I sold all my mutual funds and stocks on December 20th

Non-investing personal finance issues including insurance, credit, real estate, taxes, employment and legal issues such as trusts and wills.
Topic Author
TravelforFun
Posts: 2799
Joined: Tue Dec 04, 2012 10:05 pm

I sold all my mutual funds and stocks on December 20th

Post by TravelforFun »

I am the one that posted on December 20th that I sold everything (mostly no-load index funds) and that I would repurchase the same on January 2nd. I told everyone that it was purely a defensive move on my part because I was fearing that we were going over the fiscal cliff. I stated that I would pay no taxes because all my money is in IRA accounts. I also said that if things got resolved, market would stay where it was and I would not lose much. This is what has happened the last couple of weeks.

Dec 19. Plan B went nowhere
Dec 20. I sold everything
December 21, market down -1%. Obama headed to Hawaii
December 22 and 23, market closed
December 24, market down -0.4%
December 25, market closed
December 26, market down -0.3%
December 27, market down -0.15%
December 28, market down -1.2%
December 29, 30, market closed
December 31, market up +1.3%
January 1, market closed
January 2, market up ,+2.4%. Re-purchase all mutual funds

Overall, the market stays where it was but my action decreased my portfolio by about 0.5% but that's okay. I was concerned about a market drop of 5-10% but that didn't happen and that's good for everyone.

Would I do it again? It depends on the situation and the hunch I have. I know bogleheads buy and hold but if I see black clouds on the horizon rolling in, I would try to look for a refuge?
rustymutt
Posts: 4001
Joined: Sat Mar 07, 2009 11:03 am

Re: I sold all my mutual funds and stocks on December 20th

Post by rustymutt »

Good for you. Are you staying out?
Last edited by rustymutt on Fri Jan 04, 2013 6:34 am, edited 2 times in total.
Even educators need education. And some can be hard headed to the point of needing time out.
User avatar
pjstack
Posts: 1308
Joined: Tue Feb 20, 2007 4:03 am
Location: Harbor City, CA

Re: I sold all my mutual funds and stocks on December 20th

Post by pjstack »

Thanks for the update. Half a percent isn't too bad as losses go. I think you lucked out, BUT the market could still drop 5% to 10%, no one knows.

Happy new year!
pjstack
chaz
Posts: 13604
Joined: Tue Feb 27, 2007 1:44 pm

Re: I sold all my mutual funds and stocks on December 20th

Post by chaz »

The fear factor at work.
Chaz | | “Money is better than poverty, if only for financial reasons." Woody Allen | | http://www.bogleheads.org/wiki/index.php/Main_Page
NYBoglehead
Posts: 1588
Joined: Fri May 25, 2012 9:38 am

Re: I sold all my mutual funds and stocks on December 20th

Post by NYBoglehead »

The question remains, did you miss out on any dividends or interest as a result of your actions?
User avatar
iceman99
Posts: 157
Joined: Fri Mar 19, 2010 8:30 pm

Re: I sold all my mutual funds and stocks on December 20th

Post by iceman99 »

So what's your plan in 2 months?
Topic Author
TravelforFun
Posts: 2799
Joined: Tue Dec 04, 2012 10:05 pm

Re: I sold all my mutual funds and stocks on December 20th

Post by TravelforFun »

NYBoglehead wrote:The question remains, did you miss out on any dividends or interest as a result of your actions?
Not sure. I just compared the values of my portfolio on December 20th vs. today.
hazlitt777
Posts: 1033
Joined: Fri Aug 12, 2011 4:10 am
Location: Wisconsin

Re: I sold all my mutual funds and stocks on December 20th

Post by hazlitt777 »

You did this on a hunch? Ouch. I think you got lucky.

What makes you think cash is safe? Only a well diversified portfolio is safe imho.

