Should I bite the bullet and invest in this market?

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razor488
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Should I bite the bullet and invest in this market?

Post by razor488 »

I opened an account with Vanguard with the intent of buying their mutual funds. (Namely total stock, total international, and some bond funds)

I have had about $450k sitting in cash for too long and naturally have missed out on this great bull market. A few weeks ago I invested $35k in the total stock fund, 15k in the total international stock fund, and $60k in the Wellington fund. I am going to exchange the Wellington fund for more of the total stock fund and their short-term corporate bond fund. (Per Vanguard's recommendation)

I know the market cannot be timed and in the long long run it should be up, but it still makes me very uneasy knowing we HAVE to be towards the end of this long bull market that we have. Should I just bite the bullet and invest more than I already have? My brain tells me the market cannot be timed so just move the money in with this strategy and wait, but my gut is holding me back.
pangea33
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Re: Should I bite the bullet and invest in this market?

Post by pangea33 »

razor488 wrote: Fri Feb 23, 2018 10:15 am I know the market cannot be timed and in the long long run it should be up, but it still makes me very uneasy knowing we HAVE to be towards the end of this long bull market that we have.
These are contradictory statements. Anyway you dress it up, you're still trying to time the market.

We wouldn't be here if we thought we could time the market.

You should simply determine your appropriate asset allocation. If 100% cash makes sense for you, do nothing. Otherwise, invest.
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Darth Xanadu
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Re: Should I bite the bullet and invest in this market?

Post by Darth Xanadu »

My initial thought was to suggest not to invest, because it seems evident that IF the market dropped in the coming weeks/months/years, it would tear you up inside, which is not a good feeling.

But the converse of that is wondering for the next week/month/years "when" you should invest. This amount of worry is also not healthy.

So I concur with pangea33. If you are intending to invest, invest.
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greg24
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Re: Should I bite the bullet and invest in this market?

Post by greg24 »

Given your caution, you may want to consider investing a set amount over time.
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bottlecap
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Re: Should I bite the bullet and invest in this market?

Post by bottlecap »

The problem is that your previous attempt to time the market failed. The effect of that failure is making you hesitate today.

If you can't overcome your gut fear, which I'll submit is not entirely irrational (at least when it comes to fear of reversion to the mean after a rising market), just dollar cost average into your desired AA over the next 3 -5 years.

Good luck,

JT
Ragnoth
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Re: Should I bite the bullet and invest in this market?

Post by Ragnoth »

If you are nervous about investing all your money at once, you should try to dollar-cost average into the market (spread over the next year or two).

Set some benchmarks ahead of time. For example, plan to invest 25% of the remaining money every quarter, and get yourself into the market over the course of the next year.

It’s true the market is a little frothy, but sitting on the sidelines waiting for a pullback is usually a poor plan. If you are uncomfortable with the level of risk, you can focus on a more conservative asset allocation (as opposed to just sitting in cash).
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pennstater2005
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Re: Should I bite the bullet and invest in this market?

Post by pennstater2005 »

What if we’re not at the end of the bull market. Or what if it keeps going down and then you can actually buy those same funds cheaper. Which would you prefer? I have no preference myself. Well, at least not yet.
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David Jay
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Re: Should I bite the bullet and invest in this market?

Post by David Jay »

A bit of dollar-cost-averaging is acceptable as a psychological buffer. Invest 1/24 of your 450,000 ($18,750) every month, without fail, for 2 years.

On average, investing it all now will give better financial results but DCA will buffer any market changes (i.e. if there is a big market drop after 6 months, you buy "stocks on sale" for the final 18 months).
Prediction is very difficult, especially about the future - Niels Bohr | To get the "risk premium", you really do have to take the risk - nisiprius
SimplicityNow
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Re: Should I bite the bullet and invest in this market?

