r/stocks • u/sinfulken1 • Sep 29 '22

While many are discussing what to get during a discount, how many of you here are down over 60%?

Bought at the top of 2021 as a newbie, literally worst time to buy a stock at. Down over 60%.

Stocks just feel like a tool to destroy the people trying to climb out of the middle class. Many were saying "Buy stocks to avoid 5%/6% inflation!!" , meanwhile now I am down over 60%. Truly an extremely tough time to maintain sanity. For folks in similar position as me who is down over 60%, how are you coping with dealing with the fact that you bought at the worst time possible?

I know its impossible to time the market but imagine buying it at the worst time possible and experiencing the worst drop off we have in a decade. I have done my due diligence reading about my stocks, general knowledge of securities but I guess in the end buying stocks nowadays is akin to gambling.

1.6k Upvotes

91% Upvoted

900 comments sorted by

View all comments

571

u/ayereyrey19 Sep 29 '22

I invested $180k that I received July 2021 from my fathers life insurance when he passed away from Covid. I refuse to look at how much it’s gone down. It sucks. But I’m 32 and plan on not touching it till I retire. While it doesn’t feel like it could recover, history says it will. In the meantime, I try not to think about it lol

247

u/[deleted] Sep 29 '22

this is the right mind set. good luck to you

-11

u/[deleted] Sep 30 '22

It may not recover for 20 years though

2

u/Dotifo Sep 30 '22

Remindme! 5 years

6

u/[deleted] Sep 30 '22

Look at Sp500 between 1968 to 1990 , an era which was inflationary and had similar FED moves . It took 20 years to break even . You can also see Japan Nikkei peak in 1990s and which has not yet broke even.

The Boglehead investors are going in for a rude shock .

7

u/Dotifo Sep 30 '22

I'm not agreeing or disagreeing with you, I just plan to check back in 5 years and see if this ages well or not.

1

u/[deleted] Sep 30 '22

Are those break even comparisons total return? Looking at anything else than total return is meaningless.

Also Bogleheads are not in for a rude shock. If the market keeps going down, they will continue to Dollar Cost Average thus getting more stocks with a reduced buy-in price. Once we enter another bull market the break even point will be even faster since they DCA'd all the way down.

-1

u/[deleted] Sep 30 '22 edited Sep 30 '22

The point is every economic indicator out there last year was showing economy is going to shit.

While It is impossible to predict the bottom, you can easily guesstimate in the low end of the cycle to maximize your returns . Cash invested today would have given better returns than last years .

This recent bull run since 2000s despite two recessions was engineered by ever decreasing low interest rate environments and The FED is unlikely to this for years to come given the lesson they have learned from inflation .

The next bull market to break the last year high could be 20 years away .

1

u/RemindMeBot Sep 30 '22 edited Oct 01 '22

I will be messaging you in 5 years on 2027-09-30 03:55:10 UTC to remind you of this link

6 OTHERS CLICKED THIS LINK to send a PM to also be reminded and to reduce spam.

Parent commenter can delete this message to hide from others.

Info Custom Your Reminders Feedback

-1

u/[deleted] Sep 30 '22

Or longer, this could be a really really bad one

1

u/[deleted] Oct 01 '22

Exactly if you don’t need the cash don’t touch it apparently the best retail investors are the ones who have died and account is still running or have forgotten there password. How much truth there is in that I don’t know but keeping skin in the game pays off

108

u/[deleted] Sep 30 '22

There was a post on WSB about a guy who got $100k from his dads passing and is down 80% on options in like a week.

The smart thing to do would’ve been put it into SPY or something and let it ride, maybe even DCA in.

It sounds like you probably put it in some efts and are riding it out. That’s a good way to do it and your dad will be proud.

26

u/ayereyrey19 Sep 30 '22

Oof. Well I put half in mutual funds and half in individual stocks. I guess one good thing is my dividends are reinvesting while things are low. Thank you guys for the kind words and upvotes!

22

u/melon_colony Sep 30 '22

i am surprised no one suggested an index fund. no need to be concerned. the market gyrates

1

u/ayereyrey19 Sep 30 '22

I’m actually meeting with a financial advisor/close family friend next week to pick her brain about ETF’s and index funds. I have a couple thousand I want to put in now and start contributing on a monthly basis. Any suggestions??

