What a terrible situation.
Good luck all!
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Tough times indeed, with market sentiment at bearish levels not seen since the 1990’s, even lower than 2008 and Covid! Traffic on the boards has dried up, even at Saul’s. It’s always darkest before dawn so hopefully we should be nearing the bottom. Please let it be so!
A rather painful lesson on why investing needs to be long term, 5 yrs+. With unpredictable market swings and lately extreme high volatility, shorter time horizons are more akin to gambling.
Here’s hoping for better times ahead. Maybe this week?
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Yes, the boards have dried up as the green on the screen has disappeared. Unfortunately, most of the stocks like SHOP, APPN, ETSy and others will probably never see their old highs again. A few might, but the $64,000 question is which stocks become the next AMZN and which disappear into the dust bin of forgotten stocks. The lesson learned is that valuations do matter and to take profits when valuations seem completely disconnected from reality. I know that I would have millions more in my brokerage account if I had heeded this advice. The Motley Fool buy and hold forever strategy has a place in a portfolio, but as the dollars become more significant, my advice is to take some cash off the table. If you look at the Everlasting portfolio that is Tom’s money; how many people could handle a $5M drawdown? Seems completely crazy to continue to hammer this buy and hold approach, especially when you kept buying stocks at highs when valuations were admittedly off the charts. The Motley Fool has generated wealth for my family, but at this late stage of my life this has truly been a train wreck. Fortunately, I moved into dividend paying stocks over a year ago and this has provided some salvation, but the move in SHOP, TTD and others continue to be painful. I’m holding a 60-40% dividend-growth portfolio and hoping for better days. It will be interesting to look back at SHOP in 5 years and see if $1700 is ever reached again. By the way SHOP, TTD, MDB are any three highest conviction growth stocks.
Good luck to all, may high growth investing return, so we can all go back to seeing green everyday!
John
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Fully agree that buy n hold at very high valuations is not wise.
I believe that some of this is sector rotation, besides FED tightening policies. So the pendulum will swing back and tech with recurring revenue etc will be back as wall street’s flavor. I totally wish I retreated from the market in Q4 last year but it is what it is. I do not have the courage to sell and / or short here. If JP doesnt provide some form of fed put this week, he probably will next month when recession would have totally kicked in. We will be back to bad news = good news.
I am staying put. Interested to hear others’ strategies
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I am staying put. Interested to hear others’ strategies
Yes, now does not seem like the time to be exiting if you’ve held this long (I have). Stocks could of course go lower, they always can go lower, that I’ve learned… but it sure seems like we’re closer to the bottom than the top. The sentiment is just so bad, though, don’t know what will change that in the near term.
Fully agree that buy n hold at very high valuations is not wise.
I’m not sure you can say that, either, though, as valuations had been “very high” for years before this drop, too, so had you exited at the high valuations of 2018, or 2019 you would have missed a lot of gains. Now the valuations of those years weren’t as high as they got in late 2021, but at the time, they seemed overly high but kept going up. And a lot of my investments are in taxable accounts and I had already taken large gains for the year, so I figured I’d save some for the next year, lesson learned there, don’t let taxes dictate taking gains!
If (when, hopefully) we get back to more reasonable levels (IMO, doesn’t have to be ATHs, that could take awhile), what I will do differently is not have so much of my investments all in the highly volatile, high growth sector. Yes, when they’re going up, it’s great, but the last 6 months has been just brutal. Everyone’s situation is different, but I’m recently retired, and this is more downside than I ever realistically thought I would see. I’ve been investing for a lot of years, and I’ve always been OK with the risk, never bothered me much, but I am thinking about the accounts too much now, I realize that means I need to not be quite so concentrated in the high growth sector. When the market overall is up or maybe just down a percent and every holding I have is down 5-10%, that’s hard to take day after day, and that’s what it has felt like this entire year.
I still have great confidence in the companies I own, but it will sure be great to get back to the market feeling the same.
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I’m also recently retired (about 18 months ago) and I’m underwater right now with respect to where I was on my retirement date. But I’m staying put. I could easily see this bear market stretching out another 12 months or more, but what else am I going to invest in? I have a Saul-style portfolio and there’s no better companies out there. I had a career in IT, and digital transformation is a long-term trend (10+ years). So I have no doubt that the best companies in the field will produce the greatest gains. It’s only a matter of time. I think Saul is on the money here.
