If I Had One Financial Do-Over, What Would It Be?

Today, we are taking part in our first Yakezie Blog Swap.  This swap’s topic is:

If you had one financial do-over, what would it be and why?

When I saw the topic, I instantly knew what my “do-over” would be.  My financial do-over is about missed investment opportunity.

Like many bears, I tuned in to the impending collapse of the financial market last decade.  My wife and I sold our home in the fall of 2007 and rented for two years as home prices collapsed.  My family and I also believe strongly in living below our means and as such are very prudent when it comes to spending, debt and investing.  Although I able to see the crash coming,  I was inaccurate on two very important accounts.

The first, the crash happened about 18 months later than I thought it would.  I mistakenly believed that enough people would see the fundamental problems sooner than they did.  This, of course, is the root of the old investing adage “the market can stay irrational longer than you can stay solvent.”

Second, the crash didn’t go as low as I thought it would.  Reflecting back, I got a little too caught up in my own doom-saying.  I was fixated on the DOW going down to around 4,000 and didn’t acknowledge that government was literally going to print trillions of dollars to make sure the price wouldn’t go there.  I thought that since printing all that money would ultimately make things worse, they wouldn’t do it.  Unfortunately, just because the government shouldn’t have done it, didn’t t mean they wouldn’t.  In fact, I should have known from history that the government was most likely to try to intervene in the short term at the expense of the long term.  I was naive to think otherwise.

This leads me to my financial do-over.  While this is a lot easier said than done.  If, I was able to do it over again, when the market crashed in 2009, I would have started to make small investments in the market.  I would have then continued to dollar-cost-average into these investments. Looking at the chart below you can see where, in hindsight, I should have considered “buying the market”.  The chart is of the DOW Jones Industry Index and the trend lines you see are drawn based on key tops and bottoms of the 1930’s.

If I had a do over, stock chart

The reasons I didn’t is that I was convinced of a few things:

  • Any stimulus or bailout plan the government came up with would only make things worse (it has)
  • None of the core reasons that caused the financial crisis would be fixed (they haven’t yet)
  • Ultimately the market will “re-test” (go down) to touch the middle trend line again and may / should go down to re-test the bottom trend line.
  • Only after touching the bottom trend line, will governments resolve to fix real structural issues and hold those responsible for this mess accountable.  From there, we can re-build and enjoy many years of true prosperity.

So there you have it, my financial “do-over”.  Fortunately we live and learn.

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8 Responses to “If I Had One Financial Do-Over, What Would It Be?”

  1. No Debt MBA

    I also have regrets around not buying more stocks when the market in chaos. Hindsight is 20/20 though and I didn’t do too bad regardless 😉 I agree with you though that very few of the causes of the financial crisis have been addressed, so I have lingering concerns about the market and have diversified accordingly.

  2. Under_House_Arrest

    No doubt, had I known then what I know now, I might have rented instead of bought a house here in metro Detroit. While it was not terribly expensive to begin with ($105k for a 2-BR/1BA condo), and is not a huge financial burden, it has lost so much value in 7 years that it will be highly unlikely to recover any significant (say, more than 50%) of the original purchase price. I still live in the home, I can easily make payments, am not in danger of foreclosure, and have a low interest rate which is currently only slightly more than available CD yields.

    What this means, however, is that I can’t move, even though I’d very much like to move someday. In the lowest housing market in a long while, when opportunities to buy cheap houses abound, even in desirable spots like Florida, for me to try to sell my home would basically wipe out my current cash position along with any down payment I might use for another house. Therefore the “advantage” of cheap housing cancels itself out.

    In contrast, in the lowest stock market in many years, while I probably didn’t buy as much as I wish I had, I still had the ability and some of the foresight to buy back into the market with small increments over a long period of time, which helped to cancel out the effect of the busted market.

    Alternatively, at least, I might have been more aggressive in selling my home when I tried to sell it 6 years ago in order to be closer to work. I might have hired an actual realtor instead of trying to do it FSBO. But in hindsight, had I sold then, I would have bought something bigger, more expensive, with a higher mortgage rate, higher property taxes for similar public services rendered, and would likely have lost even more value. Even then, part of me recognized that possibility. Perhaps I can take some small comfort in that.

  3. Aaron E

    Sorry to hear about the house. You are certainly not alone. Good move on buying the market though. Hopefully, you managed to get some good gains there. If you haven’t already you might want to read this post, I think the market is in for good sized correction, then a bounce and then a major drop. I see the S&P500 having solid support at around 1050, if that doesn’t hold I don’t see why we wouldn’t hit 666 again, or even the infamous 400 number all the bears keep talking about. Time will tell though.


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    There was still so much fear and uncertainty, you can’t be faulted for missing this opportunity. I am mad at myself for not having the funds to invest as much as I wanted to. At least you sold before home prices dropped into the basement.

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