Taking Some off the Table?

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john94549
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Taking Some off the Table?

Post by john94549 »

I understand "stay-the-course" folks will hoot me down, but it does seem this market is tired.

I booked some profits lately. Up over 11% YTD seems a bit unsustainable.

You folks have fun. Think I'll whack off my gains and plop into cash for now.
livesoft
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Re: Taking Some off the Table?

Post by livesoft »

Well, around here we don't say "taking some off the table"; instead we say "I rebalanced the other day". The first phrase is met with skeptically raised eyebrows. The second phrase gets an all-knowing nod of approval.

Of course, news in Europe is gonna make the market pop this week. <-- I would not have written that if you had added to your equities. :twisted:
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john94549
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Re: Taking Some off the Table?

Post by john94549 »

I said "some", not all. Can't recall I ever took all off the table.

That said, I did cash in my VFSTX short-term investment grade bond fund tonight. Bought at 10.73, sold at 10.84, with several months' dividends added on. Annualized return, well, better than a poke in the eye. And much better than my CDs.
livesoft
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Re: Taking Some off the Table?

Post by livesoft »

Selling VFSTX is not taking anything off the table since it is a short-term bond fund that many people treat same as cash.
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fishnskiguy
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Re: Taking Some off the Table?

Post by fishnskiguy »

john94549 wrote:I said "some", not all. Can't recall I ever took all off the table.

That said, I did cash in my VFSTX short-term investment grade bond fund tonight. Bought at 10.73, sold at 10.84, with several months' dividends added on. Annualized return, well, better than a poke in the eye. And much better than my CDs.
OK, now what are you going to with the money taken off the table?

Chris
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Re: Taking Some off the Table?

Post by abuss368 »

john94549 wrote:I understand "stay-the-course" folks will hoot me down, but it does seem this market is tired.

I booked some profits lately. Up over 11% YTD seems a bit unsustainable.

You folks have fun. Think I'll whack off my gains and plop into cash for now.

Hi john94549,

The most important thing an investor can do is to determine their asset allocation between stocks and bonds.

If your allocation has moved, I would reallocate back to your desired asset allocation.

This is how an investor attempts to control or limit risk.

Best.
John C. Bogle: “Simplicity is the master key to financial success."
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john94549
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Re: Taking Some off the Table?

Post by john94549 »

livesoft wrote:Selling VFSTX is not taking anything off the table since it is a short-term bond fund that many people treat same as cash.
Goshamighty, I bought it late May, selling it tomorrow (barring a crash), that's about a 1.6% increase in three months, dividends re-invested. Started with $30,000*, ending with $30,485. Annualized, that's 6.4%. Never let green fade to red and all that. I'll take it.

PS: Answering the question: what now? Answer: nothing. I've now "made" enough to equal or exceed what I would have made in a CD in a year at five-year rates.

One could, of course, increase the return above-noted by increasing the amount wagered.
Last edited by john94549 on Wed Sep 05, 2012 10:02 pm, edited 1 time in total.
Anon1234
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Re: Taking Some off the Table?

Post by Anon1234 »

Care to make an actual prediction with a ticker, date and price?
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john94549
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Re: Taking Some off the Table?

Post by john94549 »

Anon1234 wrote:Care to make an actual prediction with a ticker, date and price?
I doubt VFSTX will vary more than a penny.
therub
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Re: Taking Some off the Table?

Post by therub »

john94549 wrote:I understand "stay-the-course" folks will hoot me down, but it does seem this market is tired.

I booked some profits lately. Up over 11% YTD seems a bit unsustainable.

You folks have fun. Think I'll whack off my gains and plop into cash for now.
Let's see, I just took a look at the S&P 500 annual returns for the last few years (wikipedia). I don't know if it includes dividends.

1988 16.61%
1989 31.69%
1990 −3.10%
1991 30.47%
1992 7.62%
1993 10.08%
1994 1.32%
1995 37.58%
1996 22.96%
1997 33.36%
1998 28.58%
1999 21.04%
2000 −9.10%
2001 −11.89%
2002 −22.10%
2003 28.69%
2004 10.88%
2005 4.91%
2006 15.79%
2007 5.49%
2008 −37.00%
2009 26.46%
2010 15.06%
2011 2.05%

Just curious where your 11% comes from..
Fees are the rub.
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Re: Taking Some off the Table?

Post by abuss368 »

therub wrote:
john94549 wrote:I understand "stay-the-course" folks will hoot me down, but it does seem this market is tired.

I booked some profits lately. Up over 11% YTD seems a bit unsustainable.