Post by SimplicityNow »

razor488 wrote: Fri Feb 23, 2018 10:15 am I opened an account with Vanguard with the intent of buying their mutual funds. (Namely total stock, total international, and some bond funds)

I have had about $450k sitting in cash for too long and naturally have missed out on this great bull market. A few weeks ago I invested $35k in the total stock fund, 15k in the total international stock fund, and $60k in the Wellington fund. I am going to exchange the Wellington fund for more of the total stock fund and their short-term corporate bond fund. (Per Vanguard's recommendation)

I know the market cannot be timed and in the long long run it should be up, but it still makes me very uneasy knowing we HAVE to be towards the end of this long bull market that we have. Should I just bite the bullet and invest more than I already have? My brain tells me the market cannot be timed so just move the money in with this strategy and wait, but my gut is holding me back.

Risk makes everyone uneasy. Investing in the market involves risk. Only you can determine how much risk you need to take, are willing to take and have the ability to take. What is your horizon for needing this money. If it it is 20+ years time is your friend. Decide on an asset allocation and invest accordingly. Read. Try Jason Zweig's Your Money and Your Brain. It will help you understand why you feel like you do and to overcome that feeling. Listen to your brain and ignore your gut. If dollar cost averaging is what you need to do to make that happen then do it.
LEB1230
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Re: Should I bite the bullet and invest in this market?

Post by LEB1230 »

Just open an account and set up auto investments. I invest every Thursday. It might go down it might go up, either way my investment money automatically moves from my bank account to the investment account. I've heard this is how people become wealthy.
RRAAYY3
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Re: Should I bite the bullet and invest in this market?

Post by RRAAYY3 »

We just had a correction ... just invest and either stop paying attention or actually invest even more when the market goes down
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tadamsmar
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Re: Should I bite the bullet and invest in this market?

Post by tadamsmar »

razor488 wrote: Fri Feb 23, 2018 10:15 am I opened an account with Vanguard with the intent of buying their mutual funds. (Namely total stock, total international, and some bond funds)

I have had about $450k sitting in cash for too long and naturally have missed out on this great bull market. A few weeks ago I invested $35k in the total stock fund, 15k in the total international stock fund, and $60k in the Wellington fund. I am going to exchange the Wellington fund for more of the total stock fund and their short-term corporate bond fund. (Per Vanguard's recommendation)

I know the market cannot be timed and in the long long run it should be up, but it still makes me very uneasy knowing we HAVE to be towards the end of this long bull market that we have. Should I just bite the bullet and invest more than I already have? My brain tells me the market cannot be timed so just move the money in with this strategy and wait, but my gut is holding me back.
You say you gut is holding you back. Does your gut recommend your current 25% or so allocation to stocks?

You need to get your brain and your gut to arrive at a consensus on what your long-term asset allocation should be.

If that is 25% stock, so be it. The Vanguard Target Retirement Income Fund allocation might be a good long term allocation for you.

I don't think a big exposure to stocks all that good of an idea, anyway. I don't think it's that important. More important is a plan to meet your financial goals.
Last edited by tadamsmar on Fri Feb 23, 2018 11:29 am, edited 1 time in total.
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randomizer
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Re: Should I bite the bullet and invest in this market?

Post by randomizer »

Dump it all in at an asset allocation that you can stomach, and if that is too much for you, dollar-cost average it in over 12 months. The market will rise and it will fall; you'll have to learn to be comfortable with both.
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David Jay
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Re: Should I bite the bullet and invest in this market?

Post by David Jay »

tadamsmar wrote: Fri Feb 23, 2018 11:24 amYou need to get your brain and your gut to arrive at a consensus on what your long-term asset allocation should be.
I am going to steal this construction: Your AA may need to be a negotiated agreement between your gut and your brain.

I watched a Bogle interview last night. He commented that he is 50% stocks, 50% bonds. He says he spends half his time questioning if his stock allocation is too high and half his time wondering if his bond allocation is too high.
Prediction is very difficult, especially about the future - Niels Bohr | To get the "risk premium", you really do have to take the risk - nisiprius
pkcrafter
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Re: Should I bite the bullet and invest in this market?

