How are you being GREEDY when others are fearful?

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Fat-Tailed Contagion
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How are you being GREEDY when others are fearful?

Post by Fat-Tailed Contagion »

“Be Fearful When Others Are Greedy and Greedy When Others Are Fearful” - Warren Buffett

What specific strategies are you considering or implementing in this fear cycle ?

All responses are appreciated, ie. buying EM, PME, rebalancing with bands according to IPS, market timing, stay the course, etc.
Last edited by Fat-Tailed Contagion on Mon Aug 24, 2015 8:54 am, edited 2 times in total.
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Mill
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Re: How are you being greedy when others are fearful?

Post by Mill »

Does staying the course count?
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Re: How are you being greedy when others are fearful?

Post by JiveTurkey »

I'm being neither.

My savings are too important for me to alter my plan based on others' courses. I'll stay with mine.
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Re: How are you being greedy when others are fearful?

Post by John3754 »

Ignore the noise and stay the course.
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Phineas J. Whoopee
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Re: How are you being greedy when others are fearful?

Post by Phineas J. Whoopee »

How? By not being so.

Why would I change my investing strategy based on the (presumed in a sort of everybody-is-stupid-but-me way) emotions of others?

I'm a frayed knot.

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Re: How are you being greedy when others are fearful?

Post by dh »

John3754 wrote:Ignore the noise and stay the course.
+1
If people are fearful, then it may be a good time to reassess their risk tolerance and their IPS. I have read others Bogleheads note that a 50% decline is considered to be the worst case scenario, but then suggest even steeper declines are a possibility. While no one wants a huge decline that tests their true risk tolerance, it is most important to be prepared, rational, and have a strategy for a range of possibilities. My plan is set and I stay with my plan and rebalance one time per year. Best wishes to all!
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Re: How are you being greedy when others are fearful?

Post by SeeMoe »

Fat-Tailed Contagion wrote:“Be Fearful When Others Are Greedy and Greedy When Others Are Fearful” - Warren Buffett

What specific strategies are you considering implementing in this fear cycle ?

All responses are appreciated, ie. buying EM, PME, rebalancing with bands according to IPS, market timing, etc.
The Pros know when to sell(so they imply), and when to buy as a fast correction zooms by,..Sometimes ! Me, I'll hang tough and look for cheaper buys as the markets gyrate with a few bucks invested now and then,...
"By gnawing through a dike, even a Rat can destroy a nation ." {Edmund Burke}
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Maynard F. Speer
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Re: How are you being greedy when others are fearful?

Post by Maynard F. Speer »

Personally I'm not too keen to buy just yet .. Markets may be fearful, but stock valuations still say optimism .. If we were at the start of a 2 year bear market, you'd still be buying near the market top today

Fear will be when headlines start questioning whether capitalism's broken and whether we'll be bartering for food and guarding a water tower with a shotgun in a few months time

While not exactly greedy, I have 3-5% of my portfolio in Opportunistic positions .. Buying Russian stocks today is a fairly contrarian move .. If I was greedy I'd have about 25% of my portfolio in Russia, Brazil and China .. Greece might be a bit of a stretch
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Re: How are you being greedy when others are fearful?

Post by randomguy »

Maynard F. Speer wrote:Personally I'm not too keen to buy just yet .. Markets may be fearful, but stock valuations still say optimism .. If we were at the start of a 2 year bear market, you'd still be buying near the market top today

Fear will be when headlines start questioning whether capitalism's broken and whether we'll be bartering for food and guarding a water tower with a shotgun in a few months time

While not exactly greedy, I have 3-5% of my portfolio in Opportunistic positions .. Buying Russian stocks today is a fairly contrarian move .. If I was greedy I'd have about 25% of my portfolio in Russia, Brazil and China .. Greece might be a bit of a stretch
Have we even had a correction yet? I can't imagine being greedy until we at least get to a bear market.

