Moving to Cash?

[GerryL]

Follow your plan.
You DO have a plan, don't you?
Is there anything in your plan about moving to cash?
Follow your plan.

[klondike]

I'd rather have 76.5% of 100 than 100% of 0.

Ideally, I would like to sell it slowly and controllably when I don't have a W2. You could keep all 100 if you do it properly-:)

[JoeRetire]

Dow is 28,000, with an all time high pre corona virus of 29,000, it seems irrational to have the Dow only 3ish% off the all time high with so many unemployed, no end to corona in sight, rising national debt, retail is a mess, real estate especially commercial is a mess.

The Dow is not the economy.

I am thinking it is best to move my equities in my 401k's and IRA to cash for a while.

Okay. So if you exit today, do you have a plan for how you will know it's a good time to re-enter? Just gut feelings?

[anon_investor]

I honestly don't understand these threads. There are literally dozens of threads just from the past 6 months asking this same question, ...

When these threads die off is when it might be time to go to cash.

I miss the why shouldn't I go 100% equities threads...

[Third Son]

Dow is 28,000, with an all time high pre corona virus of 29,000, it seems irrational to have the Dow only 3ish% off the all time high with so many unemployed, no end to corona in sight, rising national debt, retail is a mess, real estate especially commercial is a mess. I am thinking it is best to move my equities in my 401k's and IRA to cash for a while. I don't see any more upside to this market but plenty of downside especially when schools shutdown and another likely national shut down, so what are the best funds to park to be similar to cash? Does each 401K have a cash fund? should I leave bonds alone or also move to cash?

Thanks

How old are you? Are you in retirement? Those are important questions to answer.

[mrspock]

Threads and posts like this make me thankful most of my holdings are in taxable accounts. You think things through a bit more carefully when “going to cash” means cutting the IRS 6 figure checks.

Even AA changes must be much more judicious, and happen over many months vs just filling out some form on “netbenefits” (401k site).

Damn, so the capital gains on the shares you have in your taxable account are high enough that you'd owe 6 figures to the government if you sold all your shares? Baller right here.

My capital gains "up there", courtesy of just sitting on my hands and doing nothing other than rebalancing. I did not hit any home runs in investing, but I made very few "unforced errors", which is pretty much my strategy: don't lose capital, keep the mistakes small, and be consistent.

Pretty sure I'm not alone in my situation on here, which is probably why some of us have such different takes on these sorts of threads. Things look very different if going to cash actually means huge sums of money leaving your portfolio (think "lighting your house on fire" without insurance). You don't make moves like that on some "feeling" or some article you read on "Seeking Alpha".

If I worshiped some "deity", it would take something like them standing on my doorstep in the morning as I picked up my WSJ telling me to "sell". And even then.... I'd be scrutinizing them pretty hard, trying to figure out if they knew anything about index investing by asking: what their favorite investing books were, if I could read their IPS, what their thoughts were on the Fed Response in March and what their portfolio performance was over the last millennia or two was (without any cheating).

[Savermom]

If you own both stock and bond funds, you don’t have to try to time the market. If the market falls, you will be rebalancing by selling bonds and buying stocks. This is what I love about rebalancing.

Like I have read on this board before, if you’re really panicked, you may have the wrong asset allocation (too much in stocks).

[minimalistmarc]

I honestly don't understand these threads. There are literally dozens of threads just from the past 6 months asking this same question, ...

When these threads die off is when it might be time to go to cash.

I miss the why shouldn't I go 100% equities threads...

100% equities is in no way comparable to moving entirely to cash.

100% equities wasn’t even that volatile in March.

[anon_investor]

I honestly don't understand these threads. There are literally dozens of threads just from the past 6 months asking this same question, ...

When these threads die off is when it might be time to go to cash.

I miss the why shouldn't I go 100% equities threads...

100% equities is in no way comparable to moving entirely to cash.

100% equities wasn’t even that volatile in March.

100% equities harnesses the full potential of the equity premium... if you can hang on for the ride...

[minimalistmarc]

I honestly don't understand these threads. There are literally dozens of threads just from the past 6 months asking this same question, ...

When these threads die off is when it might be time to go to cash.

I miss the why shouldn't I go 100% equities threads...

100% equities is in no way comparable to moving entirely to cash.

100% equities wasn’t even that volatile in March.

100% equities harnesses the full potential of the equity premium... if you can hang on for the ride...

It’s very easy to hang on, even with a 7 figure portfolio.

[ChinchillaWhiplash]

Short term treasuries fund like SCHO would fit the bill. Won’t fluctuate much and yield helps with inflation.

