Lessons from this crash
Re: Lessons from this crash
Lump sum is the correct logical solution but it potentially opens you up to the psychology of regret if it is done immediately before a market drop so from that aspect, it introduces behavioral risk
Re: Lessons from this crash
Again, emotionally it's easier to DCA... so nothing wrong with DCAing.
Doesn't matter that much in the long run anyway...
But let's stay off this new "Oh, I just KNEW a crash was coming" theory.
One might have been nervous, sure.. Most people who DCAed back in 2014, and 2016, and 2018, and 2020 were nervous too, so DCA was the right choice, even though lump-sum would have made them slightly more money in most cases.
Market-timing sometimes works, just like betting on yo-eleven at craps sometimes works. Doesn't mean it's a good strategy.
Doesn't matter that much in the long run anyway...
But let's stay off this new "Oh, I just KNEW a crash was coming" theory.
One might have been nervous, sure.. Most people who DCAed back in 2014, and 2016, and 2018, and 2020 were nervous too, so DCA was the right choice, even though lump-sum would have made them slightly more money in most cases.
Market-timing sometimes works, just like betting on yo-eleven at craps sometimes works. Doesn't mean it's a good strategy.
"The best tools available to us are shovels, not scalpels. Don't get carried away." - vanBogle59
Re: Lessons from this crash
Agreed
"The best tools available to us are shovels, not scalpels. Don't get carried away." - vanBogle59
Re: Lessons from this crash
Not op, but I was annoyed but bought the dip by selling off some bonds on mar 23. I thought the reaction to covid was overblown and that the economy didn't actually lose a third of its productivity. I was right, but in retrospect lucky because the v shaped recovery was really spurred by the Fed rather than fundamentals.
Re: Lessons from this crash
I don't believe you are correct in this assertion.Marseille07 wrote: ↑Thu May 12, 2022 2:07 pm One of the basic premises of a Boglehead portfolio is inverse correlation of stocks and bonds.
Re: Lessons from this crash
I'm seeing a lot of that in this thread. Along with "it's different this time", although not in those exact words.
Plus ca change...
"Old value investors never die, they just get their fix from rebalancing." -- vineviz
Re: Lessons from this crash
Didn't do a thing. But, our portfolio was the least of my worries in 3/2020. I am genuinely concerned that the pandemic would be a world-ending, apocalyptic event at that time.
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Re: Lessons from this crash
Cash is king here, as counter-intuitive as it sounds. Cash drag is an issue when inflation is 2%, not when inflation is 8.5%. Going -7.5% real isn't pretty, but much better than -18% real (bonds) or -28% real (stocks).Aaand...it'sgone wrote: ↑Thu May 12, 2022 3:21 pm I think I'm learning that I should have been adding more i-bonds to my portfolio, and also that I need a larger EF. I've been keeping very little cash in my EF, and between the market and some surprises (needing new appliances and some plumbing issues), I think my EF should be 2-3 times larger.
Re: Lessons from this crash
previous crash i got stocks this crash i am buying stocks and bonds both! , also need some cash always ready to buy the dips .
Last edited by manuvns on Thu May 12, 2022 4:55 pm, edited 1 time in total.
Thanks!
- Charles Joseph
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Re: Lessons from this crash
My financial well being does not rely on the vicissitudes of market price and the speculative gyrations of the market. I continue to buy good, strong companies that share profits with shareholders at an above-average rate, along with a mix of total bond index and a tilt toward high-quality A-or-better corporate bonds.
I've weathered plenty of storms with peace of mind and continued income, and have fared quite well.
No new lessons learned here. Just staying the course.
I've weathered plenty of storms with peace of mind and continued income, and have fared quite well.
No new lessons learned here. Just staying the course.
"The big money is not in the buying and selling, but in the waiting." - Charles Munger
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Re: Lessons from this crash
But there's no rule that you couldn't have a period where inflation is high and stock gains are healthy. In fact, that was the case before very recently and could be again for all we know.Marseille07 wrote: ↑Thu May 12, 2022 3:43 pmCash is king here, as counter-intuitive as it sounds. Cash drag is an issue when inflation is 2%, not when inflation is 8.5%. Going -7.5% real isn't pretty, but much better than -18% real (bonds) or -28% real (stocks).Aaand...it'sgone wrote: ↑Thu May 12, 2022 3:21 pm I think I'm learning that I should have been adding more i-bonds to my portfolio, and also that I need a larger EF. I've been keeping very little cash in my EF, and between the market and some surprises (needing new appliances and some plumbing issues), I think my EF should be 2-3 times larger.
