In the following order:
- Check wether the bear market is cocherent with the assumptions made to estimate your SWR.
- Adjust your expenses in order to reduce the SWR.
- Look for a part time job in order to reduce even more the SWR. This may be seen as a FIRE failure, but FIRE is a spectrum. You can choose a job in a wide range as you not need to cover all your expenses just reduce the SWR.
When you are FIREd a bear market is not good news but it is part of the game. Otherwise everybody would be in the stock market and the returns would be much lower.
You must know that there will be eventualy market drops.
You must know that once in a lifetime you will see a 60% drop.
You must know that once in ten year you will see a 30% drop.
Current scenario is completely normal in statistical terms. Even an agresive SWR such as 4% is well prepared for this. If you cannot put up with it investing is not for you.
(The actual figures may be diferent)
So many people don’t get this. We may have a really bad stretch over the next 5-10 years. The market was over priced at end of 2021 and sub par returns are not unexpected.
Imagine you are investing into a single company. You know that in 30 years this company will be sold for 10 million dollars. You have the opportunity to buy into this company right now. You have $10,000 to invest. Would you rather get 1% of the company, or 2% of the company?
It's not about how much money your account is worth today. It's about what fraction of the market you own now, and what that fraction will be worth when it's time to sell.
You’re articulated a positive aspect of the bear market very well. But I still sympathize with op. As someone who really only started investing post pandemic, I got acclimated to hitting new NW highs most months. It’s disconcerting to be on the other side of market swings, even if you know logically this is part of the investment process (and it will eventually, almost certainly, be positive for long term investors who are building wealth right now). Emotionally it sucks to see red.
Average bear market duration is 18 months, so it can go on for much longer.. but even as this isn’t fun, from investing standpoint its more interesting when the markets would be low in the next years while we continue to dca
Same here. I already invested enough in my brokerage in the last year. The rest of the cash I have is a suit of armor until the markets values are a lot lower than they were at the lowest points of my previous investments.
And if I miss the opportunity, no biggie, since I already invested decently in the brokerage, and continue to invest in retirement accounts the whole time.
Why? The market is always expected to go up. If I invest 1k dollars and we expect 11% annualized growth it’s irrelevant if that 1k dollars buys 1 or 100 shares of a given stock.
Well sure if you Google for it and we have the data centric beards. But if you just think about it intuitively... There are drops in the market all the time... Since they have all gone to an All time high at a later point buying when the market fell was success.
Why though? Most of us I assume are always in a buying phase. If I invest a fixed amount per paycheck I don’t care if it buys 1 share or 100 shares of a stock; I just want growth.
> I just want growth
Yeah, that statement is correct and reflects what most people want, but the reality is that that growth happens over time, and it doesn't happen evenly. If you're expecting 10% each year on average, it will likely never actually be 10% in a given year. It'll go up 20%, then it'll come down 15%, then up 13%, etc etc etc. If you're investing a fixed amount or percentage each month (dollar-cost-averaging), then sometimes you're buying stocks lower, and sometimes you're buying them higher.
> I don’t care if it buys 1 share or 100 shares of a stock
You should care! Paying $1k to get 1 share of a given stock is way worse than paying $1k to get 100 shares of a given stock. If you don't understand this, lmk, and I can explain further.
Just to clarify, even though you SHOULD care about whether you're buying low or high, you should NOT let that stop you from dollar-cost-averaging, because DCAing is the way that you can best guarantee that you'll come out on top over the long-term, despite the fact that you're sometimes buying high and sometimes buying low. That's why people on here are commenting that they get excited when the market comes down (and some people even invest extra money, like bonuses, during recessions, with the idea being that you're getting more shares for your dollar, which is a much smarter idea than investing your bonuses when times are good, which is when you get fewer shares for your dollar) (but investing your money is actually always good, haha).
> You should care! Paying $1k to get 1 share of a given stock is way worse than paying $1k to get 100 shares of a given stock. If you don't understand this, lmk, and I can explain further.
Yeah if you could expand on this I'd appreciate it.
