Over the past 11 years just about everybody and their brother have predicted that the record-long bull market couldn’t last forever. What they didn’t say is when it would happen, why it would happen, how low would it go and when would the bad times end.
Now that it’s happened many have come forth saying they got it right although, in most cases, they were off several years. And no one I recall said it would probably start with a virus out of China that would soon spread to just about everywhere on earth. Had they known they could have made a fortune by cornering the hand sanitizer market — the possibility of a recession triggered by a global pandemic wasn’t on many radar screens.
Now that the bear has replaced the bull, the question is what next? Are we already in a recession, if not when and for how long? What, if anything, does this have in common with the Great Recession of 2008-2009? It is, as some say, a buying opportunity. Are plummeting shares in the stock-indexed C, S and I funds actually on sale, or is this recession — depression, maybe — going to be around a long, long time — maybe past the date you had planned to retire?
So what’s your plan, if any? Got any gut feelings? For those of us who went through 2008-2009 is the formula the same or is this a new ballgame? Sure seems like it.
This is some of what we’re hearing. First a game plan, then a question:
“This bear market started on news stations and papers spreading fear as constant news on this virus when news finally came out of China. Then … South Korea, Italy and Iran. Fear, which leads to panic, which is one of the worst times to make a decision. Then as the DoD and other agencies shut down official travel, the federal government asked cruise ships to stop cruises, and people started to not travel, which affects airlines and cruise ships short term, further driving the market down.
“My in-pencil retirement date is Dec. 31, 2021. I’m letting my [Thrift Savings Plan] account — buying C, S and I funds, and have some F leftover from 2008-2009 — be battered and when the DoD system for changing insurance and TSP amounts comes back on line, I plan on increasing my purchasing of the on sale stocks.” — Joe in Philly
“I am a 50-year-old fed with 27 years investing in the TSP; my husband is 46 with 11 years in. We each plan to retire at 57. When the market dipped and then rose after Super Tuesday, we moved our allocations to the G fund, and left our contributions in our usual mix of [the C, S, and I funds]. Our plan is to move the account allocations back to C once the virus is on its way out and the market starts to normalize.
“I’ve never moved anything to the G fund — I rode the market down and then up through 2008, etc. But this current situation seems very different. Applying financial analysis based on historic recession patterns doesn’t seem to apply here with a global health pandemic.
“What should we look for to signal it’s time to go back into the C fund?” — Ellen and Todd
The work “OK” was born 181 years ago on March 23, 1839. Writers at the Boston Morning Post used it as a humorous misspelling of all correct (“oll korrect”), which was a common joke among educated elites of the age. For example, “KG” stood for “know go,” or the incorrect spelling of “no go.” Comedy is, after all, subjective.