For those waiting for a 'correction' ...

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GoldenFinch
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Re: For those waiting for a 'correction' ...

Post by GoldenFinch »

I wasn’t really waiting for a correction. Rebalanced a little bit into bonds in August. Now the rest of the rebalancing happened on its own.
Last edited by GoldenFinch on Fri Oct 26, 2018 4:33 am, edited 1 time in total.
mariezzz
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Re: For those waiting for a 'correction' ...

Post by mariezzz »

shainy wrote: Thu Oct 25, 2018 11:56 am
David Jay wrote: Thu Oct 25, 2018 11:51 am
shainy wrote: Thu Oct 25, 2018 11:12 am I am waiting to pull the trigger this week.
In hindsight, probably should have started yesterday...
I was little scared with bed red yesterday and want to see how it goes today.
It was off by almost 2000 points since i decided to enter the market. It's not that bad either.
If you're in for the long term, it doesn't really matter.
rgs92
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Re: For those waiting for a 'correction' ...

Post by rgs92 »

There are always numerous threads started by people with a big lump of money to invest who say they will invest when the market has a pullback.
So I wonder if now that this has happened, they went ahead with their plan, and why or why not?

I think what usually happens is that, when the market does finally go down, this scares them off.
cadillex
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Re: For those waiting for a 'correction' ...

Post by cadillex »

rgs92 wrote: Thu Oct 25, 2018 9:25 pm I think what usually happens is that, when the market does finally go down, this scares them off.
actually i think that when the market finally goes down, its not quite deep enough, so we continue to wait... for one more big drop...
and then we miss it, i do this almost every time. when its down 10% i am waiting for just a little more, 12 % lets say, but it goes back up !
if you are the type with money in piles, waiting to invest, i dont know if its fear that the market is crashing that restrains the investment once the opportunity arrives, i think its the desire for a slightly more advantageous entry point.
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dwickenh
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Re: For those waiting for a 'correction' ...

Post by dwickenh »

I'm done waiting, harvested 2 years worth of tax reduction losses on my International funds. It can go back to normal anytime now!
The market is the most efficient mechanism anywhere in the world for transferring wealth from impatient people to patient people.” | — Warren Buffett
ge1
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Re: For those waiting for a 'correction' ...

Post by ge1 »

cadillex wrote: Thu Oct 25, 2018 7:56 pm i have always been a buy the dips kind of guy, consistently accumulate excess cash beyond the maxed out 401k's and roths, and wait for a good entry point. problem is the entry points are fleeting, and i end up sitting on too much cash(in MM) consistently. i can see in hindsight that buying in as soon as the extra funds are available would have been the best course of action.
additionally my parents, being of the rmd age, have annually executed the RMD(which they dont need to live on) and then never reinvested the proceeds, always waiting for the next big one...again missing out on potential returns over the last 10 years.
since the drop in early 2016, yes we still took 2 full years!! i have been pushing my excess and their excess into the appropriate funds at the dips, and finally, yesterday, just got all the cash laying around invested.
again the moral of the story is i should have just done it all at the big dip in 2016 and not allowed any additional money to accumulate again.
now... finally, we are at a point where all assets are invested and performing, not sitting on the sidelines, and any fresh excesses will be deployed immediately. like the upcoming RMD for the parents.
it is clear that our strategy wasted substantial returns while we waited.
all of the funds in question will never be needed by the parents, and i wont need them for another 15 years at least, so being all in with that long of a time horizon is the best course of action, any major correction, 30-50 %, can be weathered. so makes no sense to sit and wait for it.
simple asset allocation adjustment actually gives us all the dry powder we might need in such an event. even now at 80/20 stocks to bonds overall, there is enough in the bonds to adjust if necessary.
moral of the story, if yesterday was the correction you have been waiting for, like me, you lost.
I wouldn’t be so sure about that. Given that we just experienced one of the longest bull markets on record in the US, yes of course, being in the market and ideally 100% in stocks would have been the best strategy. I am fairly certain that most strategies in investing are actually good strategies, if people could only stick to them... So these days, people who had a significant portion of their stocks in INTL are now reducing those positions (with perfectly valid logical arguments), people with cash on the sidelines feel they missed out and invest near the market peak etc...
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buccimane
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Re: For those waiting for a 'correction' ...

