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How I Felt on March 9, 2009

March 9, 2017

I felt worse than miserable and terrible. March 9, 2009 was the market meltdown’s low point with the Dow Jones Industrial Average at 6507.

Actually the way I felt was on March 4th. The evening before my wife asked me how we were doing in the market, and I suggested we sit down the next morning and go over everything. That morning I printed out every account statement we had and then reviewed it all with her.

I looked over everything before I sat down with my wife and felt like the bottom dropped out. My financial assets were half of what they were at the beginning of 2008. I spent my entire life accumulating funds for my late in life financial security and saw half of it vanish in the last year. I was totally numb. All my foregone spending, entertainment and traveling were meaningless.

I had a diversified portfolio weighted heavier in stocks. Of course they dropped, but in the whole scheme of things they were stocks and there was no guarantee against that happening. I am a big boy and understood that. For the previous five months as the market dropped, I was struck with an overwhelming feeling of inaction, so I did nothing. I stopped putting new money in the market, but continued my dividend reinvestments – that was on auto pilot and I was literally frozen in decision making.

Looking at the bond portion of my portfolio was more devastating giving me a feeling of despair that I did not have with the stocks. The bonds were “conservative” investments, supposed to be an anchor, stable, and income producing and many bonds dropped 60% or more in value. That wasn’t supposed to happen. With stocks – it had to be somewhat expected, maybe not so much, but still expected in the recesses of my brain. But bonds? Totally not expected!

Luckily my inaction paid off since I sold nothing and the market recovered and the bonds lived to continue paying interest and eventually their face when they came due.

A lesson here is to not count on anything except perhaps 100% government insured bonds or bank certificates of deposits; and even with that you cannot count on a guaranteed cash flow except at very low rates. Unexpected things can happen and dreams can be destroyed. What you need to do is understand the markets, what your cash flow needs are and what can occur that can cause losses or diminution of the cash flow. What you also need to do is determine which is more important – asset values or cash flow? And build a portfolio that can give you the best chance of attaining your goals – and also hold something back in liquid cash – I call that a rainy day fund. If you do not feel fully confident doing it by yourself, then find an advisor you can completely trust and seek their guidance. After your decisions are made you then need to regularly monitor what you have, hope you made the right choices and act to minimize mistakes. And also do not panic!

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