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Did The Correction Freak You Out? Be Honest!

February 26, 2018 by Mr. 1500 Days 47 Comments

Back in 2008 when the stock market was crashing, I was terrified. I remember checking my investment accounts multiple times per day. I had trouble sleeping. I was filled with dread. Eventually, I just stopped looking.

For about 4 years, I didn’t log into any of my accounts. I didn’t even think about them. When I logged back in years later, I was pleasantly surprised to see that markets were recovering. The world was returning to normal.

A couple weeks ago, we had a market correction (a drop of 10%). If you read the media, you’d have thought that the end of the world was upon us. It wasn’t. More on that after we get to the answers from last week.

 

Do You Use Time Wisely?

Lately, I’ve noticed that I spend too much time farting around with random nonsense. Too much social media. Too much email. Too much news. Here is what you had to say about how you use your time wisely (or not):

Mrs. Adventure Rich likes to get outside:

Oof… using my time wisely is something I am constantly struggling with, tweaking, improving, reverting and trying yet again to optimize. I think one of my best hacks is to get outside. If I go for a walk/run or decide to do an activity with our family (sledding or snowshoeing, biking or swimming in the summer, etc), I tend to be good about not checking technology. But overall, I am constantly working through time optimization in a tech-filled world.

Reader Danny the Pizza Guy has a good tip:

I was notoriously bad with social media as it was affecting me at work. To solve this I went a bit extreme and purposely changed my password to something complex that I would not remember. This lasted about a year until, ultimately, I changed the password back. It worked for me as it became habit forming to not sign in all the time. Now I only check it about once every other week.

Wise Money Tips:

It helps to make a list of tasks you want to accomplish on a particular day.

Joe from Retire by 40 not only doesn’t use time wisely; he also doesn’t care! Maybe I should be more like Joe?

I don’t use my time that wisely anymore. That’s one benefit of being early retired. I can goof off or read or take a nap if I want to.

Freddy Smidlap doesn’t pay attention to the news:

I stopped on the “news” thing about 6 months ago and have never felt better about not knowing what ariel winter was up to. Oh, and the comment sections! Don’t get me started. We don’t look at hardly any of that on our days off but are guilty of checking the ebay sales as we list and downsize our significant pile o’ crap-ola.

 

Of Chaos And Corrections

I was running outside a couple weeks ago on a beautiful day. When I got home, Mrs 1500 said:

The markets are down 1400 points!

My first reaction was to smile:

Maybe we’ll have an opportunity to buy the market when it’s on sale! Great!

And then I freaked out:

Wait, what caused it? Did a war break out somewhere? Did someone important get indicted?

Mrs. 1500 assured me that we weren’t at war with North Korea and that nothing else was going on. My smile returned.

It took me a while to get my mind in the right place. What it all comes down to is this:

The long-term trajectory of the market is up. Be optimistic. It doesn’t matter what happens in the short term as long as you can hold on to optimism no matter what’s currently happening.

Of course, this isn’t easy. The time to plan for what you’ll do when markets correct is when all is good. This is the same reason why I believe in prenuptial agreements. The time to plan for the demise of a marriage isn’t when it’s actually happening, but when both parties are happy. Note: My suggestion of a prenuptial agreement many years ago was met with strong resistance:

What we saw a couple weeks ago was just a little market gyration. If (when?) there’s a war or the president is sacked, you’ll see a downturn that will make what happened earlier this month seem like nothing. It’s OK though; stay the course. Know that after the chaos, everything will return to normal. Populations will continue to grow and productivity will continue to increase. These conditions will drive the markets up. Nothing to see here.

And, if you’re worried about having to sell stocks right after a big crash, just keep a little cash around to ride out the rough times.

 

How About You?

Did you freak out? If so, did you make any irrational moves?

If you didn’t lose your cool, how did you train your brain?

 

One more thing: I’m on the Choose FI podcast again, this time discussing the upcoming Chautauqua in Greece. Check it out here!