Post by pkcrafter »

Welcome Razor,
I have had about $450k sitting in cash for too long and naturally have missed out on this great bull market.
What does this mean? Were you in the market and then got out, or you have not ever invested before?

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.
delamer
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Re: Should I bite the bullet and invest in this market?

Post by delamer »

There have been many threads here started by people who have the same fear as you — namely, that the bull market has to be near an end.

Those threads go back at least as far back as 2015 . In other words, people were afraid to get back into stocks even 3 years ago. My guess is that they have lots of regrets now. Maybe you are one of them.

As long as you are investing for the long run, which is the only time that you should be in stocks, then you need to find an asset allocation that you are comfortable with and move your money now.

Remember that in 10 years the prices you pay for stocks today will probably seem cheap.

And read this: http://www.businessinsider.com/cost-of- ... 500-2015-3
BogleMelon
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Re: Should I bite the bullet and invest in this market?

Post by BogleMelon »

razor488 wrote: Fri Feb 23, 2018 10:15 am My brain tells me the market cannot be timed so just move the money in with this strategy and wait, but my gut is holding me back.
Scientifically, there is no "gut"! it is the same brain that tells you to not time the market.
So your brain is telling you both!
In financial words: you have lower risk tolerance than what you think.
Why don't you increase the bonds ratio to the level that your brain becomes really comfortable and you can sleep well at night?
"One of the funny things about stock market, every time one is buying another is selling, and both think they are astute" - William Feather
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Re: Should I bite the bullet and invest in this market?

Post by NYC_Guy »

Current P/E ratios scare me, too. The correct answer is to set your AA and then invest ASAP. But emotion matters. We are all human. My suggestions to a new investor — today — is to double your fixed income / cash allocation and slowly reallocate to your desired equity percentage over the next two to three years.

Psychology and mental fortitude matter. Very few investors can ignore the emotional impact of a near term significant decline following an initial foray into equities.
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Re: Should I bite the bullet and invest in this market?

Post by TropikThunder »

NYC_Guy wrote: Fri Feb 23, 2018 11:27 pm My suggestions to a new investor — today — is to double your fixed income / cash allocation and slowly reallocate to your desired equity percentage over the next two to three years.
Do you mean, if ones "real" desired allocation is 80/20 stocks/bonds, you advise them to start at 60/40 and DCA from bonds to stocks over the next couple years until they get to 80/20?
AlohaJoe
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Re: Should I bite the bullet and invest in this market?

Post by AlohaJoe »

razor488 wrote: Fri Feb 23, 2018 10:15 am I have had about $450k sitting in cash for too long and naturally have missed out on this great bull market. [...] but my gut is holding me back.
You gut has been wrong for so long I'm surprised you even care what it thinks.
Finridge
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Re: Should I bite the bullet and invest in this market?

Post by Finridge »

razor488 wrote: Fri Feb 23, 2018 10:15 am I opened an account with Vanguard with the intent of buying their mutual funds. (Namely total stock, total international, and some bond funds)

I have had about $450k sitting in cash for too long and naturally have missed out on this great bull market. A few weeks ago I invested $35k in the total stock fund, 15k in the total international stock fund, and $60k in the Wellington fund. I am going to exchange the Wellington fund for more of the total stock fund and their short-term corporate bond fund. (Per Vanguard's recommendation)

I know the market cannot be timed and in the long long run it should be up, but it still makes me very uneasy knowing we HAVE to be towards the end of this long bull market that we have. Should I just bite the bullet and invest more than I already have? My brain tells me the market cannot be timed so just move the money in with this strategy and wait, but my gut is holding me back.
There is lots of great advice up ahead.

I just wanted to add something that I hope will make you feel better about listening to your brain, not your gut. Probably almost every person on this thread is--and most on this forum are--heavily invested in the market. And many of them are smarter than me.

