Just Sold Out. What do you think?
Just Sold Out. What do you think?
My employer offers a 457(b) pre tax retirement account. I have maxed it out every single year for 6 years. I also have a little chunk in my Roth.
To be honest, I cheered when the last stock market crash happened. I knew I was getting a bargain every time I purchased another monthly installment. Now things are different.
I am not a financial expert, but I look with great skepticism on the numerical all time highs of the markets. How does that make sense with all of the debt crises around the world? Where is this enthusiasm coming from?
Last Thursday I pulled the trigger and liquidated all of my mutual funds in both the 457 and the Roth. I'm up about 40-50K over the last 6 years, and I just couldn't bear to be the idiot holding on tight during the next reversal. I decided to lock in my gains and hold my funds in cash until I see a bargain on the VTSAX fund.
Am I crazy?
To be honest, I cheered when the last stock market crash happened. I knew I was getting a bargain every time I purchased another monthly installment. Now things are different.
I am not a financial expert, but I look with great skepticism on the numerical all time highs of the markets. How does that make sense with all of the debt crises around the world? Where is this enthusiasm coming from?
Last Thursday I pulled the trigger and liquidated all of my mutual funds in both the 457 and the Roth. I'm up about 40-50K over the last 6 years, and I just couldn't bear to be the idiot holding on tight during the next reversal. I decided to lock in my gains and hold my funds in cash until I see a bargain on the VTSAX fund.
Am I crazy?
- nirvines88
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Re: Just Sold Out. What do you think?
I'll check back in 5-10 years and let you know.
"Beware of little expenses, a small leak will sink a great ship" - Poor Richard
Re: Just Sold Out. What do you think?
Yes, I think that you are crazy. I do think that equities are somewhat richly valued, but I think its a bad idea to make such drastic changes to your AA.
If you are waiting to find a bargain in VTSAX, you may be waiting "forever".
If you are waiting to find a bargain in VTSAX, you may be waiting "forever".
Re: Just Sold Out. What do you think?
Nice first post, so Welcome to the forum!
Yes, you are crazy.
Yes, you are crazy.
- InvestorNewb
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Re: Just Sold Out. What do you think?
We could be in the middle of a bull market. Who knows. So yes, I think you are a little crazy to sell everything like that.
If it's a long term plan you shouldn't care all that much.
If it's a long term plan you shouldn't care all that much.
My Portfolio: VTI [US], VXUS [Int'l], VNQ [REIT], VCN [Canada] (largest to smallest)
Re: Just Sold Out. What do you think?
I would guess many had similar thoughts in the early 80s about the stock market making new highs. Perhaps their concern wasn't debt. Perhaps it was Japanese cars or nuclear war or something else.frankjuka wrote:I am not a financial expert, but I look with great skepticism on the numerical all time highs of the markets. How does that make sense with all of the debt crises around the world? Where is this enthusiasm coming from?...Am I crazy?
A man is rich in proportion to the number of things he can afford to let alone.
- Clearly_Irrational
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Re: Just Sold Out. What do you think?
Current market conditions don't seem to warrant such an extreme response. You've eliminated crash risk but now you're earning negative real returns.
Re: Just Sold Out. What do you think?
Glad to be here!
I remember when I was a kid. I had a box of baseball cards that I carried around with me everywhere. I had carefully notated how much each card was worth based on the high estimate provided by the price guide. I estimated that I had about $500 in cards. I was very proud of this number. One day I walked into the neighborhood baseball card store. I man asked to see my box of cards. He flipped through them and then pulled out one $100 bill. He said he would give me the hundred dollars for the whole box. I was outraged. I said no and walked off fuming that somebody would offer me $100 for $500 worth of cards. Then time passed, I never saw the man again, and the cards dropped in value. Instead of $500 I got nothing. I've never been able to forget it.
Maybe liquidating my mutual funds is crazy but I can't help thinking that at least I got paid. I also got rid of a bunch of high load funds.
Thanks for all of the responses. I don't mind being a little crazy.
I remember when I was a kid. I had a box of baseball cards that I carried around with me everywhere. I had carefully notated how much each card was worth based on the high estimate provided by the price guide. I estimated that I had about $500 in cards. I was very proud of this number. One day I walked into the neighborhood baseball card store. I man asked to see my box of cards. He flipped through them and then pulled out one $100 bill. He said he would give me the hundred dollars for the whole box. I was outraged. I said no and walked off fuming that somebody would offer me $100 for $500 worth of cards. Then time passed, I never saw the man again, and the cards dropped in value. Instead of $500 I got nothing. I've never been able to forget it.
