I do not understand the panic, care to educate me?

Discuss all general (i.e. non-personal) investing questions and issues, investing news, and theory.
Topic Author
Tavistock1
Posts: 309
Joined: Thu Feb 06, 2020 10:57 am

I do not understand the panic, care to educate me?

Post by Tavistock1 »

Ok, I’m 62 and only recently joined the forum. I’ve adopted a 4 fund ( 2 bond funds ) portfolio. Since the high, my portfolio is “down” just under 5%. This hasn’t reached my ips call to action for re balancing. In the last week I’m reading innumerable posts about doing this or that, “the bogle 3 fund will not protect retirees” ( complements of willthrill) , “sell now!!!” “Should. I buy an annuity???” Yada yada yada. From my limited knowledge here, this would be considered “noise”. My question ( again given limited exposure to the forum ) - is this the typical reaction in what “might” be a correction ? I’m somewhat amused as part of me says “fine, bring it, I’ll rebalance and move forward” while the other part says , “gee I’m 62 and don’t wanna see my retirement vanish” . I’m staying the course but curious …
User avatar
nisiprius
Advisory Board
Posts: 52216
Joined: Thu Jul 26, 2007 9:33 am
Location: The terrestrial, globular, planetary hunk of matter, flattened at the poles, is my abode.--O. Henry

Re: I do not understand the panic, care to educate me?

Post by nisiprius »

Yes, it's typical. The only difference is that in this forum there is a coterie of people saying "tune out the noise" and "stay the course."

Recency is a brute. So much of everything you read about investing is a reaction to recency. Often, very recent recency.

An amusing bit of CNBC unconscious self-satire occurred a few years ago, when John C. Bogle was being interviewed on CNBC. Bogle was saying, as usual, think long-term, stay the course, and ignore the daily movements of the stock market, which "so often are full of sound and fury, signifying nothing." While below him, as he was being interviewed, there was a scrolling ticker-tape-like display of the Dow Jones Industrial Average changing second by second.
Last edited by nisiprius on Tue Jan 25, 2022 6:43 pm, edited 2 times in total.
Annual income twenty pounds, annual expenditure nineteen nineteen and six, result happiness; Annual income twenty pounds, annual expenditure twenty pounds ought and six, result misery.
delamer
Posts: 17458
Joined: Tue Feb 08, 2011 5:13 pm

Re: I do not understand the panic, care to educate me?

Post by delamer »

After an extended period of positive returns for the stock market, any drop of 5% or more in a short period is going to cause some investors to freak (a bit or a lot).

So to answer your question, what you’ve seen is typical.
One thing that humbles me deeply is to see that human genius has its limits while human stupidity does not. - Alexandre Dumas, fils
lostdog
Posts: 5368
Joined: Thu Feb 04, 2016 1:15 pm

Re: I do not understand the panic, care to educate me?

Post by lostdog »

It's just noise. Some of those members don't follow the "stay the course" plan. The 3 fund comment shouldn't deter you from your plan.

Stick with your plan and don't allow those members to scare you into taking action that you'll regret. These members come and go.
Last edited by lostdog on Tue Jan 25, 2022 6:49 pm, edited 1 time in total.
Stocks-80% || Bonds-20% || Taxable-VTI/VXUS || IRA-VT/BNDW
Elysium
Posts: 4120
Joined: Mon Apr 02, 2007 6:22 pm

Re: I do not understand the panic, care to educate me?

Post by Elysium »

This forum isn't immune to market reactions and poor choices people make with their investments every day. Part of the reason is the forum has grown in members who vary by nature of their experience and knowledge, and there are many who want to do something instead of just staying the course. Most of these posters are what I call moving populations, they come and go, some stay a few years, rarely will you see someone who has been around and plans to stay around indulging in these activities, those are the people who've been through different cycles with the acumen, ability, and stability to stay the course.
Topic Author
Tavistock1
Posts: 309
Joined: Thu Feb 06, 2020 10:57 am

Re: I do not understand the panic, care to educate me?

Post by Tavistock1 »

In short, I “figgered” as much…have read numerous posts from Delamer and nisiprius - thank you for your continued contributions….
Topic Author
Tavistock1
Posts: 309
Joined: Thu Feb 06, 2020 10:57 am

Re: I do not understand the panic, care to educate me?

Post by Tavistock1 »

lostdog wrote: Tue Jan 25, 2022 6:46 pm It's just noise. Some of those members don't follow the "stay the course" plan. The 3 fund comment shouldn't deter you from your plan.

Stick with your plan and don't allow those members to scare you into taking action that you'll regret. These members come and go.
Much appreciated. Joining the forum has changed my future…and not an exaggeration
ivgrivchuck
Posts: 1672
Joined: Sun Sep 27, 2020 6:20 pm

Re: I do not understand the panic, care to educate me?

Post by ivgrivchuck »

Tavistock1 wrote: Tue Jan 25, 2022 6:32 pm “the bogle 3 fund will not protect retirees” ( complements of willthrill)
I find it hard to believe WillThrill making such a statement, so I presume that this is out of context.

