New Here Wondering About Possible Market Crash

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PineForest
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New Here Wondering About Possible Market Crash

Post by PineForest »

New to investing and to this forum. Appreciate all the valuable information. Even though I'm 44, I'm a beginner with all this. Better late than never...

I have a question about the market. I understand that no one can predict where the market is going, but do people here think that the market will crash sometime soon? Some websites I read say that the stock market has been artificially inflated and that it is not in balance with the values of businesses. Yet it keeps going up.

The practical side of my question is that I have a chunk of money and want to invest it in a couple different VG or Fidelity index funds after holding it in bank accounts for many years. I am wondering if I should wait until the market crashes to invest this money or if I should just go for it, knowing that a crash or correction will happen at some point and and that crashes/corrections are part of the long term game. I don't see myself needing this money for 16 years or more, until I retire.

Thanks.
runner3081
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Re: New Here Wondering About Possible Market Crash

Post by runner3081 »

PineForest wrote: Thu Jan 23, 2020 9:57 pm Some websites I read say that the stock market has been artificially inflated and that it is not in balance with the values of businesses.
Stop reading that junk.

Set your target and an asset allocation. Keep doing that and ignore everything else.
m@ver1ck
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Re: New Here Wondering About Possible Market Crash

Post by m@ver1ck »

The mArket was hot and going to crash last January. In fact it did. Then it went up 30%
Last edited by m@ver1ck on Thu Jan 23, 2020 10:49 pm, edited 1 time in total.
Jebediah
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Re: New Here Wondering About Possible Market Crash

Post by Jebediah »

The market WILL crash again. And if you're not comfortable investing now, just wait. There's NO WAY you'll be comfortable investing when it's War, Depression, Hyperinflation, whatever it is that's making the market cheap again.
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Brianmcg321
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Re: New Here Wondering About Possible Market Crash

Post by Brianmcg321 »

Rules to investing: | 1. Don't lose money. | 2. Don't forget rule number 1.
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Wiggums
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Re: New Here Wondering About Possible Market Crash

Post by Wiggums »

You already know the answer. Invest today. Time in the market and low fees are your best friend. I’m retired and I continue to buy more every week. Join the party.
Olemiss540
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Re: New Here Wondering About Possible Market Crash

Post by Olemiss540 »

I understand that no one can predict where the market is going, but do people here think that the market will crash sometime soon?
Thanks.
[/quote]

Re-read this one more time for the people in the back. INVEST an amount that you would feel fine if it lost 50% tomorrow.be ready for that to come but do not sit in anticipation as it may never arrive.
I hold index funds because I do not overestimate my ability to pick stocks OR stock pickers.
lexor
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Re: New Here Wondering About Possible Market Crash

Post by lexor »

PineForest wrote: Thu Jan 23, 2020 9:57 pm New to investing and to this forum. Appreciate all the valuable information. Even though I'm 44, I'm a beginner with all this. Better late than never...

I have a question about the market. I understand that no one can predict where the market is going, but do people here think that the market will crash sometime soon? Some websites I read say that the stock market has been artificially inflated and that it is not in balance with the values of businesses. Yet it keeps going up.

The practical side of my question is that I have a chunk of money and want to invest it in a couple different VG or Fidelity index funds after holding it in bank accounts for many years. I am wondering if I should wait until the market crashes to invest this money or if I should just go for it, knowing that a crash or correction will happen at some point and and that crashes/corrections are part of the long term game. I don't see myself needing this money for 16 years or more, until I retire.

Thanks.
I'd suggest you consider investing at Target allocations you can stick to now rather than time the market.
“The miracle of compounding returns is overwhelmed by the tyranny of compounding costs.” -Mr. John C. Bogle
ukbogler
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Re: New Here Wondering About Possible Market Crash

Post by ukbogler »

As it's a 'chunk' of money, you could drip it in over a year or so. That way, even if it does crash, you haven't bought it all at the very top. Doing that, BTW is harder than it sounds, honestly. I forced myself (as per the plan) to buy another bite of an international index day before yesterday, because it's getting close to end of month, and it immediately tanked. But then it's come back up today. 24 hours of thinking 'sugar, why didn't I wait?' followed by 'hurrah!'
snowox
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Re: New Here Wondering About Possible Market Crash