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Filed Under: Ask the readers Tagged With: Ask the readers, stock market correction

Reader Interactions

Comments

  1. My Sons Father says

    February 26, 2018 at 9:26 am

    January was such a weird month, the market was jumping up like crazy for the majority of the month, then that correction. I had the same thought you had, ‘sweet, stocks are on sale’. But it didn’t last very long, the bear market appears to be postponed.

    I’ll be interested in how the FI community responds to a bear market. Most of the bloggers in this community have blogged during the bull market of the past several years. Those inspiring net worth posts have continued to head the right direction. I like to think we’ll all keep our heads.

    Reply
    • Mr. 1500 Days says

      February 26, 2018 at 4:26 pm

      “I’ll be interested in how the FI community responds to a bear market. Most of the bloggers in this community have blogged during the bull market of the past several years. Those inspiring net worth posts have continued to head the right direction. I like to think we’ll all keep our heads.”

      I’ve had the same thought! It will be very interesting to see…

      Reply
      • Ty says

        February 27, 2018 at 9:42 am

        The FIRE bloggers will do fine. Most of them generate good income from working, or have working spouses.

        Reply
  2. Olivia @ birds of a fire says

    February 26, 2018 at 9:31 am

    That pool looks damn glorious. I just want to lie there all day and blog one day!

    It didn’t bother me that much. I’m three years into my journey, and if the market finally crashed, that’d be great for me. The return on positive years for the SP500 is 21% and the average return for negative years is -14%.. If we crash this year, the return on my investment over the next 5-10 years will be incredible since we probably won’t crash two years in a row (hopefully?). My salary/bonus will be much higher in years to come so I’d be able to save more too.

    Not the end of the world for me, in fact it would be great! I could do some nice tax loss harvesting too! It would probably last me forever due to the $3k/year limit.

    That being said, I don’t wish it on anyone. It would probably be extremely depressing for most and I’m sure a lot of people are going to panic sell :(. It’s difficult to explain staying in the market to a friend or while at a dinner party. I just want everyone to do the best thing they can, but human psychology is weird.
    Olivia @ birds of a fire recently posted…Free 18 day personal finance courseMy Profile

    Reply
    • Mr. 1500 Days says

      February 26, 2018 at 4:28 pm

      You nailed it with the last paragraph! It’s impossible to explain. Our brains work against us. We’re not supposed to “buy high, sell low,” but many of us do anyway.

      Reply
  3. Mr. 39 months says

    February 26, 2018 at 9:36 am

    No I didn’t freak out (see my article on this, which pretty much tracks with 1500days take on it). We’ve got a plan, and we’re sticking to it. If the market drops, it just means we get to buy stuff on sale.

    Reply
  4. Mr. Tako says

    February 26, 2018 at 9:36 am

    Nah, it was just a little blip — Less than 10%. Hardly worth freaking out about.

    I don’t worry too much about prices in the short term — as long as there’s tons of people in the world they’re always going to need goods and services.

    Eventually the stock market corrects, and life moves on — even from a terrible tragedy like war.
    Mr. Tako recently posted…When Should Kids Start Investing?My Profile

    Reply
  5. Brian says

    February 26, 2018 at 9:37 am

    I didn’t check my personal capital investment account once over the last two months. Life’s good!
    Brian recently posted…Is Education Important For Financial SuccessMy Profile

    Reply
    • Mr. 1500 Days says

      February 26, 2018 at 4:29 pm

      Two months!? I’m addicted to PC! I don’t act based on the information, but it’s a good thing the service doesn’t charge me every time I check my account!

      Reply
  6. Stephen says

    February 26, 2018 at 10:02 am

    I got a little excited every time I saw the market was down. I then bought some more index funds.

    I’ve been groaning every month the market was at an all time high while I was buying more….

    Reply
    • Mr. 1500 Days says

      February 26, 2018 at 10:06 am

      “I’ve been groaning every month the market was at an all-time high while I was buying more….”

      You my friend, are doing it right!

      Reply
  7. Danny the Pizza Guy says

    February 26, 2018 at 11:32 am

    I definitely freaked out Haha! I had just put in my normal paycheck’s worth of money plus year-end bonus at the top of the market. Was slightly kicking myself that I didn’t wait a few days, as I normally do.

