Thinking about (temporarily) moving all *retirement* stock to bonds - please help

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surfstar
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Re: Thinking about (temporarily) moving all *retirement* stock to bonds - please help

Post by surfstar »

I read about a 1/3, and I know my first point has been covered:

1. No. Its a stupid idea.

2. I guess it doesn't really matter b/c you want/plan to work until you die anyways. In that case, plan for your heirs and go 100% stock!
Retiredat57
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Re: Thinking about (temporarily) moving all *retirement* stock to bonds - please help

Post by Retiredat57 »

My risk tolerance is very low (S-25/B-70/C-5) and even I am not liking this. I haven't sold anything this week and in fact have bought some more VOO shares on each of these 1,000+ down days. My portfolio is roughly 50/50 between retirement and non-retirement monies and I could easily sustain for a decade or more before having to access any retirement funds, so I'm not that concerned.
Last edited by Retiredat57 on Fri Feb 28, 2020 3:02 am, edited 1 time in total.
Elysium
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Re: Thinking about (temporarily) moving all *retirement* stock to bonds - please help

Post by Elysium »

CT-Scott wrote: Thu Feb 27, 2020 4:21 pm The worst case scenario that many of you are predicting (locking in last week's losses, unrealized gains, and missing out on stocks recovering quickly) over the next few months feels a lot more comfortable to me than the worst case scenario that I fear, which might be stocks tanking 50% and taking a long time to recover.
No, the worst case scenario for you is likely to be as follows. You get out of stocks and into stable value now, the stock market continues it's losing streak for a few more days/weeks and you feel justified, but then stock market recovers without warning and without having any new updates on coronavirus, because stocks market often does that and news follows. News says everything under control for safe sailing. Stocks rally non-stop.

Fine you think it's only back to even or perhaps 1% to 2% more gains, and you are okay giving that up. You feel better and get back in, then within weeks stocks drop on another news/event, perhaps coronavirus is back with even more severity and the sell off this time results in actual 50% drop. What will you do, sell again and move to cash or stay put? How many times will you sell and buy? Do you actually believe this event is so unique that no other event like this will ever happen again?

Ever heard of the saying "stock market climbs a wall of worries", that is what it is, there is always something to worry. If you don't feel comfortable sell to your sleeping point instead of trying to predict outcomes and act on emotions.
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knpstr
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Re: Thinking about (temporarily) moving all *retirement* stock to bonds - please help

Post by knpstr »

Go for it.

You've been given logical rebuttals, you are not going to change your mind. An opportunity cost is a cost. You said you are okay with paying this cost.

And lets face it, we really don't care what you do.

So other than being an unwise thing to do which could end up costing you a LOT of money, no there is no other downside.

Enjoy those bonds!
Very little is needed to make a happy life; it is all within yourself, in your way of thinking. -Marcus Aurelius
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CT-Scott
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Re: Thinking about (temporarily) moving all *retirement* stock to bonds - please help

Post by CT-Scott »

muffins14 wrote: Thu Feb 27, 2020 4:11 pmSo now the plan is to avoid stocks and also most bonds until the US no longer has democratic elections? Or will you invest as long as you are more than 10 months before or 10 months after an election? Or is this year a special case, because "this time is different"?
Keep the sarcastic and mean-spirited comments coming, people. I honestly don't mind, and am having some fun discussing this now. This morning, I felt sick to my stomach. Were we making a huge mistake? I'm still not certain if my transfers will take effect today (I'm hoping so - anyone know the answer to this? When going through the transfer process, it seemed to indicate that it would be done today, but it also told me that I'd get a confirmation in 7 days or so, which seems odd. Can someone help me understand this?). Anyway, as I'm typing this, I'm actually feeling much better about it. Well, I'd feel even better had I done it a week ago, but I'm not regretting the decision to *temporarily* put my funds in a safer spot (assuming the very few helpful replies were accurate).

Anyway, to answer your "questions"...

Q: When will you invest again in stocks and/or bonds?
A: I'm going to give you an answer that will make you roll your eyes even more: I'm going to use my gut. My gut/instinct and the little bit of study that I have done, which helped me form my general philosophy (as outlined in my last post) has done pretty well for my wife and I over the last few years. It helps that we're both gainfully employed making decent money, have no debt other than our house and an extremely low interest car loan on a used car, and our daughter will be graduating college shortly. Well, I do have another indulgent purchase/loan (a used boat 2 years ago) that I have a contract on, and hope to be free of in the next month (hopefully the market doesn't give the buyer cold feet). When I feel better about the Coronavirus situation (and assuming I'm not overly concerned about some other thing - which I hadn't been over the last several years), then I'll make some moves. In fact, over the next 30 days (while I'll be restricted from moving things again, anyway), I'll probably try to learn more about some of the investment options in our various accounts (bond funds, in particular), and will hopefully feel ready to move back into a stock/bond mix of some sort. But the more I've thought about this today (and my opinions could change), the more I'm thinking that I may go heavy with bonds (and maybe even keep some percentage in value funds, depending on what I learn about my bond options) to "protect" a large amount of that ~$1M we've saved.

Q: Since you're planning to work until you die anyway, why not just go all-in on stocks to benefit your heirs?
A: You're misinterpreting my situation and my feelings about retirement and working until I die. I would ideally like to get to a place where I could quit my day job and work for myself (possibly my wife and I working together). I had a small side business that I started many years ago (still technically alive, but no current customers), that I've recently thought about reviving. I have other "side hustle" ideas that I'd like to experiment with. But I can't afford (today) to be able to quit my job. My wife, meanwhile, is pretty miserable in her well-paying job. So, we've talked about downsizing our house, significantly cutting eating out, etc., to reduce our cost of living expenses. If we can get that down far enough, and then supplement/transition to self-employment doing something we love, maybe that ~$1M (supplemented with SS) won't be too far from what we could eventually live off of. But if I keep it invested heavily in stocks and the market drops 50%, we'll both feel like we're "stuck" having to continue working a stressful high-paying job, combined with being stressed that we could lose our jobs and have trouble finding another job at our now-somewhat-older ages.
jacoavlu
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Re: Thinking about (temporarily) moving all *retirement* stock to bonds - please help

Post by jacoavlu »

this is not really meant to be insulting, but it will sound like it. Sorry in advance.

