And you’d be wrong that I didn't see the last recession coming. I pay very close attention to the news… financial news included. I have had subscriptions to the WSJ and FT for almost 20 years. I follow the news much more closely than my husband does. So when I started to talk a lot about my concerns about the housing bubble and the collapse of the bear sterns hedge fund… and then the news got increasingly worse in the fall…. We moved our entire nest egg into money market funds on November 7th 2007. We continued to contribute, but we’re out of the market. We thought it would be for a few months, but we didn’t get back in until the day after the inauguration in 2009. We didn’t hit the top, and the market didn’t bottom out until March of that year, but we missed out on 30+% of the decline. But I wouldn’t do that again…. We got lucky, and we’re not aggressive enough investors to actually short the markets. It’s easy to get out…. Much more stressful to figure out when to get back in. Had we stayed in the whole time, our nest egg would be a bit smaller, but it would have been less stressful, and ultimately we still would have been fine.
As for the future, I absolutely believe that we'll have more and more mass shootings. Where can I bet on that? Future world wars....possibly, depressions....sure...but as long as we have very active central banks not as likely. I believe that the great Civil War will continue to rage on social media for the most part....and drive a bigger and bigger wedge between the most fervent on either side....say 10-15% on each side, so 20-30% of the country will continue to scream at each other and wave stupid flags and play militia....ad nauseam. They'll continue to make it awful for the rest of us. Any talk of where the markets will end up in the next year or two is purely a guess...maybe a slightly educated guess. We're at 75% VTSAX and 25% in short term treasuries....at about 5 years out from retirement, 10 years out from having to touch our next egg. We're about 65% into building up a 5 year "emergency fund", which will act as our five year income stream once we stop working. We're 54 and 53, so we can work far beyond five years if necessary. My husband is 3/4 of the way through completing his application for dual citizenship with Italy which would allow us to move all over the EU, and work if necessary....and there's a lot of places over there where we enjoy spending time. Time is our most valuable asset...and you really start thinking about that in your 50s...at least we sure have. It's a good solid plan, with a lot of flexibility in it. We do believe a recession is coming and so our current contributions are going all in on VTSAX....as this is money we may not touch for 30 years. But we're leaving our core holdings alone, and no jumping in or out....we found that to be too stressful. And do you know where the market will be 30 years from now? Nope, me neither, but if you follow history, you'd know that the overwhelming odds will be that it's much, much higher. And so I'll take those odds any day.
What's your plan...when will the civil war start....when will the Great Depression begin? I'm curious what you think and how one times their investments for these scenarios.