Post by snowox »

I was at the same point you were when the Dow was around 15k. I put 25% in and then divided the rest in and put in over the next 12 months. Fortunately I did what i did but I missed a lot of upside. Its easy to say "Put it all in now" and people can provide the stats to support that theory BUT you have to do what helps you sleep at night knowing that you might lose some upside. With the market double of where I first got into index funds I would probably be even slower putting the money in but having it at least invested in areas where I was making something on the money being cd ladders, MM funds like VMMXX etc... while I build my portfolio . Obviously max out 401k at least up to company match etc..
Valuethinker
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Re: New Here Wondering About Possible Market Crash

Post by Valuethinker »

PineForest wrote: Thu Jan 23, 2020 9:57 pm New to investing and to this forum. Appreciate all the valuable information. Even though I'm 44, I'm a beginner with all this. Better late than never...

I have a question about the market. I understand that no one can predict where the market is going, but do people here think that the market will crash sometime soon? Some websites I read say that the stock market has been artificially inflated and that it is not in balance with the values of businesses. Yet it keeps going up.

The practical side of my question is that I have a chunk of money and want to invest it in a couple different VG or Fidelity index funds after holding it in bank accounts for many years. I am wondering if I should wait until the market crashes to invest this money or if I should just go for it, knowing that a crash or correction will happen at some point and and that crashes/corrections are part of the long term game. I don't see myself needing this money for 16 years or more, until I retire.

Thanks.
That is key.

Yes the market will crash - but we don't know when. But crashes, or bear markets (greater than -20% fall) are inevitable - they are the price we pay for the high returns of stock markets. Most people have already forgotten the December 2018 market "correction" which was a fraction of a per cent from being officially a bear market - but our portfolio values (equities) dropped by 20% in that time frame.

If you are worried re crash risk just after investing, you probably have too high an equity market allocation. That's why most of us hold bonds - because we know that being 100% in stocks during a bear market is an invitation to panic. Also rebalancing then makes us buy stocks at cheaper prices.

So:

- set your asset allocation/ Investor Policy Statement first
- then just invest - fire and forget

I would argue most investors should be 20%-40% bonds (assuming that cash reserves for a period of say 12 months baseline costs of living are available - someone with a very secure job needs less, someone with a less secure job needs more).

Because of the lower correlation between bonds and equities (the S&P500 and the US Treasury bond market were used for all the initial studies, I believe) there is a loss in returns by moving from 100% equities to 60-40 bonds, but it is a lot less than you would think. And the fall in volatility in the portfolio value is quite large. Diversification is the only "free lunch" in efficient markets.
Wanderingwheelz
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Re: New Here Wondering About Possible Market Crash

Post by Wanderingwheelz »

PineForest wrote: Thu Jan 23, 2020 9:57 pm New to investing and to this forum. Appreciate all the valuable information. Even though I'm 44, I'm a beginner with all this. Better late than never...

I have a question about the market. I understand that no one can predict where the market is going, but do people here think that the market will crash sometime soon? Some websites I read say that the stock market has been artificially inflated and that it is not in balance with the values of businesses. Yet it keeps going up.

The practical side of my question is that I have a chunk of money and want to invest it in a couple different VG or Fidelity index funds after holding it in bank accounts for many years. I am wondering if I should wait until the market crashes to invest this money or if I should just go for it, knowing that a crash or correction will happen at some point and and that crashes/corrections are part of the long term game. I don't see myself needing this money for 16 years or more, until I retire.

Thanks.
I was sitting on a very large sum of cash in money market when I was your age, too. My wife and I were so [deleted -- mod oldcomputerguy] busy making money that we neglected our investments for a number of years. I had a lot of stock exposure in tax deferred accounts, but my wife and I were both reluctant to dive in all at once with our joint assets. What we did was invest new money into 3 Funds (VTI, VXUS, VTEB) over 18 months to somewhat mitigate the risks of “buying high”. 12 to 18 months is as long as you want to take to ease a lump sum into stocks. It goes w/o saying, we have a very large capital gain today. That said, it would be completely taken away if the market pulled another GFC on us. There’s risk.