[Trader Joe]

Dow is 28,000, with an all time high pre corona virus of 29,000, it seems irrational to have the Dow only 3ish% off the all time high with so many unemployed, no end to corona in sight, rising national debt, retail is a mess, real estate especially commercial is a mess. I am thinking it is best to move my equities in my 401k's and IRA to cash for a while. I don't see any more upside to this market but plenty of downside especially when schools shutdown and another likely national shut down, so what are the best funds to park to be similar to cash? Does each 401K have a cash fund? should I leave bonds alone or also move to cash?

Thanks

Personally I am 100% VFIAX/VTSAX and I plan to stay that way.

[finite_difference]

Dow is 28,000, with an all time high pre corona virus of 29,000, it seems irrational to have the Dow only 3ish% off the all time high with so many unemployed, no end to corona in sight, rising national debt, retail is a mess, real estate especially commercial is a mess. I am thinking it is best to move my equities in my 401k's and IRA to cash for a while. I don't see any more upside to this market but plenty of downside especially when schools shutdown and another likely national shut down, so what are the best funds to park to be similar to cash? Does each 401K have a cash fund? should I leave bonds alone or also move to cash?

Thanks

Question, let's say you sell all to cash today. When will you jump back into the market? Market timing is a tough game...

+1.

And then, after you get back in, when will you get back out again? Because it’s also a game that never ends.

If I tell you that I know of a game that has a few moments of fleeting exhilaration but is not really fun to play, is exceedingly difficult over the long term, will cause you to question yourself constantly and worry about everything, will you still want to play? And I mentioned it never ends?

I also know another way to play the game which all but guarantees you’ll come out near the top, and you don’t even have to pay attention or worry about anything.

Which would you pick?

[dogagility]

Nope, ain't gonna do it... wouldn't be prudent. heh, heh

Seriously though, the OP has 1500 posts on the forum and asks the forum if they are Moving to Cash?! Of course the forum isn't moving to cash. Bogleheads aren't going to give up their stripes for weak knees.

Perhaps the OP wants to be reassured in his/her path forward. If so, consider yourself reassured that doomsday has not arrived.

[Broken Man 1999]

I honestly don't understand these threads. There are literally dozens of threads just from the past 6 months asking this same question, ...

When these threads die off is when it might be time to go to cash.

Ha! Probably a good signal!

Broken Man 1999

[SimplicityNow]

If all of the previous posts and the multitude of previous threads on this topic before this one have not convinced you, then you do not want to be convinced.

The economy and the stock market are two separate animals.

The stock market is forward looking. It is looking at a time when businesses improve, when the virus is under control, when profits and revenue start to increase.

People have told you they feel it is a bad idea to move to cash and what you should do.

I suggest you take their advice or not.

[Nightowl99]

Ray Dalio says "cash is trash" :
https://www.youtube.com/watch?v=tZyWVxGXPHo

I think it's best to keep as much cash as you need but stay invested in the market because even if there is another downturn, all your dividends/reinvested interest will be buying more shares at a lower price. Then, when the market goes back up again, you'll have more shares. As opposed to cash, which will lose purchasing power due to inflation over time.

[Candor]

I think I've seen this play before, it starts out full of hope and solace but it usually ends in heartbreak and tragedy.

[anon_investor]

I think I've seen this play before, it starts out full of hope and solace but it usually ends in heartbreak and tragedy.

More like the OP disappears and we never find out what happened...

[Jack FFR1846]

My wife's new job sign on bonus came in. We used it to buy more VTI.

In other news, Redneck Bank is at 0.85%, down from 1.35% not long ago, Ally to 1%, CIT Bank to 0.99%.

I'll stick with the market.

[jello_nailer]

Tell me how we can only be 3% worse off now than we were pre-corona virus?

Trillions in stimulus?

This guy gets it.

^ I agree.
Don't fight the Fed. I think that can be credited to a guy with the initials M.Z.

[TimeTheMarket]

Not this again

OP I agree with everything you said about why this stock market looks nuts. But, it looks nuts to me and yet it is what it is. This is simply proof that i do not know how to value the stock market. And neither do you, otherwise you would not be questioning where it is.

Your post looks an awful lot like those many posts in March in which people justified getting out of equities and since then have been reamed. Yours is just in reverse.

The market could crash on Monday. Who knows. But if you get out now you're almost certainly going to lose money by not getting in at the right time.

Hold still for God's sake. You know you should be not timing the market!