I hope you can take time to read Mr. Bogle's classic, Common Sense on Mutual Funds. I could even share my personal notes with you if the book is too much for you.
z3r0c00l
Posts: 3807
Joined: Fri Jul 06, 2012 11:43 am
Location: NYC

Re: I sold all my mutual funds and stocks on December 20th

Post by z3r0c00l »

Will you have to pay taxes on your cap gains one year sooner because of this?
70% Global Stocks / 30% Bonds
Johm221122
Posts: 6393
Joined: Fri May 13, 2011 6:27 pm

Re: I sold all my mutual funds and stocks on December 20th

Post by Johm221122 »

The market could drop 5%-10% tomorrow then what?The black clouds are still there
John
Topic Author
TravelforFun
Posts: 2799
Joined: Tue Dec 04, 2012 10:05 pm

Re: I sold all my mutual funds and stocks on December 20th

Post by TravelforFun »

z3r0c00l wrote:Will you have to pay taxes on your cap gains one year sooner because of this?
No. All my money is in tax deferred IRA accounts.
sschullo
Posts: 2840
Joined: Sun Apr 01, 2007 8:25 am
Location: Long Beach, CA
Contact:

Re: I sold all my mutual funds and stocks on December 20th

Post by sschullo »

TravelforFun wrote: I know bogleheads buy and hold but if I see black clouds on the horizon rolling in, I would try to look for a refuge?
"Buy and hold" with rebalancing and we have a fixed account allocation appx equal to our age. If you are serious, you need to read more about what we do around here. There are probably about 200 different market variables that can be perceived as "black clouds" and take the market down or all of a sudden start a bull market. One of the very basics of investing is that no one can predict what happens. As it turned out, the fiscal cliff resulted in one of the biggest one day gains in about five years. I am physically and mentally worn out just reading your daily rundown on what the market did and where the 1600 Pennsylvania Ave resident went on his vacation.
Never in the history of market day-traders’ has the obsession with so much massive, sophisticated, & powerful statistical machinery used by the brightest people on earth with such useless results.
User avatar
ruralavalon
Posts: 26351
Joined: Sat Feb 02, 2008 9:29 am
Location: Illinois

Re: I sold all my mutual funds and stocks on December 20th

Post by ruralavalon »

TravelforFun wrote:I am the one that posted on December 20th that I sold everything (mostly no-load index funds) and that I would repurchase the same on January 2nd. . . .
. . . .
Overall, the market stays where it was but my action decreased my portfolio by about 0.5% but that's okay. I was concerned about a market drop of 5-10% but that didn't happen and that's good for everyone.
Congratulations, I think you lucked out.

On the other hand, "stay the course" and ignoring the noise on the news channels would have worked out better by 0.5% over just 12 days (that's ~ 15% annualized).
Last edited by ruralavalon on Wed Jan 02, 2013 8:27 pm, edited 1 time in total.
"Everything should be as simple as it is, but not simpler." - Albert Einstein | Wiki article link: Bogleheads® investment philosophy
User avatar
parsi1
Posts: 282
Joined: Tue May 29, 2012 8:03 am

Re: I sold all my mutual funds and stocks on December 20th

Post by parsi1 »

I also sometimes get tempted to do the same thing selling everything and staying on the sideline. But then I think, if I am such an expert in predicting the market direction why do I wake up in the morning and go to work. I can stay home and make bucket full of money every day. That quickly changes my mind about selling. I go to bed wake up in the morning go to work and follow the old Bogleheads advise: stay the course and filter out the noise.
With all the doom and gloom news during 2012 about US and the rest of the world, stock market didn't do bad at all.
Last edited by parsi1 on Wed Jan 02, 2013 8:50 pm, edited 2 times in total.
Elbowman
Posts: 578
Joined: Tue Apr 03, 2012 2:25 pm

Re: I sold all my mutual funds and stocks on December 20th

Post by Elbowman »

Don't be too harsh on him, at least he had the guts to come back here and post his loss.
tim1999
Posts: 4205
Joined: Tue Dec 16, 2008 6:16 am

Re: I sold all my mutual funds and stocks on December 20th

Post by tim1999 »

I guess .5% isn't a bad price for "cliff insurance."

