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Are you preparing for doomsday? aka the next great bear?

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  • #16
    Kind of. I have paid off debt. I can now turn the income hose at more equities when there is a sale. I am also putting more into cash in preparation of quitting (but also car fund and luxury purchase fund). If there is a big downturn, based on my experience in Great Recession, all of this cash will go towards investing...undisciplined, but in a good way.

    Comment


    • #17
      I put "buy cheap" in quotations because I don't think it is possible to know whether the assets are cheap.  I believe that the market fairly values the prices of stocks and that whether they are cheap or expensive cannot be determined by me or most others posting on this forum.

      Bear markets are bad.  Do not wish for one.  Stay the course in both bear and bull markets as WCI said.  If you achieve your goals, reallocate.  Don't reallocate because you think the market is too high.

      Comment


      • #18
        Whenever a bear comes it's going to be very interesting. WCI blog and forums have really grown up and flourished during a crazy bull. I think there is a little bit of that 90s tech boom attitude of it's easy to get rich that exists here and I'm as guilty of it as anyone else. I mean I'm basically on my 6th year of investing, it hasn't taken a rocket scientist to get amazing returns. I try to be open and honest with residents and students when I talk to them about that.

        To me the interesting thing about market corrections/bears is how obvious some of them look in hindsight. I've been internally struggling with this for about a year. Obviously when we look at the last big crack it seems painfully obvious to everyone that interest only loans for people with 500 credit scores wasn't a sustainable economic model. I'm very interested in thinking about these predictions and I'm just honestly not convinced that they are totally without merit.

        Full disclosure, after 8-20% [edited down] returns in my portfolio for 3 years in a row, I've taken a few (not nearly all) of my chips off the table in the last few months. I'm open to every accusation that can be leveled against me and I'll accept them as completely valid. I'm timing the market and I admit it freely. Based on other, less pleasant discussions I've had on other threads I think some of the regulars can probably guess what some of my thought processes involve. Again, call me crazy, I'll mostly agree with you. I just feel less anxious with a decent cash position at the moment.

        I'm just kind of running a mental and emotional experiment on myself and my investing strategy. We're far enough ahead of the game in terms of savings and NW that missing out on some growth (if it comes) isn't going to sink us. If and/or when I turn out to be full of crap, maybe I'll write a guest post.

        Comment


        • #19




          Whenever a bear comes it’s going to be very interesting. WCI blog and forums have really grown up and flourished during a crazy bull. I think there is a little bit of that 90s tech boom attitude of it’s easy to get rich that exists here and I’m as guilty of it as anyone else. I mean I’m basically on my 6th year of investing, it hasn’t taken a rocket scientist to get amazing returns. I try to be open and honest with residents and students when I talk to them about that.

          To me the interesting thing about market corrections/bears is how obvious some of them look in hindsight. I’ve been internally struggling with this for about a year. Obviously when we look at the last big crack it seems painfully obvious to everyone that interest only loans for people with 500 credit scores wasn’t a sustainable economic model. I’m very interested in thinking about these predictions and I’m just honestly not convinced that they are totally without merit.

          Full disclosure, after 18-20% returns in my portfolio for 3 years in a row, I’ve taken a few (not nearly all) of my chips off the table in the last few months. I’m open to every accusation that can be leveled against me and I’ll accept them as completely valid. I’m timing the market and I admit it freely. Based on other, less pleasant discussions I’ve had on other threads I think some of the regulars can probably guess what some of my thought processes involve. Again, call me crazy, I’ll mostly agree with you. I just feel less anxious with a decent cash position at the moment.

          I’m just kind of running a mental and emotional experiment on myself and my investing strategy. We’re far enough ahead of the game in terms of savings and NW that missing out on some growth (if it comes) isn’t going to sink us. If and/or when I turn out to be full of crap, maybe I’ll write a guest post.
          Click to expand...


          You had 20% three years straight? Interesting as it was 11% in 2016 and like 1% in 2015 (S&P). Good job if true.

          Comment


          • #20


            Bear markets are bad.  Do not wish for one.  Stay the course in both bear and bull markets as WCI said.  If you achieve your goals, reallocate.  Don’t reallocate because you think the market is too high.
            Click to expand...