Buying Greece would be the classic buying when others are fearful. There is a ton of bad news and predications baked into those stocks. 90%+ of the time you are going to make a killing when only 1/3 of it happens. Of course that other 10% of the time........ Notice though how when a country is "on sale" how none of the discount buyers want to step up? They come up with all sorts of reasons why this market which is trading at something like a 60% discount to the price a mere 2 years is a bad idea:)
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Re: How are you being greedy when others are fearful?

Post by dognose »

I only rebalance on my birthday, which doesn't occur until February. This strategy is totally irrational, and it works great. Guess I'll have to pass on the latest market decline.
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Re: How are you being greedy when others are fearful?

Post by JoMoney »

On Wednesday we were pretty close to all time highs. 2 days later, the market has dropped a few percent, and we're in a "fear cycle" ? :?
The wave-length of cycles that might concern me are much longer.
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Re: How are you being greedy when others are fearful?

Post by tigerman3 »

I will rebalance when the time comes.
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Re: How are you being greedy when others are fearful?

Post by Thebigc »

tigerman3 wrote:I will rebalance when the time comes.
That may be sooner than you think.
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Maynard F. Speer
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Re: How are you being greedy when others are fearful?

Post by Maynard F. Speer »

randomguy wrote:Have we even had a correction yet? I can't imagine being greedy until we at least get to a bear market.

Buying Greece would be the classic buying when others are fearful. There is a ton of bad news and predications baked into those stocks. 90%+ of the time you are going to make a killing when only 1/3 of it happens. Of course that other 10% of the time........ Notice though how when a country is "on sale" how none of the discount buyers want to step up? They come up with all sorts of reasons why this market which is trading at something like a 60% discount to the price a mere 2 years is a bad idea:)
I think you're about 3% off a correction(?) .. So I imagine you'll have had one by Tuesday :beer

I do have a little in Greece, but I suppose a lot of these markets tend to be volatile, and don't tend to produce the kind of steady returns and general uptrend of markets like the US and UK .. So when you bet on a country like Greece or Argentina, I certainly feel it as more of a trade, with a sell-point, than a long-term investment you'd want to build up .. So I think Shiller avoids that kind of speculation and instead picks his regional investments carefully (he bought Italy at the beginning of the year) - perhaps a bit more like Buffett, only buying things he'd want to hold on to
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Re: How are you being greedy when others are fearful?

Post by Chan_va »

There seem to be a rash of threads here about how you can take advantage of a downturn. All we have had so far is a tiny drop after a record 6 year bull run. Folks, have we forgotten 2001 and 2008 already in terms of what fear feels like?

For those who haven't experienced a true brutal bear market before, a quick reality check. This is nothing.

Fear is when you seriously consider the possibility that the entire financial system will collapse.
Fear is when you contemplate at work that this week may be your company's last.
Fear is when you feel paralyzed and too numb to react to any market news.
Fear is when you have a visceral realization deep in your gut that everything you have saved for decades may be gone.
Fear is when you actually feel fear. Literally the same terror you felt as a kid about monsters in the dark. A bile inducing, heart palpitating, full body reaction.

When all that happens, and you are still able to take a contrarian view, hats off to you.
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Re: How are you being greedy when others are fearful?

Post by Snowjob »

Fear is...

Relative to oil -- which is finally heading to a rational price given the behavior of the participants. My only feel this far is vindication and then regret that I never take a short position.

Relative to china / em & possible contagion-- well, I'm so far away I don't have an opinion never mind an invest-able thesis. Stay the course?
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Re: How are you being greedy when others are fearful?

Post by Ki_poorrichard »

Chan_va wrote:There seem to be a rash of threads here about how you can take advantage of a downturn. All we have had so far is a tiny drop after a record 6 year bull run. Folks, have we forgotten 2001 and 2008 already in terms of what fear feels like?

For those who haven't experienced a true brutal bear market before, a quick reality check. This is nothing.