Post by buccimane »

CyclingDuo wrote: Thu Oct 25, 2018 10:00 am In our case we simply have things set up for our contributions to go in automatically twice a month for the tax deferred plans, and weekly for taxable. Year in and year out no matter what the market is doing. Pretty much do the same when it comes to reinvesting dividends as well, as they get reinvested automatically when they are paid each quarter/month/bi-annual depending on the security.
This is great. I had no idea Vanguard offered this automatic investing feature. Just set mine up so I don't need to look at my balance weekly. :sharebeer
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bmelikia
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Re: For those waiting for a 'correction' ...

Post by bmelikia »

ge1 wrote: Thu Oct 25, 2018 6:33 am .... here, yes, I’m one of those :D

Short answer is no, I’m not done waiting. I’am fully invested in my international stocks but my US stocks are significantly below my target allocation. US stocks have much further to fall; it may not happen now, it may not happen next year but eventually it will happen. And I’m perfectly content earning over 2% in my money market funds for that to happen. I have added Large Cap Value and Small Cap Value this week, as I think US Value is starting to look more attractive.

I am buying and selling opportunistically US large caps which have been beaten down and that strategy has done well this year.
Why didn’t you just buy when the market was lower (basically anytime in the last 10 years - and even further back in time) instead of waiting to buy now? That would have been even more “opportunistic”. . .
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ge1
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Re: For those waiting for a 'correction' ...

Post by ge1 »

Because I didn't expect the market to go up as much as it did.

I checked this week and over the last 5 years my CAGR is exactly the same as if I had been fully invested all this time as per my target asset allocation, but with much less risk, so at this point by strategy has worked out fine.

Of course the market could resume another 10 year bull market today and never look back, in which case I was wrong.

I guess we will find out.
JiggyWillis
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Re: For those waiting for a 'correction' ...

Post by JiggyWillis »

I guess my answer is "sort of?" Around July we achieved "fully invested" status in a 3-fund portfolio at a 70/30 AA, split between tax-deferred and taxable accounts. The maximum 401k contribution goes in every week at a 53/47 AA.

HOWEVER, the current available cash to invest is sitting in the MM fund which puts us at more of a 50/50 AA. I struggled getting $200k invested in taxable earlier this year and have more of the same dilemma. It seems that the heartburn comes more from the act of getting fully invested as opposed to the fact of being fully invested. It would appear to be the inner market-timer in me wanting to get my money in at good value, i.e. after a draw down.

The weekly 401k money does not bother me at all, but the chunk o change sitting in cash does. I will DCA it in at some point, like I did earlier this year, but things seem a bit cooky right now. sky-high US valuations, tanking international in spite of the fact that the rest of world's central bankers remain at maximum stimulus mode. And a trade war with the Chinese who will sit in dirt and eat bugs for decades rather than capitulate--that is a cultural thing and we have completely miscalculated by thinking they are like Americans who cannot defer gratification for even one quarter.

I don't know, accumulating cash just seems to be the way the wind is blowing right now. . . But of course you can never know when is the right time to push all-in. It has been an interesting year to learn investing!
Ilikesparklers
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Re: For those waiting for a 'correction' ...

Post by Ilikesparklers »

I sold off nearly $300K of taxable stocks and bonds this week because I've been wanting to get back to a 3 simple fund portfolio after receiving an inheritance. I had about $7K of losses, which is fine.

Today I put $250K in a total market index fund and $100K in international. However, I still have another $500K that I want to put in total market, but I think I'll DCA over the next few months. Plopping that much cash into a fund at one time is tough! This remaining money has been sitting in mostly tax-exempt money market accounts anyway, so DCA'ing the remaining amount feels like the right move right now. Who knows!
investrc
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Re: For those waiting for a 'correction' ...

Post by investrc »

Ilikesparklers wrote: Fri Oct 26, 2018 2:49 pm I sold off nearly $300K of taxable stocks and bonds this week because I've been wanting to get back to a 3 simple fund portfolio after receiving an inheritance. I had about $7K of losses, which is fine.

Today I put $250K in a total market index fund and $100K in international. However, I still have another $500K that I want to put in total market, but I think I'll DCA over the next few months. Plopping that much cash into a fund at one time is tough! This remaining money has been sitting in mostly tax-exempt money market accounts anyway, so DCA'ing the remaining amount feels like the right move right now. Who knows!
I am only at a tiny fraction of the amounts you listed, but i would like to sell majority of my stocks in my taxable account and put into funds. May I ask which funds you chose for the total market & international?
Ilikesparklers
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Re: For those waiting for a 'correction' ...