It can be argued that the 3-fund portfolio is not an ideal choice for a retiree, since it might not be optimal from the risk diversification perspective.
25% VTI | 25% VXUS | 12.5% AVUV | 10% AVDV | 2.5% VWO | 25% BND/SCHR/SCHP
260chrisb
Posts: 1281
Joined: Wed Apr 28, 2010 7:26 pm

Re: I do not understand the panic, care to educate me?

Post by 260chrisb »

Tavistock1 wrote: Tue Jan 25, 2022 6:32 pm Ok, I’m 62 and only recently joined the forum. I’ve adopted a 4 fund ( 2 bond funds ) portfolio. Since the high, my portfolio is “down” just under 5%. This hasn’t reached my ips call to action for re balancing. In the last week I’m reading innumerable posts about doing this or that, “the bogle 3 fund will not protect retirees” ( complements of willthrill) , “sell now!!!” “Should. I buy an annuity???” Yada yada yada. From my limited knowledge here, this would be considered “noise”. My question ( again given limited exposure to the forum ) - is this the typical reaction in what “might” be a correction ? I’m somewhat amused as part of me says “fine, bring it, I’ll rebalance and move forward” while the other part says , “gee I’m 62 and don’t wanna see my retirement vanish” . I’m staying the course but curious …
Well, anytime you're invested in the market you run the risk of seeing your retirement or non retirement assets vanish. Corrections are normal and somewhat frequent as are the everyday moves up or down of the market as you know. I have never reacted in a panic to either and likely nor should you. I'm nearing retirement and hope to keep my composure in upcoming said retirement. One thing that has helped me is the protection of 2-3 years worth of expenses over the past two years that is not subject to the market for peace of mind. At the same time I've tempered my level of risk moving forward. If you haven't done that perhaps you should. Maybe pay less attention to the folks on TV who love to promote panic. Normally to sell a book or get paid to sell gold, or annuities, or silver, etc. Good luck, don't panic.
260chrisb
Posts: 1281
Joined: Wed Apr 28, 2010 7:26 pm

Re: I do not understand the panic, care to educate me?

Post by 260chrisb »

Elysium wrote: Tue Jan 25, 2022 6:47 pm This forum isn't immune to market reactions and poor choices people make with their investments every day. Part of the reason is the forum has grown in members who vary by nature of their experience and knowledge, and there are many who want to do something instead of just staying the course. Most of these posters are what I call moving populations, they come and go, some stay a few years, rarely will you see someone who has been around and plans to stay around indulging in these activities, those are the people who've been through different cycles with the acumen, ability, and stability to stay the course.
Well said!
Topic Author
Tavistock1
Posts: 309
Joined: Thu Feb 06, 2020 10:57 am

Re: I do not understand the panic, care to educate me?

Post by Tavistock1 »

ivgrivchuck wrote: Tue Jan 25, 2022 6:51 pm
Tavistock1 wrote: Tue Jan 25, 2022 6:32 pm “the bogle 3 fund will not protect retirees” ( complements of willthrill)
I find it hard to believe WillThrill making such a statement, so I presume that this is out of context.

It can be argued that the 3-fund portfolio is not an ideal choice for a retiree, since it might not be optimal from the risk diversification perspective.
He didn’t say it was a bad choice, just that it was not an optimal portfolio for a retiree- the discussion was in regard to the butterfly portfolio I believe
Topic Author
Tavistock1
Posts: 309
Joined: Thu Feb 06, 2020 10:57 am

Re: I do not understand the panic, care to educate me?

Post by Tavistock1 »

260chrisb wrote: Tue Jan 25, 2022 6:53 pm
Tavistock1 wrote: Tue Jan 25, 2022 6:32 pm Ok, I’m 62 and only recently joined the forum. I’ve adopted a 4 fund ( 2 bond funds ) portfolio. Since the high, my portfolio is “down” just under 5%. This hasn’t reached my ips call to action for re balancing. In the last week I’m reading innumerable posts about doing this or that, “the bogle 3 fund will not protect retirees” ( complements of willthrill) , “sell now!!!” “Should. I buy an annuity???” Yada yada yada. From my limited knowledge here, this would be considered “noise”. My question ( again given limited exposure to the forum ) - is this the typical reaction in what “might” be a correction ? I’m somewhat amused as part of me says “fine, bring it, I’ll rebalance and move forward” while the other part says , “gee I’m 62 and don’t wanna see my retirement vanish” . I’m staying the course but curious …
Well, anytime you're invested in the market you run the risk of seeing your retirement or non retirement assets vanish. Corrections are normal and somewhat frequent as are the everyday moves up or down of the market as you know. I have never reacted in a panic to either and likely nor should you. I'm nearing retirement and hope to keep my composure in upcoming said retirement. One thing that has helped me is the protection of 2-3 years worth of expenses over the past two years that is not subject to the market for peace of mind. At the same time I've tempered my level of risk moving forward. If you haven't done that perhaps you should. Maybe pay less attention to the folks on TV who love to promote panic. Normally to sell a book or get paid to sell gold, or annuities, or silver, etc. Good luck, don't panic.
No panic and thanks- Currently not concerned and do indeed carry 5+ years of fixed outside market…
User avatar
Toons
Posts: 14467
Joined: Fri Nov 21, 2008 9:20 am
Location: Hills of Tennessee

Re: I do not understand the panic, care to educate me?

