1500 Days to Freedom

Think different and escape the rat race.

Did The Correction Freak You Out? Be Honest!

by

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!

Join the 10s who have signed up already!

Subscribing will improve your life in incredible ways*.

*Only if your life is pretty bad to begin with.

Powered by ConvertKit

Reader Interactions

Comments

  1. 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.

    • “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…

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

  2. 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

    • 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.

  3. 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.

  4. 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

    • 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!

  6. 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….

  7. 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 🙂

  9. 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

  14. 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

  15. 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 😉

  16. 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…

  17. 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!

  18. 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

  19. 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…

    • 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.

  20. 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

  22. 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.

  26. 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

  27. 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!

  28. 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.

  29. 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.

  30. 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.

  31. 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!

Trackbacks