My 401k is almost all cash now. 1/2 Mil

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eye.surgeon
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Re: My 401k is almost all cash now. 1/2 Mil

Post by eye.surgeon » Tue Oct 31, 2017 11:02 am

To repeat everyone else, At 48 you will do significantly better staying in the market and invested through a crash. What you're doing is statistically more risky for your retirement than staying invested.
"I would rather be certain of a good return than hopeful of a great one" | Warren Buffett

Arthur Digby Sellers
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Re: My 401k is almost all cash now. 1/2 Mil

Post by Arthur Digby Sellers » Tue Oct 31, 2017 11:13 am

tampaite wrote:
Tue Oct 31, 2017 10:32 am
Arthur Digby Sellers wrote:
Tue Oct 31, 2017 8:56 am

Two fundamental principles of the stock market are: 1) it tends to go up over the long term, .
Long term, we all will be dead.

You'll only need to look at Japan's Nikkei 225 Index - it reached peak of 39K in 1989 and today, it's at 22K.

If you were fully invested in 1989 and say, you were a 60-70 year old, odds are, you would be dead by now before you recovered your investment.
If an investor was 60-70 years old in 1989, presumably most of his investing was done from the 60's to 1986 (when the Nikkei rose from 1200 to 13,000--it is now at 22,000), in which case he would done fine in retirement. On the other hand, if the investor had decided to go to cash at the end of say 1985 when the Nikkei was up to 13,000 (which was an all-time high after big run-ups in the early 80s), he would have been right that a crash was coming, but he would have had to wait sixteen years to 2001 to be able to buy back in at a lower price. So guessing correctly would have gained him virtually nothing.

I will concede that an investor who is unwilling to take any risk that his investment might decline in value should avoid the stock market at all times. But that investor is giving up a lot of expected (not promised) return in order to reduce his risk to zero.

tampaite
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Re: My 401k is almost all cash now. 1/2 Mil

Post by tampaite » Tue Oct 31, 2017 11:20 am

Arthur Digby Sellers wrote:
Tue Oct 31, 2017 11:13 am

If an investor was 60-70 years old in 1989, presumably most of his investing was done from the 60's to 1986 (when the Nikkei rose from 1200 to 13,000--it is now at 22,000), in which case he would done fine in retirement. On the other hand, if the investor had decided to go to cash at the end of say 1985 when the Nikkei was up to 13,000 (which was an all-time high after big run-ups in the early 80s), he would have been right that a crash was coming, but he would have had to wait sixteen years to 2001 to be able to buy back in at a lower price. So guessing correctly would have gained him virtually nothing.

I will concede that an investor who is unwilling to take any risk that his investment might decline in value should avoid the stock market at all times. But that investor is giving up a lot of expected (not promised) return in order to reduce his risk to zero.
You cannot sugar-coat the risks in the stock market claiming that long term everything will go up like other posters do on this forum.

If it was a 30 year old who started investing in 1985, guess what will happen to everything they invested? they would have lost half of the value before they turned 70.

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Re: My 401k is almost all cash now. 1/2 Mil

Post by David Scubadiver » Tue Oct 31, 2017 11:35 am

tampaite wrote:
Tue Oct 31, 2017 11:20 am
Arthur Digby Sellers wrote:
Tue Oct 31, 2017 11:13 am

If an investor was 60-70 years old in 1989, presumably most of his investing was done from the 60's to 1986 (when the Nikkei rose from 1200 to 13,000--it is now at 22,000), in which case he would done fine in retirement. On the other hand, if the investor had decided to go to cash at the end of say 1985 when the Nikkei was up to 13,000 (which was an all-time high after big run-ups in the early 80s), he would have been right that a crash was coming, but he would have had to wait sixteen years to 2001 to be able to buy back in at a lower price. So guessing correctly would have gained him virtually nothing.

I will concede that an investor who is unwilling to take any risk that his investment might decline in value should avoid the stock market at all times. But that investor is giving up a lot of expected (not promised) return in order to reduce his risk to zero.
You cannot sugar-coat the risks in the stock market claiming that long term everything will go up like other posters do on this forum.

