My Reactions to Past Market Disruptions
"Fool me once..."
There's only one sure thing I know about the markets, whether they're going up, down, or sideways: nothing I do will affect them - I can only control my own reactions.
I was only seventeen (do not start singing Winger) on Black Monday, so it didn't leave much of an impression. The great bond massacre of 1994, on the other hand, was a seminal event in my early career. I was working trade support on a mortgage bond derivatives trading desk, and one of my responsibilities was pricing the book at close of day. My compensation wasn't terribly affected by the desk's profitability, so I didn't think about it the same way as my traders did, but it was very exciting, and we spent a lot of extra hours at the office dealing with the bonds that sent Orange County, CA into bankruptcy. Without any real money of my own on the line, it was easy to be unemotional about the $1.5 trillion in bond market losses that were going on around me.
By 2000, on the other hand, I had a decent amount of money in the market - in the dotcom market, to be exact. On top of that, I fancied myself quite the day trader. I think you can guess how that all went down. I made just about every wrong move in the book, losing money in all the best ways (buy low, sell high, generate short term capital gains tax, buy higher, wait to sell sell low until the next calendar year, hoping for recovery, locking in tax burden, etc.). That was fun. Luckily, my next job in 2002 came with serious trading restrictions, or I'd likely have figured out a way to lose even more money.
The good news was that by 2008, my savings rate, combined with relatively high income and work related hands-off investment strategy, allowed me maximize the dollar loss of the 50% drop in the equities markets between October, 2008 and March, 2009. By mid 2009 I was so sure that the aftereffects of the crisis would last years that I pulled basically all of my non-qualified money out of the market to start a business, and moved from 100% equities to a conservative 60/40 asset allocation in my qualified accounts, which is where it stayed for most of the last decade's bull market, allowing me to miss out on much of what could end up being the best 10 year run of my investing life (or not - we can't know).
I mention this mainly because the current COVID-19 related crisis is causing all sorts of people to want to turn into market timers, even folks who I've heard preach the gospel of passive investing for the last several years. Take my word for it, if I'd heeded Jack Bogle's advice to, "don't do something, just stand there," when it came to my investments over the past 25 years, my family and I would be in a significantly healthier financial position.
Nothing about what we're going through as families, a nation, and a world is going to be easy over the next weeks and months, but worrying about whether you should be making moves to somehow time this market should be the least of your concerns.