This market just scares me...

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Topic Author
CrazyTexan
Posts: 8
Joined: Thu Jan 31, 2019 3:51 pm

This market just scares me...

Post by CrazyTexan » Thu Jun 06, 2019 9:41 am

Hey guys,

I'm going to sound a little like an idiot here, but here goes...

Over the last six months, I'm made it priority to take a more active role in my investments. I've
- Read the two Bogleheads investing books
- Decided on a 60/40 AA
- Moved all my money from Betterment to Fidelity to start managing it myself.

Right now, I have about a 70/30 Stock/Bond mix.

My 401K is in the standard Fidelity 3-Fund portfolio. (Brokeragelink)
My taxable account is a mix of Vanguard Equity ETFs left over from Betterment.

Recently, I had stock vest from my employer (which I liquidated), and I realized it's a great time to do a re-balance. This involves:
- Selling off most of the equity in my 401k and converting it to the Fidelity US Bond Index (FXNAX)
- Taking the cash from my taxable account (from liquidating my employer stock) and investing it in Fidelity Total Market (FSKAX)

--
But once I liquidate what's in the 401k, with the 401k and taxable cash in hand, I find myself overcome with the desire to just either:
- Leave everything in cash for a while or
- Drop everything into bonds for a while.

A while = a year or two. More honestly, my brain is saying "until that correction that's right around the corner hits, it can't be long now..."

I look at the graphs of market growth over the last 10 years and they just... scare the shit out of me. I know Market Timing is insane, I know I can't predict the future, I know that even if there's going to be a correction, there's no guarantee that it'll be tomorrow, next year, or even two years from now, but... This is an insane, insane bull run by anyone's standards. Even if I miss the top, I'd rather hang out for a while to be protected against the bottom...

I know this flies in the face of "pick your AA and stick with it", but - the idea of taking any of that cash and investing it in equity right now just FREAKS ME OUT.

Thoughts...

lakpr
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Joined: Fri Mar 18, 2011 9:59 am

Re: This market just scares me...

Post by lakpr » Thu Jun 06, 2019 9:47 am

Sounds like you are giving in to the temptations of market Timing sirens. Just stay the course. If 70:30 is scaring you, perhaps 60:40 (your stated target allocation) and may be even 50:50 is the right choice for you to calm your nerves a bit.

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Tycoon
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Re: This market just scares me...

Post by Tycoon » Thu Jun 06, 2019 9:49 am

Purchase treasuries or CDs.
Emotionless, prognostication free investing. Ignoring the noise and economists since 1979. I see the world as it is; not how I wish it to be.

SovereignInvestor
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Re: This market just scares me...

Post by SovereignInvestor » Thu Jun 06, 2019 9:50 am

Look at the S&P over the last 12 years instead of 10. Barely 7% annualized returns since 2007, below normal.

2009-19 looks insane bevause the starting point, 2009, saw the S&P at a level 20% or so lower than it was 9 years earlier (in year 2000)..something that is among the worst beaten down levels for.stocks in history.

It sort of.is market.timing bevause 2009 to.2019 returns looks amazing but 2007 to 2019 returns are barely average and 2000 to 2019 returns are poor.
Last edited by SovereignInvestor on Thu Jun 06, 2019 9:50 am, edited 1 time in total.

Bir48die
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Re: This market just scares me...

Post by Bir48die » Thu Jun 06, 2019 9:50 am

How old are you? If you're younger than mid 50's what is your concern? Markets rise and fall. Retirement investing is a long term strategyl. If you're just getting started investing on your own why are you trying to time the market?

Just do some reallocation and stick with the plan. Unless you're going to tap your funds in the next ten years leave it along otherwise. If the market falls, double down on your contributions if you can. Do more after tax investing. Ride the wave back up when it happens.

If you're young stick with a sound strategy and when your portfolio is 40% down stop looking at your statements. Believe in the market.

I'm old enough to have seen some pretty tough market corrections and recessions. Just treat them as cycles.

MotoTrojan
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Re: This market just scares me...

Post by MotoTrojan » Thu Jun 06, 2019 9:52 am

SovereignInvestor wrote:
Thu Jun 06, 2019 9:50 am
Look at the S&P over the last 12 years instead of 10. Barely 7% annualized returns since 2007, below normal.

2009-19 looks insane bevause the starting point, 2009, saw the S&P at a level 20% or so lower than it was 9 years earlier (in year 2000)..something that is among the worst beaten down levels for.stocks in history.

It sort of.is market.timing bevause 2009 to.2019 returns looks amazing but 2007 to 2019 returns are barely average and 2000 to 2019 returns are poor.
This. Think of the last 10 years as a prolonged version of what happened after the recent December plunge.

jebmke
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Re: This market just scares me...

Post by jebmke » Thu Jun 06, 2019 9:52 am

Bir48die wrote:
Thu Jun 06, 2019 9:50 am
If you're young stick with a sound strategy and when your portfolio is 40% down stop looking at your statements. Believe in the market.
If you ignore your statements (and allocation), you may miss the re-balance points. But I agree, one should not obsess.
When you discover that you are riding a dead horse, the best strategy is to dismount.

Mister A
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Re: This market just scares me...

Post by Mister A » Thu Jun 06, 2019 9:54 am

DCA. If you're this stressed about the next year, break it up into 12 installment purchases.

retiredjg
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Re: This market just scares me...

