I bet the house. [Rebalanced portfolio to a 10/90 asset allocation]

Have a question about your personal investments? No matter how simple or complex, you can ask it here.
Topic Author
TomCat96
Posts: 1040
Joined: Sun Oct 18, 2015 12:18 pm

I bet the house. [Rebalanced portfolio to a 10/90 asset allocation]

Post by TomCat96 »

[Below is a quote from: Re: Coronavirus and the market --admin LadyGeek]
protagonist wrote: Sat Feb 29, 2020 10:42 am
TomCat96 wrote: Sat Feb 29, 2020 7:50 am Basically it is far worse than what the media is saying, prepare adequately. Do what you can. Panic helps no one.

in the meantime, I'm 99.69% stocks right now, and about .31% cash and cash equivalents.
Tomcat....I am curious....

If your first statement above is true, then it would follow that the market, as well as the media, would be significantly downplaying the risk.
So I am curious,,,,if you believe your first statement above to be true, why do you remain 99.69% in stocks? That strikes me as logically contradictory and extremely risky- you are not "preparing adequately" (your words). Yes, panic helps nobody, but having all your eggs in the stock market given your rather strong belief that things are a lot worse than suggested or acknowledged strikes me as the opposite- foolhardy at best.
Please explain.
JoeRetire wrote: Sat Feb 29, 2020 1:29 pm
TomCat96 wrote: Sat Feb 29, 2020 7:33 amDid you notice I started the thread on preparing for the Coronavirus consumer issues?
Clearly you win the "I said it first" award for the Bogleheads site.
Hopefully, you profited mightily from your clear advanced knowledge and insight.

Did you bet the house?

It's time I come clean.
I bet the house.

I never considered myself a true boglehead. But I knew the math, know the throngs of research papers saying the market can't be beat, and it's right there on my IPS.

Last Tuesday I gave all that up. Sold everything and bought into government treasuries. I am 10/90 at the moment with 10% in a single stock, and 90% in bonds.

I might eat crow. I might get egg on my face.
But based on all my research on this matter, I think I made the right call.

Still though it is only fair to my critics and detractors to give them a fair shot at me.

As per my so called research on this matter, I post here quite frequently. The entire evolution of my thoughts on this matter laid itself out in a very public way. I certainly didn't start out by throwing away my IPS.

I believe this is a once in a lifetime occurrence. I believe efforts to analogize this to anything else: SARS, Ebola, Aids, will result in a blocked insight.
Not every event that goes forward in the future can be neatly categorized by a bucket of your past experiences.

This is one such event.
User avatar
arcticpineapplecorp.
Posts: 7003
Joined: Tue Mar 06, 2012 9:22 pm

Re: I bet the house.

Post by arcticpineapplecorp. »

will your sale of all stock (except the 10%) result in capital gains taxes owed?

why didn't you sell the remaining 10% in the one stock? mind sharing what that one stock is?

p.s., you may have bet the house, but at least you didn't buy the farm.
Last edited by arcticpineapplecorp. on Sat Feb 29, 2020 2:11 pm, edited 1 time in total.
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
User avatar
canadianbacon
Posts: 197
Joined: Sun Nov 10, 2019 10:04 pm

Re: I bet the house.

Post by canadianbacon »

Cool story, bro.
Bulls make money, bears make money, pigs get slaughtered.
Bungo
Posts: 942
Joined: Wed Sep 28, 2011 11:28 am

Re: I bet the house.

Post by Bungo »

If the world doesn't end and the market bounces back, how will you determine when to buy stocks again? Seems like it's all too easy in this scenario to sell low and buy high.
averagedude
Posts: 1305
Joined: Sun May 13, 2018 3:41 pm

Re: I bet the house.

Post by averagedude »

Are your insights to the coronavirus based on research, statistics, or well thought out intelligent thought, or is it based on the emotions of witnessing a corrective decline in the stock market? Would you still maintain your same opinion of the coronavirus if the markets ignored it and their was no decline?
Topic Author
TomCat96
Posts: 1040
Joined: Sun Oct 18, 2015 12:18 pm

Re: I bet the house.

Post by TomCat96 »

arcticpineapplecorp. wrote: Sat Feb 29, 2020 2:06 pm will your sale of all stock (except the 10%) result in capital gains taxes owed?

why didn't you sell the remaining 10% in the one stock? mind sharing what that one stock is?

The one stock is Gilead Sciences, maker of Remdesivir.
Topic Author
TomCat96
Posts: 1040
Joined: Sun Oct 18, 2015 12:18 pm

Re: I bet the house.