[TimeTheMarket]

Right but then there must also have been people who when real estate was insane said this doesn't make sense, how can people get these loans with no jobs and no money down and this doesn't make sense and took some money off the table.

Tell me how we can only be 3% worse off now than we were pre-corona virus?

Yes, some made a killing getting out on real-estate. But that isn't stocks.

The stock market is not an indicator of the economy in real-time. If it were, could we say the economy is 40% better (or whatever the gain has been) since march? No,but the market went up that much anyway.

I cannot justify the current valuation of stocks. Makes little sense to me, though I do think the incredible volume of money coming from the federal reserve will continue to pump up equities purchases by some.

More importantly I have realized over a number of years that I am not very good at predicting the market. I suspect you're not, either. Prove me wrong by showing me how you detected late February that things were dire and that you sold before things went to hell. My guess is you cannot prove that. So if you didn't get it then, you probably don't now. Don't be offended by that. Most of the people reading this post don't have a clue where we're going, either. But the tiger can't eat you as long as you stay on its back.

[7eight9]

My wife's new job sign on bonus came in. We used it to buy more VTI.

In other news, Redneck Bank is at 0.85%, down from 1.35% not long ago, Ally to 1%, CIT Bank to 0.99%.

I'll stick with the market.

And 5yr MYGAs (multi-year guaranteed annuities) are paying up to 3.45% per link below.

https://www.blueprintincome.com/fixed-a ... wE&terms=5

No need to limit yourself to online banks if you can afford to lock up your money for a while and you want a decent guaranteed rate of return.

[Green Street]

Dow is 28,000, with an all time high pre corona virus of 29,000, it seems irrational to have the Dow only 3ish% off the all time high with so many unemployed, no end to corona in sight, rising national debt, retail is a mess, real estate especially commercial is a mess. I am thinking it is best to move my equities in my 401k's and IRA to cash for a while. I don't see any more upside to this market but plenty of downside especially when schools shutdown and another likely national shut down, so what are the best funds to park to be similar to cash? Does each 401K have a cash fund? should I leave bonds alone or also move to cash?

Thanks

Question, let's say you sell all to cash today. When will you jump back into the market? Market timing is a tough game...

that is my worry, I just cant believe the economy is only 3% worse off now than pre corona virus, we have national debt rising faster than ever, retail apocalypse, millions without jobs, tens of millions facing eviction once the ban is lifted, commercial real estate is ruined with everyone working from home, and corona virus they say wont go away for 100 years, and a vaccine will likely only be 40-60% effective at best, and we will be wearing masks in perpetuity. Then add in the election which I think either way is going to be a disaster....

Damn, talk about a Debbie Downer. You may want to go back to March and read some of the posts from the people who did the exact same thing you are planning to do. And see how that worked out for them. You're asking about market timing on a board where 99% of the posters don't believe in it.

Right but then there must also have been people who when real estate was insane said this doesn't make sense, how can people get these loans with no jobs and no money down and this doesn't make sense and took some money off the table.

Tell me how we can only be 3% worse off now than we were pre-corona virus?

Simple, the market is about speculation, and everything that you have said is already baked into the price. You’re not smarter than the market.

[Robert20]

Why everyone talks about sell and buy during down times?.. Isnt that cost (though little) for investor?.

Instead buy some UVXY/TVIXF/SDOW with cash and sell them for profits when market goes south? (say 1-5% of portfolio value).

[Jess Saying]

When it rebounded to S&P 3000, I doubled my cash holdings. I was convinced that the market would soon drop or at least stop rising. I turned out to be wrong.

While I don't regret increasing my cash, because I do believe I had too little before the pandemic, I'm pretty well convinced at this point that I can't predict the market and I should just pick a strategy that's good, up or down.

I road out the storm, even invested a fair amount of cash I recently got. Then mostly tapped out at 3230, thanking the "dopes" who let me get out high. Now I watch in misery and disbelief as it continues to tick upward.

Staying the course was far easier when it was crashing 35% than when it's been going back up.

[Thegame14]

Dow is 28,000, with an all time high pre corona virus of 29,000, it seems irrational to have the Dow only 3ish% off the all time high with so many unemployed, no end to corona in sight, rising national debt, retail is a mess, real estate especially commercial is a mess. I am thinking it is best to move my equities in my 401k's and IRA to cash for a while. I don't see any more upside to this market but plenty of downside especially when schools shutdown and another likely national shut down, so what are the best funds to park to be similar to cash? Does each 401K have a cash fund? should I leave bonds alone or also move to cash?