Post by Ilikesparklers »

investrc wrote: Fri Oct 26, 2018 3:24 pm
Ilikesparklers wrote: Fri Oct 26, 2018 2:49 pm I sold off nearly $300K of taxable stocks and bonds this week because I've been wanting to get back to a 3 simple fund portfolio after receiving an inheritance. I had about $7K of losses, which is fine.

Today I put $250K in a total market index fund and $100K in international. However, I still have another $500K that I want to put in total market, but I think I'll DCA over the next few months. Plopping that much cash into a fund at one time is tough! This remaining money has been sitting in mostly tax-exempt money market accounts anyway, so DCA'ing the remaining amount feels like the right move right now. Who knows!
I am only at a tiny fraction of the amounts you listed, but i would like to sell majority of my stocks in my taxable account and put into funds. May I ask which funds you chose for the total market & international?
I transferred in-kind $1MM to Fidelity from TRP & Vanguard to get a $2,500 sign up bonus, so I've decided to go with FZILX - Fidelity ZERO International Index Fund and FZROX - Fidelity ZERO Total Market Index Fund.
randomguy
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Re: For those waiting for a 'correction' ...

Post by randomguy »

livesoft wrote: Thu Oct 25, 2018 6:00 am For those waiting for a 'correction' ...

Are you done waiting?

Why or why not?
How many of these type of corrections have we had since 2009? 6 or 7? You will drive your self insane if you start obessing over minor market moves like this. Lets talk when we see a 25% drop (i.e. the once/decade type event not one that happen every 18 months).
amateurnovice
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Re: For those waiting for a 'correction' ...

Post by amateurnovice »

Can talking about a "correction" be considered as taboo as talking about economic policy and politics? It's basically in the same league - conjecture, meant to rile up, etc.
investrc
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Re: For those waiting for a 'correction' ...

Post by investrc »

Ilikesparklers wrote: Fri Oct 26, 2018 3:30 pm
investrc wrote: Fri Oct 26, 2018 3:24 pm I am only at a tiny fraction of the amounts you listed, but i would like to sell majority of my stocks in my taxable account and put into funds. May I ask which funds you chose for the total market & international?
I transferred in-kind $1MM to Fidelity from TRP & Vanguard to get a $2,500 sign up bonus, so I've decided to go with FZILX - Fidelity ZERO International Index Fund and FZROX - Fidelity ZERO Total Market Index Fund.
I use Merrill, would FZROX market be equivalent to Vanguard Total Stock Market (VTI) or Vanguard Total World Stock (VT)?
And FZILX equivalent to Vanguard Total International Stock (VXUS)?
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Re: For those waiting for a 'correction' ...

Post by triceratop »

amateurnovice wrote: Fri Oct 26, 2018 3:40 pm Can talking about a "correction" be considered as taboo as talking about economic policy and politics? It's basically in the same league - conjecture, meant to rile up, etc.
No.

I myself, I will be buying on Tuesday.
"To play the stock market is to play musical chairs under the chord progression of a bid-ask spread."
mancich
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Re: For those waiting for a 'correction' ...

Post by mancich »

Tim_S wrote: Thu Oct 25, 2018 8:47 pm "Press on regardless"
+1 Regular DCA and stick to your plan.
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livesoft
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Re: For those waiting for a 'correction' ...

Post by livesoft »

amateurnovice wrote: Fri Oct 26, 2018 3:40 pm Can talking about a "correction" be considered as taboo as talking about economic policy and politics? It's basically in the same league - conjecture, meant to rile up, etc.
If one looks at the number of views of the recent/active threads on bogleheads.org , the ones with the highest number of views are all about the recent market actions. I think a big bunch of the lurkers are concerned and have anxiety, but viewing threads like this one will not assuage that anxiety.
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GAAP
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Re: For those waiting for a 'correction' ...

Post by GAAP »

livesoft wrote: Sat Oct 27, 2018 9:19 am
amateurnovice wrote: Fri Oct 26, 2018 3:40 pm Can talking about a "correction" be considered as taboo as talking about economic policy and politics? It's basically in the same league - conjecture, meant to rile up, etc.
If one looks at the number of views of the recent/active threads on bogleheads.org , the ones with the highest number of views are all about the recent market actions. I think a big bunch of the lurkers are concerned and have anxiety, but viewing threads like this one will not assuage that anxiety.
This would be a good time for those lurkers to reevaluate their ability to handle risk. If they're having issues with these little jiggles, they certainly won't handle a real drop well...
Ilikesparklers
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Re: For those waiting for a 'correction' ...