Post by TomCat96 »

averagedude wrote: Sat Feb 29, 2020 2:10 pm Are your insights to the coronavirus based on research, statistics, or well thought out intelligent thought, or is it based on the emotions of witnessing a corrective decline in the stock market? Would you still maintain your same opinion of the coronavirus if the markets ignored it and their was no decline?
My insights are all posted in my posting history.

I'll write up about it later.
Triple digit golfer
Posts: 6083
Joined: Mon May 18, 2009 5:57 pm

Re: I bet the house.

Post by Triple digit golfer »

Congratulations. Do you post about basketball on car forums? That's about the equivalent of what you're doing here. I'm curious why, other than potential bragging, anybody who is timing the market with significantly his entire net worth would discuss it on a forum whose core principles stand for the entire opposite.
smitcat
Posts: 6947
Joined: Mon Nov 07, 2016 10:51 am

Re: I bet the house.

Post by smitcat »

TomCat96 wrote: Sat Feb 29, 2020 1:59 pm
protagonist wrote: Sat Feb 29, 2020 10:42 am
TomCat96 wrote: Sat Feb 29, 2020 7:50 am Basically it is far worse than what the media is saying, prepare adequately. Do what you can. Panic helps no one.

in the meantime, I'm 99.69% stocks right now, and about .31% cash and cash equivalents.
Tomcat....I am curious....

If your first statement above is true, then it would follow that the market, as well as the media, would be significantly downplaying the risk.
So I am curious,,,,if you believe your first statement above to be true, why do you remain 99.69% in stocks? That strikes me as logically contradictory and extremely risky- you are not "preparing adequately" (your words). Yes, panic helps nobody, but having all your eggs in the stock market given your rather strong belief that things are a lot worse than suggested or acknowledged strikes me as the opposite- foolhardy at best.
Please explain.
JoeRetire wrote: Sat Feb 29, 2020 1:29 pm
TomCat96 wrote: Sat Feb 29, 2020 7:33 amDid you notice I started the thread on preparing for the Coronavirus consumer issues?
Clearly you win the "I said it first" award for the Bogleheads site.
Hopefully, you profited mightily from your clear advanced knowledge and insight.

Did you bet the house?

It's time I come clean.
I bet the house.

I never considered myself a true boglehead. But I knew the math, know the throngs of research papers saying the market can't be beat, and it's right there on my IPS.

Last Tuesday I gave all that up. Sold everything and bought into government treasuries. I am 10/90 at the moment with 10% in a single stock, and 90% in bonds.

I might eat crow. I might get egg on my face.
But based on all my research on this matter, I think I made the right call.

Still though it is only fair to my critics and detractors to give them a fair shot at me.

As per my so called research on this matter, I post here quite frequently. The entire evolution of my thoughts on this matter laid itself out in a very public way. I certainly didn't start out by throwing away my IPS.

I believe this is a once in a lifetime occurrence. I believe efforts to analogize this to anything else: SARS, Ebola, Aids, will result in a blocked insight.
Not every event that goes forward in the future can be neatly categorized by a bucket of your past experiences.

This is one such event.

"Last Tuesday I gave all that up. Sold everything and bought into government treasuries. I am 10/90 at the moment with 10% in a single stock, and 90% in bonds."
Will you go back to some other AA in the future?
If yes then what AA and when will you go back in?
If not will you add more to treasuries over time?
User avatar
arcticpineapplecorp.
Posts: 7003
Joined: Tue Mar 06, 2012 9:22 pm

Re: I bet the house.

Post by arcticpineapplecorp. »

TomCat96 wrote: Sat Feb 29, 2020 2:11 pm
arcticpineapplecorp. wrote: Sat Feb 29, 2020 2:06 pm will your sale of all stock (except the 10%) result in capital gains taxes owed?

why didn't you sell the remaining 10% in the one stock? mind sharing what that one stock is?

The one stock is Gilead Sciences, maker of Remdesivir.
1. did you buy it because they make a trial coronavirus vaccine?
2. did you incur capital gains for which you will owe tax as a result of your stock sales?
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
Topic Author
TomCat96
Posts: 1040
Joined: Sun Oct 18, 2015 12:18 pm

Re: I bet the house.

Post by TomCat96 »

arcticpineapplecorp. wrote: Sat Feb 29, 2020 2:13 pm
TomCat96 wrote: Sat Feb 29, 2020 2:11 pm
arcticpineapplecorp. wrote: Sat Feb 29, 2020 2:06 pm will your sale of all stock (except the 10%) result in capital gains taxes owed?

why didn't you sell the remaining 10% in the one stock? mind sharing what that one stock is?

