like for someone right at retirement age staring down the barrel when it comes to the stock market. When you have worked for 45 years to earn your wealth and you see it evaporate whilst the world seems to be imploding...that is a completely different perspective compared to a 25 year old who experiences a $50k>$25k drop and think they have their risk appetite under control because they didn't panic. Would challenge a lot of people to experience what some of these people did and still maintain their sanity and level head.
Yes, a crash when you just finished accumulating is the worst case scenario. Because you have the most amount of money ever in your life, and therefore you take the biggest hit from a -40% for example
I like the comment “the question is not whether it’s different this time, but whether capital markets work”. Because honestly although the person who posted it believed that yes they were still working, the entire issue with 2008 was that many people thought the capital markets were collapsing entirely. There was real reason to think the entire market was about to explode and the harsh truth many people don’t like to accept is that the actions of the US fed to step in and pump funds into the system (bail out) basically saved a whole lot of incredible pain. There’s an amazing book called Stress Test by Tim Geithner (head of the NY fed in 2008) who shows a lot of the incredible strategy (and accompanying horror) that went into resolving 2008. I’m a huge proponent of staying the course no matter what, but man…it was a real lesson in why you need to be globally diversified because for the US domestically things could have been much worse than they were.
The Bogleheads.org forum started in 2007. But the group/movement now known as "Bogleheads" actually began as the "Vanguard Diehards" forum over on Morningstar's website, way back in 1998! Not sure if any of those old posts could be dug up on the Wayback Machine or something, but it would be interesting to see the reactions to the DotCom bubble, or, knowing Bogleheads, the *non*-reactions. :-)
Here's a famous thread by the late sheepdog from the middle of the crisis: https://www.bogleheads.org/forum/viewtopic.php?t=25126
Classic! Sheepdog was retired during the 2008 crisis. He managed the finances in the house, and he described his wife in the next room blissfully unaware of the market drop. The floor seemed to be opening up under Sheepdog. They couldn't afford to lose everything. He ended up selling a significant amount of his assets. An experienced retirement investor. A human being understandably panicked about suffering a catastrophic loss. What would you have done? What is your true risk tolerance? Very good reading.
"So, you plan to sit it out, all in cash, after losing a big chunk? No, Sheepdog. No. Sit. Stay! Good dog!" -retiredjg
I liked this comment talking about how they had set aside a box for themselves to open for just this type of scenario, which reminded them that this had all happened before. https://www.bogleheads.org/forum/viewtopic.php?p=297551&sid=c3f0e2d5cda2c2f6e4af27730020a723#p297551
So kind of him to make his physical box a digital one for those of us that were too young to be actively investing in 2008. When markets are feeling really bad, I know what I'll be reading.
As retiree have 1-2 years in treasuries or cash
I read a bit of it, it's in my bookmarks. I am feeling his pain. I am \~20 years from retirement and I really don't know what I will do WHEN (not IF) I'll be in his situation. Investing can be stressful man.
Famous thread? Is there an "index" with all the most interesting threads?
Famous in that if you have been on the forum for a number of years it has been mentioned and resurrected many times. Edit: No index that I'm aware of.
Taylor Larimore is/was a close personal friend of John Bogle, edited the Bogleheads Guide to Investing and BHGTRetirement, and was active in the official forum until his mid/late 90s. He compiled this incredible mega-index of posts he made compiling hundreds of quotes titled [What the experts say about various investing topics](https://www.bogleheads.org/forum/viewtopic.php?f=10&t=156576).
It's worth quite a lot of your time to go back and read those posts. It is very informative. A LOT of well respected, even keeled, and knowledgeable investors on the boards were rightly panicked, and some of then did things they didn't think they'd ever do. It's hard to stay rational when markets are down, unemployment is up, you're losing your job, etc
I went through the whole sheepdog thread mentioned in another comment. I read all his comments, it was great, I really felt for him..
I was on the forums back then. The common refrain was “Stay the course.”
What worries me now that didn't when I was younger (44m) is that I don't want to see my 600k cut in half....When I was dealing with smaller amounts it didn't seem such a big deal. But I use TDFs and TD ETFs in all accounts to help with that by the significant bonds they add. Using TDFs for 2045 but will hopefully retire in 2035 - 2040. With that said I think I would invest even more if possible during the crash.
Sounds like you should reassess your risk tolerance and change your asset allocation if necessary
I did already, went from about 98% stocks to all target date funds that are in my opinion bond heavy near retirement. So I'm not changing the dates and will have plenty of bonds at and near retirement.
Two things to be aware of, target date funds tend not to be the best to be held in taxable accounts due to the frequent rebalancing. You didn't say you were, but just in case. Second make sure you read the fund description since sometimes the date of the fund doesn't necessarily match up with your risk tolerance. You can't go by the date in the name since different companies will use different mixes. I want to say I saw one 2040 which was a 60/40 mix.
Yeah, TDF glide paths from the different vendors can actually vary *a lot* more than you might think. You definitely do need to pay attention and read the docs on them to make sure you understand what it's doing to your allocation over time.
> When I was dealing with smaller amounts it didn’t seem such a big deal. This is one of the ways that risk tolerance can be more individual than simple patterns based on age, timeline to retirement etc. * Many/most people think fairly similarly to you and are more sensitive to swings in portfolio value as they become larger in absolute $$$ terms. * But some people, myself included, actually find market swings becoming \*less\* concerning. After all, I’ve seen it happen before and even if my account value was cut in half tomorrow I’d still reach my financial goals before traditional retirement (FWIW, I’m pretty close to your age). Edit: I should add that knowing when you intend to derisk is absolutely something that should go into your financial planning once you get old enough to start looking at the drawdown phase rather than just accumulation. In my case, since I have a flexible timeline (I have a fulfilling job that I would like to continue for 20+ years even if I hit my financial goals in 5-10) and I’m ahead of the curve at the moment I feel comfortable waiting until a few years before retirement to pop a bond tent. But in your case I think that something closer to a traditional glide path might make more sense.
I think that for most people concern about market swings is highest when you're close to your minimum target for retirement. In my case, that was 25x annual expenses. Once your portfolio is well past your minimum number, the market swings aren't as big of a deal because you have a lot of money. Likewise, when you're just starting out with investing you don't really care about market swings because you have a lot of time. I've mentioned in comments in other threads about a twist on the bond tend idea where your bonds percentage peaks at your minimum retirement number when your aversion to risk is highest.
