1, 2, 3 panic! The stock market meltdown of 2020 has taken us all for a ride. Thanks the coronavirus pandemic, the stock market meltdown will likely come back. Then the 2022 stock market meltdown happened again.
It's a good thing that most of us are super savers, have a diversified net worth, actively rebalance our portfolios, and haven't confused brains for a bull market!
We've also been preparing for downturns all year with posts such as: “Are We In Another Financial Bubble,” and “Creating A More Defensive Portfolio With Bonds,” so I suspect most of us are doing just fine. But what about other people who might feel like jumping out the window because they went on margin? Or how about that starry-eyed person who thought the grass was greener at a startup?
In this post, I'd like to go through the implications for various types of people if there is a sustained market correction. It's nice to say that all of this is really just noise since we're investing for the long run. But over the next one-to-three years, a lot of things could change if the pummeling continues.
Besides, it's always good to have plans for various scenarios, whether they come true or not. Let's imagine a current scenario of a 20% correction in the stock market.
Stock Market Meltdown: Implications For Startup Employees
You've got to face reality that your lottery ticket is not going to make you rich. Since you aren't going to be rich, then you might as well enjoy the journey!
It is imperative that you ASK the founders what is the latest condition of the company's financials e.g. what is the burn rate, how long will the company last if revenue stays flat or goes down, etc. An implosion in the public markets means that private investors will be much more stingy in funding companies that aren't clearly on the path to profitability.
Paul Graham, founder of Y Combinator admitted that 93% of his companies fail, even though his accelerator has less than a 5% acceptance rate. The only people getting rich are the founders or employees in the inner circle who've been able to raise enough money to cash out to rabid Venture Capitalists.
The Secretly guys who cashed out for $3 million each and shut down their company within 12 months, while leaving their employees in the dust, are winning. Sure, they may never be trusted again, but who cares?
One guy drives a Ferrari and has $3 million bucks! But Zirtual management is not as lucky, and neither are the 400 employees who got let go at 1:30am Monday morning via e-mail. The need for funding is imperative given most startups don't make money for years.
There's just no liquidity for most startup employees. Even if you are eligible to offload 10% of your shares in the latest Series D round (not many startups get that far), you're going to feel tremendous peer pressure from management to not do so. Your next pay raise or promotion might be at risk.
I say, screw the pressure! Your mission is to try and get as liquid as possible, because that's what any smart founder who has brought his/her company this far is doing. Trust me, I've spoken to many, and all of them want to desperately cash out a large part of their holdings.
You're already accepting 20-50% below market pay in hopes of making it big with your equity. Turn profits into cash. Strongly consider applying to companies that have massive cash on their balance sheets. You can always say you at least tried the startup world with no regret.
Related:
Candid Advice For Those Joining The Startup World
The Best Way To Get Rich: Turn Funny Money Into Real Assets
Stock Market Meltdown: Implication For Entrepreneurs
Raise as much cash now and seriously rethink your desire to ever go public. Once you go public, your happiness will drop drastically. You'll now have regulators watching your every move. You'll have thousands of new masters, even though some might own a tiny amount of stock.
By staying private, you can manipulate folks into thinking everything is great. You don't have to disclose your financials, and you've got Venture Capitalists out there dying to give you money. Raise more money from them ASAP. What do they care? It's not their money they are investing, it's their limited partners' money.
Do you know how hard it is to hold on to your employees when your stock is cratering? It's virtually impossible. Seriously, who the hell wants to work at Twitter?
It's a shit show that does not even have a full-time CEO. Even with the stock in the dumps, it still paid its new CFO over $70 million dollars after just one year of work! Talk about demoralizing for everybody else. His nickname while at GS was “Anthony No Bonus,” after getting the bullish internet stock calls totally wrong.
Just do what most smart co-founders do, and cash out at every single round. Use your funny money to buy something tangible that will last far after the bubble bursts. There is absolutely nothing wrong with the lifestyle business. In fact, the lifestyle business is what it's all about!