I was tempted to do something similar...rebalance some things a little earlier (into fixed income) than I would have otherwise.
STC
Posts: 415
Joined: Wed Nov 14, 2012 8:22 am

Re: I sold all my mutual funds and stocks on December 20th

Post by STC »

Cherokee8215 wrote:I guess .5% isn't a bad price for "cliff insurance."

I was tempted to do something similar...rebalance some things a little earlier (into fixed income) than I would have otherwise.
Until you annualized it. It's 16.59% then. And the cliff isn't resolved, it's delayed. So either keep paying the protection, or get to an AA where you can actually handle equity risk.
livesoft
Posts: 86075
Joined: Thu Mar 01, 2007 7:00 pm

Re: I sold all my mutual funds and stocks on December 20th

Post by livesoft »

The missing dividends are a rather big deal ... around 1.5% to 2.5%. NAVs of equity funds dropped by the those amounts, so comparing before and after NAVs is not sufficient to understand what went on here.
Wiki This signature message sponsored by sscritic: Learn to fish.
atfish
Posts: 89
Joined: Tue May 29, 2012 6:41 am

Re: I sold all my mutual funds and stocks on December 20th

Post by atfish »

Elbowman wrote:Don't be too harsh on him, at least he had the guts to come back here and post his loss.
I agree. Maybe some of us learned from this.
User avatar
sometimesinvestor
Posts: 1271
Joined: Wed May 13, 2009 6:54 am

Re: I sold all my mutual funds and stocks on December 20th

Post by sometimesinvestor »

I think the criticisim is unfair though the comments/analysis are not.. It is well known that many people find they are more conservative than their asset allocation and sell at the bottom. How much better to sell when you are concerned and then get back in as planned. While the OPs decisions did not work out perfectly he avoided making a real error.
Full disclosure: I did something similar though much less extreme by increasing the share of cash by 5%.Regardless of right or wrong I have slept comfortably. I followed the advice of Polononius "To thine own self be true" which in my case meant avoid bold movies. The difference between being described as bold or being described as foolhardy is usually dependent on the result.
livesoft
Posts: 86075
Joined: Thu Mar 01, 2007 7:00 pm

Re: I sold all my mutual funds and stocks on December 20th

Post by livesoft »

sometimesinvestor wrote:.... It is well known that many people find they are more conservative than their asset allocation and sell at the bottom.
Let's be clear, there is no way any of this could be characterized as "sell at the bottom". The has all occurred at market highs.
Wiki This signature message sponsored by sscritic: Learn to fish.
sscritic
Posts: 21853
Joined: Thu Sep 06, 2007 8:36 am

Re: I sold all my mutual funds and stocks on December 20th

Post by sscritic »

I don't understand the big deal about being out of the market for 7 days. There are those around here who recommend being out of the market for 30 days after a tax loss harvest. Others recommend being only partially invested over a period of months for emotional reasons (DCA instead of jumping in the deep end). Now admittedly the percentage here might be a little larger, but the idea of being out of the market is not the strangest thing I have ever heard of. I sold a house and put the money into CDs before I finally got around to moving it all to Vanguard (it took two years, from 2004 to 2006 to go all in).
STC
Posts: 415
Joined: Wed Nov 14, 2012 8:22 am

Re: I sold all my mutual funds and stocks on December 20th

Post by STC »

sscritic wrote:I don't understand the big deal about being out of the market for 7 days. There are those around here who recommend being out of the market for 30 days after a tax loss harvest. Others recommend being only partially invested over a period of months for emotional reasons (DCA instead of jumping in the deep end). Now admittedly the percentage here might be a little larger, but the idea of being out of the market is not the strangest thing I have ever heard of. I sold a house and put the money into CDs before I finally got around to moving it all to Vanguard (it took two years, from 2004 to 2006 to go all in).