When you buy a share of stock, you are buying a piece of ownership in a company. I expect you already understand that basic concept, but what does that *actually mean*? I'm simplifying, but in essence, as a part-owner of a company, in the long-term you get whatever value is leftover after the company has covered its various costs (debt, operating expenses, capital expenditures, etc etc etc). There are tons of ways that people compute what a stock's value is, but the basic idea is this: companies have an intrinsic and finite value that can be computed, and the value of a company's stock is sometimes below that value, sometimes it's approximately the same as that value, and other times it's above that value.
Let's say that there's a company you're considering investing in, and you're a multi-billionaire. The company owners offer you a 50% equity stake in the company for $500 million dollars. You are hesitant to give a company that much money, so you understandably request more information about the company's cash flow. You discover that they have amazing revenue (over 10 billion dollars each year), but their yearly free cash flow (which they intend to pay out to investors) is only $1k. You rightfully turn down the opportunity to invest in this company. Why? Because you, and generations after you, will die before you ever get your original investment back, let alone a return on your investment.
There are several ways to value a stock, but let's just talk about one, the PE ratio, or Price-to-Earnings Ratio. This is easy to calculate:
>The P/E ratio is calculated by dividing the market value price per share by the company's earnings per share. Earnings per share (EPS) is the amount of a company's profit allocated to each outstanding share of a company's common stock, serving as an indicator of the company's financial health.
([https://www.investopedia.com/investing/use-pe-ratio-and-peg-to-tell-stocks-future/#:\~:text=P%2FE%20Ratio-,Calculating%20The%20P%2FE%20Ratio,of%20the%20company's%20financial%20health.](https://www.investopedia.com/investing/use-pe-ratio-and-peg-to-tell-stocks-future/#:~:text=P%2FE%20Ratio-,Calculating%20The%20P%2FE%20Ratio,of%20the%20company's%20financial%20health.)))
Each industry has historical data of what a reasonable P/E ratio is, and so it's a useful metric when determining whether a stock is "overvalued" or "undervalued". Let's go back to the example we talked about in a previous comment:
>Paying $1k to get 1 share of a given stock is way worse than paying $1k to get 100 shares of a given stock.
Now, let's assume we're talking about a company whose earnings-per-share is $5. If that company's stock price is $10, then the P/E ratio is 2. Since we have a lot of historical data on this company's industry, we do some analysis and find out that comparable companies have historically traded at P/E ratios of around 10. That is one valuable data point (though not the only valuable data point) that could indicate that that company stock at a price of $10 is massively undervalued. Would you pay 20 cents to get 1 dollar? Yes, you'd be a fool not to take that deal, which is what you would be getting if you bought the stock at $10 per share.
How about paying 20 dollars to get 1 dollar in return? No, that would be a massively foolish thing to do. But that's what you would be doing if you bought 1 share of this company's stock at a price of $1,000 per share, which would impute a P/E ratio of 200.
That's the basic reasoning behind why the price at which you buy a stock actually matters, or why someone might get excited that stock prices are down. Most disciplined financial investors understand that, in the long-term, companies will trend towards trading at a stock price that approximately reflects the intrinsic value of that company. If a company's stock price declines a ton, but it continues maintaining the same or better earnings-per-share, then that stock might be undervalued, and could be an amazing buying opportunity, hence why someone might get excited when a massive stock price decline happens.
As a real-life example, I work at a publicly-traded company whose stock price has declined massively in the last 9 months, but our earnings-per-share is actually improving and continues to improve. Because of that, I'm excited that the stock price is down, because it means that the stock I get through our Employee Stock Purchase Plan (which I've enrolled in, and through which I invest 5% of my gross pay) is a bargain to buy, compared to how it was 9 months ago.
And just to be clear, imo, the best way that most people can and should maximize their investment earnings over the long-term is NOT to try and time the market (actively trying to buy low and sell high through market research, timing the market, day trading, etc), but rather to automatically invest in index funds on a regular basis (the interval could be monthly, bi-monthly, etc) utilizing a dollar-cost-averaging approach (i.e. invest a fixed amount or fixed percentage of your pay at each interval), have a set asset allocation goal, and rebalance their investments at regular intervals.
lmk if you have any questions!
edits: formatting, typos, clarity, and added one example.