You folks have fun. Think I'll whack off my gains and plop into cash for now.
Let's see, I just took a look at the S&P 500 annual returns for the last few years (wikipedia). I don't know if it includes dividends.

1988 16.61%
1989 31.69%
1990 −3.10%
1991 30.47%
1992 7.62%
1993 10.08%
1994 1.32%
1995 37.58%
1996 22.96%
1997 33.36%
1998 28.58%
1999 21.04%
2000 −9.10%
2001 −11.89%
2002 −22.10%
2003 28.69%
2004 10.88%
2005 4.91%
2006 15.79%
2007 5.49%
2008 −37.00%
2009 26.46%
2010 15.06%
2011 2.05%

Just curious where your 11% comes from..

Time weighted vs. Fund returns can be two different things.
John C. Bogle: “Simplicity is the master key to financial success."
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john94549
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Re: Taking Some off the Table?

Post by john94549 »

Chris, I am going to ruminate as to my re-investing options. For now, I must admit, $485 is but a rounding error. However, I do get a "feel good" buzz knowing I "made more" in VFSTX than I would have in VMMXX.

It's not retirement-threatening, one way or the other. In any given day, my wife and I go up or down five or ten thousand dollars.

But I keep score.
therub
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Re: Taking Some off the Table?

Post by therub »

abuss368 wrote:
therub wrote:
john94549 wrote: Up over 11% YTD seems a bit unsustainable.
Let's see, I just took a look at the S&P 500 annual returns for the last few years (wikipedia). I don't know if it includes dividends.

1988 16.61%
1989 31.69%
1990 −3.10%
1991 30.47%
1992 7.62%
1993 10.08%
1994 1.32%
1995 37.58%
1996 22.96%
1997 33.36%
1998 28.58%
1999 21.04%
2000 −9.10%
2001 −11.89%
2002 −22.10%
2003 28.69%
2004 10.88%
2005 4.91%
2006 15.79%
2007 5.49%
2008 −37.00%
2009 26.46%
2010 15.06%
2011 2.05%

Just curious where your 11% comes from..
Time weighted vs. Fund returns can be two different things.
My timeframes and asset selections are as arbitrary as op's.
Fees are the rub.
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Re: Taking Some off the Table?

Post by Anon1234 »

john94549 wrote:
Anon1234 wrote:Care to make an actual prediction with a ticker, date and price?
I doubt VFSTX will vary more than a penny.
Certainly it will, eventually. Let's see how long it takes to close above 10.86 or below 10.84.

Will you update this thread when you do something with the cash? You can rub it in, or get your cumuppins. :wink:
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Re: Taking Some off the Table?

Post by john94549 »

Abuss, the S+P 5000 is over 11% YTD. Divide 1400 by 1260. It's not rocket-science, and it's not sustainable. Which is why I took some off the table.
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Re: Taking Some off the Table?

Post by jpsfranks »

MattinAustin
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Re: Taking Some off the Table?

Post by MattinAustin »

My prediction is things are going to be fine in Europe and here but not great by any means. The market will slowly slowly rise these next few years until the next thing out of nowhere gets us. I don't really consider the market all that high considering the S&P is lower than it was in 2000 and this is 12 years later.

What was your plan before? Did you say I'm going to keep a balance of 70% stocks/ 30% bonds but sell all my stocks if they make 11% in a single year?
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Re: Taking Some off the Table?

Post by john94549 »

Anon1234 wrote:
john94549 wrote:
Anon1234 wrote:Care to make an actual prediction with a ticker, date and price?
I doubt VFSTX will vary more than a penny.
Certainly it will, eventually. Let's see how long it takes to close above 10.86 or below 10.84.

Will you update this thread when you do something with the cash? You can rub it in, or get your cumuppins. :wink:


Alas, I will do nothing with the cash. I plan to sit on it. Being a good Boglehead, I tend to conserve.
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Re: Taking Some off the Table?

Post by Anon1234 »

john94549 wrote: Alas, I will do nothing with the cash. I plan to sit on it.
That's a contradiction.
And for the record, I didn't ask what you planned to do, I asked for an update when you "do" something with it. By "do" I mean "reinvest."
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Re: Taking Some off the Table?

Post by scrabbler1 »

fishnskiguy wrote:
john94549 wrote:I said "some", not all. Can't recall I ever took all off the table.

That said, I did cash in my VFSTX short-term investment grade bond fund tonight. Bought at 10.73, sold at 10.84, with several months' dividends added on. Annualized return, well, better than a poke in the eye. And much better than my CDs.
OK, now what are you going to with the money taken off the table?