The danger is the precident. It is a pure guess as to the direction of the market over a short period. Something that is provably impossible to do correctly, consistently. The slippery slope... :oops:
User avatar
bottlecap
Posts: 6906
Joined: Tue Mar 06, 2007 10:21 pm
Location: Tennessee

Re: I sold all my mutual funds and stocks on December 20th

Post by bottlecap »

Perhaps someday, you will understand just how meaningless this exercise was.

JT
sscritic
Posts: 21853
Joined: Thu Sep 06, 2007 8:36 am

Re: I sold all my mutual funds and stocks on December 20th

Post by sscritic »

STC wrote:
sscritic wrote:I don't understand the big deal about being out of the market for 7 days. There are those around here who recommend being out of the market for 30 days after a tax loss harvest. Others recommend being only partially invested over a period of months for emotional reasons (DCA instead of jumping in the deep end). Now admittedly the percentage here might be a little larger, but the idea of being out of the market is not the strangest thing I have ever heard of. I sold a house and put the money into CDs before I finally got around to moving it all to Vanguard (it took two years, from 2004 to 2006 to go all in).
The danger is the precident. It is a pure guess as to the direction of the market over a short period. Something that is provably impossible to do correctly, consistently. The slippery slope... :oops:
The same is true for a 30 day wait after a TLH (which is why I don't do it).
STC
Posts: 415
Joined: Wed Nov 14, 2012 8:22 am

Re: I sold all my mutual funds and stocks on December 20th

Post by STC »

I don't 30-day TLH. I have pairs and swap between them.
sscritic
Posts: 21853
Joined: Thu Sep 06, 2007 8:36 am

Re: I sold all my mutual funds and stocks on December 20th

Post by sscritic »

STC wrote:I don't 30-day TLH. I have pairs and swap between them.
Nor do I, but some do, which was my point. Some people prefer to stay out of the market for 30 days after a TLH (you and I not included).
User avatar
HomerJ
Posts: 21281
Joined: Fri Jun 06, 2008 12:50 pm

Re: I sold all my mutual funds and stocks on December 20th

Post by HomerJ »

TravelforFun wrote:if I see black clouds on the horizon rolling in, I would try to look for a refuge?
There's almost always black clouds on the horizon... The greatest bull markets always start during a time of black clouds.

The real time to get nervous and reduce your stock allocation is when every news story is happy bunnies and glorious sunshine.

Pick an allocation that you can stick with through bad times and good, and stay the course... It's much easier, and you won't have to second-guess yourself all the time (which is stressful).

I'm 50/50 even though I'm fairly young (mid 40s) because I know I can stick with that allocation over the next 10-20 years no matter what happens.
WendyW
Posts: 345
Joined: Sat Dec 08, 2012 3:01 pm

Re: I sold all my mutual funds and stocks on December 20th

Post by WendyW »

Elbowman wrote:Don't be too harsh on him, at least he had the guts to come back here and post his loss.
+1.

90% of people would've closed their Bogleheads account and snuck away in embarrassment.

The OP actually got off quite cheaply compared to, say, the tens of thousands of Americans that bailed out of stocks after 2008's −37% return, and subsequently missed 2009's 26% return and 2010's 15% return.
User avatar
madsinger
Posts: 985
Joined: Sat Sep 29, 2007 3:26 pm

Re: I sold all my mutual funds and stocks on December 20th

Post by madsinger »

I admire you (original poster) for updating us. It's hard to outguess the market. However, if you had happened to get in one day earlier, you would have been up almost 2% for your actions. It's hard to know what to do.

I will admit to a small bit of "market timing" here...I often rebalance my portfolio right before the end of the year (in tax deferred accounts, so taxes are not an issue). Just so I'm starting the new year with my "correct" asset allocation. (My bond target for this year was 31%, and by then end of the year, it was down to 29%...I'm bumping it up to 32% for next year). Because the market had dropped five straight days in "fear" of the fiscal cliff, and because I really felt (hunch?) that SOMETHING would be done by the first week in January, I felt that I should wait (time?) to rebalance.

