Pull out of market?

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BassMan5560
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Pull out of market?

Post by BassMan5560 »

With the Dow at over 18K, I really want to temporarily move my 60% stock mutual funds from there into my Vanguard brokerage account, but keeping the 40% bonds portion in play. I'm willing to forego any little upward ticks that we might see, in favor of protecting my portfolio against the next steep decline.

When I do get back in, I may do it as ETFs so I can make changes when I want and not have to wait until the end of the day.

I'm (hopefully) about 3-5 years away from retiring. I'm feeling like we've finally made some headway after the 2008/2009 trough, and I don't want to get into that situation again. Tell me why all of this is a good or bad idea.
finite_difference
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Re: Pull out of market?

Post by finite_difference »

What's your AA now, and what's your desired AA?

It is a bad idea if you are making the move based on trying to time the market. It sounds like you are trying to time the market based on your talk of switching to ETFs and "getting back in". Bad idea.

However, it is a good idea if you realized your stock allocation is too high for your risk, and you are making a one time change to increase your percentage of bonds. For example going from 70/30 stocks/bonds to 50/50 stocks/bonds.
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Re: Pull out of market?

Post by nisiprius »

I understand that you want to take your 60% completely out of stocks, all at once, and put it into... I'm not sure what, possibly something cashlike.

According to the the Bogleheads investment philosophy, this would be a bad idea because, point #5, you should "never try to time the market." Not even when the Dow has set a new record, or someone thinks the CAPE is high, or because your intuition is that the market is "overvalued." Point #10 is "stay the course."

Taylor Larimore took the trouble to assemble a collection of advice from 76 different experts, saying you should not try to time the market. You should, seriously, just take a moment and look at it. You don't need to read all 76, just a few. By the way I just made up the number 76. I didn't count them. If you want to count them, be my guest.

If you are so nervous holding 60% stocks that you can't stand the thought of staying the course, then your stock allocation is too high. You might consider reducing it. After all, right now is a better time than when stocks have declined. But do not use the word "temporarily." Pick some allocation lower than 60%, but think about it carefully and make a permanent change... and then stay the course.
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Re: Pull out of market?

Post by Gill »

stealth94rt wrote:I'm willing to forego any little upward ticks that we might see, in favor of protecting my portfolio against the next steep decline.
And what do you plan to do if we have just a few downward "ticks" and a very steep rise in the market?
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Re: Pull out of market?

Post by saltycaper »

It's a bad idea IMO because the "little upticks" might be big ones that you miss, the "next steep decline" might not happen anytime soon, you won't know when you should get back in, even if there is a steep decline the market might still be higher than the price at which you sell, etc. etc. etc. Nothing wrong with re-evaluating your AA, especially as you near retirement, but getting out just to get back in--don't think it's a good plan.
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Re: Pull out of market?

Post by knowsnothing »

Sell half your stocks - live peacefully at 30/70 for the rest of your days.
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BassMan5560
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Re: Pull out of market?

Post by BassMan5560 »

finite_difference wrote:What's your AA now, and what's your desired AA?

It is a bad idea if you are making the move based on trying to time the market. It sounds like you are trying to time the market based on your talk of switching to ETFs and "getting back in". Bad idea.

However, it is a good idea if you realized your stock allocation is too high for your risk, and you are making a one time change to increase your percentage of bonds. For example going from 70/30 stocks/bonds to 50/50 stocks/bonds.
I'm currently at 60 stock / 40 bonds, per my VG CFP's recommendation.
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Re: Pull out of market?

Post by cfs »

stealth94rt wrote: . . . Tell me why all of this is a good or bad idea . . .
It is never a good idea to make drastic changes to your portfolio just because the market went up or down a little. It is your money, your portfolio, your responsibility, my only recommendation is to proceed with caution. Thanks for reading.
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BeBH65
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Re: Pull out of market?

Post by BeBH65 »

Dear Stealth,
stealth94rt wrote:With the Dow at over 18K, I really want to temporarily move my 60% stock mutual funds from there into my Vanguard brokerage account, but keeping the 40% bonds portion in play. I'm willing to forego any little upward ticks that we might see, in favor of protecting my portfolio against the next steep decline.