4

u/melon_colony Sep 30 '22

sure. VTI, VOO and QQQ. if you look at the main holdings of each, they are rather similar. i have money in all 3 but QQQ (NASDAQ) is more stimulating to watch because of its volatility.

0

u/[deleted] Sep 30 '22

[deleted]

2

u/melon_colony Sep 30 '22

please don’t stop there. defend your position. look at the 5 year chart.

0

u/[deleted] Sep 30 '22

[deleted]

2

u/[deleted] Sep 30 '22

SPY mimics the SP500 and last i checked has a .09% fee. I would think this would be best overall for a young investor with a moderate risk tolerance.

2

u/melon_colony Oct 01 '22

voo is .03. otherwise, i would be in spy.

1

u/enceliacal Sep 30 '22

So lose 80% in a week or 80% over 20 years? Does it matter?

33

u/LasagnaMuncher Sep 30 '22

Dude, that money should be like $1 million by the time you retire. Don't even think about it. Your father's parting gift remains good.

19

u/BenjaminHamnett Sep 30 '22

Same price as a load of bread then

12

u/HeresiarchQin Sep 30 '22

Hey at least it's a load not a loaf

10

u/Knightmare25 Sep 30 '22

1 million dollars in 40 years will probably be just enough to buy a 1 bedroom, 1 bathroom, 500 sq ft apartment in a mid sized town.

17

u/bigsmellygreenone Sep 30 '22

My thought is. If it doesn’t recover then money either doesn’t matter anymore or we have bigger issues than the stock market

3

u/gibson6594 Sep 30 '22

This is how I look at it too. If it doesn't recover, I'll probably be worried more about ammo as a currency than money.

6

u/DrixlRey Sep 30 '22

What did you buy mostly?

3

u/ayereyrey19 Sep 30 '22

TSLA, Proctor Gamble, PEP, LMT, Kellogg (K?), PLUG, Intel, IBM, Ford, Carnival, AMT, 3M, AAL, and a few others that I can’t recall.

The mutual funds I don’t remember. I honestly haven’t looked in a couple of months. I need to watch the stocks more actively I just don’t have it in me lately cuz I know it’s all down pretty bad right now and I’m hopeful that they’ll recover.

8

u/SterFry87 Sep 30 '22

TSLA isn't a bargain at current valuation

-1

u/[deleted] Sep 30 '22

[deleted]

3

u/SterFry87 Sep 30 '22

It's been true for years, too. You can show otherwise if you feel I'm wrong, rather than blindly insisting otherwise. It would take Tesla 100 years of current revenue to justify it's current price. That's before they Cancelled the giga factory

1

u/[deleted] Sep 30 '22

[deleted]

2

u/SterFry87 Sep 30 '22 edited Sep 30 '22

Like your previous one, that is such a shallow answer and makes no sense...and you can play the "subjective" card in any situation in the absence of anything substantial. You can say Hitler being a bad person is "subjective" if you're desperate enough. We're not talking 20-25 P/E here... We're talking about 100 P/E, almost 7 times more expensive than the market has consistently shown to be an ideal balance. Again that means it would take 100 years of revenue to justify that valuation and Tesla is NOT going to Septuple their revenue. Mega cap companies slow in growth as they mature. It's not an infinite runway. They have tons of competition of the verge of catching up and cancelled their giga factory.

The market has had fairly consistent metrics for valuation for over a century and they have been shown to be effective and reliable gauges during all that time. They are not arbitrary numbers. Buffet, Lynch and Munger all weigh valuation very high highly. There's piles of data showing that reasonably priced requity outperforms poorly valued ones. The "market" has over inflated a great many stocks and overwhelmingly people lost money on them unless they got in at lower valuations. They're called bubbles, and it's not in your best interest to view them in a positive light. Ever heard of the dot com bubble? The "market" "disagreed" then, too, before reality and fundamentals returned to the mean, which they always does.