One thing we've learned during the 2020+ pandemic is that business can be shut down by the government. Therefore, online business valuations should grow. They cannot be shut down.
Please read:
Sell Your Companies For Millions And Still Not Be A Millionaire
Hurry Up And Be An Accredited Investor Already
Why I Regret Selling My Business For Millions
Stock Market Meltdown: Implications For Every Day Employees
Let's say you're like most people that don't count on equity options to make you rich. You're getting a 1-5% raise every year and have come to grips you'll have to work for 40 years before you can retire. This life sucks if you don't at least like what you do.
The only way out of this situation is to start building multiple income streams through side hustles. If you don't like your job five years in, you sure as hell won't like your job 10 years later. But if you start developing different income streams now, in 10 years, these streams may provide enough fire power for you to break free and do what you really want to do, even if the pay is much lower.
Since you're in your job for the long run, unlike many ADHD-suffering startup employees who hop around every 1-3 years, these violent downturns in the stock market should be viewed as buying opportunities. For the first 20 years of your career, the amount you save in your 401k or other retirement portfolios will make up the majority share of your portfolio's total value.
At the very least you should be maxing out your 401k. Hopefully you've got some 401k match program or company profit sharing to help add to your retirement account as well. Once you've maxed out your 401k, shoot for 20% or more in after-tax savings. You'll eventually build a financial nut so large that it'll hopefully start returning more money than you put in every year.
But remember, try to retire by a certain age, not after accumulating a certain financial figure. Your life expectancy is pretty certain at around 80 years old. On the other hand, there's always one more dollar you can make.
Please Read:
How Much Should I Have In My 401k By Age
Tether Your Income To Boost Your Staying Power
Stock Market Meltdown: Implication For Real Estate Owners
Real estate usually follows the stock market with a 12 month lag. If the stock market stays flat-to-down over the next 12 months, we should expect the real estate market to finally flatline or decline by 2017.
When equities are tumbling, bonds are generally rallying. As a result, you've seen the 10-year yield decline from a 2015 high of 2.48% to now only 1.95%. Mortgages rates have also fallen by a commensurate ~0.5% across different durations as well, which is why you should refinance if you've haven't done so already.
But now the 10-year Treasury bond yield is close to 5%, a 17-year high, thanks to aggressive Fed rate hikes since 2022.
Credible is the best place to get mortgage refinance quotes. Qualified lenders are competing for your business. You can get free quotes in minutes.
There might be a short-term knee jerk reaction where investors transfer capital from the stock market to the real estate market as we saw post 2000. That said, in the long run, real estate appreciation is tied to corporate and individual earnings power.
I strongly suggest those with more than a primary residence to deleverage through principal pay down, increase savings, or sell a property. I've personally paid off the remaining $100,000 of a rental property mortgage I took out in 2003 this year even though the mortgage was only 3.37%. So far, no regrets. When my tenant's lease is up in June 2016, I am strongly considering selling as well to not only cash out, but simplify life.
Read:
Should I Buy Property In A Rising Interest Rate Environment?
Spray And Pray: The Cheapest Way To Buy Property
Stock Market Meltdown: Implications For FIRE Movement
Many of us regulars are financial freedom fighters. We are part of the FIRE movement I helped ignite in 2009.
We want to achieve financial freedom sooner, rather than later. As a result, we're often trying to find the quickest way to make enough money so we never have to work again.
Trying to accumulate wealth quickly almost always results in the need to take more risk. There are those people who literally have over 90% of their net worth in the stock market. Meanwhile, others have leveraged to the gills and bought multiple properties in currently hot locations.
If you don't have the liquidity to hold on during downturns, you will be crushed. You'll be forced to sell your positions during the worst times, and when things finally recover, you'll start hating everybody around you.
I don't have a problem if you want to take concentrated positions in things you really believe in. Just know that in every transaction, there is a buyer and a seller. Both buyer and seller believe they got a good deal. Depending on your time horizon, one of you is going to be wrong, sometimes very wrong.
