Moved all Retirement Plans to Cash Last Wed Based on Tepper's Call

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maxInfo
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Moved all Retirement Plans to Cash Last Wed Based on Tepper's Call

Post by maxInfo » Wed May 20, 2020 11:32 pm

I have read some variant of this thread many, many times, but here goes. I went all cash in my retirement plans (401a,403b,457b) based on Tepper's call last Wed, that the market is the most overvalued he's ever seen except in 1999. His arguments made a lot of sense (also the bearish sentiments of Druckenmiller, Howard Marks, Warren Buffett, Mark Cuban, and many others). Granted that the market portfolio continues to offer the greatest reward per unit of risk, you could argue that the going "reward" just isn't enough. After holding firm through the entire debacle (and making regular payroll contributions into the indexes), it seemed stupid to risk everything for the prospect of making some extra peanuts (5-10%).

Now, very upset that I missed out on a 5%+ rally. Choose your adventure---do you:

A) Admit that you screwed up, buy back into TSM immediately, and forget it
B) Stick to the original logic (which is even more compelling now), and wait for a reversal of the "bear market rally"
C) Attempt to apply higher-Sharpe opportunities in taxable accounts (e.g., UPRO/TMF, timing models, or "optimized" buy-and-hold portfolios of individual stocks or sector ETFs)
D) Move into sectors/styles where you can still "buy low" (e.g., financials, small-cap value, mid-cap value, international)
E) Chase sectors/styles that have outperformed recently (tech, health care, large cap value, min vol, etc)

Leesbro63
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Re: Moved all Retirement Plans to Cash Last Wed Based on Tepper's Call

Post by Leesbro63 » Thu May 21, 2020 4:51 am

You need an investment plan. With an asset allocation you can stick with through thick and thin. You need to be able to “don’t just do something, stand there.”

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Stinky
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Re: Moved all Retirement Plans to Cash Last Wed Based on Tepper's Call

Post by Stinky » Thu May 21, 2020 5:01 am

Leesbro63 wrote:
Thu May 21, 2020 4:51 am
You need an investment plan. With an asset allocation you can stick with through thick and thin. You need to be able to “don’t just do something, stand there.”
MaxInfo, welcome to the Forum!

I agree 100% with Leesbro63. You need an investment plan before you take any other action. Meanwhile, you need to shut off the outside chatter, because as is often said on this Forum, "nobody knows nothing" (or some variant of that). Have a well-thought-out investment plan that works for you, and stick through it.

What percent of your assets were in equities going into last week? Based on your actions, it almost certainly was too high.
It's a GREAT day to be alive - Travis Tritt

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jakehefty17
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Re: Moved all Retirement Plans to Cash Last Wed Based on Tepper's Call

Post by jakehefty17 » Thu May 21, 2020 5:04 am

maxInfo wrote:
Wed May 20, 2020 11:32 pm
I have read some variant of this thread many, many times, but here goes. I went all cash in my retirement plans (401a,403b,457b) based on Tepper's call last Wed, that the market is the most overvalued he's ever seen except in 1999. His arguments made a lot of sense (also the bearish sentiments of Druckenmiller, Howard Marks, Warren Buffett, Mark Cuban, and many others). Granted that the market portfolio continues to offer the greatest reward per unit of risk, you could argue that the going "reward" just isn't enough. After holding firm through the entire debacle (and making regular payroll contributions into the indexes), it seemed stupid to risk everything for the prospect of making some extra peanuts (5-10%).

Now, very upset that I missed out on a 5%+ rally. Choose your adventure---do you:

A) Admit that you screwed up, buy back into TSM immediately, and forget it
B) Stick to the original logic (which is even more compelling now), and wait for a reversal of the "bear market rally"
C) Attempt to apply higher-Sharpe opportunities in taxable accounts (e.g., UPRO/TMF, timing models, or "optimized" buy-and-hold portfolios of individual stocks or sector ETFs)
D) Move into sectors/styles where you can still "buy low" (e.g., financials, small-cap value, mid-cap value, international)
E) Chase sectors/styles that have outperformed recently (tech, health care, large cap value, min vol, etc)
Surrender yourself to a 10-step program.

https://www.bogleheads.org/wiki/Boglehe ... philosophy

Contents:
1. Develop a workable plan
2. Invest early and often
3. Never bear too much or too little risk
4. Diversify
5. Never try to time the market
6. Use index funds when possible
7. Keep costs low
8. Minimize taxes
9. Invest with simplicity
10. Stay the course
"The problem with the world is that the intelligent people are full of doubts, while the stupid ones are full of confidence." -Charles Bukowski

awval999
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Re: Moved all Retirement Plans to Cash Last Wed Based on Tepper's Call

Post by awval999 » Thu May 21, 2020 5:19 am

awval999 wrote:
Wed Apr 15, 2020 5:31 am
awval999 wrote:
Thu Mar 12, 2020 5:45 am
Does anyone "rebalance" the way I do?
Default 80/20.
Then at every 10% down I go 5% more into stocks.

At -10% I'm at 85/15
At -20% I'm at 90/10
At -30% I'm at 95/5
At -40% I'm at 100/0

I then ride the wave back up to the all time high, when I go back to 80/20.
It's written in my IPS.

This morning I executed the second tranche.

It's easy to do at 34. Don't know if I'd want to do this at 54. Although I'd have plenty more bonds at 54.
I executed the 3rd tranche on Friday March 20th. At that time I was 95/5.

Yesterday I capitulated and sold all quarter-million dollars of our life savings - my 403b - into VMFXX (Vanguard Money Market fund). I hit click at 3:55pm at work.

Watching the stock market go up was harder then watching it go down.

I know I have sinned. But the things I fear that come from this cannot be posted on Bogleheads.

I was able to come home, kiss my wife and my child, and be able to sleep soundly.
This is me. You're not alone.

I sold it all over a month ago at the equivalent of VTI $142 / SPY $284.
But I've been on Bogleheads for nearly a decade. I ripped up my IPS and did exactly what it said not to do. I knew not to do it.

First, take some reflection on why you did what you did. It's OK to admit you did it on other's thoughts of valuation.

As Suze Orman says, "Stand in your Truth". So here's mine. I am the sole breadwinner in our family with an 18 month toddler. At the time we had approximately $2000 in emergency fund "cash" while maxing out the 403b and HSA along with a 15 year mortgage. Otherwise debt free. But my hospital was hemorrhaging money (as all are). The stock market was making no sense. I bought all the down, exchanging bonds for stocks, and held until what I deemed was a good recovery. I looked and we were back at August 2019 prices. But I was scared, and I wanted to defend my family and our savings. I remember thinking, I was happy then, on vacation, we were at Ocean City, not a care in the world. I knew the Cares Act passed and if necessary, I would be able to take out money penalty free from the 403b. So I capitulated.

One week later our hospital announced 20% furloughs for non-clinical staff (I am clinical), temporary 90 day pay reductions of 10-20% for senior level leadership (I am not senior level), suspension of 403b matches and elimination of 2020 raises.