If it was a 30 year old who started investing in 1985, guess what will happen to everything they invested? they would have lost half of the value before they turned 70.
The 30 year old in 1985 would be 62 in 2017. How do you know what the value of his account will be in 2025? What manner of wizardry is this?

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Hyperborea
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Re: My 401k is almost all cash now. 1/2 Mil

Post by Hyperborea » Tue Oct 31, 2017 11:49 am

tampaite wrote:
Tue Oct 31, 2017 11:20 am
Arthur Digby Sellers wrote:
Tue Oct 31, 2017 11:13 am

If an investor was 60-70 years old in 1989, presumably most of his investing was done from the 60's to 1986 (when the Nikkei rose from 1200 to 13,000--it is now at 22,000), in which case he would done fine in retirement. On the other hand, if the investor had decided to go to cash at the end of say 1985 when the Nikkei was up to 13,000 (which was an all-time high after big run-ups in the early 80s), he would have been right that a crash was coming, but he would have had to wait sixteen years to 2001 to be able to buy back in at a lower price. So guessing correctly would have gained him virtually nothing.

I will concede that an investor who is unwilling to take any risk that his investment might decline in value should avoid the stock market at all times. But that investor is giving up a lot of expected (not promised) return in order to reduce his risk to zero.
You cannot sugar-coat the risks in the stock market claiming that long term everything will go up like other posters do on this forum.

If it was a 30 year old who started investing in 1985, guess what will happen to everything they invested? they would have lost half of the value before they turned 70.
You make an excellent point for being well diversified internationally. There are many on this forum who are opposed to that or who only believe that you need a token amount. A fully world market weight equity holding would have fared far better.
"Plans are worthless, but planning is everything." - Dwight D. Eisenhower

CnC
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Re: My 401k is almost all cash now. 1/2 Mil

Post by CnC » Tue Oct 31, 2017 11:50 am

tampaite wrote:
Tue Oct 31, 2017 11:20 am
Arthur Digby Sellers wrote:
Tue Oct 31, 2017 11:13 am

If an investor was 60-70 years old in 1989, presumably most of his investing was done from the 60's to 1986 (when the Nikkei rose from 1200 to 13,000--it is now at 22,000), in which case he would done fine in retirement. On the other hand, if the investor had decided to go to cash at the end of say 1985 when the Nikkei was up to 13,000 (which was an all-time high after big run-ups in the early 80s), he would have been right that a crash was coming, but he would have had to wait sixteen years to 2001 to be able to buy back in at a lower price. So guessing correctly would have gained him virtually nothing.

I will concede that an investor who is unwilling to take any risk that his investment might decline in value should avoid the stock market at all times. But that investor is giving up a lot of expected (not promised) return in order to reduce his risk to zero.
You cannot sugar-coat the risks in the stock market claiming that long term everything will go up like other posters do on this forum.

If it was a 30 year old who started investing in 1985, guess what will happen to everything they invested? they would have lost half of the value before they turned 70.
Wrong once again. Where are you getting any of your information?

First of all a 30 year old in 1985 is only 62 so do you have some Crystal ball that you know what the market will be in 8 years?

Second money 1985 to now would give a a flat return + dividend growth that's not good, but it is not at all losing 50% 11,785 in 1985 and 19,691in 2017

Finally what 30 year old invests his entire retirement in one lump sum at 30? If he is investing in his retirement he would be theoretically buying stock even today. And 10k a year spread from 1985 to 2015 would make money. Not lose it, that doesn't even take into account dividend growth.

Please done post blatant falsehoods on the forums and attack other posters . Nothing you wrote could possibly be construed as thuthful.

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Re: My 401k is almost all cash now. 1/2 Mil

Post by LadyGeek » Tue Oct 31, 2017 3:16 pm

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Re: My 401k is almost all cash now. 1/2 Mil

Post by barnaclebob » Tue Oct 31, 2017 3:23 pm

Someone who has been sitting on the sidelines because they were afraid of a crash wont have the guts to put it all back in the market when everyone is talking about total economic collapse, rampant inflation, the end of the dollar, US treasury defaults, etc. The thing about this kind of market timing is that nobody ever sounds an all clear horn.