Having a risk-free fund in CDs or a money market account is a must. During a bull market, everybody makes fun of people with boring old cash. But cash can definitely be considered an investment. Only an ignorant idiot or someone trying to sell you a product would ever advise against having a certain amount of cash in your net worth. Focus on cash on hand and cash flow.
Here's a sample of a recommended net worth allocation. Having anywhere from 10% – 30% of your net worth in risk-free assets is a good move. There are several more frameworks to look at if you click the chart and read the post.
Read:
How To Retire Early And Never Have To Work Again
How To Build Passive Income For Financial Freedom
Stock Market Meltdown: Implication For Retirees
For those of you who are already retired, these market moves should mean very little. You've seen the worst before, and all of this is just noise. Your investment portfolio should have no more than a 50% weighting in equities. As a result, you may actually be making money if your portfolio is heavily weighted in bonds.
With debt levels at zero or close to zero, Social Security paying out, and a steady stream of dividend income, interest income, and alternative income coming in, you are sitting golden. You can't take it with you, so the focus on cash flow is key.
Only after a 50% decline in the stock market, should your worry-meter begin to rise. Good thing the chance of another 50% decline is minimal. Corporations have much more cash. Consumers are much less levered. And the creditworthiness of borrowers has steadily increased since the crisis.
Enjoy life to the max! Ignore the markets in the short run.
Read:
The Ideal Withdrawal Rate In Retirement Doesn't Touch Principal
What Does Early Retirement Feel Like? The Positives And Negatives
Everything Will Be OK
When I was an Associate back in 2001, my Director said I was lucky I didn't make much in the first place. I lamented about my bonus getting slashed by 50%. I wasn't very happy with him at the time, but now I'm ecstatic I was poor during the dotcom collapse!
For younger folks, or folks who don't have a lot of money, a stock market correction is fantastic if you actually deploy some capital and hold on. Unfortunately, a lot of people just talk about investing if the market collapses. But then get too wigged out to do anything once the market actually does.
For older folks, you've gone through enough cycles that your net worth is hopefully properly diversified to weather the reoccurring tsunamis. And even if you were too stubborn not to diversify, at least you've developed new income streams to keep the boat afloat.
The worst case is that we'll all have to go back to working minimum wage jobs flipping burgers or picking up passengers for a living. I've done both, and I can tell you that life isn't so bad making less. So long as we have each other, everything will be OK!
In case you're wondering, here's what I'm doing in this downturn:
- I've accelerated my dollar cost averaging given we're seeing 2%+ corrections.
- I've talked to a private wealth manager to hear his thoughts and what he's seeing.
- I spent several hours writing and updating this 2,400 word post to address those of you who have concerns.
- I've come up with a game plan as to what I must do in terms of generating income over a one, two, and three year time frame.
- My savings machine is on the maximum setting. I plan to save 80%+ of my after tax income until the end of the year, and at least 60% for the first six months of next year to build as much fire power as possible to low ball on a property or invest in equities.
- I've reassessed my personal burn rate (budget) to see if there have been unnecessary spending over the past six months I can cut out.
- I'm investing capital in the Fundrise Innovation Fund to invest in private growth companies that have seen their values fall post-pandemic
- I'm negotiating better terms, or not investing at all in any startups.
- I've written out a list of things I want to spend money on now instead of have it disappear into thin air.
- I've run my portfolios through a free Investment Checkup so that I know exactly what my current asset allocation is e.g. cash balance, equity and fixed income exposure compared to recommended exposure.
Invest In Private Growth Companies
Consider diversifying into private growth companies through an open venture capital fund. Companies are staying private for longer, as a result, more gains are accruing to private company investors. Finding the next Google or Apple before going public can be a life-changing investment.