Keeping your funds in cash rather then investing them in the market--if we believed that was preferable right now, then the natural corollary of that would be that we should dump all our stock and put it in cash or bonds. Notice that we are not doing that.

Also ask yourself what you would be doing if you had invested all your cash several years ago when prices were lower. Would your gut be telling you the same thing and telling you to convert to cash? I'm expecting probably not (but if you think your answer would be "yes" - then see below. ***) Your gut is upset that you "missed" the bull market. But that is in the past. Listen to your brain, not your gut.

*** If you think your answer might be "yes", then you need to rethink your asset allocation.
nooneofnote
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Re: Should I bite the bullet and invest in this market?

Post by nooneofnote »

I posted a similar post around a year ago. I'm glad the people here convinced me to just go in
stocknoob4111
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Re: Should I bite the bullet and invest in this market?

Post by stocknoob4111 »

Finridge wrote: Sat Feb 24, 2018 1:24 am Probably almost every person on this thread is--and most on this forum are--heavily invested in the market. And many of them are smarter than me.
difference is that most have experienced a 40% run up in the markets just in the last year and change will be virtually unscathed if there is a major crash. However a new investor could be spending the next 6 or 7 years just to get back to square one. Even Vanguard's own official video says next decade return expectations are only 4%, that is a negative real return after inflation.

I'm not saying timing is always prudent bit waiting for a reasonable pullback, say 10%, in a late cycle high volatility environment may not be a reasonable risk.
Fan23
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Re: Should I bite the bullet and invest in this market?

Post by Fan23 »

I'm just getting in with lots of stockpiled cash, too, since December. I found it helped to put some in bonds, some in equities, alternating back and forth, keeping a high ratio of bonds in the beginning (CDs, I-bonds, treasuries, whatever). Once you start making some money with the equity funds, you'll get more appetite for them, realizing that you're losing out by not having more invested. And if there are some dips and corrections, you'll see that it's not the end of the world and it goes up and down. I would not put it all in at once. There is a learning curve and it took me a while to see the advantages of ETFs, so I'm glad I didn't dump it all into mutual funds right in the beginning, as I had planned. Also, my sense of what asset allocation would work for me has been changing. So my advice is to start funneling it in, keep reading and learning, and start with a conservative allocation to equities that you can adjust (increase) as you invest more and become more comfortable over a few months.

Also, don't worry about people "scolding" you for having all that cash out of the market. At least you've been saving. And yes, it is a little intimidating making decisions about large sums of money, but remember you saved this much and you can save more. For the long term, all-cash is not going to be a wise money management decision.
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Re: Should I bite the bullet and invest in this market?

Post by jpsc »

My experience on total stock market fund is blah. It is better to buy SP500, Dow index or Nasdaq-100. The total
stock market is not that great.
selters
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Re: Should I bite the bullet and invest in this market?

Post by selters »

stocknoob4111 wrote: Sat Feb 24, 2018 3:14 am
Finridge wrote: Sat Feb 24, 2018 1:24 am Probably almost every person on this thread is--and most on this forum are--heavily invested in the market. And many of them are smarter than me.
Even Vanguard's own official video says next decade return expectations are only 4%, that is a negative real return after inflation.
Is inflation 4%?
WVbaron
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Re: Should I bite the bullet and invest in this market?

Post by WVbaron »

pangea33 wrote: Fri Feb 23, 2018 10:36 am
razor488 wrote: Fri Feb 23, 2018 10:15 am I know the market cannot be timed and in the long long run it should be up, but it still makes me very uneasy knowing we HAVE to be towards the end of this long bull market that we have.
These are contradictory statements. Anyway you dress it up, you're still trying to time the market.

We wouldn't be here if we thought we could time the market.

You should simply determine your appropriate asset allocation. If 100% cash makes sense for you, do nothing. Otherwise, invest.
This....