When I saw the market up 2-3% today, I decided to rebalance about 3pm today. Sold stocks to buy bonds to get my bond from 29% to 32%. It seemed like my small bet (really, it was only 3% of my portfolio I was moving) "worked". Of course, if the market had fallen hard this week, I would have either had to wait (more timing) or accept my "loss" and rebalance. This time, I got a little lucky!

-Brad.
thebogledude
Posts: 420
Joined: Thu Jun 09, 2011 12:40 am

Re: I sold all my mutual funds and stocks on December 20th

Post by thebogledude »

are you going to do it again in a couple of months when they decide what to do about the debt ceiling?
reisner
Posts: 516
Joined: Fri Jun 20, 2008 12:34 pm

Re: I sold all my mutual funds and stocks on December 20th

Post by reisner »

If you belong on this website, but still have human foibles, then at least wait to place your bet until the house does. I expected on jan. 2 to be buying stock at a discount; instead I bought bonds.
pkcrafter
Posts: 15461
Joined: Sun Mar 04, 2007 11:19 am
Location: CA
Contact:

Re: I sold all my mutual funds and stocks on December 20th

Post by pkcrafter »

TravelforFun wrote:I am the one that posted on December 20th that I sold everything (mostly no-load index funds) and that I would repurchase the same on January 2nd. I told everyone that it was purely a defensive move on my part because I was fearing that we were going over the fiscal cliff. I stated that I would pay no taxes because all my money is in IRA accounts. I also said that if things got resolved, market would stay where it was and I would not lose much. This is what has happened the last couple of weeks.

Dec 19. Plan B went nowhere
Dec 20. I sold everything
December 21, market down -1%. Obama headed to Hawaii
December 22 and 23, market closed
December 24, market down -0.4%
December 25, market closed
December 26, market down -0.3%
December 27, market down -0.15%
December 28, market down -1.2%
December 29, 30, market closed
December 31, market up +1.3%
January 1, market closed
January 2, market up ,+2.4%. Re-purchase all mutual funds

Overall, the market stays where it was but my action decreased my portfolio by about 0.5% but that's okay. I was concerned about a market drop of 5-10% but that didn't happen and that's good for everyone.

Would I do it again? It depends on the situation and the hunch I have. I know bogleheads buy and hold but if I see black clouds on the horizon rolling in, I would try to look for a refuge?
Have you done this often? It would seem to be a very tedious and unproductive action. There will be another deadline in a few months, what will you do then? It isn't those threats that are waved at us that represent the most danger. The real danger is in those threats which come unannounced, and you can't get out of the way of those in time. Market timing simply does not work. Going on hunches will cost you money, not to mention you can get whip sawed. That is getting out and then back in just in time for a significant drop. If you are concerned about losses, then your equity AA is too high.

I didn't see your portfolio or asset allocation listed in the posts which are available, but if you provide the information, we might be able to offer something useful.

Paul
When times are good, investors tend to forget about risk and focus on opportunity. When times are bad, investors tend to forget about opportunity and focus on risk.
westcoast
Posts: 207
Joined: Tue Mar 13, 2012 6:50 pm

Re: I sold all my mutual funds and stocks on December 20th

Post by westcoast »

Thanks for the update and for the courage to let us know how you fared.
555
Posts: 4955
Joined: Thu Dec 24, 2009 6:21 am

Re: I sold all my mutual funds and stocks on December 20th

Post by 555 »

NYBoglehead wrote:"The question remains, did you miss out on any dividends or interest as a result of your actions?"
OP lost 13 days worth of dividends, of course.
john94549
Posts: 4638
Joined: Tue Jul 26, 2011 8:50 pm

Re: I sold all my mutual funds and stocks on December 20th

Post by john94549 »