Check out the Innovation Fund, which invests in the following five sectors:
- Artificial Intelligence & Machine Learning
- Modern Data Infrastructure
- Development Operations (DevOps)
- Financial Technology (FinTech)
- Real Estate & Property Technology (PropTech)
Roughly 35% of the Innovation Fund is invested in artificial intelligence, which I'm extremely bullish about. In 20 years, I don't want my kids wondering why I didn't invest in AI or work in AI!
The investment minimum is also only $10. Most venture capital funds have a $250,000+ minimum. In addition, you can see what the Innovation Fund is holding before deciding to invest and how much. Traditional venture capital funds require capital commitment first and then hope the general partners will find great investments.
Protect Your Wealth By Tracking It Carefully
Track Your Net Worth Easily For Free: In order to optimize your finances, you've first got to track your finances. I recommend signing up for Empower's free financial tools so you can track your net worth, analyze your investment portfolios for excessive fees, and run your financials through their amazing Retirement Planning Calculator. Those who come up with a financial plan build much greater wealth over the longer term than those who don't!
I got slammed this week with a 10% loss (as with everyone). I’m heavily in stocks (~90%). And I’m not very diversified since banks won’t lend me enough money to buy a pencil. I got crushed during the last crisis in real estate and no longer own property.
Today I went in and bought more of a stock index fund and a short-term investment grade bonds fund, with my usual monthly allocation of $2k.
I’m wondering, should I be buying more stocks, or more bonds at this point? I realize I should have had more bonds in my portfolio to begin with, but maybe I should continue with getting more stocks since they are discounted.
I’m long-term…maybe another 20 years. 10-12 years, if I’m lucky.
Any advice? Thanks.
Well my SEP-IRA was $400,000 in equity. Now down to $350,000 over the last week lol.
I still have $40,000 cash on the side line not counting the $3000 a month standard dollar cost average that I been putting in.
So you are counting a further drop of about 10%? Which is very possible, but what if it drop only another 6%? What is your alternative strategy. Or if it drops another 20%. Will you regret not having extra money to put in?
Is it standard strategy to top off your dollar cost average by looking for period so larger percentage drop VS. dollar cost average the additional amount over a set period of time?
Right now I am real estate heavy. Close to $2,000,000 in real estate. I really want to use this opportunity to boost my equity. I am 44 y/o. I am hoping by the time I am 50 y/o I’ll be sitting on a $1,000,000 portfolio and start spreading out into fixed income.
Mmmm… just dropped $9000 into my index fund between Friday and Monday. Too early?
Dow 12,000 or 10,000?
How low do you think it’ll go?
I still have $40,000 to deploy. Dollar coast average over 1 year, 2 years, 5 years?
Depends how big your existing portfolio is?
I’m deploying money in up to five separate tranches every time there is a 2% or greater swing. This is NEW money, on top of my normal monthly contribution. I dollar cost average every single month as standard.
Im about 32 and been hoarding cash for a while now too scared to really enter the market but this hit the past few days really is motivating me to make a change.
Fully maxed 401 of about 205k all invested and and IRA maxed last two year
If i were to muster up 100k-125k in cash post emergency fund do you think its time to maybe pick up a total market fund or Spy? Think its wise to pull the 401k finds out into cash and reinvest as well?
Not sure what u are asking about the 401k. Please clarify.
I’d just leg into the market in multiple tranc
Ie dollar cost average so you don’t hurt yourself as you’ve shown reluctance to invest already.
The crash(correction) is just noise. The Fed will continue printing and there will be no interest rate increase. The market will recover- albeit temporarily. Other nations will continue to print and be weighted down by debt that will never be repaid. If something can’t go on forever, it will eventually stop. What happens then? Argentina in the 2000’s/Germany in the 20’s is my guess. At that time I’ll be buying RE with the same enthusiasm I had in 09….
It seems like there’s less than a 50% chance there will be a Fed hike now if this type of volatility continues. We shall see. In the mean time, rates have come back down by 0.5%.