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Re: My 401k is almost all cash now. 1/2 Mil

Post by sc9182 » Tue Oct 31, 2017 3:38 pm

One of our cohort has been similarly sitting on Cash in 401k - leading up to the last year (Nov 2016) election. She sure saved/made some money over her career and with decent 401k balance. Suggested her to go with 70/30 (given his low-40 age, and plan to work 15+ years, and continue 401k contributions). Took some time for her to chew on it and finally act on that advise. Finally in late Jan 2017, she acted on it.

She is up about 11%-12% so far this year alone, glad she is.

Wonder what "missed-boat" could it be for you if you were on sidelines since 5+ years !! If you have 10-12 years of working career ahead - definitely would "invest" rather than sit on side-lines. Even if the market crashes, you most likely have many years head to buy low with your new contributions, and when the tide turns - you would have a a healthier portfolio.

What you thinking to do !?

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Re: My 401k is almost all cash now. 1/2 Mil

Post by tadamsmar » Tue Oct 31, 2017 4:32 pm

King0fspades wrote:
Mon Oct 30, 2017 9:22 pm
My strategy was, once market drops 20% I will start buying again. It worked in 2008. I moved 100% in sp500. Kept on selling till 2016 Feb. Now I am just waiting.

I may start DCA into SPY a little bit and hope for a crash in next few years.
So, if the market drops 20% now, then you will buy back in.

But you sold it all between 2011 and early 2016.

The market was about 20% lower in early 2016.

Therefore, you plan to buy in at a higher level than you sold at!

And this is a rosy scenario where the market drops 20% now. You say you are willing to keep this up for years!

You said 2-3 years, but you really don't know where it will end.

Maybe you should not be investing in stocks. Or, as others have said, not till you educate yourself.
Last edited by tadamsmar on Tue Oct 31, 2017 7:25 pm, edited 3 times in total.

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Toons
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Re: My 401k is almost all cash now. 1/2 Mil

Post by Toons » Tue Oct 31, 2017 4:34 pm

I would be around 60/40 Stock Bond :happy
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Re: My 401k is almost all cash now. 1/2 Mil

Post by Call_Me_Op » Tue Oct 31, 2017 4:47 pm

eye.surgeon wrote:
Tue Oct 31, 2017 11:02 am
To repeat everyone else, At 48 you will do significantly better staying in the market and invested through a crash. What you're doing is statistically more risky for your retirement than staying invested.
I disagree. If you are concerned, then reduce equities to a small percentage such as 30% and ride it through. If the market tanks, you will be living off of the safe bonds and buying stock low until it recovers.
Best regards, -Op | | "In the middle of difficulty lies opportunity." Einstein

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stemikger
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Re: My 401k is almost all cash now. 1/2 Mil

Post by stemikger » Tue Oct 31, 2017 5:55 pm

John Bogle has 65 years of experience and one thing he tells people over and over again is to never be all in or all out of the market. Stick with a balanced approach (an Asset Allocation you can live with in bull and bear) and stay the course.

You are going to have a very long and hard investing lifestyle with this mind set. If you feel scared, lower your AA, but you are essentially timing the market and we all know how that works in the long run.

Also, tactical asset allocation sounds good on paper, but Christine Benz from Morningstar has proven a plain vanilla static allocation is the winner when comparing the two.

Check out this video with Jack below:

https://www.youtube.com/watch?v=6Qg959oYCxU&t=1384s

Good Luck!
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Re: My 401k is almost all cash now. 1/2 Mil

Post by Nicolas » Tue Oct 31, 2017 6:23 pm

tampaite wrote:
Tue Oct 31, 2017 10:32 am
Arthur Digby Sellers wrote:
Tue Oct 31, 2017 8:56 am

Two fundamental principles of the stock market are: 1) it tends to go up over the long term, .
Long term, we all will be dead.

You'll only need to look at Japan's Nikkei 225 Index - it reached peak of 39K in 1989 and today, it's at 22K.

If you were fully invested in 1989 and say, you were a 60-70 year old, odds are, you would be dead by now before you recovered your investment.
Don't neglect inflation. The Nikkei at $22K now has the buying power of $11.1K in 1989 dollars for an American investor. (Not sure what inflation was for a Japanese investor)
There’s many a slip ‘twixt the cup and the lip.