Post by Ilikesparklers »

investrc wrote: Fri Oct 26, 2018 3:42 pm
Ilikesparklers wrote: Fri Oct 26, 2018 3:30 pm
investrc wrote: Fri Oct 26, 2018 3:24 pm I am only at a tiny fraction of the amounts you listed, but i would like to sell majority of my stocks in my taxable account and put into funds. May I ask which funds you chose for the total market & international?
I transferred in-kind $1MM to Fidelity from TRP & Vanguard to get a $2,500 sign up bonus, so I've decided to go with FZILX - Fidelity ZERO International Index Fund and FZROX - Fidelity ZERO Total Market Index Fund.
I use Merrill, would FZROX market be equivalent to Vanguard Total Stock Market (VTI) or Vanguard Total World Stock (VT)?
And FZILX equivalent to Vanguard Total International Stock (VXUS)?
I believe FZROX would be closest to VTI. And FZILX like VXUS. I think going with a 3 fund portfolio using Vanguard funds is a great option. I only used Fidelity because of the bonus and they took care of the transfers for me. Their customer service was stellar. I've used Vanguard for years and still do, and I have been very happy with them.
Xrayman69
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Re: For those waiting for a 'correction' ...

Post by Xrayman69 »

First of every month for employer related contributions. Every Friday for personal contributions. The 15th of every month for the 529 contribution.

Only started to invest in 2006 when I started first real job. Was fortunate to have gone through 2008-9 with relatively low assets and learned the value of low cost and consistent dollar cost averaging investment strategy like other boggle heads.

Will continue to do the same and stay the course for the next episode and expected recovery. Will do so for the next 10 years then slowly eveolve to prepare for next stages.

Full disclosure, I also have a side account about 10% total that I accumulate and when “opportunities “ arise I will buy extra. Which I did on Friday (yesterday).
togb
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Re: For those waiting for a 'correction' ...

Post by togb »

I've held some cash for the last few years in cash, expressly watching for great buying opportunities like I missed in 2009 since I did not have as much cash as I would have liked. I have a couple of positions that I might add to next week, if they get just a little cheaper.

Mostly I'm glad that earlier this year I converted from 95/5 to about 70/30, which the goal of having enough in "safe" stuff (mostly bonds) to carry me through at least 3 years if the need arose. I'm sad that my long term bond EFT is down 7% and only yields 5%, but things could be worse. The short term bond EFT is only down 2%, which matches the yield. So while I'm not making money, it's parked safely.

I'm also plowing a lot of money into 401K at this time for tax reasons, but it's nice that it appears I'll be adding shares at a lower price than earlier this year. It's long term money, it's all good.

So short answer, I'm "casually watching" a couple things, but things have not dropped enough for me to go on a shopping spree. They have dropped enough that I'll carefully reconsider some positions that I don't love anyway.
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Youngblood
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Re: For those waiting for a 'correction' ...

Post by Youngblood »

livesoft wrote: Thu Oct 25, 2018 6:00 am For those waiting for a 'correction' ...

Are you done waiting?

Why or why not?
When something negatory happens I am definitely not one of those waiting or hoping for it to happen.
"I made my money by selling too soon." | Bernard M. Baruch
GammaPoint
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Re: For those waiting for a 'correction' ...

Post by GammaPoint »

livesoft wrote: Thu Oct 25, 2018 6:00 am For those waiting for a 'correction' ...

Are you done waiting?

Why or why not?
Still waiting. Two things go into stock prices, the fundamentals and behavioral issues. It's hard to really gauge fundamentals (who knows what earnings are going to be going forward?), but I think behaviorally there are plenty of signs that investors in US equities are not acting very risk adverse. They've been in stocks (often reluctantly) for almost a decade due to low bond yields. Plus, the mentality of "why would I own international stocks", "any stock drop is a sale", "just put it all in VTSAX!", "risk is just short-term volatility", etc. seems to be everywhere. I can't gauge fundamentals any better than the next guy, but the environment I see around me suggests that others aren't taking stock risks seriously and so are likely being overly bullish. As Warren Buffett says, "The less prudence with which others conduct their affairs, the greater the prudence with which we should conduct our own affairs". I don't think a 10% drop in US equities (taking us back to what, April 2018?) is significant enough to take the excess bullishness out of the average investor.

I haven't sold my US stocks, since I recognize that I could be wrong, but I won't be buying anymore at these prices.
Last edited by GammaPoint on Sat Oct 27, 2018 4:38 pm, edited 1 time in total.
vwgrrc
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Re: For those waiting for a 'correction' ...