When I do get back in, I may do it as ETFs so I can make changes when I want and not have to wait until the end of the day.

I'm (hopefully) about 3-5 years away from retiring. I'm feeling like we've finally made some headway after the 2008/2009 trough, and I don't want to get into that situation again. Tell me why all of this is a good or bad idea.
In life there are events that merit changing in one's Asset Allocation.
Ultimately your AA should reflect your ability, willingness and need to take risk.


Nearing retirement might be a reason to change one's AA. When does your Investment Policy Statement say that you should be dialing back your AA?
Otherwise what event happened in your sleep this night that changes your ability, willingness and need to take risk.

You know that one of the principles of Bogleheads is to "stay the course".
As you are posting here, I assume that you want to be challenged on your decision, and are looking for us to help you 'stay the course'.
So prepare yourself for reactions in that sense.

Here are mine:
- What will be your new AA? 40% bonds and 60% cash? Please realize that cash will loose value with inflation.
- When will you reenter the market? when the DJ hits 18900, so you missed 5% return, or will you wait until 19800?
- For info, on this forum we still get people asking us: "I went to cash in 2008, how should i reenter the market?'
- What is the goal of your portfolio. How far way is this goal? Does it need to support your retirement, including in 35 years?


From your other posts, I sense a restlessness related to your investments, although the funds that you published in the other thread are not bad.

Consider updating your opening post with the details of your portfolio using this format; People on this forum might help you to lower the volatility of your portfolio and to lower the risk.

Regards,
BeBH65. (only an investment enthusiast, not a financial adviser, perform your due diligence). | Have a look at https://www.bogleheads.org/wiki/Outline_of_Non-US_domiciles
livesoft
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Re: Pull out of market?

Post by livesoft »

Why not just exchange your mutual funds into the ETF share class?
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Re: Pull out of market?

Post by Fallible »

stealth94rt wrote:
finite_difference wrote:What's your AA now, and what's your desired AA?

It is a bad idea if you are making the move based on trying to time the market. It sounds like you are trying to time the market based on your talk of switching to ETFs and "getting back in". Bad idea.

However, it is a good idea if you realized your stock allocation is too high for your risk, and you are making a one time change to increase your percentage of bonds. For example going from 70/30 stocks/bonds to 50/50 stocks/bonds.
I'm currently at 60 stock / 40 bonds, per my VG CFP's recommendation.
Have you run your idea past the CFP? I agree with others here who suggest you lower your equity allocation to better match your tolerance for risk. The latter is what you're reacting to and that's fine, but to bail out now with the idea to later get back in, is overreacting and trying to time the market.
"Yes, investing is simple. But it is not easy, for it requires discipline, patience, steadfastness, and that most uncommon of all gifts, common sense." ~Jack Bogle
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packet
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Re: Pull out of market?

Post by packet »

I totally agree with Fallible... talk to your CFP about it.
stealth94rt wrote:... about 3-5 years away from retiring....
60/40 is fine... so is 40/60 ... end of the day (when you're 100) the two probably won't be amazingly different... however, if 40/60 lets you sleep at night, from here to 100 years old will be much more enjoyable.

Is it just me or are there more peeps freaking out about being at all time highs than usual?
Seems odd to me... :/

:beerCheers,
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Re: Pull out of market?

Post by HomerJ »

stealth94rt wrote:I'm (hopefully) about 3-5 years away from retiring. I'm feeling like we've finally made some headway after the 2008/2009 trough, and I don't want to get into that situation again.
Sounds like a good time to change your Asset Allocation (AA) permanently to a more conservative mix of stocks/bonds.

Note the permanent part.

It is not a good idea to try and time the market. It's not a good idea to pull out of stocks, and then try to jump back in later.

If you're pretty close to what you need for retirement, you need to start conserving it.

Set an AA assuming that the market may drop 50% tomorrow and stay down for 5 years. Since you are 3-5 years from retirement, I'd suggest dropping to 40/60 stocks/bonds or 30/70.

That way, if the market continues to go up, you get to enjoy some gains, but if it crashes, you lose a lot less, and can afford to "stay the course" through the correction, until the market comes back up again.