A lot of this talk reminds me of my wife playing fantasy football and trying to pick who to play at tight end. (She didn't draft a good tight end.)

She's looking at who got more targets or ran more routes last week, or which defense has been bad against tight ends the past few weeks, or so and so got three end zone targets last time they played so and so, and the weather in such and such place is going to be bad.

You can't analyze your way to the right decision. Because no one knows what will happen.
muffins14
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Re: Thinking about (temporarily) moving all *retirement* stock to bonds - please help

Post by muffins14 »

CT-Scott wrote: Thu Feb 27, 2020 4:21 pm
The worst case scenario that many of you are predicting (locking in last week's losses, unrealized gains, and missing out on stocks recovering quickly) over the next few months feels a lot more comfortable to me than the worst case scenario that I fear, which might be stocks tanking 50% and taking a long time to recover.
And this feeling is totally fair, so it's good we got to that point eventually
theplayer11
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Re: Thinking about (temporarily) moving all *retirement* stock to bonds - please help

Post by theplayer11 »

CT-Scott wrote: Thu Feb 27, 2020 5:01 pm
muffins14 wrote: Thu Feb 27, 2020 4:11 pmSo now the plan is to avoid stocks and also most bonds until the US no longer has democratic elections? Or will you invest as long as you are more than 10 months before or 10 months after an election? Or is this year a special case, because "this time is different"?
Keep the sarcastic and mean-spirited comments coming, people. I honestly don't mind, and am having some fun discussing this now. This morning, I felt sick to my stomach. Were we making a huge mistake? I'm still not certain if my transfers will take effect today (I'm hoping so - anyone know the answer to this? When going through the transfer process, it seemed to indicate that it would be done today, but it also told me that I'd get a confirmation in 7 days or so, which seems odd. Can someone help me understand this?). Anyway, as I'm typing this, I'm actually feeling much better about it. Well, I'd feel even better had I done it a week ago, but I'm not regretting the decision to *temporarily* put my funds in a safer spot (assuming the very few helpful replies were accurate).

Anyway, to answer your "questions"...

Q: When will you invest again in stocks and/or bonds?
A: I'm going to give you an answer that will make you roll your eyes even more: I'm going to use my gut. My gut/instinct and the little bit of study that I have done, which helped me form my general philosophy (as outlined in my last post) has done pretty well for my wife and I over the last few years. It helps that we're both gainfully employed making decent money, have no debt other than our house and an extremely low interest car loan on a used car, and our daughter will be graduating college shortly. Well, I do have another indulgent purchase/loan (a used boat 2 years ago) that I have a contract on, and hope to be free of in the next month (hopefully the market doesn't give the buyer cold feet). When I feel better about the Coronavirus situation (and assuming I'm not overly concerned about some other thing - which I hadn't been over the last several years), then I'll make some moves. In fact, over the next 30 days (while I'll be restricted from moving things again, anyway), I'll probably try to learn more about some of the investment options in our various accounts (bond funds, in particular), and will hopefully feel ready to move back into a stock/bond mix of some sort. But the more I've thought about this today (and my opinions could change), the more I'm thinking that I may go heavy with bonds (and maybe even keep some percentage in value funds, depending on what I learn about my bond options) to "protect" a large amount of that ~$1M we've saved.

Q: Since you're planning to work until you die anyway, why not just go all-in on stocks to benefit your heirs?
A: You're misinterpreting my situation and my feelings about retirement and working until I die. I would ideally like to get to a place where I could quit my day job and work for myself (possibly my wife and I working together). I had a small side business that I started many years ago (still technically alive, but no current customers), that I've recently thought about reviving. I have other "side hustle" ideas that I'd like to experiment with. But I can't afford (today) to be able to quit my job. My wife, meanwhile, is pretty miserable in her well-paying job. So, we've talked about downsizing our house, significantly cutting eating out, etc., to reduce our cost of living expenses. If we can get that down far enough, and then supplement/transition to self-employment doing something we love, maybe that ~$1M (supplemented with SS) won't be too far from what we could eventually live off of. But if I keep it invested heavily in stocks and the market drops 50%, we'll both feel like we're "stuck" having to continue working a stressful high-paying job, combined with being stressed that we could lose our jobs and have trouble finding another job at our now-somewhat-older ages.
Don't take this the wrong way, but you really should not be in the stock market...or perhaps you need an advisor to invest for you. You don't sell into panic selling. I will be buying if the market drops further.
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CT-Scott
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Re: Thinking about (temporarily) moving all *retirement* stock to bonds - please help

Post by CT-Scott »

theplayer11 wrote: Thu Feb 27, 2020 5:14 pmI will be buying if the market drops further.
I'll hold you to it. If VTSAX loses value tomorrow, how much will you be buying?
b42
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Re: Thinking about (temporarily) moving all *retirement* stock to bonds - please help

Post by b42 »

Here's a good article on "The World's Worst Market Timer":

https://awealthofcommonsense.com/2014/0 ... ket-timer/
skisk
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Re: Thinking about (temporarily) moving all *retirement* stock to bonds - please help

Post by skisk »

I shifted almost all our retirement holding over to bonds last Sunday (Feb 23) after reading about Iran, Italy and South Korea over the weekend. I have set a very arbitrary 3 month time to when I will shift the funds back to stocks again.

I have no idea if this is the right decision, however my reasoning was that the financial impact of the virus had not been recognized enough by the stock market at that point. In the end it may turn out to be a bad decisions if stocks rebound and start gaining again, and if so I will have fewer holdings when I jump back in again in 3 months time.
helloeveryone
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Re: Thinking about (temporarily) moving all *retirement* stock to bonds - please help

Post by helloeveryone »

CT-Scott wrote: Wed Feb 26, 2020 9:09 pm I posted this in the Coronavirus thread, and decided that it's better served in a dedicated thread. Please pretend that Coronavirus isn't even a thing, because I'm really asking questions here about the process of moving (large) amounts of money from one fund to another *inside* of a 401k account, and whatever tax implications or other costs are involved, as well as any other risks/factors I might be missing.