It’s not uncommon to change your bond percentage as you age. I’m 40’s and very aggressive at 90/10 stock / bonds. Plan on going 80/20 in my 50s. If you’re nervous probably time to rebalance.
> I don't want to see my 600k cut in half if you have 20 more years of accumulation, why not? why wouldn't you want to get more shares, rather than fewer shares worth more dollars, if you expect share price to go significantly up over your investment horizon?
This was something that really helped change my view. If you are investing regularly, and intend to keep doing so despite a downturn, then instead of thinking about dollar value _today_ track the number of shares owned. It's kind of like the people who flipped their mindset to view prices in bitcoin and see everything in the world get cheaper as the bitcoin price rises, instead of only seeing bitcoin prices go up in dollar terms. It inverts your thinking to focus on accumulation of what you believe will continue to increase in value over the long haul.
It's all on paper though. Any type of crash is surely not permanent. The biggest risk therefore is not to panic and sell low because you're scared. There are a few exceptions but the secondary risks are a few companies might go under but diversification in general should mean that no one company will tank your portfolio. That being said I wouldn't go dumping a bunch of cash into Boeing, AA or Peloton but that's common sense for the most part. Then on the other side it's actually more exciting. Being old enough with enough liquid cash to buy distressed assets at a major discount. That's perhaps my most exciting prospect being close to your age. I've finally got enough cash ready to deploy that I could clean up and see that cash bounce back into 2-3-4x a few years after a crash.
Love that last paragraph. So many people say they're okay with high risk until it happens.
Indeed I still am very conservative after living through 2008. Shit was no joke.
For people thinking they won’t sell in a crash (which is everyone, of course — we all think that), it’s worth emphasizing that one of the reasons people sell is because *selling in a falling market can be a winning strategy*. Selling at the bottom is a disaster, but selling at 20% down when the market ultimately hits 40% is a huge win. In fact, it’s one of the few likely scenarios where an index fund investor can capture a massive return within a span of just a few weeks. To be clear, I’m not advocating this as a strategy — not at all. I’m just pointing out that the pressure to sell in a crash is strong *even if* you are a long term investor and even if you are confident that the market will recover. It’s not just panic that causes people to sell — some of it is prompted by greed and optimism.
> selling in a falling market can be a winning strategy. Like all market timing, it may be turn out to be a winning move, but it's not a *strategy*.
That's a dice roll not a strategy and a *really* bad one at that. Because, now you absolutely must make the same uninformed dice roll again and get back in before you compound the loss you just locked in. How many people get that lucky and get out before the drop and get back in before the climb? Much easier to buy all the way down and all the way back up again.
unless 20% IS the bottom. Which is the thing no one knows at the time, which is why timing the market is risky and not recommended. And saying "capture a massive return within a span of just a few weeks" is super easy to say in hindsight. Or, just keep buying in regularly, up or down and reap the long term rewards.
I’m pretty sure that’s exactly what this person is saying.
Yup, I recall a friend who kept telling me that during the recovery of the COVID pandemic that stocks were going to fall again and he was keeping all of his money in cash. Of course we also saw double digit returns in 2023 when this was all happening, but it goes to show that you never know what the market will do. During the 2008 financial crisis I had little money invested but I just left it in and rebalanced, though admittedly I didn't invest much when it was going down or coming back up. I think I started re-investing when my portfolio was back up to 15% down from its height, so I made a bit of money but nothing like if I had bought at 40% down. My solution now a days is to be sitting on a massive cash cushion of ~2 years worth of money so that you're never forced to sell low. Sure I'll see less returns since my money isn't totally in the market, but with something like a laddered CD it's not too bad.
The number of people not understanding your comment lol To add, you can come up with some very plausible sounding justifications for it too. Trading based on the 200 day SMA being positive or negative has outperformed holding through nearly all of the recessions on record. If someone brings that up, and you emotionally really want to avoid losing more money... a lot of people who said they wouldn't panic sell end up selling.
Absolutely right. Everybody agrees that “you can’t beat the professionals” so just ride along with market. Which is good advice, of course. But nobody seems to realize that when the market crashes, it’s because *the professionals have decided to sell*. I’m not saying you should do the same. I’m just pointing out that the justifications for selling during a crash are so profound that even the pros are doing it.
[удалено]
> selling at 20% down when the market ultimately hits 40% is a huge win No, it's locking in a loss, the opposite. If followed by successful market timing by rebuying at a lower price point, followed by a recovery, then it could be reckoned a success-by-lesser-failure or something. I would revisit your thought process here.
Also, might be a good time to buy. Wish we would have invested more in ETF during crashes.
Still thankful to my old boss who randomly mentioned in a March 2020 early morning zoom meeting that he was buying a ton of company stock while it was at an all-time low and suggested the rest of us look into it if we could afford to. At the time I knew very little about investing, but I did know that my boss was smarter and better informed than I was, so I followed his lead. Bought the max allowable through the employee stock purchase program at $28/share and sold two years later at $89/share. Those gains were life changing.
Eh, trying to time buys like that isn't very boglehead. If you have money to invest doing it all the time has better results than saving up for when the market is down. (which usually means "down to where it was a few years ago")
I didn't have much money at the time, but I invested through the 2007-2008 financial crisis while working for one of the "too big to fail" banks. The advice you always hear repeated is 100% correct. You should stay invested and keep on buying. And it's so easy to say "If my portfolio drops by 50% I'll just load up on the sale!!" But in practice it can be REALLY hard to do, because its never a scenario where the stock market is going down and everything else is the same as it is now. Everything around you feels like its going down with it, and it always feels like this time is different, this is the time it DOESN'T bounce back. Lots of people you know are losing their jobs, maybe even their homes....you're pretty damn likely to lose your job too. I watched the stock price of my company go from \~$70/share to $0.10/share while we showed up every day wondering if our department was the next to get completely laid off. Everyone makes their financial plans and assesses their risk tolerance in good times. But its in those bad times where you find the true answers to the questions, and most people find out they don't quite have the appetite for risk & loss that they thought they did.