Jumping completely out of the market waiting for the next decline is a sucker's bet.
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Re: Pull out of market?

Post by coachz »

knowsnothing wrote:Sell half your stocks - live peacefully at 30/70 for the rest of your days.
Said like a winner ! :sharebeer
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Re: Pull out of market?

Post by jfave33 »

HomerJ wrote:
stealth94rt wrote:I'm (hopefully) about 3-5 years away from retiring. I'm feeling like we've finally made some headway after the 2008/2009 trough, and I don't want to get into that situation again.
Sounds like a good time to change your Asset Allocation (AA) permanently to a more conservative mix of stocks/bonds.

Note the permanent part.

It is not a good idea to try and time the market. It's not a good idea to pull out of stocks, and then try to jump back in later.

If you're pretty close to what you need for retirement, you need to start conserving it.

Set an AA assuming that the market may drop 50% tomorrow and stay down for 5 years. Since you are 3-5 years from retirement, I'd suggest dropping to 40/60 stocks/bonds or 30/70.

That way, if the market continues to go up, you get to enjoy some gains, but if it crashes, you lose a lot less, and can afford to "stay the course" through the correction, until the market comes back up again.

Jumping completely out of the market waiting for the next decline is a sucker's bet.
Awesome advice here plus a few others. You are looking for stability so lower your asset allocation now and don't be tempted to jump back in chasing return. That added return you feel you are missing out on comes with unwanted risk that you know you do not want.
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Re: Pull out of market?

Post by Globalviewer58 »

How many times do you plan to be right about timing the market? Your sounds the call for an Asset Allocation change or confirmation. If you retire in 3 to 5 years and have a 35 year retirement period you will likely face many ups and downs in life and the value of your portfolio over that 40-year period. Find a level that gives you confidence that you can handle the emotions of the increases and decreases in portfolio value.

You might calculate your Bond portfolio value as the number of years of planned retirement expenses. Let's say you have 10 years of expected portfolio withdrawals based on current market value of your bond funds. At a 60/40 AA you would have 15 years of expected withdrawals in your equity portfolio that could drop to 7.5 years of withdrawals in a really bad downturn.
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Re: Pull out of market?

Post by nedsaid »

stealth94rt wrote:With the Dow at over 18K, I really want to temporarily move my 60% stock mutual funds from there into my Vanguard brokerage account, but keeping the 40% bonds portion in play. I'm willing to forego any little upward ticks that we might see, in favor of protecting my portfolio against the next steep decline.

When I do get back in, I may do it as ETFs so I can make changes when I want and not have to wait until the end of the day.

I'm (hopefully) about 3-5 years away from retiring. I'm feeling like we've finally made some headway after the 2008/2009 trough, and I don't want to get into that situation again. Tell me why all of this is a good or bad idea.
The first question is this: How close are you to your retirement target? Your number? In other words, have you won the game? If you are very close to what you need for retirement, it might be a good idea to permanently have a much lower allocation to stocks. Maybe 30% stocks and 70% bonds. Don't be 100% out of stocks.

But seriously, don't try to time the market. Are you going to watch it go up 30% waiting for the next 10% drop? It is impossible to predict the short term moves of the market. Pretty much, everything the market does is a surprise to me. For example, I didn't expect to see the US Stock Market reach new highs within two weeks of the Brexit vote in the United Kingdom.

Do you have a plan for retirement? Are you going to annuitize any of your nest egg? Are you going to try for a 4% withdrawal rate? When will you start taking Social Security? Do you have a pension? It is hard to give advice without knowing more about your financial situation.
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retiredjg
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Re: Pull out of market?

Post by retiredjg »

It appears to me you are invested too aggressively. If 60% stocks were the right number for you, you would not be considering pulling your money out of the market and getting back in at some unknowable safer time.

The stock to bond ratio you should be looking for is one you can live with in the good times and the bad times both. Trying to sell at the unknowable right time and re-buy at the unknowable right time is a sure way to lose money - perhaps lots of it.

I suggest you reduce your stock to bond ratio to something you can stick with comfortably (not white knuckled, but comfortable) in the next 2008 like event. This may require a significant change - maybe to something like 40% stock or even less. Don't wait for retirement to get here. Go ahead and do it now.
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Re: Pull out of market?