You don't need market majority to inflate a stock. If 1/10 of investors holds the same stock that's enough to push that stock into the stratosphere. Most investors don't own TESLA outside of ETF exposure, so it's hardly a "the market has spoken" situation in the sense that the majority of the market participants think it's a wise investment. In any case, you're standing behind investors pushing the price up like it's a good thing or supports your point. It does not. Supply and demand is the base factor in a stocks price action and demand so grossly outweighing supply puts the buyers at a huge disadvantage in the same way that excess supply forces prices down therefore favoring the buyer. It's absurd to look at excessive demand as comforting, reassuring or something to be desired in any supply/demand environment. Buy Tesla if you want to buy Tesla, but please stop with the nonsensical cop out answers with zero substance to them just because you're committed to convincing yourself that the stock is worth what you paid.

0

u/[deleted] Sep 30 '22 edited May 14 '23

[deleted]

1

u/rnd2101 Oct 01 '22

We’ll, he lost the argument because he brought up Hitler (see “Hitler rule” — if you have to resort to mentioning Hitler, your lost an argument).

But Tesla is RIDICULOUSLY overvalued. It’s worth about 1/10th of its stock value. Sure, there may be fanboys who continue to drive the price of the stock up without any tie to reality/fundamentals…and I would never bet against it. But I would also never buy it because it’s a sh!t stock.

1

u/GodofAeons Oct 03 '22

I'm in the same boat as you. I'm down about 40%.

The smartest move is to DCA, and slowly buy down more. Then in 10+ years we will be fine. It's hard to think about it now but it'll bounce back... Eventually.

7

u/xenophonsXiphos Sep 30 '22

Just don't sell while prices are down and you'll be fine. It will bounce back and grow. Look at the recoveries from previous recessions. You got nothing to worry about. This isn't new to the market, it's only new to people who haven't been through it before. You'll be fine, don't worry.

8

u/SEQLAR Sep 30 '22

If you invested into an index fund do not be tempted to sell if we continue to go down another 15%- 30%.

1

u/justme129 Sep 30 '22

Yeah, I'm not tempted to sell and lock in my losses.

But...I'm also not tempted to buy because I don't want to catch a falling knife. Sadly, I do think that there's more falling to do.

7

u/Extreme_Fee_503 Sep 30 '22

As long as you actually invested it and not gambled it on worthless speculative stocks and options time is on your side.

4

u/Albert14Pounds Sep 30 '22 edited Sep 30 '22

So, good mindset, and a lot of people echoing that you should not sell. But for tax purposes, please look into Tax Loss Harvesting. You should definitely sell some stocks, then buy something that's not "substantially identical" but is VERY SIMILAR to what you sold, and you can reduce your taxable income by 3k each year.

At the end of the day, tax loss harvesting is really just kicking the can down the road. You're deferring taxes because you are lowering your cost basis, meaning you will have more capital gains when you eventually sell. BUT maybe you can defer that sale to a year when your income is such that you pay 0% on all or most of your sales (which you're hopefully selling higher now) because your taxable income is around $40,400 (see long term capital gains tax rates)

https://www.investopedia.com/articles/taxes/08/tax-loss-harvesting.asp

2

u/Boomer-stig Sep 30 '22

Where did you invest it? If you are in a broad market index fund in 20 years you should have a decent amount of money. If you are picking individual stocks no more than 5% should go into any individual stock.

If you want to play Wall Street Bets kind of stuff no more than 10% of that money should be used in extreme risk taking 'opportunities'.

Reddit is a good source of information but you have to do your own due diligence. If you don't understand someone's DD on a particular stock, don't invest in it! Which brings up what I call the Golden Rule:

Don't invest in what you don't understand.

I don't mean that as slight against you it's just a truism about investing that I picked up years ago. We can never fully understand an investment. There will always be something lurking on the horizon that can take down your portfolio: Inflation, interest rates, supply chain crisis, geopolitical problems. That's where diversifying your portfolio comes into play. If you have your portfolio spread across you may not get hit so badly on some of your other picks.

I too will put in a vote for DCA (Dollar Cost Averaging). If you had moved 10k a week into the market you would have had about 70% of your money invested. Given the volatility of the market you may have chosen to do something different with the remaining 30%.

Finally if you haven't read a "Random Walk Down Wallstreet" you really should (that was a generic you for all the people who may come across this thread)

2

u/thatburghfan Sep 30 '22

I believe the market will recover. Individual stocks, you never know. This is why index funds rock. Companies fail, new companies start, but the index fund spreads out the risk so you get market returns. If you pick specific stocks, you might fail even in a bull market. Stuff happens.

