Should I Buy in this Market?

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scboggler
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Joined: Tue Oct 22, 2013 6:13 pm

Should I Buy in this Market?

Post by scboggler »

I've been selling some individual stocks to move the money into my indexed funds. Now I'm wondering if I should buy now or wait a bit to see what the market does.

I know market timing isn't recommended but I keep hearing about the record high P/E ratios and wonder if it's not better to wait a few months to see if the market dips and get a discount.

Any advice? Thanks!
Jfet
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Re: Should I Buy in this Market?

Post by Jfet »

Do what I did (had some cash set aside for a market drop that never happened). Just hold your nose and buy 25% of what you want tomorrow, then wait a few weeks or a month. It won't kill you and it really makes you feel good, even if the market goes up or down.
Twins Fan
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Re: Should I Buy in this Market?

Post by Twins Fan »

If you had been sitting in cash the past 5 years and were hesitant to buy in now, I could see why. But, if you were invested in stocks yesterday and sell those today, then you should invest in index funds tomorrow (yesterday, today, and tomorrow only used for example). You were already in "this market", so why get out.

My opinion anyway.
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momar
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Re: Should I Buy in this Market?

Post by momar »

You could find people asking this question every week for the past few years.

Actually, probably forever. Regardless of if the market is high or low, up or down.
"Index funds have a place in your portfolio, but you'll never beat the index with them." - Words of wisdom from a Fidelity rep
MKP
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Re: Should I Buy in this Market?

Post by MKP »

Meh, my friend said this last year. He left his money in the STB index, with new contributions going into index funds. He has made 8% ytd compared to 26% for me. His risk-aversion cost him 18% return. No one knows what the future holds....sometimes you gotta jump.
Johm221122
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Re: Should I Buy in this Market?

Post by Johm221122 »

Turn off the noise, pick AA that is appropriate , save what you can and stay the course
John
dimedropper
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Re: Should I Buy in this Market?

Post by dimedropper »

Same question different topic, with total stock market / international market. The prices are at an ALL time high for the index funds. Is it a bad time to buy in now? Might it eventually drop? Many companies may be overvalued right now due to QE3.
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Ged
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Re: Should I Buy in this Market?

Post by Ged »

Since the market has an upward bias due to economic growth, and there is a survival bias in the stock market indexes you are going to find that it is often near new highs.

This general increase in prices over time is also why it is more advantageous to be invested than not most of the time.
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bottlecap
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Re: Should I Buy in this Market?

Post by bottlecap »

You're right, market timing is not recommended. So are you asking if there is an exception? Nope, there isn't.

Good luck,

JT
garlandwhizzer
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Re: Should I Buy in this Market?

Post by garlandwhizzer »

When it comes to stock purchases, I am a market timer. If you wish to consider buying stocks now after they have had a massive bull run of about 200% (with dividends reinvested) in the less than 5 years, I would suggest dollar cost averaging rather than lump sum investing. No one, certainly not I, knows where the market is going from here and so there is no certainty that you're doing the right thing until retrospect when it is too late. But given all the risks in both directions, I personally would go in a little at a time for new purchases in this environment, dollar cost averaging into stocks or keeping the funds in money markets until buying opportunities appear. Risks both ways however.

Garland Whizzer
Imdeng
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Re: Should I Buy in this Market?

Post by Imdeng »

If it is a equity to equity move (stocks to index funds) - then timing does not matter - you are in anyways.

If it is cash to equity move - then while you should not try to time, it does make sense to do dollar cost averaging. Divide the pie in 12 parts and move 1/12th start of each month. Then don't be surprised if it starts falling from 13th month onwards :-)
redhounds
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Re: Should I Buy in this Market?

Post by redhounds »

garlandwhizzer wrote:I personally would go in a little at a time for new purchases in this environment
(emphasis mine)

If he just sold individual stocks to buy stock index funds I wouldn't really consider it a new purchase, just a redeployment of assets in a more diversified manner.
--Red
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JupiterJones
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Re: Should I Buy in this Market?

Post by JupiterJones »

scboggler wrote:I [...] wonder if it's not better to wait a few months to see if the market dips and get a discount.
If the market dips, then your individual stocks will probably more or less dip with it, wouldn't they? Same goes for a market climb.

The only thing that would give you a "discount" is if the market dipped overall, but your stock didn't for some reason. But by the same token, your stock could dip more than the market for some reason, turning your discount into a premium.

There's just no way to know which will happen. One is just about as likely as the other, and previous behavior of markets has been show to have no useful predictive ability.

So just admit that you are powerless in the face of the unknowable, and do what you gotta do. :sharebeer
Stay on target...
harikaried
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Re: Should I Buy in this Market?

Post by harikaried »

Just completed moving some money around from a mixed-basis Traditional IRA to Solo 401k and Roth IRA.

