Bogleheads

[renditt]

It took all of 7 months and there are no attractive investments anymore. Stock are overpriced again, bond yields are low, REITs doubled from their lows and commodities look expensive again as well. I am grateful for the fantastic rally and used it to significantly de-risk my portfolio, but on the other hand it would have been nice to be able to invest a low valuations over a sustained period.

What to do now? Most will just stick to their AA which is fine. Personally I have a lot of cash on the sideline, ready for the next significant decline in stocks (which shouldn't be too far away) and an increase in interest rates.

[trico]

I am looking at investing in tax liens. Lots of those these days with foreclosures high as they are. I am going to a class to learn how. They say 25% return in most states by law. Good return so I will let you know how it turns out.

[Triple digit golfer]

If you find an "attractive" investment, you're probably either market timing or being duped. Stick with your AA and be done with it. That's the most attractive thing you could do in investing.

[HearDoc]

[dual]

[Mr Bear]

Scrape together every cent you can, and bet it all on the Under in Sunday's Redskins-Chiefs game.

[Taylor Larimore]

[am]

"It took all of 7 months and there are no attractive investments anymore."

So I guess it must be straight down from here for the long term according to your statement? As others have pointed out, invest according to your asset allocation and the rest will take care of itself.

[Triple digit golfer]

[Triple digit golfer]

[Adrian Nenu]

Inflation is zero or less. There are FDIC insured CDs yielding 2%, which isn't a bad real return with virtually no risk.

The Vanguard Total Bond Market index yields 3.42%. That's real return because there is no inflation.

Vanguard Intermediate Term Tax Exempt bond fund yields 2.80%. Again, this is real return and tax free.

The economy will recover eventually and the stock market will reflect that. Sure the road might be bumpy and the market has had a big runup but it's a mistake to bet against an economic recovery.

Adrian
anenu@tampabay.rr.com

[renditt]

[aszutu]

[fishndoc]

[NormanA61]

if the yield drops to 3.00 on the 10 year, that would look like a good as time as every to buy an "inverse" treasury fund. I would not do more than 10% of portfolio and add when you start making gains

A 4.00%+ 10 year treasury is quite possible in the next 1-3 years. That would produce a decent gain.

That is what I am looking at...

good luck

[renditt]

Goog points have been brought up, thanks for the replies.

Agree with Adrian's point that the real returns on bonds are not that bad and the investments mentioned are basically what I am investing in at the moment (I will probably use VWITX to replace my short term tax exempt, which has a yield below 1%, thanks for that).

Disagree completely that this is a good time to buy stocks. Valuation matters and I am hopeful to see more attractive prices soon. Any potential economic recovery has already been completely priced in. The bear market cycle, that begun in 2000, still has a few years to run and we have yet to see typical bear market valuations.

Good luck to all

[stan1]

I have some CA Intermediate Term Tax Free bonds (VCAIX) along with some CDs at a credit union.

[EmergDoc]

I don't know, it seems like a pretty good deal to be able to buy stocks at something like 1/3 off the price I thought was reasonably attractive in 2007.

I assume you didn't buy anything then because it "wasn't attractive." No? Maybe you should think about why not. You can buy stocks right now at the 1998 price. It's like a time machine for those of us who didn't have any money to invest back then.
_________________
1) Invest you must 2) Time is your friend 3) Impulse is your enemy
4) Basic arithmetic works 5) Stick to simplicity 6) Stay the course

[nisiprius]

The frustrating thing about investing is that long-term returns are always so small and so slow compared to short-term movements. It requires a great deal of patience and discipline and left-brain thinking to convince yourself they're even worthwhile, because if only you could pick stock or time the market with even partial accuracy you could get rich soooooo much quicker than by just sitting around for those pokey long-term returns.

Consider the proverbial "stocks for the long run" returns of 7% real. What, wait over a decade to double the real value of your money? When Vanguard Total Stock Market has gained 48% in just seven months, and Vanguard REIT Index Fund has gained over 80%? All you need to do is to keep finding stuff like that, and you could be doubling your money every two years instead of having to wait ten. Starting with $100,000 you could get to $3 million in constant dollars in the time it took for your long-term buy-and-hold investor to reach $200,000. Suddenly $200,000 looks like chump change, doesn't it?

And, as the Jim Cramers of the world are always anxious to point out, there are always assets that double their value in less than ten years. Whether of course anyone can identify them in advance is a very different question.

In other words, the long-term results most of us would love to get, the results we thought we'd get over the last decade and didn't, the the results that would have made the rosy dreams of our retirement worksheets come true... are the very results that "don't look attractive" in the short term.
_________________
Annual income twenty pounds, annual expenditure nineteen nineteen and six, result happiness; Annual income twenty pounds, annual expenditure twenty pounds ought and six, result misery.

