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During the '08 crash, my portfolio was small and I was also a novice/disaffected investor. Now, with a significant portfolio to protect I'm looking at my portfolio to see what my playbook would be if '08 repeats.
Would you follow Buffet's mantra of 'be greedy when others are fearful' or would you go for the sidelines?
During the '08 crash, my portfolio was small and I was also a novice/disaffected investor. Now, with a significant portfolio to protect I'm looking at my portfolio to see what my playbook would be if '08 repeats.
Would you follow Buffet's mantra of 'be greedy when others are fearful' or would you go for the sidelines?
Prepare or react?
Your plans sound like a reaction to me.
As for me,
Preparation - None. If Buffett couldn't foresee the 2008 crash, I have no delusions I can spot the next black swan before it alights, makes a nest and lays several eggs.
Reaction - Curse the fates and soldier on. Obviously I would not have sold everything (or even a majority of holdings) off since I wouldn't know it was a crash except in hindsight. So what can I do AFTER my portfolio has been cut in half? Maybe try to raise some cash and buy buy buy.
The alternative is to always keep one's portfolio 20% (+-10%) in cash and accept the drag as a fact of life.
One thing for sure, after the crash, no way I am buying treasuries with negative yield. Morons.
Rebalance, and continue putting as much money as possible into investments. I'm 100% in index funds. The market goes up and down, but long-term it's up. If it doesn't go up, we got problems no strategy will save.
For '08 I was prepared and had a very substantial portion of my portfolio in cash. I am not preparing at all for any major stock market crash. For at least the next few years I view that possibility as extremely small. We have plenty of fickle, or if you prefer cautious investors who sell with every minor negative news item. Even so the corrections we see are small and the market continues to grow at a fairly consistent rate of about 10% per year. The economy continues to rebound and many businesses are making strong profits. The Fed will keep interest rates low for a long time which means bond yields will remain very low.
I'm already preparing for a pullback, however I don't want to do it too soon as long as Govs are pumping money market will continue to rise so don't wanna pullout too soon and lose possible gains. That said, I plan on buying some silver and pulling some money out of the market to prepare to load up when the market is down. Maybe short on the day down as well
The good part:
I managed to retain my job and increase my savings and increased my investment as the market went down. I am not saying I managed to move money at absolute rock bottom, but I was pumping more money than even when the marked was near its bottom and even as it started to go up.
I ended up waaaaaaay higher than where I was in 08.
That being said, I am not sure how I would react this time. I do have about 30% in a cash account ready for events / crashes / corrections like 2 weeks ago.
I do own a structured investment that has a 6 year shelf life. At the end of 6 years I get 105% on the s&p500 upside if there is any, 1 for 1 on the downside up to 35% meaning if the s&p is down 10% I'm up 10%, if the s&p is down more than 35% I just get the market return. My risk is credit risk from my brokerage firm
Outside of that I continuously write covered calls on the spy
You can't predict the next crash, so you can't go to the sidelines. The investments should be long term, so when a crash or correction happens, it means stock prices are now on sale. You buy and buy some more. Selling after a crash is just plain crazy. Time is the one thing in your favor. If you don't have the time, don't get into the market in the first place. Patience and dollar cost averaging is the best long term way to invest, but you always want to take advantage of the sale prices.
For '08 I was prepared and had a very substantial portion of my portfolio in cash. I am not preparing at all for any major stock market crash. For at least the next few years I view that possibility as extremely small. We have plenty of fickle, or if you prefer cautious investors who sell with every minor negative news item. Even so the corrections we see are small and the market continues to grow at a fairly consistent rate of about 10% per year. The economy continues to rebound and many businesses are making strong profits. The Fed will keep interest rates low for a long time which means bond yields will remain very low.
I hold a balanced portfolio of stocks, bonds, and gold which has had consistently low volatility.. Even under 10% annualized in 2008. A repeat of 2008 would merely mean more frequent rebalanced.
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