Chris
What I bolded in your quote, fishnskiguy, is what I always ask my friend when he saw the NAV on his intermediate muni bond fund (one I got him started with 9 years ago and one I am also invested in) rise a lot in the last year or so. When he had no satisfactory answer to give me, I told him to stay put. However, he bought a co-op apartment last December so he used a good chunk of this fund's holdings to make his down payment, surely a good answer to my question. He was delighted to sell a lot of shares at a nice profit so he still has a decent amount left in the fund.

I also ask myself the same question relating to my own bond fund holdings. But when I recently found a good use for some of my holdings, I also took some gains off the table just as I did with some stock funds back in the mid-1990s to pay off my mortgage. I reached the point where I was playing only with the "house's money" for a while! :)
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Re: Taking Some off the Table?

Post by letsgobobby »

Excuse my confusion, but in all seriousness what the heck kind of philosophy is this? That sells for a profit of $400 and calls it a win? Did you sell stocks or bonds? Can you post your exact current positions and recent sales so that we may, in four or six or twelve months, come back to your unedited post and see how you've done?
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Re: Taking Some off the Table?

Post by freebeer »

jpsfranks wrote:This post sounded familiar.

http://www.bogleheads.org/forum/viewtop ... &p=1315024
Yeah and selling S&P 500 in Feb didn't work out so well for OP, did it...
staythecourse
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Re: Taking Some off the Table?

Post by staythecourse »

It amazes me folks keep thinking there is some pattern to returns when it has been shown over and over there is NONE.

Autocorrelation/ serial correlation of even YEARLY returns are ZERO of large cap stocks. small cap stocks, LTGB, and long term corporate bonds. That means even from year to year there is no correlation, i.e. a good year doesn't influence the next year or vice versa.

So any decision to be in or out is essentially a guess. If it is based on a guess why would you assume you have a better chance of being correct then wrong?? My guess is it goes back to the usual people feel pain worse then gains and will do what it takes to avoid it.

Good luck.
"The stock market [fluctuation], therefore, is noise. A giant distraction from the business of investing.” | -Jack Bogle
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Re: Taking Some off the Table?

Post by DiscoBunny1979 »

According to a study I read, one doesn't sell in an election year. The sell in may and go away until October works better in a post election year. But the study also pointed out that since it's very difficult to 'time' the market, that even if you follow the Presidential cycle in terms of when to sell and not sell, it doesn't guarantee anything except you could be wrong or you could be right. Keep money invested and only rebalance when needed, not just to take some off the table because of an emotional response.
therub
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Re: Taking Some off the Table?

Post by therub »

staythecourse wrote:It amazes me folks keep thinking there is some pattern to returns when it has been shown over and over there is NONE.
The thing I've come to realize is that you have to risk staying in on the big years so that you average out to a decent rate of return. Likewise, you have to stay in on the bad years.

Practicing timing by getting out when an arbitrary amount has been lost or gained is an attempt to soften the spikes of the market, with the risk of missing out on the next spike. After all, at some point you have to get back in - another opportunity to guess wrong.

Far easier to adequately assess your own risk tolerance and set your portfolio accordingly to minimize the spikes automatically.
Fees are the rub.
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Re: Taking Some off the Table?

Post by NYBoglehead »

As of 11:02 the S&P 500 is up 1.84%. There is no cap on how much the market can go up or down in a given year. If you want to rebalance, fine. But taking money "off the table" because you think the market is "tired" is not a sound strategy.
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Re: Taking Some off the Table?

Post by livesoft »

Now that Europe has popped a zit, it may be time to check to see if one needs to rebalance. :twisted:
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Re: Taking Some off the Table?

Post by HomerJ »

freebeer wrote:
jpsfranks wrote:This post sounded familiar.

http://www.bogleheads.org/forum/viewtop ... &p=1315024
Yeah and selling S&P 500 in Feb didn't work out so well for OP, did it...
Plus, didn't he say he only rebalances once a year (in Feb)... but now he says he bought back in May (unverified), and sold for a tiny profit today.
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Re: Taking Some off the Table?

Post by HomerJ »

Anon1234 wrote:
john94549 wrote: Alas, I will do nothing with the cash. I plan to sit on it.
That's a contradiction.
And for the record, I didn't ask what you planned to do, I asked for an update when you "do" something with it. By "do" I mean "reinvest."
In May of 2013 when the SP is at 1600, he'll tell us reinvested it in December, and is now taking some "off the table" because the market is "tired".
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Re: Taking Some off the Table?

Post by Default User BR »

livesoft wrote:Now that Europe has popped a zit, it may be time to check to see if one needs to rebalance. :twisted:
Does this count as a Really Good Day?