Post by Toons »

No knee jerk reactions.
Gradually shift asset allocation.
40/60
30/70
:happy
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Re: Pull out of market?

Post by retiredjg »

I'm not opposed to slow transitions. But in this case if the choice is between going to 0% stocks vs switching from 60% stocks to 30 or 40% stocks….a slow transition is not the best choice. Get to a comfortable allocation now.

Keep in mind that a person who goes to 0% stocks now should probably never own stocks again.
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Re: Pull out of market?

Post by minesweep »

As other posters have suggested change your asset allocation to a comfort level that so you can sleep well at night. I can understand your reluctance to holds stocks as you approach retirement (2008 is not a distant memory for many investors). But that fear shouldn’t take you entirely out of stocks. Stay the course and you only have to be right once. You’ll have to be right twice otherwise. Keep the emotion out of investing. It almost always turns out to be the wrong thing to do.
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Re: Pull out of market?

Post by Watty »

If you have money in a taxable account be sure to know the tax implications of selling to reduce your stock holding BEFORE you do it.

In addition to capital gains taxes it can affect things like medicare surcharges, AMT, ACA subsidies, tax credits that phase out above a certain income, and your state taxes too.
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Re: Pull out of market?

Post by itstoomuch »

We were very close to our number thru the spring/summer of 2008. About 1 yr -2 yrs to retirement at ages 58/61. I was already looking and exploring exit vehicles (options, annuities, reallocation,). We already had bare land RE, no appreciable debts (PLUS from our Only, manageable @3%), 60/40 allocations. I had indications something was afoot: unbelievable mortgage terms, "for sale" signs on new development next to new high school, collapse of secondary homes where Mom had the family beach house (but not unusual, cyclical). Older bro, big bank, getting more nervous and had to be connected, on his semiannual visit to Mom.

Finally decided in Nov 2008 and made moves when SP5 ~@980. :annoyed :D :x :( :idea:
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Re: Pull out of market?

Post by bottlecap »

It's a terrible idea for the reasons you state.

Don't change things just because it went up. Don't get out with a plan to get back in. If an uptick makes you feel unsafe and makes you want to get out, NOTHING will ever make you want to get back in.

Each time you consider getting back in, the news will either be bad - scaring you from buying back in for fear the news will get worse, or the news will be good - scaring you from buying back in for fear that the market is about to drop from new highs (just like now).

Come up with an AA that you can live with and stick with it. If an all time high has you nervous, then your current AA is probably incorrect.

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Re: Pull out of market?

Post by pkcrafter »

stealth wrote:
I'm (hopefully) about 3-5 years away from retiring. I'm feeling like we've finally made some headway after the 2008/2009 trough, and I don't want to get into that situation again. Tell me why all of this is a good or bad idea.
What was your AA in 2008, and did you hold? I don't blame you for being nervous. When I retired I said it felt like being on a tightrope with no net below. After going from 60% to 45% I was still uncomfortable, so I went to 40% and never had an emotional attack again. That makes no rational sense, but emotionally it was a winner.

Don't blindly sell, it won't turn out good, and the market is always going to bump along with no logical rhyme or reason. Lower your equity allocation to a point that satisfies your emotional alarm trigger and stay there.

Paul
When times are good, investors tend to forget about risk and focus on opportunity. When times are bad, investors tend to forget about opportunity and focus on risk.
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Re: Pull out of market?

Post by halford1760 »

stealth94rt wrote:With the Dow at over 18K, I really want to temporarily move my 60% stock mutual funds from there into my Vanguard brokerage account, but keeping the 40% bonds portion in play. I'm willing to forego any little upward ticks that we might see, in favor of protecting my portfolio against the next steep decline.

When I do get back in, I may do it as ETFs so I can make changes when I want and not have to wait until the end of the day.

I'm (hopefully) about 3-5 years away from retiring. I'm feeling like we've finally made some headway after the 2008/2009 trough, and I don't want to get into that situation again. Tell me why all of this is a good or bad idea.
I think many people are doing what you are doing and slowly moving money out of the stock market in bonds, is that what you plan to do? Or do you plan to hold cash? Right now, hard assets like gold seems to also be popular.