The one stock is Gilead Sciences, maker of Remdesivir.
1. did you buy it because they make a trial coronavirus vaccine?
2. did you incur capital gains for which you will owe tax as a result of your stock sales?
Let's just say I'm not as rich as some of you. The taxes I owe will be modest. My 401k was really the lions share of my net worth.
Did I buy it because of their trial coronavirus vaccine?

I bought it because Remdesivir is a current treatment to the virus yes. That is to say it has shown promise.
averagedude
Posts: 1305
Joined: Sun May 13, 2018 3:41 pm

Re: I bet the house.

Post by averagedude »

The market participants have extremely smart people, but I have followed the markets for several decades and have learned that they are often wrong. My take on this is that the market does not like uncertainty, especially at a time when the markets were a little ahead of itself.
User avatar
Kenkat
Posts: 6862
Joined: Thu Mar 01, 2007 11:18 am
Location: Cincinnati, OH

Re: I bet the house.

Post by Kenkat »

Well you’ve put your stake on the ground and I give you credit for posting the decision. Now we will all get to see what happens. The odds are not in your favor but we shall see.
Dottie57
Posts: 9536
Joined: Thu May 19, 2016 5:43 pm
Location: Earth Northern Hemisphere

Re: I bet the house.

Post by Dottie57 »

TomCat96 wrote: Sat Feb 29, 2020 7:50 am Basically it is far worse than what the media is saying, prepare adequately. Do what you can. Panic helps no one.

in the meantime, I'm 99.69% stocks right now, and about .31% cash and cash equivalents.
Why do you think/know it is worse than the media says? It may be worse but I have no extra knowledge.

My mom’s cupboard is bare so am getting groceries today.
User avatar
nisiprius
Advisory Board
Posts: 42537
Joined: Thu Jul 26, 2007 9:33 am
Location: The terrestrial, globular, planetary hunk of matter, flattened at the poles, is my abode.--O. Henry

Re: I bet the house.

Post by nisiprius »

TomCat96, in order to make any intelligent appraisal of your strategy, we need to know two things.

1) What should we compare it to?

Basically, you seem to be talking about a change in strategy, so what would you have done otherwise? Since you mention being >99% in stocks, it seems to me that you are talking about a step change in asset allocation from 100/0 to 10/90. It would be better to have more details about the actual composition before and after, but basically that's it. We should compare a 10/90 portfolio, going forward, to a 100% stocks portfolio.

2) When and how should we measure the results? I'm guessing "number of dollars" for "how."

But, can you give us a target date in the future when we will know whether your change had been successful or not? Since you are talking about the coronavirus, and since the 1918 flu pandemic was severe for about two years, I am guessing that you would agree that we will know in about three years.

I would like you to take the following statement and replace what is in the brackets with what you think is an accurate expression of your opinion. Or edit anything in it as needed.

Is this what you think?

An investor with
$10,000 in stock [XYZ]
and $90,000 in bond fund [TUVWX]
on 2/29/2020,
will find on [3/1/2023]
that they have at least [90%] as much money
as they would have had if they had put $100,000 into
[an S&P 500 index fund].
Last edited by nisiprius on Sat Feb 29, 2020 4:13 pm, edited 1 time in total.
Annual income twenty pounds, annual expenditure nineteen nineteen and six, result happiness; Annual income twenty pounds, annual expenditure twenty pounds ought and six, result misery.
anonsdca
Posts: 411
Joined: Mon Jun 01, 2015 11:47 pm

Re: I bet the house.

Post by anonsdca »

"...I never considered myself a true boglehead..."


There are many of you here.
theorist
Posts: 766
Joined: Sat Sep 28, 2019 11:39 am

Re: I bet the house.

Post by theorist »

Bold decision! Courageous to post it here.

Not a decision I would have made, or will make. But it is your money and we still live in a free country.

Good luck!
KlangFool
Posts: 18981
Joined: Sat Oct 11, 2008 12:35 pm

Re: I bet the house.

Post by KlangFool »

OP,

1) What is your portfolio size in terms of your current annual expense?

2) I never worried about the forecast for the low average annual return of the stock market. Some people will capitulate at a stock market drop because they feel that this time is different. Then, the next batch of people will capitulate when their employer start furloughing or laying off people. This is only the beginning.