            Here we will have to agree to disagree. For long-term accumulators who will keep investing through a bear market, whether it be DCA in your 401k (disagreeing with @DMFA here, I believe) or for those who can invest a windfall and for anyone who has the cajones to do what they know in their gut is right even though their emotions are screaming the opposite, a bear market is a gift from from the investing gods.

            I am not longing for a bear myself, because it is so stressful to our clients and, by association, us, but a bear market is where we will make our clients multiples of every dollar they have paid us. At that point, the hundreds of hours we have spent planning become free. At every opportunity, I tell clients that we are not magicians and the reason for fantastic returns is not due to any secrets we keep, but because they are long-term equity investors in appropriately-diversified portfolios (I guess we can take a little credit there). But also to be prepared to suck it up, wait it out, and, even, take advantage when the party stops for awhile. Bears are part of the natural cycle of investing and we are here to ensure they don't turn a temporary drop into a permanent loss.
            Our passion is protecting clients and others from predatory advisors. Fox & Co CPAs, Fox & Co Wealth Mgmt. 270-247-6087

            Comment


            • #21
              New to all of this, have never gone through a bear market

              I am keeping about 75K in a no penalty CD to invest once the bear market hits. How do I know when to do that (i.e., should I wait until it is low for a few days? Should I just open up a new Vanguard total stock market account and DCA or lump sum it in?)

              I am also wondering when and how to tax loss harvest my 40K vanguard total stock market account if that happens.

              I'm not going to touch my retirement accounts or my vanguard taxable account -- just keep it in there. My understanding is that it will all go back up eventually.

              Comment


              • #22





                Bear markets are bad.  Do not wish for one.  Stay the course in both bear and bull markets as WCI said.  If you achieve your goals, reallocate.  Don’t reallocate because you think the market is too high. 
                Click to expand…


                Here we will have to agree to disagree. For long-term accumulators who will keep investing through a bear market, whether it be DCA in your 401k (disagreeing with @dmfa here, I believe) or for those who can invest a windfall and for anyone who has the cajones to do what they know in their gut is right even though their emotions are screaming the opposite, a bear market is a gift from from the investing gods.

                I am not longing for a bear myself, because it is so stressful to our clients and, by association, us, but a bear market is where we will make our clients multiples of every dollar they have paid us. At that point, the hundreds of hours we have spent planning become free. At every opportunity, I tell clients that we are not magicians and the reason for fantastic returns is not due to any secrets we keep, but because they are long-term equity investors in appropriately-diversified portfolios (I guess we can take a little credit there). But also to be prepared to suck it up, wait it out, and, even, take advantage when the party stops for awhile. Bears are part of the natural cycle of investing and we are here to ensure they don’t turn a temporary drop into a permanent loss.
                Click to expand...


                I know.  You believe that because the market has always had a positive return over [30] years, it will always have one over any 30 year period.  This is not a sure thing in my view.

                Comment


                • #23







                  Whenever a bear comes it’s going to be very interesting. WCI blog and forums have really grown up and flourished during a crazy bull. I think there is a little bit of that 90s tech boom attitude of it’s easy to get rich that exists here and I’m as guilty of it as anyone else. I mean I’m basically on my 6th year of investing, it hasn’t taken a rocket scientist to get amazing returns. I try to be open and honest with residents and students when I talk to them about that.

                  To me the interesting thing about market corrections/bears is how obvious some of them look in hindsight. I’ve been internally struggling with this for about a year. Obviously when we look at the last big crack it seems painfully obvious to everyone that interest only loans for people with 500 credit scores wasn’t a sustainable economic model. I’m very interested in thinking about these predictions and I’m just honestly not convinced that they are totally without merit.

                  Full disclosure, after 18-20% returns in my portfolio for 3 years in a row, I’ve taken a few (not nearly all) of my chips off the table in the last few months. I’m open to every accusation that can be leveled against me and I’ll accept them as completely valid. I’m timing the market and I admit it freely. Based on other, less pleasant discussions I’ve had on other threads I think some of the regulars can probably guess what some of my thought processes involve. Again, call me crazy, I’ll mostly agree with you. I just feel less anxious with a decent cash position at the moment.