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Hyperborea
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Re: My 401k is almost all cash now. 1/2 Mil

Post by Hyperborea » Tue Oct 31, 2017 6:40 pm

Nicolas wrote:
Tue Oct 31, 2017 6:23 pm
tampaite wrote:
Tue Oct 31, 2017 10:32 am
Arthur Digby Sellers wrote:
Tue Oct 31, 2017 8:56 am

Two fundamental principles of the stock market are: 1) it tends to go up over the long term, .
Long term, we all will be dead.

You'll only need to look at Japan's Nikkei 225 Index - it reached peak of 39K in 1989 and today, it's at 22K.

If you were fully invested in 1989 and say, you were a 60-70 year old, odds are, you would be dead by now before you recovered your investment.
Don't neglect inflation. The Nikkei at $22K now has the buying power of $11.1K in 1989 dollars for an American investor. (Not sure what inflation was for a Japanese investor)
Japan had a number of years of deflation between then and now. Prices are only about 15% higher over those years. Compared to the over 100% inflation in the US.

If a Japanese investor had invested into a world market equity portfolio they would be doing fine. If they had followed the home bias advice often and vociferously given on this site they would be in trouble.
"Plans are worthless, but planning is everything." - Dwight D. Eisenhower

WhiteMaxima
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Re: My 401k is almost all cash now. 1/2 Mil

Post by WhiteMaxima » Tue Oct 31, 2017 6:49 pm

It's very hard to time the market. It might go up another 20% before it come down for -20%. Interest rate is still historical low (borrowing cost is low), world economy recovers (euro zone improve, japan improve, china not hard landing), etc. Holding 100% in cash is not a good ideal. I said I prefer 50/50 considering the stock market valuation. With 50/50, your can move forward or backup. On the contrary, holding 100% in stock is also a bad idea. Depend on your age and risk tolerance, anything between 60/40 to 40/60 is good enough.

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Re: My 401k is almost all cash now. 1/2 Mil

Post by helloeveryone » Tue Oct 31, 2017 7:44 pm

King0fspades wrote:
Mon Oct 30, 2017 6:09 pm
First time poster here. Have around $530K all in Stable Fund. Age 48.
I have seen crashes of 1999 and then 2008. Since 2011 I started selling and now it is all cash.
Thinking that I will see one more major crash, buy back all again and retire after next cycle.
I play around with ETF GLD, SLV but that is 20-30k

What would you do?
Coming to this site is a great starting point. You'll learn about asset allocation, avoiding timing the market, downsides of timing the market etc.... I recently came across an article titled "The Elegance of Indexing" from a Charles Schwab document in the education site. You might consider reading through it. (for me only the first fifteen pages felt relevant, second half was over my head and I'm okay with that)

Important quote "Time in the market is more important than timing the market." Followed by a nice graph that shows the pitfalls of missing important time points in the market. i.e. - index annualized total return from 1997 to 2016 = 7.7%. Missing out on top 10 days in market resulted in just 4.0% return, missing out on top 40 days resulted in negative 2.4% rate of return. Your strategy is high risk low rewards just based on what I have read on this forum, recommended books, and other financial sites. I really think you should reconsider the approach and learn from other folks here and decide what strategy you wish to use.

Link to the article - http://www.schwab.com/public/file?cmsid ... 8929&cv126

Bastiat
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Re: My 401k is almost all cash now. 1/2 Mil

Post by Bastiat » Tue Oct 31, 2017 8:57 pm

sambb wrote:
Mon Oct 30, 2017 8:29 pm
sounds like your risk tolerance changed, so you rebalanced out. Nothing wrong with that, if your risk tolerance changes.
People's risk tolerance can cause rebalancing. Not a big deal of thats what you want to do.
I think it's irresponsible to encourage market timing under the guise of "risk tolerance change". Your risk tolerance does not change with the market. Your risk tolerance is what it is, and it should be determined independent of the market. Going to 100% cash and waiting 6 years for a 20% drop in the market is not a change in risk tolerance.