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Re: Lessons from this crash
I wasn't saying one should dump equities. I was just comparing cash vs bonds.alfaspider wrote: ↑Thu May 12, 2022 3:53 pm But there's no rule that you couldn't have a period where inflation is high and stock gains are healthy. In fact, that was the case before very recently and could be again for all we know.
Re: Lessons from this crash
The title begs the question of whether the current fluctuation is a crash -- I think it's not even close. Putting that aside, I've learned that barbell portfolios work: in December I moved my HSA to 10% cash, 30% short term treasuries, 30% short term TIPS, 15% ex-US small cap, and 15% US small cap value. I've lost money since then, since the timing was not good, but I haven't lost very much, which is the point of a barbell portfolio.
Re: Lessons from this crash
This is more of a personal lesson, and it certainly doesn't apply equally across all phases of life. Early in accumulation, I was essentially 100% stocks (I know, I know, some people hate that label because I had a cash emergency fund and whatnot, so sue me, lol). I was kind of in the camp of "lifecycle" investors who believe it makes sense to buy one's stocks first before bonds, in order to spread out exposure to stocks over more time, and because big drops early in accumulation don't matter as much with years of income and accumulation left to recover.
As I've gotten a bit older (still only 30, but this "crash" has been informative), my stance on that approach has become a bit more nuanced. On the one hand, I still think it makes sense to be 100% stocks for a while early on, just based on the hopefully long time horizon. However, having recently bought a house, had a first child, and considering looking for a new job due to dissatisfaction with my current one, I'm coming around to the idea that stability does matter to a certain extent early on. It's not enough to go 60/40 in a low-rate environment or anything like that, and my wife and I are certainly young enough that we could work our way through any major downturns, but do we really want to? At this point, we are so happy with our circumstances and family life that if I lost my job tomorrow, I would want to know that we were still financially secure and I could take time off to be with our child without stressing about money. Is that sacrificing long-term returns? Possibly. But we've also saved so aggressively throughout our 20s that we would likely be fine if we never put another cent in retirement accounts again.
Including our primary residence, our net worth is about 40% real estate, 10% I-bonds, 5% bond funds, and 45% stocks. This level of diversification is doing incredibly well in the current environment. The stock and bond funds are down, but our real estate and I-bonds are up. This may not be the greatest long-term allocation ever, but I'm learning to really love and appreciate sleeping like a baby at night in spite of the market turmoil. I don't expect to be at this AA permanently because our risk tolerance is somewhat defensive based on our current net worth and I expect it to go up with more assets, hence why I'm still buying mostly stocks at this point, but it's putting things like those evenly distributed "all-weather" portfolios some gurus talk about in perspective. Again, I don't know that I would use one of those on a permanent basis, but I can see the appeal of being evenly exposed to various asset classes. I always thought gold was kind of dumb, but I'm almost warming up to the idea of a small 2%-5% allocation to gold just to have a little something that behaves differently than the other assets.
On a related note, I started out super gung-ho about FIRE, but as we're approaching some early lean FI targets, I'm starting to doubt the practicality of early retirement to some extent. I know I don't want to be doing what I'm doing now for the next 40 years, but the thing is the American system in particular is not set up to really facilitate early retirement. You get penalized for not having healthcare through work, you get less Social Security for not working more years, your retirement security is directly tied to extremely volatile stocks, tax rates and brackets are subject to change over time, etc. There's just so much uncertainty that it's hard to say with any real degree of confidence that you can really retire early, unless you just have so much extra. I'm definitely not bashing the FIRE community because on the whole, my values are still very much aligned with theirs, it's more that I'm reassessing my aspiration to fully retire from corporate life. Instead, I might look for part-time work, or something with well-defined hours and scope so I can have a more predictable schedule. I know it sounds like I'm being lazy and trying to coast through the rest of my career, but the thing is, I have so many personal projects, hobbies, and family obligations outside of work that my current job just eats into, and my wife is very motivated to climb the corporate ladder, so I think me taking a step back could help facilitate her dreams as well and give me more time and energy to raise children and pursue passion projects. This "crash" is kind of just reinforcing that I really don't know what's going to happen with markets and I'm not super comfortable depending on big returns well into the future to fund early retirement.