Fear is when you seriously consider the possibility that the entire financial system will collapse.
Fear is when you contemplate at work that this week may be your company's last.
Fear is when you feel paralyzed and too numb to react to any market news.
Fear is when you have a visceral realization deep in your gut that everything you have saved for decades may be gone.
Fear is when you actually feel fear. Literally the same terror you felt as a kid about monsters in the dark. A bile inducing, heart palpitating, full body reaction.

When all that happens, and you are still able to take a contrarian view, hats off to you.
+1
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Re: How are you being greedy when others are fearful?

Post by 4nursebee »

I just changed our 401K contributions from 5% pre tax to 25% pre tax.
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Re: How are you being greedy when others are fearful?

Post by MKP »

4nursebee wrote:I just changed our 401K contributions from 5% pre tax to 25% pre tax.
I did this a couple of weeks prior to the major drop - first contribution went in on thursday....

:beer
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Re: How are you being greedy when others are fearful?

Post by TorturedRegret »

Great post above.
A 5% blip is not anything remotely resembling fear.

IF the market is down 25%, then we can start talking about fear.
IF it's down 50%, we can talk about blood in the streets, etc.
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Re: How are you being greedy when others are fearful?

Post by UADM »

Fat-Tailed Contagion wrote:“Be Fearful When Others Are Greedy and Greedy When Others Are Fearful” - Warren Buffett

What specific strategies are you considering or implementing in this fear cycle ?

All responses are appreciated, ie. buying EM, PME, rebalancing with bands according to IPS, market timing, stay the course, etc.
His quote doesn't apply to what is still a minor correction. People seem to take a quote and misunderstand the complex concepts behind what the person is tryingto say.

That being said, I sold into 100% cash a little over a month ago. The market had gone up for too long. Due for a correction. I bought a 10% position at the end of friday, in only one account.
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Re: How are you being greedy when others are fearful?

Post by BTDT »

I was greedy in 2008-9, but now I'm staying the course and following my IPS, which, BTW, may soon require me to re-balance back into some equities. Life is good :beer
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Re: How are you being greedy when others are fearful?

Post by Fat-Tailed Contagion »

1. I am considering TLH exchange from FTSE All World Ex-US Stock to Emerging Markets Index in a taxable account.

This represents a 16% portion of portfolio.

2. I am also considering using the 25% in bonds to add to equity.

Good ideas or nah?
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Re: How are you being GREEDY when others are fearful?

Post by BW1985 »

Not greedy per say, but buying enough to replace losses (6%).
Chase the good life my whole life long, look back on my life and my life gone...where did I go wrong?
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Re: How are you being GREEDY when others are fearful?

Post by autonomy »

Going to get rid of the last single stock I own (was going to sell 3 days ago while it was still up but didn't have time) to tax-loss harvest.

Then, buy more index funds with the proceeds and some extra cash I have from selling other single stocks.
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Re: How are you being GREEDY when others are fearful?

Post by BolderBoy »

Fat-Tailed Contagion wrote:What specific strategies are you considering or implementing in this fear cycle ?
Some rebalancing to get back to AA. Otherwise nothing.
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Re: How are you being GREEDY when others are fearful?

Post by JupiterJones »

I'm more of a "rebalance when others are greedy and rebalance when others are fearful" kinda guy.
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Re: How are you being GREEDY when others are fearful?

Post by ThankYouJack »

If things drop a lot more, I may put extra money towards my taxable account instead of prepaying my mortgage.
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Re: How are you being GREEDY when others are fearful?

Post by nisiprius »

"Be fearful when others are greedy and greedy when others are fearful” -- Warren Buffett

"'If any one of them can explain it,' said Alice, 'I'll give him sixpence. I don't believe there's an atom of meaning in it.'"--Lewis Carroll

Before we go off talking how we are personally going to implement a strategy, I would like to hear someone give an operational definition of it, and tell us how we would test it.

I don't think this one can be defined or tested.

