Get out now or ride it out?

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jasperhobbs
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Get out now or ride it out?

Post by jasperhobbs » Sun Mar 22, 2020 10:28 am

I'm sure a similar question has been asked but I will throw out my situation and perhaps someone in the same age and retirement timeframe can share their thoughts. I do understand no one knows how low the market will go.

59 years old with plans to retire in 6-8 years. My portfolio is in a 60/40 stock/bond mix. A good chunk in Wellington. Options I see are posted below.

1) Sell everything and go with the money market until things stabilize.
2) Sell a portion of the portfolio
3) Stand pat and wait for things to recover.

Hindsight is 20/20 and most would have sold off when DOW made the first major drop. Now the question is sell now if/before DOW drops to 15,000 or less.

Thoughts appreciated
J

jebmke
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Re: Get out now or ride it out?

Post by jebmke » Sun Mar 22, 2020 10:29 am

You came to the home of "stick with your plan, re-balance if that is what your plan calls for."

You probably won't get much support for bailing out here.
When you discover that you are riding a dead horse, the best strategy is to dismount.

tom1944
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Re: Get out now or ride it out?

Post by tom1944 » Sun Mar 22, 2020 10:33 am

My guess is that in 8 years your account will be worth more if you leave it instead of taking it out now and put it into interest bearing accounts

livesoft
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Re: Get out now or ride it out?

Post by livesoft » Sun Mar 22, 2020 10:35 am

How much will you be contributing to your retirement plans over the next 10 years?

You did not mention option 4 which is what we are doing:

4) Rebalancing when trigger points are hit and buying more equities to keep our 60/40 asset allocation intact.
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tvubpwcisla
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Re: Get out now or ride it out?

Post by tvubpwcisla » Sun Mar 22, 2020 10:36 am

You forgot to mention Option 4, which in my opinion is the best one...

4) Do nothing and buy more.

:moneybag
The secret to building wealth is to have a plan, keep expenses low, become an expert in your craft, consistently buy the market, diversify, establish multiple income streams, and always smile.

cashboy
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Re: Get out now or ride it out?

Post by cashboy » Sun Mar 22, 2020 10:37 am

jebmke wrote:
Sun Mar 22, 2020 10:29 am
You came to the home of "stick with your plan, re-balance if that is what your plan calls for."

You probably won't get much support for bailing out here.
this
Three-Fund Portfolio: FSPSX - FXAIX - FXNAX (with slight tilt of CDs - CASH - Canned Beans - Rice - Bottled Water)

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Michael Patrick
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Re: Get out now or ride it out?

Post by Michael Patrick » Sun Mar 22, 2020 10:37 am

I'm about your age, and looking to retire at 65. I'm solidly option #3.

Getting out now will only lock in your losses.

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watchnerd
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Re: Get out now or ride it out?

Post by watchnerd » Sun Mar 22, 2020 10:39 am

How many years of living expenses does the 40% bonds represent?

Is it enough to get you to social security and ride out the market until then?
70% Global Market Weight Equities | 15% Long Treasuries 15% short TIPS & cash || RSU + ESPP

KlangFool
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Re: Get out now or ride it out?

Post by KlangFool » Sun Mar 22, 2020 10:42 am

OP,

1) How big is your emergency fund in terms of months/years of expense?

2) How big is your current portfolio in terms of annual expenses?

3) How big is the fixed income portion of your portfolio?

I plan for 7 years (2 years of the emergency fund and 5 years of fixed income/bond). That is my limit for rebalancing. I rebalanced twice this week.

So, option 4: rebalance while keeping a safe limit.

KlangFool

Topic Author
jasperhobbs
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Re: Get out now or ride it out?

Post by jasperhobbs » Sun Mar 22, 2020 10:48 am

I do plan on going a lot more conservative when I am 3 years out from retirement. I mean 30/70 stock/bonds and cash. Hopefully, things recover by then. (6-8 years from retirement)

tibbitts
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Re: Get out now or ride it out?