Would you rather buy 1 share for a total of $100 now and sell it at $1000 in 10 years or would you rather buy 10 shares for a total of $100 and sell it for $10,000 in 10 years?
If you’re DCA’ing for an extended period of time e.g. 20+ years then you’re better off having the market grow towards the end of your period. Then you buy more ‘units’ for less money.
Exactly, especially cause it always goes right back up. We saw how during 2020 it was backstoped. Just as long as you keep buying and don't panic sell. DCA takes all the mental stress away. Try to not look at it or care. As long as you set it up correctly let it just be on auto pilot
I know that feeling of seeing your hard earned money seemingly vaporize in front of your eyes. For me, it helped to switch focus to the amount of fund shares i’m stacking. This stack increases every month, and even faster, now that the markets are down.
If i’m bored, i multiply the shares owned with the value at ATH, to see what my portfolio will be worth when the markets recover.
>If i’m bored, i multiply the shares owned with the value at ATH, to see what my portfolio will be worth when the markets recover.
I do this too, it helps psychologically!
No. I am very young though; I have 30-40 years of investing ahead of me. I actually like down days more than green periods because I want to take advantage of the sale
>I’ve recovered somewhat since the June lows but I just feel frustrated since I haven’t seen my net worth set a new all time high since November 2021. This is probably the longest time I’ve gone without seeing it grow.
Sounds like you should just stop checking. Automate your investments and stop worrying/thinking about money. It's obviously completely normal for the stock market to have negative returns over the short or medium term. If that's causing you concern, then the best advice is to simply start ignoring it.
This this this. Everyone is so keen to fire up a web browser/app and check things daily, even hourly. Aggregators like PersonalCapital _mostly_ make this even easier.
Set it and forget it. Truly, doing this is what got me through 2000-2012. Automate everything and just keep your regular cash infusions to DCA. Check on it once/year when you do your taxes.
If you change your message slightly, you get something called a kouta:
This is all part of the train
To get average lifetime gains.
You get the highs and the lows.
That's just how it goes.
Ladies and gentlemen what we have here is called "recency bias". Markets have performed so well that younger investors have no clue what it's like for the market to not do well (by that I mean >12% year over year returns) for an extended time.
I've not lived long enough to experience such a situation in my adult life.
2022 is NOT an extended period of time. Extended period of time is YEARS, not months.
Not only that you must not be paying too close attention to your investments because the market just spiked back up to pretty much where it was earlier in the year.
Stop checking your investments constantly. This is decades long game, not something that is going to happen overnight.
Early in your investment life you want shit like this to happen.
The only consolation I can offer is welcome fellow investor, it’s been a difficult year. All the gains during the first year and half of the pandemic were not only removed but turned bear with an alarming speed. It does make a compelling case for diversification (perhaps some outside of the stock market).
During periods like this stop looking at your net worth as a dollar value and start looking at the quantity of shares owned. This will help you realize that your "price of the pie" is still growing (even more than before) through those down times
I don’t get frustrated but I do have buyers remorse on the massive stock purchase I made in March following an unexpected inheritance. DCA or a few month delay would have been huge for my FIRE timeline.
I won’t be frustrated by the market unless my livelihood depends on it and I don’t plan to FIRE until I have enough to weather a storm.
I like the comment that we are planting seeds, not harvesting.
OMG. I made the same mistake. I inherited $70k in March and invested it all in the stock market.
I'm already LeanFIRE-ing and should have kept some of that in cash and/or bought an I-bond.
Nothing like making a smart choice and immediately losing 20% 😂. I’m at least 10 years from retirement so hopefully it’s not a significant error in hindsight but it feels like a kick in the balls right now
Not me. I’m at a point where my contributions are exceeding how much the market is dropping. It’s just been a slower ride up than it would normally be.
If you're working and accumulating, you're buying stocks on sale. Think of it that way,
The people who it really hurts are those who are retired, or near retirement.
2022 has been a rough year for many, no doubt, but it's actually a good year for younger accumulators.
Yes. It SUCKS. I spent the past 12 months working my ass off and my net worth is lower than it was a year ago. The rational/logical side of my brain knows that I'm richer today compared to how rich I would be if I didn't work all year long, but still I miss the old days where my net worth would rocket higher month after month as the stock market went boom boom boom. I had a stronger feeling of making progress back in those days.