Post by retiredjg » Thu Jun 06, 2019 9:55 am

CrazyTexan wrote:
Thu Jun 06, 2019 9:41 am
But once I liquidate what's in the 401k, with the 401k and taxable cash in hand, I find myself overcome with the desire to just either:
- Leave everything in cash for a while or
- Drop everything into bonds for a while.
Unfortunately, This could (probably would) be an incredibly poor choice
.
A while = a year or two. More honestly, my brain is saying "until that correction that's right around the corner hits, it can't be long now..."
People have been saying that for at least 7 or 8 years, maybe more. If they followed that instinct, they would have missed a a very lucrative return.

Thoughts...
I'm not sure you have the emotional make up right now to manage your own portfolio. Your post and expecially the words you used in your post indicate a lot of fear. The big investing mistakes are generally made as a result of either fear or greed.

I think you should turn your money over to Vanguard's Personal Advisory Service for a year or two rather than sit on the sidelines for a year or two.

Another alternative is to move it all to something like 50/50 and sitting there for awhile. It might be a mistake but is unlikely to be a fatal mistake.

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Psyayeayeduck
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Re: This market just scares me...

Post by Psyayeayeduck » Thu Jun 06, 2019 9:55 am

There have been many "financial experts" that said the same thing since 2012. All of them were wrong.

https://www.flickr.com/photos/7166535@N05/44364009251/

Now don't get me wrong, one day someone will be right and will be hailed a genius and use that as their platform to call on the next correction/recession/depression as their popularity rises. So that's why you diversity, ensure you have a well-funded emergency fund, and hold some bonds to smooth out the rides while keeping your skill set up-to-date. It allows you minimize those losses if and when they happen. Mind you this is not just down markets but any kind of emergency such as job loss, medical emergency, and the such. Even in the days of good markets, people have bad days that can test their financial stance.

And you have to be right twice -- when to get out and when to get in. Most people can't meet the first one let alone the second one.
Last edited by Psyayeayeduck on Thu Jun 06, 2019 9:57 am, edited 2 times in total.

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ruralavalon
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Re: This market just scares me...

Post by ruralavalon » Thu Jun 06, 2019 9:55 am

But once I liquidate what's in the 401k, with the 401k and taxable cash in hand, I find myself overcome with the desire to just either:
- Leave everything in cash for a while or
- Drop everything into bonds for a while.

A while = a year or two. More honestly, my brain is saying "until that correction that's right around the corner hits, it can't be long now..."
The market "scares you", that is very natural. Don't let emotions rule your brain and decide your investing plan for you.

Market timing is a fool's errand. No one can successfully do that consistently. Besides guessing when the market top has occurred, you have to guess again when the bottom has occurred in order to reenter the market. Otherwise you miss the bargain prices at the market bottom, and miss the benefit of the recovery.

Holding on to cash while you wait for a better time to invest is might very well give you a negative real return net of inflation. I think it is better to invest in something with the prospect of a positive real return. Market timing (waiting for a good time to buy) is a fool's errand. No one can successfully do that consistently. If you wait for a good day to buy, you will never know if the next day, or the next week, or the next month, or even the next year might be an even better time to buy.
"Everything should be as simple as it is, but not simpler." - Albert Einstein | Wiki article link:Getting Started

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mhadden1
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Re: This market just scares me...

Post by mhadden1 » Thu Jun 06, 2019 9:57 am

CrazyTexan wrote:
Thu Jun 06, 2019 9:41 am

the idea of taking any of that cash and investing it in equity right now just FREAKS ME OUT.

Thoughts...
This is mostly retirement money, right? Or money you won't use for a long time? If so, between now and then there will be periods where your balances will go down, sometimes by a lot. Better get used to the idea.

If you need the money sooner then yes, cash or bonds.
Oh I can't, can I? That's what they said to Thomas Edison, mighty inventor, Thomas Lindberg, mighty flyer,and Thomas Shefsky, mighty like a rose.

ohai
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Re: This market just scares me...

Post by ohai » Thu Jun 06, 2019 9:59 am

It's always going to be scary. If you don't want to deal with volatility, there are other asset classes that are more stable but have lower potential returns. You don't HAVE to buy stocks, you know.
Last edited by ohai on Thu Jun 06, 2019 10:07 am, edited 1 time in total.

SovereignInvestor
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Re: This market just scares me...

Post by SovereignInvestor » Thu Jun 06, 2019 10:00 am

In 2000 a true time to be concerned, the S&P had insane 10 year returns but was already at all.time highs 10Years earlier in 1990 and had run up a lot from 1980-1990.

Here the 2009-2019 returns are amazing but 2009 was a super low.point.

SovereignInvestor
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Re: This market just scares me...

Post by SovereignInvestor » Thu Jun 06, 2019 10:02 am

Keep in mind the buyback run rate of the S&P is about 3.5%, and dividend yield is 2.0%....so total yield is around 5.5%, so if you DRIP then a lower stock market helps you compound wealth quicker if you don't need money for a very long time. As a young investor nothing is better than having market drop to compound the yield at.higher rates.

aristotelian
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Re: This market just scares me...

Post by aristotelian » Thu Jun 06, 2019 10:08 am

You can change your allocation without market timing as your risk tolerance changes. A windfall can certainly change your need, willingness, and ability to take risk.