Agree. I recently did a portfolio review and had about 80K in cash I was savings for a house downpayment that I do not need to use now as I am continuing my Expat contract abroad. I just put it into my AA and didn't look back. I realize it isn't as much in cash as you have but I have never tried to time the market. Agree with this post...be comfortable with an AA and go for it.

Good luck!
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corn18
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Re: Should I bite the bullet and invest in this market?

Post by corn18 »

Write an IPS and just follow it. Read this article on being the worst market timer and still do well:

http://awealthofcommonsense.com/2014/02 ... ket-timer/

Time in the market.
Don't do something, just stand there!
Dudley
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Re: Should I bite the bullet and invest in this market?

Post by Dudley »

Figure a plan how much per month you feel comfortable putting in over 3-5 years, eg 10-20k. Say the market goes down 15% from peak double this, if it goes down 30% double it again. If you start such a plan you need to follow through mechanically. Hedge your market bets again and spread it 50:50 US:non-US. At the end of this you wouldn't have picked the best option but you would have avoided the worst.
RRAAYY3
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Re: Should I bite the bullet and invest in this market?

Post by RRAAYY3 »

I bought at the literal “all time high” last March and even after this recent correction it’s still up almost 15%

The nice thing is I was able to track the index funds enough to get an idea of which date to refer for my cost basis ... my own personal “buy” signal for each fund in a way (any purchase that lowers my basis = Good move)
Caduceus
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Re: Should I bite the bullet and invest in this market?

Post by Caduceus »

I think you should average in.
Lafder
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Re: Should I bite the bullet and invest in this market?

Post by Lafder »

Welcome here!

First things first, what is your desired asset allocation? Stocks to bonds ? International?

Is this 450 k the entirety of your savings or do you have other already invested holdings that should be taken into consideration ?

Consider posting all of your holdings like this, and answer those questions and we can talk through this in more detail. You can go back and edit your first post so all the info is in one place.

viewtopic.php?f=1&t=6212

Supposedly, 2/3 of the time you come out ahead investing all at once vs dollar cost averaging it in over time. But if this is your first investing experience and the market tanks in a month or year and you panic and sell low...........that would not be good for you! I would find a way to spread it in over 6-12 months if it were me. But of course it matters what % of your total holdings this represents.

You have already dived in, and already decided to make changes to your investments. Slow down on your actions. Don't just do something, stand there til you make a plan :)

My suggestion is to stop and make a full plan, and then dive in, or wade in and stick with your plan......

lafder
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Alexa9
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Re: Should I bite the bullet and invest in this market?

Post by Alexa9 »

jpsc wrote: Sat Feb 24, 2018 5:08 am My experience on total stock market fund is blah. It is better to buy SP500, Dow index or Nasdaq-100. The total
stock market is not that great.
I'd like to hear your explanation for this. Dow Index, S&P, and Nasdaq 100 only hold large caps. Total Stock Market is mostly large caps as well. Total Stock Market and S&P are not significantly different.

To the OP it depends on your age, lifestyle, and willingness to take risk. If you're young I would definitely invest. If you're retired, I'd play it safe and dollar cost average into a conservative allocation of around 40% stocks and 60% bonds so you can sleep at night.
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Re: Should I bite the bullet and invest in this market?

Post by stocknoob4111 »

selters wrote: Sat Feb 24, 2018 5:18 am Is inflation 4%?
CPI is around 2% I believe but shadow inflation is around 10% if that is to be believed. Well, an entirely different argument. However at 4% returns equity risk premium over bonds is laughable. If the 10Y is returning 3.25% by year end as forecasted then why would you take a huge multiple of risk by investing in equities for the additional .75% ?

The big risk here is that stock market returns have been front loaded and most of those gains have already been taken between 2012-2017 and the market will readjust by going sideways for the next 10 years.
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Re: Should I bite the bullet and invest in this market?

Post by whodidntante »

Boglehead style investing requires a kind of intractable stubbornness. Statements you'll hear: invest you must, can't time the market, time in the market not market timing, etc. But your past behavior says you aren't really cut out for that. Maybe you want to be, and you can be. I don't know. But it sounds to me that you are more remorseful that you lost out on big gains than really ready for a change.

