Taking advantage of the current correction

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loklav
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Taking advantage of the current correction

Post by loklav » Wed Oct 10, 2018 3:16 pm

Hi,

I started to invest using a 3 funds portfolio 1 year ago.
Last January I did not do anything when the market dropped. I was not even aware about it... I just maxed out my 401k and continued investing in my taxable account. No TLH or additional investing...

If I look at my portfolio today, I think the drop is comparable to January.
I'm not supposed to time the market, but if I understand correctly, I should be supposed to buy low and invest more.

Am I correct? Is it what everybody is doing at the moment? TLH and investing more? Or just waiting and business as usual?

Thx

livesoft
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Re: Taking advantage of the current correction

Post by livesoft » Wed Oct 10, 2018 3:17 pm

It is pretty far from the standard Wall Street definition of a correction.

Today's drop is not as bad as the two drops in February.
Last edited by livesoft on Wed Oct 10, 2018 3:18 pm, edited 1 time in total.
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WhiteMaxima
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Re: Taking advantage of the current correction

Post by WhiteMaxima » Wed Oct 10, 2018 3:18 pm

correction is a drop 10% or more. 3% is barely noise.

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triceratop
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Re: Taking advantage of the current correction

Post by triceratop » Wed Oct 10, 2018 3:18 pm

livesoft wrote:
Wed Oct 10, 2018 3:17 pm
It is pretty far from the standard Wall Street definition of a correction.

Today's drop is not as bad as the two drops in February.
This is true, in so much as VWO was in bear market territory.
"To play the stock market is to play musical chairs under the chord progression of a bid-ask spread."

3funder
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Re: Taking advantage of the current correction

Post by 3funder » Wed Oct 10, 2018 3:18 pm

I bought more international stock today. I didn't throw all my savings at it or anything, though. Yes, buy if you'd like; just don't pretend it's March 2009 and everything is on sale at a once-in-a-generation price.

livesoft
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Re: Taking advantage of the current correction

Post by livesoft » Wed Oct 10, 2018 3:19 pm

Somebody had to be buying today since for every seller, there is a buyer. :)
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triceratop
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Re: Taking advantage of the current correction

Post by triceratop » Wed Oct 10, 2018 3:19 pm

"Somebody"? Robots are people, my friend. ;)
"To play the stock market is to play musical chairs under the chord progression of a bid-ask spread."

MJD
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Re: Taking advantage of the current correction

Post by MJD » Wed Oct 10, 2018 3:20 pm

Assuming you invest periodically and regularly and this is extra money you want to put in the market...put it in now. Or in one day, or two days, or two weeks, or ......X time frame.

If you are investing for the long term, what happens today will barely register on your overall return in the future.

Jordan4FI
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Re: Taking advantage of the current correction

Post by Jordan4FI » Wed Oct 10, 2018 3:23 pm

buy buy buy, until it is time to sell sell sell in "retirement"... and even if you can buy buy buy in retirement do that too... you are in or you are out.. simple as that..

loklav
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Re: Taking advantage of the current correction

Post by loklav » Wed Oct 10, 2018 3:23 pm

WhiteMaxima wrote:
Wed Oct 10, 2018 3:18 pm
correction is a drop 10% or more. 3% is barely noise.
Well since the last 4/5 sessions I think, it's more than 3% right?

an_asker
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Re: Taking advantage of the current correction

Post by an_asker » Wed Oct 10, 2018 3:26 pm

loklav wrote:
Wed Oct 10, 2018 3:23 pm
WhiteMaxima wrote:
Wed Oct 10, 2018 3:18 pm
correction is a drop 10% or more. 3% is barely noise.
Well since the last 4/5 sessions I think, it's more than 3% right?
Not a lot more (still closer to 3 than 10!). I've been following SPY (S&P 500 ETF). It's fallen just about six percent or so off its high - 292 to 277.

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Artsdoctor
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Re: Taking advantage of the current correction

Post by Artsdoctor » Wed Oct 10, 2018 3:27 pm

loklav wrote:
Wed Oct 10, 2018 3:16 pm
Hi,

I started to invest using a 3 funds portfolio 1 year ago.
Last January I did not do anything when the market dropped. I was not even aware about it... I just maxed out my 401k and continued investing in my taxable account. No TLH or additional investing...

If I look at my portfolio today, I think the drop is comparable to January.
I'm not supposed to time the market, but if I understand correctly, I should be supposed to buy low and invest more.

Am I correct? Is it what everybody is doing at the moment? TLH and investing more? Or just waiting and business as usual?

Thx
You never really know what lies ahead so it's best to have a plan. Buying on a "dip" isn't a great plan because it's hard to define what a dip actually is. As they say, you don't want to be trying to catch a falling knife.

A logical plan might entail setting up points when buying and re-balancing would be appropriate. For example, if you have a 70/30 split and equities fall enough to change that allocation to 65/35, that might be a point where you rebalance. If your asset allocation changes to 69/31, probably not necessary to do anything.

Likewise, if you are keeping a rough estimate of what your current asset allocation is, you can take your new investment money and put it where it's needed most.