Volatility is the price we pay for getting (staying) rich. There’s just no way around that fact. If you can’t accept having your assets shrink before they grow I’d be cautious in how I invested them. But since you’re getting a late start I think you’d be wise to get your money in places where it’ll grow at a rate that exceeds inflation. That’s in stocks.

Good luck.
anil686
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Re: New Here Wondering About Possible Market Crash

Post by anil686 »

lexor wrote: Fri Jan 24, 2020 1:43 am
PineForest wrote: Thu Jan 23, 2020 9:57 pm New to investing and to this forum. Appreciate all the valuable information. Even though I'm 44, I'm a beginner with all this. Better late than never...

I have a question about the market. I understand that no one can predict where the market is going, but do people here think that the market will crash sometime soon? Some websites I read say that the stock market has been artificially inflated and that it is not in balance with the values of businesses. Yet it keeps going up.

The practical side of my question is that I have a chunk of money and want to invest it in a couple different VG or Fidelity index funds after holding it in bank accounts for many years. I am wondering if I should wait until the market crashes to invest this money or if I should just go for it, knowing that a crash or correction will happen at some point and and that crashes/corrections are part of the long term game. I don't see myself needing this money for 16 years or more, until I retire.

Thanks.
I'd suggest you consider investing at Target allocations you can stick to now rather than time the market.
+1 - this is the best way to invest. The OP is really talking about risk tolerance and their question should prompt them to evaluate at what level when the market does go down, are they comfortable continuing their plan...
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nisiprius
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Re: New Here Wondering About Possible Market Crash

Post by nisiprius »

In late 1997, when Alan Greenspan made his "irrational exuberance" speech, I said "that's the clearest thing Alan Greenspan has ever said, and he's in a position to really know." I didn't sell all my stocks or anything like that, but I did trim back my stock allocation. I partly missed out on three years of the best stock market growth ever. But fortunately I was thinking of this as a permanent reduction in my stock allocation, not an attempt to dodge the bullet, so I did not get disgusted and raise my allocation, so I also partly missed the 50% decline that occurred in 2000-2002. Overall, in terms of where I was when I retired, it actually balanced out. I don't berate myself, but nevertheless I was too pessimistic and/or was three years too early.

In 2007, I had no idea anything was coming. I remember chatting with an old friend whom we were visiting for the first time in ten years, the conversation turned to investing, and she said "are you worried about the stock market?" I said, "Nah, I don't follow the ups and downs, I don't need to know the details. The Dow's in the 13,000s, that's all I need to know, now if it fell below 13,000 I might worry." There was a pause. Then she looked at me and said "but it is below 13,000."

If they don't kid themselves, I think most people will confess to being taken by surprise in 2008-2009. After the fact people can point to gurus who "called it," but at the time it mostly surprised people. Two people within my circle of acquaintances who were aggressively positioned ended up selling when the market was down. In one case it was a work colleague and we were both laid off at just about that time, so I never had the chance to talk to him again. In another... well, people really hate to talk about things like selling during a crash, and I have never felt that I could cross-examine this person on exactly what happened.

Fortunately, by then my stock allocation was already low, geared toward retirement, and during 2008-2009 we did not sell, although it was more like "deer caught in the headlights" than anything else. However, my wife and I both agreed that the right thing to do was to do nothing, not make any panicky moves under stress, wait it out, and if the market stayed down for a decade, so be it.

The point is, I was wrong both times. In 1997 I thought a crash was coming soon. It wasn't. In 2007 I really didn't think a crash was coming. It was.
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CyclingDuo
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Re: New Here Wondering About Possible Market Crash

Post by CyclingDuo »

PineForest wrote: Thu Jan 23, 2020 9:57 pm I have a question about the market. I understand that no one can predict where the market is going, but do people here think that the market will crash sometime soon?
Too funny!

You understand that no one can predict where the market is going, yet you ask for everyone's prediction? :mrgreen: :mrgreen: :mrgreen: :mrgreen: :mrgreen:

Stuff this in your back pocket. Hang it on your fridge. Tape it to your monitor. Make it your desktop background or phone screen background. Whatever works for you.