As I've gotten a bit older (still only 30, but this "crash" has been informative), my stance on that approach has become a bit more nuanced. On the one hand, I still think it makes sense to be 100% stocks for a while early on, just based on the hopefully long time horizon. However, having recently bought a house, had a first child, and considering looking for a new job due to dissatisfaction with my current one, I'm coming around to the idea that stability does matter to a certain extent early on. It's not enough to go 60/40 in a low-rate environment or anything like that, and my wife and I are certainly young enough that we could work our way through any major downturns, but do we really want to? At this point, we are so happy with our circumstances and family life that if I lost my job tomorrow, I would want to know that we were still financially secure and I could take time off to be with our child without stressing about money. Is that sacrificing long-term returns? Possibly. But we've also saved so aggressively throughout our 20s that we would likely be fine if we never put another cent in retirement accounts again.
Including our primary residence, our net worth is about 40% real estate, 10% I-bonds, 5% bond funds, and 45% stocks. This level of diversification is doing incredibly well in the current environment. The stock and bond funds are down, but our real estate and I-bonds are up. This may not be the greatest long-term allocation ever, but I'm learning to really love and appreciate sleeping like a baby at night in spite of the market turmoil. I don't expect to be at this AA permanently because our risk tolerance is somewhat defensive based on our current net worth and I expect it to go up with more assets, hence why I'm still buying mostly stocks at this point, but it's putting things like those evenly distributed "all-weather" portfolios some gurus talk about in perspective. Again, I don't know that I would use one of those on a permanent basis, but I can see the appeal of being evenly exposed to various asset classes. I always thought gold was kind of dumb, but I'm almost warming up to the idea of a small 2%-5% allocation to gold just to have a little something that behaves differently than the other assets.
On a related note, I started out super gung-ho about FIRE, but as we're approaching some early lean FI targets, I'm starting to doubt the practicality of early retirement to some extent. I know I don't want to be doing what I'm doing now for the next 40 years, but the thing is the American system in particular is not set up to really facilitate early retirement. You get penalized for not having healthcare through work, you get less Social Security for not working more years, your retirement security is directly tied to extremely volatile stocks, tax rates and brackets are subject to change over time, etc. There's just so much uncertainty that it's hard to say with any real degree of confidence that you can really retire early, unless you just have so much extra. I'm definitely not bashing the FIRE community because on the whole, my values are still very much aligned with theirs, it's more that I'm reassessing my aspiration to fully retire from corporate life. Instead, I might look for part-time work, or something with well-defined hours and scope so I can have a more predictable schedule. I know it sounds like I'm being lazy and trying to coast through the rest of my career, but the thing is, I have so many personal projects, hobbies, and family obligations outside of work that my current job just eats into, and my wife is very motivated to climb the corporate ladder, so I think me taking a step back could help facilitate her dreams as well and give me more time and energy to raise children and pursue passion projects. This "crash" is kind of just reinforcing that I really don't know what's going to happen with markets and I'm not super comfortable depending on big returns well into the future to fund early retirement.
Re: Lessons from this crash
Yup, twice as bad as #2: -11.50% since August 2020 vs -5.86% from March to September 1987 according to Portfolio Visualizer.
“Adapt what is useful, reject what is useless, and add what is specifically your own.” ― Bruce Lee
Re: Lessons from this crash
This isn’t a crash.
Significant Market downturns are often preceded by unexpected events, so unless you can predict the unexpected market timing is impossible.
Interest rates won’t always go down (not a lesson, seems obvious, but a realization for many)
Inflation is not dead. (Again, not a lesson, to me anyway)
Significant Market downturns are often preceded by unexpected events, so unless you can predict the unexpected market timing is impossible.
