10 year anniversary of the bull market

[catherine]

This article in the NYT (https://www.nytimes.com/2019/03/09/business/bull-market-anniversary.html?action=click&module=Top%20Stories&pgtype=Homepage) hit home for me. It talks about how the 10-year anniversary of the start of the bull market has been met with very subdued reactions.

It talks about how while the economy has rebounded, it doesn't mean that the individuals who were impacted have been able to rebound. The spoils of the bull market have, once again, gone to the wealthy.

It home to me. As you guys know, my agreement to cosign on a cash-out mortgage for my retired MIL as an interim strategy for buying them the house next door backfired on me on the worst possible way. The timing of our plan couldn't have been worse and cost me, personally, probably 250,000-300,000. My MIL told me to let her house go to foreclosure, but I didn't want to ruin my credit at this stage in my life and I was hopeful that I would be saved from the situation soon.

The other point they make in the article is the obvious: when you lose all your money, you don't have that money to just put back when the going gets good again.

And they talk about how kids brought up in the Recession are much more risk-averse now, with low savings rates among that generation.

Yeah, I'm not cheering for this anniversary. I'm glad we're still in a bull market, but while the wounds may have healed, the scars remain.

Just a ramble. The article stirred old regrets for me, that's all.

[iris lilies]

“The spoils of the bull market have gone to the wealthy.”

spoken like a true Bernie-ite. Always blame The Wealthy.


I was just thinking this week that Trump will get no love for for the current state of the market and I credit his election with some of it.

We rebounded just fine. That said, I am not putting any more of our new funds into the stock market and we are pulling some of our financial instruments out of the market. Investing in instruments for financial gain IS a gamble and I am too old for another downturn of significance.

We are talking about the renovation of our Hermann house and people talk to us about making a master suite and opening walls a la current trend. But No! I am going to keep with two small bedrooms and a bathroom in between. There will be no taking down of walls for Open Floorplan (shudder.)

I am not caving in to thinking about “resale value” because who cares I will be dead or infirm by then and it doesnt matter if we have more $ into this house then we can get out of it.

[catherine]

“The spoils of the bull market have gone to the wealthy.”

spoken like a true Bernie-ite. Always blame The Wealthy.



I knew that would get to some of you. :) Anyone else care to comment? Alan? LDAHL? Anyone? Anyone? Bueller?

But it's true. It's not a political statement. It's a mathematical fact. If you lose all your money when the stock market tanks, it takes a long time to rebound. If you were able to let your investments ride, you did OK. There were a lot of middle class Americans who lost their life savings, similar to the Great Depression. They had nothing to let ride and rebound. They had to start from scratch. I'm not the only one. My DD's bf's family also lost their home to foreclosure. They worked their whole lives as teachers and now, in their early 60s are playing catch-up. It's easy to cheer for the bull market if you still have a bull.

[sweetana3]

Iris, I still think we are twins separated at birth. In exactly the same situation. In fact, just talking about the market yesterday. Never have done the "popular" thing either.

[Rogar]

I have pretty much subscribed to a very general rule of thumb, 100 minus age equals the recommended percent of savings in equities. So I've benefited from the bull market, but better interest rates on lower risk savings would probably have a larger benefit for me.

[dado potato]

March 9, 2009 the SP 500 Index hit an intraday low of 666, and so we can say the "Bull Market Began" at that time.

I think it is significant that Quantitative Easing increased Federal Reserve balance sheet from 6% of the US Gross Domestic Product in 2009 to 26% of GDP in December of 2014. Meanwhile the European Central Bank increased their balance sheet to 40% of Europe's GDP. And the Bank of Japan increased theirs to 101%.

The Federal Reserve balance sheet peaked at $4,516 billion in December 2014, due to purchases of Treasury and Mortgage-Backed securities, in effect goosing liquidity in US securities markets. Since 12/2014 the Federal Reserve has been "normalizing" their balance sheet on "auto-pilot" at a rate of $50 billion per month.

I believe that plenteous liquidity enabled leveraged speculation and higher asset prices. The SP500 made an intraday peak of 2,940.9 on 9/21/2018. The bull market that began in March 2009 may have ended then.