Image
"Save like a pessimist, invest like an optimist." - Morgan Housel
magicrat
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Re: New Here Wondering About Possible Market Crash

Post by magicrat »

If we accept your premise that stocks are overvalued, a market crash is only one remedy. Other possibility are that returns are lower than average (but still positive) for some period of time, or that earnings increase faster than expected.
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Re: New Here Wondering About Possible Market Crash

Post by Jack FFR1846 »

Do "people here" believe a market crash is coming soon? I don't.
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KlangFool
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Re: New Here Wondering About Possible Market Crash

Post by KlangFool »

OP,

1) Set your allocation. If you have no idea, pick 60/40.

https://investor.vanguard.com/mutual-fu ... estrategy/#/

2) Pick a Vanguard LifeStrategy Fund that matches your allocation.

3) Invest.

4) If the market crashes, the fund will buy the stock while it is on-sale for you.

KlangFool
Jags4186
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Re: New Here Wondering About Possible Market Crash

Post by Jags4186 »

PineForest wrote: Thu Jan 23, 2020 9:57 pm
I have a question about the market. I understand that no one can predict where the market is going, but do people here think that the market will crash sometime soon?
I will give you 3 predictions you can take to the bank.

1) Yes, there will be a crash soon. Depending on how you define crash, it could simply be a pullback.
2) Yes, there will be a dramatic rise in the not so distant future
3) Yes, there will be a fairly long period of sideways action not far off from today

Hope this helps
GrowthSeeker
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Re: New Here Wondering About Possible Market Crash

Post by GrowthSeeker »

“Far more money has been lost by investors preparing for corrections, or trying to anticipate corrections, than has been lost in corrections themselves.”
— Peter Lynch

Statistically, putting a chunk in all at once beats putting it in gradually two times out of three.

About one trading day out of every 20 is a market top.

Nobody knows nuthin'.
Just because you're paranoid doesn't mean they're NOT out to get you.
02nz
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Re: New Here Wondering About Possible Market Crash

Post by 02nz »

m@ver1ck wrote: Thu Jan 23, 2020 10:25 pm The mArket was hot and going to crash last January. In fact it did. Then it went up 30%
In December of 2018, actually. Close enough, most people would say. But that's the thing with trying to time the market - you have to get the timing just right (and "right" is basically all luck). And you have to do it twice, once getting out and again getting back in.

Also worth reading - what happens if you invested only at market peaks? https://awealthofcommonsense.com/2014/0 ... ket-timer/
Last edited by 02nz on Fri Jan 24, 2020 11:56 am, edited 1 time in total.
MotoTrojan
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Re: New Here Wondering About Possible Market Crash

Post by MotoTrojan »

Do you care more about what this small forum thinks, or what the entire market thinks? Guess what, you can survey what the entire market thinks the stock market is worth on average. It is the current price :).
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Re: New Here Wondering About Possible Market Crash

Post by Toons »

Time Not Timing
Invest Today
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Re: New Here Wondering About Possible Market Crash

Post by Call_Me_Op »

PineForest wrote: Thu Jan 23, 2020 9:57 pm I understand that no one can predict where the market is going, but do people here think that the market will crash sometime soon?
Given the first half of this sentence, it is not clear why you ask the question in the second part.
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Re: New Here Wondering About Possible Market Crash

Post by RootSki »

One person's "CRASH" is my buying opportunity. Ymmv.
dacalo
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Re: New Here Wondering About Possible Market Crash

Post by dacalo »

Nobody knows, so the best time is now. Ignore all the noise and just be diligent, that's all you need to build wealth. It's pretty simple, really.
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Re: New Here Wondering About Possible Market Crash

Post by Dottie57 »

ukbogler wrote: Fri Jan 24, 2020 3:28 am As it's a 'chunk' of money, you could drip it in over a year or so. That way, even if it does crash, you haven't bought it all at the very top. Doing that, BTW is harder than it sounds, honestly. I forced myself (as per the plan) to buy another bite of an international index day before yesterday, because it's getting close to end of month, and it immediately tanked. But then it's come back up today. 24 hours of thinking 'sugar, why didn't I wait?' followed by 'hurrah!'
+1

Hopefully you are in the market for the long term. Markets will go up and down. Keep plowing money in.
Unladen_Swallow
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Re: New Here Wondering About Possible Market Crash

Post by Unladen_Swallow »

"Crash" is a dramatic and pointless word used much too loosely here without any meaning.