Post by Toons »

The masses focus more on "loss"
rather than a
wonderful opportunity
:mrgreen:
"One does not accumulate but eliminate. It is not daily increase but daily decrease. The height of cultivation always runs to simplicity" –Bruce Lee
Elysium
Posts: 4120
Joined: Mon Apr 02, 2007 6:22 pm

Re: I do not understand the panic, care to educate me?

Post by Elysium »

Tavistock1 wrote: Tue Jan 25, 2022 6:59 pm
ivgrivchuck wrote: Tue Jan 25, 2022 6:51 pm
Tavistock1 wrote: Tue Jan 25, 2022 6:32 pm “the bogle 3 fund will not protect retirees” ( complements of willthrill)
I find it hard to believe WillThrill making such a statement, so I presume that this is out of context.

It can be argued that the 3-fund portfolio is not an ideal choice for a retiree, since it might not be optimal from the risk diversification perspective.
He didn’t say it was a bad choice, just that it was not an optimal portfolio for a retiree- the discussion was in regard to the butterfly portfolio I believe
There are always these "sophisticated" discussions as some of us usually get tired of having to do nothing, that doesn't mean people are taking actions. Sometimes you debate something, especially if that's based on reason, logic, and data. Often there is merit to these discussions, and they aren't entirely wrong for someone under the right circumstances. But when you inspect the data thoroughly and have debated the issues fully well, you will come out with an understanding that there are very few things that you can do to improve upon the already well thought out plan that you have. So, you continue to stay the course. It doesn't prevent you from reading and debating differing opinions. Otherwise we simply become an echo chamber.
User avatar
Sandtrap
Posts: 19591
Joined: Sat Nov 26, 2016 5:32 pm
Location: Hawaii No Ka Oi - white sandy beaches, N. Arizona 1 mile high.

Re: I do not understand the panic, care to educate me?

Post by Sandtrap »

Tavistock1 wrote: Tue Jan 25, 2022 6:32 pm Ok, I’m 62 and only recently joined the forum. I’ve adopted a 4 fund ( 2 bond funds ) portfolio. Since the high, my portfolio is “down” just under 5%. This hasn’t reached my ips call to action for re balancing. In the last week I’m reading innumerable posts about doing this or that, “the bogle 3 fund will not protect retirees” ( complements of willthrill) , “sell now!!!” “Should. I buy an annuity???” Yada yada yada. From my limited knowledge here, this would be considered “noise”. My question ( again given limited exposure to the forum ) - is this the typical reaction in what “might” be a correction ? I’m somewhat amused as part of me says “fine, bring it, I’ll rebalance and move forward” while the other part says , “gee I’m 62 and don’t wanna see my retirement vanish” . I’m staying the course but curious …
Solutions:

Don't watch TV
Don't watch the news on TV
Don't read financial news
Only look at your portfolio 1 or 2x/year.
Consider forum market and economic reactive posts and threads just fun discussions to settle nerves and reduce anxiety.
Consider that at age 62, you have at least until age 92, so at least 30 years of daily "noise" to get used to.
Recheck your portfolio and nerves. If 5% has your worried, what would happen in a 30% drop in 30 days as in March 2020?

j :D
Wiki Bogleheads Wiki: Everything You Need to Know
indexlover
Posts: 204
Joined: Mon May 11, 2015 10:39 am

Re: I do not understand the panic, care to educate me?

Post by indexlover »

Tavistock1 wrote: Tue Jan 25, 2022 6:59 pm
ivgrivchuck wrote: Tue Jan 25, 2022 6:51 pm
Tavistock1 wrote: Tue Jan 25, 2022 6:32 pm “the bogle 3 fund will not protect retirees” ( complements of willthrill)
I find it hard to believe WillThrill making such a statement, so I presume that this is out of context.

It can be argued that the 3-fund portfolio is not an ideal choice for a retiree, since it might not be optimal from the risk diversification perspective.
He didn’t say it was a bad choice, just that it was not an optimal portfolio for a retiree- the discussion was in regard to the butterfly portfolio I believe
Here is the actual post : viewtopic.php?p=6474870#p6474870
“If a statue is ever erected to honor the person who has done the most for American investors, the hands-down choice should be Jack Bogle.” - Mr. Buffett - Berkshire Hathaway ’s 2016 annual report.
Topic Author
Tavistock1
Posts: 309
Joined: Thu Feb 06, 2020 10:57 am

Re: I do not understand the panic, care to educate me?

Post by Tavistock1 »

Elysium wrote: Tue Jan 25, 2022 7:04 pm
Tavistock1 wrote: Tue Jan 25, 2022 6:59 pm
ivgrivchuck wrote: Tue Jan 25, 2022 6:51 pm
Tavistock1 wrote: Tue Jan 25, 2022 6:32 pm “the bogle 3 fund will not protect retirees” ( complements of willthrill)
I find it hard to believe WillThrill making such a statement, so I presume that this is out of context.