Thanks

How old are you? Are you in retirement? Those are important questions to answer.

I am 40, hope to "retire" at 55

[Third Son]

Dow is 28,000, with an all time high pre corona virus of 29,000, it seems irrational to have the Dow only 3ish% off the all time high with so many unemployed, no end to corona in sight, rising national debt, retail is a mess, real estate especially commercial is a mess. I am thinking it is best to move my equities in my 401k's and IRA to cash for a while. I don't see any more upside to this market but plenty of downside especially when schools shutdown and another likely national shut down, so what are the best funds to park to be similar to cash? Does each 401K have a cash fund? should I leave bonds alone or also move to cash?

Thanks

How old are you? Are you in retirement? Those are important questions to answer.

I am 40, hope to "retire" at 55

Then this would be an especially bad time since compounding of your investments should kick into overdrive mode soon. Keep investing. You will be short changing yourself if the market continues to grow going forward. I just retired at 60 and lived through a few tumultuous times in the market. Hang in there and you will be rewarded.

[ruralavalon]

I honestly don't understand these threads. There are literally dozens of threads just from the past 6 months asking this same question, ...

When these threads die off is when it might be time to go to cash.

I miss the why shouldn't I go 100% equities threads...

100% equities is in no way comparable to moving entirely to cash.

100% equities wasn’t even that volatile in March.

I see a comparison, being the opposite extremes .

[BolderBoy]

Dow is 28,000, with an all time high pre corona virus of 29,000, it seems irrational to have the Dow only 3ish% off the all time high with so many unemployed, no end to corona in sight, rising national debt, retail is a mess, real estate especially commercial is a mess. I am thinking it is best to move my equities in my 401k's and IRA to cash for a while. I don't see any more upside to this market but plenty of downside especially when schools shutdown and another likely national shut down, so what are the best funds to park to be similar to cash? Does each 401K have a cash fund? should I leave bonds alone or also move to cash?

The translation of the above = "My asset allocation makes me worry too much."

So tell us, what is your present AA?

[arcticpineapplecorp.]

Here's 2 fun market timing games to check one's skill levels.
https://qz.com/487013/this-game-will-sh ... right-now/
Another fun one.
https://engaging-data.com/market-timing-game/

j

where'd you get those from?

here's another good one (and more stylistically appealing):
https://www.prudential.com/cdn/tools/ou ... oolcta=OFF

[Sandtrap]

Here's 2 fun market timing games to check one's skill levels.
https://qz.com/487013/this-game-will-sh ... right-now/
Another fun one.
https://engaging-data.com/market-timing-game/

j

where'd you get those from?

here's another good one (and more stylistically appealing):
https://www.prudential.com/cdn/tools/ou ... oolcta=OFF

Son & DW is getting addicted to these games!
Thanks!
j

[arcticpineapplecorp.]

15 years to go? No. Hopefully 60. If you didn't sell everything now, do you plan to do that at 55? How do you plan to make that cash last if you live for another 40 years after that?

Why all or nothing? Either stocks or cash? Do you approach the rest of your life with an all or nothing approach or just your investments?

If you go to cash and the market goes up (and never gets back down to where it is now) when do you ever get back in except at higher prices?
If you go to cash and the market goes down will you be getting back in then? If you're afraid of risk now, do you really think you'll feel good about buying when there's fear and maximum pessimism? Be honest with yourself.

The answer to all your market timing questions:

Q: When should I buy?
A: When you have the money.

Q: When should I sell?
A: When you need the money.

stop playing with your money. buy and hold works. more people should really try it sometime.

https://www.etf.com/sections/index-inve ... nopaging=1

[arcticpineapplecorp.]

Here's 2 fun market timing games to check one's skill levels.
https://qz.com/487013/this-game-will-sh ... right-now/
Another fun one.
https://engaging-data.com/market-timing-game/

j

where'd you get those from?

here's another good one (and more stylistically appealing):
https://www.prudential.com/cdn/tools/ou ... oolcta=OFF

Son & DW is getting addicted to these games!
Thanks!
j

that's a problem because once the sooner you see the light, the sooner you stop playing a loser's game.

the goal of the game is not to get you to keep playing, but to see that it's best to stop playing.

investing shouldn't be exciting or "addictive". it should be boring if you're doing it right.

do nothing.
stay the course.
stop the market timing and improve your returns.