Maybe liquidating my mutual funds is crazy but I can't help thinking that at least I got paid. I also got rid of a bunch of high load funds.
Thanks for all of the responses. I don't mind being a little crazy.
Re: Just Sold Out. What do you think?
With all due respect, you aren't "a little crazy." You are "extremely crazy."frankjuka wrote:I don't mind being a little crazy.
You can't time the market in the manner you described. It sounds like you panicked, and your fear made an emotional decision for you to liquidate everything. There are ways to manage risk - real or perceived - but I don't believe selling out everything is one of those. You could have switched to a more risk-averse portfolio. That way, you would be somewhat protected while still avoiding negative earnings.
- nisiprius
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Re: Just Sold Out. What do you think?
You acted like a long-term investor for six years, and then you acted like a short-term speculator.
The only way I can see your move being obviously sound would be if you had, in fact, hit your "number" and felt that you had completed your retirement savings. But you say you haven't.
We all know what the long-term return of the whole stock market has been. And we know a simple way of getting the long-term return of the stock market--which may be higher or lower than it used to be, I think lower myself. And that's to invest in a total market index fund and stay the course. Since 100% stocks is far too difficult for me to stick with, I'd have personally used a much smaller allocation than that. I've used a small enough allocation so that I've mostly been able to stay the course. It wouldn't surprise me at all if the stock market took a 20% tumble in the next few years--it also wouldn't surprise me if it didn't. If it takes a tumble, fine. I won't think it's fine if happens, but it's fine. I'm in it for the long-term return of the total stock market, bubbles and crashes, booms and busts.
Anything else than staying the course? Jumping in and out? "Tactical asset allocation?" Well, it will get you something different from the long term total return of the stock market, might be lower, might be higher. Unless you really think you can time the market--and there is incredibly strong evidence that people can't--all you've done is added some gambling risk on top of that total return, the extra risk from your guesses about when to get in and get out.
Vanguard used to have a mutual fund called the Vanguard Asset Allocation fund, an example of a genre that was all the rage 15-20 years ago. In these funds, experts use quantitative models to decide how to shift back and forth between stocks and bonds. Their track record was so dismal, compared to just holding a steady allocation, that all of these funds have largely gone by the waysize, and Vanguard has giving up and is in the process of dismantling this fund--closing it to new investors and freezing it at a plain old fixed 60/40 balance.
Good luck on deciding when to get back in. You have about a coin-flip chance of beating those of us who hold the same time-averaged allocation as you and stay the course, but you are going to churn a lot of stomach acid in the process, and when it's all done you're as likely to do worse as to do better.
The only way I can see your move being obviously sound would be if you had, in fact, hit your "number" and felt that you had completed your retirement savings. But you say you haven't.
We all know what the long-term return of the whole stock market has been. And we know a simple way of getting the long-term return of the stock market--which may be higher or lower than it used to be, I think lower myself. And that's to invest in a total market index fund and stay the course. Since 100% stocks is far too difficult for me to stick with, I'd have personally used a much smaller allocation than that. I've used a small enough allocation so that I've mostly been able to stay the course. It wouldn't surprise me at all if the stock market took a 20% tumble in the next few years--it also wouldn't surprise me if it didn't. If it takes a tumble, fine. I won't think it's fine if happens, but it's fine. I'm in it for the long-term return of the total stock market, bubbles and crashes, booms and busts.
Anything else than staying the course? Jumping in and out? "Tactical asset allocation?" Well, it will get you something different from the long term total return of the stock market, might be lower, might be higher. Unless you really think you can time the market--and there is incredibly strong evidence that people can't--all you've done is added some gambling risk on top of that total return, the extra risk from your guesses about when to get in and get out.
Vanguard used to have a mutual fund called the Vanguard Asset Allocation fund, an example of a genre that was all the rage 15-20 years ago. In these funds, experts use quantitative models to decide how to shift back and forth between stocks and bonds. Their track record was so dismal, compared to just holding a steady allocation, that all of these funds have largely gone by the waysize, and Vanguard has giving up and is in the process of dismantling this fund--closing it to new investors and freezing it at a plain old fixed 60/40 balance.
Good luck on deciding when to get back in. You have about a coin-flip chance of beating those of us who hold the same time-averaged allocation as you and stay the course, but you are going to churn a lot of stomach acid in the process, and when it's all done you're as likely to do worse as to do better.