It can be argued that the 3-fund portfolio is not an ideal choice for a retiree, since it might not be optimal from the risk diversification perspective.
He didn’t say it was a bad choice, just that it was not an optimal portfolio for a retiree- the discussion was in regard to the butterfly portfolio I believe
There are always these "sophisticated" discussions as some of us usually get tired of having to do nothing, that doesn't mean people are taking actions. Sometimes you debate something, especially if that's based on reason, logic, and data. Often there is merit to these discussions, and they aren't entirely wrong for someone under the right circumstances. But when you inspect the data thoroughly and have debated the issues fully well, you will come out with an understanding that there are very few things that you can do to improve upon the already well thought out plan that you have. So, you continue to stay the course. It doesn't prevent you from reading and debating differing opinions. Otherwise we simply become an echo chamber.
Good point , and I’ll certainly continue reading all of it- philosophy degree :)
User avatar
JoeRetire
Posts: 15381
Joined: Tue Jan 16, 2018 1:44 pm

Re: I do not understand the panic, care to educate me?

Post by JoeRetire »

Tavistock1 wrote: Tue Jan 25, 2022 6:32 pmis this the typical reaction in what “might” be a correction ?
This is the typical overreaction here. I'm not sure I'd use the term "panic".

To be fair, this forum hardly constitutes a homogenous group. Some react to everything. Some don't.
Last edited by JoeRetire on Tue Jan 25, 2022 7:16 pm, edited 1 time in total.
This isn't just my wallet. It's an organizer, a memory and an old friend.
livesoft
Posts: 86079
Joined: Thu Mar 01, 2007 7:00 pm

Re: I do not understand the panic, care to educate me?

Post by livesoft »

I like this forum because I learned that many people are not like me. I have learned that lots of people have high anxiety about things that do not bother me at all. I cannot help myself that I am not bothered by many things and I realize that others cannot help themselves that they are bothered by many things. That's just they way folks are wired. Everybody's neurons are connected differently.

As for the panic, we cannot predict the future. I've been thinking that some Russian generals and admirals are bored with their careers and the past glories that their fathers (and maybe mothers) had standing up to the USA. Do you think the average citizens of Russia care about what's going on in Eastern Europe? Maybe there is a Известия лиса driving opinion, but we do not hear or read about it.
Wiki This signature message sponsored by sscritic: Learn to fish.
Topic Author
Tavistock1
Posts: 309
Joined: Thu Feb 06, 2020 10:57 am

Re: I do not understand the panic, care to educate me?

Post by Tavistock1 »

ivgrivchuck wrote: Tue Jan 25, 2022 6:51 pm
Tavistock1 wrote: Tue Jan 25, 2022 6:32 pm “the bogle 3 fund will not protect retirees” ( complements of willthrill)
I find it hard to believe WillThrill making such a statement, so I presume that this is out of context.

It can be argued that the 3-fund portfolio is not an ideal choice for a retiree, since it might not be optimal from the risk diversification perspective.
As I noted..he didn’t say it was bad…just not optimal as you note
Topic Author
Tavistock1
Posts: 309
Joined: Thu Feb 06, 2020 10:57 am

Re: I do not understand the panic, care to educate me?

Post by Tavistock1 »

indexlover wrote: Tue Jan 25, 2022 7:10 pm
Tavistock1 wrote: Tue Jan 25, 2022 6:59 pm
ivgrivchuck wrote: Tue Jan 25, 2022 6:51 pm
Tavistock1 wrote: Tue Jan 25, 2022 6:32 pm “the bogle 3 fund will not protect retirees” ( complements of willthrill)
I find it hard to believe WillThrill making such a statement, so I presume that this is out of context.

It can be argued that the 3-fund portfolio is not an ideal choice for a retiree, since it might not be optimal from the risk diversification perspective.
He didn’t say it was a bad choice, just that it was not an optimal portfolio for a retiree- the discussion was in regard to the butterfly portfolio I believe
Here is the actual post : viewtopic.php?p=6474870#p6474870
That’s where I got it- and yes, I did not accurately state what he said. That said, the jist of “not optimal” I’ll stand by :)
abc132
Posts: 2435
Joined: Thu Oct 18, 2018 1:11 am

Re: I do not understand the panic, care to educate me?

Post by abc132 »

This thread should probably be closed/edited since it specifically calls out one forum member.

More generally, we always see panicked posts here and the community is usually of great support in making and sticking to a plan.

Where we disagree we always want each other to succeed.
Blue456
Posts: 2152
Joined: Tue Jun 04, 2019 5:46 am

Re: I do not understand the panic, care to educate me?

Post by Blue456 »

Not it is not typical until you see a bunch of posts "market will crash and will never recover." Although same people never seem to define what "the market" really is...
av111
Posts: 717
Joined: Mon Jan 26, 2015 12:27 pm

Re: I do not understand the panic, care to educate me?

Post by av111 »

Toons wrote: Tue Jan 25, 2022 7:03 pm The masses focus more on "loss"
rather than a
wonderful opportunity
:mrgreen:
Falling knife or frog that will turn into a prince
AV111
Topic Author
Tavistock1
Posts: 309
Joined: Thu Feb 06, 2020 10:57 am

Re: I do not understand the panic, care to educate me?

Post by Tavistock1 »

abc132 wrote: Tue Jan 25, 2022 7:23 pm This thread should probably be closed/edited since it specifically calls out one forum member.

More generally, we always see panicked posts here and the community is usually of great support in making and sticking to a plan.