Post by tibbitts » Sun Mar 22, 2020 10:50 am

jasperhobbs wrote:
Sun Mar 22, 2020 10:28 am
I'm sure a similar question has been asked but I will throw out my situation and perhaps someone in the same age and retirement timeframe can share their thoughts. I do understand no one knows how low the market will go.

59 years old with plans to retire in 6-8 years. My portfolio is in a 60/40 stock/bond mix. A good chunk in Wellington. Options I see are posted below.

1) Sell everything and go with the money market until things stabilize.
2) Sell a portion of the portfolio
3) Stand pat and wait for things to recover.

Hindsight is 20/20 and most would have sold off when DOW made the first major drop. Now the question is sell now if/before DOW drops to 15,000 or less.

Thoughts appreciated
J
Well you have your plan B threshold: when you hit that number, you're done. There is no re-entry to the market for your lifetime. It seems pretty simple - you stick with plan A until you switch to plan B. There is plan AB that I know of.

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Wiggums
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Re: Get out now or ride it out?

Post by Wiggums » Sun Mar 22, 2020 10:51 am

I’m 58, buying weekly and not selling. S&P 500 rose 400% during bull market. We are back, just below the mean. Taylor covers this is his book. More downside risk (in my opinion), when PMI gives us a hint of 2nd quarter on Monday.

I would sell stuff to rebalance annually and consider adjusting your AA, if it is wrong for your family. I discourage panic selling, but I do sympathize with those cannot sleep at night. Having the right amount of fixed income takes some of the pain away.

Good luck to you

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jasperhobbs
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Re: Get out now or ride it out?

Post by jasperhobbs » Sun Mar 22, 2020 11:00 am

I am considering lowering 401K contribution rate so I have more take home pay to build up an emergency fund. The downside is I will lose the tax advantage and buying in when stocks are cheaper.

alphabet
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Re: Get out now or ride it out?

Post by alphabet » Sun Mar 22, 2020 11:02 am

I don't blame people for selling they' re scared. I'm scared, I just checked mine I'm down $100K from my high of a few months ago.

The only stock I have is CVX chevron which took a big hit but otherwise I have TBM and Wellesley. I don't need this money because I have a large cash position in CD's .
What will happen if the government decides to stop trading for a couple of weeks. This will create panic selling.

Ocean77
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Re: Get out now or ride it out?

Post by Ocean77 » Sun Mar 22, 2020 11:07 am

Focus on the important things. Get exercise to boost your immune system. Stay safe. Take care of your family. Your portfolio is in great shape, with the 60/40 allocation you had set up. It is the one thing that does not need you now. Leave it in peace, and get back to tending it once this is all over.

3funder
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Re: Get out now or ride it out?

Post by 3funder » Sun Mar 22, 2020 11:09 am

Option 3.

MDfan
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Re: Get out now or ride it out?

Post by MDfan » Sun Mar 22, 2020 11:12 am

I'm about your age, same portfolio allocation, and plan to retire in 2021 (hopefully). I'm option 3 as well. How much lower do you think it will go?

Topic Author
jasperhobbs
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Re: Get out now or ride it out?

Post by jasperhobbs » Sun Mar 22, 2020 11:18 am

MDfan wrote:
Sun Mar 22, 2020 11:12 am
I'm about your age, same portfolio allocation, and plan to retire in 2021 (hopefully). I'm option 3 as well. How much lower do you think it will go?
It is anybody's guess where the market will bottom out. I see 1000 point gain days trumped by more 1000 point drops. 2 or 3 weeks will tell us a lot more about the virus and if the curve flattens.

Pikel
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Re: Get out now or ride it out?

Post by Pikel » Sun Mar 22, 2020 11:20 am

I would also say bend rules before you start breaking them. Stop rebalancing before you start selling. If you can't bring yourself to buy total market buy cash rich companies.