[ruralavalon]

Here's 2 fun market timing games to check one's skill levels.
https://qz.com/487013/this-game-will-sh ... right-now/
Another fun one.
https://engaging-data.com/market-timing-game/

j

where'd you get those from?

here's another good one (and more stylistically appealing):
https://www.prudential.com/cdn/tools/ou ... oolcta=OFF

Son & DW is getting addicted to these games!
Thanks!
j

that's a problem because once the sooner you see the light, the sooner you stop playing a loser's game.

the goal of the game is not to get you to keep playing, but to see that it's best to stop playing.

investing shouldn't be exciting or "addictive". it should be boring if you're doing it right.

do nothing.
stay the course.
stop the market timing and improve your returns.

Wise investing is about as exciting as watching paint dry or grass grow .

[nigel_ht]

Dow is 28,000, with an all time high pre corona virus of 29,000, it seems irrational to have the Dow only 3ish% off the all time high with so many unemployed, no end to corona in sight, rising national debt, retail is a mess, real estate especially commercial is a mess. I am thinking it is best to move my equities in my 401k's and IRA to cash for a while. I don't see any more upside to this market but plenty of downside especially when schools shutdown and another likely national shut down, so what are the best funds to park to be similar to cash? Does each 401K have a cash fund? should I leave bonds alone or also move to cash?

Thanks

Question, let's say you sell all to cash today. When will you jump back into the market? Market timing is a tough game...

that is my worry, I just cant believe the economy is only 3% worse off now than pre corona virus, we have national debt rising faster than ever, retail apocalypse, millions without jobs, tens of millions facing eviction once the ban is lifted, commercial real estate is ruined with everyone working from home, and corona virus they say wont go away for 100 years, and a vaccine will likely only be 40-60% effective at best, and we will be wearing masks in perpetuity. Then add in the election which I think either way is going to be a disaster....

Damn, talk about a Debbie Downer. You may want to go back to March and read some of the posts from the people who did the exact same thing you are planning to do. And see how that worked out for them. You're asking about market timing on a board where 99% of the posters don't believe in it.

Well, if you are going to move to cash then near the all time high is a heck of a lot better than in March...

March is when you start to buy. The greed index IS pretty high right now...

[Clever_Username]

Dow is 28,000, with an all time high pre corona virus of 29,000, it seems irrational to have the Dow only 3ish% off the all time high with so many unemployed, no end to corona in sight, rising national debt, retail is a mess, real estate especially commercial is a mess. I am thinking it is best to move my equities in my 401k's and IRA to cash for a while. I don't see any more upside to this market but plenty of downside especially when schools shutdown and another likely national shut down, so what are the best funds to park to be similar to cash? Does each 401K have a cash fund? should I leave bonds alone or also move to cash?

The translation of the above = "My asset allocation makes me worry too much."

So tell us, what is your present AA?

Bingo. Asking if one should go to cash tells us that the person asking has an asset allocation not in line with their ability to take risk.

[CanaBogle24]

Relative newbie, longtime lurker here... I have a high risk tolerance, am 90% equities and staying that way... but would like to play the devil's advocate for a minute.

If someone believes there's currently substantial downside potential and limited upside potential over the next 6-12 months, why isn't it reasonable to pull some portion out of the market as a hedge? Let's say your personal belief is "I could see the market rising another 10% over the next year if things stay on track, but dropping 30%+ if we can't contain COVID through school reopening, winter months / flu season, etc." Feels not crazy to "take the risk" of missing ~a year's worth of upside to give yourself a shot to buy back on a 20-30% drop. Ie. you could create an addendum to your investment plan specific to the next 12 months that will have you getting back into the market DCA starting in 6-months from now through 12-months.

The counter argument always seems to be "well, what if the market just continues to go up and you're sitting on the sidelines in cash?" Of course OP must know this is at least a somewhat likely possibility and they'd lose the upside from now until whenever they decide to get back in. But that's the cost of insurance, right? If you don't get to use it, it's "wasted". But if you're of the belief that we're in a period of asymetric risk, biased to the downside, feels like a reasonable time to take on the "risk" of lost upside.

Pulling out a bit when the market's at an all-time high seems substantially less dumb than pulling out in the middle of a recession because you believe we haven't hit bottom; in that case there'd be a bigger risk in that if you don't act quickly, you could miss out on an accelerated rebound; in this case, it feels extremely unlikely (though, admittedly, possible) we'll see a 20-30% bump over the next year.

For everyone saying "clearly you're taking on too much risk and should adjust your asset allocation so you can sleep at night" - I see it the other way around. The person may have an even greater risk appetite and be willing to "risk" missing out on a bit of growth for the chance to hop onto the sidelines for a minute with a shot to buy back in during a decline.