KlangFool
User avatar
mrspock
Posts: 1393
Joined: Tue Feb 13, 2018 2:49 am
Location: Vulcan

Re: I bet the house.

Post by mrspock »

anonsdca wrote: Sat Feb 29, 2020 2:36 pm "...I never considered myself a true boglehead..."


There are many of you here.
Lol, think of how boring would the forums be without them? We’d all be like “I rebalanced to my AA today”, “I saved .0001% in management fees today”, “should I buy munis or bnd?” Etc

Instead we get threads like this :D .
Wanderingwheelz
Posts: 852
Joined: Mon Mar 04, 2019 9:52 am

Re: I bet the house.

Post by Wanderingwheelz »

Wow!

That is all.
Normchad
Posts: 1760
Joined: Thu Mar 03, 2011 7:20 am

Re: I bet the house.

Post by Normchad »

For me, the primary benefit of this website is an educational tool. There is a lot of self reinforcing group think on here, which is good and to be expected.

But I really do appreciate when others do things differently, state their case and lay out the results so that we can all watch and learn as things unfold. Think markettimer and hedgefundie. I add you to the list.

I wish you well. I hope it works out well for you. But mostly I thank you for sharing the experience and your thinking with us.
User avatar
watchnerd
Posts: 5990
Joined: Sat Mar 03, 2007 11:18 am
Location: Seattle, WA, USA

Re: I bet the house.

Post by watchnerd »

TomCat96 wrote: Sat Feb 29, 2020 1:59 pm

It's time I come clean.
I bet the house.
How big is the house in terms of years of living expenses?

And how far are you from retirement?

If you're 25 and your portfolio is smallish, it won't make a difference in life outcomes, probably, no matter what.
70% Global Market Weight Equities | 15% Long Treasuries 15% short TIPS & cash || RSU + ESPP
KlangFool
Posts: 18981
Joined: Sat Oct 11, 2008 12:35 pm

Re: I bet the house.

Post by KlangFool »

OP,

I am not agreeing or disagreeing with you whether this time is different. It won't matter to me. My AA is 60/40 and my portfolio is 20 times my current annual expense. I have 8 years of expenses in my bonds. I plan to rebalance if my 5/25 band trigger and keep 5 years of expense in the bond.

My plan is designed for a recession lasting 5 years. Why 5 years? Because I am pessimistic enough to believe that after 5 years of recession, money is no longer the problem.

I am prepared.

KlangFool
User avatar
Nicolas Perrault
Posts: 226
Joined: Thu Sep 27, 2018 12:33 pm
Location: Oxford, UK

Re: I bet the house.

Post by Nicolas Perrault »

Triple digit golfer wrote: Sat Feb 29, 2020 2:12 pm Congratulations. Do you post about basketball on car forums? That's about the equivalent of what you're doing here. I'm curious why, other than potential bragging, anybody who is timing the market with significantly his entire net worth would discuss it on a forum whose core principles stand for the entire opposite.
I sympathise with this sentiment. Nevertheless, I credit the OP with posting his thoughts so that he may be held accountable. This may just become a thread that is referenced to in future years to warn people who feel like market timing.

I think it's remarkable that in the list of diseases he mentions (ebola, etc.), the OP does not mention the Spanish flu where ~3% of world population was killed, but where stocks apparently did not notice.

OP: Do you think this will be as bad as the black death?
LoveTheBogle
Posts: 85
Joined: Tue Aug 13, 2019 5:53 pm

Re: I bet the house.

Post by LoveTheBogle »

My favorite is that he said he sold 90% before the sell off. I wonder why he didn’t post that when he did it?

If you want to be totally transparent post your trades and fill prices when you do it not several days later when it makes you sound smart. It’s all luck anyway, even if true.
mbasherp
Posts: 531
Joined: Mon Jun 26, 2017 8:48 am

Re: I bet the house.

Post by mbasherp »

I have a book that predicts the future too. It disagrees with you.

Which should we believe?
BoggledHead2
Posts: 562
Joined: Tue Jun 12, 2018 6:50 pm

Re: I bet the house.

Post by BoggledHead2 »

TomCat96 wrote: Sat Feb 29, 2020 2:18 pm
arcticpineapplecorp. wrote: Sat Feb 29, 2020 2:13 pm
TomCat96 wrote: Sat Feb 29, 2020 2:11 pm
arcticpineapplecorp. wrote: Sat Feb 29, 2020 2:06 pm will your sale of all stock (except the 10%) result in capital gains taxes owed?

why didn't you sell the remaining 10% in the one stock? mind sharing what that one stock is?