No one is a robot. I don't believe anyone that says this hasn't been a rollercoaster of emotion.

BigDrop
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Re: Get out now or ride it out?

Post by BigDrop » Sun Mar 22, 2020 11:25 am

You need to ask what the insurance is for your various investments. Money market funds? How much on your brokerage account and from who? Ask how much IT WILL COST YOU to now buy a 3 or 6 month t bill (they are negative)? Is cash in a brokerage covered by the FDIC?

Vanguard Wellesley dropped 22% in ‘08. It’s down $4.00 and falling rapidly. How are munis doing? Are your bond funds having their biggest one day losses ever?

For myself it is no longer about investing. It is now about protection.

eldinerocheapo
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Re: Get out now or ride it out?

Post by eldinerocheapo » Sun Mar 22, 2020 11:27 am

I'm three years older than the poster, and retired. We're in Wellington Admiral, and here's where things stand.
Down 22% ytd
Reinvested 1st Q 2020 dividend around $58 a share, down from $76.
Taking $1k in distributions per month, down from $3k last month
Cashing in and using one of twenty 12mo CD's and MM set up for just this occasion.
Wife working p/t with health benefits @ $40k a year.
Strongly considering applying for SS in 6 months @ age 63.

We'll ride this out, and then reallocate and ramp up more cash savings when possible. Hope our scenario gives you some ideas.

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jasperhobbs
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Re: Get out now or ride it out?

Post by jasperhobbs » Sun Mar 22, 2020 11:33 am

eldinerocheapo wrote:
Sun Mar 22, 2020 11:27 am
I'm three years older than the poster, and retired. We're in Wellington Admiral, and here's where things stand.
Down 22% ytd
Reinvested 1st Q 2020 dividend around $58 a share, down from $76.
Taking $1k in distributions per month, down from $3k last month
Cashing in and using one of twenty 12mo CD's and MM set up for just this occasion.
Wife working p/t with health benefits @ $40k a year.
Strongly considering applying for SS in 6 months @ age 63.

We'll ride this out, and then reallocate and ramp up more cash savings when possible. Hope our scenario gives you some ideas.
Thanks for your post. I think I will stay in Wellington Admiral for the long haul and as retirement gets closer, shift other things to more cash and CD's.

My wife and I are working on having a 2-3 year non-IRA savings.

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Wiggums
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Re: Get out now or ride it out?

Post by Wiggums » Sun Mar 22, 2020 11:39 am

eldinerocheapo wrote:
Sun Mar 22, 2020 11:27 am
I'm three years older than the poster, and retired. We're in Wellington Admiral, and here's where things stand.
Down 22% ytd
Reinvested 1st Q 2020 dividend around $58 a share, down from $76.
Taking $1k in distributions per month, down from $3k last month
Cashing in and using one of twenty 12mo CD's and MM set up for just this occasion.
Wife working p/t with health benefits @ $40k a year.
Strongly considering applying for SS in 6 months @ age 63.

We'll ride this out, and then reallocate and ramp up more cash savings when possible. Hope our scenario gives you some ideas.
I like the “ramp up cash” statement and watching your expenses. Good luck to you.
Last edited by Wiggums on Sun Mar 22, 2020 11:39 am, edited 1 time in total.

MishkaWorries
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Re: Get out now or ride it out?

Post by MishkaWorries » Sun Mar 22, 2020 11:39 am

I agree about sticking it out. I'm 56 and ready for semi-retirement in 5 years.

What I wanted to add is look at the Wellington (and Wellesley) bond positions. They are fairly heavy in corporate bonds of lower quality and longer duration than BND.

I'm seriously thinking about dumping Wellington and Wellesley in favor VTI and BND -- Total stock market and total bond market. I may even go to short-term treasury.

Just a suggestion and lots depends on the future economic scene and corporate debt situation.
We plan. G-d laughs.

