Well thank goodness I lost a fortune in the stock market during the 2000-2001 dot-com bubble burst. I try not to think of this too often, because I truly would like to forget it even happened. But to make a long story short, while patiently waiting for a few of my tech stocks to get back up to their 1999 highs, I watched them drop until 2003 when I finally gave up all hope and locked in my nearly half-million dollars of losses. (By the way, had I continued holding them through today, I wouldn't be any better off--they never recovered). Even though the magnitude of her losses was much smaller, it is comforting to read Silicon Valley Blogger's reminiscing of similar blunders.
But thank goodness that happened to me while I still had a job and could recover from that lesson while still collecting paychecks. Thank goodness I am NOT, just now, six weeks before retirement, learning that lesson. Having experienced such market losses, we not only have spent the last five years building a solidly diversified portfolio, we have stockpiled three years of living expenses for retirement in CASH. We will not be forced to liquidate at depressed values to purchase such mundane items as food and shelter. Or worse yet, to postpone retirement!
At least there was a silver lining (a stroke of accidental diversification) during those dot-com years. After agonizing and actually thinking it was a very foolish decision at the time, we did sell some of those high-fliers on their way down to purchase a vacation home. Even with the recent fall in local real estate values, that chunk of change did a whole lot better than had we continued to hang on to those stocks until the bitter end.
I suppose if this market doesn't change its direction in the next three years, I'll have to start worrying about the "F" word (frugality), but that's a topic for a future post.