The one stock is Gilead Sciences, maker of Remdesivir.
1. did you buy it because they make a trial coronavirus vaccine?
2. did you incur capital gains for which you will owe tax as a result of your stock sales?
Let's just say I'm not as rich as some of you. The taxes I owe will be modest. My 401k was really the lions share of my net worth.
Did I buy it because of their trial coronavirus vaccine?

I bought it because Remdesivir is a current treatment to the virus yes. That is to say it has shown promise.
You did all of this because of a virus that 80+% of its “victims” have symptoms that are so mild they don’t even know they have it.

Wow.
FI4LIFE
Posts: 507
Joined: Sun Apr 28, 2019 9:27 am

Re: I bet the house.

Post by FI4LIFE »

I don't consider this "betting the house." It's simple fear selling. Betting the house would be buying 3x weighted bear etfs.
Call_Me_Op
Posts: 8076
Joined: Mon Sep 07, 2009 2:57 pm
Location: Milky Way

Re: I bet the house.

Post by Call_Me_Op »

The real reason not to sell (in the midst of a panic) is it usually is better to hang on. The main reason is it is very hard to get back in - for similar behavioral reasons that made you get out in the first place. It is not that Bogleheads believe in going down with the ship out of some form of dogmatic loyalty to principles.

The key to allowing one to comfortably ride the market down, however, is to have the right amount of safe assets (usually fixed income). This is what many get wrong.
Best regards, -Op | | "In the middle of difficulty lies opportunity." Einstein
Pikel
Posts: 185
Joined: Sat Jan 04, 2020 9:55 am

Re: I bet the house.

Post by Pikel »

FI4LIFE wrote: Sat Feb 29, 2020 3:08 pm I don't consider this "betting the house." It's simple fear selling. Betting the house would be buying 3x weighted bear etfs.
I agree. OP is afraid to be in the market, not making a leveraged bet on a 'once in a lifetime occurance.'
User avatar
watchnerd
Posts: 5990
Joined: Sat Mar 03, 2007 11:18 am
Location: Seattle, WA, USA

Re: I bet the house.

Post by watchnerd »

FI4LIFE wrote: Sat Feb 29, 2020 3:08 pm I don't consider this "betting the house." It's simple fear selling. Betting the house would be buying 3x weighted bear etfs.
I tend to agree.

90% bonds is not betting the house.

Going leveraged bear, as you said, shorting the market, or investing a lot in puts.....that's the gutsy 'bet the house' move.
70% Global Market Weight Equities | 15% Long Treasuries 15% short TIPS & cash || RSU + ESPP
User avatar
watchnerd
Posts: 5990
Joined: Sat Mar 03, 2007 11:18 am
Location: Seattle, WA, USA

Re: I bet the house.

Post by watchnerd »

FI4LIFE wrote: Sat Feb 29, 2020 3:08 pm I don't consider this "betting the house." It's simple fear selling. Betting the house would be buying 3x weighted bear etfs.
Okay, now you have me shopping for leveraged inverted ETFs.

Do you have a favorite?

Instead of using my rebalancing funds to just buy the usual indexes, going leveraged bear might be more needle-moving.
70% Global Market Weight Equities | 15% Long Treasuries 15% short TIPS & cash || RSU + ESPP
Ocean77
Posts: 274
Joined: Wed Oct 23, 2019 3:20 pm

Re: I bet the house.

Post by Ocean77 »

It would be ironic if as a response to the virus, the Fed started to print massive amounts of money to support the market, resulting in a spike of inflation and interest rates, sending bonds to the dumpster. I'd rather stay with a balanced AA.
User avatar
watchnerd
Posts: 5990
Joined: Sat Mar 03, 2007 11:18 am
Location: Seattle, WA, USA

Re: I bet the house.

Post by watchnerd »

Ocean77 wrote: Sat Feb 29, 2020 3:18 pm It would be ironic if as a response to the virus, the Fed started to print massive amounts of money to support the market, resulting in a spike of inflation and interest rates, sending bonds to the dumpster. I'd rather stay with a balanced AA.
My Long Treasuries would hate that.

My short TIPS would love that.
70% Global Market Weight Equities | 15% Long Treasuries 15% short TIPS & cash || RSU + ESPP
Fallible
Posts: 7625
Joined: Fri Nov 27, 2009 4:44 pm
Contact:

Re: I bet the house.