There are always people who feel the same way as me and people who feel differently. How do I decide who counts as "others?" Should I be fearful when Bogleheads are greedy? Fearful when Warren Buffett is greedy? How do I know whether Warren Buffett is feeling greedy or fearful? How do I determine whether anyone is feeling greedy or fearful?

If I feel greedy, am I supposed to do something about it? Like buy stocks? Or is it just a guide as to how I ought to feel?

These kinds of soundbites do nothing but give us a chance to rationalize our impulses.

If you want to be greedy, tell yourself, "be greedy when others are fearful."
If you don't want to be greedy, tell yourself, "Bulls make money and bears make money but pigs get slaughtered."
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Re: How are you being GREEDY when others are fearful?

Post by jainn »

. . . .
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Re: How are you being GREEDY when others are fearful?

Post by Maynard F. Speer »

nisiprius wrote:"Be fearful when others are greedy and greedy when others are fearful” -- Warren Buffett

...
I don't think this one can be defined or tested.
I like Rothschild's "Buy when there's blood in the streets"

I'd suppose you could create a "fear" index - perhaps by recording the incidence of fearful terms in financial media; retail investor fund outflows; the VIX volatility index; the doomsday clock; whatever else you can find, and set a threshold

Personally I define fear and greed quite simply by dividing valuations by forecast earnings growth .. It crudely tells you what people are paying for something today, and what the market thinks it will be worth tomorrow .. Any discrepancies in this ratio need another explanation .. Today Russian energy companies sit at one end of the scale and US Biotech stocks at the other
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Re: How are you being greedy when others are fearful?

Post by yukon50 »

UADM wrote:
Fat-Tailed Contagion wrote:“Be Fearful When Others Are Greedy and Greedy When Others Are Fearful” - Warren Buffett

What specific strategies are you considering or implementing in this fear cycle ?

All responses are appreciated, ie. buying EM, PME, rebalancing with bands according to IPS, market timing, stay the course, etc.
His quote doesn't apply to what is still a minor correction. People seem to take a quote and misunderstand the complex concepts behind what the person is tryingto say.

That being said, I sold into 100% cash a little over a month ago. The market had gone up for too long. Due for a correction. I bought a 10% position at the end of friday, in only one account.
what were you before 100% cash?

when is the bottom?
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Re: How are you being GREEDY when others are fearful?

Post by Awsi Dooger »

Absolutely marvelous day. I grabbed chunks of XBI and FHLC and SLF at prices I never thought I would see again. I didn't manage the absolute bottom, but close enough. I actually left for a mid afternoon dental appointment with a huge grin. I'm not sure I needed anesthesia. Nothing was going to hurt.

I can't imagine not being involved on a day like that. It was like Christmas in every direction. I checked one stock and ETF after another, just to guess the bottom number they reached. Invariably I did not guess low enough.

This market is not nearly as wise or sturdy as sports investing. That could not be more glaring. Fear doesn't dominate in those markets, not even for brief stretches. There is always somebody willing to take the other side, a loyalty to power rating logic. In this case there has to be similar power rating foundation to corporations but it doesn't matter. Fear can take the number seemingly anywhere.

Mutual funds are worthless on a day like Monday. There is a Friday closing number and a Monday closing number. What a waste. Meanwhile, all the fun and bargains were playing ping pong in between.

I typically mock fear. I'm wrong. We need exponentially more of it.
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Re: How are you being GREEDY when others are fearful?

Post by rakaye47 »

The ultimate fear portfolio: 30% commodity futures, 30% gold, 40% china stocks
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Re: How are you being GREEDY when others are fearful?

Post by grayfox »

Fat-Tailed Contagion wrote:“Be Fearful When Others Are Greedy and Greedy When Others Are Fearful” - Warren Buffett

What specific strategies are you considering or implementing in this fear cycle ?