Day 1) sold everything in the Traditional to cash (to avoid balance fluctuation)
Day 2) direct rollover of pre-tax Traditional to Solo 401k
Day 3) converted remaining (i.e., after-tax) Traditional to Roth IRA
Day 3) repurchase Total Stock Market fund in both Solo 401k and Roth IRA

Didn't bother to look at prices when selling or buying as this money is for 40+ years down the road.
Last edited by harikaried on Thu Oct 31, 2013 5:07 pm, edited 1 time in total.
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Taylor Larimore
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Re: Should I Buy in this Market?

Post by Taylor Larimore »

scboggler wrote:I've been selling some individual stocks to move the money into my indexed funds. Now I'm wondering if I should buy now or wait a bit to see what the market does.

I know market timing isn't recommended but I keep hearing about the record high P/E ratios and wonder if it's not better to wait a few months to see if the market dips and get a discount.

Any advice? Thanks!
schboggler:

Welcome to the Bogleheads forum!

A few minutes ago I made a post with our stock market forecasts made last January. Less than 4% guessed how high the market would be today.

Forget market timing. Structure a long-term asset allocation plan -- invest -- then stay-the-course.

2013 BOGLEHEAD CONTEST

Best wishes.
Taylor
"Simplicity is the master key to financial success." -- Jack Bogle
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HomerJ
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Re: Should I Buy in this Market?

Post by HomerJ »

garlandwhizzer wrote:massive bull run of about 200% (with dividends reinvested) in the less than 5 years
One could also easily say that the market is only up 35% over the last 6 years (10/30/2007 - 10/30/2013), so it's not overpriced. Both are correct statements.

The thing is, markets reach new highs a LOT... One could have easily asked in 1992 (and 1993, and 1994, and 1995, and 1996, etc.) "Hey should I invest now or wait for a correction? Market is at all-time highs!"

I don't know what's going to happen next... You should be investing the same when the market is all-time highs and when it's at all-time lows... Set an asset allocation (I'm at 50/50 stocks/bonds) and stick with it, rebalancing occasionally.
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TomatoTomahto
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Re: Should I Buy in this Market?

Post by TomatoTomahto »

I understand the concern, but OP, basically your post is: "I know I shouldn't try to time the market, but should I try to time the market?"
I get the FI part but not the RE part of FIRE.
IlliniDave
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Re: Should I Buy in this Market?

Post by IlliniDave »

go ahead and buy. I do every other Thursday
Don't do something. Just stand there!
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TomatoTomahto
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Re: Should I Buy in this Market?

Post by TomatoTomahto »

Every year, my wife gets a bunch of money (bonus and vesting deferred comp) around February/March. It is nearly 100% of our taxable investment funds for the year. Some of it is held for the coming tax bill, but most of it is invested. Every year I get nervous about putting it into the market, so I space out the investments for a few weeks (I usually wait for Moderately Bad Days to put in a lump). I wait a while, but never more than 4-8 weeks.
I get the FI part but not the RE part of FIRE.
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Toons
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Re: Should I Buy in this Market?

Post by Toons »

Buy As Much As You Can ,with the idea of holding for about 20 years,it makes the decision an Easy One :happy
"One does not accumulate but eliminate. It is not daily increase but daily decrease. The height of cultivation always runs to simplicity" –Bruce Lee
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mickeyd
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Re: Should I Buy in this Market?

Post by mickeyd »

Now I'm wondering if I should buy now or wait a bit to see what the market does.

1. Follow your Plan (IPS).

2. If you don't have as IPS, getamovin.

3. See #1
Part-Owner of Texas | | “The CMH-the Cost Matters Hypothesis -is all that is needed to explain why indexing must and will work… Yes, it is that simple.” John C. Bogle
Jfet
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Re: Should I Buy in this Market?

Post by Jfet »

TomatoTomahto wrote:Every year, my wife gets a bunch of money (bonus and vesting deferred comp) around February/March. It is nearly 100% of our taxable investment funds for the year. Some of it is held for the coming tax bill, but most of it is invested. Every year I get nervous about putting it into the market, so I space out the investments for a few weeks (I usually wait for Moderately Bad Days to put in a lump). I wait a while, but never more than 4-8 weeks.
Same situation here with wife, except it is in October. I thought I would get a great opportunity to put it into the market because of the debt crisis but alas the market just wants to climb a wall of worry.
Thales
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Re: Should I Buy in this Market?

Post by Thales »

I bought into the market in 2009 from a technical analysis interpretation. Now I am seeing the inverse of what I saw then with the added nastiness of some negative divergence. So my answer to you would really depend upon how long you have to ride out the various market ups and downs.

If you want to try and time the market why not examine a balanced trade off. An asset allocation I have been considering recently would be 10% bonds 25% stock 65% cash with a timescale of eighteen months or so to re assess market developments.

I am a huge huge fan of a fire and forget passive approach as being virtually impossible to beat. The best thing about passive investing is its pure simplicity and never ever not knowing what to do. Nobody knows the answer anyway.
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