I know long term I need to get back in. I can't hold $250,000 in money market forever. Do I dollar cost average back in once monthly? I continue to max my 403b and all new contributions are invested 100% in equities. I don't have the answers yet.

Over the last month I've made great progress on the emergency fund end with sale of individual stock from "fun money account", stimulus check and spending less. It's at $10,000 now. I also have to admit my life and my responsibilities are different from when I wrote my original IPS in 2011. I was single, living in a downtown apartment, with no kids.

I don't have answers for you, but I'm here to talk it through. There's many more like us out there. Many of my successful millennial friends. There's a lot of cash on the sideline.

sd323232
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Re: Moved all Retirement Plans to Cash Last Wed Based on Tepper's Call

Post by sd323232 » Thu May 21, 2020 5:26 am

maxInfo wrote:
Wed May 20, 2020 11:32 pm
I have read some variant of this thread many, many times, but here goes. I went all cash in my retirement plans (401a,403b,457b) based on Tepper's call last Wed, that the market is the most overvalued he's ever seen except in 1999. His arguments made a lot of sense (also the bearish sentiments of Druckenmiller, Howard Marks, Warren Buffett, Mark Cuban, and many others). Granted that the market portfolio continues to offer the greatest reward per unit of risk, you could argue that the going "reward" just isn't enough. After holding firm through the entire debacle (and making regular payroll contributions into the indexes), it seemed stupid to risk everything for the prospect of making some extra peanuts (5-10%).

Now, very upset that I missed out on a 5%+ rally. Choose your adventure---do you:

A) Admit that you screwed up, buy back into TSM immediately, and forget it
B) Stick to the original logic (which is even more compelling now), and wait for a reversal of the "bear market rally"
C) Attempt to apply higher-Sharpe opportunities in taxable accounts (e.g., UPRO/TMF, timing models, or "optimized" buy-and-hold portfolios of individual stocks or sector ETFs)
D) Move into sectors/styles where you can still "buy low" (e.g., financials, small-cap value, mid-cap value, international)
E) Chase sectors/styles that have outperformed recently (tech, health care, large cap value, min vol, etc)
When argument makes a lot of sense and you are 100% that exactly how market is gonna behave, market does just complete opposite of that. All experts were throwing their opinion how this stock market is doomed, but who is laughing now, buy and hold people.

bgf
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Re: Moved all Retirement Plans to Cash Last Wed Based on Tepper's Call

Post by bgf » Thu May 21, 2020 6:00 am

Come up with a more conservative portfolio allocation (but not so conservative that when stocks rip up you'll sell bonds to buy more stocks) and implement it. ASAP.

Waiting builds inertia and makes it harder to buy back.
Last edited by bgf on Thu May 21, 2020 7:48 am, edited 1 time in total.
“TE OCCIDERE POSSUNT SED TE EDERE NON POSSUNT NEFAS EST"

bgf
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Re: Moved all Retirement Plans to Cash Last Wed Based on Tepper's Call

Post by bgf » Thu May 21, 2020 6:03 am

awval999 wrote:
Thu May 21, 2020 5:19 am
awval999 wrote:
Wed Apr 15, 2020 5:31 am
awval999 wrote:
Thu Mar 12, 2020 5:45 am
Does anyone "rebalance" the way I do?
Default 80/20.
Then at every 10% down I go 5% more into stocks.

At -10% I'm at 85/15
At -20% I'm at 90/10
At -30% I'm at 95/5
At -40% I'm at 100/0

I then ride the wave back up to the all time high, when I go back to 80/20.
It's written in my IPS.

This morning I executed the second tranche.

It's easy to do at 34. Don't know if I'd want to do this at 54. Although I'd have plenty more bonds at 54.
I executed the 3rd tranche on Friday March 20th. At that time I was 95/5.

Yesterday I capitulated and sold all quarter-million dollars of our life savings - my 403b - into VMFXX (Vanguard Money Market fund). I hit click at 3:55pm at work.

Watching the stock market go up was harder then watching it go down.

I know I have sinned. But the things I fear that come from this cannot be posted on Bogleheads.

I was able to come home, kiss my wife and my child, and be able to sleep soundly.
This is me. You're not alone.

I sold it all over a month ago at the equivalent of VTI $142 / SPY $284.
But I've been on Bogleheads for nearly a decade. I ripped up my IPS and did exactly what it said not to do. I knew not to do it.

First, take some reflection on why you did what you did. It's OK to admit you did it on other's thoughts of valuation.

As Suze Orman says, "Stand in your Truth". So here's mine. I am the sole breadwinner in our family with an 18 month toddler. At the time we had approximately $2000 in emergency fund "cash" while maxing out the 403b and HSA along with a 15 year mortgage. Otherwise debt free. But my hospital was hemorrhaging money (as all are). The stock market was making no sense. I bought all the down, exchanging bonds for stocks, and held until what I deemed was a good recovery. I looked and we were back at August 2019 prices. But I was scared, and I wanted to defend my family and our savings. I remember thinking, I was happy then, on vacation, we were at Ocean City, not a care in the world. I knew the Cares Act passed and if necessary, I would be able to take out money penalty free from the 403b. So I capitulated.

One week later our hospital announced 20% furloughs for non-clinical staff (I am clinical), temporary 90 day pay reductions of 10-20% for senior level leadership (I am not senior level), suspension of 403b matches and elimination of 2020 raises.

I know long term I need to get back in. I can't hold $250,000 in money market forever. Do I dollar cost average back in once monthly? I continue to max my 403b and all new contributions are invested 100% in equities. I don't have the answers yet.

Over the last month I've made great progress on the emergency fund end with sale of individual stock from "fun money account", stimulus check and spending less. It's at $10,000 now. I also have to admit my life and my responsibilities are different from when I wrote my original IPS in 2011. I was single, living in a downtown apartment, with no kids.

I don't have answers for you, but I'm here to talk it through. There's many more like us out there. Many of my successful millennial friends. There's a lot of cash on the sideline.
You've listed a lot of good reasons for having a more conservative allocation. Everyone's risk tolerance is different not just because they're born that way but because their lives dictate one way or another. It sounds like you've done well to build a healthier emegency fund.

Have you looked into target date funds? Perhaps a date sooner than you expect to retire for a more conservative allocation.
“TE OCCIDERE POSSUNT SED TE EDERE NON POSSUNT NEFAS EST"

RadAudit
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Re: Moved all Retirement Plans to Cash Last Wed Based on Tepper's Call

Post by RadAudit » Thu May 21, 2020 6:23 am

maxInfo wrote:
Wed May 20, 2020 11:32 pm
I went all cash in my retirement plans (401a,403b,457b) based on Tepper's call last Wed, that the market is the most overvalued he's ever seen except in 1999. ... Granted that the market portfolio continues to offer the greatest reward per unit of risk, you could argue that the going "reward" just isn't enough. After holding firm through the entire debacle (and making regular payroll contributions into the indexes), it seemed stupid to risk everything for the prospect of making some extra peanuts (5-10%).
You are way too concerned about a 5% fluctuation in portfolio value. Not that I haven't been there long before you. I found out my AA was too aggressive for me in every major down turn before this one in the last 20 years. Moved the stock allocation down by 10% each time. (This time it was just an interesting number. Just worth a passing comment at the breakfast table and roll on.)
jakehefty17 wrote:
Thu May 21, 2020 5:04 am
Surrender yourself to a 10-step program.
https://www.bogleheads.org/wiki/Getting_started
BTW, who's Tepper?