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Wiggums
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Re: Get out now or ride it out?

Post by Wiggums » Sun Mar 22, 2020 11:41 am

MishkaWorries wrote:
Sun Mar 22, 2020 11:39 am
I agree about sticking it out. I'm 56 and ready for semi-retirement in 5 years.

What I wanted to add is look at the Wellington (and Wellesley) bond positions. They are fairly heavy in corporate bonds of lower quality and longer duration than BND.

I'm seriously thinking about dumping Wellington and Wellesley in favor VTI and BND -- Total stock market and total bond market. I may even go to short-term treasury.

Just a suggestion and lots depends on the future economic scene and corporate debt situation.
My mom is 91 and holds Wellesley.

Nowizard
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Re: Get out now or ride it out?

Post by Nowizard » Sun Mar 22, 2020 11:47 am

As someone already in retirement, I think that personal circumstances are the issue to consider, something which you have not mentioned in detail. For example, younger people should almost certainly continue the course and add to stocks if they can regardless of portfolio size. Those nearer retirement, or those who are in retirement and aware they have been riding the recent market and taking more risk than necessary may make other choices.
Those nearing retirement with larger portfolios should definitely make projections of retirement income, expected investment returns over longer periods, projected retirement expenses, time horizons based on health, etc. That could inform a decision. Those with smaller portfolios have a greater issue, though horizons and projected retirement expenses should inform decisions about preservation versus staying the course.
Also, there are those who are in retirement who have been riding the current market and may begin to move toward recommendations for those who have "Won the game." Finally, from this opinion, there is how you change your portfolio if you make changes.
You mentioned selling everything and putting it into MM. That is the most extreme choice if you make a change. Many would recommend not going below a 20/80 stock/bond ratio ever, even among those who had won the game. One can also put some assets in MM and either leave others in bonds or simply exchange equities for bonds. Yes, the bond funds are also under pressure and may drop, but there is an assurance they are not as likely to drop as much as equities in periods of correction or recession.
A final consideration is whether any moves are made in taxable or retirement accounts and the potential impact on taxation. Speaking personally, we recognized we have been taking an uncomfortable amount of risk and more than we need to take. Analysis of our circumstances, the key to what is being posted here, results in the conclusion that we can expect a positive outcome even with a 20/80 stock/bond allocation rather than one similar to yours. We have moved to a 30/70 one, all changes moving equities to stocks in retirement accounts, still a higher level of risk than necessary. Are we correct? Who knows. Most here would probably say we have made an error, even though in our mid-to-late 70's and in good health. Our ultimate conclusion is that we do not have to be absolutely correct, just assess the best we can and be willing to accept the outcome. That is a more practical than analytical approach to investing but one that has resulted in acquiring a comfortable retirement well above expectations based on what were moderate incomes during our working years.

Tim

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BolderBoy
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Re: Get out now or ride it out?

Post by BolderBoy » Sun Mar 22, 2020 11:47 am

jasperhobbs wrote:
Sun Mar 22, 2020 10:28 am
59 years old with plans to retire in 6-8 years. My portfolio is in a 60/40 stock/bond mix.
IMO, if you are thinking of "getting out" it means that your AA isn't correct for you. So I recommend two things:

1) ride this out and
2) once things settle down change your AA to something more akin to your taste for risk; maybe 40/60.

"Age in bonds" gets a lot of short shrift here, but it is times like this when it suddenly doesn't look so bad.
"Never underestimate one's capacity to overestimate one's abilities" - The Dunning-Kruger Effect

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jasperhobbs
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Re: Get out now or ride it out?

Post by jasperhobbs » Sun Mar 22, 2020 11:48 am

Ramping up savings was the plan before all this happened. Even more reinforced now. Also, no major purchases planned (cars, trips ETC)

Chrono Triggered
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Re: Get out now or ride it out?

Post by Chrono Triggered » Sun Mar 22, 2020 11:52 am

You're a few weeks too late. Ride the wave.