When was indiscriminate speculation in US markets exhausted?
According to my notes:
FNG (an index of high-tech & media stocks) hit $24.04 on 11/19/2017
Bitcoin hit $19,375 on 12/11/2017
Customer margin accounts at FINRA member firms peaked at $668.9 billion at the end of May 2018.
RUT (Russell 2000 small-cap stocks) hit 1,742 on 8/21/2018
NASD hit 8,133 on 8/30/2018

It is obviously possible that prices could go from here to new all-time highs. Or as the song of mehitabel goes,
there s a dance in the old dame yet toujours gai toujours gai

[dmc]

I retired in 2007, so I was a bit concerned by 2009. But even though my stocks had taken a hit, they didn’t go to zero. I don’t get those claiming to have lost everything. What were they investing in that all their holdings went bankrupt? I just let mine ride and of coarse they all rebounded and then some.

[iris lilies]

I retired in 2007, so I was a bit concerned by 2009. But even though my stocks had taken a hit, they didn’t go to zero. I don’t get those claiming to have lost everything. What were they investing in that all their holdings went bankrupt? I just let mine ride and of coarse they all rebounded and then some.

yes, agreed that losing everything doesnt make sense for the average American investor in mutual funds and the like. It is hyperbole to support the false narrative about The Evil Wealthy People.Sure, people who SOLD OFF all of their financial
instruments and then spent that money—sure, they are chit out of luck. They sold their holdings.

I am glad you said this because I was going to say the same thing.

We “lost” maybe 25% to 35% of our assets on paper at the time, but we didnt sell the instruments we owned. And, they rebounded. And thanks to The Donald they really bumped up in recent years.

[rutter]

seems like most of the benefits of the bull market goes to the American oligarchs. There's alot of jobs all rights- alot of low paying, no benefits jobs. It's the rich that keeps getting richer and make out like bandits.

[catherine]

yes, agreed that losing everything doesnt make sense for the average American investor in mutual funds and the like. It is hyperbole to support the false narrative about The Evil Wealthy People.Sure, people who SOLD OFF all of their financial
instruments and then spent that money—sure, they are chit out of luck. They sold their holdings.



So we were dumba$$es for losing our money. I know it seems that way.

Here's what the NYT says about that:

But to buy stocks, you need money. After watching their fortunes — and retirement funds — shrivel, few Americans were in a position to take a fresh flier on beaten-down stocks.

Those who could were already well-off. In 2007, the wealthiest 10 percent of American families owned 81 percent of the nation’s household stock market wealth, according Ed Wolff, a professor of economics at New York University who studies the distribution of wealth in the United States. By 2016, they owned 84 percent, he said.

The recovery in the stock market made those families even richer, increasing their net worth by double-digit percentages. Median American family wealth, meanwhile, dropped 34 percent.

Here's an example of how it's hard to just ride it out. This is what happened to me. Bear with me and I apologize for repeating myself--you've heard most of this before.

I had a late in life career change (I was 46 at the time, in 1998). Up to that point I couldn't make ends meet for a variety of reasons that I won't go into to protect the innocent. I had a low-level job raising 4 kids on $28k. In a plucky and brave moment (if I do say so myself) I asked my superior for a job that I was, on paper, vastly unqualified for, but I got it anyway. I determined that I would work hard and double my salary in 5 years. I did it in one.. and then by 2007 I had quadrupled it. In the meantime I was able to buy a reasonably priced car and put 3 kids through college, and using airline points, bring my family to Scotland.

I also saved up $75,000 which was in a 401k

Then disaster hit and you know what happened in 2007. In the subsequent couple of years of the recession, my $75k shrunk to $25k. At that point, I needed to make a property tax payment on the house we had bought in foreclosure, and I had various other bills associated with the two extra houses I was now responsible for legally. (yes, yes,yes, if I had it to over again, and had a crystal ball to tell me that the housing market was just about to go bust I wouldn't have put myself in that position--but who knew?? The market was screaming then).

My MIL would not pay the property taxes or other bills. So I sat for several days to see if there would be any way I could avoid liquidating my 401k. I couldn't see it. So I thought, oh, well, I'll liquidate and then I'll pay myself back as soon as we sell the house.

Which didn't happen for another 5 years. And when it did sell, we took a $100k loss. I got no money at the closing. So I had no money to pay myself back.

That's how it happened in my case. I was not out buying Prada bags and Lexus cars and cruises and then found myself in a financial whoopsie! I consider myself pragmatic, and reasonably sensible when it comes to money, although I am an easy touch when it comes to my family. I don't consider myself a proverbial grasshopper. Maybe I'm not an ant, but I'm definitely not a hapless dumba$$ either, and I feel that there are a lot of Americans out there like me who suffered in the recession and who struggled or are still struggling to make up for lost ground.

[Teacher Terry]

Catherine, we knew people that similar things happened to. In hindsight you always make the right decisions. Not so easy in real life.