It’s days like today Im glad I am a real estate investor. Even if the real estate market lags or has a small decline I am still okay with it because people are always going to need to rent. Im positioned now so that worst case scenario, I can drop all my rent prices anywhere from $200 to $350 lower and I would still at least break even. And I highly doubt that will happen. Even with the last RE crash the rent market didnt drop that bad.
I don’t plan on selling any of my rentals, Im just going to ride anything out that comes and hope for the best. But ill need a nice cash cushion for sure to keep me feeling warm and cozy.
It is crazy to see what is going on though.
Yes, I like real estate for this reason too. There is no constant mark to market.
My rents stayed flat and went up each year during the last recession due to one year leases. And the irony is that the more people who can’t buy, the more people rent in the short-term, until jobs are lost.
I completely and accurately forecasted this and knew it was coming, and now know where it is going….not! :)
We did our normal rebalance in July and have a 70/30 exposure with stocks and bonds. The good news is we have at least a 5-year window before we considered needing any funds from these accounts. The bad news is we are getting a nice hair cut to our net worth this week.
I have gone through many of these corrections in my life so far and my prediction is there will be many more in the future.
Stayed pat in 2008, will stay pat again this time with the exception of doubling up on Apple this morning, it has already been beaten down recently before this past few days. With more cash on hand than California’s annual budget (well north of 100B), a fair (if not underwhelming) dividend, a P/E of @12 how can the future not be good for Apple?.
The other investment I made yesterday was $100 for the Patriots to win it all (8 to 1) in Laughlin, regardless if the suspension stands at 4 games, or is reduced, Brady has something to prove (again) and like a cornered animal, that is a dangerous proposition (for the opposition).
I use stop losses. When there is a downturn I’ll just short sell. Ride the trend baby!
Darn I wish I had done that with disney and whole foods.
I always enter a stop loss right after making a stock purchase. it’s good to always have your exit plan to take emotion out of it
Any recommendations on strategy of when and how to start deploying our cash positions to best take advantage of this correction?
Agreed. Looking for advice to deploy some cash in this correction. However, not sure the best way to do it. Say I have 10k to invest. Should I do that slowly over the next few weeks/months, anticipating that stocks will just keep going down? Or should I just deploy that all now and wait? and Im not allowed to buy individual stocks, so which ETFs should i be targeting?
Dollar cost average over time, unless you think your are smarter than robo-algorithms currently driving most stock trades or professional traders
-all dressed up with nowhere to go-
Also cash heavy waiting for correction, have no idea what to with it.
Advice?
Jesse Felder is shaving his beard.
Sam when you transfer your money to where you don’t touch it as you mentioned Fidelity or Motif — what type of account do you put it in- another Money Market? CD? On another note I was ready to buy a two family this week – live in one unit for about 3 years until son grads high school. I live in an high end real estate market outside NYC and have to stay until he graduates. I am trying to get on my feet after divorce and will keep the home and buy another one in a few years.
Only problem is I’ll have to sell stock for downpayment. Or I can stay in this rental and try to save cash ?
Howdy,
My money market account(s) are w/ Citibank, my main operational bank. Fidelity contributions are now based on my company profitability, up to $53,000, and Motif is regular tranches.
My main CDs are w/ USAA, b/c when I opened them at the time, they had the best rates.
Here’s my 2016 Passive Income Update.
Thanks for taking the time to write this, Sam. I’m not making any asset adjustments in my portfolio (all stocks and index funds) and I’ve stepped up my savings rate to prepare for my next real estate investment. I own a home in a popular inner-city neighborhood in Nashville on almost an acre of land. There’s space for more development, so I’m thinking about my options. In the meantime, I’m continuing my side hustles and saving as much as possible.
Sounds good Kate. If you can build up enough income for the next property without touching or worrying about your stock portfolio, then that’s good. It’s good not to rob from the left pocket to pay for the right pocket.