    I quickly realized that this was a short-term issue, calmed down and celebrated this mini-drop for what it was…an opportunity. Looking forward to putting a large chunk of my next paycheck into the market 🙂

    Reply
  8. Dave @ Married with Money says

    February 26, 2018 at 11:48 am

    Honestly the biggest bummer of not watching the market is that I initiated a rollover near the low point…so that sucks.

    Otherwise nope, obviously didn’t even notice until I saw some Tweets about it and then just carried on with my life.
    Dave @ Married with Money recently posted…The 10 Commandments of Credit CardsMy Profile

    Reply
    • Mr. 1500 Days says

      February 26, 2018 at 4:30 pm

      Nice.

      Reply
  9. Revanche @ A Gai Shan Life says

    February 26, 2018 at 12:29 pm

    In 2008, I had less than $1000 in my brokerage and the same in my retirement account, market so the crash was more of an academic exercise. I wish I’d know then what I know now! This time around, I made sure that I had cash handy to draw on in case a bargain came up and I dropped a small blob of cash into JuggerBaby’s 529 account at the lowest price it’s been in 3 years. So no, I wasn’t nervous, just curious whether it was going to be a correction of a couple weeks or the opening drop of a recession. If it had dragged on a lot longer, though, I might have gotten nervous!
    Revanche @ A Gai Shan Life recently posted…Do you worry about money?My Profile

    Reply
    • Mr. 1500 Days says

      February 26, 2018 at 4:31 pm

      “I wish I’d know then what I know now!”

      I know, right???

      Reply
  10. Accidental FIRE says

    February 26, 2018 at 12:39 pm

    No freak out here, I’ve been through too many of these. Didn’t buy extra either, just kept doing what I’m doing.
    Accidental FIRE recently posted…What Will You Earn Based On Your Major?My Profile

    Reply
  11. Jason@WinningPersonalFinance says

    February 26, 2018 at 1:26 pm

    Wait. There was a correction? I did not notice.

    Just kidding of course. Twitter made me notice.

    I did not bother to check my accounts for a while after the drop. There was no point. I was not selling. I don’t have any cash sitting around to buy. I’m in it for the long haul. This is just a blip. There will be plenty more.
    Jason@WinningPersonalFinance recently posted…Pay Off Debt or Invest Interview 3 (The Wealth Hound)My Profile

    Reply
    • Mr. 1500 Days says

      February 26, 2018 at 4:31 pm

      Haha, stupid Twitter!

      Reply
  12. Financial Velociraptor says

    February 26, 2018 at 2:28 pm

    I rode it out with chill as I have a high allocation to fixed income. Enough to cover my annual budget from distributions, dividends, and interest. I will never have to ‘sell at the bottom’. I had this to say about the correction: http://velociraptor.cc/blog/2018/02/12/is-the-correction-making-you-nervous/
    Financial Velociraptor recently posted…Monday Trades 20.65% annualized returnsMy Profile

    Reply
  13. Mr. Need2Save says

    February 26, 2018 at 6:44 pm

    As Accidental Fire mentioned, I’ve seen enough corrections and a few recessions over the last 20+ years that it didn’t cause any concern. If we were actively retired, it may cause me to pay a little more attention to ensure that we aren’t overweight in equities.
    Mr. Need2Save recently posted…Using HSAs To Support Your Early Retirement GoalsMy Profile

    Reply
  14. Jim @ Route To Retire says

    February 26, 2018 at 7:21 pm

    It didn’t bother me – I’ve actually been hoping for a correction (or even a crash!) because we were sitting on a good chunk of money after rolling over my wife’s former 401(k). That gave us a good opportunity to jump in (which we did), but obviously, the worse the market, the better the deal!

    However, we’re both still working right now. I would bet if we were FIRE (especially freshly FIRE), that would cause a pretty good churn in my stomach.

    — Jim
    Jim @ Route To Retire recently posted…Why You Truly Need to Get Out of DebtMy Profile

    Reply
  15. sendaiben says

    February 26, 2018 at 8:17 pm

    I was disappointed. Hoping for a much larger correction.