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jasperhobbs
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Re: Get out now or ride it out?

Post by jasperhobbs » Sun Mar 22, 2020 11:57 am

BolderBoy wrote:
Sun Mar 22, 2020 11:47 am
jasperhobbs wrote:
Sun Mar 22, 2020 10:28 am
59 years old with plans to retire in 6-8 years. My portfolio is in a 60/40 stock/bond mix.
IMO, if you are thinking of "getting out" it means that your AA isn't correct for you. So I recommend two things:

1) ride this out and
2) once things settle down change your AA to something more akin to your taste for risk; maybe 40/60.

"Age in bonds" gets a lot of short shrift here, but it is times like this when it suddenly doesn't look so bad.
Actually, I am comfortable with a 60/40 stock/bond at this point and plan still is to go 30/70 or 40/60 within 3 years of retirement (3 years from now). Like everyone else, never anticipated the bottom falling out like this. A recession, sure but not this. It changes a person's perspective going forward.

dreamrider
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Re: Get out now or ride it out?

Post by dreamrider » Sun Mar 22, 2020 12:11 pm

#1. The worst is yet to come.

Topic Author
jasperhobbs
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Re: Get out now or ride it out?

Post by jasperhobbs » Sun Mar 22, 2020 12:14 pm

dreamrider wrote:
Sun Mar 22, 2020 12:11 pm
#1. The worst is yet to come.
Source?

UpperNwGuy
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Re: Get out now or ride it out?

Post by UpperNwGuy » Sun Mar 22, 2020 12:14 pm

Ride it out.

dreamrider
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Re: Get out now or ride it out?

Post by dreamrider » Sun Mar 22, 2020 12:19 pm

jasperhobbs wrote:
Sun Mar 22, 2020 12:14 pm
dreamrider wrote:
Sun Mar 22, 2020 12:11 pm
#1. The worst is yet to come.
Source?

1. China.
2. Italy.
3. New York.
4. My gut feeling.

7eight9
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Re: Get out now or ride it out?

Post by 7eight9 » Sun Mar 22, 2020 12:44 pm

It is a tough call. I was talking with a friend the other day who is in a similar situation as you. I told them that there are three choices - sell, hold or double down.

How sure are you that you will stay employed for the next 6-8 years? Would your retirement be problematic if this didn't happen?

In terms of your retirement accounts - how much more can you afford to lose before it becomes problematic? There comes a time when everyone has to sell. You don't want to necessarily wait until that is your reality.

Taylor Larimore wrote a very good post about it "Maximum Tolerable Loss" -- Not just a fear factor.
viewtopic.php?t=30085

Neither I nor anybody else on this board is going to either reimburse you for your losses if you hold or compensate you for any gains you miss if you sell. Ultimately it is your money and you are responsible for it.

Best of luck in your decision.
I guess it all could be much worse. | They could be warming up my hearse.

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jasperhobbs
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Re: Get out now or ride it out?

Post by jasperhobbs » Sun Mar 22, 2020 12:53 pm

7eight9 wrote:
Sun Mar 22, 2020 12:44 pm
It is a tough call. I was talking with a friend the other day who is in a similar situation as you. I told them that there are three choices - sell, hold or double down.

How sure are you that you will stay employed for the next 6-8 years? Would your retirement be problematic if this didn't happen?

In terms of your retirement accounts - how much more can you afford to lose before it becomes problematic? There comes a time when everyone has to sell. You don't want to necessarily wait until that is your reality.

Taylor Larimore wrote a very good post about it "Maximum Tolerable Loss" -- Not just a fear factor.
viewtopic.php?t=30085

Neither I nor anybody else on this board is going to either reimburse you for your losses if you hold or compensate you for any gains you miss if you sell. Ultimately it is your money and you are responsible for it.