Post by Fallible »

TomCat96 wrote: Sat Feb 29, 2020 1:59 pm ...
But based on all my research on this matter, I think I made the right call. ...
Reading this, the common investor affliction known as overconfidence comes to mind. Now, I might not think that if you had stated it this way:

"I realize research can be wrong and that it may not have been as thorough as needed, and that I may not have all the qualifications to conduct such research (e.g., judging its quality), and that because I feel so strongly (emotional) about my bet that I am especially vulnerable to confirmation bias (and overconfidence), but I hope it is good enough and that I made the right call."
"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
smitcat
Posts: 6947
Joined: Mon Nov 07, 2016 10:51 am

Re: I bet the house.

Post by smitcat »

TomCat96 wrote: Sat Feb 29, 2020 2:18 pm
arcticpineapplecorp. wrote: Sat Feb 29, 2020 2:13 pm
TomCat96 wrote: Sat Feb 29, 2020 2:11 pm
arcticpineapplecorp. wrote: Sat Feb 29, 2020 2:06 pm will your sale of all stock (except the 10%) result in capital gains taxes owed?

why didn't you sell the remaining 10% in the one stock? mind sharing what that one stock is?

The one stock is Gilead Sciences, maker of Remdesivir.
1. did you buy it because they make a trial coronavirus vaccine?
2. did you incur capital gains for which you will owe tax as a result of your stock sales?
Let's just say I'm not as rich as some of you. The taxes I owe will be modest. My 401k was really the lions share of my net worth.
Did I buy it because of their trial coronavirus vaccine?

I bought it because Remdesivir is a current treatment to the virus yes. That is to say it has shown promise.
Will you go back to some other AA in the future?
If yes then what AA and when will you go back in?
If not will you add more to treasuries over time?
mortfree
Posts: 2484
Joined: Mon Sep 12, 2016 7:06 pm

Re: I bet the house.

Post by mortfree »

Marge-g Retreat to Cash - Part 2

Here’s hoping for a similar outcome for those who stay the course.
Wanderingwheelz
Posts: 852
Joined: Mon Mar 04, 2019 9:52 am

Re: I bet the house.

Post by Wanderingwheelz »

watchnerd wrote: Sat Feb 29, 2020 3:12 pm
FI4LIFE wrote: Sat Feb 29, 2020 3:08 pm I don't consider this "betting the house." It's simple fear selling. Betting the house would be buying 3x weighted bear etfs.
I tend to agree.

90% bonds is not betting the house.

Going leveraged bear, as you said, shorting the market, or investing a lot in puts.....that's the gutsy 'bet the house' move.
If this gets real ugly I may just bet my house by getting a HELOC at .75%, or whatever ridiculous level loans are being written at, and pile every last dollar into stocks.

I’m not joking.
ballons
Posts: 463
Joined: Sun Aug 18, 2019 3:05 pm

Re: I bet the house.

Post by ballons »

Ocean77 wrote: Sat Feb 29, 2020 3:18 pm It would be ironic if as a response to the virus, the Fed started to print massive amounts of money to support the market, resulting in a spike of inflation and interest rates, sending bonds to the dumpster. I'd rather stay with a balanced AA.
Spike of interest rates would trigger corporate debt bubble to pop.
User avatar
watchnerd
Posts: 5990
Joined: Sat Mar 03, 2007 11:18 am
Location: Seattle, WA, USA

Re: I bet the house.

Post by watchnerd »

Wanderingwheelz wrote: Sat Feb 29, 2020 3:28 pm
If this gets real ugly I may just bet my house by getting a HELOC at .75%, or whatever ridiculous level loans are being written at, and pile every last dollar into stocks.

I’m not joking.
Why take out a HELOC instead of just buying a leveraged inverse ETF?

Or did you mean both?
70% Global Market Weight Equities | 15% Long Treasuries 15% short TIPS & cash || RSU + ESPP
Topic Author
TomCat96
Posts: 1040
Joined: Sun Oct 18, 2015 12:18 pm

Re: I bet the house.

Post by TomCat96 »

nisiprius wrote: Sat Feb 29, 2020 2:35 pm Tomkat96, in order to make any intelligent appraisal of your strategy, we need to know two things.

1) What should we compare it to?

Basically, you seem to be talking about a change in strategy, so what would you have done otherwise? Since you mention being >99% in stocks, it seems to me that you are talking about a step change in asset allocation from 100/0 to 10/90. It would be better to have more details about the actual composition before and after, but basically that's it. We should compare a 10/90 portfolio, going forward, to a 100% stocks portfolio.

2) When and how should we measure the results? I'm guessing "number of dollars" for "how."