That said, when the market was going up I think I got too much of a rush checking prices daily and seeing all that green, recalculating my % gain for the year. I started loosening my investing discipline and took a few fliers on more speculative stocks (e.g. FUBO, EXPI). I let too much of my happiness depend on wealth creation.
I need to learn to treat the green days and red days equally. To enjoy life regardless of whether the market is up or down. And to have the same approach to investing regardless of how much I’ve made (or lost).
One thing I am doing better now is adjusting my portfolio without price anchoring affecting my decisions. When the market is down so much it’s so easy to hang onto a stock like AFRM or MNDY just because it’s dropped more than others. You think it’s the one that’s going to bounce back the most, right? Well it often doesn’t work that way. I recently adjusted my entire portfolio by considering what I would like to own if I started with 100% cash today. If you can do that it’s very freeing.
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Wow, wow, wow…
I’m starting to believe the whole reversion to the mean theory, as there seems to be no bottom in sight.
A number of people have said the market has been priced way too high for a few years. And I heard too often the “TINA” excuse. Well, that is a bad way to invest, and now rates are no longer near zero, I guess people have found alternatives.
Fortunately I don’t have as much in as some do but still it is painful. Of course if you are young, it won’t matter but for those older folks close to retirement, a 20% drop is often several years of withdrawals down the drain. That 20% drop on a 7 digit portfolio is a lot different than one on a 5 digit portfolio. At least it is to me.
Not sure when, but housing will see a correction as well.
Fortunately I don’t have as much in as some do but still it is painful. Of course if you are young, it won’t matter but for those older folks close to retirement, a 20% drop is often several years of withdrawals down the drain. That 20% drop on a 7 digit portfolio is a lot different than one on a 5 digit portfolio. At least it is to me. – richinaz
I retired in 2010 and had a VERY nice portfolio in November that had hopes of reaching 8 digits soon. Now, down about… 85% (partially due to withdrawals for a place now getting built in the mountains… might have to walk away from the amount we have sunk into it).
Searching Amazon for some books on “Creative Cardboard Box Living” and “Roadkill vs Rats”.
Looking for used copies of course… Gotta save a couple bucks… 
Still, I have a plan.
But yeah, it’s been painful at times.
(Side note: I visited a community in India in March. The folks there are known as Rat Eaters and they keep small dogs for catching them. Maybe something to add to the reading list…)
Rob
Rule Breaker Home Fool
He is no fool who gives what he cannot keep to gain what he cannot lose.
”If you are in the right companies, the potential rise can be so enormous that everything else is secondary. Every $1,000 I and my clients put into Motorola in 1957 is now worth $1,993,846 — after all the ups and downs of the stock and of the market…
If I’d sold Motorola because I thought it was overpriced 10 or 15 years ago, chances are I would not have known when to get back in, and I would have missed a tremendous profit. If one of my stocks gets overpriced, I warn my clients that things may be unpleasant for a little while but it will rise to a new peak later.” Phillip Fisher
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2020: +24% (bought shares for first time ever in July that year, found TMF in the Fall. Invested all our savings.)
2021: +16.3%
2022: -57% atm
The pain is real.
42 years old, safe job, live in Europe.
I would be relatively relaxed and buying more with scraps from monthly paychecks, but need to put in a down payment for a house sometime in the next 12 months.
Regrets regrets…
What I should have done - Sell enough in October/November last year , when I was up 100%+ for the year, to have cash for the house down payment. Wife would be happy, my anxiety would be severely reduced.
What I did instead - remained fully invested, and as prices came down borrowed and leveraged to buy more. So now I’m in the dumps AND paying for a loan. Also thought it was a good idea to buy call options… those are down 84%. They’re LEAPs, might get my money back, but… ouch.
Also started a portfolio for the kids in the family (my kid, my siblings’ kids), thinking we’d split it up between them in 15 years or so. It’s down 69% from September.
Upstart has the largest share in both portfolios, still strongly believe all this will be worth it over a 10yr horizon or so, but right now, the feeling is not so great.
Good luck to all.