Where we disagree we always want each other to succeed.
I agree with that ie that all should succeed - my reference to that poster ( who has been a huge positive in posting great thoughts) was simply an “aside” if you will..
Topic Author
Tavistock1
Posts: 309
Joined: Thu Feb 06, 2020 10:57 am

Re: I do not understand the panic, care to educate me?

Post by Tavistock1 »

livesoft wrote: Tue Jan 25, 2022 7:15 pm I like this forum because I learned that many people are not like me. I have learned that lots of people have high anxiety about things that do not bother me at all. I cannot help myself that I am not bothered by many things and I realize that others cannot help themselves that they are bothered by many things. That's just they way folks are wired. Everybody's neurons are connected differently.

As for the panic, we cannot predict the future. I've been thinking that some Russian generals and admirals are bored with their careers and the past glories that their fathers (and maybe mothers) had standing up to the USA. Do you think the average citizens of Russia care about what's going on in Eastern Europe? Maybe there is a Известия лиса driving opinion, but we do not hear or read about it.
And a thank you to livesoft for your many thoughtful and helpful posts….
Topic Author
Tavistock1
Posts: 309
Joined: Thu Feb 06, 2020 10:57 am

Re: I do not understand the panic, care to educate me?

Post by Tavistock1 »

lostdog wrote: Tue Jan 25, 2022 6:46 pm It's just noise. Some of those members don't follow the "stay the course" plan. The 3 fund comment shouldn't deter you from your plan.

Stick with your plan and don't allow those members to scare you into taking action that you'll regret. These members come and go.
Thanks..
Topic Author
Tavistock1
Posts: 309
Joined: Thu Feb 06, 2020 10:57 am

Re: I do not understand the panic, care to educate me?

Post by Tavistock1 »

JoeRetire wrote: Tue Jan 25, 2022 7:14 pm
Tavistock1 wrote: Tue Jan 25, 2022 6:32 pmis this the typical reaction in what “might” be a correction ?
This is the typical overreaction here. I'm not sure I'd use the term "panic".

To be fair, this forum hardly constitutes a homogenous group. Some react to everything. Some don't.
And thank you joeretire , enjoy your many posts…
richard.h.gao
Posts: 340
Joined: Tue Jan 18, 2022 11:34 am

Re: I do not understand the panic, care to educate me?

Post by richard.h.gao »

Tavistock1 wrote: Tue Jan 25, 2022 6:32 pm Ok, I’m 62 and only recently joined the forum. I’ve adopted a 4 fund ( 2 bond funds ) portfolio. Since the high, my portfolio is “down” just under 5%.
Wait til its down "just" 50%. Then you'll understand.
User avatar
Wricha
Posts: 1014
Joined: Sun Mar 25, 2012 10:33 am

Re: I do not understand the panic, care to educate me?

Post by Wricha »

richard.h.gao wrote: Wed Jan 26, 2022 12:28 am
Tavistock1 wrote: Tue Jan 25, 2022 6:32 pm Ok, I’m 62 and only recently joined the forum. I’ve adopted a 4 fund ( 2 bond funds ) portfolio. Since the high, my portfolio is “down” just under 5%.
Wait til its down "just" 50%. Then you'll understand.
Even then you may not understand but it certainly will become more visceral.
Topic Author
Tavistock1
Posts: 309
Joined: Thu Feb 06, 2020 10:57 am

Re: I do not understand the panic, care to educate me?

Post by Tavistock1 »

Wricha wrote: Wed Jan 26, 2022 5:06 am
richard.h.gao wrote: Wed Jan 26, 2022 12:28 am
Tavistock1 wrote: Tue Jan 25, 2022 6:32 pm Ok, I’m 62 and only recently joined the forum. I’ve adopted a 4 fund ( 2 bond funds ) portfolio. Since the high, my portfolio is “down” just under 5%.
Wait til its down "just" 50%. Then you'll understand.
Even then you may not understand but it certainly will become more visceral.
Hear that- prior to being here, the portfolio I had dipped about that on more than one occasion. Reacted poorly once, luckily not twice
ponyboy
Posts: 1224
Joined: Fri Feb 06, 2015 9:39 am

Re: I do not understand the panic, care to educate me?

Post by ponyboy »

Am I the only one moving money to vtsax during this drop?
nguy44
Posts: 597
Joined: Sun Jul 09, 2017 1:52 pm

Re: I do not understand the panic, care to educate me?

Post by nguy44 »

To the OP - sensational news gets eyeballs and clicks. The financial media rarely put things in perspective. You will rarely see a headline in muted tones saying "Market down 5%, so what? After 30+% gain last year and bazillion gain since 2009, what are you worried about?" Keeping people calm is not a priority :D.

From an individual investor perspective, a good exercise I learned is to look at your equity holdings, calculate their worth after 10%,25%, or 50% fall, and see if their resulting value bothers you. If not, sleep well. If so, you have probably set your AA too high for your risk tolerance. Many look at AA just in terms of percentages and forget to look at it in terms of how much they are risking.
Topic Author
Tavistock1
Posts: 309
Joined: Thu Feb 06, 2020 10:57 am

Re: I do not understand the panic, care to educate me?