If one were to believe what you say, they would simply justify their market timing by calling it a change in risk tolerance. Risk is what drives people to market time to begin with.

OP, you have lost >$150,000 because of your market timing. It would take at least a 35% drop tomorrow for you to break even. I'd suggest developing an asset allocation and sticking to it, rebalancing as necessary. There are thousands of pages of documentation that show your strategy is a losing one.

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eye.surgeon
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Re: My 401k is almost all cash now. 1/2 Mil

Post by eye.surgeon » Tue Oct 31, 2017 9:54 pm

Call_Me_Op wrote:
Tue Oct 31, 2017 4:47 pm
eye.surgeon wrote:
Tue Oct 31, 2017 11:02 am
To repeat everyone else, At 48 you will do significantly better staying in the market and invested through a crash. What you're doing is statistically more risky for your retirement than staying invested.
I disagree. If you are concerned, then reduce equities to a small percentage such as 30% and ride it through. If the market tanks, you will be living off of the safe bonds and buying stock low until it recovers.
I wouldn't necessarily disagree with what you're saying, which is to adjust asset allocation to your risk tolerance. But that's not what the OP is doing. He's out of the market, trying to time a correction. Pretty much the opposite of boglehead investing fundamentals.
"I would rather be certain of a good return than hopeful of a great one" | Warren Buffett

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Re: My 401k is almost all cash now. 1/2 Mil

Post by basspond » Wed Nov 01, 2017 3:57 am

Your original question is what you would do? First scenario is that I am looking to time the market and dump my equities. I would leave 20% in market, commodities 25%, bonds 25%, real estate 25%, weapons to safe guard my stuff 5%. Second scenario if I had sold all my equities and waiting to time the market. Buy a cow, put it in a pen that has been sectioned with 100 future quarterly dates, whichever section the first cow patty lands into use that date as to get back into the market.

But seriously I have lived through Black Monday 1987, Dot com crash in 2000, and 2007-2008. Not all crashes are created equally, but I have never heard anyone say that they wished they would have sold their equities during the crashes. Most have said how much more money they would have it they would not have panicked.

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Re: My 401k is almost all cash now. 1/2 Mil

Post by DaftInvestor » Wed Nov 01, 2017 6:20 am

"What would you do?"
I would stop "playing around" (your wording with the ETF choice) and educate myself (using some of the resources others have mentioned) - all the research will show you that market timing does not work. Maybe you got lucky once and that's why you went with this strategy - but it won't work long term.

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Re: My 401k is almost all cash now. 1/2 Mil

Post by donaldfair71 » Wed Nov 01, 2017 7:53 am

tadamsmar wrote:
Tue Oct 31, 2017 4:32 pm
King0fspades wrote:
Mon Oct 30, 2017 9:22 pm
My strategy was, once market drops 20% I will start buying again. It worked in 2008. I moved 100% in sp500. Kept on selling till 2016 Feb. Now I am just waiting.

I may start DCA into SPY a little bit and hope for a crash in next few years.
So, if the market drops 20% now, then you will buy back in.

But you sold it all between 2011 and early 2016.

The market was about 20% lower in early 2016.

Therefore, you plan to buy in at a higher level than you sold at!

And this is a rosy scenario where the market drops 20% now. You say you are willing to keep this up for years!

You said 2-3 years, but you really don't know where it will end.

Maybe you should not be investing in stocks. Or, as others have said, not till you educate yourself.
This is a point I was gonna make as well until I saw your post. There is a very real likelihood that a person with this timing mechanism will be buying back in higher than what they sold.

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Re: My 401k is almost all cash now. 1/2 Mil

Post by corner559 » Wed Nov 01, 2017 8:01 am

King0fspades wrote:
Mon Oct 30, 2017 6:09 pm
First time poster here. Have around $530K all in Stable Fund. Age 48.
I have seen crashes of 1999 and then 2008. Since 2011 I started selling and now it is all cash.
Thinking that I will see one more major crash, buy back all again and retire after next cycle.
I play around with ETF GLD, SLV but that is 20-30k

What would you do?
If you sold back in 2011 then you've missed out on one of the best bull runs in market history. Why on earth are you trying to time the market????
Since it seems like you've already made up your mind to try to time, best of luck to you. That's all I've gotta say because you're going to need it.