Looking forward to your rebuttals

[goodenyou]

Moving to cash, to me, is like shorting the market. It has that weird schadenfreude vibe to it. It would make me want to root for a continued decline so that I could someday get back in. If not, I will be left with the unenviable position of eating crow by selling high, watching low, and buying in higher.

It reminds me of the saying "buy high and sell higher". I do have a robust cash position right now because of some short term spending goals, but I have not sold more positions to move more to cash because I am risk adverse. Risk adverse to screwing up market timing and possibly screwing up meeting my long term investing goals by insufficient portfolio growth and inflation erosion of cash.

[Independent George]

Good reasons to move to cash right now:

1. Concern about job security/wages in an uncertain environment
2. Preparation for sudden Corona-related medical expenses
3. Preparation for sudden repair expenses due to civil unrest

Bad reasons to move to cash right now:
1. Market timing
2. Market timing
3. Market timing

I'm pretty new to investing in even a moderately thoughtful manner, but isn't all of the first three items also related to market timing? If this was supposed to be ironic I loved this post. Hope this comment doesn't come across as rude.

Generally speaking, market timing refers to attempts to increase returns by based on volatility and perceptions of markets being over/undervalued. What I am referring to in the first three items is increasing your cash to prepare for an emergency, and not an attempt to increase your returns. In fact, doing so is far more likely make you under-perform. That is still a much, much better scenario than needing cash and not having it in those situations.

Forget gains and losses for a second - if you need $30k and you only have $10k in cash, you are left with either (a) putting it on a credit card, (b) taking out a HELOC which might not be available (as happened in 2008), or (c) paying tax and penalties to withdraw from a traditional 401k/IRA. I suppose you could also withdraw from a Roth account, but I really hate that idea and would only do it as a last resort because of what it costs you in the long run.

Note that this also applies if you use FZROX (or equivalent) as an emergency fund - the general rule of thumb in that case, though, is to have 2x your anticipated needs saved to cover expenses in the event of a drawdown. So for a six-month emergency fund using stocks, you'd want at least twelve months of expenses saved. I'm not a fan of this because (1) I'm loss averse enough that I want at least some cash even if it's a drag on my balances, (2) FDIC insurance is nice even if it's unlikely to be needed, and (3) there are some situations where equity trading might be suspended, preventing access to your accounts. Note that #3 would also be highly correlated to needing access to your accounts.

[sperry8]

Dow is 28,000, with an all time high pre corona virus of 29,000, it seems irrational to have the Dow only 3ish% off the all time high with so many unemployed, no end to corona in sight, rising national debt, retail is a mess, real estate especially commercial is a mess. I am thinking it is best to move my equities in my 401k's and IRA to cash for a while. I don't see any more upside to this market but plenty of downside especially when schools shutdown and another likely national shut down, so what are the best funds to park to be similar to cash? Does each 401K have a cash fund? should I leave bonds alone or also move to cash?

Thanks

1. The stock market is not the economy.
2. All those negatives are known. Stocks do not move on what we know happened. They move on future expectations. The market is anticipating things to get better and anticipating a vaccine or at least therapeutics. You are anticipating neither. You could be right, but going 100% out is a heck of a bet. Because if you're wrong, you'll be 100% wrong. Never understood placing a bet like that. Bets (imo) should be placed with a portion of your monies, not all of them.
3. There are winners from all this (not just losers). A pandemic is not a ruins "all" type scenario. Many firms are experiencing blowout earnings. Those firms are over-represented in the market, while the firms you mentioned are under-represented. Read #1 again.
4. There is no inflation & zero interest rates. Not only here, but most of the world. Cash? You can't be there for long, if at all. With this backdrop, stocks (and hard assets such as residential real estate and gold) are the place to be.

Here was my response to someone else with similar concerns: search.php?keywords=sperry8&t=314276

[ruralavalon]

Relative newbie, longtime lurker here... I have a high risk tolerance, am 90% equities and staying that way... but would like to play the devil's advocate for a minute.

If someone believes there's currently substantial downside potential and limited upside potential over the next 6-12 months, why isn't it reasonable to pull some portion out of the market as a hedge? Let's say your personal belief is . . .

Don't base investing decisions on "personal belief", that's just guessing.

Invest for the long-term, not for the short-term. I expect that long-term markets will probably go up .

If someone believes that long-term the markets will go down , then they shouldn't invest at all, so cash in the sock drawer might better for them.