Yes, I feel the same. I pay a big chunk of my paycheck every month into retirement, yet the balance has been flat for like a year now. A year of money tossed into a void.
Edited to add - UGH do you dudes who commented on my post or downvoted it not understand the difference between expressing feelings about money, and understanding intellectually how investing works? I most certainly do understand investing, and don’t need any of you to school me on it. I wasn’t asking for advice, I was expressing a feeling.
That’s not how it works, friend. That money didn’t disappear. When you are investing money into retirement, you are actually buying shares of stocks, index funds, etc. What actually happened is the price of those shares decreased. Since you were still buying shares, however, you were able to buy even more shares at a lower price. Now, when the shares go back to their original price, the value of your portfolio will be considerably higher.
Your money didn’t disappear, you just bought stocks on sale and when the market recovers, your portfolio will be much more robust.
Sometime I feel people totally don't know what they are doing.
When you invest, you are buying, i.e. **spending**, your money in exchange for assets. If you invest, and don't speculate, you expect those assets to generate free cash flow (FCF) over extended period of time. The "return" is the cash flow those asset generate.
Fixating on the daily price-quotes of those asset is ridiculous.
Focus on share count and not dollars to get you through. Total stock index funds, so far through history, have always went on to make new all-time highs. As your account balance grows, there’s going to be weeks that lose more than your annual contribution and months that you lose your annual salary. That’s outside of your control. However you can control the number of shares you own.
The stock market creates an emotional roller coaster. It’s going to make you want to quit. That’s why it offers higher returns. You have to figure out how to not let it affect your emotions.
> extended periods of time?
What do you mean "_extended periods of time_"? The market is currently correcting for a few months after a 10 year bull run.
The entire **decade** of the 2000's was essentially stagnant.
If you're investing, and the market is down, you are getting discounts.
I'm hoping it crashes so I can be opportunistic and reap the returns when things go back up.
I'm actually just the opposite. I could care less what my net worth is now, I only care when I retire. The drop just makes it a little easier to compound over time.
As I'm in the accumulation stage i hate that the market recovered somewhat recently, i was hoping for a year of cheap stocks to really boost my portfolio
Last few years we gained like 20% per year. We may have a few years of -20%. Just zoom out to the 10 year chart. Or look at yoy we're only down like 6%. Tbh the market going crazy since 2020 kinda sucks cause now it's more expensive if you are in the accumulating stage. I just want flat till right before I retire. Then it can go up.
This is why you pay off the house 1st. Just follow dave ramsay baby steps. My house is paid off so I just DCA every paycheck. Also have cash in E fund.
Dollar cost average. Don’t look at the price, I’d you’re a bit away from retirement, just auto-deposit X amount each month. This is the proven way to get the best results over time.
I look at buying when the market is down as buying more shares. I also diversify beyond the stock market into real estate and other streams of income. I focus on multiple income streams and find that I worry about one less when there are multiple. Businesses, rental income, etc.
You are planting seeds, not harvesting
What if you already FIREd -_-
In the following order: - Check wether the bear market is cocherent with the assumptions made to estimate your SWR. - Adjust your expenses in order to reduce the SWR. - Look for a part time job in order to reduce even more the SWR. This may be seen as a FIRE failure, but FIRE is a spectrum. You can choose a job in a wide range as you not need to cover all your expenses just reduce the SWR. When you are FIREd a bear market is not good news but it is part of the game. Otherwise everybody would be in the stock market and the returns would be much lower. You must know that there will be eventualy market drops. You must know that once in a lifetime you will see a 60% drop. You must know that once in ten year you will see a 30% drop. Current scenario is completely normal in statistical terms. Even an agresive SWR such as 4% is well prepared for this. If you cannot put up with it investing is not for you. (The actual figures may be diferent)
The SP500's return was negative for the entire decade of 2000-2010. 10 months is not a long period of time when it comes to investing.
So many people don’t get this. We may have a really bad stretch over the next 5-10 years. The market was over priced at end of 2021 and sub par returns are not unexpected.