Best of luck in your decision.
I don't think there are too many now that are sure of their employment nowadays. At 59 years old, I would have to work at least 3 more years for SS at 62. 65-67 is the plan but who knows what life brings with employment and health. We live frugally so could get by on just SS and 2 small pensions but planning on 4% draw from retirement accounts to live more comfortably.

Thanks for your input.

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HokeyPokey2020
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Re: Get out now or ride it out?

Post by HokeyPokey2020 » Sun Mar 22, 2020 1:04 pm

Ocean77 wrote:
Sun Mar 22, 2020 11:07 am
Focus on the important things. Get exercise to boost your immune system. Stay safe. Take care of your family. Your portfolio is in great shape, with the 60/40 allocation you had set up. It is the one thing that does not need you now. Leave it in peace, and get back to tending it once this is all over.
I agree. You have time on your side. Create an emergency fund that you can live on for 2 years if you need, since the market will have its moments.

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watchnerd
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Re: Get out now or ride it out?

Post by watchnerd » Sun Mar 22, 2020 1:59 pm

dreamrider wrote:
Sun Mar 22, 2020 12:11 pm
#1. The worst is yet to come.
This is obvious.

Nobody is saying we're on the upswing.
70% Global Market Weight Equities | 15% Long Treasuries 15% short TIPS & cash || RSU + ESPP

Frugalbear
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Re: Get out now or ride it out?

Post by Frugalbear » Sun Mar 22, 2020 2:01 pm

tvubpwcisla wrote:
Sun Mar 22, 2020 10:36 am
You forgot to mention Option 4, which in my opinion is the best one...

4) Do nothing and buy more.

:moneybag
Best choice

investing_newbie_
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Re: Get out now or ride it out?

Post by investing_newbie_ » Sun Mar 22, 2020 2:03 pm

I'm down $600K from my highs earlier this year. I have $200K in cash to hold me over for the next few years. But I'm definitely feeling the urge to sell before this all gets worse. But I'm planning on just holding out for the long-term. I'm only 38 and have a stable job, but OUCH this all hurts bad. :shock:

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watchnerd
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Re: Get out now or ride it out?

Post by watchnerd » Sun Mar 22, 2020 2:13 pm

investing_newbie_ wrote:
Sun Mar 22, 2020 2:03 pm
I'm down $600K from my highs earlier this year. I have $200K in cash to hold me over for the next few years. But I'm definitely feeling the urge to sell before this all gets worse. But I'm planning on just holding out for the long-term. I'm only 38 and have a stable job, but OUCH this all hurts bad. :shock:
Well, I'm 11 years your senior, have lost more, have 5-6 years of living expenses in risk free assets, and plan to just ride it out.

On the other hand, stocks are only 35% of our net worth. As a policy, we put no more than 50% of our net worth in public markets. The rest goes in private, illiquid markets.

Good luck! You have time on your side.
70% Global Market Weight Equities | 15% Long Treasuries 15% short TIPS & cash || RSU + ESPP

over45
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Re: Get out now or ride it out?

Post by over45 » Sun Mar 22, 2020 2:18 pm

I just came across this website which shows quite a bit of information / statistics on everything from stocks, commodities, currencies, etc. There is a "forecasts" section link at the top that projects out 4 quarters - though the information may not be completely updated. Seems legit. Might be worth a look for anyone who may be interested in forecasts:

https://tradingeconomics.com/stocks

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watchnerd
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Re: Get out now or ride it out?

Post by watchnerd » Sun Mar 22, 2020 2:35 pm

over45 wrote:
Sun Mar 22, 2020 2:18 pm
I just came across this website which shows quite a bit of information / statistics on everything from stocks, commodities, currencies, etc. There is a "forecasts" section link at the top that projects out 4 quarters - though the information may not be completely updated. Seems legit. Might be worth a look for anyone who may be interested in forecasts:

https://tradingeconomics.com/stocks
[Removed -- mod oldcomputerguy] I really need to invest in Venezuela and Tehran.
70% Global Market Weight Equities | 15% Long Treasuries 15% short TIPS & cash || RSU + ESPP

pkjr
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Re: Get out now or ride it out?