[beernutz]

Dow is 28,000, with an all time high pre corona virus of 29,000, it seems irrational to have the Dow only 3ish% off the all time high with so many unemployed, no end to corona in sight, rising national debt, retail is a mess, real estate especially commercial is a mess. I am thinking it is best to move my equities in my 401k's and IRA to cash for a while. I don't see any more upside to this market but plenty of downside especially when schools shutdown and another likely national shut down, so what are the best funds to park to be similar to cash? Does each 401K have a cash fund? should I leave bonds alone or also move to cash?

Thanks

Did you move your equities to cash during the 30 straight months of 9% or higher unemployment from 2009 to 2011?

[Escapevelocity]

Relative newbie, longtime lurker here... I have a high risk tolerance, am 90% equities and staying that way... but would like to play the devil's advocate for a minute.

If someone believes there's currently substantial downside potential and limited upside potential over the next 6-12 months, why isn't it reasonable to pull some portion out of the market as a hedge? Let's say your personal belief is "I could see the market rising another 10% over the next year if things stay on track, but dropping 30%+ if we can't contain COVID through school reopening, winter months / flu season, etc." Feels not crazy to "take the risk" of missing ~a year's worth of upside to give yourself a shot to buy back on a 20-30% drop. Ie. you could create an addendum to your investment plan specific to the next 12 months that will have you getting back into the market DCA starting in 6-months from now through 12-months.

Looking forward to your rebuttals

You said something fairly reasonable here although I cannot defend timing the market. You said pull "some portion" out of the market. Contrast that with the OP who is preparing to pull 100% of his investments into cash. What amazes me is how often market timers are so fixated on moving 100% out of the market. My natural inclination is to tinker with smaller adjustments because intuitively I don't know how to time the market even though I might be tempted to try.

[HomerJ]

Dow is 28,000, with an all time high pre corona virus of 29,000, it seems irrational to have the Dow only 3ish% off the all time high with so many unemployed, no end to corona in sight, rising national debt, retail is a mess, real estate especially commercial is a mess. I am thinking it is best to move my equities in my 401k's and IRA to cash for a while. I don't see any more upside to this market but plenty of downside especially when schools shutdown and another likely national shut down, so what are the best funds to park to be similar to cash? Does each 401K have a cash fund? should I leave bonds alone or also move to cash?

Thanks

How old are you? Are you in retirement? Those are important questions to answer.

I am 40, hope to "retire" at 55

100% cash is dumb. You know this. You have 1500 posts on this board.

Go 50/50 and stop worrying about the market.

50/50 and you're never wrong.

Market is going up... you own some stocks and you're enjoying some gains
Market goes down... good thing you were smart enough to have some money in bonds!

Investing is long-term. You know this.

Quit trying to time the market. You know that is dumb. Did you predict the market would go up over the past 3 months? You don't have a crystal ball. No one does. Pick an allocation and hold onto it for the long-term.

Short-term moves are likely to cost you money.

[HomerJ]

Relative newbie, longtime lurker here... I have a high risk tolerance, am 90% equities and staying that way... but would like to play the devil's advocate for a minute.

If someone believes there's currently substantial downside potential and limited upside potential over the next 6-12 months, why isn't it reasonable to pull some portion out of the market as a hedge? Let's say your personal belief is "I could see the market rising another 10% over the next year if things stay on track, but dropping 30%+ if we can't contain COVID through school reopening, winter months / flu season, etc." Feels not crazy to "take the risk" of missing ~a year's worth of upside to give yourself a shot to buy back on a 20-30% drop. Ie. you could create an addendum to your investment plan specific to the next 12 months that will have you getting back into the market DCA starting in 6-months from now through 12-months.

The counter argument always seems to be "well, what if the market just continues to go up and you're sitting on the sidelines in cash?" Of course OP must know this is at least a somewhat likely possibility and they'd lose the upside from now until whenever they decide to get back in. But that's the cost of insurance, right? If you don't get to use it, it's "wasted". But if you're of the belief that we're in a period of asymetric risk, biased to the downside, feels like a reasonable time to take on the "risk" of lost upside.

Pulling out a bit when the market's at an all-time high seems substantially less dumb than pulling out in the middle of a recession because you believe we haven't hit bottom; in that case there'd be a bigger risk in that if you don't act quickly, you could miss out on an accelerated rebound; in this case, it feels extremely unlikely (though, admittedly, possible) we'll see a 20-30% bump over the next year.

For everyone saying "clearly you're taking on too much risk and should adjust your asset allocation so you can sleep at night" - I see it the other way around. The person may have an even greater risk appetite and be willing to "risk" missing out on a bit of growth for the chance to hop onto the sidelines for a minute with a shot to buy back in during a decline.