So what’s the best way to invest in equities during a downturn? Just buy VTSMX every week starting now and ending when the market seems to have recovered? What are other people doing who have anticipated a drop? I’ve never invested in equities outside of a 401k/HSA, so maybe this is a good time to get started…
VTSMX, VYM, DVY, SPY are all good index etf alternatives to leg in.
I basically contribute X amount every month and Y amount to a liquid cash hoard. Whenever the markets correct by more than 1%, I contribute X * 1.5.
I have been 10 percent protective in my portfolio for a long time. IMO – the China deval is going to lead to lower stock prices. By every measure, this is not a value market yet, at least not for US equities although there are a few individual firms that are in value territory. Whatever systematic program you are employing should continue. I am still keeping cash on the sidelines since I think the market will lower 1 month from now.
Call me stupid but I don’t have any spare cash laying around, as I already deployed it in the market. I have enough passive income to cover our normal expenses so barring all my holdings cutting their dividends, things should be ok. I am still saving aggressively so all my job income goes to savings in effect.
Net worth is broken down by: 20% principle residence, 10% rental property. 15% in a start up, 55% in equities, pursuing a dividend growth strategy. Too bad I didn’t figure this out years ago. If the market continues to shed I’ll be regularly investing in high quality companies, hopefully I can average down on my positions.
-Mike
Just turn that savings meter to maximum setting to build up the cash hoard to invest new money. Over the next 12 months, I’m sure there will be a lot more of these volatile corrections.
I’m of the opinion that there are some serious deals to be had right now, but only in certain industries. The commodities and energy sectors have been absolutely HAMMERED. From a macro perspective, supply and demand always prevails – albeit timeframe can not be accurately estimated.
The thing I actually like about a potential market meltdown is that commodities and energy stocks really can’t got THAT much lower. If you have some money in those sectors – or even stay in cash – you can always move it to some of the more “in vogue” sectors once the market bottoms for a hefty gain.
You hit the nail on the head, though. Leverage can absolutely destroy you if you’re not careful right now, but it can also exponentially increase your gains if you have the liquidity to stick with it.
-DP
Commodity prices have proven to demonstrate weakness in underlying demand. But you sure as heck wouldn’t notice a lack of demand for oil/gas driving around the world.
Timely article, Sam!
I’m pretty much doing nothing right now. I have my eye on a couple very small positions I want to pick up, but otherwise don’t plan on selling out of fear or going all in with my 1-2 years worth of living expenses sitting in cash.
This correction is long overdue and nothing out of the ordinary so far (other than the drop happened over just a few days instead of a couple of weeks).
I bought some more shares of one of my stock mutual funds on Thursday. Wish I’d waited until Friday. I’ll add a little more on Monday if the market drops some more. I also have some global bond funds that need to be fed some extra cash.
I am LOVING this correction! Let it come, let it burn!
I invest mainly in dividend growth stocks (I do have a P2P lending portfolio, my 401k, and an emergency savings account as well). By buying high quality businesses that have grown their dividends for decades, I ensure that any drops in stock price are the results of macroeconomic factors and not the companies’ fundamentals. Coca Cola isn’t going to out of business because of interest rates or Greek debt, after all. And then I buy more, celebrating my ability to own more of a fantastic company at a discount.
Portfolio value doesn’t concern me. All I care about is income. Dividends. Cash flow. And with 70 companies in my portfolio and more coming, I ensure that I am well diversified to weather any storm. With the range of sectors and industries I have ownership staked in, from food to consumer staples to railroads to utilities, it would literally take a nuclear war for all my companies to cut or suspend their dividends.
As for side hustles, I would say my blog, but it’s not exactly making me any money yet. Maybe soon. But hopefully when the NEXT bubble buds up and bursts, my blogging income will be able to give me the capital to make even more income investments. My day job’s barely cutting it.
So let the correction come. ANd let the market stay depressed for a good while. I need these great businesses to sell at discount prices. More passive dividend income for me.