[frugal-one]

yes, agreed that losing everything doesnt make sense for the average American investor in mutual funds and the like. It is hyperbole to support the false narrative about The Evil Wealthy People.Sure, people who SOLD OFF all of their financial
instruments and then spent that money—sure, they are chit out of luck. They sold their holdings.

I am glad you said this because I was going to say the same thing.

We “lost” maybe 25% to 35% of our assets on paper at the time, but we didnt sell the instruments we owned. And, they rebounded. And thanks to The Donald they really bumped up in recent years.

I don't say thanks to Donald. He came on board when things were up. As usual though, he likes to take the credit.

[dmc]

So we were dumba$$es for losing our money. I know it seems that way.

Here's what the NYT says about that:
But to buy stocks, you need money. After watching their fortunes — and retirement funds — shrivel, few Americans were in a position to take a fresh flier on beaten-down stocks.

Those who could were already well-off. In 2007, the wealthiest 10 percent of American families owned 81 percent of the nation’s household stock market wealth, according Ed Wolff, a professor of economics at New York University who studies the distribution of wealth in the United States. By 2016, they owned 84 percent, he said.

The recovery in the stock market made those families even richer, increasing their net worth by double-digit percentages. Median American family wealth, meanwhile, dropped 34 percent.

Here's an example of how it's hard to just ride it out. This is what happened to me. Bear with me and I apologize for repeating myself--you've heard most of this before.

I had a late in life career change (I was 46 at the time, in 1998). Up to that point I couldn't make ends meet for a variety of reasons that I won't go into to protect the innocent. I had a low-level job raising 4 kids on $28k. In a plucky and brave moment (if I do say so myself) I asked my superior for a job that I was, on paper, vastly unqualified for, but I got it anyway. I determined that I would work hard and double my salary in 5 years. I did it in one.. and then by 2007 I had quadrupled it. In the meantime I was able to buy a reasonably priced car and put 3 kids through college, and using airline points, bring my family to Scotland.

I also saved up $75,000 which was in a 401k

Then disaster hit and you know what happened in 2007. In the subsequent couple of years of the recession, my $75k shrunk to $25k. At that point, I needed to make a property tax payment on the house we had bought in foreclosure, and I had various other bills associated with the two extra houses I was now responsible for legally. (yes, yes,yes, if I had it to over again, and had a crystal ball to tell me that the housing market was just about to go bust I wouldn't have put myself in that position--but who knew?? The market was screaming then).

My MIL would not pay the property taxes or other bills. So I sat for several days to see if there would be any way I could avoid liquidating my 401k. I couldn't see it. So I thought, oh, well, I'll liquidate and then I'll pay myself back as soon as we sell the house.

Which didn't happen for another 5 years. And when it did sell, we took a $100k loss. I got no money at the closing. So I had no money to pay myself back.

That's how it happened in my case. I was not out buying Prada bags and Lexus cars and cruises and then found myself in a financial whoopsie! I consider myself pragmatic, and reasonably sensible when it comes to money, although I am an easy touch when it comes to my family. I don't consider myself a proverbial grasshopper. Maybe I'm not an ant, but I'm definitely not a hapless dumba$$ either, and I feel that there are a lot of Americans out there like me who suffered in the recession and who struggled or are still struggling to make up for lost ground.

Unless you lost your job, how did the market cause you be responsible for three Homes? If they were an investment how were you figuring to pay the taxes? It sounds like you were doing fine, paying for college and overseas trips. But then you didn’t have the money to pay taxes and had to sell your 401 k. No emergency fund to tap first?

What wealthy person made you make these choices?

[Teacher Terry]

Catherine is not blaming rich people for losing her money. She is talking about what a tough time it was for many people. Also she is just stating facts about how so much of our countries wealth belong to a few. I am not sure why the MIL didn’t pay the taxes to help out since Catherine helped her by co-signing. People make errors in decisions because there is no crystal ball. It gets tiring for people that have had good jobs all their lives and no financial setbacks to pick on people less fortunate. It’s really getting to be a theme on this forum.

[dmc]

Catherine is not blaming rich people for losing her money. She is talking about what a tough time it was for many people. Also she is just stating facts about how so much of our countries wealth belong to a few. I am not sure why the MIL didn’t pay the taxes to help out since Catherine helped her by co-signing. People make errors in decisions because there is no crystal ball. It gets tiring for people that have had good jobs all their lives and no financial setbacks to pick on people less fortunate. It’s really getting to be a theme on this forum.

Ive made my share of bad financial decisions. I lost quite a bit in the tech bust, but it was my fault, no one else. I’ve also had to move across the country a few times due to job loss and to go where the jobs were.

