Potential crash?

[whyme 0]

Ed, I will echo Tony's sentiment: your future looks bright.  I'm not going to presume to come up with a dollar amount for you--there are too many moving parts to sort through in this forum, not to mention the limits of my own competence in these matters.  But if I've got this right, you already have something approaching a million dollars in investments, you plan to make substantial contributions for another couple of years, then you expect to be able to keep that money invested for two or three decades before you take income from it (wow), and when you do so you'll just want to withdraw the equivalent of about 25k/year in current dollars.  (Maybe less than that, if you've got social security benefits.) If that's the case, it seems to me that you are on course to "oversave." Short of some Alex Jones-style survivalist apocalypse, you'll likely have resources beyond your needs, even with a protracted period of stingy markets or a large weighting in low-risk fixed-rate investments.  

I suppose you should (if you haven't already) explore the arithmetic for worst-case scenarios that undermine your plan--unexpected health crises, your wife's job ends prematurely, family members who will need your support, etc--and verify that you've built in a margin that will allow you to roll with such punches should they occur.  But saving big at a young age, limiting expenses and planning--that's a great formula, one that very few of us manage to pull off as well as you seem to be doing.

[EdLaFave 0]

Not quite a million. I can't remember how close we got, but we were pushing 800k. With all of the fun going on, it is now closer to 725k. The bogleheads gave me some input on this topic, but I still need to find the time to read the resources they linked me to in order to evaluate the quality of the guidance. I've definitely got my own model, but it sure is a big decision.

It looks like we're approaching -10%. It may be a good time to start paying attention because if you've got a taxable account then you may be able to realize some losses and deduct them (3k/year) from your income taxes. A small conciliation prize provided by your declining investments.

[tony 0]

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. It may be a good time to start paying attention because if you've got a taxable account then you may be able to realize some losses and deduct them (3k/year) from your income taxes

I checked my taxable accounts . All are still   way in the black. Its going to take much more loss for me to claim my losses.  That just goes to show how much of a run up we have had. I'm still not worried. I am convinced the government shutdown looming again, Yellen's final words that the market is overvalued, a new fed being installed, and fear of rising interest rates all are playing a roll. This is now considered a correction. Nothing new here. Just RELAX and let it all playout 

 

[EdLaFave 0]

And just  like that, over the past week or so, we're up about 7%.

If any lurkers read this thread, acting on your emotions will cause you  to fail as an investor. Had I listened to that crazy voice in my head (which, if I'm honest, is still screaming about an impending crash) then I would have missed out on that rapid upswing. We talk abut paying 1-2% in  expense ratios as a killer, imagine regularly missing out on +7% swings in the market! The sooner we acknowledge that we have no way to predict or outsmart the market, the better off we'll be.

[tony 0]

 

 

 

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he sooner we acknowledge that we have no way to predict or outsmart the market, the better off we'll be.

Amen

Everything is a scare tactic to get you to part with your money. Stay the course.

[EdLaFave 0]

Looks like we're down close to 10% since the January peak. I'm enjoying the crash/trade war discussions that are breaking now :)

[tony 0]

Enjoy the crash/ trade discussions but don't act on it. !!

[EdLaFave 0]

That reminded me of a poster who declared they were shorting the entire S&P 500. Want some more excitement in your life?

[sschullo 0]

Yeah! besides shorting, there are these terrible strategies: individual stocks, options, puts and calls, timing, hedging, momentum investing, active management in all of its forms outside of Vanguard, buying low and selling high, trading frequently are all so "EXCITING." As Nobel prize-winning economist, Paul Samuelson said, "Investing should be dull, investing should be more like watching paint dry or grass grow. If you want excitement, take $800 and go to Vegas."

I have a slight disagreement with Paul on that $800. My girlfriend and I are driving to Vegas to see U2 and Bono on Friday evening and Elton John on Saturday evening in one weekend next month. Neither one of us gambles. Watching these shows are a lot more fun and exciting than watching $800 get sucked up by the tables or the slot machines. The great Paul Samuelson was making a valuable point, but he used the wrong example. I think I have a better example, if you want genuine excitement, see a show. It's sad when I go to a casino to see a show, and I many old people with canes, wheelchairs, and even walkers, sitting at slot machines. 

[EdLaFave 0]

Alright everyone, as they say, I’ve predicted 30 of the last 2 down markets...so is this the moment we begin our return to more (historically) normal prices for stocks?

(purely rhetorical because nobody knows anything, this is just meant to commiserate with anybody feeling the pain of losses)

The past couple months have been tough. I hope we’re all riding it out well!

[tony 0]

Corrections are healthy. I'd be more worried if things had gone down all at once significantly. We all know that the market is somewhat hyped by emotion one way or another. I think that is at play here. Certainly, a downturn of some sort is in order as this has been an amazing historical and longwinded expansion. 

I have my doubts that the market is heading for a major plummet. The interstate commerce is unbelievable. I have never seen so many tractor-trailer trucks delivering goodsl on the interstate. I just got back from Northern Pa., and the roads were crowded with trucks. More than I can remember ever seeing.  It was annoying to share the interstate with these monsters. Plenty of AMAZON.COM TRUCKS TOO despite the fact they did not meet earnings expectations this quarter. Unfortunately, bad financial earnings reports from some of the bigger companies like Apple can set the emotional tone for the market in general.

Just don't watch the financial news channels because in pursuit of ratings they can often go over the top with predictions and many of their guest gurus are constantly making predictions that prove to be wrong more often than not. These channels can affect your emotions and cause you do mess with your money. The media has the power to cause a huge herd effect of selling and trading which could be disastrous and cause a collapse. 

Of course, I am an idiot too making these predictions because the market will do what the market will do and nobody knows what will happen but historically over time the market always goes up.  Don't do a thing. Stick to your savings plan through thick and thin.  For you younger guys and gals you'll want the markets to go south if you are employed and have earned money to contribute to your retirement funds. It's an opportunity but  it just won't feel like one because you see your balances go way down on paper short term.

 

[EdLaFave 0]

Took a quick glance at the market and we are in correction territory. I guess we will find out soon enough if we are heading towards bear market territory.

If you believe in such things, the shiller p/e is a shade above 29, which is historically high and gives us plenty of room to fall. Once again, I feel like we are in the beginnings of a downturn.

[sschullo 0]

We have all planned for growth and downturns. Stick with your plan no matter what. 

[tony 0]

Thinking makes it so. I say Nope .   And if I am wrong, I say so what?

[EdLaFave 0]

One of the metrics I keep track of is my profits. I’m down 80k from my high watermark and I’m psychologically preparing to lose another 100k during 2019.

If we hit a downturn I’ll be studying the emotional affect it has on me. So far I feel nothing about losses as long as I think about them in terms of dollars. However, if I think of losses in terms of how it affects my FIRE date (assuming a 5 year decline/recovery cycle), then I feel some real negative emotions.

It’ll be an interesting ride and I look forward to seeing what affect a potential recession has on other investors. I will be staying the course simply because there isn’t another viable option.