But, can you give us a target date in the future when we will know whether your change had been successful or not? Since you are talking about the coronavirus, and since the 1918 flu pandemic was severe for about two years, I am guessing that you would agree that we will know in about three years.

I would like you to take the following statement and replace what is in the brackets with what you think is an accurate expression of your opinion. Or edit anything in it as needed.

Is this what you think?

An investor with
$10,000 in stock [XYZ]
and $90,000 in bond fund [TUVWX]
on 2/29/2020,
will find on [3/1/2023]
that they have at least [90%] as much money
as they would have had if they had put $100,000 into
[an S&P 500 index fund].

I don't think I have to answer that. It's not an accurate characterization. There is a reason I am here after all (on this website)

As a general rule I don't think one can beat the market. But there is a difference between beating the market all the time and never being able to beat the market once on a single timing event. Active management(hedge funds) loses to the market. The research shows that. I do not disagree.

I intend to re-enter the market at 100% stocks.
I have the shared the conditions of when I will re-enter the market with a few on this site. I prefer not to share it here.

It is highly unlikely I will time the market at the absolute lowest point. I am perfectly ok with that. I have always been ~100% stocks. Riding out crashes does not bother me. Losing 10% 20% does not bother me. It was not the fear which drove me to do what I am doing. It was an attempt to profit abnormally.

When I re-enter the market, I will own more shares of the same position than I did previously. I do not have to perfectly time the bottom to come out ahead.

So the way you characterize it is inapposite. It assumes that my market timing will be so specific, based on dates. It assumes time frames.
It is not. It is based on events.
Wanderingwheelz
Posts: 852
Joined: Mon Mar 04, 2019 9:52 am

Re: I bet the house.

Post by Wanderingwheelz »

watchnerd wrote: Sat Feb 29, 2020 3:34 pm
Wanderingwheelz wrote: Sat Feb 29, 2020 3:28 pm
If this gets real ugly I may just bet my house by getting a HELOC at .75%, or whatever ridiculous level loans are being written at, and pile every last dollar into stocks.

I’m not joking.
Why take out a HELOC instead of just buying a leveraged inverse ETF?

Or did you mean both?
There’s more than one way to skin a cat. Depends how you wanted to take the risk.
Last edited by Wanderingwheelz on Sat Feb 29, 2020 3:38 pm, edited 1 time in total.
Topic Author
TomCat96
Posts: 1040
Joined: Sun Oct 18, 2015 12:18 pm

Re: I bet the house.

Post by TomCat96 »

smitcat wrote: Sat Feb 29, 2020 3:24 pm
TomCat96 wrote: Sat Feb 29, 2020 2:18 pm
arcticpineapplecorp. wrote: Sat Feb 29, 2020 2:13 pm
TomCat96 wrote: Sat Feb 29, 2020 2:11 pm
arcticpineapplecorp. wrote: Sat Feb 29, 2020 2:06 pm will your sale of all stock (except the 10%) result in capital gains taxes owed?

why didn't you sell the remaining 10% in the one stock? mind sharing what that one stock is?

The one stock is Gilead Sciences, maker of Remdesivir.
1. did you buy it because they make a trial coronavirus vaccine?
2. did you incur capital gains for which you will owe tax as a result of your stock sales?
Let's just say I'm not as rich as some of you. The taxes I owe will be modest. My 401k was really the lions share of my net worth.
Did I buy it because of their trial coronavirus vaccine?

I bought it because Remdesivir is a current treatment to the virus yes. That is to say it has shown promise.
Will you go back to some other AA in the future?
If yes then what AA and when will you go back in?
If not will you add more to treasuries over time?

Yes, I will return to 100% stocks. That is my default position, the one I tend to ride out for the long haul.
100/0 is my default AA.

If the market continues to drop another 20-30% after I buy back in, I am ok with that. I am ok with riding it out for the very long run.

This was an attempt to come out ahead by owning more shares of total market.
Last edited by TomCat96 on Sat Feb 29, 2020 3:39 pm, edited 1 time in total.
User avatar
DrPayItBack
Posts: 56
Joined: Sun Dec 22, 2019 6:27 pm
Contact:

Re: I bet the house.

Post by DrPayItBack »

TomCat96 wrote: Sat Feb 29, 2020 3:35 pm I have the shared the conditions of when I will re-enter the market with a few on this site. I prefer not to share it here.
So what on earth is the point of this post? It’s clearly not for useful discussion.
Wanderingwheelz
Posts: 852
Joined: Mon Mar 04, 2019 9:52 am

Re: I bet the house.