Last edited by nisiprius on Mon May 13, 2013 5:21 pm, edited 2 times in total.
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- Noobvestor
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Re: Just Sold Out. What do you think?
If you can live for the rest of your life on what you cashed in, great - buy an annuity and/or bonds and call it good. If you can't, you're just trading one kind of risk (equities/volatility) for another (inflation/shortfall). There is zero analogy to be made here with baseball cards ... those were always a speculative fad ... if stocks go to zero, your cash will be worthless anyway.frankjuka wrote:Glad to be here!
I remember when I was a kid. I had a box of baseball cards that I carried around with me everywhere. I had carefully notated how much each card was worth based on the high estimate provided by the price guide. I estimated that I had about $500 in cards. I was very proud of this number. One day I walked into the neighborhood baseball card store. I man asked to see my box of cards. He flipped through them and then pulled out one $100 bill. He said he would give me the hundred dollars for the whole box. I was outraged. I said no and walked off fuming that somebody would offer me $100 for $500 worth of cards. Then time passed, I never saw the man again, and the cards dropped in value. Instead of $500 I got nothing. I've never been able to forget it.
Maybe liquidating my mutual funds is crazy but I can't help thinking that at least I got paid. I also got rid of a bunch of high load funds.
Thanks for all of the responses. I don't mind being a little crazy.
"In the absence of clarity, diversification is the only logical strategy" -= Larry Swedroe
- HardKnocker
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Re: Just Sold Out. What do you think?
A bird in the hand...
You have just defined your risk tolerance.
You can always get back in the market. If this helps you sleep at night then it is right for you.
You have just defined your risk tolerance.
You can always get back in the market. If this helps you sleep at night then it is right for you.
Last edited by HardKnocker on Mon May 13, 2013 5:24 pm, edited 1 time in total.
“Gold gets dug out of the ground, then we melt it down, dig another hole, bury it again and pay people to stand around guarding it. It has no utility.”--Warren Buffett
Re: Just Sold Out. What do you think?
What is your plan now?
What will trigger buy signal for you? 10% drop, 5%, 20%? What if the market goes up 10% more and then drops 15%? Is that a buy signal?
Having an answer to that before you sold says that you have a plan, whether it is a good plan or not is another matter.
IMO, taking some profits (10-15%) and sitting in cash for a while is not irrational while you wait to reposition into low fee indexes and have concern about current values. I would want to have a plan though and a trigger point to say that my plan did not work and I need a new plan.
What will trigger buy signal for you? 10% drop, 5%, 20%? What if the market goes up 10% more and then drops 15%? Is that a buy signal?
Having an answer to that before you sold says that you have a plan, whether it is a good plan or not is another matter.
IMO, taking some profits (10-15%) and sitting in cash for a while is not irrational while you wait to reposition into low fee indexes and have concern about current values. I would want to have a plan though and a trigger point to say that my plan did not work and I need a new plan.
I own the next hot stock- VTSAX
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Re: Just Sold Out. What do you think?
It's your money and your risk tolerance. I can totally relate and figure what ever happens, it will be a learning experience for you. If the market tanks you'll be really glad you took profits. If it keeps rising, you'll wish you hadn't. But your own unique personality determines how bad you'd feel in either case.
Perhaps the real lesson here is that your stock allocation was too aggressive for your risk tolerance. In that case, if and or when you go back into stocks you can dial back how much of your assets you put into them.
Personally, I'd prefer to do what might be technically wrong, if I had strong reasons for doing it, rather than blindly follow anyone else's advice without testing it.
And if the market tanks next week, and stays down for 20 years, you will end up treasuring your intuition.
Now I better duck because the Bogleheads will be coming after me with tar and feathers.
Perhaps the real lesson here is that your stock allocation was too aggressive for your risk tolerance. In that case, if and or when you go back into stocks you can dial back how much of your assets you put into them.
Personally, I'd prefer to do what might be technically wrong, if I had strong reasons for doing it, rather than blindly follow anyone else's advice without testing it.
And if the market tanks next week, and stays down for 20 years, you will end up treasuring your intuition.
Now I better duck because the Bogleheads will be coming after me with tar and feathers.
Re: Just Sold Out. What do you think?
Welcome to the Forum!frankjuka wrote:To be honest, I cheered when the last stock market crash happened. I knew I was getting a bargain every time I purchased another monthly installment. Now things are different....