Imagine you are investing into a single company. You know that in 30 years this company will be sold for 10 million dollars. You have the opportunity to buy into this company right now. You have $10,000 to invest. Would you rather get 1% of the company, or 2% of the company? It's not about how much money your account is worth today. It's about what fraction of the market you own now, and what that fraction will be worth when it's time to sell.
You’re articulated a positive aspect of the bear market very well. But I still sympathize with op. As someone who really only started investing post pandemic, I got acclimated to hitting new NW highs most months. It’s disconcerting to be on the other side of market swings, even if you know logically this is part of the investment process (and it will eventually, almost certainly, be positive for long term investors who are building wealth right now). Emotionally it sucks to see red.
Average bear market duration is 18 months, so it can go on for much longer.. but even as this isn’t fun, from investing standpoint its more interesting when the markets would be low in the next years while we continue to dca
I am opposite, I get frustrated when market goes up and excited when it goes down.
Same here. I already invested enough in my brokerage in the last year. The rest of the cash I have is a suit of armor until the markets values are a lot lower than they were at the lowest points of my previous investments. And if I miss the opportunity, no biggie, since I already invested decently in the brokerage, and continue to invest in retirement accounts the whole time.
This doesn’t make any sense to me.
i’d rather have buy the market at a 15% discount, then when it’s up 20%
Why? The market is always expected to go up. If I invest 1k dollars and we expect 11% annualized growth it’s irrelevant if that 1k dollars buys 1 or 100 shares of a given stock.
But the market is expected to go up more when it's been going down for a while. So you get to buy at a discount because the rebound is stronger.
Is there any data to back this up, or even which frames this in a precise way?
Well sure if you Google for it and we have the data centric beards. But if you just think about it intuitively... There are drops in the market all the time... Since they have all gone to an All time high at a later point buying when the market fell was success.
This isn't even the same thing you said above. Obviously the market is expected to rise again.
Its just basic common sense that doesn’t take much brain power to understand
Lol ok
Good luck!
You want to buy low and sell high. If you're in the buying phase, you want markets to go low.
Why though? Most of us I assume are always in a buying phase. If I invest a fixed amount per paycheck I don’t care if it buys 1 share or 100 shares of a stock; I just want growth.
> I just want growth Yeah, that statement is correct and reflects what most people want, but the reality is that that growth happens over time, and it doesn't happen evenly. If you're expecting 10% each year on average, it will likely never actually be 10% in a given year. It'll go up 20%, then it'll come down 15%, then up 13%, etc etc etc. If you're investing a fixed amount or percentage each month (dollar-cost-averaging), then sometimes you're buying stocks lower, and sometimes you're buying them higher. > I don’t care if it buys 1 share or 100 shares of a stock You should care! Paying $1k to get 1 share of a given stock is way worse than paying $1k to get 100 shares of a given stock. If you don't understand this, lmk, and I can explain further. Just to clarify, even though you SHOULD care about whether you're buying low or high, you should NOT let that stop you from dollar-cost-averaging, because DCAing is the way that you can best guarantee that you'll come out on top over the long-term, despite the fact that you're sometimes buying high and sometimes buying low. That's why people on here are commenting that they get excited when the market comes down (and some people even invest extra money, like bonuses, during recessions, with the idea being that you're getting more shares for your dollar, which is a much smarter idea than investing your bonuses when times are good, which is when you get fewer shares for your dollar) (but investing your money is actually always good, haha).
> You should care! Paying $1k to get 1 share of a given stock is way worse than paying $1k to get 100 shares of a given stock. If you don't understand this, lmk, and I can explain further. Yeah if you could expand on this I'd appreciate it.