Brian
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Re: Taking Some off the Table?

Post by TomatoTomahto »

Default User BR wrote:
livesoft wrote:Now that Europe has popped a zit, it may be time to check to see if one needs to rebalance. :twisted:
Does this count as a Really Good Day?


Brian
I'll take it, Brian. For that matter, could I have another tomorrow please? :sharebeer
I get the FI part but not the RE part of FIRE.
Easy Rhino
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Re: Taking Some off the Table?

Post by Easy Rhino »

I'm not sure if market-timing a short term bond fund really counts as market timing.

Kind of like watching snail races.
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Re: Taking Some off the Table?

Post by minesweep »

john94549 wrote:You folks have fun
Keep them well wishes coming. Today was fun. :)

Mike
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Anon1234
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Re: Taking Some off the Table?

Post by Anon1234 »

john94549 wrote:
Anon1234 wrote:
john94549 wrote:
Anon1234 wrote:Care to make an actual prediction with a ticker, date and price?
I doubt VFSTX will vary more than a penny.
Certainly it will, eventually. Let's see how long it takes to close above 10.86 or below 10.84.

Will you update this thread when you do something with the cash? You can rub it in, or get your cumuppins. :wink:


Alas, I will do nothing with the cash. I plan to sit on it. Being a good Boglehead, I tend to conserve.
Just for documentation, your prediction proved wrong in less than 24 hours. VFSTX closed down $0.02 at $10.83 the day after we had this exchange.
RenoJay
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Re: Taking Some off the Table?

Post by RenoJay »

To the original poster: Yeah, you'll get tarred and feathered around here, but I did the same thing as you. I finally acknowledged my risk tolerance is lower than I previously thought, and the best time to acknowledge that is when stocks are up.
Anon1234
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Re: Taking Some off the Table?

Post by Anon1234 »

RenoJay wrote:To the original poster: Yeah, you'll get tarred and feathered around here, but I did the same thing as you. I finally acknowledged my risk tolerance is lower than I previously thought, and the best time to acknowledge that is when stocks are up.
I would not tar and feather for risk control. I applaud your self-awareness.
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Re: Taking Some off the Table?

Post by Cash »

RenoJay wrote:To the original poster: Yeah, you'll get tarred and feathered around here, but I did the same thing as you. I finally acknowledged my risk tolerance is lower than I previously thought, and the best time to acknowledge that is when stocks are up.
As long as your "risk tolerance" doesn't have you changing your AA again "when stocks are down." That's just market timing.
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Re: Taking Some off the Table?

Post by Call_Me_Op »

john94549 wrote:I understand "stay-the-course" folks will hoot me down, but it does seem this market is tired.

I booked some profits lately. Up over 11% YTD seems a bit unsustainable.

You folks have fun. Think I'll whack off my gains and plop into cash for now.
I believe this was posted the day before the market went through the roof. There may be a lesson here.
Best regards, -Op | | "In the middle of difficulty lies opportunity." Einstein
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Re: Taking Some off the Table?

Post by BigFoot48 »

john94549 wrote:Started with $30,000*, ending with $30,485. Annualized, that's 6.4%. Never let green fade to red and all that. I'll take it..
Hold the $30,485 in a money market account earning 0.5% and in nine months your 6.4% magically becomes 2.0%. The magic of market timing?
Retired | Two-time in top-10 in Bogleheads S&P500 contest; 15-time loser
ResNullius
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Re: Taking Some off the Table?

Post by ResNullius »

I didn't take any money off the table, but I did change tables this week. For many years, I've had close to 100% of our investable assets in Vanguard funds, with our cash portion in Prime MM. This week, I moved almost all of the cash in Prime MM over to a new account they have at BOA (I know, BOA stinks). BOA has a new MM Savings Account that pays .35%, which is a lot higher than Vanguard's .04%, so I made the switch, plus the BOA account is FDIC insured. I also switched my Visa card to a cash back card with BOA (no fees). It pays 1% on everything, 2% on groceries, and 3% on gas, plus an additional 50% bump if you have the money deposited into an existing BOA account. Oddly, the MM Savings Account pays the same interest as BOA's 24-month CD, which makes no sense at all to me, but that's the way it is. These changes don't amount to a ton of money, but something is better than nothing. I went with BOA because I didn't want to use an internet bank, where you can find somewhat better rates. If Vanguard's MM account starts to pay more down the road, I'll move the money back to Vanguard.
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Re: Taking Some off the Table?