                  I’m just kind of running a mental and emotional experiment on myself and my investing strategy. We’re far enough ahead of the game in terms of savings and NW that missing out on some growth (if it comes) isn’t going to sink us. If and/or when I turn out to be full of crap, maybe I’ll write a guest post.
                  Click to expand…


                  You had 20% three years straight? Interesting as it was 11% in 2016 and like 1% in 2015 (S&P). Good job if true.
                  Click to expand...


                  Sorry I typed that wrong it should read 8-20%.

                  Those are ballpark but it's been really good.

                  Comment


                  • #24








                    Bear markets are bad.  Do not wish for one.  Stay the course in both bear and bull markets as WCI said.  If you achieve your goals, reallocate.  Don’t reallocate because you think the market is too high. 
                    Click to expand…


                    Here we will have to agree to disagree. For long-term accumulators who will keep investing through a bear market, whether it be DCA in your 401k (disagreeing with @dmfa here, I believe) or for those who can invest a windfall and for anyone who has the cajones to do what they know in their gut is right even though their emotions are screaming the opposite, a bear market is a gift from from the investing gods.

                    I am not longing for a bear myself, because it is so stressful to our clients and, by association, us, but a bear market is where we will make our clients multiples of every dollar they have paid us. At that point, the hundreds of hours we have spent planning become free. At every opportunity, I tell clients that we are not magicians and the reason for fantastic returns is not due to any secrets we keep, but because they are long-term equity investors in appropriately-diversified portfolios (I guess we can take a little credit there). But also to be prepared to suck it up, wait it out, and, even, take advantage when the party stops for awhile. Bears are part of the natural cycle of investing and we are here to ensure they don’t turn a temporary drop into a permanent loss.
                    Click to expand…


                    I know.  You believe that because the market has always had a positive return over [30] years, it will always have one over any 30 year period.  This is not a sure thing in my view.
                    Click to expand...


                    Thats the scary part. Alot of passive index investing is based on the fact that these are cycles and if there is bear, it will eventually go bull (like it has in the past). What if we go bear for like 20 years! doubtful to impossible but still can happen I guess. Disastrous that'd be for every asset class or assets and people and life etc etc

                    Comment


                    • #25




                      Whenever a bear comes it’s going to be very interesting. WCI blog and forums have really grown up and flourished during a crazy bull. I think there is a little bit of that 90s tech boom attitude of it’s easy to get rich that exists here and I’m as guilty of it as anyone else. I mean I’m basically on my 6th year of investing, it hasn’t taken a rocket scientist to get amazing returns. I try to be open and honest with residents and students when I talk to them about that.

                      To me the interesting thing about market corrections/bears is how obvious some of them look in hindsight. I’ve been internally struggling with this for about a year. Obviously when we look at the last big crack it seems painfully obvious to everyone that interest only loans for people with 500 credit scores wasn’t a sustainable economic model. I’m very interested in thinking about these predictions and I’m just honestly not convinced that they are totally without merit.

                      Full disclosure, after 8-20% [edited down] returns in my portfolio for 3 years in a row, I’ve taken a few (not nearly all) of my chips off the table in the last few months. I’m open to every accusation that can be leveled against me and I’ll accept them as completely valid. I’m timing the market and I admit it freely. Based on other, less pleasant discussions I’ve had on other threads I think some of the regulars can probably guess what some of my thought processes involve. Again, call me crazy, I’ll mostly agree with you. I just feel less anxious with a decent cash position at the moment.

                      I’m just kind of running a mental and emotional experiment on myself and my investing strategy. We’re far enough ahead of the game in terms of savings and NW that missing out on some growth (if it comes) isn’t going to sink us. If and/or when I turn out to be full of crap, maybe I’ll write a guest post.
                      Click to expand...


                      Really great post, IMO. The thought process and actions that you describe are shared by many of your colleagues, especially those who are thoughtful about where they are and where they are going. I do not criticize you for taking some chips off the table, but I would advise you to do so in the context of formally modifying your asset allocation and being prepared to stick with that allocation going forward.