Post by Tavistock1 »

nguy44 wrote: Wed Jan 26, 2022 8:03 am To the OP - sensational news gets eyeballs and clicks. The financial media rarely put things in perspective. You will rarely see a headline in muted tones saying "Market down 5%, so what? After 30+% gain last year and bazillion gain since 2009, what are you worried about?" Keeping people calm is not a priority :D.

From an individual investor perspective, a good exercise I learned is to look at your equity holdings, calculate their worth after 10%,25%, or 50% fall, and see if their resulting value bothers you. If not, sleep well. If so, you have probably set your AA too high for your risk tolerance. Many look at AA just in terms of percentages and forget to look at it in terms of how much they are risking.
Well stated and only since I’ve been on this forum did I do that calculation - arriving at what I find (ish sometimes! ) comfortable- thanks
User avatar
AnnetteLouisan
Posts: 7263
Joined: Sat Sep 18, 2021 10:16 pm
Location: New York, NY

Re: I do not understand the panic, care to educate me?

Post by AnnetteLouisan »

Bessemer just issued a client memo reminding people that pullbacks occur in a bull market. They expect the bull market to continue and believe earnings support it. They are not materially changing their outlook. They do think some de risking of low quality assets is occurring and will opine again after the fed meeting.

Not endorsing this or disparaging it, just thought it might be of interest. It’s paraphrased, so does not capture the entire content and is my limited interpretation of the content.

I personally think after we emerge from the pandemic and geopolitical risk abates, pent up demand and demographic chafe will lead to an upward swing after a scary drop. But who knows.
Last edited by AnnetteLouisan on Wed Jan 26, 2022 8:14 am, edited 1 time in total.
brian91480
Posts: 683
Joined: Fri Jan 29, 2021 6:44 pm
Location: Minnesota

Re: I do not understand the panic, care to educate me?

Post by brian91480 »

One strategy to avoid the panic... don't log in to your investment accounts to look at your balances.

I haven't looked in a few weeks... so I haven't seen any losses! :sharebeer

--- Brian
User avatar
AnnetteLouisan
Posts: 7263
Joined: Sat Sep 18, 2021 10:16 pm
Location: New York, NY

Re: I do not understand the panic, care to educate me?

Post by AnnetteLouisan »

brian91480 wrote: Wed Jan 26, 2022 8:10 am One strategy to avoid the panic... don't log in to your investment accounts to look at your balances.

I haven't looked in a few weeks... so I haven't seen any losses! :sharebeer

--- Brian
I haven’t looked either. Don’t want to know what my bond funds are doing. Much less equities. Still in my Santa melt up mood.

I only look once or twice a month anyhoo.
Last edited by AnnetteLouisan on Wed Jan 26, 2022 10:24 am, edited 1 time in total.
Topic Author
Tavistock1
Posts: 309
Joined: Thu Feb 06, 2020 10:57 am

Re: I do not understand the panic, care to educate me?

Post by Tavistock1 »

AnnetteLouisan wrote: Wed Jan 26, 2022 8:15 am
brian91480 wrote: Wed Jan 26, 2022 8:10 am One strategy to avoid the panic... don't log in to your investment accounts to look at your balances.

I haven't looked in a few weeks... so I haven't seen any losses! :sharebeer

--- Brian
I haven’t looked either. Don’t want to know what my bond funds are doing. Much less equities. Still in my Santa melt up mood.
Ha- pretty much same- looked once in the last 2 weeks just because I was curious- numbers were pretty much what I thought they’d be , all good
User avatar
BrooklynInvest
Posts: 1183
Joined: Sun Jul 28, 2013 9:23 am

Re: I do not understand the panic, care to educate me?

Post by BrooklynInvest »

One of the selling points of advisors is that they "help you stay the course."

Me, I stay the course on my own and keep the 1% per year I'd give an advisor. My average holding period is measured in decades... several of 'em.

Keeping that money in MY pocket also helps me better stay the course ;-)
User avatar
canadianbacon
Posts: 677
Joined: Sun Nov 10, 2019 9:04 pm

Re: I do not understand the panic, care to educate me?

Post by canadianbacon »

Tavistock1 wrote: Tue Jan 25, 2022 6:32 pm Ok, I’m 62 and only recently joined the forum. I’ve adopted a 4 fund ( 2 bond funds ) portfolio. Since the high, my portfolio is “down” just under 5%.
People who get agitated are likely doing so because they fear it's the start of a deeper drop and a slow recovery. It's impossible to actually know that except in retrospect.
Bulls make money, bears make money, pigs get slaughtered.
jbinpa59
Posts: 150
Joined: Wed Jul 10, 2019 3:29 pm

Re: I do not understand the panic, care to educate me?

Post by jbinpa59 »

Sandtrap wrote: Tue Jan 25, 2022 7:08 pm
Tavistock1 wrote: Tue Jan 25, 2022 6:32 pm qoutes edited down
Solutions:

Don't watch TV
Don't watch the news on TV
Don't read financial news
Only look at your portfolio 1 or 2x/year.
Consider forum market and economic reactive posts and threads just fun discussions to settle nerves and reduce anxiety.
Consider that at age 62, you have at least until age 92, so at least 30 years of daily "noise" to get used to.
Recheck your portfolio and nerves. If 5% has your worried, what would happen in a 30% drop in 30 days as in March 2020?

j :D
about 10 days into the March 2020 crash ( I only normaly check my portfolio every payday to verify deposit) I went from equal $1000 /pay dca contributions into TSP(Fed 401k Plan) to front loading TSP as much as My monthly budget would stand till fund NAV's were back to pre crash levels
then I recalculated my equal contribution per pay amount needed to max out TSP and sailed on.
The investing ocean is wide and can be stormy , stay on course for your destination and ignore the howler monkeys that somehow snuck onboard :shock:
delamer
Posts: 17458
Joined: Tue Feb 08, 2011 5:13 pm

Re: I do not understand the panic, care to educate me?