Edit - Changed the link
Last edited by RadAudit on Thu May 21, 2020 9:18 am, edited 2 times in total.
FI is the best revenge. LBYM. Invest the rest. Stay the course. - PS: The cavalry isn't coming, kids. You are on your own.

macher
Posts: 163
Joined: Tue Apr 14, 2020 5:21 pm

Re: Moved all Retirement Plans to Cash Last Wed Based on Tepper's Call

Post by macher » Thu May 21, 2020 6:25 am

maxInfo wrote:
Wed May 20, 2020 11:32 pm
I have read some variant of this thread many, many times, but here goes. I went all cash in my retirement plans (401a,403b,457b) based on Tepper's call last Wed, that the market is the most overvalued he's ever seen except in 1999. His arguments made a lot of sense (also the bearish sentiments of Druckenmiller, Howard Marks, Warren Buffett, Mark Cuban, and many others). Granted that the market portfolio continues to offer the greatest reward per unit of risk, you could argue that the going "reward" just isn't enough. After holding firm through the entire debacle (and making regular payroll contributions into the indexes), it seemed stupid to risk everything for the prospect of making some extra peanuts (5-10%).

Now, very upset that I missed out on a 5%+ rally. Choose your adventure---do you:

A) Admit that you screwed up, buy back into TSM immediately, and forget it
B) Stick to the original logic (which is even more compelling now), and wait for a reversal of the "bear market rally"
C) Attempt to apply higher-Sharpe opportunities in taxable accounts (e.g., UPRO/TMF, timing models, or "optimized" buy-and-hold portfolios of individual stocks or sector ETFs)
D) Move into sectors/styles where you can still "buy low" (e.g., financials, small-cap value, mid-cap value, international)
E) Chase sectors/styles that have outperformed recently (tech, health care, large cap value, min vol, etc)
If it’s your retirement and you’re in it for the long run just keep contributing and don’t look back. My asset allocation and contributions are 65% US Stocks 35% TIAA Traditional. I’m in it for another 14 years at least and I’m not looking back.

B. Wellington
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Re: Moved all Retirement Plans to Cash Last Wed Based on Tepper's Call

Post by B. Wellington » Thu May 21, 2020 7:33 am

bgf wrote:
Thu May 21, 2020 6:00 am
Come up with a more conservative portfolio allocation (but not so conservative that when stocks rip up you'll bonds to buy more stocks) and implement it. ASAP.

Waiting builds inertia and makes it harder to buy back.
Agree. I moved to a more conservative portfolio years ago which has helped me from my worst enemy, myself. Everyone is different, however there have been many studies which has shown that balanced AA's have served small investors well by "keeping them in the game."

Bogle's advice: Be balanced. Don't peek. And "tune out the noise."

Call_Me_Op
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Re: Moved all Retirement Plans to Cash Last Wed Based on Tepper's Call

Post by Call_Me_Op » Thu May 21, 2020 7:39 am

maxInfo wrote:
Wed May 20, 2020 11:32 pm
I have read some variant of this thread many, many times, but here goes. I went all cash in my retirement plans (401a,403b,457b) based on Tepper's call last Wed, that the market is the most overvalued he's ever seen except in 1999. His arguments made a lot of sense (also the bearish sentiments of Druckenmiller, Howard Marks, Warren Buffett, Mark Cuban, and many others). Granted that the market portfolio continues to offer the greatest reward per unit of risk, you could argue that the going "reward" just isn't enough. After holding firm through the entire debacle (and making regular payroll contributions into the indexes), it seemed stupid to risk everything for the prospect of making some extra peanuts (5-10%).

Now, very upset that I missed out on a 5%+ rally. Choose your adventure---do you:

A) Admit that you screwed up, buy back into TSM immediately, and forget it
B) Stick to the original logic (which is even more compelling now), and wait for a reversal of the "bear market rally"
C) Attempt to apply higher-Sharpe opportunities in taxable accounts (e.g., UPRO/TMF, timing models, or "optimized" buy-and-hold portfolios of individual stocks or sector ETFs)
D) Move into sectors/styles where you can still "buy low" (e.g., financials, small-cap value, mid-cap value, international)
E) Chase sectors/styles that have outperformed recently (tech, health care, large cap value, min vol, etc)
None of the above. Develop a plan you are able to stick with, and stay the course.
Best regards, -Op | | "In the middle of difficulty lies opportunity." Einstein

UpperNwGuy
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Re: Moved all Retirement Plans to Cash Last Wed Based on Tepper's Call

Post by UpperNwGuy » Thu May 21, 2020 7:44 am

My advice:
1. Put most of your money into a Total Stock index fund immediately, and the balance into a Total Bond index fund.
2. Stop reading financial websites and listening to financial podcasts.
3. Delete all stock market apps from your smart phone so you can't follow the daily zig and zag of the market.

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Watty
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Re: Moved all Retirement Plans to Cash Last Wed Based on Tepper's Call

Post by Watty » Thu May 21, 2020 7:57 am

When people say "write up an investing plan" they are likely referring to an Investing Policy Statement, there is a wiki on that.

https://www.bogleheads.org/wiki/Investm ... _statement

If any of this was in a taxable account then you need to watch out for the wash sale rules if you reinvest the money so soon. You may be able to work around that by investing in similar but not identical investments.

https://www.bogleheads.org/wiki/Wash_sale

There are lots of problems with selling investments when you hear someone like Tepper say to sell but even if he was reliable and right you would have a problem in that you will not see headlines when he starts putting money back into the the stock market. To successfully time the market you have to do it twice, when you get out and also when you get back in.
maxInfo wrote:
Wed May 20, 2020 11:32 pm
A) Admit that you screwed up, buy back into TSM immediately, and forget it
Being 100% stocks is rarely if ever the right asset allocation. You might consider using a target date fund in your retirement accounts if you have good low cost ones in your plans.

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Horton
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Re: Moved all Retirement Plans to Cash Last Wed Based on Tepper's Call

Post by Horton » Thu May 21, 2020 8:45 am

F) Wait for Tepper to call you back and tell you to get in the market. (Sorry, couldn’t resist :beer )

G) Admit that you are your own worst enemy and put your money in a target date fund, use Vanguard PAS, or devise some other approach to keep yourself from making knee jerk reactions.