I don't think it is a bad idea (a bad idea would be to cash out and go to vegas to win a person's retirement fund); it is a strategy and holding USD cash (securely) is the only way to guarantee you'll have that much USD cash later on.

As for market drop, that'd be like market timing. Maybe there's some benefits to long term market timing; but it isn't discussed much in the news.
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Re: Pull out of market?

Post by FelixTheCat »

Toons wrote:No knee jerk reactions.
Gradually shift asset allocation.
40/60
30/70
:happy
You need to have an AA that allows you to sleep at night. I agree that you should shift your 60/40 to something more conservative like 40/60.
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Re: Pull out of market?

Post by JoMoney »

If you desire a less risky position, I don't think it's a bad idea to move towards that.
If you're selling with the expectation that someone else will sell it back to you cheaper later, I think you're playing a game you're not likely to succeed at.
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BassMan5560
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Re: Pull out of market?

Post by BassMan5560 »

Thanks much to everyone who responded -- lots of good information and food for thought there. I think I need to schedule an appointment with my Vanguard CFP.
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Re: Pull out of market?

Post by retiredjg »

stealth94rt wrote: I think I need to schedule an appointment with my Vanguard CFP.
I think many of us think that too. :happy
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Re: Pull out of market?

Post by Ged »

stealth94rt wrote:With the Dow at over 18K, I really want to temporarily move my 60% stock mutual funds from there into my Vanguard brokerage account, but keeping the 40% bonds portion in play. I'm willing to forego any little upward ticks that we might see, in favor of protecting my portfolio against the next steep decline.
I was in your situation about 3 years ago - just started retirement and was nervous about what my expenses really were going to be and the potential for a market downturn. So I decided the best protection was to reduce the equity exposure in my portfolio to 40% and have 60% in bonds. That was I'd have reduced volatility in case of a steep decline. So far it's worked out well.

Taking everything out of stocks is risky in it's own right. You may miss out on gains that will turn out to be an important part of what you need to counteract inflation.
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Re: Pull out of market?

Post by Taylor Larimore »

stealth94rt wrote:With the Dow at over 18K, I really want to temporarily move my 60% stock mutual funds from there into my Vanguard brokerage account, but keeping the 40% bonds portion in play. I'm willing to forego any little upward ticks that we might see, in favor of protecting my portfolio against the next steep decline.

When I do get back in, I may do it as ETFs so I can make changes when I want and not have to wait until the end of the day.

I'm (hopefully) about 3-5 years away from retiring. I'm feeling like we've finally made some headway after the 2008/2009 trough, and I don't want to get into that situation again. Tell me why all of this is a good or bad idea.
stealth94rt:

Pulling out of the stock market to protect your portfolio against "the next steep decline" is almost certainly a mistake. No one knows when will be the next "steep decline" or the next steep incline. You have many more years of investing ahead. I would urge you to re-examine your portfolio's stock/bond allocation so that you will have a portfolio you can sleep with and stay-the-course. Use this Vanguard tool for help:

Vanguard Investor Questionnaire
"Stay the Course. No matter what happens, stick to your program. I've said "Stay the course" a thousand times, and I meant it every time. It is the most important single piece of investment wisdom I can give to you." -- Jack Bogle
Best wishes.
Taylor
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Re: Pull out of market?

Post by Fallible »

stealth94rt wrote:Thanks much to everyone who responded -- lots of good information and food for thought there. I think I need to schedule an appointment with my Vanguard CFP.
Yes, since you apparently went with his or her recommendation. It's entirely up to you, of course, but I think we would be interested to know what the CFP advises.
"Yes, investing is simple. But it is not easy, for it requires discipline, patience, steadfastness, and that most uncommon of all gifts, common sense." ~Jack Bogle
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Re: Pull out of market?

Post by michaeljc70 »

knowsnothing wrote:Sell half your stocks - live peacefully at 30/70 for the rest of your days.
I agree with this (though % can vary)....if you are feeling this way, your AA is probably not right for you.
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Re: Pull out of market?