Keep in mind that bond yields are as low as they have been in 2+ years. You are not going to get much return by going into bonds right now.

Topic Author
CrazyTexan
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Re: This market just scares me...

Post by CrazyTexan » Thu Jun 06, 2019 10:09 am

To answer a couple questions:

- How old am I?
39

- Is this retirement money?
Ostensibly, yes.

- What's my retirement time horizon?
That's a sticky point. I have a physical condition that may make it difficult for me to work as long as others do, but it's hard to know when things will degenerate to the point where it's a real problem. I'd love to get to an "I can retire if I need to" point by 45, but that's wishful thinking. 50 or 55 might be possible, depending on how my career progresses. But I don't feel like a young person anymore, now that I'm 20 years into my career, and in tech, I'm the old guy around the office. But... by the numbers, I should have some time.

- Do I have the emotional makeup to manage my own portfolio?
Perhaps, Perhaps not. But I think that one way or the other, it's my responsibility to do it for my family.

- To the person who said: If so, between now and then there will be periods where your balances will go down, sometimes by a lot. Better get used to the idea.
I hear you. I need to teach myself that the idea that times will always be good, if I'm just *smart enough* is a fantasy. Winter is coming.

retiredjg
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Re: This market just scares me...

Post by retiredjg » Thu Jun 06, 2019 10:15 am

CrazyTexan wrote:
Thu Jun 06, 2019 10:09 am
- Do I have the emotional makeup to manage my own portfolio?
Perhaps, Perhaps not. But I think that one way or the other, it's my responsibility to do it for my family.
Now think about what you just said. If you fail (by doing something like going to cash) how will you have fulfilled your responsibility? Better to let a low cost advisor help you through this rough patch and take the reins back over when you are ready.

BeneIRA
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Re: This market just scares me...

Post by BeneIRA » Thu Jun 06, 2019 10:17 am

Nobody knows anything. This article from January 2016 still gets me: https://www.theguardian.com/business/20 ... economists. Obviously the next three years did not experience a market crash.

The answer for you is to Dollar Cost Average. Break the investment up into 12, 18, 24, whatever number of installments and invest if on the same day each month. If you are so convinced that something cataclysmic will happen in the next six to twelve months, then hold onto your money but write down and promise yourself that after that time, you will invest the money. No going back on your word.

bizkitgto
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Re: This market just scares me...

Post by bizkitgto » Thu Jun 06, 2019 10:27 am

Even though this is one of the longest bull markets, remember that it's also one of the weakest bull markets in history. We could still have a lot of room to grow.
Keep it simple: 20% BND, 50% VTI and 30% VXUS

new2bogle
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Re: This market just scares me...

Post by new2bogle » Thu Jun 06, 2019 10:30 am

bizkitgto wrote:
Thu Jun 06, 2019 10:27 am
Even though this is one of the longest bull markets, remember that it's also one of the weakest bull markets in history. We could still have a lot of room to grow.
Could explain what you mean by this?

asif408
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Re: This market just scares me...

Post by asif408 » Thu Jun 06, 2019 10:31 am

CrazyTexan,

You might be comforted to know not all markets have gone up since 2007. Here is a graph for you: http://quotes.morningstar.com/chart/etf ... 2%3A955%7D

Developed ex-US, emerging markets, gold miners, and energy stocks are all still below their 2007 highs. Why not invest more money in those?

bizkitgto
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Re: This market just scares me...

Post by bizkitgto » Thu Jun 06, 2019 10:52 am

new2bogle wrote:
Thu Jun 06, 2019 10:30 am
bizkitgto wrote:
Thu Jun 06, 2019 10:27 am
Even though this is one of the longest bull markets, remember that it's also one of the weakest bull markets in history. We could still have a lot of room to grow.
Could explain what you mean by this?
Growth in the US economy has persisted for ~ 10 years now, which has resulted in the second longest expansion in the post war era. However, this GDP growth has also been the shallowest, with an annualized real growth rate of only 2.0%. See for yourself, just type in "us gdp growth" in google search to see the chart.
Keep it simple: 20% BND, 50% VTI and 30% VXUS

stocknoob4111
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Re: This market just scares me...

Post by stocknoob4111 » Thu Jun 06, 2019 10:59 am

CrazyTexan wrote:
Thu Jun 06, 2019 9:41 am
This is an insane, insane bull run by anyone's standards.
It isn't an insane bull run, FAR from it... the markets have gone NOWHERE in the last 18 months, my portfolio has a ZERO return since Jan 2018 and a negative return inflation adjusted and that is with having 18% in bonds which have rallied like crazy recently. The performance of equities has just sucked and it's just stalling.

For the record, the S&P500 is below the levels of Jan 2018. Small caps are flirting with bear market territory. What insane bull run are you talking about??? :?

Another fact, the CAGR of the Total Stock Market since the prior peak 2007 is 7.7% which is hardly insane at all... if you take it from 2000 then it's even worse at 5.6%

So no, the market has performed badly for the last 2 decades and we actually need a massive run up from this point to return to historical averages.

Rus In Urbe
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Re: This market just scares me...

