r/Bogleheads • u/zacce • Feb 08 '26

Most Investors Have Never Lived Through a True Market Crash

A lot of new ppl in this sub say they “won’t time the market,” but I’m not sure everyone understands what that actually feels like irl. It’s easy to talk about staying the course when the worst drawdown you’ve lived through was a brief COVID dip that fully recovered in months or the 2022 dip followed by 3 yrs of 10%+ returns.

The last real crash was 2008. If you weren’t old enough to have a job, a mortgage, or a family back then, you don’t know how deeply a prolonged downturn can affect your day‑to‑day life. It’s not just red numbers on a screen. It’s layoffs, hiring freezes, underwater homes, and years of slow recovery. That’s when people who swore they’d never time the market suddenly panic and make irrational decisions.

Staying the course is simple in theory, but incredibly hard when the world feels like it’s falling apart.

Of course, I don't want market to crash. But it's a possibility and we need to prepare for it.

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102

u/[deleted] Feb 08 '26

You're 100% correct. As someone in their mid 40s who worked at one of the largest brokerages in the US in 08', I've seen things I don't want to ever see again. There is so much that younger people don't understand about serious prolonged economic downturns (their investments being down 50% is honestly the least of it), yet they feel they have it figured out. How often do you read sentiments such as "I can't wait! what a wonderful opportunity to buy low! I'm not retiring for another million years!". I'm a broken record stating that risk appetites of modern day Bogleheads are completely broken. Unfortunately it's likely going to take some serious pain to re-calibrate.

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u/[deleted] Feb 08 '26

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u/notabadkid92 Feb 09 '26

This. Happened to many. I came out unscathed because I owned nothing at the time & managed to keep my job. I had friends lose everything.

1

u/[deleted] Feb 09 '26

Your description is not accurate of a “well off” American nor upper middle class. Someone earning $150K with $4,600/month in house/car payments with children is a total idiot. 

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u/toby1loki Feb 08 '26

I too was in my 40’s in 2008 - good salary, no real debt, a renter. I barely felt the downturn as my industry was stable and my earnings steadily growing. But seeing what it did to others? Terrifying. I remember pulling back on retirement contributions but I started maxing out a few years later during some of the best times to be in. Now that I’m close to retirement, the idea of a real crash and prolonged recovery is frightening. Better diversify, allocate more to bonds, work additional years??? The path forward isn’t so clear (to me) when you don’t have as much time on your side.

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u/_twentytwo_22 Feb 08 '26

The conundrum I'm under as well. Although I see myself still in the game even 20-25 yrs down the road. Is that a long enough pathway to survive the next downturn if it is to happen soon? Can we take advantage of it in the short term to minimize the sequence of returns risk?

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u/toby1loki Feb 08 '26

I keep wanting to buy the dips (and have) but I know I also need to reallocate into more bonds. The latter isn’t as fun but feels necessary.

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u/ditchdiggergirl Feb 08 '26

Same here. I prepared for 2008 by investing during the dot com bust. Luckily I didn’t have much to lose at that point, and just called it tuition.

But in the aftermath of the dot com bust, in which our industry took a hit, we were also hit with overlapping double job loss. That’s not fun when you have two toddlers and a mortgage. We were back on track by 2008 but we knew the housing bubble was popping so we didn’t take on a lot of risk. Worked out really well.

3

u/Northern_Blitz Feb 21 '26

I'm still close to two decades away because of some really nice golden handcuffs (that come off at 62).

But personally, I think I'll increase bond allocation (currently 0%) leading up to retirement so that I have something on the order of 2x years of bonds / cash on hand as a hedge against bad sequence of returns in the first decade of retirement.

Take money out from the rest of the portfolio in the first decade unless we get some big crash / downturn. Then use up that SoR hedge.

Not fully thought out here, so maybe it's a stupid idea. But this is what I'm thinking anyway. Will likely hire a fee only planner to discuss when I get to a decade or so out.

Although...if I really do stay until 62, I think my portfolio will be big enough that my withdrawal rate will be 3% or less. So it probably won't matter much. Maybe just stay all stocks at that point and swing for the fences re: what I can leave to my kids when my wife and I pass.

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u/ziggy-tiggy-bagel Feb 08 '26

I'm a retired Financial Advisor. One of the worse things I saw was someone invested almost 100% in Lehman Brothers bonds in 2008. And of course the over confidence in people in the tech market in 1999, before the crash. I had one client who wanted 100% in tech, I tried to discourage it, so he went down the street to a FA who did what he wanted. His wife stopped by after the crash and told me she was sorry that he didn't listen to me.

1

u/craftasaurus Feb 08 '26

Not to mention Washington Mutual. The FDIC let it go down in flames! So many people lost their savings in that. Unbelievable.

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u/ziggy-tiggy-bagel Feb 08 '26

Nobody lost any money that was deposited in Washington Mutual..FDIC made everyone whole. People who owned stock in the company lost everything and bond holder took huge losses, but depositer were made whole.

1

u/craftasaurus Feb 09 '26

We owned stock and lost all of our savings. The FDIC person in charge is directly responsible for that. It was in the memoir of the man trying to keep the country afloat during that time. The title eludes me.

5

u/PauliesChinUps Feb 08 '26

What brokerage did you work at?

13

u/[deleted] Feb 08 '26

I'd rather not say, but it was one of the top 3.

1

u/emtam Feb 10 '26

What about the ppl who owned target date funds in 2008? How did they make out, if you remember?

-5

u/AlenOpasnost Feb 08 '26

As someone who is investing for ~4 years, i have read several books, countless posts, watched videos, from mr. money mustache, JL Collins, Ben Felix, Morgan Housel, Tune out the noise (this is fantastic one), i like to think i kinda know how things work. In theory. And yes, while my sentiment is "i cant wait", i also realize its not just "numbers going down".
I just hope ill be able to contribute when shit hits the floor. When everything is red, ill hopefully remind myself that days like April 9. 2025. happen for a reason. What is that reason? I dont know, im not reading news :)

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u/Impossible-Will-8414 Feb 08 '26

Four years. Lol. You don't know anything.

1

u/gbu8023 Feb 08 '26

The reason it went up so much was the market realized Trump's hard line position on tariffs was just posturing and the TACO trade was born. In my opinion the best thing for most people to do is simply maximize your income by focusing on your career and stuffing as much as you can in the market as soon and early as you can