Last Thursday I pulled the trigger and liquidated all of my mutual funds in both the 457 and the Roth. I'm up about 40-50K over the last 6 years, and I just couldn't bear to be the idiot holding on tight during the next reversal.
You seem like a young(er) accumulator - the "6 years" gave you up - and my only suggestion is that and you should develop a plan, Asset Allocation, and just accumulate.
Link: http://www.bogleheads.org/wiki/Investme ... _Statement
Landy |
Be yourself, everyone else is already taken -- Oscar Wilde
Re: Just Sold Out. What do you think?
I have no problem with your post nor your advice. Frankly, I've been dialing back my equities as well in the current environment (but commensurate with my risk tolerance per my written IPS). I don't mind getting a little less if the bull keeps running. What I would mind would be getting caught out trying to stretch for additional gains without heeding my own good advice.Scooter57 wrote:It's your money and your risk tolerance. I can totally relate and figure what ever happens, it will be a learning experience for you. If the market tanks you'll be really glad you took profits. If it keeps rising, you'll wish you hadn't. But your own unique personality determines how bad you'd feel in either case.
Perhaps the real lesson here is that your stock allocation was too aggressive for your risk tolerance. In that case, if and or when you go back into stocks you can dial back how much of your assets you put into them.
Personally, I'd prefer to do what might be technically wrong, if I had strong reasons for doing it, rather than blindly follow anyone else's advice without testing it.
And if the market tanks next week, and stays down for 20 years, you will end up treasuring your intuition.
Now I better duck because the Bogleheads will be coming after me with tar and feathers.
Re: Just Sold Out. What do you think?
All I can say is it looks like you joined this forum 4 days too late. Better late than never though. Read up as others have suggested and maybe you'll luck out when you're ready to jump back in and the market will be down from your May 9th exit...
Re: Just Sold Out. What do you think?
Being out of the market feels good until it doesn't. I should know. I'm an expert.
It's likely that you will underperform the rest of us. timing strategies attempt to reduce risk by selectively reducing equity exposure. Unfortunately, you pay for the reduced risk in reduced return, on average. It's the whole free lunch, cake and eat it too. It doesn't usually work out.
You may get lucky, but the odds don't favor it. Reducing risk reduces return [period]...and selling everything is a drastic reduction in risk.
It's likely that you will underperform the rest of us. timing strategies attempt to reduce risk by selectively reducing equity exposure. Unfortunately, you pay for the reduced risk in reduced return, on average. It's the whole free lunch, cake and eat it too. It doesn't usually work out.
You may get lucky, but the odds don't favor it. Reducing risk reduces return [period]...and selling everything is a drastic reduction in risk.
Nadie Sabe Nada
Re: Just Sold Out. What do you think?
Good move, since the market is at an all time high you should sell everything. As evidenced in the past, market timing during a market peak is fool proof
40% Extended Market | 40% S&P 500 | 10% REIT | 5% State Muni Bond | 5% Cash
Re: Just Sold Out. What do you think?
I appreciate your honest responses. The thing that makes me think that I am crazy is that I haven't really worried about it that much at all. I had successful funds that were up a bunch but were chosen without regard to loads. I decided the .05 of VTSAX is more to my liking. I sold everything that made me money in a market that seems insanely valued. I have a bunch of money to buy back in. How can I not think of a little market timing at a time like this?
I have about 20 years of active investing left in me. For now, I'm willing to have 100% in VTSAX. I just haven't decided when I want to make the buy in.
I have about 20 years of active investing left in me. For now, I'm willing to have 100% in VTSAX. I just haven't decided when I want to make the buy in.
Re: Just Sold Out. What do you think?
Whoah!! As others have said, yes, that's probably crazy.frankjuka wrote:Last Thursday I pulled the trigger and liquidated all of my mutual funds in both the 457 and the Roth. I'm up about 40-50K over the last 6 years, and I just couldn't bear to be the idiot holding on tight during the next reversal. I decided to lock in my gains and hold my funds in cash until I see a bargain on the VTSAX fund.
Am I crazy?
To determine how much... When you say liquidate, do you mean moved everything in the 457 to a stable value fund and everything in the Roth to a MM fund, or do you mean withdrew everything from both accounts, as in early withdrawl penalties, taxes on the 457, taxes on the earnings in the Roth, lost all that tax advantaged space, and bumped up your 2013 income by a crapload? Have fun at 2013 tax time if the later is the case.