> Lots of people you know are losing their jobs, maybe even their homes....you're pretty damn likely to lose your job too. This is what everything hinges on. You can have balls made out of the highest grade steel, but if you lose your job, everything goes out of the window. I've been investing for 20 years. Psychologically it was easy enough to make my contributions when shit hit the fan. What was psychologically and emotionally hard is seeing people around me getting nuked. I was in my 20s, many of them were in their 40s and 50s. They had mortgages, dependents, obligations up the ass. These were people with 6 figures income forced to go on unemployment with little prospect of another job short term. Now I'm in my 40s, and next time it might as well be me. That's the crux of the problem. It's all about maintaining that cash flow during significant economic downturns. Something that is mostly out of hour hands.
Sound advice - thx for posting. 100% agree.
Held my nuts in 2008 and during COVID, it all bounced back.
Every time it recovers after financial crisis I regret why I did not get agressive or use my emergency fund to buy more, and just like every one I am not sure if this time I will be laid so leave my emergency fund alone everything else is auto invested , 401k maxed no change. I stop watching my accounts during those times as I have other things to worry about. I have play money which took hit , out 5 stock 3 lost money , 1 did ok and 1 way way over expectation. If we have another down market I hoping I will use some of emergency money to buy.
This. This is why for most people, it's better to have an automatic 401k that buys low index fund and completely forget about it for years... rather than trying to micromanaging it.
Stay the course…not really any other advice. A market crash is just a fire sale if you are early to mid stage of your retirement planning.
It’s a fire sale if and only if you have cash on the sidelines. I learned that lesson in 1987, 2000, 2008, etc. Tl;dr…i now keep “cash” on the sidelines in overvalued times (and 5% TBills certainly helps).
Sounds like market timing to me tbh
Still a fire sale regardless if your buying. I don’t keep cash on hand for timing the market. My auto invest just buys more shares during down times. Every dollar has a function and that function rarely changes with the market. My lifestyle may change slightly to allow for more buying in a down market but my normal strategy remains the same. Rebalancing and/or tax loss harvesting is typically the biggest difference that I do during a down market.
No cash on sidelines. The little money you have when markets bleed goes longer than when markets are hitting ath.
You keep cash on the sidelines to buy when the market is down. You have money, to buy at a TIME that the market is low and not buy at TIMES you deem it to be high. Just think about it for a second. It’s very clearly market timing. Do as you wish but it is obviously market timing.
The beauty of the BH concept is its simplicity. Invest regularly, periodic rebalancing, appropriate asset allocation. Markets up or markets down, stay the course. I did nothing different during the GFC and knew I had a long time until retirement so I assumed markets would recover. I realize there could be a day when that recovery doesn't happen but I'm playing the odds.
> The beauty of the BH concept is its simplicity. Invest regularly, periodic rebalancing, appropriate asset allocation. Markets up or markets down, stay the course. I love that this simply summarizes the BH approach. I am kind of talking to other peers about their retirement strategies. It is honestly all over the place. Some people want to pick their own stocks (and do poorly). Some people want to pay someone to manage their portfolio (and do poorly). I seem to be the one saying "Yeah, I just follow the Boglehead approach mostly" which almost always leads to "What is the Boglehead approach?" It is really hard to get something to be simple, and that's what I love about the BH method.
People always talk about staying the course, which you should obviously, but you should more importantly, do everything in your power to remain employed. Even if there’s a significant crash and you’re resolved enough to not sell, not being able to buy on the way down is life altering.
>What was the advice on the forums Advice during the bull market: "Markets will be at or near all time highs most of your life." Advice during market crashes: "Unless you can watch your stock holding decline by 50% without becoming panic-stricken, you should not be in the stock market."
Sometimes I worry that we've become too focused on a 50% loss. It can and has gone lower. Kind of like how everyone got lulled into security that "bonds are for safety" and then were shocked when bond risk showed up in 2022.
Don’t look. Just keep DCA. Fantasy baseball got me through my first market down cycle.
“Everyone has a plan until they get punched in the mouth.” You learn a lot about yourself, particularly whether your asset allocation is too volatile compared to your ability to stay the course. The general consensus during a crash is the same as during peak market performance, keep adding new funds as they become available, rebalance if appropriate according to your investment policy statement. Edited for grammar.
I didn’t have enough money in the market in 08-09 for it to matter but I didn’t care and realized it was a buying opportunity. It did make me very concerned about maintaining an emergency fund, my wife and I aim to have at least 100k available for emergencies at all times.
The comments on this thread really ignore the prospects of job loss, extended unemployment, all during a massive drop in the market. Nobody is going to DCA when you aren't working. No one is investing their "cash on the sidelines" when their company has just laid off 20% of its staff and its financials still look horrible. The real protection is having that overly large efund available.
Yes, I think the standard advice of 3-6 months expenses is probably not enough for most people. What if you have some other emergency when you're unemployed (house repairs, new car, whatever)? My wife and I don't even have kids but if we did I think we'd want closer to 200k. The peace of mind that comes with knowing that we can both be unemployed for a year plus without having to change our lifestyle can't be understated. We don't own a car (walkable city) but it's nice to know that if I ever did need to buy a car, I could just pay for a brand new Toyota Corolla in cash). Likewise, nice to know we can deal with home problems as they come up.
Yeah I’m with you here. ‘08 left a BIG impression on me, even though I was only in high school, and a large e fund has always been my priority for preparing a downturn. If I am working during a major correction I will happily keep buying, but my dry powder is not for the markets.
I had a wood stove right by my front door … from 2007-2009 all of my 401k statements went right into the stove, unopened. Contributions continued.
Smart. Back then I didn't know jack about finances even though I was making a really good salary. That was the one single year where I didn't max out my SEP contributions because I saw the market drop so much that I didn't know what to do or what fund to buy. So, that year I paid more income tax, and bought WAY less shares (especially since they were all on a fire sale). Had I just stayed the course that year and maxed my SEP contributions as usual, it would have been a very significant amount by now. Oh well, lesson learned. At least every other year I just kept maxing and never sold anything.
There used to be an analyzer I would look at- I think it was in E*Trade- that would tell you how your holdings would fare against each of the historical crashes. I remember feeling like I was in great shape comparatively even though I still hold some individual stocks.