It could be that stocks aren't for you, or that you need to adopt a smaller allocation to them. It's true that they are very risky. But you can think of risk as risk of gain and risk of loss. Holding a lower allocation to stocks will reduce your expected returns, and you'll have to save more as a consequence. Maybe an advisor could help you stay the course with a higher stock allocation, I'm not sure. Bond funds have a risk of loss, too. Are you comfortable with the risk level there? If not, you could buy and roll CDs or treasuries, and always hold them to maturity. Then you'll never see a loss in nominal terms.

You can also look into non-Boglehead ways of investing like trend following. The idea is to enter and exit the market based on signals, such as how current prices compare to a moving average. It is not a buy and hold strategy. It is a systematic and quantitative timing model. It might satisfy your urge to time the market. Now we can debate the merits of trend following, but I think most people would agree it is likely to produce better outcomes than timing the market based on your gut feelings.
http://mebfaber.com/timing-model/
software
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Re: Should I bite the bullet and invest in this market?

Post by software »

stocknoob4111 wrote: Sat Feb 24, 2018 12:08 pm
selters wrote: Sat Feb 24, 2018 5:18 am Is inflation 4%?
CPI is around 2% I believe but shadow inflation is around 10% if that is to be believed. Well, an entirely different argument. However at 4% returns equity risk premium over bonds is laughable. If the 10Y is returning 3.25% by year end as forecasted then why would you take a huge multiple of risk by investing in equities for the additional .75% ?

The big risk here is that stock market returns have been front loaded and most of those gains have already been taken between 2012-2017 and the market will readjust by going sideways for the next 10 years.
The part I find laughable is how you think 10 year stock returns (or even 10 year bond returns for that matter) can be predicted with any kind of accuracy.
stocknoob4111
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Re: Should I bite the bullet and invest in this market?

Post by stocknoob4111 »

software wrote: Sat Feb 24, 2018 12:23 pm The part I find laughable is how you think 10 year stock returns (or even 10 year bond returns for that matter) can be predicted with any kind of accuracy.
Not trying to make a prediction, I was going off Vanguard's official expectations of the markets for the next decade based on their experts. The videos are on their channel.
software
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Re: Should I bite the bullet and invest in this market?

Post by software »

stocknoob4111 wrote: Sat Feb 24, 2018 12:45 pm
software wrote: Sat Feb 24, 2018 12:23 pm The part I find laughable is how you think 10 year stock returns (or even 10 year bond returns for that matter) can be predicted with any kind of accuracy.
Not trying to make a prediction, I was going off Vanguard's official expectations of the markets for the next decade based on their experts. The videos are on their channel.
Sorry, but the fact that Vanguard mentioned it does not make it any more likely to occur. Don’t fool yourself, nobody knows nothin’.
RRAAYY3
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Re: Should I bite the bullet and invest in this market?

Post by RRAAYY3 »

Logic and advanced metrics/analytics/colorful charts are lovely ... in the end: nobody knows anything, the stock market is illogical, and 2 world wars / depressions / etc haven’t stopped it from trending upward

Soooo ... I’ll just keep on investing and not pretend I know any better - because “it’s All BS” according to my buddy on Wall Street
autopeep
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Re: Should I bite the bullet and invest in this market?

Post by autopeep »

stocknoob4111 wrote: Sat Feb 24, 2018 3:14 am
Finridge wrote: Sat Feb 24, 2018 1:24 am Probably almost every person on this thread is--and most on this forum are--heavily invested in the market. And many of them are smarter than me.
difference is that most have experienced a 40% run up in the markets just in the last year and change will be virtually unscathed if there is a major crash. However a new investor could be spending the next 6 or 7 years just to get back to square one. Even Vanguard's own official video says next decade return expectations are only 4%, that is a negative real return after inflation.