First, some background: my wife and I are fully employed and our average age is about 50. Right now, the bulk of our funds are in 401k accounts, and let's say that we're allocated roughly 75% total US stock market (e.g., VTSAX), 10% international stock (e.g., VTIAX), and 15% bonds (e.g., VBTLX).

Now, after a rough week of the stock market plummeting, where I normally would "stay the course", let's say that I feel like things *might* be different and that things *might* get a whole lot worse. Some observations:

- VTSAX (stock market) - the last 3 months of gains have been practically eliminated in the course of just this last week. News might get a *LOT* better tomorrow, and stocks could start going up again, but it seems unlikely that the gains would happen as quickly and significantly as the losses. In other words, if things turn around tomorrow, it seems near impossible that VTSAX will regain the 8% it lost this past week in one week (correct me if you think I'm wrong, but please provide real examples of when that has happened).

- VBTLX (bonds) - this gained significantly over the last week, but even looking back over the last 1 year or 2 years, it's been up.

So...extreme scenario: If I were to move *EVERYTHING* in my *retirement* accounts (i.e., no tax implications) from VTSAX to VBTLX, what's the worst that would happen to my investments? VTSAX could rebound (slowly), and VBTLX could *maybe* (???) drop, but also would do so slowly (right?). In which case, then I just move things back again, taking a *temporary* but *mild* hit to the gains that I otherwise would have had, had I just left things as-is. Again, just to be super-clear, I'm talking about 401k accounts, where I can request moving 100% of my money from one fund to another one day, and then move 100% of my money to another fund right after, all without any tax implications (right?).

Am I overlooking something significant here? I'm not asking for your opinion about whether or not holding 100% of my money in bonds vs stock for a month or more is "dumb". I'm not asking you for your opinion (or John Bogle's opinion) on whether or not my fears are irrational. I'm asking specifically (and only) if I'm being stupid in assuming that there's no significant cost implications (or other implications?) to moving 100% of my money from one fund to another *INSIDE* of my 401k account, *other* than potential unrealized gains from leaving it as-is for that time duration.
I'm not answering your question so I apologize. But looking at your post- you are at 85% stock 15% bonds. You are looking to move everything to bond temporarily based on your concerns over corona virus. Then you will get back into the market.

Also - you have no plans on retiring for at least 10-15 years and perhaps may never retire.

Thus - as others have said - a great recommendation is to stay the course or adjust your asset allocation to something that is comfortable for you to not take any action as you are wanting to.

The link below has two graphs that I have come across in the past and help me justify staying the course. One graph is the S&P 500 corrections and another the S&P 500 bear markets - by percent drops, and number of days to recovery. The days to recovery in the past has never been 10-15 years away.

Since you are AT LEAST 10-15 years away from retirement - the two graphs help me note that regardless of what the drop will be - it will recover by the time you retire. Thus - staying the course is perfectly safe and acceptable for your timeline. By staying the course - you leave your stocks intact (adjust allocation to make sure you are comfortable - it seems like 85% stocks is not at your comfort level). Thus - every month when you invest - you are buying low, and every quarter when dividends get paid out you are buying low.

Other things BH has taught me is that it's time in the market that matters. Not timing the market.
Sometimes we can only learn from our mistakes and this might me the mistake you make that you learn from. (unless you get lucky which could always happen)

https://blog.wealthfront.com/stock-mark ... you-think/
carminered2019
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Re: Thinking about (temporarily) moving all *retirement* stock to bonds - please help

Post by carminered2019 »

LOL, I am doing the opposite as the OP. I sold high 6 digit bond portfolio and so far I bought 100K total US and 25K total international. Next purchase will be -20%, -40%, -50% then ammo.
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climber2020
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Re: Thinking about (temporarily) moving all *retirement* stock to bonds - please help

Post by climber2020 »

All of the "Why Bonds?" posts that occur at least once a week should redirect to this thread.
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Re: Thinking about (temporarily) moving all *retirement* stock to bonds - please help

Post by Grt2bOutdoors »

Big mistake! If you do that for the reason of market timing which it sounds like you are when you ask a question like "What's going to happen, bonds will move up slowly or total stock market will move up slowly"? Like you know or us for that matter! The market declined 10% in 6 days, what's to say that the reverse will not happen, it will go up 10% in 3 days because where else is it going to go? Under the mattress?

The preferred route for you is to create an Investment Policy Statement that maps out your actions far in advance of any market hiccups, up or down. Obviously, in hindsight, it appears your asset allocation was way too aggressive for you. Remember, invest based on need, willingness and ability. You don't have the willingness to stick through a 10-20% decline in equity markets, so 85% allocation is clearly too risky for you. How about a 65/35 or 60/40 allocation from now until you get to retirement ~ steady as she goes, stay the course through ups and downs. Going 100% to bonds? Not unless you have enough in the kitty to tide you over for 50 years. Do you?
"One should invest based on their need, ability and willingness to take risk - Larry Swedroe" Asking Portfolio Questions
Grt2bOutdoors
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Re: Thinking about (temporarily) moving all *retirement* stock to bonds - please help

Post by Grt2bOutdoors »

CT-Scott wrote: Thu Feb 27, 2020 5:34 pm
theplayer11 wrote: Thu Feb 27, 2020 5:14 pmI will be buying if the market drops further.
I'll hold you to it. If VTSAX loses value tomorrow, how much will you be buying?
I'm buying what my Investment Policy Statement says to buy which is my allocation across domestic, international and fixed income.
"One should invest based on their need, ability and willingness to take risk - Larry Swedroe" Asking Portfolio Questions
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dmcmahon
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Re: Thinking about (temporarily) moving all *retirement* stock to bonds - please help

Post by dmcmahon »

MathWizard wrote: Wed Feb 26, 2020 11:36 pm Move some, but not all.

It sounds like you have too aggressive an AA. Better to take a small loss now, selling after a small percentage drop than selling all at the bottom .

