Steinbrenner

Unless that pattern is reversed . . .

In 1987 it was 22%. In 2008 it was 20% Now, as of this hour, it is 13%. But, of course, we don't know where it will end.

For example, 2009, the DJI and S&P were down about 50%. It took 5 years of no gains just to break even - that's not good.

[Yes, individual cases will vary - the concept is things have been getting worse. the debt bubble, trump, and the corona virus don't bode well. Perhaps, trump will get his miracle cure next week . . . however . . . ]

[I would shift to T-bills until more sense of what is going on occurs. What I've done in fact, was few months ago increased my bear fund stake, which has counter balanced this stock drop very well. Investments I can control are in T-bills]

I have been quite nervous, just having made a change, and not really being an educated investor.

If you have need for liquidity in the next 2-3 years, I hope that you were actively engaged in managing your money before this week...

As a general rule of thumb, any money that may need to access for living expenses or retirement in the short term (2 years or less) does not belong in equities unless you have an abnormal risk tolerance (and really not even then!)...

My time line was once much longer than its becoming, and I just became much more acutely aware of that this week...I am still not ready to pull up equity stakes yet, but if this was in another 4-5 years down the road, I would have been diversifying to minimize volatility a while back...

For those approaching or in retirement, I hope you were adequately prepared and advised before the lunatic took over otherwise, this might have been a very consequential week for many years to follow...

And, as retirees we can manage our expenses better.

In 1987 I had a nice account and my buddy I was sharing a house with had got $100K insurance settlement. He invested in the highest paying fund he found, about 17%/year increase. He panicked and sold it, lost about $60K. I let mine ride and in a year or two got it all back and it kept going up.

here is a true story from about 5 years ago.

In the town I lived in, an old high school math teacher, in his 80s, donated 10 million to a local college basketball team. He also made a couple of more multi-million donations. A local reported asked him how he was able to do that on a teachers income. He said he got some great advice when he first started teaching. Some guy told him told him to take about 10% of his take home income every month and invest it in good solid (boring) high dividend stocks and reinvest those. That's how he did it. He also quoted Einstein "The strongest force in the universe is the power of compound interest".

For no other reason than to buy when bargains appear.

or with capital losses. Like in 2008-2009 I took the opportunity of getting rid of a bunch of inherited individual stocks (from 2004) and a couple of accounts complete with all their stuff, and consolidate the proceeds into stuff that I already owned from before (all equities). And I ended up with a net capital loss on all that of like $24,000 IIRC which reduced my taxes for many years after that.

Nothing like having a generous parent!

Sounds like you used the events to your advantage. Well done.




On edit to add that what you describe is one of the advantages of having a plain old, vanilla investment account.

None of what you describe can be used in a Tax Qualified account. That is to say, realized losses in an IRA or 401(k) don't help like you experienced.

when I merely change allocations or switch from something to something else.

And while it was great (in my regular accounts) utilizing the capital losses to offset capital gains and even ordinary income over the following 9 years or so, I now have a big time bomb of huge unrealized capital gains because the new stuff I bought after selling the old stuff has a really low basis, given that it was purchased around the market bottom.

superior long-time record over bonds and other fixed income investments.

http://pages.stern.nyu.edu/~adamodar/New_Home_Page/datafile/histretSP.html

As for me -- in my early investing years in the mid-1980s thru the 1990s, I was mostly in bonds and CDs (which were in the double digit yields in the beginning of the period and in high single digit yields in most of the 1990s). Fortunately, I did have about 25% in equities and that did considerably better than the fixed income stuff.

During the 1980s and 1990s, I used to squawk and holler about national and world events and oh God, the market is going to crash and its rigged and blah blah blah. And whenever the market dipped, I was a "see I told you so" type of idiot. And whenever it went up, I was a "it's a bubble" type of idiot. Meanwhile I noticed that my parents were nonchalant about market dips and just plugged away with a wide range of equity investments (mostly). They've seen a lot worse than we have, having experienced the Great Depression and World War II (in which they both served).

I was also fortunate enough to be a member of AAII (the American Association of Individual Investors), and eventually began to read more and more articles from the AAII Journal, and that was my primary way that I learned to invest, and to spend less time gnashing my teeth and wringing my hands. Consequently, I fortunately held on to my equities through both the dot com crash and the housing bubble crashes (I did switch between equities during the housing bubble crash, but I kept it in equities).

Just looked at how we finished the week, the month, really, and we are 3.5% down for the year..

But then, of course, there will be next week and next month..