And I'm not talking technical definitions of correction/recession etc. Just that the word crash has all the implications of doom and gloom, irrationality, chance, and disaster. No wonder there are people who really think one might as well play the slots than invest in companies.

December 2018 was not a crash. Every so often the market has a sizeable drawdown. And it gets over it shortly. On more infrequent occasions the drawdown is larger and longer. And rarely something happens that warrants the hyperbolic and dramatic implications associated with the word "crash".


If someone talks about a crash in 1929, it seems a reasonable way to capture the financial and emotional impact. Dec 2018 was not that.
"I think it's much more interesting to live not knowing than to have answers which might be wrong." - Richard Feynman
wrongfunds
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Re: New Here Wondering About Possible Market Crash

Post by wrongfunds »

after holding it in bank accounts for many years.
Think of that money as belonging to your cash/bond allocation. Often I look at some of my dormant cash accounts and wonder only if I had invested them years ago but then console myself saying precisely that. I see nothing wrong with that.
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peetsperk
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Re: New Here Wondering About Possible Market Crash

Post by peetsperk »

Welcome to the forum PineForest. First, you need to read The Little Book of Common Sense Investing by John (Jack) C. Bogle. He was a wise man with sage advice, including:
"Nobody knows nothing"
"Investors should keep their emotions the heck outta the way!"
"Daily movements of the market are a tale told by an idiot, full of sound and fury, signifying nothing!"
“The idea that a bell rings to signal when investors should get into or out of the stock market is simply not credible. After nearly 50 years in this business, I do not know of anybody who has done it successfully and consistently. I don't even know anybody who knows anybody who has done it successfully and consistently."
“Stay the course. No matter what happens, stick to your program. I’ve said “Stay the course” a thousand times, and I meant it every time. It is the most important single piece of investment wisdom I can give to you.”

Good luck!
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Re: New Here Wondering About Possible Market Crash

Post by abuss368 »

I am wondering too and have been since the day I started investing decades ago. And I will still be wondering in the future.

No one knows nothin!

No one has a crystal ball that is right otherwise we would all be multi billionaires!

Bogleheads develop an asset allocation based on goals, time frame, and tolerance for risk, tune out the noise, and stay the course!
John C. Bogle: “Simplicity is the master key to financial success."
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Re: New Here Wondering About Possible Market Crash

Post by abuss368 »

If you are worried and up at night I would suspect your asset allocation is too risky. You may want to revisit and increase the allocation to bonds.

Market timing has been proven to not work.
John C. Bogle: “Simplicity is the master key to financial success."
mimiesg
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Re: New Here Wondering About Possible Market Crash

Post by mimiesg »

Very good comments, helped me also understand a bit more about asset allocation and regular investing. However I have a doubt that I cant shake off.

I understand the BH approach recommends everyone to treat all your assets as one big pile and not compartmentalize.

But, shouldn't the asset allocation actually depend on "time horizon" when the assets will be used?


Lets say, hypothetically, someone plans to "retire at 55".

Shouldn't that person actually think in terms of two separate buckets - taxable and tax-deferred.

1) Taxable - perhaps be less aggressive since the money when person is 55 - 65 e.g. AA 50-50%
2) Non-Taxable - can be a bit more aggressive since money is needed 10 years later so e.g. AA 70 - 30%

Why is this thinking wrong?
quantAndHold
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Re: New Here Wondering About Possible Market Crash

Post by quantAndHold »

Welcome to the forums!

To answer your question, yes, there will be a crash. There will always be another crash. When it will be or how bad it will be, nobody knows. The key is to pick an asset allocation you can live with, and then ignore Jim Cramer and all of his buddies. If you need help getting started, the Bogleheads wiki is a good place to start.
Yes, I’m really that pedantic.
Unladen_Swallow
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Re: New Here Wondering About Possible Market Crash

Post by Unladen_Swallow »

There is no wrong or right. Finance is personal, and a black and white approach can be self defeating. There are people that use a bucket approach, but it might not actually be that different than another that thinks they don't. Your total assets have an average AA, doesn't matter of you see it that way or not. Dont let the asset allocation tail wag the prudent financial planning dog.