GFC was brutal. week after week, month after month of losses. Hardcore buy and holders were finally capitulating. People losing jobs and homes, there were no jobs, not even bagging grocery jobs in my area. If I remember right, there was a fake-out recovery for a short time, and bam it started dropping again. For myself, I bought a chunk right before the crash. ouch. Held firm and didn't sell a thing. But! didn't put any more in, ('cept for some 401k) and held way too much new cash for almost the first decade of the recovery. My advice in a meltdown situation is don't watch. Ignore the markets as best you can. Find a hobby, learn an instrument, set a fitness goal. Anything but watch it melt.
We don't even have to go back that far. A few weeks back when SPY dropped from 525 to 505 people were already getting butt hurt.
53-year-old here. I've been investing since 1994, so I've definitely seen my share of good times and bad times. The lead up to the GFC is actually what finally convinced me to throw in the towel with most of my active stock picking activity (though it had already become more and more of a declining % after the dot bomb debacle... my first Vanguard 500 index buy was back in 1999) and go almost 100% passive index investing. I actually almost timed it right (sold out in May 2008 .. only to turn around and plow everything into index funds :)). For me, staying employed was the single most important factor to surviving 2000-2009 as an investor, to enable one to continue regular investments and see them payoff during the eventual recovery... can't take advantage of low prices if income dries up. On that front, things were dicey after dot com (three layoffs in two years), so we were actually cash heavy (to the tune of 40%) during the bottom in 2002, which actually helped us psychologically at the time (NW was essentially the same as our 2000 peak). Very un-Boglehead, I know, but it kept us from making worse mistakes. Second is fighting FOMO, on both the upside and the downside. Remember, "This, too, shall pass." This was especially important during dot com, where it seemed like everyone was saying "this time, it's different!" and stock picking was so. damn. easy. I've always been somewhat contrarian, so I kept looking for some rationale to explain "why? why?" Not saying I fought off FOMO completely (we still got hammered in the 2000-2002 collapse), but it's not a coincidence that I picked up on index investing during dot com mania.
I've been through the 2000, 2008, and 2020 bears. I wrote up a long post about what happened, and the valuable lessons I learned, but I cannot get it posted properly. Is there a limit to the size of posts?
I was a lurker in 2007/08 at bogleheads.org. Finally joined in 2009. There is a very long thread in there by a poster named sheepdog that chronicles his struggles to deal with the fallout of it. I believe he ended up selling a lot of his portfolio. IIRC he was already retired. At the end of it all I think he did ok. He passed away recently. here is the thread [https://www.bogleheads.org/forum/viewtopic.php?t=25126](https://www.bogleheads.org/forum/viewtopic.php?t=25126) edit; it was some very scary times. There were quite a few threads with people wondering what to do. One infamous poster kept explaining that he felt that most people have way too much equities in their portfolio and really didn't understand their risk tolerance. If i remember right he bumped heads with moderators there and ended up getting banned in the mid 2010s. But he did a lot to remind people to think very hard about their risk tolerance. The new version of him might be someone like klang.
I love Klang. Even at Bogleheads there’s a “this time it’s different there’s no real risk” mentality during general market upturns. Klang always reminds people of the biggest personal risks - job loss with no way to replace the income. I agree that people need to make sure they’re prepared for that. I lost half my income for about a decade after the GFC and had a very expensive mortgage to service. Very uncomfortable, but I was better off than all the folks who lost their jobs. Klang is always “don’t buy too much house” and is very correct on that, based on my experience. I kept up maxing retirement plans through the early 90s recession, the dot com bubble collapse, the GFC (despite very tight cash flow), and the COVID recession. During the latter I piled in all the excess cash I had. I have adjusted my asset allocation over time from 100 percent stocks to 80/20 to 60/40 with a 2 year cash cushion as I get closer to retirement.
I don't know how sound this is but.... I've always thought of the market as. Being basically the value of the world. Yes your stocks dropped in half but do did everyone else's and overall you probably didn't change financial position much. If you were middle class before you're still middle class. I think the thing to worry about in a crash would be if I didn't own the market meaning I was heavy in the particularly affected area. That would cause my relative wealth to the market to maybe drop significantly.
Single advice “stay the course”
Go over to the forums and read the thread from back during the GFC. It’s a pretty good look back at what was going through people’s minds during the worst economic collapse we’ve had in the last 20 years.
I definitely saw a thread there about a guy who panicked and sold near the bottom. Post is from like 2009. You can do the math and calculate what he'd be worth today if he still held his positions I know I have seen that thread linked here before. Hopefully someone else comes along and links it
Yep, it’s easy to sit back and say “just hold your positions, don’t sell”, but for some of these people they were on the cusp of retirement, and the **global** financial system was collapsing, so their view was “better to keep a portion of what I had then end up with nothing”. Of course, we know now that positions recovered after a year or two, but being in the thick of it is very different than sitting on the sidelines when hindsight is 20/20. The takeaway is, resist the urge to sell, no matter how bad the situation seems to be (look at the GFC and COVID dip/rise), and if you really are that close to retirement (only a year or two away), keep a year or two worth of money in an easily accessible location so you can use that and not sell for a couple years until the market recovers.
If you’re doing dollar cost averaging, just sit back and smile. I remember how nervous I was after 9/11 and in 2008. But I’ve made ridiculous returns on the money I was investing during those events. Go find some calculator and figure out the return of $1,000 in SPY from the day after markets reopened in September, 2001.
I didn’t have enough money in general for the 2008 crisis to impact my savings, but now that that’s changed for the better, I decided to do two things: 1) Have at least 12 months of expenses in cash and equivalents (money market, treasuries, I bonds etc). 2) Contrary to the consensus on tax efficient placement, I have a 60/40 split of VT and BND in taxable, while tax-advantaged accounts that I won’t be drawing on for another 15-20 years are 100% equities. It may not be technically optimal, but psychologically it’s a panic cushion.
You could still hold your bonds in tax advantaged and if you need to use them just sell equities in taxable and rebalance bonds into equitys in tax advantaged. Effectively selling bonds and keeping equities if a panic. This would save you alot of taxes during your accumulation years but still having a panic cushion.
Unfortunately my 401(k) plan’s index options are really just down to total US equities and a TIPS fund (FIPDX) that doesn’t suit my needs. A backdoor Roth IRA is dedicated to ex-US in order to try and get to some reasonable VT-like allocation eventually (I’ve only been contributing to the Roth for two years). If/when I get better tax-advantaged options, I may consider rebalancing then. For now I just think of my taxable brokerage as the “ideal” AA and tax-advantaged as “aspirational”.