If you went to a 50/50 AA would you sleep better?
I would second this. If you’re worrying then it’s a sign you’ve been too aggressive.
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DrPayItBack
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Re: Thinking about (temporarily) moving all *retirement* stock to bonds - please help

Post by DrPayItBack »

Grt2bOutdoors wrote: Thu Feb 27, 2020 7:03 pm
CT-Scott wrote: Thu Feb 27, 2020 5:34 pm
theplayer11 wrote: Thu Feb 27, 2020 5:14 pmI will be buying if the market drops further.
I'll hold you to it. If VTSAX loses value tomorrow, how much will you be buying?
I'm buying what my Investment Policy Statement says to buy which is my allocation across domestic, international and fixed income.
Yeah, legitimately confused by this question. I sold a few thousand in bonds to rebalance into equities today. Will repeat if balance is thrown off by enough again.
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CT-Scott
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Re: Thinking about (temporarily) moving all *retirement* stock to bonds - please help

Post by CT-Scott »

Grt2bOutdoors wrote: Thu Feb 27, 2020 7:00 pmLike you know or us for that matter! The market declined 10% in 6 days, what's to say that the reverse will not happen, it will go up 10% in 3 days because where else is it going to go? Under the mattress?
Two things:
1) When was the last time that VTSMAX went up 10% in 3 days?
2) "Like you know or us for that matter!" - No, I don't *know*, but I'm starting to think that I have more common sense than many here. If I'm driving 80 miles/hour on the highway and I see a crash one mile ahead, I don't just "stay on course" because I know that *eventually* that wreck will be cleaned up and out of the way. No, I think, I'm going to slow down and see if there's an exit between me and that crash, so that I can avoid being stuck here for the next 2 hours.
muffins14
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Re: Thinking about (temporarily) moving all *retirement* stock to bonds - please help

Post by muffins14 »

Out of curiosity, what were your actions when the stock market fell by 15% in Dec 2018? Did that experience change your approach to investing?
carminered2019
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Re: Thinking about (temporarily) moving all *retirement* stock to bonds - please help

Post by carminered2019 »

CT-Scott wrote: Thu Feb 27, 2020 8:51 pm
Grt2bOutdoors wrote: Thu Feb 27, 2020 7:00 pmLike you know or us for that matter! The market declined 10% in 6 days, what's to say that the reverse will not happen, it will go up 10% in 3 days because where else is it going to go? Under the mattress?
Two things:
1) When was the last time that VTSMAX went up 10% in 3 days?
2) "Like you know or us for that matter!" - No, I don't *know*, but I'm starting to think that I have more common sense than many here. If I'm driving 80 miles/hour on the highway and I see a crash one mile ahead, I don't just "stay on course" because I know that *eventually* that wreck will be cleaned up and out of the way. No, I think, I'm going to slow down and see if there's an exit between me and that crash, so that I can avoid being stuck here for the next 2 hours.
so did you pull the trigger to go all bonds ? your money, go for it !
Nightowl99
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Re: Thinking about (temporarily) moving all *retirement* stock to bonds - please help

Post by Nightowl99 »

Are you kidding? Making the "temporary" change of selling stock funds when the Dow just had the biggest one day drop in history is selling low, the opposite of what you're supposed to do, and could easily result in a permanent loss to your portfolio because you don't know when stocks will rise again. It could happen right after you've sold them. Then what are you going to do, buy them back at a higher price? Or stay in 100% bonds too long and risk losing money to inflation?
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FS51
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Re: Thinking about (temporarily) moving all *retirement* stock to bonds - please help

Post by FS51 »

Trolling bogleheads? All I can figure.
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Re: Thinking about (temporarily) moving all *retirement* stock to bonds - please help

Post by pkcrafter »

CT-Scott:
Looking back to 2008, it appears that *both* bonds and stocks fell sharply.
Vanguard total bond fund was up 5.05% in 2008.
Vanguard total stock market was down -38% and it was no fun.
I am retired and was holding a 40/60 portfolio and it was down 22%, which was quite manageable.

When looking at risk you must consider need, ability, and willingness. At 85% stock you obviously don't have willingness (emotional ability), and probably don't have need.

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.
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arcticpineapplecorp.
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Re: Thinking about (temporarily) moving all *retirement* stock to bonds - please help

Post by arcticpineapplecorp. »

pkcrafter wrote: Thu Feb 27, 2020 9:38 pm CT-Scott:
Looking back to 2008, it appears that *both* bonds and stocks fell sharply.
Vanguard total bond fund was up 5.05% in 2008.
Vanguard total stock market was down -38% and it was no fun.
I am retired and was holding a 40/60 portfolio and it was down 22%, which was quite manageable.

When looking at risk you must consider need, ability, and willingness. At 85% stock you obviously don't have willingness (emotional ability), and probably don't have need.

Paul
thanks for posting this Paul. I saw CT-Scott's post earlier today at work and wanted to post a correction but you beat me to it.

There is some truth that bonds fell on Oct 30, 2008...by 2.54% (between 10/1/08-10/30/08) but the U.S. stock market fell 19.11% during the same time. See link below

source: http://quotes.morningstar.com/chart/fun ... A%5B%5D%7D

But as Paul showed, the total bond index went up (5.14% according to morningstar) and U.S. stock lost 37%:

http://quotes.morningstar.com/chart/fun ... A%5B%5D%7D

Right now, while the U.S. stock market is down 7.44% ytd, the total bond market is UP 3.32%:

Image
It's "Stay" the course, not Stray the Course. Buy and Hold works. You should really try it sometime. Get a plan: www.bogleheads.org/wiki/Investment_policy_statement
TallBoy29er
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Re: Thinking about (temporarily) moving all *retirement* stock to bonds - please help

Post by TallBoy29er »

You are making emotional decisions. They will bite you in the end. Careful.
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sergeant
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Re: Thinking about (temporarily) moving all *retirement* stock to bonds - please help

Post by sergeant »

skisk wrote: Thu Feb 27, 2020 5:42 pm I shifted almost all our retirement holding over to bonds last Sunday (Feb 23) after reading about Iran, Italy and South Korea over the weekend. I have set a very arbitrary 3 month time to when I will shift the funds back to stocks again.