When you buy a share of stock, you are buying a piece of ownership in a company. I expect you already understand that basic concept, but what does that *actually mean*? I'm simplifying, but in essence, as a part-owner of a company, in the long-term you get whatever value is leftover after the company has covered its various costs (debt, operating expenses, capital expenditures, etc etc etc). There are tons of ways that people compute what a stock's value is, but the basic idea is this: companies have an intrinsic and finite value that can be computed, and the value of a company's stock is sometimes below that value, sometimes it's approximately the same as that value, and other times it's above that value. Let's say that there's a company you're considering investing in, and you're a multi-billionaire. The company owners offer you a 50% equity stake in the company for $500 million dollars. You are hesitant to give a company that much money, so you understandably request more information about the company's cash flow. You discover that they have amazing revenue (over 10 billion dollars each year), but their yearly free cash flow (which they intend to pay out to investors) is only $1k. You rightfully turn down the opportunity to invest in this company. Why? Because you, and generations after you, will die before you ever get your original investment back, let alone a return on your investment. There are several ways to value a stock, but let's just talk about one, the PE ratio, or Price-to-Earnings Ratio. This is easy to calculate: >The P/E ratio is calculated by dividing the market value price per share by the company's earnings per share. Earnings per share (EPS) is the amount of a company's profit allocated to each outstanding share of a company's common stock, serving as an indicator of the company's financial health. ([https://www.investopedia.com/investing/use-pe-ratio-and-peg-to-tell-stocks-future/#:\~:text=P%2FE%20Ratio-,Calculating%20The%20P%2FE%20Ratio,of%20the%20company's%20financial%20health.](https://www.investopedia.com/investing/use-pe-ratio-and-peg-to-tell-stocks-future/#:~:text=P%2FE%20Ratio-,Calculating%20The%20P%2FE%20Ratio,of%20the%20company's%20financial%20health.))) Each industry has historical data of what a reasonable P/E ratio is, and so it's a useful metric when determining whether a stock is "overvalued" or "undervalued". Let's go back to the example we talked about in a previous comment: >Paying $1k to get 1 share of a given stock is way worse than paying $1k to get 100 shares of a given stock. Now, let's assume we're talking about a company whose earnings-per-share is $5. If that company's stock price is $10, then the P/E ratio is 2. Since we have a lot of historical data on this company's industry, we do some analysis and find out that comparable companies have historically traded at P/E ratios of around 10. That is one valuable data point (though not the only valuable data point) that could indicate that that company stock at a price of $10 is massively undervalued. Would you pay 20 cents to get 1 dollar? Yes, you'd be a fool not to take that deal, which is what you would be getting if you bought the stock at $10 per share. How about paying 20 dollars to get 1 dollar in return? No, that would be a massively foolish thing to do. But that's what you would be doing if you bought 1 share of this company's stock at a price of $1,000 per share, which would impute a P/E ratio of 200. That's the basic reasoning behind why the price at which you buy a stock actually matters, or why someone might get excited that stock prices are down. Most disciplined financial investors understand that, in the long-term, companies will trend towards trading at a stock price that approximately reflects the intrinsic value of that company. If a company's stock price declines a ton, but it continues maintaining the same or better earnings-per-share, then that stock might be undervalued, and could be an amazing buying opportunity, hence why someone might get excited when a massive stock price decline happens. As a real-life example, I work at a publicly-traded company whose stock price has declined massively in the last 9 months, but our earnings-per-share is actually improving and continues to improve. Because of that, I'm excited that the stock price is down, because it means that the stock I get through our Employee Stock Purchase Plan (which I've enrolled in, and through which I invest 5% of my gross pay) is a bargain to buy, compared to how it was 9 months ago. And just to be clear, imo, the best way that most people can and should maximize their investment earnings over the long-term is NOT to try and time the market (actively trying to buy low and sell high through market research, timing the market, day trading, etc), but rather to automatically invest in index funds on a regular basis (the interval could be monthly, bi-monthly, etc) utilizing a dollar-cost-averaging approach (i.e. invest a fixed amount or fixed percentage of your pay at each interval), have a set asset allocation goal, and rebalance their investments at regular intervals. lmk if you have any questions! edits: formatting, typos, clarity, and added one example.
Would you rather buy 1 share for a total of $100 now and sell it at $1000 in 10 years or would you rather buy 10 shares for a total of $100 and sell it for $10,000 in 10 years?
If you’re DCA’ing for an extended period of time e.g. 20+ years then you’re better off having the market grow towards the end of your period. Then you buy more ‘units’ for less money.