    We have at least four more years of buying investments, so would like them to be as cheap as possible 😉

    Reply
    • Mr. 1500 Days says

      February 27, 2018 at 8:41 am

      I think you’ll have your moment in the next 4 years!

      Reply
  16. wendy says

    February 26, 2018 at 9:37 pm

    Nope, no freaking out.
    Maybe because I’m not FI yet and don’t actually have a set ‘date’… my projections are 3-8years, depending on how I run the numbers and lots of unknowns, so I’m looking at every up & down with curiosity but a sense of detachment….
    In general, partly because health insurance is still my Final Frontier, I’m thinking a lot will change in 2020, so no use getting all warped about it yet.
    I mean, I should be saving my max amount, right? Who cares what the fluctuations are in the interim…

    Reply
    • Mr. 1500 Days says

      February 27, 2018 at 8:42 am

      Yep, right on all counts!

      And health insurance will work itself out too. If the government options don’t work, maybe one of the health sharing programs will: https://www.libertyhealthshare.org/

      Reply
  17. Lily says

    February 27, 2018 at 3:33 am

    I freaked out a bit yes! We’re thinking of selling our rental so it’s a sensitive time for us and the raising interest rates are bad news enough. We never sold anything before! My anxiety doesn’t be more encouragement Mr Market!

    Reply
    • Mr. 1500 Days says

      February 27, 2018 at 8:44 am

      Selling real estate can be stressful, but you’re probably worrying more than you should be…

      Reply
  18. Budget On a Stick says

    February 27, 2018 at 6:07 am

    Didn’t do anything crazy. I had mixed emotions about my 401k and Roth auto contributions since I didn’t know if we were at the bottom when they were going in. Luckily, we were when they went in but this is why I don’t try to time the market.

    Makes me wonder if I would make the right call if the market does crash or would I just keep “waiting” for a better discount.
    Budget On a Stick recently posted…Where To Spend Tax ReturnsMy Profile

    Reply
  19. Adam says

    February 27, 2018 at 6:17 am

    About 20% of me was a little bummed to watch five figures evaporate. The other 80% was bummed that it didn’t drop MORE, because at 15%-20% I would’ve sold half my bond stash to get into equities on sale.

    But then my area is reasonably recession proof. DC is a company town, and that company prints the money…

    Reply
    • Mr. 1500 Days says

      February 27, 2018 at 8:46 am

      DC is a great place to live. I always liked smaller college towns too.

      “The other 80% was bummed that it didn’t drop MORE, because at 15%-20% I would’ve sold half my bond stash to get into equities on sale.”

      I’m guessing that you’ll get your chance and it will be sooner than later.

      Reply
  20. Jason says

    February 27, 2018 at 8:55 am

    I didn’t freak out as much. What I did wish for was to get the Bear Market over. Although I continue to plow money into the market I know that the other shoe will drop and probably drop soon. Considering I think that we are in a secular bull market for another decade or so the sooner we get rid of the bear the sooner we can get back to having a really good bull run. Of course then we will have a decade or so of sub optimal returns.
    Jason recently posted…America’s Lottery Mentality, Part IMy Profile

    Reply
  21. Tom @ Dividends Diversify says

    February 27, 2018 at 10:30 am

    Like you, having been through the crash of 2008 and early 2009, the recent correction wasn’t even a blip on my radar. I did a little selective buying of dividend stocks, but that’s about it. Tom
    Tom @ Dividends Diversify recently posted…So What’s With These Model Portfolios?My Profile

    Reply
  22. Acastus says

    February 27, 2018 at 10:32 am

    I was more ticked off than panicky. As of Jan. 31, I was on track to FIRE this spring. After the correction, I thought I would need to postpone it for a few months. Arrgh! I want to do something else, after a nice long vacation / sabbatical. Now I am remembering that the market is supposed to bounce around instead of just going up like last year.. As long as I stick with my allocation, have enough cash to live on for 2 years, and get ready to buy stocks in the down turn to maintain that allocation, all will be well.

    Reply
  23. Wade says

    February 27, 2018 at 11:35 am

    Don’t just do something. Stand there.

    Outsmart the market. Continue with your plan. It works.