Interest rates won’t always go down (not a lesson, seems obvious, but a realization for many)
Inflation is not dead. (Again, not a lesson, to me anyway)
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Re: Lessons from this crash
Indeed. My dad went 20% cash when he retired in 2020. I thought that was too conservative, but with his goal of wealth preservation, it looks like the least worst option, in retrospect.Marseille07 wrote: ↑Thu May 12, 2022 3:43 pmCash is king here, as counter-intuitive as it sounds. Cash drag is an issue when inflation is 2%, not when inflation is 8.5%. Going -7.5% real isn't pretty, but much better than -18% real (bonds) or -28% real (stocks).Aaand...it'sgone wrote: ↑Thu May 12, 2022 3:21 pm I think I'm learning that I should have been adding more i-bonds to my portfolio, and also that I need a larger EF. I've been keeping very little cash in my EF, and between the market and some surprises (needing new appliances and some plumbing issues), I think my EF should be 2-3 times larger.
Re: Lessons from this crash
You are spot on!Marseille07 wrote: ↑Thu May 12, 2022 3:43 pmCash is king here, as counter-intuitive as it sounds. Cash drag is an issue when inflation is 2%, not when inflation is 8.5%. Going -7.5% real isn't pretty, but much better than -18% real (bonds) or -28% real (stocks).Aaand...it'sgone wrote: ↑Thu May 12, 2022 3:21 pm I think I'm learning that I should have been adding more i-bonds to my portfolio, and also that I need a larger EF. I've been keeping very little cash in my EF, and between the market and some surprises (needing new appliances and some plumbing issues), I think my EF should be 2-3 times larger.
Once again, in hindsight, it seems pretty obvious.
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Re: Lessons from this crash
Thus far the main lesson for me has been that things that are cheap can always get cheaper.
While the most speculative stuff has crashed a lot, I guess I had assumed that when we finally got a crash there would be a flight to things with good fundamentals and that that stuff would only drop slightly, while the expensive stuff would drop dramatically. That’s happened to a small extent, but I’m surprised at how well some of the really expensive stuff has held up.
While the most speculative stuff has crashed a lot, I guess I had assumed that when we finally got a crash there would be a flight to things with good fundamentals and that that stuff would only drop slightly, while the expensive stuff would drop dramatically. That’s happened to a small extent, but I’m surprised at how well some of the really expensive stuff has held up.
Re: Lessons from this crash
The lessons have been around awhile.
1. Have an investment philosophy, ideally, written down.
2. Know your long term goals, current position, and where you want to be and when.
3. Figure out your Asset Allocation and get your monies in line with the AA. Re-evaluate your AA every few years.
4. Know at what delta from your AA will require a rebalancing to get back to your AA and how often you will "check under the hood" and determine if maintenance is needed to get back to your AA.
5. Fees are a drain, so do what you can to keep your investment fees low.
6. Neither you or any "advisor of the month" can consistently beat the market, so low cost index funds that represent the broad bond and stock markets do pretty well in the long run.
7. Folks that talk and/or write about how great they are doing at picking specific bonds or stocks (their winners) are generally pretty quiet when it comes to their losses ( their losers).
8. Know wisdom. At the BH forum, Taylor has wisdom. Jack Bogle had wisdom. If either of them wrote it or said it, it is worth reading or listen to, and pondering deeply.
9. Votes have consequences.
1. Have an investment philosophy, ideally, written down.
2. Know your long term goals, current position, and where you want to be and when.
3. Figure out your Asset Allocation and get your monies in line with the AA. Re-evaluate your AA every few years.
4. Know at what delta from your AA will require a rebalancing to get back to your AA and how often you will "check under the hood" and determine if maintenance is needed to get back to your AA.
5. Fees are a drain, so do what you can to keep your investment fees low.
6. Neither you or any "advisor of the month" can consistently beat the market, so low cost index funds that represent the broad bond and stock markets do pretty well in the long run.
7. Folks that talk and/or write about how great they are doing at picking specific bonds or stocks (their winners) are generally pretty quiet when it comes to their losses ( their losers).
8. Know wisdom. At the BH forum, Taylor has wisdom. Jack Bogle had wisdom. If either of them wrote it or said it, it is worth reading or listen to, and pondering deeply.
9. Votes have consequences.
Re: Lessons from this crash
As I'm still in the accumulation phase, I know logically that this is good long-term for me. That being said, just because I like hamburgers doesn't mean I want to peek inside the slaughterhouse.