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Re: My 401k is almost all cash now. 1/2 Mil

Post by ryman554 » Wed Nov 01, 2017 8:31 am

King0fspades wrote:
Mon Oct 30, 2017 9:22 pm
My strategy was, once market drops 20% I will start buying again. It worked in 2008. I moved 100% in sp500. Kept on selling till 2016 Feb. Now I am just waiting.

I may start DCA into SPY a little bit and hope for a crash in next few years.
This is why "mechanical investing" doesn't work. Or plans based on 1 or 2 data points. On the face of it, your strategy has merit. It makes sense. It just, unfortunately, doesn't work as a strategy. Lots of folks have posted real results here with this. None have survived long term. My father invests like this, too, and it makes me sad.

Let's say the market crashes by 20% today. You still sold low and bought high, relative to 2011.

Read what I am about to say and read it again, and then answer it truthfully: What do you know about the market that the robots don't already know? answer: nothing. I know nothing, either.

If you answered something: Are you sure? If you are, you should be beating the market. You're not. Are you still sure? If so, best of luck to you.
If you answered nothing: Then you have to ask yourself:

Do you believe whatever you are investing in will go up or down, not from today, but on average. (answer: stable value fund/TIPS keeps pace with inflation. So, you're trading water. Not so bad. But you want to invest in things which grow the most, on average)
How much tolerance do you have to ride out the dips? (answer: I'm not sure if you have a little or a lot of tolerance, depending on when you bought/sold in 2008, but you do have an innate desire to take house money off the table, so seem conservative)

Combine the two questions above, and that sets your investments. Nobody knows when to get in, nobody knows when to get out. So just get in and go along for the ride.

We understand it may be difficult to buy in today. Things seem high. They also seemed high at the end of 1999. And they did crash, spectacularly. But where are they today? Did the crash really happen if you didn't sell?

David Scubadiver
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Re: My 401k is almost all cash now. 1/2 Mil

Post by David Scubadiver » Wed Nov 01, 2017 8:42 am

My favorite market timing game, takes only a minute or two to play.

https://qz.com/487013/this-game-will-sh ... right-now/

Crisium
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Re: My 401k is almost all cash now. 1/2 Mil

Post by Crisium » Wed Nov 01, 2017 8:42 am

It is very possible the stock market will never be as low as 2011 again in your entire lifetime. It is also possible it won't even be as low as early 2016 when you fully bailed out. Just like, so far, despite the market reaching then all time highs in 1996 and 1997 ("irrational exuberance" and 1929 earnings valuations) it never got that low ever again (bailing out before ~July 1997 was a mistake, and even then it was virtually impossible to time it perfectly to barely save anything if you re-bought at the bottom).

Learn from your opportunity costs, and your own temperance to set an appropriate allocation. "Almost all cash" probably isn't appropriate unless you can retire tomorrow and live off the 1-2% interest your stable value is earning.

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Re: My 401k is almost all cash now. 1/2 Mil

Post by wstalcup » Wed Nov 01, 2017 10:00 am

inflation is your enemy. sure the market could crash but it might not, or just level out for a while. I really think you need to put some of that money into vanguard retirement 2035 mutual fund
Best investment advice: "Invest in your education" -Bill Gates

sco
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Re: My 401k is almost all cash now. 1/2 Mil

Post by sco » Wed Nov 01, 2017 11:06 pm

It has cost you a lot of money just sitting on that much cash, and not just the market returns that you could have had.

Find a stock/bond allocation that you can live/sleep with and stick with it. I'd suggest something like 50/50 or 40/60? But would you be able to stick with it?

1/2 Million isn't enough for many of us to retire early on, you'll have to take and accept some risk to get the rewards of higher long term returns.

There is no way you will enter and exit the market at the right time, you have already proven that by withdrawing from the market since 2011..


you may be the person that target date was invented for, no thinking, no timing just put your money in and don't look at it.