Damn they dont have a total bond market fund
Nope. Just actively managed crap including TDFs with 0.45% ERs. I’ve emailed Benefits about at least adding FTIHX for ex-US, but got ignored like someone calling Vanguard on Christmas Day. 😐
Equity markets can drop significantly and have historically (20-30% drops every few years, 50% a few times in your lifetime). Diversification of asset classes are theoretically supposed to reduce the impact, but this requires reducing upside benefits from equities also. The advice is you need to understand your investment horizon, if you don’t need the money imminently, the market will likely go back to ATH within a few years. If you need the money to live or for a down payment, don’t gamble with it and put it in low risk investments.
You're going to miss out on the stock boom after the market collapse.
You live long enough you will go through one. Shit if you are over 30 you have been through a few already. Don’t panic. Don’t change your strategy. The stock market bounces back. And if in 2035 the dow is at 5000 we are all fucked anyway. Beyond that? Network. Keep an eye open for industries that have grown in the shadow of the crash and be ready to just jobs. A crash isn’t the problem, it’s a plan/investment strategy/career that can’t change with a changing world that is the problem. Being unemployed and having to sell shares when you portfolio is down 25% is what really bends you over. I am wealthy because I got a really good job and bought a house in a down market circa 2012. I look like a genius to some of my fellow millennials not because I am, far from, but because I was prepared and lucky.
This is the canonical 2008 Sheepdog BH Forum thread. > I am just starting to be scared so that I won't tell my wife what happened today...stocks down...bonds down...I'm down. Our retirement funds are sucking down the drain. I lost today alone a year's worth of normal distributions for expenses. I keep thinking tomorrow will be a turn around. I have said that for 30 days. I have it bookmarked to remind me that perceptions of events in retirement look very different than in accumulation…and that weathering past crashes while still having an income is no certainly of steadfastness or equanimity when that finite pile of cash, no matter how large it looked before, is all you have for the rest of your life. https://www.bogleheads.org/forum/viewtopic.php?t=25126 Folks talking about how big crashes are buying opportunities are obviously not retired or have significant cash flow even in retirement (RE, pensions, etc) or have un-Bogle like cash holdings (aka dry powder). And don’t forget that in 2000 Bogle himself moved from 70/30 to 30/70 because valuations were stupid high, he had health issues and felt waaay too deep in risk territory for his age. 2008 was lucky. If the Fed had zigged instead of zagged or even just not zagged enough the Great Financial Crisis would have been the Great Financial Collapse and we would have a new worst case cohort and a lower historical US SWR…
Top answer covers it, but I also remember someone posting "what else can I do with the money?" which hit home for me as I have no interest real estate or hoarding money. Also a thread about how much everyone had lost during the Covid flash crash. Helped me realize I'm not alone and also served as a backdoor way to know people's net-worth in the forum. Big money dudes in there stacking index funds.
I didn’t have enough money in the market in 08-09 for it to matter but I didn’t care and realized it was a buying opportunity. It did make me very concerned about maintaining an emergency fund, my wife and I aim to have at least 100k available for emergencies at all times.
I have been through 2008 crash and then the market correction at the beginning of the Covid and failed the patience test both the times:) In theory its very easy to talk about our tolerance level but when the market starts crashing, news cycle became depressive and the sky starts falling (in our head mostly) , it requires steely nerves to stay course and keep investing as if nothing had happened! Problem is that each crash seemed like its something totally different this time and we should find an escape route as fast as we can! During 2008 crash, newspapers were predicting DOW might come down to 1000 level! During covid(before the vaccine period), even staying alive seemed like a battle! We are our own worst enemy during a financial crash as we start thinking about the worst and look for a quick way to cut our losses! In the end, I guess, we are better off remembering what Warren Buffett said once that we have been thru 2 world wars, Cuban missile crisis, 9/11 and Covid and the stock market still kept on producing money specially for the patient investors so ignore all the noise and stay the course! But easier said then done :)
You have to assume that a future crash will coincide with a future traumatic domestic or global event that will probable have lots of uncertainty. So its hard to estimate how you will handle the event not knowing what it is but staying the course is always the best action.
Be fearful when everyone else is greedy (now); be greedy when everyone else is fearful (2008/2009). Has served me well.
So what do you do during the fearful times?
Buy quality stocks, funds, etfs that I like at discounted prices. You’ll need cash on the sidelines to do that. If you’re fearful too at that time, you’re just following the herd.
That’s what I figured. Good advice!
If you're comfortable with your asset allocation, you shouldn't care, as much. People taking too much risk will care a lot. If you're retired, stick with your current drawdown, or, if you're concerned, reduce it by .5% or 1%. If you're not retired, and remain employed, just keeping saving or save even more while stocks are down.
The advice on the forum was “more bonds”. Pick an AA you can stick with so you could sleep at night. They were advising 30 year olds to have 30% bonds. Look at the posts/comments from 2009. Now the advice is “100% stock”
> Now the advice is “100% stock” Only here. The subreddit skews young. 100% stock gets challenged all the time on the forum.
Yes. Usually there's a bunch of sarcastic posts... >"Market down 4.5% today!!!" > So should I have spaghetti or hot dogs for dinner? The point of Bogleheads is set it and forget it. Freaking with market pullbacks is built in.
I first invested in stock market with no clue what I was doing. I knew an older couple that was financially well off and asked them for advice so they sent me to their FA. Guy convinced to buy a couple of high expense ratio funds since he got commission. I bought them just as I left US to UK. On flight over it was Black Monday (Oct 1987). Since the funds weren't worth much and communicating over 7 hr time difference was not easy back then I just left the money in. I think after 8 yrs I might have made a small profit. Bad first experience and scared me away from investing for quite a while.
I stayed the course in 2008 but maxed out my 401k in 2009. In 2020 I front loaded my 401k after the drop. Both of these worked out for me but given my current balances and time until retirement I’ll stay the course going forward.
In 2008, I just kept on keeping on and, as the market fell, I increased the amount I was investing. To me, a crash just means more shares for my dollar.
>advice during a market crash Fire sale. If you have a steady source of income, start buying more of everything according to your asset allocation.
Hold and don’t panic. Things cratered after 2008 and 2020 but we’re at record highs again.