My hedges are a tad more modest than the OP's, but no great harm in what he did. I do have a question about timing and dividend re-investing. It does appear that dividends, while they might have been earned, would not have been re-invested at the "bargain" prices in the week or so before the end of the year. I do tend to turn an oblivious eye to trading (in my trading account) in "silly season", the last couple of weeks in each quarter.
User avatar
zebrafish
Posts: 531
Joined: Sat Nov 24, 2012 9:28 pm
Location: Inside the tank

Re: I sold all my mutual funds and stocks on December 20th

Post by zebrafish »

I have to say, if I didn't have a 20+ year time horizon, I might be very tempted to do the same thing.

The problem with this approach is, you can make yourself feel similarly about so many current events. I think no one can predict the future. They key downfall of the market timer.
555
Posts: 4955
Joined: Thu Dec 24, 2009 6:21 am

Re: I sold all my mutual funds and stocks on December 20th

Post by 555 »

OP, this is very risky, and it could have turned out badly. You could have missed out on a runup, and worse still, when confronted with buying back at higher prices, you could have balked at getting back in, and stayed out longer and missed further runups.

Jumping in and out of the market adds risk with no expected reward, and it will generally cost you in the long run.
thebogledude
Posts: 420
Joined: Thu Jun 09, 2011 12:40 am

Re: I sold all my mutual funds and stocks on December 20th

Post by thebogledude »

pkcrafter wrote: Have you done this often? It would seem to be a very tedious and unproductive action. There will be another deadline in a few months, what will you do then? It isn't those threats that are waved at us that represent the most danger. The real danger is in those threats which come unannounced, and you can't get out of the way of those in time. Market timing simply does not work. Going on hunches will cost you money, not to mention you can get whip sawed. That is getting out and then back in just in time for a significant drop. If you are concerned about losses, then your equity AA is too high.
I'm not saying this was the wrong course for OP to take, but in 20/20 hindsight, it is a better example of what staying the course would have resulted in.
User avatar
BHCadet
Posts: 391
Joined: Sat Jan 14, 2012 11:47 pm
Location: SoCal

Re: I sold all my mutual funds and stocks on December 20th

Post by BHCadet »

Congrat to you!!!
But, this would have given me too much stress.
It also would have taken me half day to sell everything.
And another half day to buy everything back.
letsgobobby
Posts: 12073
Joined: Fri Sep 18, 2009 1:10 am

Re: I sold all my mutual funds and stocks on December 20th

Post by letsgobobby »

livesoft wrote:The missing dividends are a rather big deal ... around 1.5% to 2.5%. NAVs of equity funds dropped by the those amounts, so comparing before and after NAVs is not sufficient to understand what went on here.
Can anyone find the total return (not price) between end of day Dec 20 and end of day Jan 2? If I am using Morningstar correctly the price difference in NAV was 1.76%, not the 0.5% OP stated. And then the dividends. Does that mean OP missed out on more like 3%?
Last edited by letsgobobby on Thu Jan 03, 2013 12:32 am, edited 1 time in total.
NOLA
Posts: 373
Joined: Sun Jul 10, 2011 1:23 pm

Re: I sold all my mutual funds and stocks on December 20th

Post by NOLA »

Glad you were able to man(woman) up and admit what you did. I think we all did something "stupid" one time or another, which led us to this great site.

Out of curiosity, how are lost dividends calculated in this case?
User avatar
CaliJim
Posts: 3050
Joined: Sun Feb 28, 2010 7:47 pm
Location: California, near the beach

Re: I sold all my mutual funds and stocks on December 20th

Post by CaliJim »

NOLA wrote:Glad you were able to man(woman) up and admit what you did. I think we all did something "stupid" one time or another, which led us to this great site.