Whatever system you implement, understand it well, ensure that it will help you achieve your goals, and that the risk is worthwile to you.

We intend to retire well before 55. Our taxable holds only stock. In fact, only Total Stock index. It is tax efficient. When we near retirement, I might keep a modest amount in cash for flexibility. We intend our taxable to be large enough to sustain us even during a significant drawdown. IF we want to maintain any specific asset allocation, we can adjust in our tax deferred. Or not.

Our plan doesn't work for everyone, and might not comfort everyone. It is not a recommendation. If crap hits the fan, we still have a large human capital at 50 to work a bit more.
mimiesg wrote: Fri Jan 24, 2020 2:50 pm Very good comments, helped me also understand a bit more about asset allocation and regular investing. However I have a doubt that I cant shake off.

I understand the BH approach recommends everyone to treat all your assets as one big pile and not compartmentalize.

But, shouldn't the asset allocation actually depend on "time horizon" when the assets will be used?


Lets say, hypothetically, someone plans to "retire at 55".

Shouldn't that person actually think in terms of two separate buckets - taxable and tax-deferred.

1) Taxable - perhaps be less aggressive since the money when person is 55 - 65 e.g. AA 50-50%
2) Non-Taxable - can be a bit more aggressive since money is needed 10 years later so e.g. AA 70 - 30%

Why is this thinking wrong?
"I think it's much more interesting to live not knowing than to have answers which might be wrong." - Richard Feynman
quantAndHold
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Re: New Here Wondering About Possible Market Crash

Post by quantAndHold »

mimiesg wrote: Fri Jan 24, 2020 2:50 pm Very good comments, helped me also understand a bit more about asset allocation and regular investing. However I have a doubt that I cant shake off.

I understand the BH approach recommends everyone to treat all your assets as one big pile and not compartmentalize.

But, shouldn't the asset allocation actually depend on "time horizon" when the assets will be used?


Lets say, hypothetically, someone plans to "retire at 55".

Shouldn't that person actually think in terms of two separate buckets - taxable and tax-deferred.

1) Taxable - perhaps be less aggressive since the money when person is 55 - 65 e.g. AA 50-50%
2) Non-Taxable - can be a bit more aggressive since money is needed 10 years later so e.g. AA 70 - 30%

Why is this thinking wrong?
That’s a form of bucketing, if you want to do some research in the pros and cons. Some people do indeed do things that way.

Money is fungible. Most of us keep investments in taxable or tax advantaged accounts according to the tax treatment of the asset, not when we’re going to need the money. When we need money, we rebalance the whole portfolio, not just the account we’re drawing money out of.

For example, say I have a $1M portfolio, and half my money in taxable and half in an IRA, and my allocation is 70/30. Also, I’m an early retiree, not 59 1/2 yet, so I’m drawing entirely out of my taxable account for now. if I had 2 investments, 70% in VT (total world stock), and 30% BND (bond index fund), I would probably have $500k of VT in the taxable account, and $200k of VT and $300k of BND in the IRA, because VT is more tax efficient than BND. So the whole portfolio is 70/30. When I go to draw $100k of living expenses, I would sell $100k of VT out of the taxable account, and then rebalance the amounts in the IRA so that the allocation of the full portfolio is 70/30 again. In years where stocks have gone up a lot, I may not have to sell any bonds at all, but in years where the stock market goes down, I’m going to be selling bonds and buying stocks in the IRA to get it back into balance.
Yes, I’m really that pedantic.
Blue456
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Re: New Here Wondering About Possible Market Crash

Post by Blue456 »

Wiggums wrote: Thu Jan 23, 2020 10:41 pm You already know the answer. Invest today. Time in the market and low fees are your best friend. I’m retired and I continue to buy more every week. Join the party.
:sharebeer :beer
mega317
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Re: New Here Wondering About Possible Market Crash

Post by mega317 »

nisiprius wrote: Fri Jan 24, 2020 9:05 am After the fact people can point to gurus who "called it,"
Yep, and also to your point there are gurus calling everything every day, so someone will be right after the fact. It's kind of like if you put monkeys in front of typewriters (I guess it's keyboards now) one of them will bang out Moby Dick, but to make it likely you'd need more monkeys than will fit in the observable universe.
https://www.bogleheads.org/forum/viewtopic.php?t=6212
KlangFool
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Re: New Here Wondering About Possible Market Crash

Post by KlangFool »

mimiesg wrote: Fri Jan 24, 2020 2:50 pm
1) Taxable - perhaps be less aggressive since the money when person is 55 - 65 e.g. AA 50-50%
2) Non-Taxable - can be a bit more aggressive since money is needed 10 years later so e.g. AA 70 - 30%

Why is this thinking wrong?
mimiesg,

It is wrong.