Post by supernova »

Before you try to time the market, check this link: http://qz.com/487013/this-game-will-sho ... right-now/
NMJack
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Re: Pull out of market?

Post by NMJack »

packet wrote:60/40 is fine... so is 40/60 ... end of the day (when you're 100) the two probably won't be amazingly different..
Math and history do not agree with you.
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Re: Pull out of market?

Post by Hector »

stealth94rt wrote:With the Dow at over 18K, I really want to temporarily move my 60% stock mutual funds from there into my Vanguard brokerage account, but keeping the 40% bonds portion in play. I'm willing to forego any little upward ticks that we might see, in favor of protecting my portfolio against the next steep decline.

When I do get back in, I may do it as ETFs so I can make changes when I want and not have to wait until the end of the day.

I'm (hopefully) about 3-5 years away from retiring. I'm feeling like we've finally made some headway after the 2008/2009 trough, and I don't want to get into that situation again. Tell me why all of this is a good or bad idea.
I think it is a bad idea because I do not know what is going to happen tomorrow. Since I do not know what is going to happen tomorrow, staying the course is right thing for me.

I wont do it, but you can buy insurance (put options) for the duration that you are thinking about staying out of market. The reason I won't do it is because I do not know what is going to happen tomorrow. If I knew, I would already be richest person on the earth.
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Re: Pull out of market?

Post by Estate_Esq »

coachz wrote:
knowsnothing wrote:Sell half your stocks - live peacefully at 30/70 for the rest of your days.
Said like a winner ! :sharebeer
'Tis indeed saintly advice. I'm reminded of that great little book by the Frenchman Rev. Jacques Philippe entitled Searching for and Maintaining Peace: A Small Treatise on Peace of Heart.
Last edited by Estate_Esq on Wed Jul 13, 2016 6:58 pm, edited 1 time in total.
AlohaJoe
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Re: Pull out of market?

Post by AlohaJoe »

That link is very cool.
itstoomuch
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Re: Pull out of market?

Post by itstoomuch »

stealth94rt wrote:With the Dow at over 18K, I really want to temporarily move my 60% stock mutual funds from there into my Vanguard brokerage account, but keeping the 40% bonds portion in play. I'm willing to forego any little upward ticks that we might see, in favor of protecting my portfolio against the next steep decline.

When I do get back in, I may do it as ETFs so I can make changes when I want and not have to wait until the end of the day.

I'm (hopefully) about 3-5 years away from retiring. I'm feeling like we've finally made some headway after the 2008/2009 trough, and I don't want to get into that situation again. Tell me why all of this is a good or bad idea.
Sounds like your risk tolerance has changed.

In 2008 our retirement income had a immediate Market risk of ~75% (IRA, 401k, pension in a smallesh rust co), only SS and small pension was somewhat safe (25%).
Today 2016, our retirement income has a immediate Market risk of ~25% (Discretionary Accts, currently 60% cash, +3% since Brexit, +7% YTD); Pseudo pensionize the IRAs and rollover 401ks, ~75% (RIF'd in 2010).

see signature notes below.
YMMV.
Rev012718; 4 Incm stream buckets: SS+pension; dfr'd GLWB VA & FI anntys, by time & $$ laddered; Discretionary; Rentals. LTCi. Own, not asset. Tax TBT%. Early SS. FundRatio (FR) >1.1 67/70yo
selftalk
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Re: Pull out of market?

Post by selftalk »

How can you pull out of the market and foresake the compounding effect to enhance your wealth going forward. What happened to stay the course ? Isn`t that funny behavior and destructive behavior for accumulating wealth. We all know I think that no one can time the market continually yet as soon as some "experts" start saying and writing that prices are overvalued we hear folks on this website trying to develop strategies for exiting at these price levels only to say they will get back in later when it is lower. Fear of loss is a motivator for some. I read that hedge funds are dumping their losing sector investments at a large clip. They are emotional creatures also and hold large cash positions too. It seems to work this way all the time. Again "don`t peek" appears to be the best policy for growth.
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BolderBoy
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Re: Pull out of market?