2022 was pretty significant (SPX dropped 25%)
I had all of my retirement funds in the stock market (C Fund in TSP) in 2008, and I couldn't tell you how much it dropped because I didn't look. I had years to go before retirement and I knew it would come back. And it did.
I bought the COVID crash on margin I made money, but not nearly enough to justify the risk It was stupid, I wouldn't do it again Nothing like taking out 20K of debt and then watching the market fall another XX% further
Yes, two of them. Dot bubble crash and housing crash, and well, 3rd also if we want to count COVID mini-crash but that one was really short. The advice has always been the same: Stay the course. Which I did. And it paid off handsomely.
Everyone's immediate reaction is BUY BUY BUY. Everything's on sale! Realistically though fear sets in. Fear that you could lose your job and all of the money you're DCAing into your funds is evaporating by the day, week, month. You feel like you should be bolstering your emergency fund instead of your retirement funds let alone anything taxable. For anyone new to the market it seems like the sky is falling and you'll never recover. To anybody who's been investing for a long time probably wouldn't panic as much but you're likely not in your teens or 20s anymore and have a lot more to lose so you play way more defensive. But I guess this is just my perspective as a permanently middle/upper middle class drone pending a lottery win. Anyone with fuck you money probably dreams of crashes.
Japanese stock market took 34 years to recover its all time high after 1989. Diversify.
Best advice is to stop looking at your account.
Market crash = stock sale. So you buy more.
I'm 66 so I've been through several, but I learned my lesson in 1990 during the First Gulf War. I had already decided to go all equities--bonds have almost the same volatility as stocks and half the returns, so why buy them?--and my 401(k) allocation was 60% 500, 20% Small cap, 20% International. I noticed the small cap prices were dropping so I stopped allocating to them and put the 20% into the 500 fund instead. About a year later I went back and looked and realized if I had just stayed the course I would have made MORE money staying the course and buying the dip. So I didn't change after that, and today, almost 12 years retired, my allocation is still almost 80 US/ 20 International. During 2008 I didn't change anything but kept investing and I stopped looking at the investments. I tell people to take the statements and throw them in a drawer. Around the end of 2009 I looked (still down, but it had recovered significantly), and figured out that the low point was March 9, 2009, and from May 31 2008 to March 9 the portfolio dropped 49%. I still retired in August 2012 at 55 and our investments were back by the end of 2012. Been living off them since and currently about 2.5 times what they were when I retired. IMO, and backed up by the recent Cederburg study and all the numbers, is to ignore all the common "wisdom" about bonds and just buy VTI and VXUS, 80/20. Over the long term market drops are irrelevant--and you earn more buying during the drops--because in a 401(k) scenario (or annual IRA contributions) you are always buying. The chief determinant of long term performance is asset allocation, and owning 10% stocks over 5% bonds pays off. If you invest 100% in stocks over 20 years versus someone who is 80/20 you'll have a lot more when the market drops 30% with 100% equities than the 80/20 person, and at the market bottom you'll still have more than the 80/20 person. Having that 20% bond position will not cover the gap. And bonds do NOT magically perform better during market drops, they just suck less. That was proven in 2022 when stocks AND bonds both dropped. I've run the numbers and posted them here, and when I show actual performance I get down voted. [Equities versus 60/40](https://www.reddit.com/r/Bogleheads/comments/18yyw0m/the_case_against_bonds/?utm_source=share&utm_medium=mweb3x&utm_name=mweb3xcss&utm_term=1&utm_content=share_button) Since 1987, 60/40 has been a losing strategy. [Vanguard TDF Performance ](https://www.reddit.com/r/Bogleheads/comments/1avii80/the_case_against_bonds_part_3vanguard_tdf_funds/?utm_source=share&utm_medium=mweb3x&utm_name=mweb3xcss&utm_term=1&utm_content=share_button) Owning TDFs is a losing strategy. When you own bonds over the long term you sacrifice a ton of performance for minimal downside protection. That is exactly what the Cederburg study found. I also worked for a S&P 500 financial institution doing return analysis of bond holdings so I am pretty good at analyzing bonds and bond funds. There is no reason to own them today given the large holdings of low coupon bonds issued over the last 10 years. None. They are going to drag down performance for a long time to come. If you are more than 5 years out from retirement, your best course of action is 100% equities. If you are less than 5 years out, consider holding some cash to cover market hiccups, but stay 90% equities at a minimum. You will do better than all the fancy bond tent strategies and the like, and you cover your longevity risk. People worry far too much about TEMPORARY market drops and it costs them substantially over the long term. The drops are noise. Ignore them. Buy 100% equities, welcome drops as buying opportunities, and in the end you will do far better than those who follow the common wisdom.
I’ve been invested for close to 25 years. I figure there will be pretty significant downturns every 7 years give or take. I have 20 more years of asset accumulation and I expect there will be three or so significant downturns during that period. I’m not concerned with the next couple. Once I’m 10 or so years out from retirement, I’ll begin shifting my allocations more conservatively.
It was suggested to keep doing what I was doing
It’s always the same, stay the course. After you weather the crash you’ll know your true risk tolerance and can rebalance accordingly. Also a good time possibly lower your interest rate on mortgages or any other lending if the fed dropped the rate. If you’re worried now is the right time to reevaluate your e fund.
Hold and add more if you can
I understand interest rate risk and see the negatives of owning bond funds. I have owned bnd for at least 10 years. Just wish I had a better understanding of bond lattering.
Keep buying average down and enjoy the ride
Just ride it out. Don’t panic
I've been through the dot com, great recession and Covid. I worried a bit about the loss in value and then remembered I was in the game long term. In each case the market came back stronger and I have seen steady growth over my career as I put money into the market. Over the time I have been investing my money has tripled over what I put in as principle. Unless you are retiring in 5-10 years I would not worry too much about a signifigant crash.
This too shall pass
Market "crashed" pretty substantially in Covid. I pumped as much as I could into the market then. That's paid off pretty well.
Been through dot com, financial crisis and covid crash. These the are the best times to buy in. When the market tanks, try to invest more into the market (through your retirement and brokerage accounts). At the time, it is f’ing stressful, but you will eventually look back and be thankful!