Afty
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Re: My 401k is almost all cash now. 1/2 Mil

Post by Afty » Wed Nov 01, 2017 11:23 pm

True story: my wife forgot about an old 401k account from 2013 until about a month ago. She was invested in a target retirement account, and when we discovered the account, we found that the value had increased by 50% since the last time we checked it. Turns out that ignoring the noise (even unintentionally) was a great strategy for her.

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Re: My 401k is almost all cash now. 1/2 Mil

Post by HomerJ » Thu Nov 02, 2017 12:18 am

sambb wrote:
Mon Oct 30, 2017 8:29 pm
sounds like your risk tolerance changed, so you rebalanced out. Nothing wrong with that, if your risk tolerance changes.
People's risk tolerance can cause rebalancing. Not a big deal of thats what you want to do.
You probably should look up the word "rebalance" in the wiki. It doesn't mean what you seem to think it means.

And swinging from 100% cash to 100% stocks can indeed be a "big deal". This is real person with a real life that you are giving advice to.

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HomerJ
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Re: My 401k is almost all cash now. 1/2 Mil

Post by HomerJ » Thu Nov 02, 2017 12:21 am

tampaite wrote:
Tue Oct 31, 2017 11:20 am
Arthur Digby Sellers wrote:
Tue Oct 31, 2017 11:13 am

If an investor was 60-70 years old in 1989, presumably most of his investing was done from the 60's to 1986 (when the Nikkei rose from 1200 to 13,000--it is now at 22,000), in which case he would done fine in retirement. On the other hand, if the investor had decided to go to cash at the end of say 1985 when the Nikkei was up to 13,000 (which was an all-time high after big run-ups in the early 80s), he would have been right that a crash was coming, but he would have had to wait sixteen years to 2001 to be able to buy back in at a lower price. So guessing correctly would have gained him virtually nothing.

I will concede that an investor who is unwilling to take any risk that his investment might decline in value should avoid the stock market at all times. But that investor is giving up a lot of expected (not promised) return in order to reduce his risk to zero.
You cannot sugar-coat the risks in the stock market claiming that long term everything will go up like other posters do on this forum.

If it was a 30 year old who started investing in 1985, guess what will happen to everything they invested? they would have lost half of the value before they turned 70.
A 30 year old would have invested the vast majority of his money at much lower prices for the 20 years after the crash. He would have been fine.

rr2
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Re: My 401k is almost all cash now. 1/2 Mil

Post by rr2 » Thu Nov 02, 2017 1:55 am

King0fspades wrote:
Mon Oct 30, 2017 9:22 pm

My strategy was, once market drops 20% I will start buying again. It worked in 2008. I moved 100% in sp500. Kept on selling till 2016 Feb. Now I am just waiting.

I may start DCA into SPY a little bit and hope for a crash in next few years.
Can you elaborate a little more? When in 2008 did you sell and go to cash? You said that you bought in when the market dropped 20% from it's high. If that was the case, how did you feel when the market dropped even further?

As an exercise, before doing anything further, you should go back and calculate how much you would have had if you did not make any market timing moves and had just stayed invested/rebalanced even with a conservative AA such as 50/50.

I agree with others. Sit tight and spend time on this forum and read Bogle's books.

WanderingDoc
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Re: My 401k is almost all cash now. 1/2 Mil

Post by WanderingDoc » Thu Nov 02, 2017 1:58 am

rr2 wrote:
Thu Nov 02, 2017 1:55 am
King0fspades wrote:
Mon Oct 30, 2017 9:22 pm

My strategy was, once market drops 20% I will start buying again. It worked in 2008. I moved 100% in sp500. Kept on selling till 2016 Feb. Now I am just waiting.

I may start DCA into SPY a little bit and hope for a crash in next few years.
Can you elaborate a little more? When in 2008 did you sell and go to cash? You said that you bought in when the market dropped 20% from it's high. If that was the case, how did you feel when the market dropped even further?

As an exercise, before doing anything further, you should go back and calculate how much you would have had if you did not make any market timing moves and had just stayed invested/rebalanced even with a conservative AA such as 50/50.