I'm thinking the OP is REALLY going to wish he had come here, asked some questions, and done some reading BEFORE making this drastic decision.
Re: Just Sold Out. What do you think?
Everything is in money market funds, not withdrawn. That would be unquestionably crazy. Sorry if my post was misleading on that account. I opted for the schwab self directed option through the 457 specifically so I could opt for VTSAX. It is in mm account there. In the Ira too
Last edited by frankjuka on Mon May 13, 2013 6:08 pm, edited 1 time in total.
Re: Just Sold Out. What do you think?
Ok, just making sure there. I was going to say, "absolutley crazy" if you withdrew it all.
Re: Just Sold Out. What do you think?
Why bother with the boglehead site/philosophy at all - if you aren't going to implement it?
If what you are really asking is what the boglehead approach would be to your situation, then such a question would likely be more actionable for you.
If what you are really asking is what the boglehead approach would be to your situation, then such a question would likely be more actionable for you.
Leonard |
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Market Timing: Do you seriously think you can predict the future? What else do the voices tell you? |
|
If employees weren't taking jobs with bad 401k's, bad 401k's wouldn't exist.
Re: Just Sold Out. What do you think?
Then, I think it was good to get out of any high ER and high load funds. We still might be able to avoid "crazy" here.
But, you were invested in stocks a few days ago... why not jump back in now? Just at the lower ER and likely better index fund you want to be in.
You say you have a 20 year time frame of investing. Do you think the market will be the same as it is now, lower than it is now, or higher than it is now 20 years from now? There is absolutely going to be ups and downs in the market for the next 20 years. No question about it. Do you think you will be able to time each up and each down?
Do some reading on "market timing", like now, and I think you will see why that is not a good strategy.
But, you were invested in stocks a few days ago... why not jump back in now? Just at the lower ER and likely better index fund you want to be in.
You say you have a 20 year time frame of investing. Do you think the market will be the same as it is now, lower than it is now, or higher than it is now 20 years from now? There is absolutely going to be ups and downs in the market for the next 20 years. No question about it. Do you think you will be able to time each up and each down?
Do some reading on "market timing", like now, and I think you will see why that is not a good strategy.
Re: Just Sold Out. What do you think?
How do you define "bargain"? VTSAX closed at 40.84 on Thursday. What price do you intend to buy back in?frankjuka wrote: Last Thursday I pulled the trigger and liquidated all of my mutual funds in both the 457 and the Roth. I'm up about 40-50K over the last 6 years, and I just couldn't bear to be the idiot holding on tight during the next reversal. I decided to lock in my gains and hold my funds in cash until I see a bargain on the VTSAX fund.
Re: Just Sold Out. What do you think?
It seems the OP is tryng to pick and choose what parts they like best? They like the low expenses and indexing parts, but don't believe in the buy and hold part.leonard wrote:Why bother with the boglehead site/philosophy at all - if you aren't going to implement it?
If what you are really asking is what the boglehead approach would be to your situation, then such a question would likely be more actionable for you.
We'll get the OP fully pointed in the right direction here.
Re: Just Sold Out. What do you think?
Well, your plan of moving to VTSAX is good. Good luck with the timing of when.
The sewer system is a form of welfare state. |
-- "Libra", Don DeLillo
Re: Just Sold Out. What do you think?
I thought that the OP was in VTSAX all along using the self directed brokerage option in the 457b. The only thing is that the asset allocation was 100% VTSAX with ZERO% in fixed income/bonds.roymeo wrote:Well, your plan of moving to VTSAX is good. Good luck with the timing of when.
Re: Just Sold Out. What do you think?
Are you crazy? Absolutely not.
Have you done the right thing? Well again, nobody here knows the answer to that question with 100% certainty.
Is this what "most Bogleheads" would have done? I would guess probably not.
If you are going to try and time the market, getting out when you think it's high, and jumping back in when you think it's low, then you will probably not get a lot of support here. Most people here think this is a very hard thing to do successfully on a consistent basis.
The common recommendation here is to select an asset allocation that is consistent with your need, your willingness and your ability to take risk. If you have all of the money you will ever need from your investments, you have no need to take risk (i.e. invest in such a way that you may lose money). If you have no other means of making money (retired, long term disability, etc.) then you are not "able" to take risk, and must lower your expectations. If you just can't stand to hold an investment that may (and will....) drop in value, you do not have the willingness to take risk. You should invest up to the minimum of these factors.