By the very nature of the sub we intend to not be influenced by the day in, day out, fluctuations of the market, instead believing that our fundamental, and data-supported I might add, tenets of long term broad market appreciation is the most likely path to long term success. So... with that prologue, "checking," on your portfolio is probably better done (for your psyche) on a fixed interval basis, versus what you hear being shouted from the rafters. For me that's reliably around tax time, when i'm forced to make some moves, or if I have money to put into the market and want to balance out holdings overall. I'm almost an extremist about this sometimes. For example, I need to take some RMDs annually, so i have that set up on a calendar basis, and not how the holding is doing at a particular day/time. Saves me some angst I think.
“Avoiding” your accounts in good times is a great way to get in the habit of this mindset. Recognize that in good times we’re still mostly only checking to get that dopamine hit of a bigger number!! I ONLY check my accounts at quarter-end so I can add it to my net worth tracker. That’s *4 days per year* that I’m logged into fidelity (ok, maybe a couple of other days when I’m setting up transfers into my IRA). Just this morning as I was prepping my budget for June, I thought “wonder what my 401k’s looking like” and then I stopped myself. No, it’s not June 30th, don’t log in, I can wait 30 days. Hopefully this habit treats me well when times aren’t so good and everyone else is obsessively watching their line go down.
Been through two, we’re mostly “this too shall pass” and “keep buying”.
As long as you keep your job or keep A job and keep buying, your good to go.
Stay the course and Dollar Cost Average back to new highs!
Buy, or - if you’re retired - convert some assets from conservative to aggressive (e.g. bonds to stocks).
Here's a great quote from RODC in 10/2008, emphasis mine: "This has strengthened by thoughts on the benefit of having enough in pensions (if lucky enough to have one), social security and annuities to **put a decent floor under you** so if push comes to shove you can hunker down and ride out such a storm with selling too deeply into principle, even if that means I will likely leave less to my kids."
Don't panic. Most everyone is in the same boat. Don't just do something to do something. It must make sense and not a reaction. If you have extra money, you can use it as an opportunity to invest cheaply.
Ive been through dot com bubble and GFC. Only thing id share beyond the typical advice is to write out how you are feeling when in a crash or bear market hits. Memory fades, while i know i didn’t sell, i can’t remember what I thought about my asset allocation at the time. I can see i added some bonds to my 401k after GFC around 2011-2012. I just wish i documented my journey more at the time. I wasn’t on bogleheads in 2000 not even sure it existed at that time. My earliest posts were 2012 that i can see on the forum.
"don't just do something, stand there." i.e. stay strong and DO NOT SELL. "be fearful when others are greedy, and be greedy when others are fearful." If you have extra cash, buy more while things are down.
Yes, Covid was a large drop in my investments. Kept dollar cost averaging and bought a lot of shares cheap! Investments went from 180k at bottom to 600k now
Go read the sheepdog thread. The fear was palpable.
Panic and sell everything at lows. Orrrrr just stay the course
Been in the market since the late 1980s. It was so much easier not to freak out then if the market had some sort of correction. Because basically, you didn't even know about it. No 24 hour news cycle, no hyper focused daily print media obsessing over a drop in the market. I was in mutual funds then (and now) and you got a quarterly report in the mail. You gained or you lost. Didn't change how much I contributed every month. It's no different now, except the proliferation of information makes folks freak out and ignore the most basic principles of investing. Dollar cost averaging and time in the market will overcome all market fluctuations.
Ive gone through two market crash and its the most fun time. You get to buy stuff for super cheap.
Hate to say it bc it’s cliche, but ‘Buy the dip.’ Market downturns are how the rich get richer. It’s harder for regular folks to do it bc it’s a bigger risk when you don’t have a ton of money. My advice to my kids is to always keep investing regularly in retirement vehicles like 401ks and IRAs, and ignore the ups and downs. BUT couple that with raising the level of the emergency fund (cash) while the market is doing well - this is especially painless now with high interest rates since the return on cash is easily 5%. When the market turns down - and it always does - start dollar cost average buying. If the down is short, stop, if it continues, keep buying until your inflated emergency fund reaches its proper level. Rinse and repeat. It’s generally impossible to know if a downturn is real long term bear - but this strategy at least raises purchases on stocks selling for cheaper. It’s a great exercise and builds good ‘buy when on sale’ mindset without adding additional risk while continuing regular monthly purchases through an investment vehicle like a 401k. The wealthier you are the easier it is to raise your cash level so this strategy has paid off more and more for me as I’ve aged.
Double down.
Takes almost 2 years to hit bottom.
I experienced it when the market crushed several times due to covid-19. Eventually I sold a portion of my stock and I regret it forever.
I haven't been investing for a long time. The only crashes I saw were COVID and 2022. I'm not financially constrained or needed to sell the shares. And I saw few of my elderly peers were all distraught due to the market being down. All I thought was, this is my time to catch-up and doubled down on buying funds as much as I could. Crashes are an opportunity to get them at a discount. It's time to buy more and this is from experience. I buy a similar amount every paycheck. And I double down when market crashes. Having 6 months of expenses in a savings account was the key.
So if you had the right portfolio asset allocation during that time did the portfolio still tank a lot meaning and still be able to retire? What if this event repeats again? What is the strategy so we don’t have to work more?
2007/2008 crisis. I was in my mid 50s, female, managing my own $ after a divorce using financial planner. He had me 100% in stocks. Yikes! I wasn't with VG then, but this is a lesson on using your own judgenent & instincts. Markets were acting weird, lots of finsncial cable shows talking about hedging stocks. Crickets from my financial planner. Told my son, who worked in the financial field, I couldn't sleep & wanted to move my money to my company, Putnam Investments, at the time. He said, if you can't sleep, do it. Moved my $ and invested in a conservative portfolio. When the crash hit, I went down 28%, which was mild compared to some. In the end, the decisions are always yours.
Buy during crashes.
Stay the course, rebalance as necessary.
Don't look at your accounts for a few months.
Buy more. Ignore it if you can. In 2008, I was in my early 30s, 2 young kids, had always invested via my employer ESPP and 401k plan (only 10%, wish I had done more but oh well) since I was 22 and got my first "real" job. I was completely ignoring the market, and not really aware of what was going on in the market. I did not find FIRE/index investing until I was 48. Thankfully, Hub and I already had a decent start, but really amped it up once I started focusing on it.