Lloyd Christmas
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Re: Moved all Retirement Plans to Cash Last Wed Based on Tepper's Call

Post by Lloyd Christmas » Thu May 21, 2020 9:00 am

There is a tremendous amount of value in keeping things simple. The Boglehead method of regular retirement contributions into three broad index funds is the simplest method out there. Trying to time the market brings with it a lot of risk and worry. In the end you might end up with a few more bucks, but is it worth all of that time, energy, risk, and worry? To a lot of people, me included, it's not worth it. Just stay invested, continue to invest, and reap the rewards.

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Re: Moved all Retirement Plans to Cash Last Wed Based on Tepper's Call

Post by White Coat Investor » Thu May 21, 2020 9:12 am

maxInfo wrote:
Wed May 20, 2020 11:32 pm
I have read some variant of this thread many, many times, but here goes. I went all cash in my retirement plans (401a,403b,457b) based on Tepper's call last Wed, that the market is the most overvalued he's ever seen except in 1999. His arguments made a lot of sense (also the bearish sentiments of Druckenmiller, Howard Marks, Warren Buffett, Mark Cuban, and many others). Granted that the market portfolio continues to offer the greatest reward per unit of risk, you could argue that the going "reward" just isn't enough. After holding firm through the entire debacle (and making regular payroll contributions into the indexes), it seemed stupid to risk everything for the prospect of making some extra peanuts (5-10%).

Now, very upset that I missed out on a 5%+ rally. Choose your adventure---do you:

A) Admit that you screwed up, buy back into TSM immediately, and forget it
B) Stick to the original logic (which is even more compelling now), and wait for a reversal of the "bear market rally"
C) Attempt to apply higher-Sharpe opportunities in taxable accounts (e.g., UPRO/TMF, timing models, or "optimized" buy-and-hold portfolios of individual stocks or sector ETFs)
D) Move into sectors/styles where you can still "buy low" (e.g., financials, small-cap value, mid-cap value, international)
E) Chase sectors/styles that have outperformed recently (tech, health care, large cap value, min vol, etc)
First, read this so you understand why you did this: https://www.fool.com/investing/general/ ... smart.aspx
1) Invest you must 2) Time is your friend 3) Impulse is your enemy | 4) Basic arithmetic works 5) Stick to simplicity 6) Stay the course

montanagirl
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Re: Moved all Retirement Plans to Cash Last Wed Based on Tepper's Call

Post by montanagirl » Thu May 21, 2020 9:18 am

The ideal time to go to cash would have been around Feb. 18. The best time to buy back in would have been March 23. Funny how no one seems to call those things ahead of time.

Instead, they call it after it happens.

barnaclebob
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Re: Moved all Retirement Plans to Cash Last Wed Based on Tepper's Call

Post by barnaclebob » Thu May 21, 2020 9:22 am

maxInfo wrote:
Wed May 20, 2020 11:32 pm
I have read some variant of this thread many, many times, but here goes. I went all cash in my retirement plans (401a,403b,457b) based on Tepper's call last Wed, that the market is the most overvalued he's ever seen except in 1999. His arguments made a lot of sense (also the bearish sentiments of Druckenmiller, Howard Marks, Warren Buffett, Mark Cuban, and many others). Granted that the market portfolio continues to offer the greatest reward per unit of risk, you could argue that the going "reward" just isn't enough. After holding firm through the entire debacle (and making regular payroll contributions into the indexes), it seemed stupid to risk everything for the prospect of making some extra peanuts (5-10%).

Now, very upset that I missed out on a 5%+ rally. Choose your adventure---do you:

A) Admit that you screwed up, buy back into TSM immediately, and forget it
B) Stick to the original logic (which is even more compelling now), and wait for a reversal of the "bear market rally"
C) Attempt to apply higher-Sharpe opportunities in taxable accounts (e.g., UPRO/TMF, timing models, or "optimized" buy-and-hold portfolios of individual stocks or sector ETFs)
D) Move into sectors/styles where you can still "buy low" (e.g., financials, small-cap value, mid-cap value, international)
E) Chase sectors/styles that have outperformed recently (tech, health care, large cap value, min vol, etc)
F) You admit that you know nothing and realize that nobody else does either. And if anybody does know anything they wouldn't tell you. Once you accept these truths then its a choice between indexing or gambling.

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Re: Moved all Retirement Plans to Cash Last Wed Based on Tepper's Call

Post by Jack FFR1846 » Thu May 21, 2020 9:24 am

The answer for you is "F": Open a Vanguard account, choose a target date fund, put all of your money into it, go into the "change password" option. Write a random password on a small piece of paper. This should be very randomized. Change your password. Log out. Eat the piece of paper.

If you can't do that, then your answer is "G": Hire an advisor who will siphon 1% from you every year and put you into high ER funds, but won't go selling to cash in a panic because some moron put out a newsletter to do so.
Bogle: Smart Beta is stupid

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Re: Moved all Retirement Plans to Cash Last Wed Based on Tepper's Call

Post by carolinaman » Thu May 21, 2020 9:27 am

RadAudit wrote:
Thu May 21, 2020 6:23 am
maxInfo wrote:
Wed May 20, 2020 11:32 pm
I went all cash in my retirement plans (401a,403b,457b) based on Tepper's call last Wed, that the market is the most overvalued he's ever seen except in 1999. ... Granted that the market portfolio continues to offer the greatest reward per unit of risk, you could argue that the going "reward" just isn't enough. After holding firm through the entire debacle (and making regular payroll contributions into the indexes), it seemed stupid to risk everything for the prospect of making some extra peanuts (5-10%).
You are way too concerned about a 5% fluctuation in portfolio value. Not that I haven't been there long before you. I found out my AA was too aggressive for me in every major down turn before this one in the last 20 years. Moved the stock allocation down by 10% each time. (This time it was just an interesting number. Just worth a passing comment at the breakfast table and roll on.)
jakehefty17 wrote:
Thu May 21, 2020 5:04 am
Surrender yourself to a 10-step program.
https://www.bogleheads.org/wiki/Getting_started
BTW, who's Tepper?

Edit - Changed the link
Tepper is the new owner of our Carolina Panthers. Supposedly a very successful hedge fund manager worth around $10B I think.

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Re: Moved all Retirement Plans to Cash Last Wed Based on Tepper's Call

Post by InvestInLife » Thu May 21, 2020 9:31 am

Stinky wrote:
Thu May 21, 2020 5:01 am
What percent of your assets were in equities going into last week? Based on your actions, it almost certainly was too high.
Just to expand on Stinky's comment, it's not that you necessarily need to lessen your investment in stocks due to any current market conditions, but rather if you are anxious about it there's a higher risk of doing something erratic out of panic. Around here they say when you can sleep at night without worry or thinking about reconfiguring your portfolio, then that's the allocation for you. It's more the psychology of investing.

Bogleheads approach stocks as a buy & hold long-term investment. The studies we share all conclude that staying in the stock market for several decades will very possibly come out ahead. There's one about how the investment accounts of dead people come out ahead, presumably because they are unable to "tinker" with their investments.