Post by Rus In Urbe » Thu Jun 06, 2019 11:07 am

retiredjg wrote:
I'm not sure you have the emotional make up right now to manage your own portfolio. Your post and expecially the words you used in your post indicate a lot of fear. The big investing mistakes are generally made as a result of either fear or greed.
I think you should turn your money over to Vanguard's Personal Advisory Service for a year or two rather than sit on the sidelines for a year or two.
And above, more advice from retiredjg. Excellent advice.

Fear & greed are the enemies of sound investing. They are also what drive the broader market. Learning to watch the market while not participating in the fear/greed is essential. It's clear from what the OP wrote, that that will be a very hard lesson.

So, OP, use your head and put everything on auto-pilot with a Personal Advisory Service for a while with some modest AA (60-40 or 50-50) until you get the hang of this. Also don't think too much about your money. That way lies madness. Just let it accumulate. The most important factor in amassing wealth is----saving. So, spend all your nervous energy ploughing as much as you can into your stash. Guaranteed to make you FI over time.

Good luck to you!
I'd like to live as a poor man with lots of money. ~Pablo Picasso

sf_tech_saver
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Re: This market just scares me...

Post by sf_tech_saver » Thu Jun 06, 2019 11:15 am

There is absolutely nothing wrong with a 50/50 portfolio. That's how I invest as I don't need stellar growth to get to retirement goals. When you are 60/40 or 50/50 you can rebalance into a monster correction IF/WHEN that even happens.

Remember that economic growth is the real leverage you are looking for in index investing. You aren't trying to appropriately time asset pricing/momentum at all.

Mentally this has helped me as I get equally excited to buy/own both stocks and bonds. The result of it all is that at most I'm deciding to be 45/55% stocks bonds at any given moment as income arrives and I invest chucks.
VTI is a modern marvel

Cody6136
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Re: This market just scares me...

Post by Cody6136 » Thu Jun 06, 2019 11:31 am

CrazyTexan wrote:
Thu Jun 06, 2019 9:41 am
Hey guys,

I'm going to sound a little like an idiot here, but here goes...

Over the last six months, I'm made it priority to take a more active role in my investments. I've
- Read the two Bogleheads investing books
- Decided on a 60/40 AA
- Moved all my money from Betterment to Fidelity to start managing it myself.

Right now, I have about a 70/30 Stock/Bond mix.

My 401K is in the standard Fidelity 3-Fund portfolio. (Brokeragelink)
My taxable account is a mix of Vanguard Equity ETFs left over from Betterment.

Recently, I had stock vest from my employer (which I liquidated), and I realized it's a great time to do a re-balance. This involves:
- Selling off most of the equity in my 401k and converting it to the Fidelity US Bond Index (FXNAX)
- Taking the cash from my taxable account (from liquidating my employer stock) and investing it in Fidelity Total Market (FSKAX)

--
But once I liquidate what's in the 401k, with the 401k and taxable cash in hand, I find myself overcome with the desire to just either:
- Leave everything in cash for a while or
- Drop everything into bonds for a while.

A while = a year or two. More honestly, my brain is saying "until that correction that's right around the corner hits, it can't be long now..."

I look at the graphs of market growth over the last 10 years and they just... scare the shit out of me. I know Market Timing is insane, I know I can't predict the future, I know that even if there's going to be a correction, there's no guarantee that it'll be tomorrow, next year, or even two years from now, but... This is an insane, insane bull run by anyone's standards. Even if I miss the top, I'd rather hang out for a while to be protected against the bottom...

I know this flies in the face of "pick your AA and stick with it", but - the idea of taking any of that cash and investing it in equity right now just FREAKS ME OUT.

Thoughts...

Well. Damn. You are in the same place as me, but much much younger. You've spent 6 months learning about managing your money and lo and behold, you are using terms like "insane" "scare the sh*t" and "freaks."

Calm down. Slow down. Breathe, for Crissakes. Think of the boys at D-Day for a bit of perspective.

Read some of my over-heated posts, beginning with "How Did it Come to This." Or another one of my recent beauties ...a thread called What, If Anything, do I owe this guy?"

Learning about your money is like learning anything else and comes in stages. Which, by the way, are not usually measured in months or weeks.

Learning typically goes like this, in a few stages. And I'm painting with a broad brush :

*Unconscious incompetence stage. You don't know, yet you're not aware of your own ignorance. You say things like "How hard can this be?" Or "who cares? I don't have much money anyway. Or, more money, more problems." This is where many people live, much of the time and often for their entire lives. Ignorance is bliss.

*Conscious incompetence stage: Now you're aware that you're ignorant and this is not a pleasant state. You say things like "Oh, my God! I lost so much TIME! This is hard, painful and regret-filled. And I know nothing!" At this point the consciousness of your own incompetence can trigger fear and for some people this is the time to flee --into denial, anger and a wish that they had not discovered the problem at all. At this stage, you may ask for help and get it -- from the wrong kind of person. This can be the point of maximum danger.

Conscious competence stage: You're beginning to "get it." And you know it. You take a class, read a book, post here, talk to friends. You begin to feel a hint of mastery. You make mistakes, but they are more and more sophisticated mistakes. You feel thrilled that you're beginning to "steer" but it is very effortful and takes focus that can be exhausting. You're often preoccupied. Ups and downs characterize this stage of the journey and you may hang out here for a long, long time.

Unconscious competence stage: Your skill level is so high that you can operate nearly without thinking. You make it look easy. You are dialed in and things flow. You can give advice. Mentor. You're like Wayne Gretzky, the hockey player who didn't skate to where the puck was, but where it was going to be.