At this point, assuming you want to be in stocks again some day, you may want to ask yourself when you will get back in? If the market drops 10% from today, then you made a good call to get out when you did....but will you be willing to get back in? What is your entry point? -10%? -20%? -50? What if the market is 5% higher in six months, 10% higher in a year, 20% higher in two years? Will you jump back in at some point? If so, when?
I'm not trying to be sarcastic here. This is the question you really need to answer for yourself.
I certainly don't think you're "crazy", and you may very well have done the right thing. The question you need to ask yourself now, is "what is my plan for my future investments?" If you have $100K in money market funds right now, and no other investments...it doesn't really matter how you got to this point today --- whether you invested slowly and consistently for 5 years, whether you inherited it or won the lottery, whether you had $500K and lost 80% of it. The question is what do I do going forward?
-Brad.
Have you done the right thing? Well again, nobody here knows the answer to that question with 100% certainty.
Is this what "most Bogleheads" would have done? I would guess probably not.
If you are going to try and time the market, getting out when you think it's high, and jumping back in when you think it's low, then you will probably not get a lot of support here. Most people here think this is a very hard thing to do successfully on a consistent basis.
The common recommendation here is to select an asset allocation that is consistent with your need, your willingness and your ability to take risk. If you have all of the money you will ever need from your investments, you have no need to take risk (i.e. invest in such a way that you may lose money). If you have no other means of making money (retired, long term disability, etc.) then you are not "able" to take risk, and must lower your expectations. If you just can't stand to hold an investment that may (and will....) drop in value, you do not have the willingness to take risk. You should invest up to the minimum of these factors.
At this point, assuming you want to be in stocks again some day, you may want to ask yourself when you will get back in? If the market drops 10% from today, then you made a good call to get out when you did....but will you be willing to get back in? What is your entry point? -10%? -20%? -50? What if the market is 5% higher in six months, 10% higher in a year, 20% higher in two years? Will you jump back in at some point? If so, when?
I'm not trying to be sarcastic here. This is the question you really need to answer for yourself.
I certainly don't think you're "crazy", and you may very well have done the right thing. The question you need to ask yourself now, is "what is my plan for my future investments?" If you have $100K in money market funds right now, and no other investments...it doesn't really matter how you got to this point today --- whether you invested slowly and consistently for 5 years, whether you inherited it or won the lottery, whether you had $500K and lost 80% of it. The question is what do I do going forward?
-Brad.
Re: Just Sold Out. What do you think?
I'm curious as to what this means. What does your IPS say exactly?Blues wrote:I've been dialing back my equities as well in the current environment (but commensurate with my risk tolerance per my written IPS).
I always wanted to be a procrastinator.
Re: Just Sold Out. What do you think?
I'd rather not quote it here but trust me when I tell you that it calls for a very conservative allocation of stocks /bonds based upon our need to take risk.Sidney wrote:I'm curious as to what this means. What does your IPS say exactly?Blues wrote:I've been dialing back my equities as well in the current environment (but commensurate with my risk tolerance per my written IPS).
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Re: Just Sold Out. What do you think?
Personally, I agree with all that. It's your money. "Trust thyself: every heart vibrates to that iron string." It's bad to follow your instincts and be wrong, but it's absolutely terrible to do something you don't believe in because someone told you to do it and be wrong. The people who gave you advice aren't going to make you whole. They probably aren't even going to apologize.Scooter57 wrote:It's your money and your risk tolerance.... Personally, I'd prefer to do what might be technically wrong, if I had strong reasons for doing it, rather than blindly follow anyone else's advice without testing it.... And if the market tanks next week, and stays down for 20 years, you will end up treasuring your intuition. Now I better duck because the Bogleheads will be coming after me with tar and feathers.
I've never quite solved the puzzle of how to use advice, but advice is most useful and at its best, not when it is telling you what to do, but when it is illuminating aspects of the situation you hadn't thought about.
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.
Re: Just Sold Out. What do you think?
It's not bad to get out of the market, so long as you don't get back in with the market higher than it is now. It's particularly not a bad idea if you have somewhere useful to hide in cash, like a 3% stable value fund. It might be that 3% will be all you need. You just need to have a plan and stick to it.
Paul
Paul
Re: Just Sold Out. What do you think?
Well said.nisiprius wrote:It's bad to follow your instincts and be wrong, but it's absolutely terrible to do something you don't believe in because someone told you to do it and be wrong. The people who gave you advice aren't going to make you whole. They probably aren't even going to apologize...I've never quite solved the puzzle of how to use advice, but advice is most useful and at its best, not when it is telling you what to do, but when it is illuminating aspects of the situation you hadn't thought about.