1) It is not tax-efficient to put the bond in your taxable account. You would pay more taxes with those bucketing.

https://www.madfientist.com/how-to-acce ... nds-early/

2) It is one portfolio. You could access money in any account at any time if you know how to play the game. So, there is no reason that when you need to treat those accounts separately.

3) It is unnecessarily complicated by having two separate AAs.

My AA is 60/40. My taxable account is 100% stock. All my bond is in the tax-advantaged account.

If I want to sell the bond, I could exchange the bond in my tax-advantaged account into the stock. And, sell the stock in my taxable account. Vice versa.

KlangFool
Fallible
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Re: New Here Wondering About Possible Market Crash

Post by Fallible »

CyclingDuo wrote: Fri Jan 24, 2020 9:26 am
PineForest wrote: Thu Jan 23, 2020 9:57 pm I have a question about the market. I understand that no one can predict where the market is going, but do people here think that the market will crash sometime soon?
Too funny!

You understand that no one can predict where the market is going, yet you ask for everyone's prediction? :mrgreen: :mrgreen: :mrgreen: :mrgreen: :mrgreen: ...
In fairness to the OP and as I read it, he is asking simply what we "think" about a market crash. I would never predict a market crash, but being human and if I'm honest about it, I do "think" about it. And I doubt that I'm alone in that thinking.
"Yes, investing is simple. But it is not easy, for it requires discipline, patience, steadfastness, and that most uncommon of all gifts, common sense." ~Jack Bogle
mimiesg
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Re: New Here Wondering About Possible Market Crash

Post by mimiesg »

KlangFool wrote: Fri Jan 24, 2020 3:58 pm
mimiesg wrote: Fri Jan 24, 2020 2:50 pm
1) Taxable - perhaps be less aggressive since the money when person is 55 - 65 e.g. AA 50-50%
2) Non-Taxable - can be a bit more aggressive since money is needed 10 years later so e.g. AA 70 - 30%

Why is this thinking wrong?
mimiesg,

It is wrong.

1) It is not tax-efficient to put the bond in your taxable account. You would pay more taxes with those bucketing.

https://www.madfientist.com/how-to-acce ... nds-early/

2) It is one portfolio. You could access money in any account at any time if you know how to play the game. So, there is no reason that when you need to treat those accounts separately.

3) It is unnecessarily complicated by having two separate AAs.

My AA is 60/40. My taxable account is 100% stock. All my bond is in the tax-advantaged account.

If I want to sell the bond, I could exchange the bond in my tax-advantaged account into the stock. And, sell the stock in my taxable account. Vice versa.

KlangFool
Thank you @Klangfool, @quantAndHold, @Unladen_Swallow !!!

I finally get it! Many many thanks for explaining!! Seems so obvious now ...and I had many weeks of trouble grasping why...!
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PineForest
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Re: New Here Wondering About Possible Market Crash

Post by PineForest »

Thanks to everyone for the informative (and entertaining! :D) responses. Very helpful.
financeperchance
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Re: New Here Wondering About Possible Market Crash

Post by financeperchance »

CyclingDuo wrote: Fri Jan 24, 2020 9:26 am
PineForest wrote: Thu Jan 23, 2020 9:57 pm I have a question about the market. I understand that no one can predict where the market is going, but do people here think that the market will crash sometime soon?
Too funny!

You understand that no one can predict where the market is going, yet you ask for everyone's prediction? :mrgreen: :mrgreen: :mrgreen: :mrgreen: :mrgreen:

Stuff this in your back pocket. Hang it on your fridge. Tape it to your monitor. Make it your desktop background or phone screen background. Whatever works for you.