                      I emerged from training in 1996, into the tech boom of the late 90's, and today does not feel anything like it did in late 1999. At that time, there was the sense that the internet was changing the world (it was) and that everyone around you was getting filthy rich from it, either directly or indirectly. There was the sense that you were a fool if you were not shoveling money hand-over-fist into tech stocks. Everyone knew someone who was a fool but became wealthy from investing in internet stocks. (If he was fool and was getting rich, what did that make you for missing out?)

                      Today, we have the great bull market that everyone despises and no one trusts. If this were 1999, you would not be taking chips off the table, you would be looking under the sofa cushions and under every stone for more chips to throw onto the table.

                      Comment


                      • #26


                        Today, we have the great bull market that everyone despises and no one trusts. If this were 1999, you would not be taking chips off the table, you would be looking under the sofa cushions and under every stone for more chips to throw onto the table.
                        Click to expand...


                        That may be what's happening today.  I think that's the basis of the "melt up" theory.

                        Comment


                        • #27
                          I have to admit, the last year shook us a little. My husband REALLY wanted out of equities, I REALLY wanted to stay the course, but as a compromise I ended up keeping a little bit of "dry powder" -- and underperformed my benchmark as a result.

                          I am preparing for the bear by keeping our asset allocation where we can live with it no matter what happens. I think it's foolhardy market timing to crow about preparing to buy stocks on "sale", but to each their own.

                          @Phoenixdown99, you don't know when the market is low enough to get in. No one does. Ask a monkey to throw a dart, or consult your stars, or just guess, I guess...BTW, you can't TLH in a tax-protected account. Time for a bit of research before you're compelled to test-drive the whole TLH thing, eh?

                          Comment


                          • #28
                            A lot of physicians are in a unique situation to buy cheap during the bear since they have excess cash.  It might not be sitting in the bank ready to go, but the earning power remains there and can be redirected into the market nevertheless.  This might be an extra $50k or a few hundred grand per year.    A bear and the subsequent early bull might last a few years in which a physician may be able to throw an extra million dollars into the market to "buy cheap," on top of his or her regular 401k etc contributions.

                            This is a stark contrast to most earners who typically can't afford to fill a 401k in a good year.  It's a great time to buy but there's simply no extra resources.  While physicians can definitely be downsized, demand for healthcare is more or less a constant.

                            Even though a physician might not lose income during a bear market, it's as good an excuse as any to tighten the purse strings, delay large purchases and find ways to funnel more money into investment.

                            Comment


                            • #29


                              Kind of. I have paid off debt. I can now turn the income hose at more equities when there is a sale
                              Click to expand...


                              I'd also say - kind of.

                              Every month we pay off more debt, save some more, and have some room to invest. The more months out until a dip, the more cash flow we'll have to buy, but if the market crashed tomorrow, that'd be okay too, as our monthly 401k contributions add a little more equities each month. We can't time things.


                              2. TLH – to optimize during sharp downturns. I don’t equate TLH to a buying opportunity, but moreso an efficiency opportunity to minimize losses.
                              Click to expand...


                              We've focused on debt repayment, and not adding to a taxable account, thus we don't have much to TLH. Perhaps just having a little to TLH would be wise for then dip comes. (tomorrow or years away).

                              Comment


                              • #30


                                Today, we have the great bull market that everyone despises and no one trusts. If this were 1999, you would not be taking chips off the table, you would be looking under the sofa cushions and under every stone for more chips to throw onto the table.
                                Click to expand...


                                This does not feel like 1999 except for people into bitcoin.  In 1999 no one cared about PE ratios and the cape index was not yet invented.  Companies were going pubic based on an idea without earnings.  Reminds me of Bitcoin believers.  In the end earnings do matter and they have turned upward.  Economic data is good so do not go to cash.......yet.  Eventually we will get a correction but it is impossible to predict when.  I would figure out your asset allocation and shovel in the money.  If you are young forget keeping your powder dry.  Just invest now and quit trying to be perfect.

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