Post by delamer »

ponyboy wrote: Wed Jan 26, 2022 7:37 am Am I the only one moving money to vtsax during this drop?
If you mean is anyone rebalancing, evaluting whether I should is on my to-do list for today.

EDIT: Didn’t rebalance. Was very close to meeting rebalancing criteria for large cap US stocks, but since we’re in the middle of an indirect rollover and have unallocated funds, I decided to wait.
Last edited by delamer on Wed Jan 26, 2022 3:50 pm, edited 1 time in total.
One thing that humbles me deeply is to see that human genius has its limits while human stupidity does not. - Alexandre Dumas, fils
mikejuss
Posts: 2833
Joined: Tue Jun 23, 2020 1:36 pm

Re: I do not understand the panic, care to educate me?

Post by mikejuss »

ponyboy wrote: Wed Jan 26, 2022 7:37 am Am I the only one moving money to vtsax during this drop?
I bought some just this morning.
50% VTSAX | 25% VTIAX | 25% VBTLX (retirement), 25% VTEAX (taxable)
DarkMatter731
Posts: 224
Joined: Sat Apr 25, 2020 8:28 am

Re: I do not understand the panic, care to educate me?

Post by DarkMatter731 »

Elysium wrote: Tue Jan 25, 2022 6:47 pm This forum isn't immune to market reactions and poor choices people make with their investments every day. Part of the reason is the forum has grown in members who vary by nature of their experience and knowledge, and there are many who want to do something instead of just staying the course. Most of these posters are what I call moving populations, they come and go, some stay a few years, rarely will you see someone who has been around and plans to stay around indulging in these activities, those are the people who've been through different cycles with the acumen, ability, and stability to stay the course.
Do people honestly think this is mainly retail that's causing the drop here?!

It's institutional investors adjusting their asset allocations due to pricing in the additional expected interest rate hike.

Retail investors panicking don't really do much. I feel like the media has hyped up retail investors as being this massive behemoth and responsible for much of what goes on when this is not the case.

Even the GameStop debacle last year was institutional investor versus institutional investor, not institutional investor versus retail investor.
User avatar
Beensabu
Posts: 5658
Joined: Sun Aug 14, 2016 3:22 pm

Re: I do not understand the panic, care to educate me?

Post by Beensabu »

DarkMatter731 wrote: Wed Jan 26, 2022 11:44 am
Elysium wrote: Tue Jan 25, 2022 6:47 pm This forum isn't immune to market reactions and poor choices people make with their investments every day. Part of the reason is the forum has grown in members who vary by nature of their experience and knowledge, and there are many who want to do something instead of just staying the course. Most of these posters are what I call moving populations, they come and go, some stay a few years, rarely will you see someone who has been around and plans to stay around indulging in these activities, those are the people who've been through different cycles with the acumen, ability, and stability to stay the course.
Do people honestly think this is mainly retail that's causing the drop here?!

It's institutional investors adjusting their asset allocations due to pricing in the additional expected interest rate hike.

Retail investors panicking don't really do much. I feel like the media has hyped up retail investors as being this massive behemoth and responsible for much of what goes on when this is not the case.

Even the GameStop debacle last year was institutional investor versus institutional investor, not institutional investor versus retail investor.
It's not about the cause. It's about the reaction. Retail investors react to drops when they have exceeded their risk tolerance and/or concentrated their position. "Never bear too much or too little risk" and "diversify" is about putting yourself in a position where you don't experience the impulse to react.
"The only thing that makes life possible is permanent, intolerable uncertainty; not knowing what comes next." ~Ursula LeGuin
Booogle
Posts: 605
Joined: Wed Nov 09, 2016 2:57 pm

Re: I do not understand the panic, care to educate me?

Post by Booogle »

Dot Com Bust repeating, followed by a decade of no gains.
Creedxs
Posts: 12
Joined: Thu Feb 25, 2021 2:36 pm

Re: I do not understand the panic, care to educate me?

Post by Creedxs »

I'm just a lurker on here but anytime the market drops posters come out of the wood work stating how the world is falling apart and everyone needs to sell.

It is quite funny and "stay the course" is apparently very hard for many people on this site. But all those posters disappear as soon as the market goes up.

I enjoy reading Mr. Spock and Willthrills post during these times. IMO they are the best and most rational posters.
User avatar
gobel
Posts: 553
Joined: Mon Feb 08, 2021 3:50 pm

Re: I do not understand the panic, care to educate me?