Image
Love this! I'm not quite sure I understand that first point ("markets average one -14% decline").
smectym
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Re: New Here Wondering About Possible Market Crash

Post by smectym »

PineForest wrote: Fri Jan 24, 2020 5:12 pm Thanks to everyone for the informative (and entertaining! :D) responses. Very helpful.
You've come to the right place, and even when the advice conflicts it is valuable stuff
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Watty
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Re: New Here Wondering About Possible Market Crash

Post by Watty »

PineForest wrote: Thu Jan 23, 2020 9:57 pm Even though I'm 44,...
As odd is it sounds during the accumulation phase the best thing that could happen for you would be is if the stock market crashed while you were making 401k contributions from every paycheck. You would be buying stocks at a low price while they are on sale.

During the stock market crash in 2008 I was not only making my normal 401k contributions but I increased them since I was concerned. I did not track it carefully but I would guess that when the market eventually recovered I made enough to retire a few years early since I was able to buy stocks with they were low.
nix4me
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Re: New Here Wondering About Possible Market Crash

Post by nix4me »

Time in the market is more important than trying to time the market.
mimiesg
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Re: New Here Wondering About Possible Market Crash

Post by mimiesg »

Watty wrote: Fri Jan 24, 2020 10:12 pm
PineForest wrote: Thu Jan 23, 2020 9:57 pm Even though I'm 44,...
As odd is it sounds during the accumulation phase the best thing that could happen for you would be is if the stock market crashed while you were making 401k contributions from every paycheck.
Till what age do you consider it as the accumulation phase?

- Till the day you stop putting money into the 401k and retire at 65?

... - Or does it end 5-10 years before since the percentage is not enough to budge?
KlangFool
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Re: New Here Wondering About Possible Market Crash

Post by KlangFool »

mimiesg wrote: Fri Jan 24, 2020 10:46 pm
Watty wrote: Fri Jan 24, 2020 10:12 pm
PineForest wrote: Thu Jan 23, 2020 9:57 pm Even though I'm 44,...
As odd is it sounds during the accumulation phase the best thing that could happen for you would be is if the stock market crashed while you were making 401k contributions from every paycheck.
Till what age do you consider it as the accumulation phase?

- Till the day you stop putting money into the 401k and retire at 65?

... - Or does it end 5-10 years before since the percentage is not enough to budge?
mimiesg,

When you are employed, you are accumulating. If you are unemployed, you live on your emergency fund until you need to withdraw from your portfolio. So, unless you have good job security even in the case of recession, the phases do not exist.

I had been unemployed for more than 1 year a few times. My portfolio is designed not to assume those phases. My AA ranged from 70/30 to 60/40 over the past 10+ years. It is balanced enough that I could retire with the AA if I need to.

KlangFool
JonnyB
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Re: New Here Wondering About Possible Market Crash

Post by JonnyB »

nisiprius wrote: Fri Jan 24, 2020 9:05 am In late 1997, when Alan Greenspan made his "irrational exuberance" speech, I said "that's the clearest thing Alan Greenspan has ever said, and he's in a position to really know." I didn't sell all my stocks or anything like that, but I did trim back my stock allocation. I partly missed out on three years of the best stock market growth ever.
If you took your sales of stocks in 1997 and put them in the Total Bond Fund, it may have been the smartest investment decision you ever made. You would have been ahead all the up to late 2013 -- 16 years later. You should be thanking Greenspan and Shiller for warning you about irrational exuberance.
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Watty
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Re: New Here Wondering About Possible Market Crash

Post by Watty »

mimiesg wrote: Fri Jan 24, 2020 10:46 pm
Watty wrote: Fri Jan 24, 2020 10:12 pm
PineForest wrote: Thu Jan 23, 2020 9:57 pm Even though I'm 44,...
As odd is it sounds during the accumulation phase the best thing that could happen for you would be is if the stock market crashed while you were making 401k contributions from every paycheck.
Till what age do you consider it as the accumulation phase?

- Till the day you stop putting money into the 401k and retire at 65?

... - Or does it end 5-10 years before since the percentage is not enough to budge?
Technically it is until you stop putting money in the 401k but there are many factors to consider.
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