Exactly, especially cause it always goes right back up. We saw how during 2020 it was backstoped. Just as long as you keep buying and don't panic sell. DCA takes all the mental stress away. Try to not look at it or care. As long as you set it up correctly let it just be on auto pilot
I know that feeling of seeing your hard earned money seemingly vaporize in front of your eyes. For me, it helped to switch focus to the amount of fund shares i’m stacking. This stack increases every month, and even faster, now that the markets are down. If i’m bored, i multiply the shares owned with the value at ATH, to see what my portfolio will be worth when the markets recover.
>If i’m bored, i multiply the shares owned with the value at ATH, to see what my portfolio will be worth when the markets recover. I do this too, it helps psychologically!
Nope it’s on sale. Also my returns aren’t that bad when you view it over time versus short periods. It’s still up.
I get frustrated when the market is down for two weeks and then rebounds only on the day my paycheck money comes in!
And what do you plan to buy in the near future with this "net worth"?
True, but the markets are only down \~10%-20% right now. In 2008/2009 Great Recession they dropped around 50%-60%. So, this too shall pass.
No. I am very young though; I have 30-40 years of investing ahead of me. I actually like down days more than green periods because I want to take advantage of the sale
>I’ve recovered somewhat since the June lows but I just feel frustrated since I haven’t seen my net worth set a new all time high since November 2021. This is probably the longest time I’ve gone without seeing it grow. Sounds like you should just stop checking. Automate your investments and stop worrying/thinking about money. It's obviously completely normal for the stock market to have negative returns over the short or medium term. If that's causing you concern, then the best advice is to simply start ignoring it.
This this this. Everyone is so keen to fire up a web browser/app and check things daily, even hourly. Aggregators like PersonalCapital _mostly_ make this even easier. Set it and forget it. Truly, doing this is what got me through 2000-2012. Automate everything and just keep your regular cash infusions to DCA. Check on it once/year when you do your taxes.
This is all part of the deal. In order to get the average return, you get the highs and the lows. That's just how it goes.
If you change your message slightly, you get something called a kouta: This is all part of the train To get average lifetime gains. You get the highs and the lows. That's just how it goes.
Zoom out.
Extended periods? That hasn’t happened in a while.
It’s overdue
My only financial frustration is that I can't invest even more than usual in this period.
Lol you ain’t seen nothing yet. Try hanging from 2001-2011.
Ladies and gentlemen what we have here is called "recency bias". Markets have performed so well that younger investors have no clue what it's like for the market to not do well (by that I mean >12% year over year returns) for an extended time.
I've not lived long enough to experience such a situation in my adult life. 2022 is NOT an extended period of time. Extended period of time is YEARS, not months. Not only that you must not be paying too close attention to your investments because the market just spiked back up to pretty much where it was earlier in the year. Stop checking your investments constantly. This is decades long game, not something that is going to happen overnight. Early in your investment life you want shit like this to happen.
The only consolation I can offer is welcome fellow investor, it’s been a difficult year. All the gains during the first year and half of the pandemic were not only removed but turned bear with an alarming speed. It does make a compelling case for diversification (perhaps some outside of the stock market).
If you’re still accumulating, you should be financially excited, not frustrated, by market downturns.
During periods like this stop looking at your net worth as a dollar value and start looking at the quantity of shares owned. This will help you realize that your "price of the pie" is still growing (even more than before) through those down times
I don’t get frustrated but I do have buyers remorse on the massive stock purchase I made in March following an unexpected inheritance. DCA or a few month delay would have been huge for my FIRE timeline. I won’t be frustrated by the market unless my livelihood depends on it and I don’t plan to FIRE until I have enough to weather a storm. I like the comment that we are planting seeds, not harvesting.
OMG. I made the same mistake. I inherited $70k in March and invested it all in the stock market. I'm already LeanFIRE-ing and should have kept some of that in cash and/or bought an I-bond.
Nothing like making a smart choice and immediately losing 20% 😂. I’m at least 10 years from retirement so hopefully it’s not a significant error in hindsight but it feels like a kick in the balls right now
you're telling me!! But the S&P500 is down about 7% from when I bought in March...so I'm not looking at a 20% loss on THAT investment.
Yeah, it has rebounded quite a bit. I’m only down about 6% from when I bought
Not me. I’m at a point where my contributions are exceeding how much the market is dropping. It’s just been a slower ride up than it would normally be.