Post by SteveB3005 »

I think moving fractions of a portfolio from pile to pile will matter little relative to what you've made and saved over the course. Tinkering has the nice effect of feeling positive about outcome, that's why we're here. If we can reinforce some sense of control by little tweaks and it helps the overall discipline, what's the harm? Even the master, seems to have an evolving Plan B.
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Re: Taking Some off the Table?

Post by jdilla1107 »

john94549 wrote:Started with $30,000*, ending with $30,485. Annualized, that's 6.4%. Never let green fade to red and all that. I'll take it..
The s&p 500 was up around 2% just the other day. That's well over 500% annualized! :shock:
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Re: Taking Some off the Table?

Post by Tom_T »

BigFoot48 wrote:
john94549 wrote:Started with $30,000*, ending with $30,485. Annualized, that's 6.4%. Never let green fade to red and all that. I'll take it..
Hold the $30,485 in a money market account earning 0.5% and in nine months your 6.4% magically becomes 2.0%. The magic of market timing?
Two thumbs up for this post.
staythecourse
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Re: Taking Some off the Table?

Post by staythecourse »

I would reinforce to the OP and others who market time that the advice to not market time is always good advice, but not because in this case the OP was completely wrong. When the market does come down (and it always will before going up again) I'm sure the OP will come on this same thread and show how good of a move it was he got out when he did. That is the dangerous thing about looking at random time periods it can prove or disprove any move.

The point should be that the data shows that from year to year there is a "random walk" in returns supported by serial correlation of year to year of ZERO. So thinking if this happens now that must mean this will happen in the future is just the human mind trying to find a pattern when there is no pattern.

What should someone do then?? The lesson to learn is control what you can control. That is saving, LBYM, asset allocation to control volatility, reduce costs, stay the course, and AVOID active management. The investor can control 90% of investing doing the above, yet everyone is so greedy that they want to control the one aspect that is NOT in anyone's control and that is returns. Trying to control the returns part of investing by prediciting what can' be known ahead of time is how investors fail.

Good luck.
"The stock market [fluctuation], therefore, is noise. A giant distraction from the business of investing.” | -Jack Bogle
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market timer
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Re: Taking Some off the Table?

Post by market timer »

Here is one report supporting market timing, though it argues for owning equities next week: http://libertystreeteconomics.newyorkfe ... drift.html
JRA
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Re: Taking Some off the Table?

Post by JRA »

Portfolio risk should be determined by one's willingness and need to take risk, not by market forecasting. There is nothing wrong with taking money off the table if your need to take risk has changed or if your willingness to do so has shifted--the latter will probably result in selling at a loss in a market downturn.
staythecourse
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Re: Taking Some off the Table?

Post by staythecourse »

JRA wrote:Portfolio risk should be determined by one's willingness and need to take risk, not by market forecasting. There is nothing wrong with taking money off the table if your need to take risk has changed or if your willingness to do so has shifted--the latter will probably result in selling at a loss in a market downturn.
No one is saying that is wrong, the OP did not take money out because of that reason. He did it because he predicted the market would have a contraction.

The question did the OP actually change is IPS and strategic asset allocation after his move which would indicate he did realize his ability/willingness/ need to take risk was different??

Good luck.
"The stock market [fluctuation], therefore, is noise. A giant distraction from the business of investing.” | -Jack Bogle
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Re: Taking Some off the Table?

Post by livesoft »

staythecourse wrote: No one is saying that is wrong, the OP did not take money out because of that reason. He did it because he predicted the market would have a contraction.
I wouldn't be too sure of that. Selling shares of a short-term bond fund to go to cash is about as meaningful as someone selling cash to go to a short-term bond fund for their emergency fund. It really does not involve the market at all.

Now if the OP has sold VFSTX to buy VFTSX, that would be market timing and it would have been very successful market timing. :twisted: But selling near-cash to buy cash is just twiddling one's thumbs. I wouldn't even consider it a rebalancing move.
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hoops777
Posts: 3457
Joined: Sun Apr 10, 2011 12:23 pm

Re: Taking Some off the Table?

Post by hoops777 »

There is a school of thought that says never apologize for making a profit.
Last edited by hoops777 on Mon Sep 10, 2012 10:23 am, edited 1 time in total.
K.I.S.S........so easy to say so difficult to do.
linenfort
Posts: 2241
Joined: Sat Sep 22, 2007 9:22 am
Location: #96151D

Re: Taking Some off the Table?

Post by linenfort »

livesoft wrote:Well, around here we don't say "taking some off the table"; instead we say "I rebalanced the other day". The first phrase is met with skeptically raised eyebrows. The second phrase gets an all-knowing nod of approval.
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So true. Made me laugh! :happy
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