I think I am currently at the painful second stage. I'm losing sleep as I adjust from an asset allocation that would make a 30 year old blush. But I am glad that I began this journey. It is potentially one of the most satisfying of my life. I think you may come to agree. The fear is real but it will not be permanent.

Slow down. Then slow down some more.

You can do this.

In addition, I think you may benefit from learning a bit about "behavioral finance." I thought it was hokey at first. It's not. Reading about how your emotions affect your finance may be a good use of your time. Start with The Behavioral Investor. Daniel Crosby. Bernstein covers the same ground with great clarity in the Four Pillars as well, with a lot less humbug.

I wish you the very best.

Cody

Cody6136
Posts: 262
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Re: This market just scares me...

Post by Cody6136 » Thu Jun 06, 2019 11:32 am

Cody6136 wrote:
Thu Jun 06, 2019 11:31 am
CrazyTexan wrote:
Thu Jun 06, 2019 9:41 am
Hey guys,

I'm going to sound a little like an idiot here, but here goes...

Over the last six months, I'm made it priority to take a more active role in my investments. I've
- Read the two Bogleheads investing books
- Decided on a 60/40 AA
- Moved all my money from Betterment to Fidelity to start managing it myself.

Right now, I have about a 70/30 Stock/Bond mix.

My 401K is in the standard Fidelity 3-Fund portfolio. (Brokeragelink)
My taxable account is a mix of Vanguard Equity ETFs left over from Betterment.

Recently, I had stock vest from my employer (which I liquidated), and I realized it's a great time to do a re-balance. This involves:
- Selling off most of the equity in my 401k and converting it to the Fidelity US Bond Index (FXNAX)
- Taking the cash from my taxable account (from liquidating my employer stock) and investing it in Fidelity Total Market (FSKAX)

--
But once I liquidate what's in the 401k, with the 401k and taxable cash in hand, I find myself overcome with the desire to just either:
- Leave everything in cash for a while or
- Drop everything into bonds for a while.

A while = a year or two. More honestly, my brain is saying "until that correction that's right around the corner hits, it can't be long now..."

I look at the graphs of market growth over the last 10 years and they just... scare the shit out of me. I know Market Timing is insane, I know I can't predict the future, I know that even if there's going to be a correction, there's no guarantee that it'll be tomorrow, next year, or even two years from now, but... This is an insane, insane bull run by anyone's standards. Even if I miss the top, I'd rather hang out for a while to be protected against the bottom...

I know this flies in the face of "pick your AA and stick with it", but - the idea of taking any of that cash and investing it in equity right now just FREAKS ME OUT.

Thoughts...

Well. Damn. You are in the same place as me, but much much younger. You've spent 6 months learning about managing your money and lo and behold, you are using terms like "insane" "scare the sh*t" and "freaked out."

Calm down. Slow down. Breathe, for Crissakes. Think of the boys at D-Day for a bit of perspective.

Read some of my over-heated posts, beginning with "How Did it Come to This." Or another one of my recent beauties ...a thread called What, If Anything, do I owe this guy?"

Learning about your money is like learning anything else and comes in stages. Which, by the way, are not usually measured in months or weeks.

Learning typically goes like this, in a few stages. And I'm painting with a broad brush :

*Unconscious incompetence stage. You don't know, yet you're not aware of your own ignorance. You say things like "How hard can this be?" Or "who cares? I don't have much money anyway. Or, more money, more problems." This is where many people live, much of the time and often for their entire lives. Ignorance is bliss.

*Conscious incompetence stage: Now you're aware that you're ignorant and this is not a pleasant state. You say things like "Oh, my God! I lost so much TIME! This is hard, painful and regret-filled. And I know nothing!" At this point the consciousness of your own incompetence can trigger fear and for some people this is the time to flee --into denial, anger and a wish that they had not discovered the problem at all. At this stage, you may ask for help and get it -- from the wrong kind of person. This can be the point of maximum danger.

Conscious competence stage: You're beginning to "get it." And you know it. You take a class, read a book, post here, talk to friends. You begin to feel a hint of mastery. You make mistakes, but they are more and more sophisticated mistakes. You feel thrilled that you're beginning to "steer" but it is very effortful and takes focus that can be exhausting. You're often preoccupied. Ups and downs characterize this stage of the journey and you may hang out here for a long, long time.

Unconscious competence stage: Your skill level is so high that you can operate nearly without thinking. You make it look easy. You are dialed in and things flow. You can give advice. Mentor. You're like Wayne Gretzky, the hockey player who didn't skate to where the puck was, but where it was going to be.

I think I am currently at the painful second stage. I'm losing sleep as I adjust from an asset allocation that would make a 30 year old blush. But I am glad that I began this journey. It is potentially one of the most satisfying of my life. I think you may come to agree. The fear is real but it will not be permanent.

Slow down. Then slow down some more.

You can do this.

In addition, I think you may benefit from learning a bit about "behavioral finance." I thought it was hokey at first. It's not. Reading about how your emotions affect your finance may be a good use of your time. Start with The Behavioral Investor. Daniel Crosby. Bernstein covers the same ground with great clarity in the Four Pillars as well, with a lot less humbug.

I wish you the very best.

Cody

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Re: This market just scares me...