I agree with others. Sit tight and spend time on this forum and read Bogle's books.
Such as?
I'm not looking to get rich quick (crypto), I'm not looking to get rich slow (index funds).. I'm looking to get rich, for sure (real estate).

rr2
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Re: My 401k is almost all cash now. 1/2 Mil

Post by rr2 » Thu Nov 02, 2017 2:21 am

WanderingDoc wrote:
Thu Nov 02, 2017 1:58 am
rr2 wrote:
Thu Nov 02, 2017 1:55 am
King0fspades wrote:
Mon Oct 30, 2017 9:22 pm

My strategy was, once market drops 20% I will start buying again. It worked in 2008. I moved 100% in sp500. Kept on selling till 2016 Feb. Now I am just waiting.

I may start DCA into SPY a little bit and hope for a crash in next few years.
Can you elaborate a little more? When in 2008 did you sell and go to cash? You said that you bought in when the market dropped 20% from it's high. If that was the case, how did you feel when the market dropped even further?

As an exercise, before doing anything further, you should go back and calculate how much you would have had if you did not make any market timing moves and had just stayed invested/rebalanced even with a conservative AA such as 50/50.

I agree with others. Sit tight and spend time on this forum and read Bogle's books.
Such as?
For me, the first book I came across in the local library way back in 2007/2008 was "The Little Book of Common Sense Investing". There is a newer edition but I've not read that yet.

SrGrumpy
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Re: My 401k is almost all cash now. 1/2 Mil

Post by SrGrumpy » Thu Nov 02, 2017 7:32 am

I empathize with OP, having recently gone to about 80% cash on a slightly bigger IRA before heading to Europe for two months. I wanted peace of mind in the event of a seasonal dip (?). Of course it didn't eventuate. No regrets, but now I have to get back in at slightly higher prices. I see my extreme rebalancing as a form of insurance.

aqan
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Re: My 401k is almost all cash now. 1/2 Mil

Post by aqan » Thu Nov 02, 2017 7:37 am

SrGrumpy wrote:
Thu Nov 02, 2017 7:32 am
I empathize with OP, having recently gone to about 80% cash on a slightly bigger IRA before heading to Europe for two months. I wanted peace of mind in the event of a seasonal dip (?). Of course it didn't eventuate. No regrets, but now I have to get back in at slightly higher prices. I see my extreme rebalancing as a form of insurance.
Ever thought about buying actual insurance (puts) instead of temporary rebalancing?

aqan
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Re: My 401k is almost all cash now. 1/2 Mil

Post by aqan » Thu Nov 02, 2017 7:42 am

Afty wrote:
Wed Nov 01, 2017 11:23 pm
True story: my wife forgot about an old 401k account from 2013 until about a month ago. She was invested in a target retirement account, and when we discovered the account, we found that the value had increased by 50% since the last time we checked it. Turns out that ignoring the noise (even unintentionally) was a great strategy for her.
True story: someone i know forgot about company stocks they were granted. She checked after 10 year or so and it was over a million $$. A nice surprise:)

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parsi1
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Re: My 401k is almost all cash now. 1/2 Mil

Post by parsi1 » Thu Nov 02, 2017 8:17 am

Please take a look at the following video. No one can be more convincing than Jack Bogle.

https://www.youtube.com/watch?v=k6ra5POdsYg

rr2
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Re: My 401k is almost all cash now. 1/2 Mil

Post by rr2 » Thu Nov 02, 2017 7:04 pm

parsi1 wrote:
Thu Nov 02, 2017 8:17 am
Please take a look at the following video. No one can be more convincing than Jack Bogle.

https://www.youtube.com/watch?v=k6ra5POdsYg
Thanks for this link. I love listening to him. Very interesting that Bogle admitted to have himself market-timed before the 2000 crash by going down to an asset allocation of 35/65 Stock/Bonds from 80/20. The rationale given was that Bonds then were yielding 7% while the market PE was close to 40. I suppose the difference now is that bond yields are nowhere near those highs now.

tampaite
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Re: My 401k is almost all cash now. 1/2 Mil

Post by tampaite » Sat Nov 04, 2017 8:16 am

HomerJ wrote:
Thu Nov 02, 2017 12:21 am

A 30 year old would have invested the vast majority of his money at much lower prices for the 20 years after the crash. He would have been fine.
so nothing wrong like thinking like a 30 year old now as OP is doing.

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