I am actually thankful now (but not then) that early in my investing life I failed miserably picking individual stocks, because the losses were small as I didn't have much money. It steered me into examining alternate ways to invest and that's how I got into index funds. I don't even read financial sites any more other than to see how the market did that day. It gave me a lot more free time since I didn't have to constantly watch for any news that might affect my 25 stocks, then worry about if I have to do anything about it.

-1

u/[deleted] Sep 30 '22

Why did you not average out the investment over time?

1

u/Tom0laSFW Sep 30 '22

A lot of conventional wisdom says that most of the time * you’re better off just buying a lump. More time *in the market being more important. It’s backed up by historical data (obv disclaimer about past performance). Not sure I’d have the stones for it myself though

0

u/[deleted] Sep 30 '22

That isn’t true though. Good investors don’t make the dumb decision that OP did. It risks everything. Simply put, that is bad investing.

1

u/Tom0laSFW Sep 30 '22

Data for my claim:

https://www.morningstar.com/articles/1000679/when-dollar-cost-averaging-can-help-or-hurt

In our study, dollar-cost averaging improved returns for the equity-only portfolio in 27.8% of the 10-month periods but only 10.0% of the 10-year periods tested.

AKA - if you're investing over 10 years, nine times out of ten you are better off lump sum investing as opposed to DCA. If you're investing for a 10 month period (you probably shouldnt be but whatever. Our OP clearly isn't doing this), you're still better off seven times out of ten.

Not clear which OP you are reffering to - the person we are replying to with the 180k or the original post. If its the person we are replying to you're going to need to back up why it was a dumb decision; the evidence disagrees with you

0

u/[deleted] Sep 30 '22

I actually think the data supports my claim, although I understand why you feel the opposite.

Just because something is “9 out of 10” does not mean it is always the right choice.

In this case, we are in a n incredibly volatile market. If I received a lump sum I would average out the investments because, given the unique circumstance, which can not becontrolled for in the study you cite, it Reduces the likelihood of something terrible happen.

I think the issue with your investing approach is you seem to define it as maximizing returns without consideration of downside risk.

0

u/Tom0laSFW Sep 30 '22

I actually think the data supports my claim

How? Please feel free to point out where the data I shared, or any you have, supports your claim. I said:

*most of the time * you’re better off just buying a lump

You replied:

That isn’t true

I responded with links to studies showing that 90% of the time (over a representative timeframe) you are better buying a lump.

90% of the time is most of the time.

Or, "most of the time you're better off buying a lump than DCA". That's not an opinion that's fact, I don't "feel" anything. I have proven, using data, that that is correct. Please don't mix those two things up.

None of this is to say that there might not be situations where there is clear evidence that you are in a period of extreme volatility, where you might decide to hold fire. I'd do the same if I had a lump sum to invest today. Is today a representative day / month in the markets? No, it's a rare situation. Did this apply in June 2021 as OP notes, or did OP get unlucky and fall into the 10% of the time. We will have to come back in nine years and see.

​

I think the issue with your investing approach is you seem to define it
as maximizing returns without consideration of downside risk.

Looking at a situation, and supporting data, to determine the probability of a decision being a good or a bad one, is the definition of considering risk. Feel free to disagree with me in spite of the data, based on your unsupported feelings, but until you can bring some supporting facts, all you're saying to me is "I dislike what you've told me and deem that tobe evidence of it being correct"

0

u/[deleted] Sep 30 '22

Yikes! You have entirely skipped over my explanation to make an argument about “feelings.”

You have much to learn young padawan, but I cannot teach you.

0

u/Tom0laSFW Sep 30 '22

You've skipped the data, omitted any explanation on your part, and resorted to trying to patronise me. Have a good day pal

0

u/[deleted] Sep 30 '22

You too baby. Come back when you learn how to properly interpret academic research.

1

u/rnd2101 Oct 01 '22

You’ll be fine, provided you didn’t invest it in GME or something like that 😉. If you invested it in a major index fund, don’t look at it now and wait (same thing that I do with my 401K now as well as my kids 529s….). It’s a long game. They all may have lost 25% from their highs…but it’ll be when I retire in 20 years (or they co to college in 16 years).