I have no idea if this is the right decision, however my reasoning was that the financial impact of the virus had not been recognized enough by the stock market at that point. In the end it may turn out to be a bad decisions if stocks rebound and start gaining again, and if so I will have fewer holdings when I jump back in again in 3 months time.
Congratulations on your timing prowess. Do tell which retirement provider allows asset changes on Sunday?
AA- 20+ Years of Expenses Fixed Income/The remainder in Equities.
Triple digit golfer
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Re: Thinking about (temporarily) moving all *retirement* stock to bonds - please help

Post by Triple digit golfer »

CT-Scott wrote: Thu Feb 27, 2020 8:51 pm
Grt2bOutdoors wrote: Thu Feb 27, 2020 7:00 pmLike you know or us for that matter! The market declined 10% in 6 days, what's to say that the reverse will not happen, it will go up 10% in 3 days because where else is it going to go? Under the mattress?
Two things:
1) When was the last time that VTSMAX went up 10% in 3 days?
2) "Like you know or us for that matter!" - No, I don't *know*, but I'm starting to think that I have more common sense than many here. If I'm driving 80 miles/hour on the highway and I see a crash one mile ahead, I don't just "stay on course" because I know that *eventually* that wreck will be cleaned up and out of the way. No, I think, I'm going to slow down and see if there's an exit between me and that crash, so that I can avoid being stuck here for the next 2 hours.
So go through with your plan and keep us up to date. Maybe we'll learn something.
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Re: Thinking about (temporarily) moving all *retirement* stock to bonds - please help

Post by HomerJ »

CT-Scott wrote: Thu Feb 27, 2020 4:21 pmThe worst case scenario that many of you are predicting (locking in last week's losses, unrealized gains, and missing out on stocks recovering quickly) over the next few months feels a lot more comfortable to me than the worst case scenario that I fear, which might be stocks tanking 50% and taking a long time to recover.
Your post was very informative. Nice work.

One last time, 50/50 is probably an excellent long-term strategy for you. Best of both worlds.

Once you are 100% bonds, it's going to be hard to decide when to go back to 85/15. Once you start moving in and out, it will be hard to go back to just "buy and hold".

You should ALWAYS be worried about having $1 million plus at risk.

The risk will not be zero in 2 months or 6 months or 1 year. If you go back to 85/15, that full $1 million (and growing) will absolutely be at risk of a 50% crash taking a long time to recover.

That can happen at any time. You can't count on seeing it coming.

50/50 is the way to go... Not jumping back and forth between 100% bonds and 85/15 stocks/bonds. Once you go 100% bonds, I guarantee it will drive you crazy trying to decide when to get back in, and when to get out again (the NEXT time you get nervous).
A Goldman Sachs associate provided a variety of detailed explanations, but then offered a caveat, “If I’m being dead-### honest, though, nobody knows what’s really going on.”
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Re: Thinking about (temporarily) moving all *retirement* stock to bonds - please help

Post by CT-Scott »

arcticpineapplecorp. wrote: Thu Feb 27, 2020 10:03 pm thanks for posting this Paul. I saw CT-Scott's post earlier today at work and wanted to post a correction but you beat me to it.
I beat you *both* to it. Read my post from about 12 posts back.
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Re: Thinking about (temporarily) moving all *retirement* stock to bonds - please help

Post by HomerJ »

skisk wrote: Thu Feb 27, 2020 5:42 pm I shifted almost all our retirement holding over to bonds last Sunday (Feb 23) after reading about Iran, Italy and South Korea over the weekend.
How did you do that on a Sunday when the markets were closed?
A Goldman Sachs associate provided a variety of detailed explanations, but then offered a caveat, “If I’m being dead-### honest, though, nobody knows what’s really going on.”
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Re: Thinking about (temporarily) moving all *retirement* stock to bonds - please help

Post by CT-Scott »

muffins14 wrote: Thu Feb 27, 2020 9:11 pm Out of curiosity, what were your actions when the stock market fell by 15% in Dec 2018? Did that experience change your approach to investing?
I did nothing special. That did not phase me. This feels different to me, so I'm reacting. Time will tell if I'm right or wrong, but guessing wrong seems like it will have a lot more impact than guessing right here.
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Re: Thinking about (temporarily) moving all *retirement* stock to bonds - please help

Post by TheDDC »

HomerJ wrote: Thu Feb 27, 2020 10:22 pm
CT-Scott wrote: Thu Feb 27, 2020 4:21 pmThe worst case scenario that many of you are predicting (locking in last week's losses, unrealized gains, and missing out on stocks recovering quickly) over the next few months feels a lot more comfortable to me than the worst case scenario that I fear, which might be stocks tanking 50% and taking a long time to recover.
Your post was very informative. Nice work.

One last time, 50/50 is probably an excellent long-term strategy for you. Best of both worlds.

Once you are 100% bonds, it's going to be hard to decide when to go back to 85/15. Once you start moving in and out, it will be hard to go back to just "buy and hold".

You should ALWAYS be worried about having $1 million plus at risk.

The risk will not be zero in 2 months or 6 months or 1 year. If you go back to 85/15, that full $1 million (and growing) will absolutely be at risk of a 50% crash taking a long time to recover.

That can happen at any time. You can't count on seeing it coming.

50/50 is the way to go... Not jumping back and forth between 100% bonds and 85/15 stocks/bonds. Once you go 100% bonds, I guarantee it will drive you crazy trying to decide when to get back in, and when to get out again (the NEXT time you get nervous).
50/50 is a silly AA. If you are that averse then just stay all cash.

This thread is hilarious. It is also illustrative regarding why you should always have a passive income source in retirement as you need to continue to backfill your stock allocation. “Decumulation” is always a sorry state to be in. If anything you want to reduce drawing from mutual funds at times like this.

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Re: Thinking about (temporarily) moving all *retirement* stock to bonds - please help

Post by MIretired »

CT-Scott wrote: Thu Feb 27, 2020 10:29 pm
muffins14 wrote: Thu Feb 27, 2020 9:11 pm Out of curiosity, what were your actions when the stock market fell by 15% in Dec 2018? Did that experience change your approach to investing?
I did nothing special. That did not phase me. This feels different to me, so I'm reacting. Time will tell if I'm right or wrong, but guessing wrong seems like it will have a lot more impact than guessing right here.
Agree. You stay the course because you don't know when/if there's a recession. But when you get a fair warning of things to come, you have reason to be on guard.
I sold some today. I'm in decummulation, and don't want the risks when the probability is this high. I won't need to withdraw much at all once on SS, but why risk possibly flushing it away.
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Re: Thinking about (temporarily) moving all *retirement* stock to bonds - please help

Post by CT-Scott »

HomerJ wrote: Thu Feb 27, 2020 10:22 pm Your post was very informative. Nice work.

