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Ask HN: How to deal with markets down turn? Feeling down

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Re: Ask HN: How to deal with markets down turn? Feeling down

#91

Post by edgyquant »

causi wrote: post #88
cloudking wrote: post #63

Be aware that: 1) we're likely in a declining/sideways market for at least another year until inflation subsides, possibly longer 2) the Fed has most of the control over the inflation/deflation levers (on demand side) 3) markets will most likely recover over the long term, historically speaking The Fed is purposefully reducing their asset holdings and increasing interest rates to slow down demand, which in theory sho…

1) we're likely in a declining/sideways market for at least another year until inflation subsides Gonna be a lot longer than that, at least as far as inflation goes. Q3 2022 is the median date for retirement of the largest generation, the Boomers. When they retire they take their capital with them. Expect the cost of capital triple for at least the next decade.

Most people will have their capital in accounts the rebalance towards bonds on a yearly basis. They aren’t going to be just pulling a ton of acapital out of the market to live off of

Re: Ask HN: How to deal with markets down turn? Feeling down

#92

Post by paganel »

tjs8rj wrote: post #79
sicp-enjoyer wrote: post #78

Earlier quoted context omitted.

There is always a reason to think it's different this time.

Investments doing so well these last 40 years is the unusual part. Vast majority of the gains in the stock market over its history happened from 1977-2007.

The FTSE 100 is almost at the same level as in 2014, those betting that the S&P 500 will always be different than the rest of the exchanges/indeces might be in for a nasty surprise.

Re: Ask HN: How to deal with markets down turn? Feeling down

#93

Post by sicp-enjoyer »

tjs8rj wrote: post #79
sicp-enjoyer wrote: post #78

Earlier quoted context omitted.

There is always a reason to think it's different this time.

Investments doing so well these last 40 years is the unusual part. Vast majority of the gains in the stock market over its history happened from 1977-2007.

If that period really was remarkable, I think the outcome of a worse period is just lower expected returns, not the end of the world. Japan is often used as an example. But, if you invested regularly in Japanese stocks over that period of stagnation, I think with dividends its still a fine investment.

Re: Ask HN: How to deal with markets down turn? Feeling down

#94

Post by prottog »

TechnicolorByte wrote: post #89
causi wrote: post #88

Earlier quoted context omitted.

1) we're likely in a declining/sideways market for at least another year until inflation subsides Gonna be a lot longer than that, at least as far as inflation goes. Q3 2022 is the median date for retirement of the largest generation, the Boomers. When they retire they take their capital with them. Expect the cost of capital triple for at least the next decade.

Can you expand on this? What do you mean when you say that the cost of capital will triple over the next decade?

They probably mean that prevailing interest rates will triple.

Re: Ask HN: How to deal with markets down turn? Feeling down

#95

Post by throw0101c »

bluGill wrote: post #62

Fidelity did a survey of thier customers whose 401k did the best over the years. The most popular response (about 1/3) was 'I don't have a 401k at fidelity'. They had forgotten about it and left it alone to grow through good and bad. If you know how your investments are doing you know too much

> Fidelity did a survey

[citation needed]

This is an urban legend from what I recall. (But not touching your investments is generally a good idea.)

Re: Ask HN: How to deal with markets down turn? Feeling down

#96

Post by Aulig »

bluGill wrote: post #62

Fidelity did a survey of thier customers whose 401k did the best over the years. The most popular response (about 1/3) was 'I don't have a 401k at fidelity'. They had forgotten about it and left it alone to grow through good and bad. If you know how your investments are doing you know too much

Your first and second sentence made me laugh out loud because I thought it was a joke. The explanation makes perfect sense though - buy and hold beats the average attempt at market timing.

Re: Ask HN: How to deal with markets down turn? Feeling down

#97

Post by causi »

TechnicolorByte wrote: post #89
causi wrote: post #88

Earlier quoted context omitted.

1) we're likely in a declining/sideways market for at least another year until inflation subsides Gonna be a lot longer than that, at least as far as inflation goes. Q3 2022 is the median date for retirement of the largest generation, the Boomers. When they retire they take their capital with them. Expect the cost of capital triple for at least the next decade.

Can you expand on this? What do you mean when you say that the cost of capital will triple over the next decade?

The US population pyramid is no longer a pyramid, and neither are those of most of the rest of the world. Not having to pay to raise a larger generation created a golden age that's lasted thirty years. It's now time to pay the piper.

https://i.imgur.com/iUYcuTQ.png

Re: Ask HN: How to deal with markets down turn? Feeling down

#98

Post by gtirloni »

greymalik wrote: post #57
gtirloni wrote: post #48

Earlier quoted context omitted.

Same advice. Unless you're a day trader, just pick strong assets and look at them once in a while. You'll get sick if you keep reacting to the fluctuations every day.

Since the GP talks about stock options I’m guessing these are part of their total compensation and not a discretionary investment. I’m in a similar boat - stock is about 50% of my total compensation but its value has dropped by 90%. It’s hard to be blasé about losing almost half my income.

I don't understand how someone can tie 50% of their income to a highly volatile asset. But thanks for the perspective.

Re: Ask HN: How to deal with markets down turn? Feeling down

#99

Post by TimBurman »

The money is gone but you have a lot of qualities, you can learn from this valuable lesson and do better in the future. For example, I know someone who buys companies that have 20 years of consistent profits. He is down 9% this year, but fell far behind people who were making money from technology stocks in the boom times. He only looks at his stocks every 3 months and worries about nothing.

In one of the Market Wizards books, an investor said that if he cannot sleep from worrying about his positions, he sells them until he is comfortable.

If your company is granting you call options, all your new ones will be at lower prices and they may even lower the strike prices on the old ones to retain good employees. Try to get investments that are not correlated with the success of your company or industry or where you own property.

The boss that hired me 15 years ago told me to save 20% of my take home income and invest it in quality companies with consistent earnings. He later retired at 55. Cut your costs, pay off your debts and lower your personal overhead, so that you are more resilient if you have to switch jobs or earn less money.

Timing the market over the long term is very difficult and it is better to assume you cannot. It has been known for decades that if you miss a couple dozen up days because you were flat or short the market, your returns over decades are much lower. https://www.marketwatch.com/story/how-missing-out-on-25-days...

If you are going to buy stocks or an index like the S&P 500, take a look at 50 years of data and see how bad the top 10 declines were and how long it took for those investments to reach new highs. The stocks I own have gone down 50% previously and I assume they could top that with a 60-70% decline. The worst time it took almost 3 years to get back to new highs. Once you know that about your investments, you can rest easier.

Look for chances to buy quality companies so you do well when profits improve. You have all your valuable skills, you know more now and will do better in the future.

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