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Re: Moved all Retirement Plans to Cash Last Wed Based on Tepper's Call

Post by goingup » Thu May 21, 2020 9:38 am

awval999 wrote:
Thu May 21, 2020 5:19 am
awval999 wrote:
Wed Apr 15, 2020 5:31 am
awval999 wrote:
Thu Mar 12, 2020 5:45 am
Does anyone "rebalance" the way I do?
Default 80/20.
Then at every 10% down I go 5% more into stocks.

At -10% I'm at 85/15
At -20% I'm at 90/10
At -30% I'm at 95/5
At -40% I'm at 100/0

I then ride the wave back up to the all time high, when I go back to 80/20.
It's written in my IPS.

This morning I executed the second tranche.

It's easy to do at 34. Don't know if I'd want to do this at 54. Although I'd have plenty more bonds at 54.
I executed the 3rd tranche on Friday March 20th. At that time I was 95/5.

Yesterday I capitulated and sold all quarter-million dollars of our life savings - my 403b - into VMFXX (Vanguard Money Market fund). I hit click at 3:55pm at work.

Watching the stock market go up was harder then watching it go down.

I know I have sinned. But the things I fear that come from this cannot be posted on Bogleheads.

I was able to come home, kiss my wife and my child, and be able to sleep soundly.
This is me. You're not alone.
Your IPS calls for you to be very active, follow the market closely, and make a lot of decisions. This presents the opportunity for lots of emotion and subsequent behavioral errors. Consider keeping it simpler. Jack Bogle has said it's most important for long term investing success to get the big things right.

Big things are saving enough. Getting invested in an appropriate AA. Staying invested. IMO, the things that aid in that plan are having enough liquidity to feel secure, automating investments, and ignoring market fluctuations. :beer

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Re: Moved all Retirement Plans to Cash Last Wed Based on Tepper's Call

Post by muffins14 » Thu May 21, 2020 9:40 am

Please do not do B). There are many threads of people who sat out long periods of 2010-2020 because surely the market was supposed to fall.

Also do not do c,d, or e. Lots of good advice here on a path forward

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Re: Moved all Retirement Plans to Cash Last Wed Based on Tepper's Call

Post by grobertj » Thu May 21, 2020 9:44 am

I'm retired. I did the same thing about a month ago after my portfolio had dropped about 12%. I recently talked to Vanguard and have decided to reinvest with a conservative portfolio. I've got enough money for spending this year in an Ally savings account which pays 1.25%. I have another 2 years spending in the Vanguard Ultra-Short-Term Bond Fund Admiral Shares (VUSFX) which is safe and should pay more than a money market. I've invested the bulk of my savings in the Vanguard Target Retirement Income Fun (VTINX) which has around 30% stocks and 70% bonds. I, too, am concerned that we''ll see another big dip in the stock market. After I feel comfortable that the economy is back on track, I plan to invent in more stocks.
The only constant is change.

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Re: Moved all Retirement Plans to Cash Last Wed Based on Tepper's Call

Post by deltaneutral83 » Thu May 21, 2020 9:47 am

maxInfo wrote:
Wed May 20, 2020 11:32 pm
I have read some variant of this thread many, many times, but here goes. I went all cash in my retirement plans (401a,403b,457b) based on Tepper's call last Wed, that the market is the most overvalued he's ever seen except in 1999. His arguments made a lot of sense (also the bearish sentiments of Druckenmiller, Howard Marks, Warren Buffett, Mark Cuban, and many others). Granted that the market portfolio continues to offer the greatest reward per unit of risk, you could argue that the going "reward" just isn't enough. After holding firm through the entire debacle (and making regular payroll contributions into the indexes), it seemed stupid to risk everything for the prospect of making some extra peanuts (5-10%).

Now, very upset that I missed out on a 5%+ rally. Choose your adventure---do you:

A) Admit that you screwed up, buy back into TSM immediately, and forget it
B) Stick to the original logic (which is even more compelling now), and wait for a reversal of the "bear market rally"
C) Attempt to apply higher-Sharpe opportunities in taxable accounts (e.g., UPRO/TMF, timing models, or "optimized" buy-and-hold portfolios of individual stocks or sector ETFs)
D) Move into sectors/styles where you can still "buy low" (e.g., financials, small-cap value, mid-cap value, international)
E) Chase sectors/styles that have outperformed recently (tech, health care, large cap value, min vol, etc)
I wouldn't be too concerned with the market timing and the subsequent pain endured with losing out on 5% of your portfolio if this is your first and last dance with trying to get cute and you make no more big mistakes like this going forward. Many of us paid 5% commissions on actively managed mutual funds just to get in the market years ago. Some older than I paid 8%. Some paid 1%+ AUM for years to a guy who couldn't spell Vanguard. So if you plan to spend a lot of time detailing an IPS that gives you an AA you can stick to thick and thin, this lesson really isn't as costly as you may think. HOWEVER, most of the responses you list out (B-E) are comical and if you really feel like they are viable options you most certainly will want to go back to the drawing board on that IPS. "Apply higher Sharpe opportunities" and "Chase sectors" have zero value and isn't written in any IPS I've ever seen of someone who built wealth. Stay away from financial porn, it's landed you in a pickle you don't want to repeat.

5% haircut is just that, a haircut, if done once. If you make similar decisions going forward and accumulate many 5% haircuts, it becomes permanent.
Last edited by deltaneutral83 on Thu May 21, 2020 9:48 am, edited 1 time in total.

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Re: Moved all Retirement Plans to Cash Last Wed Based on Tepper's Call

Post by bertilak » Thu May 21, 2020 9:48 am

RadAudit wrote:
Thu May 21, 2020 6:23 am
BTW, who's Tepper?
Isn't it amazing how someone you (or I) have never heard of can induce such radical and extreme action? It makes you realize how important "turn off the noise" advice is!

If you ARE going to listen to the noise I think Baron von Rothschild advice is better: "Buy when there's blood in the streets."

Pertinent to this thread is the rest of Rothchild's quote "even if the blood is your own."
May neither drought nor rain nor blizzard disturb the joy juice in your gizzard. -- Squire Omar Barker (aka S.O.B.), the Cowboy Poet

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Re: Moved all Retirement Plans to Cash Last Wed Based on Tepper's Call

Post by Jack FFR1846 » Thu May 21, 2020 9:51 am

carolinaman wrote:
Thu May 21, 2020 9:27 am

Tepper is the new owner of our Carolina Panthers. Supposedly a very successful hedge fund manager worth around $10B I think.
So a basketball team owner has any clue about investment advice? Sort of like Mark Cuban, except nobody's heard of him? (and for the record, I think Cuban is a clown)
Bogle: Smart Beta is stupid

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Re: Moved all Retirement Plans to Cash Last Wed Based on Tepper's Call

Post by ruralavalon » Thu May 21, 2020 10:10 am

Welcome to the forum :) .

maxInfo wrote:
Wed May 20, 2020 11:32 pm
I have read some variant of this thread many, many times, but here goes. I went all cash in my retirement plans (401a,403b,457b) based on Tepper's call last Wed, that the market is the most overvalued he's ever seen except in 1999. His arguments made a lot of sense (also the bearish sentiments of Druckenmiller, Howard Marks, Warren Buffett, Mark Cuban, and many others). Granted that the market portfolio continues to offer the greatest reward per unit of risk, you could argue that the going "reward" just isn't enough. After holding firm through the entire debacle (and making regular payroll contributions into the indexes), it seemed stupid to risk everything for the prospect of making some extra peanuts (5-10%).