Post by Fallible » Thu Jun 06, 2019 11:47 am

CrazyTexan wrote:
Thu Jun 06, 2019 9:41 am
...
I know this flies in the face of "pick your AA and stick with it", but - the idea of taking any of that cash and investing it in equity right now just FREAKS ME OUT.
...
Staying the course means staying the course that is right for you, one that reflects your ability, willingness, and need to take risk (links below). Now would be a good time for you to review the risks you are taking, in particular willingness, which is risk tolerance, and how much risk you can and want to take. Determine how much you can afford to lose in a market downturn before you'll need the money.

Meantime, my advice would be to lower your equities and dollar-cost-average into the market. You probably have at least a ten-year time horizon, possibly longer depending on your health.

https://www.cbsnews.com/news/asset-allo ... -you-take/
https://www.cbsnews.com/news/asset-allo ... tolerance/
https://www.cbsnews.com/news/asset-allo ... -you-need/

Other good reading material for you at this time: Your Money & Your Brain (Chapter on "Risk") by WSJ columnist Jason Zweig; All About Asset Allocation, 2nd, by Rick Ferri (Chapter 14 in particular).
Last edited by Fallible on Thu Jun 06, 2019 11:52 am, edited 1 time in total.
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willthrill81
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Re: This market just scares me...

Post by willthrill81 » Thu Jun 06, 2019 11:51 am

If you're looking for reasons to be scared of equities, you never have to look far. If you think that the market is scary today, you must not have been around a decade ago when it looked like the entire financial system might collapse.

Nonetheless, I agree with others that it sounds like your equity allocation may be too high, and moving more into fixed income might be appropriate.
“It's a dangerous business, Frodo, going out your door. You step onto the road, and if you don't keep your feet, there's no knowing where you might be swept off to.” J.R.R. Tolkien,The Lord of the Rings

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Re: This market just scares me...

Post by magicrat » Thu Jun 06, 2019 11:52 am

The correction was at the end of last year. Did you miss it?

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Re: This market just scares me...

Post by stan1 » Thu Jun 06, 2019 12:13 pm

CrazyTexan wrote:
Thu Jun 06, 2019 9:41 am
- Taking the cash from my taxable account (from liquidating my employer stock) and investing it in Fidelity Total Market (FSKAX)
Sorry for some bad news but you may want to look into that further (and change your mind / take corrective action if there's a capital loss). FSKAX has a long history of capital gains distributions that other Total Stock Market funds and ETFs don't have. It's not a small amount either. It could be hundreds or thousands of dollars per year of unnecessary taxes if you have a large balance especially if you live in a state that taxes capital gains as ordinary income like California. In a taxable account I'd go with ITOT (no transaction fee at Fidelity).

https://fundresearch.fidelity.com/mutua ... /315911693

Others would choose the Fidelity Zero fund but it is not portable to another brokerage. I would pay a few dollars per year to give myself the flexibility to move somewhere else in the future if I wanted or needed to. Again fine for a tax deferred account but I would not use it in a taxable account. Reasonable people will disagree on this though.

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Re: This market just scares me...

Post by TheOscarGuy » Thu Jun 06, 2019 1:25 pm

CrazyTexan wrote:
Thu Jun 06, 2019 9:41 am
Hey guys,

I'm going to sound a little like an idiot here, but here goes...

Over the last six months, I'm made it priority to take a more active role in my investments. I've
- Read the two Bogleheads investing books
- Decided on a 60/40 AA
- Moved all my money from Betterment to Fidelity to start managing it myself.

Right now, I have about a 70/30 Stock/Bond mix.

My 401K is in the standard Fidelity 3-Fund portfolio. (Brokeragelink)
My taxable account is a mix of Vanguard Equity ETFs left over from Betterment.

Recently, I had stock vest from my employer (which I liquidated), and I realized it's a great time to do a re-balance. This involves:
- Selling off most of the equity in my 401k and converting it to the Fidelity US Bond Index (FXNAX)
- Taking the cash from my taxable account (from liquidating my employer stock) and investing it in Fidelity Total Market (FSKAX)

--
But once I liquidate what's in the 401k, with the 401k and taxable cash in hand, I find myself overcome with the desire to just either:
- Leave everything in cash for a while or
- Drop everything into bonds for a while.

A while = a year or two. More honestly, my brain is saying "until that correction that's right around the corner hits, it can't be long now..."

I look at the graphs of market growth over the last 10 years and they just... scare the shit out of me. I know Market Timing is insane, I know I can't predict the future, I know that even if there's going to be a correction, there's no guarantee that it'll be tomorrow, next year, or even two years from now, but... This is an insane, insane bull run by anyone's standards. Even if I miss the top, I'd rather hang out for a while to be protected against the bottom...

I know this flies in the face of "pick your AA and stick with it", but - the idea of taking any of that cash and investing it in equity right now just FREAKS ME OUT.

Thoughts...
How close are you to retirement?
If you are decades away, you should not care.
If you are close, maybe choose something more conservative that will let you sleep at night :happy

rascott
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Re: This market just scares me...

Post by rascott » Thu Jun 06, 2019 1:40 pm

CrazyTexan wrote:
Thu Jun 06, 2019 10:09 am
To answer a couple questions:

- How old am I?
39

- Is this retirement money?
Ostensibly, yes.