Out of curiosity, how are lost dividends calculated in this case?
Dividend distribution is different for different funds. Good discussion here: http://www.bogleheads.org/forum/viewtopic.php?t=18714

I assume that Bond ETFs behave like stocks and stock ETFs - dividends are not prorated.
Last edited by CaliJim on Sun Jan 06, 2013 4:14 pm, edited 1 time in total.
-calijim- | | For more info, click this Wiki
livesoft
Posts: 86075
Joined: Thu Mar 01, 2007 7:00 pm

Re: I sold all my mutual funds and stocks on December 20th

Post by livesoft »

Bond funds paid substantial capital gains distributions this year during the time the OP was out of the market. There were several HELP MY FUND DROPPED 3%! threads while the OP was away. Nevertheless, Morningstar Growth of charts show a small gain of 1.5% to 2% for stock funds from Dec 20th through Jan 2nd with bond funds about even.
Image

That 1.5% to 2% is a big deal, especially if it happens too often. The 2% difference is not going to go away. It will be a 2% difference in the end value of the portfolio during retirement. It will be 6 months worth of annual withdrawal from the portfolio in retirement.

It is also like paying an advisor 1.5% to 2% of the portfolio in 2012 in AUM fees. OTOH, if the OP had an advisor that charged him only 1% for holding his hand during the past few weeks and helping him to stay-the-course, then he would of come out ahead by a little bit. The forum tried to be that advisor and charge nothing, but it didn't work out.

If the OP had re-invested last Friday on Dec 28th, we would all be patting him on the back. And finally, although there were no "worst days" in this time frame, there were some "best days". Be aware that worst/best days often occur relatively close in time. Are we gonna have a worst day coming up?? http://www.bogleheads.org/forum/viewtop ... 10&t=60207 :twisted: :twisted:
Wiki This signature message sponsored by sscritic: Learn to fish.
umfundi
Posts: 3361
Joined: Tue Jun 07, 2011 5:26 pm

Re: I sold all my mutual funds and stocks on December 20th

Post by umfundi »

TravelforFun wrote:I am the one that posted on December 20th that I sold everything (mostly no-load index funds) and that I would repurchase the same on January 2nd. I told everyone that it was purely a defensive move on my part because I was fearing that we were going over the fiscal cliff. I stated that I would pay no taxes because all my money is in IRA accounts. I also said that if things got resolved, market would stay where it was and I would not lose much. This is what has happened the last couple of weeks.

Dec 19. Plan B went nowhere
Dec 20. I sold everything
December 21, market down -1%. Obama headed to Hawaii
December 22 and 23, market closed
December 24, market down -0.4%
December 25, market closed
December 26, market down -0.3%
December 27, market down -0.15%
December 28, market down -1.2%
December 29, 30, market closed
December 31, market up +1.3%
January 1, market closed
January 2, market up ,+2.4%. Re-purchase all mutual funds

Overall, the market stays where it was but my action decreased my portfolio by about 0.5% but that's okay. I was concerned about a market drop of 5-10% but that didn't happen and that's good for everyone.

Would I do it again? It depends on the situation and the hunch I have. I know bogleheads buy and hold but if I see black clouds on the horizon rolling in, I would try to look for a refuge?
Am I missing something? How did you purchase before the gain of January 2?

If you continue down this path, you will psych yourself out of ever being invested.

Keith
Déjà Vu is not a prediction
dickenjb
Posts: 2941
Joined: Tue Jan 05, 2010 12:11 pm
Location: Philadelphia PA

Re: I sold all my mutual funds and stocks on December 20th

Post by dickenjb »

livesoft wrote: It is also like paying an advisor 1.5% to 2% of the portfolio in 2012 in AUM fees. OTOH, if the OP had an advisor that charged him only 1% for holding his hand during the past few weeks and helping him to stay-the-course, then he would of come out ahead by a little bit. The forum tried to be that advisor and charge nothing, but it didn't work out.
Livesoft that is a great thought. Many AUM advisors would say that is the primary function they serve, keeping Nervous Nellies invested when things look bleak. Not that I would advocate an advisor for folks who have the courage of their convictions to form a plan and stick to it.
User avatar
bottlecap
Posts: 6906
Joined: Tue Mar 06, 2007 10:21 pm
Location: Tennessee

Re: I sold all my mutual funds and stocks on December 20th

Post by bottlecap »

TravelforFun wrote:my action decreased my portfolio by about 0.5% but that's okay.
No it didn't. It increased it by .5%. Even with the correct math, it doesn't mean anything. Very few will be able to predict the next 5 to 10% drop. Those that do will only do so by luck.