I understand those just starting out, and that unforsean events can happen. But many also just don’t plan well. Those that chose to live below their means and save can withstand the rainy days.

[catherine]

Catherine is not blaming rich people for losing her money. She is talking about what a tough time it was for many people. Also she is just stating facts about how so much of our countries wealth belong to a few. I am not sure why the MIL didn’t pay the taxes to help out since Catherine helped her by co-signing. People make errors in decisions because there is no crystal ball. It gets tiring for people that have had good jobs all their lives and no financial setbacks to pick on people less fortunate. It’s really getting to be a theme on this forum.

Thank you.

dmc, it is a long, boring story, and I'm over trying to justify it to myself and others--I know I started this thread, but I'm ready to finish it. As TT suggests, if you've never walked in another person's shoes, it's very easy to make snap judgments.

[Teacher Terry]

I have known people with plenty of savings and living below their means that got hit by divorce, job losses, disability, huge medical bills with insurance, etc. It can turn even the best plans into a dumpster fire. Between my job helping people with disabilities get back to work and some friends lives life can be very cruel even to people that do everything right. I suggest people feel lucky and grateful versus superior.

[dmc]

I have known people with plenty of savings and living below their means that got hit by divorce, job losses, disability, huge medical bills with insurance, etc. It can turn even the best plans into a dumpster fire. Between my job helping people with disabilities get back to work and some friends lives life can be very cruel even to people that do everything right. I suggest people feel lucky and grateful versus superior.

i agree that some have had a hard time. And some have done well because of hard work, thoughtful investments, and living below their means. A good work ethic, good planning, and being frugal is not lucky.

[iris lilies]

LDahl said it in another thread, it is better to be lucky than smart. :~)

[iris lilies]

I don't say thanks to Donald. He came on board when things were up. As usual though, he likes to take the credit.
Look at the sharp upturn when he was elected.

Hey I am not saying the market is rational.

[Teacher Terry]

It’s still lucky if you manage not to be very sick or disabled. My job made me very grateful for things that are beyond my control.

[iris lilies]

Iris, I still think we are twins separated at birth. In exactly the same situation. In fact, just talking about the market yesterday. Never have done the "popular" thing either.
I know! We do share many similarities!

[Zoe Girl]

My story is that I didn't really recover, the divorce was a big part of it and going to grad school for a solid career (didn't happen due to the recession). So I am here, don't have much of anything, not doing stocks again, and probably not retiring.

[LDAHL]

I knew that would get to some of you. :) Anyone else care to comment? Alan? LDAHL? Anyone? Anyone? Bueller?

But it's true. It's not a political statement. It's a mathematical fact. If you lose all your money when the stock market tanks, it takes a long time to rebound. If you were able to let your investments ride, you did OK. There were a lot of middle class Americans who lost their life savings, similar to the Great Depression. They had nothing to let ride and rebound. They had to start from scratch. I'm not the only one. My DD's bf's family also lost their home to foreclosure. They worked their whole lives as teachers and now, in their early 60s are playing catch-up. It's easy to cheer for the bull market if you still have a bull.

Since you asked, I think your experience speaks more to the temptations and dangers of leverage than to the intrinsic wickedness of those who dabble in the dark arts of finance. Asset prices will not always rise when we need them to. The downside risk is always lurking under the surface, and people shouldn’t risk more than they can afford to lose. Arbitraging a debt against an assumption of rising asset prices or an ongoing source of income can do very well for you or end in disaster.

Markets exist to distribute capital and risk, not to reward virtue. It’s better to be lucky than smart, but it’s also true that “chance favors the prepared mind”.

[catherine]

Since you asked, I think your experience speaks more to the temptations and dangers of leverage than to the intrinsic wickedness of those who dabble in the dark arts of finance.

I wasn't going to continue on, but yes, LDAHL, it's that. I'm not "blaming" the wealthy for taking my money away--I readily admit that I didn't even entertain the notion that the housing market bubble would burst, and yes, I did know I was heavily leveraged, but figured it would all work out and I'd be clear in less than 6 months.


it’s also true that “chance favors the prepared mind”.

Yes, true, but as my mother always taught me, sometimes "Man plans and God laughs." I had a plan and I just couldn't hear God chuckling.

[Molly]

I believe the reason the market soared when The Donald was elected was because investors (rightly) believed The Donald would dismantle regulations that protect our environment and finances.

[Tybee]

Well, a day like yesterday certainly gives me the fon-tons, Molly.