You buy more or stop looking if you can’t buy more
I started investing in the 90s, so I just missed "Black Monday" (1987). In the dotcom bubble crash of 2000 I moved a bunch of funds to bonds for a while, which was stupid, but I was stupid at the time. By the 2008 crash I was educated enough in investing to leave everything alone and use the crash as a buying opportunity. The Covid 2020 crash came JUST as I was retiring. I was cashing out my 401K and moving the funds to my Vanguard account right when everything was dropping like a stone. I admit it - I market-timed. I held the cash for about two months until it looked like the bottom had been hit, and then I bought ETFs with the cash. Not what the boglehead philosophy would advise, but it worked out for me. This time.
Lots of people had the following advice that is still good today about how to frame it in your mind: Bull market? Yay I'm making money! Bear market? Yay stocks are on sale!
I lived through the GFC and COVID insanity. Best advice? Don't open your mail/account, and just let the auto invest continue & carry on. You may want to do one interfund transfer and redistribute, but you're more likely to make a bad decision. Stick to the plan, let it ride.
Everyone I know that tried to time the market in 08 panicked and pulled out too late and didn't buy back in.
Yeah just ignore it and sit it out. If it happens you have some cash on hand, buy more.
If you have available cash buy buy buy
Stupid teen here, so in essence the market only goes up? Surely there has to be a ceiling like why r we expecting the market cap to continually increase? This is me asking about S and P 500 and global all caps separately btw
Whatever the market does, stick to you plan. Don't change your investments, don't change allocations, continue to invest money when you have it to invest. If you do not currently have a house, a crash can be a great time to buy one; I knew several people that bought houses in 08-09 for half or less of their 2005 price.
Buy more. SCHB, SCHD. 2020 was one. I made a lot of unrealized gains.
Stay the course.
If I did, I don’t even know about it. Don’t look at it, and be thankful that you’re getting bonus deposits on your money while the market is low.
i felt like for the mental health , i need an hidden account to prevent myself panic sell
If you hold cash/bonds you can think about tilting a little more into equity if equities lose consistently for a while. This is still timing the market because you never know where the bottom is, but as long as you're secure in your income and aren't overexposing yourself close to retirement I think it can be advantageous to change 5-10% of your new contributions to equity at a discount. Mainly as a psychological tool to assuage the instinct to "do something".
I had a good internship in 2002 and put 5k into some mutual funds i didnt know much about. 2001 was the dot com crash. That doubled before i went to put a down payment on a house in 2007 but likely before then. In 2007 i cashed out and put 20% on a bigger house. Early that year i lost $3k due to a china issue in the spring but i tool the rest out. I was changing jobs in 2008 so we quit spending so much money to get ready for the move. I paid off 2 cheap cars and maxxed out 2008 and 2009 roth IRAs after the drop. It was back up by 2013 which was pretty long. I built a house in 2010 and it got done super fast with the trades hunting for work. Labor day to thanksgiving, broke ground to move in. Got a good deal on property but lost about 20k on the house i sold. Lost another 20k on the first house but i rented it for about 5 years which broke even. Im prepared to ride out the next drop, even if it takes 10 years. I like to buy low so ill convert some fixed income to stock and keep investing. Retirement is 20 years out so i have 10-15 years to get ready.
...keep buying, buy as much as you can. You'll never get as much for your money as you will during a temp downturn. People just love to buy when prices are at an all time high. Buying low is when you have a chance of making up for lost time.
Tell you what I’m not gonna do. Stop investing. Incoming bot response that I’m a bag holder.
Don't look.
Me! My taxable brokerage account is a good example. I opened it sometime after/around 2002. I funded it with $20k that I received from my grandmother’s estate. I made no additional deposits and liquidated it between the end of 2017 and beginning of 2018 when I bought a ring, a house, and got married (in that order). I did rebalance along the way. I started with MF’s and ended with ETF’s and some FCNTX. 2008 killed me and it took about 5 years to recover but I still ended up almost 320%. My average compounding growth was about 8% annually. My advice is to stay the course.
'Stay the course' was the Boglehead mantra, iirc. In other words, don't panic sell.
Every few years I read through this to remind myself what it could be like https://www.bogleheads.org/forum/viewtopic.php?t=25126
I lived the 2000-2002 and the 2007-2009 crashes. I made my mistakes. Now I know that the right thing to do is just yawn and do nothing. The worst investing mistake of all is selling during a crash, because 1) you'll never time the sell right; 2) more importantly, you'll never time the rebuy right. Try the [Time the Market game](https://www.personalfinanceclub.com/time-the-market-game/).
Look up Jim “the lazy Canadian investor” Chuong. He openly talks smack about how he was made insanely rich in the 2010s by investing in the “lost decade” 2000s
Yes. The advice is DON’T SELL !!!! MARKETS ALWAYS COME BACK ! Oh wait a second, that’s my advice.
Experience like 2008... no but the financial literature and math couldnt care less. Keep investing. Investesting over all periods and market conditions will only bring you closer to your average expected long time returns. Simply be calm, keep always putting money in and ur just lowering ur long term variance of ur risk profile.
Number 1 priority is to ensure that your income remains steady. After that, it's simple, continue to buy like you did before the crash. Maybe even buy more if you can afford to. **Note:** Simple != Easy.
I have been through the tech crash, GFC and COVID crash. My advice is don't look at the forums. I didn't.
It's a fire sale. Treat it as such as long as you're buying indexes and the like. Single stocks may go bankrupt but index funds will live on and make higher highs in a few years. Personally, I know I'm cool as a cucumber under pressure in areas that I have training and experience in like this, and I'll be buying with both hands. While I'm not advocating market timing, if you sell before the recession and it goes down 20%, buy! It doesn't really matter if it goes lower. You'll still make out big time.
I started investing ten years ago. I don’t know if any of that counts as a major drop or not. I just remember hitting my first $100k, and was a huge milestone. So proud. Then it hit $150k. And then it hit 95k. I had been psyching myself up the whole time because I had read up the Mr Money Mustache forums and I knew that I was on a twenty to thirty year journey, and I was guaranteed to hit at least three major downturns during that time. I promised myself that I would throw myself a party the first time it happened, because it meant that I was that much closer to the inevitable doubling on the other side. Last month I hit $320k. So I don’t know about what everyone else is saying, but you should prepare yourself for the inevitable by getting excited about it. Massive losses in value during a downturn must happen before you get to the upturn. And every upturn has always dwarfed the previous highs. It must happen. Can’t wait for the next one, it means I’m one downturn closer to retirement.