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But I’m staying put. I could easily see this bear market stretching out another 12 months or more
Hey 5th,
If you suspect a long drawn out bear market with further declines in value, isn’t there a contradiction in your thinking there or is the notion of staying 100% invested unwavering? I know the question has no perfect or definitive answer, but I also found myself very certain of a further drop in January but took no action. It’s always easier to criticize oneself in hindsight but I was literally arguing with others like I was short and yet didn’t consider selling anything because buy n hold is indoctrinated in me now!
Curious how others are handling these thoughts and plans for the coming weeks of continued war, inflation, supply chain woes, rate hikes, perceived high valuations … oh and have a great Sunday!
Don’t overestimate your clairvoyance. It’s easy to feel certain when you’re not putting any money on the line.
When you actually hover over the “Sell” button, you come to realize that your certainty about a coming bear market is more like 55% than 95%.
I think “buy and hold” is a stock-level concept distinct from the more macro-oriented “stay fully invested”, but the point is largely similar: predicting anything short-term is extremely hard and fraught with behavioral biases. Demonstrating an ability to do it requires more than looking back at the one time what someone said turned out to be right. Talk is cheap, and I don’t listen to anyone who doesn’t put their money where their mouth is, including my former self.
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Hey fireblade, very good question. Lol I probably am fully indoctrinated with the “always stay fully invested” philosophy, albeit by choice. I find it unsettling when I keep money out of the market, even for a few days! That’s probably just FOMO. However, I also honestly believe I can’t time the market. And since the market goes up more than down, it makes sense to be in rather than out. So yeah, I am kind of stuck in this mode just as you are in “buy and hold”.
It’s interesting that you made this post now, as I was just today thinking ever more seriously about the implications of a drawn out bear market, specifically one in which my Saul stocks drop to even lower lows. Why not just go to cash, maybe 40% or something like that. But I think it’s the fear speaking.
As someone recently said, the first rule of investing is “Know Thyself”. For me that means recognising my greed and my fear, and not giving in to either one.
No, I think the right move for me now is to double up my efforts on getting to know my investments better. It’s really boring work to track all those figures and read the earnings call transcripts, but I’ve been doing more of it as time went on. This actually was the first earnings season where I had all my companies fully documented: theses written, key metrics identified and tracked, and expectations set. Felt good.
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I find it unsettling when I keep money out of the market, even for a few days!
well I hope you (we) have learnt a lesson on that one, as not every market is investable without risk management
I find it unsettling when I keep money out of the market, even for a few days!
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well I hope you (we) have learnt a lesson on that one, as not every market is investable without risk management
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I’m not sure what the lesson is here. Even if I regret not holding cash in the past, if I don’t have a method of deciding when to go to cash and when to deploy it, I’m no further ahead. I’d be guessing on when to move in and out of cash. Then second-guessing, etc. Too many emotions in play and I find my emotions betray me. Optimism convinces me to buy at the top and pessimism gets me to sell at the bottom.
Whatever system I use I have to know it works. I’m not a believer in just having a system and sticking to it (I read a lot of people saying this).
The obvious question then, is how do I know staying fully-invested works? I guess I really don’t, but it’s the best way to keep emotions out of my decisions. My best choice is to continue making rational decisions based on the earnings reports of companies on my radar.
That said, I did cash out of UPST yesterday and will sit on the funds for the foreseeable future. I am also looking at trimming a few others like BILL, MDB, and S. Yeah, I’m letting emotion have a bit of a say. I do believe we will drop more. 
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I’m not sure what the lesson is here. Even if I regret not holding cash in the past, if I don’t have a method of deciding when to go to cash and when to deploy it, I’m no further ahead.
I follow Puru Saxena on Twitter, a retired fund manager (@saxena_puru). He writes what he does and why.
IIRC, he sold in early November… everything or something like that, I can’t remember his exact words but his tweet must still be accessible. He saw the Fed was about to act against inflation. His timing was pretty good.
He also wrote it when he started buying again. He was a bit early and mentioned it later.
I also found this Website: https://www.chrisperruna.com/2013/03/18/identify-market-tops…
The URL says it all, although the “guaranteed” part remains to be seen. He simply follows the New Highs/New Lows.
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