Re: Lessons from this crash
This is a great post... Thanks for sharing it...dboeger1 wrote: ↑Thu May 12, 2022 3:58 pm This is more of a personal lesson, and it certainly doesn't apply equally across all phases of life. Early in accumulation, I was essentially 100% stocks (I know, I know, some people hate that label because I had a cash emergency fund and whatnot, so sue me, lol). I was kind of in the camp of "lifecycle" investors who believe it makes sense to buy one's stocks first before bonds, in order to spread out exposure to stocks over more time, and because big drops early in accumulation don't matter as much with years of income and accumulation left to recover.
As I've gotten a bit older (still only 30, but this "crash" has been informative), my stance on that approach has become a bit more nuanced. On the one hand, I still think it makes sense to be 100% stocks for a while early on, just based on the hopefully long time horizon. However, having recently bought a house, had a first child, and considering looking for a new job due to dissatisfaction with my current one, I'm coming around to the idea that stability does matter to a certain extent early on. It's not enough to go 60/40 in a low-rate environment or anything like that, and my wife and I are certainly young enough that we could work our way through any major downturns, but do we really want to? At this point, we are so happy with our circumstances and family life that if I lost my job tomorrow, I would want to know that we were still financially secure and I could take time off to be with our child without stressing about money. Is that sacrificing long-term returns? Possibly. But we've also saved so aggressively throughout our 20s that we would likely be fine if we never put another cent in retirement accounts again.
Including our primary residence, our net worth is about 40% real estate, 10% I-bonds, 5% bond funds, and 45% stocks. This level of diversification is doing incredibly well in the current environment. The stock and bond funds are down, but our real estate and I-bonds are up. This may not be the greatest long-term allocation ever, but I'm learning to really love and appreciate sleeping like a baby at night in spite of the market turmoil. I don't expect to be at this AA permanently because our risk tolerance is somewhat defensive based on our current net worth and I expect it to go up with more assets, hence why I'm still buying mostly stocks at this point, but it's putting things like those evenly distributed "all-weather" portfolios some gurus talk about in perspective. Again, I don't know that I would use one of those on a permanent basis, but I can see the appeal of being evenly exposed to various asset classes. I always thought gold was kind of dumb, but I'm almost warming up to the idea of a small 2%-5% allocation to gold just to have a little something that behaves differently than the other assets.
On a related note, I started out super gung-ho about FIRE, but as we're approaching some early lean FI targets, I'm starting to doubt the practicality of early retirement to some extent. I know I don't want to be doing what I'm doing now for the next 40 years, but the thing is the American system in particular is not set up to really facilitate early retirement. You get penalized for not having healthcare through work, you get less Social Security for not working more years, your retirement security is directly tied to extremely volatile stocks, tax rates and brackets are subject to change over time, etc. There's just so much uncertainty that it's hard to say with any real degree of confidence that you can really retire early, unless you just have so much extra. I'm definitely not bashing the FIRE community because on the whole, my values are still very much aligned with theirs, it's more that I'm reassessing my aspiration to fully retire from corporate life. Instead, I might look for part-time work, or something with well-defined hours and scope so I can have a more predictable schedule. I know it sounds like I'm being lazy and trying to coast through the rest of my career, but the thing is, I have so many personal projects, hobbies, and family obligations outside of work that my current job just eats into, and my wife is very motivated to climb the corporate ladder, so I think me taking a step back could help facilitate her dreams as well and give me more time and energy to raise children and pursue passion projects. This "crash" is kind of just reinforcing that I really don't know what's going to happen with markets and I'm not super comfortable depending on big returns well into the future to fund early retirement.
In 2008, I was 66/33 stocks/bonds... Like $500,000 in stocks, and $250,000 in fixed-income...
After it dropped a bit, I rebalanced $50,000 of my bonds into stocks, but then I decided I wasn't going to touch the remaining $200,000.
2008-2009 dropped a LOT more, and I was somewhat worried about losing my job... But that $200,000 in bonds/cash/CDs really helps one sleep at night.
Knowing that even if I lost my job, my family would be safe, warm, and fed for several years at least, really helped.
Having that safety net made it much easier to "stay the course" during the crash. Had plenty of friends who sold stocks because they couldn't handle the losses, but I never even came close to selling (Bogleheads helped me too - check my join date).
"The best tools available to us are shovels, not scalpels. Don't get carried away." - vanBogle59
Re: Lessons from this crash
Things got overvalued. Reversion to the mean is always a possibility.