Now, very upset that I missed out on a 5%+ rally. Choose your adventure---do you:

A) Admit that you screwed up, buy back into TSM immediately, and forget it
B) Stick to the original logic (which is even more compelling now), and wait for a reversal of the "bear market rally"
C) Attempt to apply higher-Sharpe opportunities in taxable accounts (e.g., UPRO/TMF, timing models, or "optimized" buy-and-hold portfolios of individual stocks or sector ETFs)
D) Move into sectors/styles where you can still "buy low" (e.g., financials, small-cap value, mid-cap value, international)
E) Chase sectors/styles that have outperformed recently (tech, health care, large cap value, min vol, etc)

A version of "A", admit that you screwed up.

If you were 100% in stocks your asset allocation was wrong. Create a reasonable plan, decide to on an asset allocation that is suitable for you in any market.

What is your age? About how long until expected retirement? What debt do you have? Do you have dependents? How secure is you your job? Will you have a pension?

Review these wiki articles to help in deciding on a new asset allocation:
"Asset allocation"; and
"Bogleheads® investment philosophy".

If you want help in deciding on a plan then post your financial details in this format: "Asking Portfolio Questions".
"Everything should be as simple as it is, but not simpler." - Albert Einstein | Wiki article link:Getting Started

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Re: Moved all Retirement Plans to Cash Last Wed Based on Tepper's Call

Post by RadAudit » Thu May 21, 2020 10:28 am

maxInfo wrote:
Wed May 20, 2020 11:32 pm
based on Tepper's call last Wed, that the market is the most overvalued he's ever seen except in 1999. His arguments made a lot of sense
Apparently, Tepper's current (former?) job is to make his calls sound like they make a lot of sense. He's probably very good at it.
FI is the best revenge. LBYM. Invest the rest. Stay the course. - PS: The cavalry isn't coming, kids. You are on your own.

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Re: Moved all Retirement Plans to Cash Last Wed Based on Tepper's Call

Post by HomerJ » Thu May 21, 2020 10:48 am

carolinaman wrote:
Thu May 21, 2020 9:27 am
Tepper is the new owner of our Carolina Panthers. Supposedly a very successful hedge fund manager worth around $10B I think.
A successful hedge fund manager = a successful salesman.

They make their money from the fees, not from their investing prowess.

The guys who are REALLY good at investing don't have clients.
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: Moved all Retirement Plans to Cash Last Wed Based on Tepper's Call

Post by galawdawg » Thu May 21, 2020 10:48 am

Welcome to Bogleheads. Lot's of good advice from folks here. My summary for a basic starting point to put your money back to work for you:

1. Take a deep breath. You can't undo what you did. But you can learn from your error and move forward.
2. Decide what asset allocation you are comfortable with based upon your ability to take risk, your willingness to take risk and your need to take risk. Read the Bogleheads wiki on asset allocation: https://www.bogleheads.org/wiki/Asset_allocation
3. Once you have decided upon an asset allocation appropriate to your personal individual circumstances, invest in a low-cost two or three fund portfolio (https://www.bogleheads.org/wiki/Two-fund_portfolio and https://www.bogleheads.org/wiki/Three-fund_portfolio) according to that asset allocation. Put your money back to work.
4. Then STAY THE COURSE. Do NOT buy or sell based upon what anyone on television tells you. Nobody knows anything about future market performance. Don't panic. Don't make investment decisions based upon emotion or fear. If you cannot STAY THE COURSE, then your asset allocation is not right for you and you need to study again how to set an appropriate asset allocation and revisit whether you need to adjust.
5. Buy and sell only as necessary to maintain your desired asset allocation. Here is the Bogleheads wiki on rebalancing: https://www.bogleheads.org/wiki/Rebalancing

Continue to read and post questions here and folks will be happy to point you in the right direction or at least attempt to talk you off the ledge!

Good luck.

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Re: Moved all Retirement Plans to Cash Last Wed Based on Tepper's Call

Post by retiredjg » Thu May 21, 2020 11:16 am

A) Admit that you screwed up, take a little time to let the idea that market timing really does not work sink into your brain and gut, and then reinvest quickly at some level less aggressive than 100% stocks....something you can be comfortable with during the bad times as well as the good times.

Write down a plan and then forget about your portfolio. Stop listening to anyone who thinks they know what to do...nobody knows anything about the future.

The other ideas are all just dumb. Do not give them any consideration.

Welcome to the forum. :happy Here's a good place to start. https://www.bogleheads.org/wiki/Main_Page

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Re: Moved all Retirement Plans to Cash Last Wed Based on Tepper's Call

Post by MathWizard » Thu May 21, 2020 11:47 am

This is your first post. Welcome to Bogleheads. You will get a lot of good advice here.


I am going to assume that you were not in the market (or have very much invested) in 2000 or 2008, or else
5% moves would not surprise you.

If that is the case, your contributions are more important that return on investment.

I agree that you need a consistent plan that you can stick to.

You dd not mention why you sold bonds, or did not move from stocks to bonds,
so I assume that you did not have any bonds (100% stocks).

That is likely much too aggressive or you. Assuming it is early on, 5% is not that big of
a lost opportunity.

Re-evaluate
Choose an AA that you can stick to
Don't market time

Then, get back into the market with some stocks and bonds, not just 100% stocks.

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Re: Moved all Retirement Plans to Cash Last Wed Based on Tepper's Call

Post by grabiner » Thu May 21, 2020 12:00 pm

Leesbro63 wrote:
Thu May 21, 2020 4:51 am
You need an investment plan. With an asset allocation you can stick with through thick and thin. You need to be able to “don’t just do something, stand there.”
In particular, here is the last paragraph of my Investment Policy Statement, which I recommend in some form as part of most statements:

"This statement will be reviewed whenever there is a substantial change in my financial situation, and annually when I rebalance. If there is no substantial change in my financial situation, I will wait at least three months between changing the asset allocation in my statement and changing the asset allocation of my investments, and review the change in the statement at that time."