Post by vwgrrc »

dwickenh wrote: Thu Oct 25, 2018 9:54 pm I'm done waiting, harvested 2 years worth of tax reduction losses on my International funds. It can go back to normal anytime now!
I'm thinking about the exact same thing! But I don't know if I'm allowed (by THL rule) to exchange the International Index for the US Index, regardless of AA. Can someone confirm if this work? :confused
MathWizard
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Re: For those waiting for a 'correction' ...

Post by MathWizard »

The market drop just got valuations somewhere near where it was in January.
If there is a real correction, it would drop the market somewhere in the 20 to 30%,
so that P/E rations would be around 20, not the current 30.

This will happen either by a drop, or by prices staying about the same while
earnings catch up, or a combination of both.
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burt
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Re: For those waiting for a 'correction' ...

Post by burt »

Not waiting, just watching.
Went to 30/70 stock/bonds when I retired 3 years ago.
I will rebalance, but other than that .... just watching.
I will not jeopardize my Wednesday meatloaf dinner at the local diner.

burt
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JoMoney
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Re: For those waiting for a 'correction' ...

Post by JoMoney »

burt wrote: Sat Oct 27, 2018 5:26 pm...I will not jeopardize my Wednesday meatloaf dinner at the local diner.
That sounds delicious :beer
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stocknoob4111
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Re: For those waiting for a 'correction' ...

Post by stocknoob4111 »

i'm not waiting to get in, i'm happy with my current allocation but i'm slightly overweight bonds at 24%, IF the market declines significantly I would take the opportunity to reduce my bonds to 10% where I want my allocation to be... I know some may regard this technically as timing but i'm ok with this strategy. I think the downside risk at this point is much much greater than any upside but I do understand we have no idea where it goes from here. If markets go up I still have enough invested to capture a bulk of those gains.

Thanks to my 24% allocation in bonds my losses this month have not been as extreme as they could've been, i'm down about 6.5% from all time highs despite insane losses in International over the course of the year. I'm happy with that.
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Re: For those waiting for a 'correction' ...

Post by TropikThunder »

80-somethings posts, and maybe 3 of them from livesoft's intended audience. :P

If I may be so bold, I believe this was directed at those who have been sitting on cash "waiting for the correction" to get back in, not those who never considered sitting on the sidelines in the first place.

But I could be wrong ......
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Re: For those waiting for a 'correction' ...

Post by lostdog »

Months ago I removed the Vanguard application from my Pixel 2 phone. We use automatic contributions to fund our Roth IRA's at Vanguard. Slowly I am working on not looking at our balances.

Stay the course, look at your balances only when needed and try to automate the process.
Stocks-80% || Bonds-20% || Taxable-VTI/VXUS || IRA-VT/BNDW
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market timer
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Re: For those waiting for a 'correction' ...

Post by market timer »

I've had essentially a 0% equity allocation most of 2018.
Added a 25% position to international stocks over the past couple months.
Added a 10% position to US equities on the latest downturn by selling put options.
Will continue to add to these positions if the correction intensifies.

As ever, my crystal ball is cloudy. I believe this is a great time to earn money but a lousy time to invest it. As the pendulum swings back to favoring investment, perhaps in the next two years, I'd love to time my exit from the formal labor market with a well-timed increase in risk exposure.
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CyclingDuo
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Re: For those waiting for a 'correction' ...

Post by CyclingDuo »

buccimane wrote: Fri Oct 26, 2018 8:09 am
CyclingDuo wrote: Thu Oct 25, 2018 10:00 am In our case we simply have things set up for our contributions to go in automatically twice a month for the tax deferred plans, and weekly for taxable. Year in and year out no matter what the market is doing. Pretty much do the same when it comes to reinvesting dividends as well, as they get reinvested automatically when they are paid each quarter/month/bi-annual depending on the security.
This is great. I had no idea Vanguard offered this automatic investing feature. Just set mine up so I don't need to look at my balance weekly. :sharebeer
In our opinion - excellent choice, buccimane!

If it is indeed true that market timing is the ubiquitous killer of portfolio performance return - as shown in this JP Morgan graph of returns for a period that included the dot com bubble pop and the real estate bubble pop from 1998 - 2017 where the orange color in the chart is the average investor return based on behavioral investing mistakes of actively timing - we certainly want to stick to the automatic method of delivery for our savings and AA for our remaining working years.

Image

Salary deductions for our deferred plans, automatic reinvested dividends, a weekly automatic contribution to our taxable account, and a weekly amount into the vacation slush fund accomplishes that automation for us.