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Re: Lessons from this crash
TLH with ETFs at Fidelity is nearly as easy as TLH with MFs at Vanguard.
Re: Lessons from this crash
Don't take "investment" advice from Matt Damon.
A man is rich in proportion to the number of things he can afford to let alone.
Re: Lessons from this crash
But he called me a coward!
A useful razor: anyone asking about speculative strategies on Bogleheads.org has no business using them.
Re: Lessons from this crash
I suspect that this poster is referring to the Super Bowl ad starring Matt Damon, promoting crypto.com.
merely an interested amateur
Re: Lessons from this crash
^ Yes, exactly.
A useful razor: anyone asking about speculative strategies on Bogleheads.org has no business using them.
Re: Lessons from this crash
Re: Lessons from this crash
Know when to hold them. Know when to fold them. Follow my plan better.
Re: Lessons from this crash
If you're talking about the advertisement I'm thinking of, I was legitimately sickened when I saw it. Perhaps the thing I hate most is that as much as I'd like to rub it in his face with what's going on now, he's not the one suffering from what he was selling.
I couldn't have said it better myself. I actually posted a topic here a few months ago seeking help in deciding how to increase our bond allocation, and the conclusion I came to after taking into account all the posts and racking my brain a bit was that what I wanted was actually more of a fixed-size bond allocation as opposed to a percentage of the portfolio. The reason was that I wanted them to serve as more of an extended emergency fund for drawing down in the event of an extended loss of all income (which is unlikely for us given that we have 2 good incomes). $100k is still a bit modest, but that was the figure that I came up with. I-bonds just happened to be really attractive at the time, so I loaded up to $100k of I-bonds, with the caveat that there are lock-up periods involved, but they are unlikely to be problematic for us unless the world comes close to ending tomorrow. That fixed allocation along with our recent home purchase is why stocks are a relatively modest percentage of our net worth at the moment after having been 90+% for years. So in a way, I just kind of lucked out with the timing and experiencing how calming it is to have a nice bond cushion during market volatility. That cushion is essentially giving me permission to pour all new savings into stocks. And when I feel like I want to secure a little more wealth, I'll start adding more to the bond cushion.HomerJ wrote: ↑Thu May 12, 2022 4:53 pm 2008-2009 dropped a LOT more, and I was somewhat worried about losing my job... But that $200,000 in bonds/cash/CDs really helps one sleep at night.
Knowing that even if I lost my job, my family would be safe, warm, and fed for several years at least, really helped.
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Re: Lessons from this crash
It really, kind of like the last 1, confirms that I can sleep at night with 100% equities in my portfolio.
At the same time, it confirms that I probably don’t want to be 100% equities if I were within 10 years of retirement. Don’t know if I’d feel as comfortable.
At the same time, it confirms that I probably don’t want to be 100% equities if I were within 10 years of retirement. Don’t know if I’d feel as comfortable.
Re: Lessons from this crash
What crash? there's a crash going on
didn't know, everything looks normal, just some adjustments in price ...
didn't know, everything looks normal, just some adjustments in price ...
Re: Lessons from this crash
Frankly, I think inflation, not the stock market, is the more atypical and worrisome thing happening right now. I’ve learned two surprising things from reading this forum for the last several months
A lot more people that I expected don’t understand how bonds work (because they are behaving just as predicted).
Even more people don’t understand that TIPS are the same as treasuries of equivalent duration except without the risk of high unexpected inflation (maybe because they focus on the stated negative real yield?)
A lot more people that I expected don’t understand how bonds work (because they are behaving just as predicted).
Even more people don’t understand that TIPS are the same as treasuries of equivalent duration except without the risk of high unexpected inflation (maybe because they focus on the stated negative real yield?)
"The greatest enemy of a good plan is the dream of a perfect plan" - Carl Von Clausewitz
Re: Lessons from this crash
Related to that, one thing that never occurred to me until reading a recent post on here was that since gains are taxed, even "inflation-protected" assets lose to inflation after taxes in taxable accounts. It should be obvious, but it's not something anyone really thought or talked about after decades of low inflation. I used to not be super concerned about inflation because retirement calculators always just assumed nominal return - inflation = real return, but in many cases, that's not actually true. It kind of changes the whole calculus for investing over long time horizons, especially for things like FIRE, because even if you assume historically good real returns, if the time horizon sees high inflation, a bigger chunk of those real returns could be taxable.