Re: Just Sold Out. What do you think?
The OP just has to be lucky enough to pick those exact 10 worst days of the market to be out of the market for the next 20 years, and he will be set.
http://www.mymoneyblog.com/missing-the- ... p-500.html
http://thefinancebuff.com/avoiding-wors ... -best.html
Since I haven't won the Powerball yet, I think I will stick with the buy and hold and rebalance.
http://www.mymoneyblog.com/missing-the- ... p-500.html
http://thefinancebuff.com/avoiding-wors ... -best.html
Since I haven't won the Powerball yet, I think I will stick with the buy and hold and rebalance.
Last edited by ieee488 on Mon May 13, 2013 7:21 pm, edited 1 time in total.
Dell Optiplex 3020 (Win7 Pro), Dell Precision M6300 (Ubuntu Linux 12.04), Dell Precision M6300 (Win7 Pro), Dell Latitude D531 (Vista)
Re: Just Sold Out. What do you think?
The market is at an all time high but it is just a tad higher than it was 6 years ago. Who is to say that it will not reach 20,000 30,000 or even 50,000. Personally, I am young enough (30's) to handle a 30, 40 or 50% decline because I know the market will bounce back. For me the only variable in the market is time, not bull market rallies or bear market declines.
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Re: Just Sold Out. What do you think?
Crazy, correct.livesoft wrote:Nice first post, so Welcome to the forum!
Yes, you are crazy.
You sold all your BOND mutual funds as well?
Being up 50K is small change.
What if you were up 500K?
No, wait, you'll never know now...
Attempted new signature...
Re: Just Sold Out. What do you think?
Let's look on the positive side: The OP "got rid of a bunch of high load funds." The OP has been out of the market less time than someone who is transferring from one custodian to another and had to go to cash to do so. And maybe the market will go down this summer, too!
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Re: Just Sold Out. What do you think?
Nope, not crazy. Just a typical human being, and therefore, a terrible investor.
Re: Just Sold Out. What do you think?
Not crazy, just a market timer
The key in investing is you have to do it your own way and you have to learn your own lessons. I share your view that the US market is overpriced, but being 0% in stocks doesn't make any sense, especially given your age.
A few thoughts
- Even though the S&P is at a record high, other markets a far from it (e.g., Emerging Markets). Maybe you would be more comfortable investing in those? At least that way you maintain exposure to stocks.
- Radical moves are never good. Get away from the all-or-nothing approach, learn to do things incrementally. For example, you could have moved 25% from stocks to cash. If the market tanks, you'll be glad you took some money off the table, if it keeps rising, you still participate in the rally.
- ultimately the key is to find an asset allocation you are comfortable with. Based on my own experience, it can take a while to figure this out.
Good luck
The key in investing is you have to do it your own way and you have to learn your own lessons. I share your view that the US market is overpriced, but being 0% in stocks doesn't make any sense, especially given your age.
A few thoughts
- Even though the S&P is at a record high, other markets a far from it (e.g., Emerging Markets). Maybe you would be more comfortable investing in those? At least that way you maintain exposure to stocks.
- Radical moves are never good. Get away from the all-or-nothing approach, learn to do things incrementally. For example, you could have moved 25% from stocks to cash. If the market tanks, you'll be glad you took some money off the table, if it keeps rising, you still participate in the rally.
- ultimately the key is to find an asset allocation you are comfortable with. Based on my own experience, it can take a while to figure this out.
Good luck
- Peter Foley
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Re: Just Sold Out. What do you think?
Frankjuka
Welcome. I doubt that you are crazy, I just think you might be posting to the wrong web site. Note the line at the top, "Investing Advice Inspired by Jack Bogle." Most of us here believe in having a plan that involves broadly diversified investing using low cost mutual funds and sticking to that plan. I'm sure there are other sites devoted to market timing. They will likely give you high fives and praise your moves, unless of course the market goes higher in which case they can boo and call you stupid for not accurately predicting the future. If you stick around here a bit and read some of books that are recommended, you can make your own decision as to whether this is the approach for you or not.
As to what we would believe to be your mistake, it is not irreversible. Simply write a plan for yourself that you think you can live with, i.e., one where you can stay the course. Then reinvest in low cost mutual funds accordingly.