The only non-automated contributions we make would be any IRA contributions as we always have to wait until doing our taxes to see if we do or do not qualify in any given tax year to contribute. This makes it a "once a year" automation so to speak. The other would be occasional extra or additional side gig money that I/we make and choose to add to taxable.

Nothing like a built in automated DCA program that lasts for 30-40 years regardless of the markets moves along the way! That being said, we don't want to gloss over the reality that 2000-03 and 2007-09 were not trying times for all of us. They questioned the intestinal fortitude of most. At least in our case, the knowledge during the 2007-09 time frame that we were still contributing on automatic pilot at lower and lower prices each and every week/month kept us optimistic that the risk/reward would eventually pay off. Ditto for the 12 corrections we have had since 2009 as automation seemingly has kept us on track.

The road is never smooth...
https://www.yardeni.com/pub/sp500corrbear.pdf
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CarpeDiem22
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Re: For those waiting for a 'correction' ...

Post by CarpeDiem22 »

I believe unless P/Es are below their past long term average, equity is not on bargain. I'm well below my target equity allocation (as I started with almost zero equity couple of years back) but have been consistently increasing equity allocation by monthly contributions all going to equity. Another reason I am not doing lumpsum to reach target equity allocation is because if stock markets took a big dip, I won't have enough liquid bonds to re-balance (part of my retirement fixed income allocation is not liquid for country-specific reason).

If stocks were to go below their long term valuations, I would lumpsum to my target equity allocation. So, yes, I'm waiting for that to happen.
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livesoft
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Re: For those waiting for a 'correction' ...

Post by livesoft »

TropikThunder wrote: Sat Oct 27, 2018 7:33 pm 80-somethings posts, and maybe 3 of them from livesoft's intended audience. :P

If I may be so bold, I believe this was directed at those who have been sitting on cash "waiting for the correction" to get back in, not those who never considered sitting on the sidelines in the first place.

But I could be wrong ......
You are not wrong.
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Akitagrrl
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Re: For those waiting for a 'correction' ...

Post by Akitagrrl »

pdog2006 wrote: Thu Oct 25, 2018 8:09 am Waiting is not the way of the Boglehead. I just placed my order for my Roth trade. I do that every other Thursday no matter the market. Stick to your plan.
Encouraging words, pdog. Thanks.
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Re: For those waiting for a 'correction' ...

Post by Akitagrrl »

flyingaway wrote: Thu Oct 25, 2018 10:29 am
livesoft wrote: Thu Oct 25, 2018 6:00 am For those waiting for a 'correction' ...

Are you done waiting?

Why or why not?
I did not have much patience, I bought on Tuesday, before the big drop on Wednesday.
Baa haa haa. Yeah. We decided we'd been sissies long enough after 15 years of plugging $ in savings account, went ahead and put $900k of savings in Vanguard stock and bond index funds... Sept. 25. Oy. But as has been said, a good plan does not become a bad plan because of unlucky timing. Gonna stay the course.
Namashkar
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Re: For those waiting for a 'correction' ...

Post by Namashkar »

livesoft wrote: Thu Oct 25, 2018 6:00 am For those waiting for a 'correction' ...

Are you done waiting?

Why or why not?
I am waiting for a 25% drop from the S&P 500 high this year and then I will start buying TSM with DCA. I went from 60/40 S/B to 50/30/20 S/B/MM about a month ago. It may not drop 25% and in that case I will miss the opportunity.
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livesoft
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Re: For those waiting for a 'correction' ...

Post by livesoft »

I saw a report that the S&P500 was down 10% from its high back in September 2018. A chart shows the Vanguard S&P500 index fund VFIAX has hit this 10%-off level 3 times since then on 10/29, 11/25, and 12/07. Another report wrote that more than half of the S&P500 companies were down 20% or more, so bear market territory for them.

I suspect that those waiting for a 'correction' won't use this correction to stop waiting. Or will they?
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HomerJ
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Re: For those waiting for a 'correction' ...

Post by HomerJ »

ge1 wrote: Fri Oct 26, 2018 9:14 amBecause I didn't expect the market to go up as much as it did.
No one can predict the market. Until you learn that, you will likely do poorly investing. Of course, you could get lucky. Not a great plan, but certainly possible.
I checked this week and over the last 5 years my CAGR is exactly the same as if I had been fully invested all this time as per my target asset allocation, but with much less risk, so at this point by strategy has worked out fine.
You're doing the math wrong. Stock market has made over 9% a year in the last 5 years, even after the recent drop.
"The best tools available to us are shovels, not scalpels. Don't get carried away." - vanBogle59
pdavi21
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Re: For those waiting for a 'correction' ...