A statement like this ensures that any moves you make will be well-considered when you make them. For example, I decreased my stock allocation this January, based on a plan which has been in the statement since 2015: as retirement gets closer, I reduce my stock allocation by 2% annually. But I didn't change it at the February peak, nor at the March bottom (I had to sell some bonds to rebalance into stock to get back to my target), nor the May recovery.
Wiki David Grabiner

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Re: Moved all Retirement Plans to Cash Last Wed Based on Tepper's Call

Post by Gort » Thu May 21, 2020 12:12 pm

Many suggestions here about using individual funds. I think the OP would be better off in a Target Retirement fund or a Life Strategy Fund. Less chance of making emotional mistakes with these.

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Re: Moved all Retirement Plans to Cash Last Wed Based on Tepper's Call

Post by sperry8 » Thu May 21, 2020 12:17 pm

maxInfo wrote:
Wed May 20, 2020 11:32 pm
I have read some variant of this thread many, many times, but here goes. I went all cash in my retirement plans (401a,403b,457b) based on Tepper's call last Wed, that the market is the most overvalued he's ever seen except in 1999. His arguments made a lot of sense (also the bearish sentiments of Druckenmiller, Howard Marks, Warren Buffett, Mark Cuban, and many others). Granted that the market portfolio continues to offer the greatest reward per unit of risk, you could argue that the going "reward" just isn't enough. After holding firm through the entire debacle (and making regular payroll contributions into the indexes), it seemed stupid to risk everything for the prospect of making some extra peanuts (5-10%).

Now, very upset that I missed out on a 5%+ rally. Choose your adventure---do you:

A) Admit that you screwed up, buy back into TSM immediately, and forget it
B) Stick to the original logic (which is even more compelling now), and wait for a reversal of the "bear market rally"
C) Attempt to apply higher-Sharpe opportunities in taxable accounts (e.g., UPRO/TMF, timing models, or "optimized" buy-and-hold portfolios of individual stocks or sector ETFs)
D) Move into sectors/styles where you can still "buy low" (e.g., financials, small-cap value, mid-cap value, international)
E) Chase sectors/styles that have outperformed recently (tech, health care, large cap value, min vol, etc)
Welcome to Bogleheads! You've come to the right place.

First, I have less of an issue with what you did initially then your reaction to it. You felt that markets were heading lower (regardless of reason). You decided based on this feeling to make a bet. You decided to then make a bet of 100% of your money on that feeling. Other options existed (you could've placed a bet by moving 1/2 of your 401, etc. to cash). But you were/are so sure that you decided to place a bet at 100%. All this, while not the Bogleheads way, can make sense.

What does not make sense is that your bet had to be correct, within one week. And if it wasn't, if the market didn't tumble within 5 trading days, you would be "very upset". Absolutely no one, not Tepper, no one - knows what markets will do over any given week. Even Teppers call doesn't say that markets will plummet within a week. He simply stated they are quite overvalued. So why then are you so "very upset"? It has been one week. In the late 90s the techs stayed "overvalued" for quite a long time. People were saying fellows like Berkshire misunderstood the new normal. But up and up and up they went. He also had a feeling that this couldn't last and didn't participate in the madness. Ultimately he was proven correct (although this didn't have to be the case). So if you (and Tepper) feel this is madness, then don't participate. But surely don't get very upset if your bet proves out to be wrong. And absolutely do not get "very upset" if your bet doesn't come in within one week.

Also - if your tendency is to get very upset based on extremely short moves, then I'd say you really didn't believe Teppers call in the first place. It may takes years for his call to be proven correct (ala Buffett in the late 90s). Of course he could be proven wrong too. But if that's the bet you want to place... you better be prepared to ride it out for a long time. If you are unwilling, then either don't make the bet in the first place, or lower the % of your money you make the bet with (i.e., perhaps pulling out 1/2) and letting the other 1/2 stay in. This will lessen potential losses if Teppers call is correct but will keep you with some gains/growth if it isn't.

Personally I think no one should play these games. The advice in this thread is to set a proper AA. And that is sage advice.
Last edited by sperry8 on Thu May 21, 2020 12:19 pm, edited 1 time in total.
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Re: Moved all Retirement Plans to Cash Last Wed Based on Tepper's Call

Post by hudson » Thu May 21, 2020 12:19 pm

maxInfo wrote:
Wed May 20, 2020 11:32 pm
Now, very upset that I missed out on a 5%+ rally. Choose your adventure---do you:
A) Admit that you screwed up, buy back into TSM immediately, and forget it
B) Stick to the original logic (which is even more compelling now), and wait for a reversal of the "bear market rally"
C) Attempt to apply higher-Sharpe opportunities in taxable accounts (e.g., UPRO/TMF, timing models, or "optimized" buy-and-hold portfolios of individual stocks or sector ETFs)
D) Move into sectors/styles where you can still "buy low" (e.g., financials, small-cap value, mid-cap value, international)
E) Chase sectors/styles that have outperformed recently (tech, health care, large cap value, min vol, etc)
MaxInfo,

I feel your pain!
I recommend reading Boglehead books:

https://www.bogleheads.org/RecommendedReading.php

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Re: Moved all Retirement Plans to Cash Last Wed Based on Tepper's Call

Post by Dasnyc » Thu May 21, 2020 12:22 pm

Leesbro63 wrote:
Thu May 21, 2020 4:51 am
You need an investment plan. With an asset allocation you can stick with through thick and thin. You need to be able to “don’t just do something, stand there.”
+1

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Re: Moved all Retirement Plans to Cash Last Wed Based on Tepper's Call

Post by whoshighpitch » Thu May 21, 2020 12:46 pm

I too tried and failed to time this recent market. I was convinced the April rally was insane and the market had no reason to go up like it did. So I sold everything March 5th so I'd be out for the next leg down. I was pumped when the following day the market dropped a half a percent. Then the next day it went up 1.5%. I checked CNBC about every 2 seconds...sweating...anxious.. It definitely hurt way more to see the market go up than down as someone else said. I said to myself "what the heck are you doing!?". So I bought back in 2 days after I sold everything. I realized I couldn't stomach the stress. It was a quick reminder to Stay the Course!

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Re: Moved all Retirement Plans to Cash Last Wed Based on Tepper's Call

Post by Fallible » Thu May 21, 2020 12:50 pm

maxInfo wrote:
Wed May 20, 2020 11:32 pm
...
Now, very upset that I missed out on a 5%+ rally. Choose your adventure---do you:

A) Admit that you screwed up, buy back into TSM immediately, and forget it...
You've already admitted you screwed up, so time to move on.

The first thing you should do is LEARN AND UNDERSTAND where you screwed up. It appears the problem was taking on too much risk, which made you vulnerable to a Tepper-type call, followed by panic and bailing out. I join others here who have asked for more information from you such as age and asset allocation and to use the "Asking portfolio questions" link to provide information that will further help us help you: viewtopic.php?f=1&t=6212

Again, the main problem is taking on too much risk and not understanding your own personal tolerance for it. The more you learn about risk, the better prepared you'll be to re-enter the market and stay a course that is right for YOU and with the help of a new, improved Investment policy statement.