Re: Lessons from this crash
Brilliant visual from Ben Carlson on the appropriate time frame for thinking about equities.
more:
https://awealthofcommonsense.com/2022/0 ... -20-years/
l2r
more:
https://awealthofcommonsense.com/2022/0 ... -20-years/
l2r
Re: Lessons from this crash
A discussion on lump sum vs. dollar cost averaging his been moved to a new thread. See: [Lessons from this crash - Lump Sum vs. Dollar Cost Averaging side discussion]
(Thanks to the member who reported the post and explained what's wrong.)
(Thanks to the member who reported the post and explained what's wrong.)
Re: Lessons from this crash
Lesson learned:jay22 wrote: ↑Thu May 12, 2022 3:41 pmDidn't do a thing. But, our portfolio was the least of my worries in 3/2020. I am genuinely concerned that the pandemic would be a world-ending, apocalyptic event at that time.
You overreacted about the pandemic, now you are overreacting about the pullback?
Re: Lessons from this crash
There was a crash? I must be living under a rock...
Re: Lessons from this crash
Yup, inflation is insidious and unlike the price decline in stocks or bonds, you can’t really “see” it so to many it’s not top of mind worrisome. Here’s an interesting way to look at it using the rule of 72.dboeger1 wrote: ↑Thu May 12, 2022 5:51 pmRelated to that, one thing that never occurred to me until reading a recent post on here was that since gains are taxed, even "inflation-protected" assets lose to inflation after taxes in taxable accounts. It should be obvious, but it's not something anyone really thought or talked about after decades of low inflation. I used to not be super concerned about inflation because retirement calculators always just assumed nominal return - inflation = real return, but in many cases, that's not actually true. It kind of changes the whole calculus for investing over long time horizons, especially for things like FIRE, because even if you assume historically good real returns, if the time horizon sees high inflation, a bigger chunk of those real returns could be taxable.
https://platformania.com/how-fast-does ... ple-guide/
And of course this is without the incremental tax burden that you mention.
"The greatest enemy of a good plan is the dream of a perfect plan" - Carl Von Clausewitz
Re: Lessons from this crash
Maybe I have a weird way of looking at things, but....
I don't look at my investments as "my" money. I look at my savings/MM account as my money, my investments though is just fantasy land for me at this point and whatever it says on paper makes no difference to me, I just keep adding to it and one day I will actually use it. For now though it really doesn't exist for me in the realm of every day life and I act like I don't have it.
Of course if I were at or near retirement I would probably be looking at it differently
I don't look at my investments as "my" money. I look at my savings/MM account as my money, my investments though is just fantasy land for me at this point and whatever it says on paper makes no difference to me, I just keep adding to it and one day I will actually use it. For now though it really doesn't exist for me in the realm of every day life and I act like I don't have it.
Of course if I were at or near retirement I would probably be looking at it differently
Re: Lessons from this crash
I pretty much followed it. I didn't react exactly on the 200, but I came close. I'm in short term treasuries and gold right now.Marseille07 wrote: ↑Thu May 12, 2022 5:36 pmAren't you doing 200-day MA? You'd be on the sidelines if you were following it, and that's kind of the point.
Re: Lessons from this crash
What went up, will come down. Not usually in the same time or amount.
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Re: Lessons from this crash
My plan of investing in a balanced fund and then moving toward equities in a bear market kind of sucked. Down equally or within a few %. Did I learn anything though? Not really
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Re: Lessons from this crash
That this yet is not a crash, but a good old fashioned grinding bear market (S&P 500 hasn't joined quite yet but a lot of indices are down 20%+.
1987 was a crash. So was 1962. The Covid bear was a crash. The last legs of the 73-74 and 2008-2009 bear markets were crash like. The late 30's bear market was crash like.
1929-1932 was the king of pain. But bonds (and some gold stocks like Homestake Mining) did okay and would have helped out.
RM
1987 was a crash. So was 1962. The Covid bear was a crash. The last legs of the 73-74 and 2008-2009 bear markets were crash like. The late 30's bear market was crash like.
1929-1932 was the king of pain. But bonds (and some gold stocks like Homestake Mining) did okay and would have helped out.
RM
I figure the odds be fifty-fifty I just might have something to say. FZ