JT
hlfo718
Posts: 808
Joined: Wed Dec 01, 2010 8:17 am
Location: NYC

Re: I sold all my mutual funds and stocks on December 20th

Post by hlfo718 »

I think OP should stay away from various business news channels and magazines because all they tried to do is scare investors with stupid headlines. This morning Bloomberg TV was asking "Can you make money in the stock market?". I turned off the TV.
User avatar
camontgo
Posts: 329
Joined: Tue Oct 27, 2009 1:46 pm
Location: Chicago, IL
Contact:

Re: I sold all my mutual funds and stocks on December 20th

Post by camontgo »

I recently transferred a meaningful amount of money out of an old retirement account at a former employer.

I had no option for an in-kind or electronic transfer, so, like the OP, I was out of the market for a short period of time before I could repurchase funds similar to the funds I had in the original account.

I was worried about market swings while the transaction was in process, and I ran some stats on how much equity markets can move over a few trading days (using Ken French data library daily return data for U.S. Equities).

Here is the table (of course, when you are out of the market the positive market returns are bad for you, and the negative market returns are good for you):

Image

Conclusion: Large moves in a short time are not particularly uncommon, so there is a lot of risk. I highly doubt these swings can be predicted. On average, of course, you lose money by being out of the market. So, when jumping in and out of the market you are taking a large risk for a negative expected return.

I originally posted this table here:
http://www.calculatinginvestor.com/2012 ... term-risk/
"Essentially, all models are wrong, but some are useful." - George E. P Box
User avatar
tadamsmar
Posts: 9972
Joined: Mon May 07, 2007 12:33 pm

Re: I sold all my mutual funds and stocks on December 20th

Post by tadamsmar »

TravelforFun wrote:I am the one that posted on December 20th that I sold everything (mostly no-load index funds) and that I would repurchase the same on January 2nd. I told everyone that it was purely a defensive move on my part because I was fearing that we were going over the fiscal cliff. I stated that I would pay no taxes because all my money is in IRA accounts. I also said that if things got resolved, market would stay where it was and I would not lose much. This is what has happened the last couple of weeks.

Dec 19. Plan B went nowhere
Dec 20. I sold everything
December 21, market down -1%. Obama headed to Hawaii
December 22 and 23, market closed
December 24, market down -0.4%
December 25, market closed
December 26, market down -0.3%
December 27, market down -0.15%
December 28, market down -1.2%
December 29, 30, market closed
December 31, market up +1.3%
January 1, market closed
January 2, market up ,+2.4%. Re-purchase all mutual funds

Overall, the market stays where it was but my action decreased my portfolio by about 0.5% but that's okay. I was concerned about a market drop of 5-10% but that didn't happen and that's good for everyone.

Would I do it again? It depends on the situation and the hunch I have. I know bogleheads buy and hold but if I see black clouds on the horizon rolling in, I would try to look for a refuge?
You are comparing apples and rotted apples. You locked in a 0.5% loss. 5-10% market downturns (or stock sales as we sometimes call them) are not really losses till you lock them in. No need to lock them in unless you need the money for consumption. You are not thinking like a good investor.

5% to 10% downturns are pretty common. You will still have some even if you continue to trade in and out on hunches in advance of events.
Last edited by tadamsmar on Thu Jan 03, 2013 11:39 am, edited 1 time in total.
Post Reply