I'm not saying timing is always prudent bit waiting for a reasonable pullback, say 10%, in a late cycle high volatility environment may not be a reasonable risk.
This, quite frankly, is bad advice full of obfuscating pseudo-scientific financial babble ("late cycle high volatility"). The OP should 1.) determine his objective. (AKA why is he investing in the first place?) 2.) determine the risk he is willing to accept. 3.) acknowledge that all investing carries risk. 4.) Either dollar cost average or lump sump invest into the market.

Waiting for a mythical 10% pullback (why 10%? why not 8%? Why not 15%?) is neither evidence-based nor different from the approach that got him into this situation in the first place.
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Re: Should I bite the bullet and invest in this market?

Post by NYC_Guy »

TropikThunder wrote: Fri Feb 23, 2018 11:44 pm
NYC_Guy wrote: Fri Feb 23, 2018 11:27 pm My suggestions to a new investor — today — is to double your fixed income / cash allocation and slowly reallocate to your desired equity percentage over the next two to three years.
Do you mean, if ones "real" desired allocation is 80/20 stocks/bonds, you advise them to start at 60/40 and DCA from bonds to stocks over the next couple years until they get to 80/20?
Yes. And simply because psychology matters (we are talking about a new investor).
mortfree
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Re: Should I bite the bullet and invest in this market?

Post by mortfree »

If someone won’t invest in this market,what market will they invest in?
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cfs
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Re: Should I bite the bullet and invest in this market?

Post by cfs »

Don't do a thing until you read the latest letter from the Oracle of Omaha. My signature applies, y gracias por leer / cfs
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TropikThunder
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Re: Should I bite the bullet and invest in this market?

Post by TropikThunder »

cfs wrote: Sat Feb 24, 2018 8:50 pm Don't do a thing until you read the latest letter from the Oracle of Omaha. My signature applies, y gracias por leer / cfs
Is there anything actionable in that 17-page letter? I don't see anything there that's actual investment advice for the masses (other than active funds always lose, evidenced by the lost bet vs the S&P 500). But then again, now I know I can play bridge and ping pong at the shareholders' meeting. :beer
http://www.berkshirehathaway.com/letters/2017ltr.pdf
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Re: Should I bite the bullet and invest in this market?

Post by Finridge »

stocknoob4111 wrote: Sat Feb 24, 2018 3:14 am
Finridge wrote: Sat Feb 24, 2018 1:24 am Probably almost every person on this thread is--and most on this forum are--heavily invested in the market. And many of them are smarter than me.
difference is that most have experienced a 40% run up in the markets just in the last year and change will be virtually unscathed if there is a major crash. However a new investor could be spending the next 6 or 7 years just to get back to square one. Even Vanguard's own official video says next decade return expectations are only 4%, that is a negative real return after inflation.

I'm not saying timing is always prudent bit waiting for a reasonable pullback, say 10%, in a late cycle high volatility environment may not be a reasonable risk.
I guess I didn't do a very good job of making my point--because this shows that it was entirely missed.

In the market today, we ware where we are. What happened yesterday or last year does not matter. Let me make this concrete: Say you have a $100,000 in the Vanguard Total Stock Market Fund. (To avoid this becoming about tax implications, let's say it's an IRA.) HOW you got there does not matter. Whether you bought it yesterday, or last year or ten years ago. Whether your run-up was -40% or +40%. Or +1000%. It does not matter.

If you knew that stocks would have a negative return over the next 10 years--heck you wouldn't even have to know that for sure--if you just believed that was more likely than not, then the rational course of action would be to sell all your stocks. Regardless of whether you enjoyed a run-up getting hear or not.

When people are reluctant to sell (in a situation where that is the rational thing to do) because they lost money and want to regain it first, that is called the lost cost fallacy. Not wanting to sell because you gained money--that is the other side of the same fallacy--maybe some are staying in the market because of this. But I think most of us--at least here on this forum--have our current portfolio allocation because we believe in the Boglehead principles and the research underlying them. The research shows that not only can we not be sure about what the markets will do in the future, but that any attempts to guess and to time the markets are more likely than not to hurt us rather then help us.