Sincerely,
ARB–Angry Retail Banker
I made a mistake a few years ago and pulled some of my money out of equities in my 401k and put it in a cash like fund. I’ve been slowly pushing it back into stock at market corrections. I’m lucky enough to have a pension and realized that because of that I can be more of a risk taker on my other retirement accounts. I only came to that realization recently and have been moving slowly moving that way in order to account for dollar cost averaging.
I do need some cash in the next couple of months so I’ll be changing where it comes from. I’ve got some old Saving’s bonds that I’m going to redeem instead of using some stock positions like I was planning to.
I’m under contract to sell a rental unit (it was my residence when I lived in another state and I’m not a fan of being a long distance landlord but it worked to rent when I ended up with a long term tenant 4 years.) I was originally planning to use most of the money to pay down my current mortgage but I may move that into buying either stock or a new local rental instead.
I have about 50k invested in total market. and about 10k in actual cash. I just started and I’m in my 20s and don’t plan to retire in 15 or 20 years. Should I be worried?
Only be worried that you don’t make a bad decision like selling if the market goes down.
you are going to need millions to retire and one of if not the best way to do that over time is in stocks.
I would dispute the assumption that you necessarily need “millions” to retire. Maybe you will, maybe you won’t. It depends a lot on your expenses, your debt, your life expectancy, your location (including the tax situation in your area), whether you’ll expect an inheritance, how much you want to leave to heirs, the rate of inflation over the years, the state of social security. It’s something you have to evaluate on an ongoing basis. I retired a year ago at age 67 not having “millions,” but so far I’m doing fine. As for the current market situation, I’m just shrugging it off and doing nothing, since I’m still within my target stock-bond allocation and I have other resources as well. But if you’re young and have the money, buy stocks now when prices are low! It sounds counterintuitive, but in the long run stocks are always the best investment.
I wouldn’t be worried at all. You have so much time to invest and $50,000 is not a lot of capital yet.
Your gross monthly paycheck can probably make up for your losses quickly. The same cannot be said for many folks who are older and have much larger portfolios.
You have the opportunity now to consider following my net worth diversification recommendations. I hope you at least read the article by clicking the chart above.
Great post. Short DWTI. Go to the beach.
Is it just me or is a 9% correction not anything to lose sleep over? Especially considering how far up we’ve come. The local (Bay Area) news is making it sound like 2007-2008 all over again.
I have about a third in equities, third in RE, and the rest in cash. I’m holding off deploying cash at the moment, in hopes that we see some real pain in the streets…maybe 15%-20% min down from the tops.
I’m really, really hoping for a 15-20% bloodletting so I can deploy some cash in the market. I’ve already lost a ton in the oil sector and railways, but I’ll be buying more of the same if Wall Street continues to bath in red.
My crystal ball wasn’t working recently or I wouldn’t have been averaging down on a bunch of stocks over the past few weeks. Just a massive paper loss though, as I don’t plan to sell anything as long as the dividends keep rolling in.
Well, after Monday’s further 9% correction, we’re almost there for a 20%er!
Amazing how quickly we fall, yet how relatively slowly we rise.
I’m in the Financial Freedom Fighter category. More than 90% of my net worth is in the equity markets so I’m taking a beating. Emerging markets have been a drag all year and it’s only gotten worse. My net worth is still pretty small, though, so with a high savings rate it still should continue to increase unless things get really bad (my 9-5 is like a bond). My cash position is too low right now, but unless I get fired, I won’t have to sell any equities fortunately. Emotionally I’m pretty unaffected by this which should keep me from doing anything stupid. I just don’t log in to see what my actual losses are.
Hi, Financial Freedom Fighter here! Since we’re about 3 years away from FIRE, we’ve been allocating cash on the side to support us for the first 5 years of early retirement. This is a great buying opportunity for the rest of our money. Since we’re diversified, we’re not worried! Great post, as always, this is one of my favorite personal finance sites! Thanks for sharing your wisdom.