Post by gobel »

Tavistock1 wrote: Tue Jan 25, 2022 6:32 pm Ok, I’m 62 and only recently joined the forum. I’ve adopted a 4 fund ( 2 bond funds ) portfolio. Since the high, my portfolio is “down” just under 5%. This hasn’t reached my ips call to action for re balancing. In the last week I’m reading innumerable posts about doing this or that, “the bogle 3 fund will not protect retirees” ( complements of willthrill) , “sell now!!!” “Should. I buy an annuity???” Yada yada yada. From my limited knowledge here, this would be considered “noise”. My question ( again given limited exposure to the forum ) - is this the typical reaction in what “might” be a correction ? I’m somewhat amused as part of me says “fine, bring it, I’ll rebalance and move forward” while the other part says , “gee I’m 62 and don’t wanna see my retirement vanish” . I’m staying the course but curious …
The main problem with this post is that all the quotes are totally made up. If you search on any of them, only this thread comes up. "Sell now" with 3 exclamation points? It does not exist.

So it's basically like many of the news articles we read today where the reporter has made up or exaggerated some event for theatrical effect or to create a strawman. The list of topics on the main bogleheads.org at this moment are no different than at any other time - a lot of investing and tax questions, maybe a bit tilted to TLH and wash sale questions - no sign of panic IMO.
DarkMatter731
Posts: 224
Joined: Sat Apr 25, 2020 8:28 am

Re: I do not understand the panic, care to educate me?

Post by DarkMatter731 »

Beensabu wrote: Wed Jan 26, 2022 12:07 pm
DarkMatter731 wrote: Wed Jan 26, 2022 11:44 am
Elysium wrote: Tue Jan 25, 2022 6:47 pm This forum isn't immune to market reactions and poor choices people make with their investments every day. Part of the reason is the forum has grown in members who vary by nature of their experience and knowledge, and there are many who want to do something instead of just staying the course. Most of these posters are what I call moving populations, they come and go, some stay a few years, rarely will you see someone who has been around and plans to stay around indulging in these activities, those are the people who've been through different cycles with the acumen, ability, and stability to stay the course.
Do people honestly think this is mainly retail that's causing the drop here?!

It's institutional investors adjusting their asset allocations due to pricing in the additional expected interest rate hike.

Retail investors panicking don't really do much. I feel like the media has hyped up retail investors as being this massive behemoth and responsible for much of what goes on when this is not the case.

Even the GameStop debacle last year was institutional investor versus institutional investor, not institutional investor versus retail investor.
It's not about the cause. It's about the reaction. Retail investors react to drops when they have exceeded their risk tolerance and/or concentrated their position. "Never bear too much or too little risk" and "diversify" is about putting yourself in a position where you don't experience the impulse to react.
Absolutely.

I was just noting that it's interesting when institutional investors adjust their asset allocations, we tend not to say that they're panicking or over-reacting (or readjusting when an additional expected interest rise exceeds their risk tolerance). However, when retail investors exceed their risk tolerance and 'react', we say they're panicking and reacting impulsively. During 2006-2008, plenty of institutional investors exceeded their risk tolerance/acted impulsively for example.

Like I understand why. It's just interesting lol.
User avatar
Beensabu
Posts: 5658
Joined: Sun Aug 14, 2016 3:22 pm

Re: I do not understand the panic, care to educate me?

Post by Beensabu »

DarkMatter731 wrote: Wed Jan 26, 2022 12:23 pm
Beensabu wrote: Wed Jan 26, 2022 12:07 pm
DarkMatter731 wrote: Wed Jan 26, 2022 11:44 am
Elysium wrote: Tue Jan 25, 2022 6:47 pm This forum isn't immune to market reactions and poor choices people make with their investments every day. Part of the reason is the forum has grown in members who vary by nature of their experience and knowledge, and there are many who want to do something instead of just staying the course. Most of these posters are what I call moving populations, they come and go, some stay a few years, rarely will you see someone who has been around and plans to stay around indulging in these activities, those are the people who've been through different cycles with the acumen, ability, and stability to stay the course.
Do people honestly think this is mainly retail that's causing the drop here?!

It's institutional investors adjusting their asset allocations due to pricing in the additional expected interest rate hike.

Retail investors panicking don't really do much. I feel like the media has hyped up retail investors as being this massive behemoth and responsible for much of what goes on when this is not the case.

Even the GameStop debacle last year was institutional investor versus institutional investor, not institutional investor versus retail investor.
It's not about the cause. It's about the reaction. Retail investors react to drops when they have exceeded their risk tolerance and/or concentrated their position. "Never bear too much or too little risk" and "diversify" is about putting yourself in a position where you don't experience the impulse to react.
Absolutely.

I was just noting that it's interesting when institutional investors adjust their asset allocations, we tend not to say that they're panicking or over-reacting (or readjusting when an additional expected interest rise exceeds their risk tolerance). However, when retail investors exceed their risk tolerance and 'react', we say they're panicking and reacting impulsively. During 2006-2008, plenty of institutional investors exceeded their risk tolerance/acted impulsively for example.

Like I understand why. It's just interesting lol.
I get it. The whole "sophisticated" vs. "rube" thing.

I think of it like this: Those who have the ability to move markets move them. Those who don't have that ability need to be aware of that and make the ride tolerable for themselves or risk getting gamed.
"The only thing that makes life possible is permanent, intolerable uncertainty; not knowing what comes next." ~Ursula LeGuin
Post Reply