The idea would be to remove all emotion from the process and set up your own triggers and plans in a methodical way that you can use at all times. Otherwise, you'll just be guessing. Even if you want to get into setting up bands or define your own "really bad day" plan, at least make it a plan you can stick to.
Last edited by Artsdoctor on Wed Oct 10, 2018 3:30 pm, edited 1 time in total.

justsomeguy2018
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Re: Taking advantage of the current correction

Post by justsomeguy2018 » Wed Oct 10, 2018 3:29 pm

If that giant whooshing sound is money getting pulled out of equities, where is it going? Has to go somewhere right? In cash or treasury assets?

loklav
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Re: Taking advantage of the current correction

Post by loklav » Wed Oct 10, 2018 3:34 pm

Artsdoctor wrote:
Wed Oct 10, 2018 3:27 pm
loklav wrote:
Wed Oct 10, 2018 3:16 pm
Hi,

I started to invest using a 3 funds portfolio 1 year ago.
Last January I did not do anything when the market dropped. I was not even aware about it... I just maxed out my 401k and continued investing in my taxable account. No TLH or additional investing...

If I look at my portfolio today, I think the drop is comparable to January.
I'm not supposed to time the market, but if I understand correctly, I should be supposed to buy low and invest more.

Am I correct? Is it what everybody is doing at the moment? TLH and investing more? Or just waiting and business as usual?

Thx
You never really know what lies ahead so it's best to have a plan. Buying on a "dip" isn't a great plan because it's hard to define what a dip actually is. As they say, you don't want to be trying to catch a falling knife.

A logical plan might entail setting up points when buying and re-balancing would be appropriate. For example, if you have a 70/30 split and equities fall enough to change that allocation to 65/35, that might be a point where you rebalance. If your asset allocation changes to 69/31, probably not necessary to do anything.

Likewise, if you are keeping a rough estimate of what your current asset allocation is, you can take your new investment money and put it where it's needed most.

The idea would be to remove all emotion from the process and set up your own triggers and plans in a methodical way that you can use at all times. Otherwise, you'll just be guessing.
it makes perfectly sense. My target allocation is supposed to be 85/15. Currently I was closer to 84... The min was may be 81... I never rebalanced...
My international allocation is supposed to be between 20/25 ...

I will look at it at the end of the week... let see where I am in my 5% range.

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randomizer
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Re: Taking advantage of the current correction

Post by randomizer » Wed Oct 10, 2018 3:36 pm

Not much to take advantage of, but if a TLH opportunity presents itself, I have generally taken it. (Not today though.)
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justsomeguy2018
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Joined: Wed Oct 03, 2018 8:11 pm

Re: Taking advantage of the current correction

Post by justsomeguy2018 » Wed Oct 10, 2018 3:43 pm

How do you rebalance short of either investing more money or buying and selling your bonds/securities so the ratio is right?

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nisiprius
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Re: Taking advantage of the current correction

Post by nisiprius » Wed Oct 10, 2018 4:37 pm

Speaking strictly personally: if I believed in buying on a 3% dip of the S&P 500, then I would have bought in late 2008.

And then I would have gotten intensely anxious at the continued decline, more so than I experience just by holding what I had, because of having made an active decision to buy more. I would then be invested in the idea of having been "right" to buy. The result could well have been that I would have been even more bothered by the decline than I was (and I was very bothered), and I might quite possibly have run out of patience and sold in early 2009.

I'm not saying that everybody would do that. But I am saying that "deciding to make decisions" has implications.

If you decide to buy on the 3% dip, in my opinion you should make a written record of what you are expecting, and what your future plans are. A decision to buy implies a decision to sell, and you should probably write down your decision rule about what conditions to sell... sell the shares you bought, I supposed. You could write down "hold until retirement," of course. But write it down.

John C. Bogle has written "Time is your friend. Impulse is your enemy." A sane person can decide to buy on a 3% dip, but it shouldn't be based on impulse.
Annual income twenty pounds, annual expenditure nineteen nineteen and six, result happiness; Annual income twenty pounds, annual expenditure twenty pounds ought and six, result misery.

harvestbook
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Re: Taking advantage of the current correction

Post by harvestbook » Wed Oct 10, 2018 4:42 pm

If I had any money to buy with, I'd already have it in the market.
I'm not smart enough to know, and I can't afford to guess.

Darth Xanadu
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Re: Taking advantage of the current correction

Post by Darth Xanadu » Wed Oct 10, 2018 5:03 pm

harvestbook wrote:
Wed Oct 10, 2018 4:42 pm
If I had any money to buy with, I'd already have it in the market.
Same here; my next opportunity will be in January most likely when ESPP hits and 401k contributions start back up.
"A courageous teacher, failure is."

2015
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Re: Taking advantage of the current correction

Post by 2015 » Wed Oct 10, 2018 8:42 pm

randomizer wrote:
Wed Oct 10, 2018 3:36 pm
Not much to take advantage of, but if a TLH opportunity presents itself, I have generally taken it. (Not today though.)
Salivating at the thought. I'm *this* close. But not today, though.