- What's my retirement time horizon?
That's a sticky point. I have a physical condition that may make it difficult for me to work as long as others do, but it's hard to know when things will degenerate to the point where it's a real problem. I'd love to get to an "I can retire if I need to" point by 45, but that's wishful thinking. 50 or 55 might be possible, depending on how my career progresses. But I don't feel like a young person anymore, now that I'm 20 years into my career, and in tech, I'm the old guy around the office. But... by the numbers, I should have some time.

- Do I have the emotional makeup to manage my own portfolio?
Perhaps, Perhaps not. But I think that one way or the other, it's my responsibility to do it for my family.

- To the person who said: If so, between now and then there will be periods where your balances will go down, sometimes by a lot. Better get used to the idea.
I hear you. I need to teach myself that the idea that times will always be good, if I'm just *smart enough* is a fantasy. Winter is coming.

There was a correction already, 4Q18. On we go.

You can touch those 401k funds (without penalty) for another 20 years. So why worry about what happens this year or next?

Jags4186
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Re: This market just scares me...

Post by Jags4186 » Thu Jun 06, 2019 1:44 pm

It amazes me the amount of people freaked out by *this* market which has for all practical purposes been amazing for 10 years. Sure last year was a modestly down year but YTD the SP500 is up over 10%.

What’s going to happen when the market has a 2000-2002 period again?

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Re: This market just scares me...

Post by deltaneutral83 » Thu Jun 06, 2019 1:47 pm

Jags4186 wrote:
Thu Jun 06, 2019 1:44 pm
It amazes me the amount of people freaked out by *this* market which has for all practical purposes been amazing for 10 years. Sure last year was a modestly down year but YTD the SP500 is up over 10%.

What’s going to happen when the market has a 2000-2002 period again?
People won't be scared of the market, because they will be out of the market, that's what will happen.

rascott
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Re: This market just scares me...

Post by rascott » Thu Jun 06, 2019 1:48 pm

Jags4186 wrote:
Thu Jun 06, 2019 1:44 pm
It amazes me the amount of people freaked out by *this* market which has for all practical purposes been amazing for 10 years. Sure last year was a modestly down year but YTD the SP500 is up over 10%.

What’s going to happen when the market has a 2000-2002 period again?

As an accumulator....I hope for that everyday. As a 38 yr old, I could really use a big bear sooner than later. Particularly since I'm now in a position to put large contributions in, a lot more than I could do a decade ago.

yousha
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Re: This market just scares me...

Post by yousha » Thu Jun 06, 2019 1:58 pm

The Market will do what the Market will do!

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dratkinson
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Re: This market just scares me...

Post by dratkinson » Thu Jun 06, 2019 2:01 pm

Data point. Many retirees report keeping 5yrs of living expenses in cash-equivalents to avoid the "sequence of return risk"---the need to sell equities in a down market. Why? Most market corrections recover within 4yrs, so 5yrs in cash-equivalents avoids the SoRR. (Search forum for other methods used by retirees.)

I used this idea.



Disclosure. I quit worrying about market corrections (for the most part) after I moved to a more conservative AA, increase the size of my 1st-tier EF to 1yr of living expenses, and established a 2nd-tier EF of 3yrs of living expenses.

So now I'm:
--50/50 AA. The "I don't know AA." I don't know which will do betters, stocks or bonds.
--1st-tier EF: checking (2mos), savings (1mo), tax-exempt mmkt (9mos).
--2nd-tier EF: IT muni bond fund (3yrs).

The remainder of my taxable investments is a 3-fund portfolio, heavily skewed toward more risky/rewarding bonds to give me a 50/50 AA. Because...

My Roth IRA is all equities for growth to "shoot for the moon".


Since I stopped worrying about market corrections, I've just been buying bonds since 2009---trying to maintain a 50/50 AA. Since I don't sell to rebalance, I can only do so much with limited new money + redirected distributions.

I watched with interest the increasing market downturn during 2018. And used it to TLH bonds in Nov-Dec, and rebalanced into TSM... before the market rebound. (For the record, that's one in a row.)

If the market had not rebounded, I'd planned to continue buying TSM "on sale".

Unfortunately the market rebound and rise has again skewed my AA toward equities, and I'm again buying bonds to try to keep up.



Suggestions. Since the market is worrying you...
--Establish a larger EF (1-5yrs). As much as you need to feel more comfortable.
--Establish a more conservative AA. As much as you need to feel more comfortable.
--DCA or lump sum your stock proceeds into your AA. Whatever allows you to feel more comfortable.

Please don't sit on the sidelines in cash. Why? Over the long run, the market must rise as businesses meet the increasing demand for goods and services of a growing population. Meaning: you may never again see prices this low.


But if the market does correct? TLH equities, and sell bonds (up to the amount of your TLH, if in taxable), to buy equities on sale.

You'll just have to tolerate the fact that when the market does recover, your newly purchased equities will skew your desired AA toward equities. So you’ll need to buy bonds (with new money) to rebalance. (Life's tough.)
d.r.a, not dr.a. | I'm a novice investor, you are forewarned.

FrankLUSMC
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Re: This market just scares me...

Post by FrankLUSMC » Thu Jun 06, 2019 4:34 pm

I saw a call on MarketWatch today for Dow 40K in a few years, just sayin.

rascott
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Re: This market just scares me...