Post by pkjr » Sun Mar 22, 2020 2:52 pm

My target on SP is 2100. I do time some sells/purchases. I did liquidate 90% of her stock portfolio in Jan. When treasuries had this crazy mOve in Feb to the upside I sold all bond funds in my wife’s 401k and put them to cash. The risk reward was not there. I did lenderFi refi 30 yrs 2.99 with $300 out of pocket from 4.125 thanks to this forum.

But now we entered slowly a buy zone I actually did my1st repurchase in my wife’s fidelity sp500 fund on Friday 10%. No bonds going forward. Can the market go lower it sure can but I believe that downside now is limited to 10%. I increased my wife’s contribution to 401k as well as I believe any relief rally will move her contributions into green zone. If You went through 30% drawdown now is not the time to throw the towel. Damage is done. Now we are entering real panic zone and you can also sense it here.
Last edited by pkjr on Sun Mar 22, 2020 2:55 pm, edited 1 time in total.

dreamrider
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Re: Get out now or ride it out?

Post by dreamrider » Sun Mar 22, 2020 2:55 pm

watchnerd wrote:
Sun Mar 22, 2020 2:13 pm
investing_newbie_ wrote:
Sun Mar 22, 2020 2:03 pm
I'm down $600K from my highs earlier this year. I have $200K in cash to hold me over for the next few years. But I'm definitely feeling the urge to sell before this all gets worse. But I'm planning on just holding out for the long-term. I'm only 38 and have a stable job, but OUCH this all hurts bad. :shock:
Well, I'm 11 years your senior, have lost more, have 5-6 years of living expenses in risk free assets, and plan to just ride it out.

On the other hand, stocks are only 35% of our net worth. As a policy, we put no more than 50% of our net worth in public markets. The rest goes in private, illiquid markets.

Good luck! You have time on your side.
I think the buy and hold strategy is alright if your in the 1% club. Its tough to stomach a 30% loss after 35 years of investing and nearing retirement. Especially hard if you make the average salary.

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watchnerd
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Re: Get out now or ride it out?

Post by watchnerd » Sun Mar 22, 2020 3:03 pm

dreamrider wrote:
Sun Mar 22, 2020 2:55 pm
I think the buy and hold strategy is alright if your in the 1% club. Its tough to stomach a 30% loss after 35 years of investing and nearing retirement. Especially hard if you make the average salary.
I think it works well at 5%.

Above that, private markets start having some advantages. Public markets are great for liquidity and cheap beta. But they're not the best ROI if you're willing to be illiquid.

As for average salary:

Everything is tough on an average salary these days. That's not to diminish it, but retirement savings is just one of many challenges.
70% Global Market Weight Equities | 15% Long Treasuries 15% short TIPS & cash || RSU + ESPP

dvvader
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Re: Get out now or ride it out?

Post by dvvader » Sun Mar 22, 2020 3:07 pm

I posted this in another thread but I'll post it again here because I think it's important to see. Below is a snippet from an article I read recently. Hold on, this could all reverse very soon, or it could not. As people like to say on this forum, nobody knows nothing.
7. “Why don’t we just sell everything and wait this out? Get back in when the dust settles?”
This is the question every financial advisor is getting this week, from at least one or two clients. They’re asking out of genuine curiosity, not just panic or fear. And it’s a great question. The great answer is that you won’t know when the dust settles. There’s no airplane writing the “all clear” in the sky above your neighborhood. And when the dust settles, do you think stocks will be at their lows? Or will they have already rallied furiously, in anticipation of this? Let me give you an example. Today is March 9th. Precisely eleven years ago today, in 2009, the stock market stopped going down. There was no reason. The dust had settled, without fanfare or any sort of official announcement. If you had polled people that day, or week or even month, most would not have agreed that we had seen the worst. The economic headlines were not improving. But there it was. And by June 1st, less than 3 months later, the stock market had climbed 41% from that March low. And even with that having happened, the majority of participants still weren’t clear that the dust had fully settled. That we had, in fact, seen the worst. There were still people calling us 3, 5 and 7 years later who had gone to cash and still hadn’t gotten back into stocks. They missed a new record-high a few years later and hundreds of percentage points in compounding on their assets.