Post by pdavi21 »

If you were waiting 1-2 years or less...that's the ONLY way you could be done waiting for US stocks. Otherwise, you lost big time and left money on the table.
"We spend a great deal of time studying history, which, let's face it, is mostly the history of stupidity." -Stephen Hawking
ge1
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Re: For those waiting for a 'correction' ...

Post by ge1 »

HomerJ wrote: Tue Dec 11, 2018 8:54 am
ge1 wrote: Fri Oct 26, 2018 9:14 amBecause I didn't expect the market to go up as much as it did.
No one can predict the market. Until you learn that, you will likely do poorly investing. Of course, you could get lucky. Not a great plan, but certainly possible.
I checked this week and over the last 5 years my CAGR is exactly the same as if I had been fully invested all this time as per my target asset allocation, but with much less risk, so at this point by strategy has worked out fine.
You're doing the math wrong. Stock market has made over 9% a year in the last 5 years, even after the recent drop.
I am capable of doing the math, thanks. I said “as per my target asset allocation” which you don’t know. Also quoting just the performanceof the US market says nothing about the performance of a diversified portfolio.
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HomerJ
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Re: For those waiting for a 'correction' ...

Post by HomerJ »

ge1 wrote: Tue Dec 11, 2018 8:05 pm
HomerJ wrote: Tue Dec 11, 2018 8:54 am
ge1 wrote: Fri Oct 26, 2018 9:14 amBecause I didn't expect the market to go up as much as it did.
No one can predict the market. Until you learn that, you will likely do poorly investing. Of course, you could get lucky. Not a great plan, but certainly possible.
I checked this week and over the last 5 years my CAGR is exactly the same as if I had been fully invested all this time as per my target asset allocation, but with much less risk, so at this point by strategy has worked out fine.
You're doing the math wrong. Stock market has made over 9% a year in the last 5 years, even after the recent drop.
I am capable of doing the math, thanks. I said “as per my target asset allocation” which you don’t know. Also quoting just the performanceof the US market says nothing about the performance of a diversified portfolio.
You're stating you weren't invested in stocks up to your target asset allocation during this recent bull market, but you did just as well as you would have if you had invested in stocks.

With much less risk.

So it doesn't matter what your target AA was... If your target was 50% stocks, and you only had 20% stocks, and 30% something else, or 0% stocks and 50% something else, I doubt your returns were as good as if you invested in stocks.

With much less risk.

So what investment were you in the past 5 years that returned 9% or more with much less risk?
"The best tools available to us are shovels, not scalpels. Don't get carried away." - vanBogle59
ge1
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Re: For those waiting for a 'correction' ...

Post by ge1 »

I'll try one more time HomerJ, but I don't get the impression you are actually listening or reading my answers and rather just want to make your overall point.

Anyway, here it goes: My target allocation is
10% Cash
40% Bonds
20% US stocks (split 2/3 total market and 1/3 small cap value)
20% International stocks (split 2/3 developed and 1/3 emerging)
10% Other (mix of Energy, Precious Metals, REITs, EM Bonds, High Yield)

That mix returned 4.1% annually over the last 5 years.

My own portfolio return is exactly 4.1% as well, even though my allocation to US stocks was on average clearly less than 10%, probably closer to 5%.

How is it possible that the returns were the same? I traded in and out of US blue chips several times and made timely bets in other areas as well.

Now, you will tell me I could have had a much better return investing more heavily in US stocks - and that is true, but my need to take risk is low and I'm perfectly happy with a 4% annual return.
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Re: For those waiting for a 'correction' ...

Post by finagle »

I have written my "IPS" for 2019. Inspired by yesterday's Vanguard 2019 outlook webinar thing.
tl;dr: I will invest ~60% of my investable monies into stock indexes, each month.
  • I have $3500 to invest, every 4 weeks
  • I WILL invest $2200 into stock indexes, every 4 weeks
Here's my initial set point to buy extra, unscheduled:
- DJIA 23,000
- S&P 2500
- FTIHX (Fido's Total Intl) $10.25.


In the throes of the recession, I will make lower & lower set points. "Average down" or whatever it's called.
I will get more limit order/ set point ideas from Reddit's r/investing, as I'm sure no one will play with me here.

Inspired by yesterday's Vanguard 2019 outlook webinar thing, I can't do the bogleheads thing of "maxx Roth IRA by 3rd Jan, all into VTSAX duhh".