One last time, 50/50 is probably an excellent long-term strategy for you. Best of both worlds.
Thanks. When I first saw your suggestion (I think in the other thread?...but things are starting to blur and my own thread here has now started to get into 4 pages), I thought 50/50 sounded crazy. I was at 85/15 - 90/10 and wondered if I should go all-stock for a while. So I was pretty certain yesterday that I was just looking to put things into limbo for a brief period, and then go aggressive again as soon as I felt like things were back to normal). But as the day progressed, and I was really evaluating my situation (often so that I could better explain to others here why it made sense to me), I came to actually be convinced that maybe I should be much more risk-averse than I have been.

We've got about $1M in retirement funds today...that's like hitting the lottery for many people. Sadly, with the lifestyle we've been living over the last several years, $1M wouldn't last long enough. But we've more recently gotten into agreement that we needed to ramp things back, and that we'd both prefer to be rid of the full-time jobs we have where we care too much about people and the end-result, while being unappreciated for it. As I responded to more and more replies in this thread, I started to think...if we really ratchet down our spending, downsize, etc., why *couldn't* we live comfortably with a $1M nest egg? So maybe preserving that $1M should be a high priority. We'll both be working for at least a few more years, so if I keep that $1M (or some high percentage of that) secure, then we'll still be able to contribute over and above that to higher-risk options while we continue to work. So, yeah, that 50/50 split is no longer sounding too-conservative to me.
HomerJ wrote: Thu Feb 27, 2020 10:22 pm50/50 is the way to go... Not jumping back and forth between 100% bonds and 85/15 stocks/bonds. Once you go 100% bonds, I guarantee it will drive you crazy trying to decide when to get back in, and when to get out again (the NEXT time you get nervous).
I think it all boils down to how secure/happy you are in your current work/financial situation. Over the last few years, I've felt reasonably secure in my job and content with what we could do financially, so being riskier in my 401k felt fine. As I (and my wife) have become less happy in our jobs, I've been thinking more about how to "get out" which requires some financial security blanket. We don't have that in our bank accounts, but if we look at our "retirement savings", and compare it to what many others have/lack, we're actually in pretty good shape *today*. The biggest factor that makes the current retirement savings seem insufficient is ourselves and our lifestyle, which is something we can choose to change. So many others (relatives of ours) are living happily, but more modestly, on far less per year than we currently "require."

...sorry...I really started to go off the rails here.
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Re: Thinking about (temporarily) moving all *retirement* stock to bonds - please help

Post by HomerJ »

TheDDC wrote: Thu Feb 27, 2020 10:35 pm50/50 is a silly AA. If you are that averse then just stay all cash.
I think you meant to say "If you are that risky, then just stay all in stocks"

(Both statements are equally true. And there lies the beauty of 50/50)
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Re: Thinking about (temporarily) moving all *retirement* stock to bonds - please help

Post by VikingThor »

CT-Scott wrote: Thu Feb 27, 2020 8:51 pm
Grt2bOutdoors wrote: Thu Feb 27, 2020 7:00 pmLike you know or us for that matter! The market declined 10% in 6 days, what's to say that the reverse will not happen, it will go up 10% in 3 days because where else is it going to go? Under the mattress?
Two things:
1) When was the last time that VTSMAX went up 10% in 3 days?
2) "Like you know or us for that matter!" - No, I don't *know*, but I'm starting to think that I have more common sense than many here. If I'm driving 80 miles/hour on the highway and I see a crash one mile ahead, I don't just "stay on course" because I know that *eventually* that wreck will be cleaned up and out of the way. No, I think, I'm going to slow down and see if there's an exit between me and that crash, so that I can avoid being stuck here for the next 2 hours.
Great analogy, it's common sense, you can see the wreck from a mile away and just drive around it and get right back on the road right after.

That analogy sums up the disconnect between you and everyone else. If you could see it a mile away you should have gotten out several days ago since you've already lost a lot of money.

So it's not so obvious when to get off and back on. But you seem to think everyone else lacks common sense and it's easy to do this. Maybe you are a genius and the rest of us are average. Why don't you just go ahead and get off the road and back on later and let us know how it goes.
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Re: Thinking about (temporarily) moving all *retirement* stock to bonds - please help

Post by skisk »

sergeant wrote: Thu Feb 27, 2020 10:07 pm
skisk wrote: Thu Feb 27, 2020 5:42 pm I shifted almost all our retirement holding over to bonds last Sunday (Feb 23) after reading about Iran, Italy and South Korea over the weekend. I have set a very arbitrary 3 month time to when I will shift the funds back to stocks again.

I have no idea if this is the right decision, however my reasoning was that the financial impact of the virus had not been recognized enough by the stock market at that point. In the end it may turn out to be a bad decisions if stocks rebound and start gaining again, and if so I will have fewer holdings when I jump back in again in 3 months time.
Congratulations on your timing prowess. Do tell which retirement provider allows asset changes on Sunday?
I put in the order on Sunday, and the transaction was done after the close of business on Monday. Hopefully it is not a surprise to anyone that it is possible to put in an order when the market is closed.
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Re: Thinking about (temporarily) moving all *retirement* stock to bonds - please help

Post by CT-Scott »

VikingThor wrote: Fri Feb 28, 2020 12:00 am Great analogy, it's common sense, you can see the wreck from a mile away and just drive around it and get right back on the road right after.

That analogy sums up the disconnect between you and everyone else. If you could see it a mile away you should have gotten out several days ago since you've already lost a lot of money.
Quite true. A better analogy might be that I'm in a Tesla which is driving itself, while I'm playing a game on my phone, and the accident happens several miles away. Traffic starts to slow down, eventually coming to a crawl. I can't see the accident itself from where I am, so I have no idea how long it will take to clear up. Instead of sitting in traffic knowing that it will *eventually* clear up (but having no idea how long it will take), I get off the next exit and use my Waze app to find an alternative route.