Looking forward to your rebuttals

It's all market-timing.

It's very hard to calculate the odds.

EVERY market-timer says to herself "that we're in a period of asymetric risk, biased to the downside, feels like a reasonable time to take on the "risk" of lost upside."

But no one really knows if we are biased to the downside.

That's just the OP's feeling. Everyone in the world sees the same data he sees. They all see the unemployment numbers, they all see the increased debt.

What most of us have learned over years and years of investing is that you can't predict the odds very accurately.

And investing is a long-term game. You don't NEED to predict short-term movements to get rich.

Sure, if you can get out and then get back in after a drop, you'll make more money. But if you guess wrong, you'll make LESS money.

But, so far, if you just wait long enough, you'll get rich anyway without having to guess correctly at all.

[HomerJ]

Dow is 28,000, with an all time high pre corona virus of 29,000, it seems irrational to have the Dow only 3ish% off the all time high with so many unemployed, no end to corona in sight, rising national debt, retail is a mess, real estate especially commercial is a mess. I am thinking it is best to move my equities in my 401k's and IRA to cash for a while. I don't see any more upside to this market but plenty of downside especially when schools shutdown and another likely national shut down, so what are the best funds to park to be similar to cash? Does each 401K have a cash fund? should I leave bonds alone or also move to cash?

Thanks

1. The stock market is not the economy.
2. All those negatives are known. Stocks do not move on what we know happened. They move on future expectations. The market is anticipating things to get better and anticipating a vaccine or at least therapeutics. You are anticipating neither. You could be right, but going 100% out is a heck of a bet. Because if you're wrong, you'll be 100% wrong. Never understood placing a bet like that. Bets (imo) should be placed with a portion of your monies, not all of them.
3. There are winners from all this (not just losers). A pandemic is not a ruins "all" type scenario. Many firms are experiencing blowout earnings. Those firms are over-represented in the market, while the firms you mentioned are under-represented. Read #1 again.
4. There is no inflation & zero interest rates. Not only here, but most of the world. Cash? You can't be there for long, if at all. With this backdrop, stocks (and hard assets such as residential real estate and gold) are the place to be.

Here was my response to someone else with similar concerns: search.php?keywords=sperry8&t=314276

Good post. All points are accurate.

The stock market is not totally crazy. Companies that have lost money are way down (cruise lines, hotels, etc.). Companies that have made a ton of money (Amazon, Netflix, boat manufacturers, RV manufacturers, etc.) are way up.

It's actually quite logical so far.

And the point about making a 100% bet is spot on.

Even if one thinks they can predict the odds accurately, you'd have to be crazy to bet ALL your money on it.

Never go 100% cash. That's just silly.

[CyclingDuo]

Dow is 28,000, with an all time high pre corona virus of 29,000, it seems irrational to have the Dow only 3ish% off the all time high with so many unemployed, no end to corona in sight, rising national debt, retail is a mess, real estate especially commercial is a mess. I am thinking it is best to move my equities in my 401k's and IRA to cash for a while. I don't see any more upside to this market but plenty of downside especially when schools shutdown and another likely national shut down, so what are the best funds to park to be similar to cash? Does each 401K have a cash fund? should I leave bonds alone or also move to cash?

Thanks

Go back to 2007 on these boards and search for all of the "I'm going to cash" threads all way up to your current date of this post. See if you can find any that successfully timed "going to cash" and then the subsequent timing of "going back into the market" that ended up with them being better off with their returns than those who just sat through it all.

One of my favorite illustrations in the form of Tiffany (terrible timer), Brittany (best market timer), and Sarah (slow and steady): https://imgur.com/gallery/BlK4jzM

Visit Taylor's market timing quotes at the Wiki here:

https://www.bogleheads.org/wiki/Taylor_ ... ing_quotes

CyclingDuo

[hnd]

I guess my question to anyone who ever makes a statement "the market seems overvalued" (or something similar to it when the market being at some high when there is a sense of impending doom) is what metric or information are you using to make this determination.

There are sectors of the market that are still down YTD. Small Cap Value and Mid Cap Value is still a very inexpensive buy as they are down around -15% YTD still. Do you think those sectors and value caps are over valued?

I'm not a "do whatever makes you sleep better" guy. people waste large amounts of money on all sorts of things unnecessarily to allow themselves to sleep at night. If things are going to get so disastrous that you can't recover within the 15 years you hope to retire, then i'm not sure it will matter how much money you have by then.