123
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Re: Taking advantage of the current correction

Post by 123 » Wed Oct 10, 2018 9:17 pm

My asset allocation has sort of flexible bands in taxable accounts (I use a Vanguard LifeStrategy fund in traditional IRA accounts). As a result I can scoop up more VTI if there's a significant price decline. Currently I have some pending limit orders to buy if the price drops to 135 or lower. The last couple of years I've used pending limit orders to scoop up things if there's another "flash crash" or similar buying opportunity. With limit orders I have to use expiration dates, which can be a couple of months out, and I review outstanding orders every couple of months. It's kind of market timing without any anxiety.
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livesoft
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Re: Taking advantage of the current correction

Post by livesoft » Wed Oct 10, 2018 9:36 pm

justsomeguy2018 wrote:
Wed Oct 10, 2018 3:43 pm
How do you rebalance short of either investing more money or buying and selling your bonds/securities so the ratio is right?
Hmmm. Isn't that like asking "How do you rebalance without rebalancing?" ??
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AlphaLess
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Re: Taking advantage of the current correction

Post by AlphaLess » Wed Oct 10, 2018 9:43 pm

livesoft wrote:
Wed Oct 10, 2018 3:19 pm
Somebody had to be buying today since for every seller, there is a buyer. :)
Vanguard, State Street, Fidelity are all buying today.
Just like every day.

loklav
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Re: Taking advantage of the current correction

Post by loklav » Wed Oct 10, 2018 10:16 pm

2015 wrote:
Wed Oct 10, 2018 8:42 pm
randomizer wrote:
Wed Oct 10, 2018 3:36 pm
Not much to take advantage of, but if a TLH opportunity presents itself, I have generally taken it. (Not today though.)
Salivating at the thought. I'm *this* close. But not today, though.
How to you quantify this *this* ? :)

MotoTrojan
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Re: Taking advantage of the current correction

Post by MotoTrojan » Wed Oct 10, 2018 10:32 pm

You’re better off in the long run staying fully invested. That would mean not having any funds for this moment, until payday.

historyforsale
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Re: Taking advantage of the current correction

Post by historyforsale » Wed Oct 10, 2018 10:39 pm

nisiprius wrote:
Wed Oct 10, 2018 4:37 pm
Speaking strictly personally: if I believed in buying on a 3% dip of the S&P 500, then I would have bought in late 2008. [...]
Nisiprius, anytime I want to see the most cogent and thoughtful response to an issue I scroll down and look for a butterfly. Sorry not to add anything salient, I just wanted to express my appreciation.

AlphaLess
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Re: Taking advantage of the current correction

Post by AlphaLess » Wed Oct 10, 2018 10:52 pm

RBD rebalancers, rejoice.
It is going to be another down day tomorrow.
E-minis are down close to 1% in the Asia session.

SoAnyway
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Re: Taking advantage of the current correction

Post by SoAnyway » Thu Oct 11, 2018 12:04 am

nisiprius wrote:
Wed Oct 10, 2018 4:37 pm
Speaking strictly personally: if I believed in buying on a 3% dip of the S&P 500, then I would have bought in late 2008.

And then I would have gotten intensely anxious at the continued decline, more so than I experience just by holding what I had, because of having made an active decision to buy more. I would then be invested in the idea of having been "right" to buy. The result could well have been that I would have been even more bothered by the decline than I was (and I was very bothered), and I might quite possibly have run out of patience and sold in early 2009.

I'm not saying that everybody would do that. But I am saying that "deciding to make decisions" has implications.

If you decide to buy on the 3% dip, in my opinion you should make a written record of what you are expecting, and what your future plans are. A decision to buy implies a decision to sell, and you should probably write down your decision rule about what conditions to sell... sell the shares you bought, I supposed. You could write down "hold until retirement," of course. But write it down.

John C. Bogle has written "Time is your friend. Impulse is your enemy." A sane person can decide to buy on a 3% dip, but it shouldn't be based on impulse.
Just want to echo historyforsale's post - Thank you, nisiprius.
For anyone reading who's feeling any "jitters", I highly highly recommend nisiprius's post here that is stickied to the top of one of the subforums.
FWIW, until I logged in to the forum tonight, I wasn't even aware of what happened in the markets today and haven't bothered to look at the effect on my portfolio. Thanks to Jack and sage guidance on this forum, I know it won't matter in the long run and I've got enough in short-term to cover. No jitters. I'll re-balance if needed per my plan.

2015
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Re: Taking advantage of the current correction

Post by 2015 » Thu Oct 11, 2018 8:03 pm

loklav wrote:
Wed Oct 10, 2018 10:16 pm
2015 wrote:
Wed Oct 10, 2018 8:42 pm
randomizer wrote:
Wed Oct 10, 2018 3:36 pm
Not much to take advantage of, but if a TLH opportunity presents itself, I have generally taken it. (Not today though.)
Salivating at the thought. I'm *this* close. But not today, though.
How to you quantify this *this* ? :)
My VTIAX still has approx $1200 in capital gains, even after today! As soon as that number on the VG site turns from green to red, I'm all in with TLH. I have some serious tax obligations coming up. It's a first world problem, but I wouldn't mind making it a little less so.

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