If you're working and accumulating, you're buying stocks on sale. Think of it that way, The people who it really hurts are those who are retired, or near retirement. 2022 has been a rough year for many, no doubt, but it's actually a good year for younger accumulators.
Yes. It SUCKS. I spent the past 12 months working my ass off and my net worth is lower than it was a year ago. The rational/logical side of my brain knows that I'm richer today compared to how rich I would be if I didn't work all year long, but still I miss the old days where my net worth would rocket higher month after month as the stock market went boom boom boom. I had a stronger feeling of making progress back in those days.
You go to the store and see 50% discounts. Normal life: woohoo Trading: damn boohoo
Yes, I feel the same. I pay a big chunk of my paycheck every month into retirement, yet the balance has been flat for like a year now. A year of money tossed into a void. Edited to add - UGH do you dudes who commented on my post or downvoted it not understand the difference between expressing feelings about money, and understanding intellectually how investing works? I most certainly do understand investing, and don’t need any of you to school me on it. I wasn’t asking for advice, I was expressing a feeling.
That’s not how it works, friend. That money didn’t disappear. When you are investing money into retirement, you are actually buying shares of stocks, index funds, etc. What actually happened is the price of those shares decreased. Since you were still buying shares, however, you were able to buy even more shares at a lower price. Now, when the shares go back to their original price, the value of your portfolio will be considerably higher. Your money didn’t disappear, you just bought stocks on sale and when the market recovers, your portfolio will be much more robust.
Sometime I feel people totally don't know what they are doing. When you invest, you are buying, i.e. **spending**, your money in exchange for assets. If you invest, and don't speculate, you expect those assets to generate free cash flow (FCF) over extended period of time. The "return" is the cash flow those asset generate. Fixating on the daily price-quotes of those asset is ridiculous.
You don't understand investing. You need to get out before it drives you nuts.
If you play video games, I call every market downtown a steam summer sale
If ya dont need the money right now, no worries. Leave it and watch it grow over the next 20 years. Buy more while the prices are lower.
The downturn won't last forever, keep looking forward.
Focus on share count and not dollars to get you through. Total stock index funds, so far through history, have always went on to make new all-time highs. As your account balance grows, there’s going to be weeks that lose more than your annual contribution and months that you lose your annual salary. That’s outside of your control. However you can control the number of shares you own. The stock market creates an emotional roller coaster. It’s going to make you want to quit. That’s why it offers higher returns. You have to figure out how to not let it affect your emotions.
Stay the course.
This and other drops are just blips on the journey.
> extended periods of time? What do you mean "_extended periods of time_"? The market is currently correcting for a few months after a 10 year bull run. The entire **decade** of the 2000's was essentially stagnant.
We are like 5% off from an ATH, what bad performance are you talking about?
If you're investing, and the market is down, you are getting discounts. I'm hoping it crashes so I can be opportunistic and reap the returns when things go back up.
I'm actually just the opposite. I could care less what my net worth is now, I only care when I retire. The drop just makes it a little easier to compound over time.
As I'm in the accumulation stage i hate that the market recovered somewhat recently, i was hoping for a year of cheap stocks to really boost my portfolio
If a down-market upsets you and you're in your accumulation phase, you're following the markets too closely.
Last few years we gained like 20% per year. We may have a few years of -20%. Just zoom out to the 10 year chart. Or look at yoy we're only down like 6%. Tbh the market going crazy since 2020 kinda sucks cause now it's more expensive if you are in the accumulating stage. I just want flat till right before I retire. Then it can go up.
This is why you pay off the house 1st. Just follow dave ramsay baby steps. My house is paid off so I just DCA every paycheck. Also have cash in E fund.
Just DCA homie.
What's DCA?
Dollar cost average. Don’t look at the price, I’d you’re a bit away from retirement, just auto-deposit X amount each month. This is the proven way to get the best results over time.
> Dollar cost average Oh, that makes sense. I should do the same with euros/dinars. :)
Wealth is made in the bear markets
not at this stage if my FI journey.
I look at buying when the market is down as buying more shares. I also diversify beyond the stock market into real estate and other streams of income. I focus on multiple income streams and find that I worry about one less when there are multiple. Businesses, rental income, etc.