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watchnerd
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Re: Get out now or ride it out?

Post by watchnerd » Sun Mar 22, 2020 3:11 pm

dvvader wrote:
Sun Mar 22, 2020 3:07 pm
I posted this in another thread but I'll post it again here because I think it's important to see. Below is a snippet from an article I read recently. Hold on, this could all reverse very soon, or it could not. As people like to say on this forum, nobody knows nothing.
7. “Why don’t we just sell everything and wait this out? Get back in when the dust settles?”
This is the question every financial advisor is getting this week, from at least one or two clients. They’re asking out of genuine curiosity, not just panic or fear. And it’s a great question. The great answer is that you won’t know when the dust settles. There’s no airplane writing the “all clear” in the sky above your neighborhood. And when the dust settles, do you think stocks will be at their lows? Or will they have already rallied furiously, in anticipation of this? Let me give you an example. Today is March 9th. Precisely eleven years ago today, in 2009, the stock market stopped going down. There was no reason. The dust had settled, without fanfare or any sort of official announcement. If you had polled people that day, or week or even month, most would not have agreed that we had seen the worst. The economic headlines were not improving. But there it was. And by June 1st, less than 3 months later, the stock market had climbed 41% from that March low. And even with that having happened, the majority of participants still weren’t clear that the dust had fully settled. That we had, in fact, seen the worst. There were still people calling us 3, 5 and 7 years later who had gone to cash and still hadn’t gotten back into stocks. They missed a new record-high a few years later and hundreds of percentage points in compounding on their assets.
Thanks for that.

Having lived through it, and held on, I experienced those gains and knew it anecdotally to be true, but not the specifics.
70% Global Market Weight Equities | 15% Long Treasuries 15% short TIPS & cash || RSU + ESPP

miket29
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Re: Get out now or ride it out?

Post by miket29 » Sun Mar 22, 2020 3:40 pm

jasperhobbs wrote:
Sun Mar 22, 2020 10:28 am
Hindsight is 20/20 and most would have sold off when DOW made the first major drop. Now the question is sell now if/before DOW drops to 15,000 or less.
The investment philosophy here might not be a good fit for you. The Boglehead philosophy is for long-term investing with the understanding that markets will have ups and downs and that selling after a drop only locks in losses and kills the chance for a decent long-term return. It is the opposite of the market timing you suggest. Nobody really knows if the market will recover or plunge; they didn't back in February and they don't now. Sure you'll hear plenty of opinions and somebody is bound to be right. But an underpinning of the Boglehead philosophy is to understand market timing doesn't work.

So long ago most here would have created an IPS (see https://www.bogleheads.org/wiki/Investm ... _statement) to decide what their allocation of stocks and bonds should be. One that fits with their understanding of investing, that allows them to sleep at nite, that takes into account the years before they want to start drawing down their portfolio. Then when the Dow dropped they'd do exactly nothing.
Last edited by miket29 on Sun Mar 22, 2020 3:45 pm, edited 4 times in total.

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welderwannabe
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Re: Get out now or ride it out?

Post by welderwannabe » Sun Mar 22, 2020 3:41 pm

tom1944 wrote:
Sun Mar 22, 2020 10:33 am
My guess is that in 8 years your account will be worth more if you leave it instead of taking it out now and put it into interest bearing accounts
Thats optmistic. Money markets are going to be bearing interest? :)
I am not an investment professional, but I did stay at a Holiday Inn Express last night.

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