[brick-house]

Emerg doc stated

[LH]

[LH]

[Adrian Nenu]

[EmergDoc]

[sschullo]

[Rick Ferri]

What do you mean by "Stocks are overpriced again"?

Stock prices have only rebounded from depression levels to recession levels. The S&P 500 is still off 28% from its high of two years ago, and off about 13% from October 1999.

Fairly priced? Perhaps. Overpriced? I don't think so.

[mda42]

[mda42]

[Paladin]

[digit8]

[Adrian Nenu]

[Eureka]

Wouldn't it have been great if we had all known how "attractive" stocks were in March? Personally, if I had put my entire portfolio in the Total Stock Market Index Fund then, I'd have no more worries. Heck, I might just put it all in the GNMA Fund on Monday, live off the dividends and forget the stock market.

We might all benefit from making at least a mental note of every time we have an almost unquenchable urge to "do something." I remember my last two well:

-- In October 2007, eight months after I took early retirement, the stock market was reaching new highs, and I very nearly shifted bond money into equities. I vividly remember the walk I was taking while pondering this. But I slapped myself and said: "50/50 was your plan, dumb-ass. There was a reason, and it's just as valid now." In fact, if I had bothered to calculate my fixed/equity ratio that month, I'd probably have taken some equity money off the table.

-- In November through January 2009, I had two or three near-misses on pulling some (not all) equity money. But I knew intellectually that would be a classic panicking out at the bottom. Yes, I probably should have put more in stock in January (my normal month for rebalancing), but my nerves were shot, and I couldn't stomach it.

I don't have any real regrets about not rebalancing, but I do thank God I didn't sell stocks at the bottom (I give Bogleheads a lot of credit for that).

The lesson I learned is that sometimes it's best to do nothing. That is my default position. I'm not sure where to do up-to-the-minute calculation, but through Sept. 30, money in a mattress still beat the S&P 500 for 10 years.

[Mr Bear]

I've taken some of my equity gains of the past two quarters and used it to pay off 60K of my mortgage, 10K of my HELOC and 7K in CC debt. In doing so, I relied more on common sense than on running the numbers, but I do know that since 2008, my debt-to-assets ratio had risen substantially, and undedr the circumstances, it feels good to pay down some debt.

[Eureka]

[nisiprius]

[Eureka]

[neverknow]

[Rodc]

If nothing looks great, that would include cash, either because you judge yields to be too low, and stock prices too high or risk too high, then pretty much everything is equally attractive, so you simply spread your money around and be done with it. Easy.

Two rational things to do are: skip investing and party like there is no tomorrow with the extra cash flow and accept your retirement, college savings, etc are screwed. Or save more and/or plan to work longer.

Personally I share some unease about cash, bonds and stocks, but I don't really think things are all that bad, and not knowing the future and being in a fairly decent place regarding college savings and retirement goals, I'm just going to stay to the course I laid out before this mess and keep my fingers crossed.
_________________
"all standard caveats apply"

[Fbone]

If one had bought just one stock in March ... Bank of America ... there was a good chance you'd be able to retire in August.

[neverknow]

[MnD]

No good investments?

I am 80/20 equity/fixed income and after buying a great deal of "60% off sale" additional equity shares in November and March through rebalancing, I have placed one rebalancing sale of international and small cap equity a couple months ago and am due to make another.

I am paying $2000 extra per month on my house note which yields 4.75% pre-tax. Contractor labor and materials are very low right now so we are improving the house and adding equity. We redid all our banking accounts to lower costs and fees and continue to save and invest automatically with every paycheck. We are now debt-free except for a rapidly diminishing mortgage.

Consequently, while "the market" is still down 38% or so from the peak, our net worth is down only 7% from the peak, despite maintaining a high allocation in stocks and much of the remainder in our home.

Relative to the households we compete against on price for airline seats, resort vacations, new cars, home improvements, furniture etc., we are much better off now than at the peak of bubble, and the good deals keep rolling in. Large cap equity is still "38% off" and selling at 1998 prices. Maybe not a screaming bargain but I'm not complaining.

[MCSquared]

[TenS2XS]

[heyyou]

I do own some of what is going up next.

I just don't know which part of my portfolio will match that statement. With a 65% equity allocation to about 14,000 businesses, I also own plenty of what went down.

I have faith that part of my investments will recover someday from the recent bust. Between now and then, my wife and I will adapt as needed. We will muddle through these "interesting" times.

The answer to what to invest in next for immediate profits is unknown. The entire market is available for sale on Monday, I would suggest a well thought out AA with appropriate risk, including broad diversification with buy and HOLD and rebalancing by bands.

Historically, for low risk stuff like CDs and short term bonds, 2% was a SWR. Adjust your spending to match what your portfolio can tolerate.

[EmergDoc]

[gotherelate]

[sommerfeld]

[Paladin]

[renditt]

[grok87]