As I mentioned previously, I wasn't paying much attention to the market or the Coronavirus news until late last week. I logged in here earlier this week and found this thread (started by XM16E1 on Wed, 2/5):
viewtopic.php?f=10&t=302849

User Cnc replied with this at 11:32am of the same day (Wed, 2/5):
I really feel that the markets are missing something, much of China has been shut down for weeks. The sheer loss of production if everything starts back up today will knock global trade down more than trumps trade war. I just do not see how we are at all time highs and going up in this time of turmoil and lost production.
VTSAX closed at $82.35 that day, and would continue to move upward for the next couple of weeks.

The night of Tues, 2/25 I must have taken a look at VTSAX on my iPhone and saw that it had fallen significantly in the last couple of days. It had closed on Tues at $77.50...so down 5.9% since CnC posted his concern.

The next morning (Wed, 2/26) I thought, "Hey, I should see how the experts on the Bogleheads forum are reacting." I logged in here that morning, found that thread, and read the entire thing through the course of the day (I was working and quite busy, so I could only spare a few mins here and there to read it). It took me until the evening to finish reading it all. There were several people like CnC ringing some alarm bells, but *FAR* more Bogleheads chanting "stay the course." I wasn't impressed with the arguments put forth by most of the Bogleheads, and more swayed by the arguments of the alarmists. That's where my "gut" was.

But VTSAX closed at $77.08 on Wed, so it was down less than 1% for the day. I was hopeful that I still had time to mull things over, and get some advice. I posted my first reply to that thread that evening, which read:
So, I'm late to this thread. It took me a LONG time to read every single post here. Average age for my wife and I is approx 50. Right now, my wife and I have less than 10% of our retirement accounts in bonds. Most of it is in total US stock market or similar (e.g., VFIAX, VTSAX). I'm thinking about pulling the trigger and reallocating a significant chunk to bonds (no idea how much) while I wait for this situation to become better understood.

Suggestions?
So then I waited to see if anyone would reply to me directly. Here are the first couple of replies I got that night...

User knpstr said:
If you're reallocating due to coronavirus fears I'd suggest you not do it.
User deviant355 said:
It's buy low, sell high. Many would consider this a good time to buy more stocks, not sell them.
I replied back, and there was some back-and-forth. I wasn't feeling convinced, but also wasn't getting any helpful answers to the specific questions I was asking (trying to confirm just how "safe" bonds were if the market crashed). So then I started this thread (at 10:09pm that same night). My gut was telling me to move my funds into something safer, but I waited a bit to see what the "experts" here had to say and, more importantly, to try to get (as quickly as possible) confirmation as to whether I should move to VBTLX, something else, or if we were helpless (i.e., anything available in our 401k accounts would fall if the Coronavirus was a big deal).

My wife asked me why I was looking for validation from a bunch of strangers in a forum. "What do they know?" she asked. "They're very knowledgable about stocks and bonds," I replied. She and I were both on-board with moving the funds, but I still wasn't certain how drastic I should be (30%? 50%? 100%?) and I still wasn't sure *what* to move them to.

The next morning (Thurs, 2/28), I logged in, hoping to find more help on whether bonds were the right thing, and also asked about the "value" funds. I wanted to move quickly, and get an answer to that, but was mostly hearing more of "stay the course." A couple of helpful people did tell me that the "value" fund might be the most stable, so I pulled the trigger. The sale went through that day (yesterday), but much damage had been done, with VTSAX closing at $73.76 (down 4.3%) (I should note that I actually have VFIAX in my 401k, we have VTSAX in our Roth IRA's, and my wife has some other similar thing in her Prudential account).

So, between the time my "gut" told me to act, and when I actually pulled the trigger, I needed information, thought it best to seek it from this forum, and instead got mostly "stay the course", so I had to also try educating myself (quickly and probably not very well) on "value" funds outside of this forum. The overall turnaround time (Wed night to late Thurs morning) seems insignificant, but probably cost me some of that extra 4.3% loss.

Looking back, I wish I had looked at my stock app a few days sooner, but I hadn't. So, I've lost about 12% since the peak (of last week), and am back to where things were valued in mid-October (which sounds better than thinking about the 12% loss). Spinning this more positively, the price I sold at is still up about 60% from where VFIAX/VTSAX was at in early 2016. But I don't remember off-hand how long I've been heavily allocated in those funds (something for me to try to track down later).

Stocks could pop back up today and start rocketing upward and then I'll look back and wish I had never looked at my stock app this week. Or maybe my gut will have saved us from much worse damage. We'll see as the days/weeks/months progress.
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Re: Thinking about (temporarily) moving all *retirement* stock to bonds - please help

Post by tlk59 »

Whelp different strokes--I'll be going 100% stock as of close today (have had ~28% bond allocation in recent times). And yes, in that I am no less a market timer. My only point: That's what makes a market I guess!
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Re: Thinking about (temporarily) moving all *retirement* stock to bonds - please help

Post by CT-Scott »

In case anyone cares, I logged into our accounts today and confirmed that everything was transferred. And, at least in the case of my Fidelity 401k account, it looks like I got the day's closing price for my various funds, despite submitting my order in the morning. Prices can fluctuate during the day and I'm not sure where to find that info (e.g., I kept looking today for a "live" look at today's prices and every site (and my iPhone stock app) would just show me yesterday's closing prices). So I have no idea whether getting the closing price was better or worse for me than had I gotten a price reflective of when I submitted the order, but I suspect it didn't help me. Bummer, but oh well.
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Re: Thinking about (temporarily) moving all *retirement* stock to bonds - please help

Post by MIretired »

CT-Scott wrote: Fri Feb 28, 2020 5:52 pm In case anyone cares, I logged into our accounts today and confirmed that everything was transferred. And, at least in the case of my Fidelity 401k account, it looks like I got the day's closing price for my various funds, despite submitting my order in the morning. Prices can fluctuate during the day and I'm not sure where to find that info (e.g., I kept looking today for a "live" look at today's prices and every site (and my iPhone stock app) would just show me yesterday's closing prices). So I have no idea whether getting the closing price was better or worse for me than had I gotten a price reflective of when I submitted the order, but I suspect it didn't help me. Bummer, but oh well.
Mutual funds (like VTSAX, VBTLX) don't trade during the day. And you can't get an interday trade or a price; they only trade and price at close.
ETF versions do trade and price track during the day and after close. (Like VTI, BND.)(same funds, ETF class)
So, whenever you order a trade in mutual funds, you'll get the NEXT closing price(not the last closing price, either--buy right now, you get Mon close price)
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Re: Thinking about (temporarily) moving all *retirement* stock to bonds - please help

Post by BeneIRA »

CT-Scott wrote: Fri Feb 28, 2020 5:52 pm In case anyone cares, I logged into our accounts today and confirmed that everything was transferred. And, at least in the case of my Fidelity 401k account, it looks like I got the day's closing price for my various funds, despite submitting my order in the morning. Prices can fluctuate during the day and I'm not sure where to find that info (e.g., I kept looking today for a "live" look at today's prices and every site (and my iPhone stock app) would just show me yesterday's closing prices). So I have no idea whether getting the closing price was better or worse for me than had I gotten a price reflective of when I submitted the order, but I suspect it didn't help me. Bummer, but oh well.
Please let us know when you come back in. For the sake of record, you sold at $73.76, which is the closing price on 2/27/2020.