    Reply
    • Mr. 1500 Days says

      February 27, 2018 at 11:45 am

      ???

      Reply
      • Jeff D says

        March 2, 2018 at 8:58 am

        It’s a reference to a PoF post.

        Reply
        • Mr. 1500 Days says

          March 2, 2018 at 9:09 am

          Ahhh, thanks for clarifying.

          Reply
  24. Team CF says

    February 27, 2018 at 12:32 pm

    Correction? What correction? I’m still waiting 😉
    Team CF recently posted…Leuven FIRE Meetup RecapMy Profile

    Reply
  25. LadyFIRE says

    February 27, 2018 at 3:47 pm

    I bought! My only stress was hoping that I managed to get my buy order in before the markets bounced back 😀
    LadyFIRE recently posted…Why do you think $40k isn’t enough?My Profile

    Reply
  26. Kate says

    February 28, 2018 at 6:49 am

    We’re in it for the long term, and we’ve got many years ahead of us. I was curious to see if we lost any of our initial investment (we only started in the full stock market outside of IRAs in October) and nope, still have that. Even if we did lose it, I probably would’ve bought a little more. I am kind of excited to watch the ride up and down in the next 20 years (and hope my income at least improves so I can buy more when it’s lower).

    When I invest in VTSAX, I pretty much consider the money is no longer available to us. So, I just write it off as a loss in my mind (which is probably why the market downturn didn’t bother me much). In my mind, the money was gone anyway, but secretly still helps our net worth report in Personal Capital 😉
    Kate recently posted…Weekend DIY: Installing a New Stair RailMy Profile

    Reply
  27. Mrs. LSF says

    February 28, 2018 at 8:11 am

    I was just bummed the downturn didn’t stick around long enough to overlap with one of my regularly scheduled transfers to my brokerage account!

    Reply
  28. Joe says

    February 28, 2018 at 9:53 am

    Thanks for the mention! I made some contributions to my solo 401k so it worked out okay. Otherwise, I didn’t worry about it. Wake me up when we get to 20%. That’s a much bigger pain point. 30-40% would be great buying opportunities.

    Reply
  29. GrowtoRetire says

    February 28, 2018 at 9:58 am

    Actually no. I’ve written in my blog post “2018 Investment Outlook”…with all that money floating around from central banks, I don’t believe in long and harsh bear markets.
    There will be corrections, but until:
    1- Inflation shows up (rates increase) or;
    2- Major geopolitical event.

    corrections will be short in terms of duration.

    Reply
  30. Simon Jönsson says

    March 2, 2018 at 1:20 am

    When you invest in cryptocurrencies, 10% up or down is normal on a daily basis and crashes with >50 % happend several times last year. So I dont worry to much about the stock market anymore. Just got some extra money to buy when it dips.

    Reply
  31. Stock Street says

    March 4, 2018 at 10:59 pm

    I like your followup reaction about if we were at war haha. I always have a similar reaction – I am happy stocks are on sale but hope some geopolitical crisis didn’t cause it. Once I check and make sure it is just an economic reason and not some war breaking out, I feel better and then start thinking about buying as the market declines and/or if there are companies I like that seem to be newly on sale. Anway, nice article!

    Reply

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Freedom!

My goal was to build a portfolio of $1,000,000 by February of 2017; 1500 days from the birth of this blog (January 1, 2013). And hey look, I’ve since retired!

Investments only (primary home excluded)
1/1/13 (The Start): $586,043
1/1/14 (1 Yr Later): $869,635
1/1/15 (2 Yrs Later): $987,351
1/1/16 (3 Yrs Later): $1,057,961
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1/1/21 (8 Yrs Later): $3,379,746**
1/1/22 (9 Yrs Later): $4,762,642
1/1/23 (10 Yrs Later): $3,112,821

2023: Investments only
1/1: $3,112,821

Overall
2023 investment gains: $0
Investment gains since 1/1/2013: $2,526,778
Net worth***: $3,342,821

* The big jump between 2019 and 2020 was partly because we bought another home, but kept the previous (much more expensive) one as a rental. We have since sold it.

** Tesla.

*** Includes our primary home equity in addition to our investment portfolio.

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