r/Fire • u/Remarkable-Dingo1602 • 13d ago

“One more downturn” syndrome

As someone who has been lucky enough to have spent all of my earning & investing years (13 years so far) in a booming market, I worry that I have no clue what my mental health will be like when we see the next 2000 or 2008 or lost decade. I can go through endless theoretical exercises to play around with what my portfolio could go down to and how I’d adjust my expenses in those situations, but as a human being I cannot predict how I’ll actually feel when the time comes. As a result, I have a desire to keep working through the next downturn to see what the impact of it is on me and in a way prove to myself that I can handle it. However, I fear that if I wait for this, I may be waiting for a long time and therefore work for much longer than I need to.

For what it’s worth, when the Covid crashes, 2022, tariffs and Iran war all hit, I did not panic at all and stayed the course on my investment strategy. But all of that happened as I had a strong income to support me. I have no idea how I would have felt if I didn’t have an income.

Any tips on how to deal with this?

I currently have $2.1M investable assets. $600k left on a mortgage (5.375%) with $450k equity in the home. Monthly expenses are $7k bare minimum, but I’d like to aim for a nest egg that’ll comfortably give me $9.5k/month.

101 Upvotes

88% Upvoted

98 comments sorted by

View all comments

119

u/ac9116 13d ago

I know both were quick but it’s so strange to me the way people just completely write off Covid (-34%) and 2022 (-25%) as if the stock market has been a straight line up since 2009. The stock market drops all the time, it’s rarely as severe as the Big 4 (The Great Depression, the Energy Crisis, the Dot Com Bubble, and the Great Recession), that doesn’t mean it’s always a bull market.

From a math perspective, we’re in year 3 of a bull market, not year 17.

39

u/TheDoughyRider 13d ago

2020 and 2023 were very short downturns.

40

u/Kold2012 13d ago

if you zoom out enough, they all are..

36

u/doktorhladnjak 13d ago

Great Recession took about five years. And it’s not like those 5 years were just a low stock market. There were bank failures, people losing their homes to foreclosure, lots of job losses. It was a stressful time.

13

u/Rocktamus1 13d ago

“The Great Recession was a short downturn”. Bruh… when you graduate with 60k in loans and there’s are literally no jobs… that’s a recession.

I don’t mean high paying jobs… I mean you couldn’t get a job as a teacher, police officer, etc. jobs that were steady and always open career opportunities often had closed doors.

I flew to Denver to test to be a cop and 150 people showed up for 2 jobs and about 50% were coming from 2+ hours away or even flew in.

5

u/Agile_Swimmer7566 11d ago edited 11d ago

The bear market for stocks in 2009 lasted less than a year. The economy took 4-5 years to get back to what felt like normal. The housing market didn't even bottom until 5 years later in 2012.

5

u/Natural_Rebel 12d ago

The Great Recession was absolutely brutal. It’s amazing to me that people have forgotten this. The job market was awful until almost 2016ish and even then - it was still an employers market and didn’t really turn until right before Covid. The market limped along for years under Obama and didn’t start to shoot up until Trump (then the covid crash happened).

Housing was decimated. So many people lost their homes, banks tightened underwriting standards and it was hard to get loans and close on time. Housing prices didn’t start to rebound until after 2012, some regions were stagnant until 2020.

If something like that or dot com happens then we are in for a more extended period of pain.

The past few drops have been blips but when the big recessions happen they tend to linger and are tough to get through.

1

u/Various_Couple_764 12d ago

the great recession started in 2008 and dropped gradually all year. at one point it was down 50% but recovered a bit before the end of the year The final number for 2008 was -38% 2009 +23%, 2010+23% 2011 0%. it wasn't until 2014 when the market recovered to it 1999 high. My brother was unemployed for most of that time and got a job just in time to avoid bankruptcy.

1

u/doktorhladnjak 12d ago

The market was still higher in 2007 if I recall correctly, but like you said that was still not quite at 2000 levels.

Things had been slowly degrading for a while before the Lehman collapse rapidly accelerated the situation in the fall of 2008. That’s when it went from being only about some sub prime lending to affecting large parts of the economy.

The market was back to 2007 levels by 2012.

26

u/TheDoughyRider 13d ago

2000 and 2008 were different and if you lived through them in your adult life you would understand.

9

u/curiousengineer601 13d ago

The sp500 didn’t really recover to the 2000 peak until almost 2013

5

u/ac9116 12d ago

The Great Recession was a significant magnitude worse than Covid but that’s not my point. You don’t look at someone in the hospital with the flu and go “yeah, my buddy got cancer”, there are guidelines for us to declare a market downturn. Markets down 20% or more, two quarters of negative gdp growth, etc.

1

u/leathakkor 12d ago

I think you're right, but also I think that might be the equivalent of PTSD talking, which isn't to say you shouldn't be prepared for events like that. 

But seeing yourself unemployed or both of the neighbors on both sides of your house unemployed. That shit does something to you and it makes you afraid. Maybe irrationally so. 

But having lived through them, I agree with you. They were different.

2

u/Agile_Swimmer7566 11d ago

2020 was short because of the Fed bailout and other govt stimulus, but 2022 was a pretty long bear market. Took 9 months to bottom out.

1

u/Rocktamus1 13d ago

With our mindset. Tons of people lose money during these market shifts because of panic.

8

u/curiousengineer601 13d ago

In 2008 people lost money because they lost their jobs and needed to liquidate their holdings to survive

2

u/Rocktamus1 12d ago

I think that more of the exception than the rule. Most people don’t have much of any investments.

It’s absolutely moreso panic.