I wish the market wasn't so high! Hold out for a fall?

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Re: I wish the market wasn't so high! Hold out for a fall?

Postby Novine » Thu Apr 04, 2013 10:10 pm

If you are 60 and on disability, the kind of lump sum investment you'll make looks nothing like that of a 20 year old. The 60 year old isn't going "all in" with stocks so a crash isn't going to hit their portfolio the same way. Why assume that it would?
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Re: I wish the market wasn't so high! Hold out for a fall?

Postby wshang » Thu Apr 04, 2013 10:40 pm

FWIW, there is one more method using options: (Collar)
1) Buy your entire position
2) Sell a slightly out of the money call for your entire position
3) Use the premium from the call and purchase a put position which covers your entire position.

This way, if the market crashes, you only lose that portion between the original stock purchase and the put. The beauty of this is it cost you nothing. Well, it cost you any short-term sharp gain beyond the call strike. But hey, no problem, if that happens, you start off next month with even more money.
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Re: I wish the market wasn't so high! Hold out for a fall?

Postby TroutMD » Fri Apr 05, 2013 2:27 pm

Confused wrote:
longview wrote:
beachplum wrote: If I had a 25 million windfall today, I wouldn't put all if it into the stock/bond market either. why does this person need to do that? Or did I misread something.


But where else would you put it?


$25 million? I'd put it in FDIC-insured savings accounts and CDs. Once I've won the game, I'm taking my cards off the table.



I would figure up what I need to live on, then double it. That amount, I would put into a FDIC insured CD. I would then do a standard allocation of all thats left.

Me personally, my goal would be a 3 million, 4% withdraw, 120K/year. I would double that, probably triple it. 10 million into the account, the other 15 million I would invest. I would then try my hardest to spend the 'profit' that it makes each year. I would consider that free money that I dont care about. Ferrari fund, private jet rental fund, donation fund, neighbors kids college fund, etc. Spend at will and as needed. If it loses, dont spend that year.

I will never have a 25 million dollar windfall, but if I did, thats what I would do.
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Re: I wish the market wasn't so high! Hold out for a fall?

Postby tadamsmar » Fri Apr 05, 2013 2:47 pm

BrianOB wrote:"Potential Regret" isn't always just feeling sorry for yourself - for some it's not being able to pay the bills.


The problem is that all investors who stayed in the market should feel the same regret. The could have sold out an lump summed back in. Why don't they feel it, too? Are they irrational for not feeling it. Or is the guy who lumped sum irrational for feeling it?

Or, if they do feel the same regret, why is it the best policy for them to not sell out and lump sum back in?

All investors have the same opportunity to avoid the regret and take the same lower expected returns. Should they all do it? Why not?

You are right that it can rational to trade lower expected return for less regret and list risk of not being able to pay bills. But it is not rational to arbitrarily advise some to do this and others to not do this.
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Re: I wish the market wasn't so high! Hold out for a fall?

Postby goodoboy » Mon Apr 08, 2013 1:53 pm

wow,

$26 million. Do you really even need to invest? That's not enough?
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Re: I wish the market wasn't so high! Hold out for a fall?

Postby Clearly_Irrational » Mon Apr 08, 2013 1:57 pm

goodoboy wrote:wow,

$26 million. Do you really even need to invest? That's not enough?


With negative real rates on savings accounts I'd have to say that yes, some level of investment is a good idea. Does he need to take much risk, no not at all.
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Re: I wish the market wasn't so high! Hold out for a fall?

Postby longview » Thu Apr 11, 2013 9:32 pm

Thread Resurrection -- maybe this should be a seperate thread. But, the question:

Is there any real reason to DCA into a Bond fund?

ie, If you are in it for the long term, and believe that as the fund value drops the re-invested dividends compensate, then what is the point of doing DCA?
(To color my comments: my situation is ER trying to make a large portfolio that is 99% taxable last 45 years)
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Re: I wish the market wasn't so high! Hold out for a fall?

Postby livesoft » Thu Apr 11, 2013 9:35 pm

What if you DCA? So what? It's not like your bond fund is gonna gain 5% in the next 6 months anyways. You might as well market-time investing in bond funds with a plan such that you will have all your bond-designated money invested in 6 months.
It's all about short-term opportunistic rebalancing due to a short-term change in one's asset allocation, uh, I mean opportunistic rebalancing, uh I mean rebalancing, uh I mean market timing.
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Re: I wish the market wasn't so high! Hold out for a fall?

Postby longview » Thu Apr 11, 2013 9:46 pm

livesoft wrote:What if you DCA? So what? It's not like your bond fund is gonna gain 5% in the next 6 months anyways. You might as well market-time investing in bond funds with a plan such that you will have all your bond-designated money invested in 6 months.


Well, if the money is currently sitting at 0.01% or so -- then it would be better off in the bond fund was my thought. And what's the downside that is being avoided by using DCA? Where as with equities, you are trying to average your entrance cost since you are looking for capital appreciation.
(To color my comments: my situation is ER trying to make a large portfolio that is 99% taxable last 45 years)
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