Post by BolderBoy »

stealth94rt wrote:I'm (hopefully) about 3-5 years away from retiring. I'm feeling like we've finally made some headway after the 2008/2009 trough, and I don't want to get into that situation again. Tell me why all of this is a good or bad idea.
Your post screams that your AA is incorrect. Perhaps a 30/70 is better for you in which case sell half your stock fund and buy more bond fund now.

The rest is market timing and that is tough to do correctly and consistently.

(PS - I'm at 35/65 and retired)
"Never underestimate one's capacity to overestimate one's abilities" - The Dunning-Kruger Effect
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whaleknives
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Re: Pull out of market?

Post by whaleknives »

nisiprius wrote:. . . Taylor Larimore took the trouble to assemble a collection of advice from 76 different experts, saying you should not try to time the market. You should, seriously, just take a moment and look at it. You don't need to read all 76, just a few. By the way I just made up the number 76. I didn't count them. If you want to count them, be my guest. . .
I took you up on your challenge, and collected the definitive 102 Taylor Larimore Quotes on Market Timing.
"I'm an indexer. I own the market. And I'm happy." (John Bogle, "BusinessWeek", 8/17/07) ☕ Maritime signal flag W - Whiskey: "I require medical assistance."
Nowizard
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Re: Pull out of market?

Post by Nowizard »

I have not seen whether this question has been asked. Have you reached your asset goals for retirement or are you only wanting to protect what you have? If the former, then consider moving to a 20/80 ratio of stocks/bonds since this ratio is generally considered to be as good or better than a 100% bond portfolio.

Tim
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Re: Pull out of market?

Post by Gnirk »

After years of angst since the big downturn I finally got the picture that I don't like or tolerate risk well, and I have settled on a 35 stock/60 bond/5 cash allocation, and find that lets me sleep at night. Over 90% of my portfolio is taxable , and I haven't had to withdraw from it yet, other than my RMD from my small TIRA.
My DH, whose portfolio is much larger than mine, is 77 and his investments (mostly in taxable accounts) are at 50 stocks/ 45 bonds/ 5 cash.

We've both found our comfort level.
looking
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Re: Pull out of market?

Post by looking »

just reduce AA then you can sleep peacefully at night
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White Coat Investor
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Re: Pull out of market?

Post by White Coat Investor »

How much risk do you need to take?

We've clearly established that you're taking more than you're capable of taking, at least without more education, experience, or the help of a good advisor.

If you have enough money that you don't need to take the risk of a 60/40 portfolio, then the solution is easy. Get a 25/75 portfolio or whatever. If you don't have that much money, you've got to decide whether you just want to live on less or, in the words of Phil Demuth, "get a grip" and learn to deal with the volatility and deep risk of a 60/40 portfolio without abandoning the plan.

It might help if you can convince yourself that you don't possess the ability to jump in and out of the market advantageously. If you can't convince yourself of that, it's probably hopeless and you might want to consider a portfolio of CDs and annuities.
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
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King's Gambit
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Re: Pull out of market?

Post by King's Gambit »

supernova wrote:Before you try to time the market, check this link: http://qz.com/487013/this-game-will-sho ... right-now/

"You didn't beat the market.
The $10,000 you invested turned into $39,634. If you hadn't made any trades you would have made $3,523 more—leaving an ending balance of $43,158. At the time you reinvested, your trade had cost you only $998 but it ended up costing you $2,525 more because of the compounded gains you missed. Want to try again?"


That stressed me out and it was only a game. :annoyed

We will just stick to what we've been doing and enjoy retirement some day. :beer
Pretium Refert
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meowcat
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Re: Pull out of market?

Post by meowcat »

stealth94rt wrote:With the Dow at over 18K, I really want to temporarily move my 60% stock mutual funds from there into my Vanguard brokerage account, but keeping the 40% bonds portion in play.
Here's the problem with that thinking; What happens if the Dow hits 19k? Then 20k? how about 21k? Can you imagine 22k? At some point, you're going to be furious that you dropped all your equities. You're going to say "forget this, I'm getting back in, I don't want to miss out on more gains".
And that's when the market will crash. Of course, I'm not saying that's what's going to happen but the point is, no one knows. However, it is a very common tale of what happens when one tries to time the market.
What the bold print givith, the fine print taketh away. | -meowcat
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