All responses are appreciated, ie. buying EM, PME, rebalancing with bands according to IPS, market timing, stay the course, etc.
Before the open today (Tuesday), I placed a low-ball day limit order for ETF VYM. I'm hoping for another gap opening on Tuesday like we saw on Monday. Probably wishful thinking. :greedy
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Re: How are you being GREEDY when others are fearful?

Post by JoMoney »

grayfox wrote:...
Before the open today (Tuesday), I placed a low-ball day limit order for ETF VYM. I'm hoping for another gap opening on Tuesday like we saw on Monday. Probably wishful thinking. :greedy
Looking at the futures right now, http://www.bloomberg.com/markets/stocks/futures
I think we'll have a gap opening, but on the up side, S&P500 futures currently at $1,935
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Re: How are you being GREEDY when others are fearful?

Post by IlliniDave »

I was neither greedy nor fearful, nor totally above the fray. I stayed the course but did not sit on my hands. I did a little TLH and deferred about $900 in taxes down the road for a time, and eliminated some positions in my taxable account that I'd come to decide would work better for me in my 401k.
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Re: How are you being GREEDY when others are fearful?

Post by HongKonger »

Dropped a chunk of change into VTI on the opening drop yesterday and placed another, lower, buy order for a second chunk - but I don't think that's greedy.

35% of my portfolio is Hong Kong (HSI/REIT/Individual stocks) - but I'm not fearful.

I'm personally more fascinated by how the word 'rout' is being bandied around by the talking heads. Don't think I heard it used in either 08 or 11.
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Re: How are you being GREEDY when others are fearful?

Post by avenger »

ThankYouJack wrote:If things drop a lot more, I may put extra money towards my taxable account instead of prepaying my mortgage.
This is my plan. For the last couple of years I've been doing about 3:1 debt reduction:taxable investing.
cheers ... -Mark | "Our life is frittered away with detail. Simplify. Simplify." -Henry David Thoreau | [VTI, VXUS, BND, VTEB, SV fund]
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Re: How are you being GREEDY when others are fearful?

Post by theunknowntech »

Awsi Dooger wrote:Absolutely marvelous day. I grabbed chunks of XBI and FHLC and SLF at prices I never thought I would see again. I didn't manage the absolute bottom, but close enough. I actually left for a mid afternoon dental appointment with a huge grin. I'm not sure I needed anesthesia. Nothing was going to hurt.

I can't imagine not being involved on a day like that. It was like Christmas in every direction. I checked one stock and ETF after another, just to guess the bottom number they reached. Invariably I did not guess low enough.

This market is not nearly as wise or sturdy as sports investing. That could not be more glaring. Fear doesn't dominate in those markets, not even for brief stretches. There is always somebody willing to take the other side, a loyalty to power rating logic. In this case there has to be similar power rating foundation to corporations but it doesn't matter. Fear can take the number seemingly anywhere.

Mutual funds are worthless on a day like Monday. There is a Friday closing number and a Monday closing number. What a waste. Meanwhile, all the fun and bargains were playing ping pong in between.

I typically mock fear. I'm wrong. We need exponentially more of it.
If only we had had the Internet, and boards such as this, in November of 1929. You can RECONSTRUCT what would have been the conversation, using the available literature.This whole thing is silly, because the American economy is strong right now. People who suggest otherwise, just go away.

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Re: How are you being GREEDY when others are fearful?

Post by pennstater2005 »

By continuing to purchase my monthly amount of mutual fund shares like normal. It doesn't feel greedy though.
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Re: How are you being GREEDY when others are fearful?

Post by z3r0c00l »

rakaye47 wrote:The ultimate fear portfolio: 30% commodity futures, 30% gold, 40% china stocks
That is terrifying : )
70% Global Stocks / 30% Bonds
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Re: How are you being GREEDY when others are fearful?

Post by Rodc »

Rebalance per IPS as needed.

It is way too early to be worked up. If this stops here it is a minor blip.