No bonds. I'm 28 (but plan to FI at 34). Now is a bad time to buy into the bond market. I don't regard bonds as an "amazing cushioning pillow" like most here, that's what Ally Bank 2% apy is for.
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HomerJ
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Re: For those waiting for a 'correction' ...

Post by HomerJ »

ge1 wrote: Wed Dec 12, 2018 3:47 pm I'll try one more time HomerJ, but I don't get the impression you are actually listening or reading my answers and rather just want to make your overall point.

Anyway, here it goes: My target allocation is
10% Cash
40% Bonds
20% US stocks (split 2/3 total market and 1/3 small cap value)
20% International stocks (split 2/3 developed and 1/3 emerging)
10% Other (mix of Energy, Precious Metals, REITs, EM Bonds, High Yield)

That mix returned 4.1% annually over the last 5 years.

My own portfolio return is exactly 4.1% as well, even though my allocation to US stocks was on average clearly less than 10%, probably closer to 5%.

How is it possible that the returns were the same? I traded in and out of US blue chips several times and made timely bets in other areas as well.

Now, you will tell me I could have had a much better return investing more heavily in US stocks - and that is true, but my need to take risk is low and I'm perfectly happy with a 4% annual return.
My confusion was that you said the part of your portfolio that wasn't in stocks matched the 9% return of stocks "with much less risk".

I certainly believe that you could match the 9% returns of stocks, but I couldn't think of any asset that you could do that "with much less risk."

Trading in and out of blue chips, and timely bets in "other areas" is risky, far more than a buy and hold in a total stock fund.

If your need to take risk is low, and you're perfectly happy with a 4% annual return, I highly recommend that you just stick with 20% in stocks. That is already a very very conservative allocation. Making trades and bets is less conservative and more risky for someone whose need to take risk is low.

Good luck to you! I mean that sincerely.
"The best tools available to us are shovels, not scalpels. Don't get carried away." - vanBogle59
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Re: For those waiting for a 'correction' ...

Post by Waiting_for_Godot »

finagle wrote: Wed Dec 12, 2018 6:02 pm
No bonds. I'm 28 (but plan to FI at 34). Now is a bad time to buy into the bond market. I don't regard bonds as an "amazing cushioning pillow" like most here, that's what Ally Bank 2% apy is for.
My first foray into 'Taxable' investing came in June 2016 when I plopped a bit of funds into VCAIX, the CA intermediate muni... lost my nerve at the market bottom of the time, Dec 3rd, and have been in either rewards checking or Ally accounts ever since. Given that I don't really know what I want to do with this specific pile of funds, I justify getting 2-2.5% guaranteed. My current dilemma is resisting the urge to drastically change the 401k allocation.

Once I complete an upcoming career change, I'll up my 401k contribution beyond the match amount, but I seem to be much more risk-averse with taxable.
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Re: For those waiting for a 'correction' ...

Post by brandonp311 »

I’m fairly new to the Boglehead world but I do understand that sitting in cash (or cash equivalents) waiting for the dip is not the Bogle way. Since there is of course a Bogle bias on this forum I would imagine the OP would expect a biased answer as it seems they have gotten.

With that said buying the dip occurs naturally through rebalancing to your target AA or am I mistaken? When my 60/40 AA become 54/46 and I rebalance I either 1. sold my overpriced bonds to buy equities or 2. Sold stable bonds to buy discounted equities.

If I’m correct with that train of thought then what’s the concensus on rebalancing frequency?
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HomerJ
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Re: For those waiting for a 'correction' ...

Post by HomerJ »

brandonp311 wrote: Wed Dec 12, 2018 8:36 pm I’m fairly new to the Boglehead world but I do understand that sitting in cash (or cash equivalents) waiting for the dip is not the Bogle way. Since there is of course a Bogle bias on this forum I would imagine the OP would expect a biased answer as it seems they have gotten.

With that said buying the dip occurs naturally through rebalancing to your target AA or am I mistaken? When my 60/40 AA become 54/46 and I rebalance I either 1. sold my overpriced bonds to buy equities or 2. Sold stable bonds to buy discounted equities.

If I’m correct with that train of thought then what’s the concensus on rebalancing frequency?
You are correct.

I usually check my portfolio once a month, and if I'm 5% off, then I sell/buy to get back to my 50/50. So 54/46, I wouldn't do anything. 57/43 I would rebalance back to 50/50.
"The best tools available to us are shovels, not scalpels. Don't get carried away." - vanBogle59
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