I'm going to liquidate my portfolio

[abenjami]

1 hour ago, patsplat said:

 

 

Very different market 90 years ago.  2008 is a better comparison.

[Number9]

It's going to be a different economy.

[CaliTitan3518]

On 4/2/2020 at 9:49 AM, Jamalisms said:

Gonna be a lot of people who didn't pay mortgage and rent who lose homes as well, barring legislation that addressing something other than the business side of things.

Depends on what ends up being passed in states. California (well atleast most counties have implemented it) has a moratorium banning foreclosures and evictions for the next couple of months if they can prove they were financially impacted due to Covid-19. They will then have 12 months to repay any balances due. Courts are also closed so it wouldn't matter if you tried to evict anyone right now. Courts are going to be so backlogged its going to take forever to have any kind of settlements on evictions.

 

With the 12 months to repay I would imagine people will sell leading up to it and in the Summer of 2021 we will see a higher foreclosure rate start to spike. I'll be waiting for them.

[OILERMAN]

Let's say you had the ability of a god - you could determine the exact low point of the stock market each year], in real-time, and only put your cash in at that very moment. You might assume that this ability would guarantee you could outperform all other investors. And you'd be wrong.

 

https://www.youtube.com/channel/UCBRpqrzuuqE8TZcWw75JSdw/videos

 

 

 

 

 

 

[OILERMAN]

https://ofdollarsanddata.com/buying-during-a-crisis/

 

To demonstrate this, let’s imagine that you decided to invest $100 every month into U.S. stocks from September 1929 to November 1954 (i.e. the 1929 crash and recovery).  

If you were to follow such a strategy, here is what each $100 monthly payment would have grown to (including dividends and adjusted for inflation) by the time U.S. stocks recovered in November 1954:

 

Chart

 

As you can see, the closer you bought to the bottom in the summer of 1932, the greater the long term benefit of that purchase.  Every $100 invested at the lows would grow to $1,200, which is 3x greater than the growth of a $100 purchase made in 1930 ($400).   

 

Yes, the amounts in the chart above are biased because the Dow’s price recovery took multiple decades [Author’s note: If we included dividends and inflation U.S. stocks had recovered by 1937, not 1954]. 

However, even if we look at the other 30%+ declines identified earlier, we see a sizable benefit to purchasing during these major dips:

 

This plot demonstrates that buying nearer the bottom usually provides 50-100% in additional growth compared to investing during other periods.  This means that your same $100 would grow to $150 or $200 (adjusted for inflation) by the time the market recovered.

 

Where does this upside come from?  It comes from a simple mathematical fact:  every percentage loss requires an even larger percentage gain to get back to even. 

Losing 10% requires an 11.11% gain to recover, losing 20% requires a 25% gain to recover, and losing 50% requires a 100% gain (a doubling) to recover.  

 

If you aren’t buying at these levels, you are implying that (a) you don’t want 14% annual returns for the next 3 years or (b) you think it will take markets considerably longer to recover compared to consensus estimates.  

Even if we assume it takes 5 years to recover, that would be 8% returns over the next half decade.  Where else can you get 8% right now? 

Nowhere.  

 

 

 

 

[Jamalisms]

What's it say about someone who times selling at the top and then reinvests at a lower point, compared to someone who stayed in blindly?

[Jamalisms]

That article is pretty disappointing. What would happen if you just started investing a month before the crash and kept investing for 30 years?

 

Unsurprisingly, you'd have done great.

 

What if you started 20 years before the crash and stopped 10 years after? What if you were approaching retirement at the crash, should you have pulled out as it started going south or waited blindly in the market and the workforce until a recovery - how long would that have taken?

 

Starting investing right at a crash and continuing for a long period through recovery is a dream scenario. Which is why I'm happy I pulled out right before the crash. I got my gains before and will see gains after. How much after depends on when I reinvest, but I'll net out at worst ... and get the dream scenario at best.

[OILERMAN]

It can be a big problem if a market crash happens right during or after you retire, “sequence of returns” is all luck. 
 

If you’re forced to sell right now you can do serious damage to your long account long term. 
 

The smart thing to do is have 2-3 years worth of living expenses set in the money market portion of your account in cash. If there is a crash you use the cash and give your equities time to recover. 

[OILERMAN]

@Jamalisms

 

How old are you? 33-35? You said you had less than 6 figures. You’re in no danger at all, you should be loading up!!!

[headhunter]

I say the US economy will soar after all this. And I also think we will be more self efficient amd not rely on China flr alot of our manufacturing anymore for the forseable future.

[Jamalisms]

1 hour ago, OILERMAN said:

@Jamalisms

 

How old are you? 33-35? You said you had less than 6 figures. You’re in no danger at all, you should be loading up!!!

I've increased my contributions and will again when my refinance closes Monday and my mortgage drops by $300. I left my contributions in S&P when I pulled back out the rest, waiting until it's more settled.

 

I'm going to come out more than ok.

[OILERMAN]

1 hour ago, Jamalisms said:

I've increased my contributions and will again when my refinance closes Monday and my mortgage drops by $300. I left my contributions in S&P when I pulled back out the rest, waiting until it's more settled.

 

I'm going to come out more than ok.

Oh I thought you said you moved contributions to bonds, which was the most alarming possibility  to me 

[Jamalisms]

47 minutes ago, OILERMAN said:

Oh I thought you said you moved contributions to bonds, which was the most alarming possibility  to me 

I did until the drop, when I hit my reinvest point and there is all into S&P. Then, when I pulled everything back out, I decided not to update contributions. That's a small bleed into the lower market, just in case.

 

... though I've lost value in those contributions so far. But I expected that. I think the low is going to be broken pretty definitively. Long term, those contributions will earn value.

[OILERMAN]

21 hours ago, Jamalisms said:

What if you started 20 years before the crash and stopped 10 years after?

 

I've tried to find something more specific. 

 

If you started dollar cost averaging on the market’s peak day before the Depression hit, you’d be even by 1933. And by 1936, you would have doubled your money!

Contrast that with this scenario: If by happenstance you put all your money in the day before the bottom fell out, you wouldn’t recover completely until 1954.

 

Based on this if you had 20k the day the market fell(1929) it would take 1954 to get back to 20k, 25 years. 

 

But your contributions from the 1929 date would double 7 years later(1936). What are your contributions over those 7 years through 1956? 1k annually for simplicity

 

Based on S&P 500 returns From 1936 to 1956 

 

Dollar cost averaging 1k from 1929 until 1956 would end up $257,645

 

+

 

20k principal 1929 without any returns

 

=

 

$277,645

 

This is actually too low because I did the original principal totally separate from the new contributions and the benefit of compound interest ignored the 20k principal. 

 

1919-1956 38 year career with contributions. That would roughly be from age 24 to 62. Your original scenario had you stopping contributions at age 54, not realistic

 

You contributed 38k into this account that grew to 277+ through the worst potential time frame. You also have to consider if you're serious about retirement you;d most def be raising your contributions over 38 years. 

 

1k in 1919 would be roughly 15k today and 277k would be 2.5 mill in today's dollars

[OILERMAN]

Futures up pretty big right now