Welcome. I doubt that you are crazy, I just think you might be posting to the wrong web site. Note the line at the top, "Investing Advice Inspired by Jack Bogle." Most of us here believe in having a plan that involves broadly diversified investing using low cost mutual funds and sticking to that plan. I'm sure there are other sites devoted to market timing. They will likely give you high fives and praise your moves, unless of course the market goes higher in which case they can boo and call you stupid for not accurately predicting the future. If you stick around here a bit and read some of books that are recommended, you can make your own decision as to whether this is the approach for you or not.
As to what we would believe to be your mistake, it is not irreversible. Simply write a plan for yourself that you think you can live with, i.e., one where you can stay the course. Then reinvest in low cost mutual funds accordingly.
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Re: Just Sold Out. What do you think?
I can't help thinking of boggler, the Yin to your Yang. He has been waiting and waiting for a dip to get in on and finally gave up and pulled the trigger, buying in last Wednesday. One of you is definitely going to be wrong (but not necessarily crazy). Bogleheads seem to prefer the middle ground, half crazy and only half wrongfrankjuka wrote:
Last Thursday I pulled the trigger and liquidated all of my mutual funds in both the 457 and the Roth. I'm up about 40-50K over the last 6 years, and I just couldn't bear to be the idiot holding on tight during the next reversal. I decided to lock in my gains and hold my funds in cash until I see a bargain on the VTSAX fund.
Am I crazy?
http://www.bogleheads.org/forum/viewtop ... 1&t=116028
JW
Retired at Last
Re: Just Sold Out. What do you think?
You are not as crazy as the guy that sold out at the bottom in 2009. However, you could still be the semi-crazy guy who sold out in the middle in 2013 and never got back in. That's a serious risk from a psychological perspective. It will be very hard to get back in if the market keeps going up.
Most here, me included, would advocate setting a reasonable plan containing a mix of asset classes appropriate to your age and willingness and ability to take risk and then just follow your plan come rain or shine.
Most here, me included, would advocate setting a reasonable plan containing a mix of asset classes appropriate to your age and willingness and ability to take risk and then just follow your plan come rain or shine.
- SpaceCommander
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Re: Just Sold Out. What do you think?
Since you asked:
I think you're on the wrong board. You might feel a better affinity with the participants on this board: http://www.marketthoughts.com/forum/tra ... s-f14.html
I think you're on the wrong board. You might feel a better affinity with the participants on this board: http://www.marketthoughts.com/forum/tra ... s-f14.html
I honor my personality flaws, for without them I would have no personality at all.
Re: Just Sold Out. What do you think?
What done, can't be undone. My suggestion would be to enter market now....maybe at 5% of your investment each week (or maybe 5% /month) till it reaches your AA.
If market is going up in next 6-12 months, you are gaining part of it. If its goes down...you will gain when it comes back up (your original rational of selling everything).
If market is going up in next 6-12 months, you are gaining part of it. If its goes down...you will gain when it comes back up (your original rational of selling everything).
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Re: Just Sold Out. What do you think?
I would recommend you go through the wiki and read about IPS. Even if you can't come up with an asset allocation right now, go through the process to look at your future retirement needs, (a good way to check is your current living expenses and estimate from there), look at your current income stream, your savings rate and then see if and when you can reach your retirement goal with a zero return. Then calculate the numbers if your portfolio grows at 1%, 2%, 3%, 4% and 5%.
You might soon realize that without making drastic changes in your savings rate or work until you are in your mid 70's that you might have to take some market risk - but it might be less or more than you think before you take the time to run your numbers.
Then set yourself goals where you want to be every year from now until retirement - once you do that, you might know if you have the need to participate in the market (like most people) and that might help with your willingness to take market risk - key is to have a plan, and believe me, no plan is ever perfect but it is much better than no plan. I think impulsive actions (all/nothing) are usually a sign that you don't have a well thought-out plan or that your asset allocation might not reflect your risk tolerance.
You might soon realize that without making drastic changes in your savings rate or work until you are in your mid 70's that you might have to take some market risk - but it might be less or more than you think before you take the time to run your numbers.
Then set yourself goals where you want to be every year from now until retirement - once you do that, you might know if you have the need to participate in the market (like most people) and that might help with your willingness to take market risk - key is to have a plan, and believe me, no plan is ever perfect but it is much better than no plan. I think impulsive actions (all/nothing) are usually a sign that you don't have a well thought-out plan or that your asset allocation might not reflect your risk tolerance.
Re: Just Sold Out. What do you think?
Thank you all for your responses!