If we were reasonably sure that stocks were going to lose money, we would sell.
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Re: Should I bite the bullet and invest in this market?

Post by denovo »

razor488 wrote: Fri Feb 23, 2018 10:15 am I opened an account with Vanguard with the intent of buying their mutual funds. (Namely total stock, total international, and some bond funds)

I have had about $450k sitting in cash for too long and naturally have missed out on this great bull market. A few weeks ago I invested $35k in the total stock fund, 15k in the total international stock fund, and $60k in the Wellington fund. I am going to exchange the Wellington fund for more of the total stock fund and their short-term corporate bond fund. (Per Vanguard's recommendation)

I know the market cannot be timed and in the long long run it should be up, but it still makes me very uneasy knowing we HAVE to be towards the end of this long bull market that we have. Should I just bite the bullet and invest more than I already have? My brain tells me the market cannot be timed so just move the money in with this strategy and wait, but my gut is holding me back.
Have you invested in the stock market before? What did you have invested in stocks in 2007-2009? Did you sell it all in 2008? Tell us a bit about yourself.
"Don't trust everything you read on the Internet"- Abraham Lincoln
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Re: Should I bite the bullet and invest in this market?

Post by cfs »

TropikThunder wrote: Sat Feb 24, 2018 10:44 pm . . . Is there anything actionable in that 17-page letter? . . .
Investors just need to drink a teaspoon of [para 2, page 10], and call Doctor Buffett in the morning! Muchas gracias por leer ~cfs~
Last edited by cfs on Sun Feb 25, 2018 10:45 pm, edited 1 time in total.
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Re: Should I bite the bullet and invest in this market?

Post by Dottie57 »

greg24 wrote: Fri Feb 23, 2018 10:48 am Given your caution, you may want to consider investing a set amount over time.

+1

If I had that amount I would DCA over 2years or so. I would not go pure stocks either but also acquire bonds.
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munemaker
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Re: Should I bite the bullet and invest in this market?

Post by munemaker »

Dottie57 wrote: Sun Feb 25, 2018 1:53 pm
greg24 wrote: Fri Feb 23, 2018 10:48 am Given your caution, you may want to consider investing a set amount over time.

+1

If I had that amount I would DCA over 2years or so. I would not go pure stocks either but also acquire bonds.
I am with Dottie57 on this one.
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bligh
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Re: Should I bite the bullet and invest in this market?

Post by bligh »

munemaker wrote: Sun Feb 25, 2018 10:37 pm
Dottie57 wrote: Sun Feb 25, 2018 1:53 pm
greg24 wrote: Fri Feb 23, 2018 10:48 am Given your caution, you may want to consider investing a set amount over time.

+1

If I had that amount I would DCA over 2years or so. I would not go pure stocks either but also acquire bonds.
I am with Dottie57 on this one.
I just don't get why so many seem to love and support DCA. It just doesn't make sense to me.

What happens if the market tanks exactly 2 years from now? Well that's just too bad right? Who could have known? He just got really unlucky.

Well isn't that exactly like if the OP invested tomorrow and the market tanked the day after? Is there a reason the market is more likely to tank within the next two years instead of after the 2 years of DCAing are over?

Remember, every day that each one of us is invested in the market, we are essentially, lump summing into the market that day. Why aren't we selling most or all of it to hold a huge percentage of our portfolio in cash and DCAing it back into the market over the next 2 years? It has been shown that time IN the market is important, while timing the market is difficult or impossible. Why are we okay attempting to do the opposite in this case but not others? Isn't DCAing just a way of hedging against the risk that the market might tank in the next 2 years. Why do we feel we can make that prediction or need to take up a strategy against that risk but are ok with the risk that it tanks after the 2 years are up?
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