Two more links I'll add to those of previous posters are on the ability, willingness (risk tolerance), and need (vs. desire) to take risk by Larry Swedroe, followed by a link to the BH wiki on "Investment policy statement":

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

https://www.bogleheads.org/wiki/Investm ... _statement
John Bogle on his often bumpy road to low-cost indexing: "When a door closes, if you look long enough and hard enough, if you're strong enough, you'll find a window that opens."

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Re: Moved all Retirement Plans to Cash Last Wed Based on Tepper's Call

Post by KlangFool » Thu May 21, 2020 1:35 pm

OP,

The answer is none of the above.

Put your money into a target retirement fund and/or a Balanced Fund of 60/40.

You are oscillating between 100/0 and 0/100. Do not go extreme. And, given that you cannot buy, hold, and rebalance. 3-funds is too dangerous for you.

I wish that I can say that I was smarter than you. But, I made the same mistake. I was 100/0. I sold and lost 50% of my whole life savings 10+ years ago. I learned my lesson and moved on from there.

KlangFool

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Re: Moved all Retirement Plans to Cash Last Wed Based on Tepper's Call

Post by magicrat » Thu May 21, 2020 2:41 pm

What's a Tepper's call? Some new derivative?

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Re: Moved all Retirement Plans to Cash Last Wed Based on Tepper's Call

Post by Phineas J. Whoopee » Thu May 21, 2020 2:47 pm

Has Tepper offered to reimburse you personally for opportunity costs? If not, all the risk is yours and all the prestige is theirs.
PJW

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Re: Moved all Retirement Plans to Cash Last Wed Based on Tepper's Call

Post by anoop » Thu May 21, 2020 2:53 pm

I got out in early 2008 and never got back in. :)

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Re: Moved all Retirement Plans to Cash Last Wed Based on Tepper's Call

Post by vijaym73 » Thu May 21, 2020 4:38 pm

Everyone,

IGNORE THE NOISE !!

TURN OFF CNBC, BLOOMBERG, etc. etc. !!

I make it a point every friday to put a fixed amount into VOO (taxable account)-- dont care if the market is up or down. I have 20 years ahead of me

My wife's portfolio -- 403B/457B/401A are either in a large cap fund or S+P 500 -- again, not deviating from that.

My portfolio I have more risk -- 100% is in PSLDX (this is in my 401K) -- again i just add every 2 weeks when i contribute

Just keep it simple and ignore everything else. Please, dont try to market time anything

thanks and stay safe

VJ

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Re: Moved all Retirement Plans to Cash Last Wed Based on Tepper's Call

Post by Doctor Rhythm » Thu May 21, 2020 4:43 pm

magicrat wrote:
Thu May 21, 2020 2:41 pm
What's a Tepper's call? Some new derivative?
I'll do you one better. Why is a Tepper's call?

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Re: Moved all Retirement Plans to Cash Last Wed Based on Tepper's Call

Post by petulant » Thu May 21, 2020 4:46 pm

awval999 wrote:
Thu May 21, 2020 5:19 am
awval999 wrote:
Wed Apr 15, 2020 5:31 am
awval999 wrote:
Thu Mar 12, 2020 5:45 am
Does anyone "rebalance" the way I do?
Default 80/20.
Then at every 10% down I go 5% more into stocks.

At -10% I'm at 85/15
At -20% I'm at 90/10
At -30% I'm at 95/5
At -40% I'm at 100/0

I then ride the wave back up to the all time high, when I go back to 80/20.
It's written in my IPS.

This morning I executed the second tranche.

It's easy to do at 34. Don't know if I'd want to do this at 54. Although I'd have plenty more bonds at 54.
I executed the 3rd tranche on Friday March 20th. At that time I was 95/5.

Yesterday I capitulated and sold all quarter-million dollars of our life savings - my 403b - into VMFXX (Vanguard Money Market fund). I hit click at 3:55pm at work.

Watching the stock market go up was harder then watching it go down.

I know I have sinned. But the things I fear that come from this cannot be posted on Bogleheads.

I was able to come home, kiss my wife and my child, and be able to sleep soundly.
This is me. You're not alone.

I sold it all over a month ago at the equivalent of VTI $142 / SPY $284.
But I've been on Bogleheads for nearly a decade. I ripped up my IPS and did exactly what it said not to do. I knew not to do it.

First, take some reflection on why you did what you did. It's OK to admit you did it on other's thoughts of valuation.

As Suze Orman says, "Stand in your Truth". So here's mine. I am the sole breadwinner in our family with an 18 month toddler. At the time we had approximately $2000 in emergency fund "cash" while maxing out the 403b and HSA along with a 15 year mortgage. Otherwise debt free. But my hospital was hemorrhaging money (as all are). The stock market was making no sense. I bought all the down, exchanging bonds for stocks, and held until what I deemed was a good recovery. I looked and we were back at August 2019 prices. But I was scared, and I wanted to defend my family and our savings. I remember thinking, I was happy then, on vacation, we were at Ocean City, not a care in the world. I knew the Cares Act passed and if necessary, I would be able to take out money penalty free from the 403b. So I capitulated.

One week later our hospital announced 20% furloughs for non-clinical staff (I am clinical), temporary 90 day pay reductions of 10-20% for senior level leadership (I am not senior level), suspension of 403b matches and elimination of 2020 raises.

I know long term I need to get back in. I can't hold $250,000 in money market forever. Do I dollar cost average back in once monthly? I continue to max my 403b and all new contributions are invested 100% in equities. I don't have the answers yet.

Over the last month I've made great progress on the emergency fund end with sale of individual stock from "fun money account", stimulus check and spending less. It's at $10,000 now. I also have to admit my life and my responsibilities are different from when I wrote my original IPS in 2011. I was single, living in a downtown apartment, with no kids.

I don't have answers for you, but I'm here to talk it through. There's many more like us out there. Many of my successful millennial friends. There's a lot of cash on the sideline.
Thank you for sharing your story. I actually think you made the right moves in response to your situation. The reality of the situation was that you figured out real fast your emergency fund was not enough, and you took steps to protect your family. This is exactly why I recommend investors who are accumulating for retirement have a separate emergency fund in an accessible account that makes them sleep well at night so that they don't have to worry about what's happening with their long-term portfolio in the 403(b) or 401(k) or what have you.

reln
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Re: Moved all Retirement Plans to Cash Last Wed Based on Tepper's Call

Post by reln » Thu May 21, 2020 6:33 pm

Leesbro63 wrote:
Thu May 21, 2020 4:51 am
You need an investment plan. With an asset allocation you can stick with through thick and thin. You need to be able to “don’t just do something, stand there.”
This

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F150HD
Posts: 3017
Joined: Fri Sep 18, 2015 7:49 pm

Re: Moved all Retirement Plans to Cash Last Wed Based on Tepper's Call

Post by F150HD » Thu May 21, 2020 6:36 pm

no clue who Tepper (?) is. Taffer? Trapper John? Jack Tripper?

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