If it does not stop for a while, it is way too early to be in the "Be greedy when others are fearful" mode.
We live a world with knowledge of the future markets has less than one significant figure. And people will still and always demand answers to three significant digits.
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Re: How are you being GREEDY when others are fearful?

Post by renue74 »

TLH $15K out of my international fund on Friday and exchanged $190K into VEMAX and VTMGX at the end of Monday. Also bought $7K of VTSMX for today. We have 15-20 years before retirement.

That's enough greed on my part. I'm done until next month.
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Re: How are you being GREEDY when others are fearful?

Post by Dandy »

If I was in the accumulation stage I'm pretty sure I would have been a buyer of equities on Friday and/or Monday. In retirement I was tempted but since my equity allocation is pretty much on target I took no action.

However, since most of my assets are in a TIRA and all of those equity assets are in Balanced Index and Wellesley - the fund managers were likely buying equities in my behalf - keeping my overall equity allocation fairly stable. I also have enough "safe" assets to fund my retirement until at least age 90 -- a al Wm Bernstein. So the combination of balanced funds in my IRA and enough "safe" assets to fund my retirement to age 90 - has helped keep me calm and my finger off the trigger. I still worried a bit but slept well.
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Re: How are you being greedy when others are fearful?

Post by UADM »

yukon50 wrote:
UADM wrote:
Fat-Tailed Contagion wrote:“Be Fearful When Others Are Greedy and Greedy When Others Are Fearful” - Warren Buffett

What specific strategies are you considering or implementing in this fear cycle ?

All responses are appreciated, ie. buying EM, PME, rebalancing with bands according to IPS, market timing, stay the course, etc.
His quote doesn't apply to what is still a minor correction. People seem to take a quote and misunderstand the complex concepts behind what the person is tryingto say.

That being said, I sold into 100% cash a little over a month ago. The market had gone up for too long. Due for a correction. I bought a 10% position at the end of friday, in only one account.
what were you before 100% cash?

when is the bottom?
What I always do, trade in and out.

You think it works like that? Simplistic like, precise nostradamus predictions? That is why I watch and adapt : ).
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Re: How are you being GREEDY when others are fearful?

Post by stemikger »

I was actually more fearful when things kept going up. Glad to get a few bargains while I still have 12 to 15 years of investing ahead of me.
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Re: How are you being GREEDY when others are fearful?

Post by Grt2bOutdoors »

stemikger wrote:I was actually more fearful when things kept going up. Glad to get a few bargains while I still have 12 to 15 years of investing ahead of me.
Nice to see you back! I was getting worried, when I didn't see anymore John Bogle video threads or "why the Balanced Index is the best fund to hold". :beer
"One should invest based on their need, ability and willingness to take risk - Larry Swedroe" Asking Portfolio Questions
Grt2bOutdoors
Posts: 25625
Joined: Thu Apr 05, 2007 8:20 pm
Location: New York

Re: How are you being GREEDY when others are fearful?

Post by Grt2bOutdoors »

Bought on Friday, bought on Monday, TLH out of Total International into FTSE yesterday. I hope we have some more TLHing available before the year is up, I always like paying less in taxes. :)
"One should invest based on their need, ability and willingness to take risk - Larry Swedroe" Asking Portfolio Questions
Grt2bOutdoors
Posts: 25625
Joined: Thu Apr 05, 2007 8:20 pm
Location: New York

Re: How are you being greedy when others are fearful?

Post by Grt2bOutdoors »

TorturedRegret wrote:Great post above.
A 5% blip is not anything remotely resembling fear.

IF the market is down 25%, then we can start talking about fear.
IF it's down 50%, we can talk about blood in the streets, etc.
I own individual energy equity, some of them are down close to that 50% figure you speak of about - I'm getting that giddy feeling Warren Buffett keeps talking about. :)
"One should invest based on their need, ability and willingness to take risk - Larry Swedroe" Asking Portfolio Questions
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