Post by Wanderingwheelz »

TomCat96 wrote: Sat Feb 29, 2020 3:37 pm
smitcat wrote: Sat Feb 29, 2020 3:24 pm
TomCat96 wrote: Sat Feb 29, 2020 2:18 pm
arcticpineapplecorp. wrote: Sat Feb 29, 2020 2:13 pm
TomCat96 wrote: Sat Feb 29, 2020 2:11 pm


The one stock is Gilead Sciences, maker of Remdesivir.
1. did you buy it because they make a trial coronavirus vaccine?
2. did you incur capital gains for which you will owe tax as a result of your stock sales?
Let's just say I'm not as rich as some of you. The taxes I owe will be modest. My 401k was really the lions share of my net worth.
Did I buy it because of their trial coronavirus vaccine?

I bought it because Remdesivir is a current treatment to the virus yes. That is to say it has shown promise.
Will you go back to some other AA in the future?
If yes then what AA and when will you go back in?
If not will you add more to treasuries over time?

Yes, I will return to 100% stocks. That is my default position, the one I tend to ride out for the long haul.
100/0 is my default AA.

This was an attempt to come out ahead by owning more shares of total market.
What is your criteria that’ll let you signal the “all clear” and go back to 100/0?
smitcat
Posts: 6947
Joined: Mon Nov 07, 2016 10:51 am

Re: I bet the house.

Post by smitcat »

TomCat96 wrote: Sat Feb 29, 2020 3:37 pm
smitcat wrote: Sat Feb 29, 2020 3:24 pm
TomCat96 wrote: Sat Feb 29, 2020 2:18 pm
arcticpineapplecorp. wrote: Sat Feb 29, 2020 2:13 pm
TomCat96 wrote: Sat Feb 29, 2020 2:11 pm


The one stock is Gilead Sciences, maker of Remdesivir.
1. did you buy it because they make a trial coronavirus vaccine?
2. did you incur capital gains for which you will owe tax as a result of your stock sales?
Let's just say I'm not as rich as some of you. The taxes I owe will be modest. My 401k was really the lions share of my net worth.
Did I buy it because of their trial coronavirus vaccine?

I bought it because Remdesivir is a current treatment to the virus yes. That is to say it has shown promise.
Will you go back to some other AA in the future?
If yes then what AA and when will you go back in?
If not will you add more to treasuries over time?

Yes, I will return to 100% stocks. That is my default position, the one I tend to ride out for the long haul.
100/0 is my default AA.

This was an attempt to come out ahead by owning more shares of total market.
When are you going back to 100% stocks? What is the trigger?
User avatar
whodidntante
Posts: 9559
Joined: Thu Jan 21, 2016 11:11 pm
Location: outside the echo chamber

Re: I bet the house.

Post by whodidntante »

OP, I applaud you for reaching a level of conviction about what is going to happen that I feel is out of reach for me. If I could reach your level of conviction, I would have the guts to act. I have happily bet mortgage payments on poker hands because I had conviction it was the right thing to do. But as it is, the best I can do for myself is to stay in the market, avoid single stocks, and to buy with positive cash flow, or to sell with negative cash flow. I do not know what is going to happen.

But as is, I hope you lose, sir. Because if you win, it is bad for me. :twisted:
VaR
Posts: 723
Joined: Sat Dec 05, 2015 11:27 pm

Re: I bet the house.

Post by VaR »

What question are we trying to answer? I'm not sure this is actionable.
DesertDiva
Posts: 1001
Joined: Thu Mar 01, 2018 12:49 pm
Location: In the desert

Re: I bet the house.

Post by DesertDiva »

Bet the house on a single pharmaceutical stock - now that’s being risk adverse!
Topic Author
TomCat96
Posts: 1040
Joined: Sun Oct 18, 2015 12:18 pm

Re: I bet the house.

Post by TomCat96 »

Let's be clear on how to splice this..

Bogleheads you are used to seeing it this way:

1. The market has gone down. I am so scared that I want to sell. I can't handle the drops.

The above is the type of market timing you perceive. I am sorry but that is not what is happening here.

This is how I perceive it.

2. The market is going to go down. Im 100% stocks for the long haul anyway.
Why don't I get out now, wait for it to drop more, and then buy back in at 100% stocks. I'll come out ahead.


I am market timing, just not the standard assumption you all are so used to jumping to.
Last edited by TomCat96 on Sat Feb 29, 2020 3:46 pm, edited 1 time in total.
Locked