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What We've Learned from 150 Years of Stock Market Crashes

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Re: What We've Learned from 150 Years of Stock Market Crashes

#11

Post by Analemma_ »

throw0101c wrote: post #8
Analemma_ wrote: post #4

> Though they varied in length and severity, the market always recovered and went on to new highs. Not in Japan it didn't. If you bought a Nikkei 225 index in December 1989, your returns are negative to this day (apart from a very brief breakeven in 2024): that's 35 years and counting of the market not recovering and going on to new highs. And Japan's experience is probably going to become the norm rather than the ex…

> Not in Japan it didn't. Only if you were 100% JP equities without any diversification: if you had some (20%?) bonds (and rebalanced), or had an international equities (and rebalanced), you were probably fine. * https://www.bogleheads.org/blog/2017/02/06/a-short-study-of-... * https://www.gocurrycracker.com/lessons-from-japans-lost-deca... > Using Portfolio Charts withdrawal rates calculator, which uses data going b…

Real interest rates in Japan were zero or negative for pretty much all of that same 35-year period, so bonds wouldn't have helped you either. And "you were up if you bought international equities" kind of proves my point: if Japan is the harbinger for the rest of the world, there will be no more "always up" markets to flee to.

Re: What We've Learned from 150 Years of Stock Market Crashes

#12

Post by Pigalowda »

US giving up its place after 80 years so the gerontocracy can still feel relevant and in charge is a black swan event. We’ll correct to 30% of current value and trade sideways for 20 years.

Regular people talking about making money while giving up the world order? Rofl. You’re not in the club! Carlin already told you that.

Re: What We've Learned from 150 Years of Stock Market Crashes

#14

Post by tylerflick »

throw0101c wrote: post #5

A popular post that is often given to folks who are freaking out about drops in their portfolio: * https://awealthofcommonsense.com/2014/02/worlds-worst-market... And for those who want to sit on the sidelines, that's usually not a good idea: * https://ofdollarsanddata.com/even-god-couldnt-beat-dollar-co... The main folks that do have to worry about their portfolio are those who are about to retire, and those that ha…

People about to retire shouldn’t be that exposed anyway. Target day funds exist for a reason.

Re: What We've Learned from 150 Years of Stock Market Crashes

#15

Post by actionfromafar »

xvilka wrote: post #10
losvedir wrote: post #6

Hm, interesting article but I wish they had included global data as well. For example, stock market crashes in Japan and other countries. As I understand it, Japan still hasn't quite recovered from its crash more than 30 years ago.

Mostly because of the restrictive Plaza accord[1] and tariffs[2]. [1] https://en.m.wikipedia.org/wiki/Plaza_Accord [2] https://edition.cnn.com/2019/05/24/business/us-china-trade-w...

Tariffs... sounds familiar.

Re: What We've Learned from 150 Years of Stock Market Crashes

#16

Post by dkarl »

tylerflick wrote: post #14
throw0101c wrote: post #5

A popular post that is often given to folks who are freaking out about drops in their portfolio: * https://awealthofcommonsense.com/2014/02/worlds-worst-market... And for those who want to sit on the sidelines, that's usually not a good idea: * https://ofdollarsanddata.com/even-god-couldnt-beat-dollar-co... The main folks that do have to worry about their portfolio are those who are about to retire, and those that ha…

People about to retire shouldn’t be that exposed anyway. Target day funds exist for a reason.

A lot of people plan on living twenty years past retirement and leaving some behind for charities and/or younger relatives.

Re: What We've Learned from 150 Years of Stock Market Crashes

#17

Post by wintermutestwin »

tylerflick wrote: post #14
throw0101c wrote: post #5

A popular post that is often given to folks who are freaking out about drops in their portfolio: * https://awealthofcommonsense.com/2014/02/worlds-worst-market... And for those who want to sit on the sidelines, that's usually not a good idea: * https://ofdollarsanddata.com/even-god-couldnt-beat-dollar-co... The main folks that do have to worry about their portfolio are those who are about to retire, and those that ha…

People about to retire shouldn’t be that exposed anyway. Target day funds exist for a reason.

>Target day funds exist for a reason.

Yes - to make a lot of money on the expense ratio.

I guess if you really didn't want to learn a damn thing about modern portfolio construction a taget date fund is your best bet. However, it is incredibly easy to buy 4-6 ETFs that give you the same thing at a lower cost. Yes, you have to do a little work to re-balance these funds, but that is also an advantage to this approach as you have control over the re-balancing and can do it in a way that is more tailored to your specific situation.

I highly recommend the Risk Parity Radio podcast.

Re: What We've Learned from 150 Years of Stock Market Crashes

#18

Post by bryanlarsen »

losvedir wrote: post #6

Hm, interesting article but I wish they had included global data as well. For example, stock market crashes in Japan and other countries. As I understand it, Japan still hasn't quite recovered from its crash more than 30 years ago.

The US stock market has been an outlier for the last 150 years. Predicting that the US stock market will be an outlier for the next 150 years seems unlikely. A better predictor is likely global stock market performance, which leads to a much less rosy prediction.

Re: What We've Learned from 150 Years of Stock Market Crashes

#19

Post by ebiester »

throw0101c wrote: post #5

A popular post that is often given to folks who are freaking out about drops in their portfolio: * https://awealthofcommonsense.com/2014/02/worlds-worst-market... And for those who want to sit on the sidelines, that's usually not a good idea: * https://ofdollarsanddata.com/even-god-couldnt-beat-dollar-co... The main folks that do have to worry about their portfolio are those who are about to retire, and those that ha…

There are a fair number of us not worried about the drop in our portfolio as much as we are worried that the current decisions will decrease the world's willingness to invest in American companies and markets permanently.

What if your hypothesis is that the fundamentals have changed?

Re: What We've Learned from 150 Years of Stock Market Crashes

#20

Post by MilnerRoute »

uptownfunk wrote: post #7

People say not to time it but if you took your profits December ish you’re probably much happier than if you had lost everything since then and reset to 6-12m ago unless you’re playing the short. There is a premium on mental health and market volatility.

Since December the S&P 500 is down... 4.10%. It's a small loss, but I don't know if people who cashed out in December are really that much happier.

Especially since for the last 12 months the S&P 500 is still up nearly 10%.

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