Post by rascott » Thu Jun 06, 2019 4:37 pm

CrazyTexan wrote:
Thu Jun 06, 2019 9:41 am
Hey guys,

I'm going to sound a little like an idiot here, but here goes...

Over the last six months, I'm made it priority to take a more active role in my investments. I've
- Read the two Bogleheads investing books
- Decided on a 60/40 AA
- Moved all my money from Betterment to Fidelity to start managing it myself.

Right now, I have about a 70/30 Stock/Bond mix.

My 401K is in the standard Fidelity 3-Fund portfolio. (Brokeragelink)
My taxable account is a mix of Vanguard Equity ETFs left over from Betterment.

Recently, I had stock vest from my employer (which I liquidated), and I realized it's a great time to do a re-balance. This involves:
- Selling off most of the equity in my 401k and converting it to the Fidelity US Bond Index (FXNAX)
- Taking the cash from my taxable account (from liquidating my employer stock) and investing it in Fidelity Total Market (FSKAX)

--
But once I liquidate what's in the 401k, with the 401k and taxable cash in hand, I find myself overcome with the desire to just either:
- Leave everything in cash for a while or
- Drop everything into bonds for a while.

A while = a year or two. More honestly, my brain is saying "until that correction that's right around the corner hits, it can't be long now..."

I look at the graphs of market growth over the last 10 years and they just... scare the shit out of me. I know Market Timing is insane, I know I can't predict the future, I know that even if there's going to be a correction, there's no guarantee that it'll be tomorrow, next year, or even two years from now, but... This is an insane, insane bull run by anyone's standards. Even if I miss the top, I'd rather hang out for a while to be protected against the bottom...

I know this flies in the face of "pick your AA and stick with it", but - the idea of taking any of that cash and investing it in equity right now just FREAKS ME OUT.

Thoughts...

Go look at a 30 year chart of the market....that's all you need to really care about (assuuming you want to live to age 69). You'll see the "plunges" barely show up.

That said....maybe you aren't cut out for equity investing. Look at something like the Wellington fund. You'll most certainly have less money when you are 69......but if you can sleep better may be worth it.

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Re: This market just scares me...

Post by pkcrafter » Thu Jun 06, 2019 6:44 pm

CrazyTexan wrote:
Thu Jun 06, 2019 9:41 am
Hey guys,

I'm going to sound a little like an idiot here, but here goes...

Over the last six months, I'm made it priority to take a more active role in my investments. I've
- Read the two Bogleheads investing books
- Decided on a 60/40 AA
- Moved all my money from Betterment to Fidelity to start managing it myself.

Right now, I have about a 70/30 Stock/Bond mix.
OK, you are at 70/30, not at your target 60/40.
My 401K is in the standard Fidelity 3-Fund portfolio. (Brokeragelink)
My taxable account is a mix of Vanguard Equity ETFs left over from Betterment.

Recently, I had stock vest from my employer (which I liquidated), and I realized it's a great time to do a re-balance. This involves:
- Selling off most of the equity in my 401k and converting it to the Fidelity US Bond Index (FXNAX)
- Taking the cash from my taxable account (from liquidating my employer stock) and investing it in Fidelity Total Market (FSKAX)
What you were going to do is move to 60/40, which involves a small adjustment in stock allocation, but it's all basically a sideways move, meaning no significant changes in risk exposure. Now suddenly in the transfer process you decide not to complete it, but instead, stay out. That doesn't sound rational.
More honestly, my brain is saying "until that correction that's right around the corner hits, it can't be long now..."
You can not successfully invest if you are always going to worry about the next market drop. What if there isn't a drop, or what happens if there is, then you get in and there is another drop?

You are risk averse and you should not be a 70/30 and maybe not at 60/40 either.

Read this, including the linked articles and tell us what your AA is going to be.

https://finpage.blog/




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.

JoeRetire
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Re: This market just scares me...

Post by JoeRetire » Thu Jun 06, 2019 7:20 pm

CrazyTexan wrote:
Thu Jun 06, 2019 9:41 am
Even if I miss the top, I'd rather hang out for a while to be protected against the bottom...

I know this flies in the face of "pick your AA and stick with it", but - the idea of taking any of that cash and investing it in equity right now just FREAKS ME OUT.
Clearly your asset allocation isn't working for you.

You should be 100% in cash if you feel this strongly. At least until you are no longer freaked out.
- Do I have the emotional makeup to manage my own portfolio?
Perhaps, Perhaps not. But I think that one way or the other, it's my responsibility to do it for my family.
Many folks who don't have the emotional makeup hire an adviser to do the work for them, so that they can avoid freaking out.

SGM
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Re: This market just scares me...

Post by SGM » Thu Jun 06, 2019 7:44 pm

Making investment decisions based on emotions is foolish. At 39 I was happy when the market was down as I was investing automatically in a 401k, purchasing an IRA in January and investing in taxable if I had money left over. Anything I didn't need for an upcoming purchase was in stocks. Somehow I didn't feel any fear, because I had job security and disability insurance until I became financially independent. Using Vanguard's PAS for a while is a good idea. Dollar cost average in if you are nervous. Find a way to control your emotions. Cash doesn't keep up with inflation. Some of our most illustrious authors admit that they were too cautious when they were young. Be conservative when you get closer to retirement or with money you are going to need to spend in the next year or so. Write a investment plan statement and stick with it. You can handle this.

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