Price on February 24: $79.96.
Price on February 21 (Friday before RBW): $82.68.
Price on February 19 (Looks like all-time high): $83.79.

Edited to correct day to Thursday.
Last edited by BeneIRA on Sun Mar 01, 2020 8:39 pm, edited 1 time in total.
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Re: Thinking about (temporarily) moving all *retirement* stock to bonds - please help

Post by CT-Scott »

MIretired wrote: Fri Feb 28, 2020 6:47 pm Mutual funds (like VTSAX, VBTLX) don't trade during the day. And you can't get an interday trade or a price; they only trade and price at close.
ETF versions do trade and price track during the day and after close. (Like VTI, BND.)(same funds, ETF class)
So, whenever you order a trade in mutual funds, you'll get the NEXT closing price(not the last closing price, either--buy right now, you get Mon close price)
Thank you, I've learned something new. Sadly, I'll probably forget it in a month's time, but maybe it's not that important for me to remember. :)
BeneIRA wrote: Fri Feb 28, 2020 7:36 pm Please let us know when you come back in. For the sake of record, you sold at $73.13, which is the closing price on 2/28/2020.
I promise that I'll try, but I can be easily distracted. Hopefully, though, you've seen in this thread that I'm pretty much an open-book and don't mind sharing more personal details than the average person (my wife would probably be *SO* mad at me if she knew how much I shared). Just to clarify, though, I submitted my transfers on Thursday morning, so the closing price was closing on Thursday (for my company-based 401k funds...my Vanguard Roth IRA accounts might have worked differently?). But the markets only went down a little bit today, so it's not far off - VTSAX (as one example) lost a little less than 1% today.

So if we want to cite some specifics "for the record", I sold the following funds from my 401k on close-of-business Thursday (moving 100% to the "value" fund):
- VFIAX (43% of my portfolio) - $275.69
- VSMAX (22%) - $71.96
- VTIAX (13%) - $27.13
- TBCIX (11%) - $119.46
- VBTLX (11%) - $11.37 (I probably should have left this alone)

In my Roth IRA account I sold the following (moving 100% to Money Market fund):
- VTSAX (71% of my portfolio) - $73.76
* the other funds in here were in the Money Market fund, which I had forgotten that I hadn't transferred to stock, but now of course was leaving as-is

These are my accounts, not my wife's. Her 401k was in different funds (Prudential doesn't use stock symbols) but overall was about 85% in stock, 15% in bonds. Her Roth IRA was similar to mine (I don't have the specific VTSAX to Money Market ratio off-hand).
Last edited by CT-Scott on Sat Feb 29, 2020 8:07 am, edited 2 times in total.
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Re: Thinking about (temporarily) moving all *retirement* stock to bonds - please help

Post by Call_Me_Op »

CT-Scott wrote: Thu Feb 27, 2020 2:06 pm Looking back to 2008, it appears that *both* bonds and stocks fell sharply. So, I'm still unclear as to why that happened then, but is not happening over this past week. Anyone who can help answer that, I'd be very appreciative of that.
In 2008, the highest quality bonds (US treasuries) did not fall - they rose sharply. There are different types of bonds; some are safer than others.
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Re: Thinking about (temporarily) moving all *retirement* stock to bonds - please help

Post by CT-Scott »

Call_Me_Op wrote: Fri Feb 28, 2020 7:56 pmIn 2008, the highest quality bonds (US treasuries) did not fall - they rose sharply. There are different types of bonds; some are safer than others.
This thread is only 4 pages long, which isn't that bad. I already corrected that more than a page ago.
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Re: Thinking about (temporarily) moving all *retirement* stock to bonds - please help

Post by HomerJ »

skisk wrote: Fri Feb 28, 2020 12:57 am
sergeant wrote: Thu Feb 27, 2020 10:07 pm
skisk wrote: Thu Feb 27, 2020 5:42 pm I shifted almost all our retirement holding over to bonds last Sunday (Feb 23) after reading about Iran, Italy and South Korea over the weekend. I have set a very arbitrary 3 month time to when I will shift the funds back to stocks again.

I have no idea if this is the right decision, however my reasoning was that the financial impact of the virus had not been recognized enough by the stock market at that point. In the end it may turn out to be a bad decisions if stocks rebound and start gaining again, and if so I will have fewer holdings when I jump back in again in 3 months time.
Congratulations on your timing prowess. Do tell which retirement provider allows asset changes on Sunday?
I put in the order on Sunday, and the transaction was done after the close of business on Monday. Hopefully it is not a surprise to anyone that it is possible to put in an order when the market is closed.
Nope, no surprise to any of us... That's why we questioned you. You can put in an order on Sunday, but you didn't escape the Monday drop. You switched all your retirement holding over to bonds on Monday (Feb 24).
A Goldman Sachs associate provided a variety of detailed explanations, but then offered a caveat, “If I’m being dead-### honest, though, nobody knows what’s really going on.”
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Re: Thinking about (temporarily) moving all *retirement* stock to bonds - please help

Post by CT-Scott »

I wish the Monday drop was the only drop I had to take this week.
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Re: Thinking about (temporarily) moving all *retirement* stock to bonds - please help

Post by Ob81 »

Op, thank you for posting and sharing this. It really has helped me keep my own risk decisions within perspective. It was tough to stay with the fundamentals when everything was just hitting all-time highs. Good luck with your new allocation.
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