Moving to Cash?

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bei22000
Posts: 142
Joined: Mon Jan 30, 2017 2:58 pm

Re: Moving to Cash?

Post by bei22000 »

Thegame14 wrote: Tue Aug 11, 2020 10:14 am 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
If you are near the retirement or considering it, you may move to a more conservative AA. Otherwise, I don't see any reason to do so-at least not all cash sideline.
wannalearn
Posts: 41
Joined: Wed Oct 17, 2007 11:49 pm

Re: Moving to Cash?

Post by wannalearn »

7eight9 wrote: Tue Aug 11, 2020 8:48 pm 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.
Thank you for posting this... this actually interests me... hmm... I assume I would lose my investment if the insurance company went out of business and this unlikely scenario is the reason why it pays somewhat higher than a typical CD/Savings.

Hmm... Is there such a thing as a fund which mitigates the risk over multiple MYGAs?
Jess Saying
Posts: 15
Joined: Fri Apr 10, 2020 11:42 am

Re: Moving to Cash?

Post by Jess Saying »

hnd wrote: Wed Aug 12, 2020 12:53 pm 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.
CAPE ratio. It seems as if investors have just calculated that US stocks will remain permanently overvalued.
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HomerJ
Posts: 15345
Joined: Fri Jun 06, 2008 12:50 pm

Re: Moving to Cash?

Post by HomerJ »

Jess Saying wrote: Wed Aug 12, 2020 1:38 pm
hnd wrote: Wed Aug 12, 2020 12:53 pm 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.
CAPE ratio. It seems as if investors have just calculated that US stocks will remain permanently overvalued.
CAPE has been "high" for 98% of the years since it was discovered. CAPE has mostly failed as a prediction tool
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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grobertj
Posts: 88
Joined: Fri May 15, 2020 1:02 pm
Location: Greensboro, NC

Re: Moving to Cash?

Post by grobertj »

I've been in retirement for 7 years. Recently, I've increased my Cash Reserve to 12 months spending. Otherwise, I'm maintaining a 50/50 AA in Vanguard's Total Bond and Total Stock ETFs. I like to keep it simple especially when it comes to rebalancing. I'm currently considering moving to my bond allocation to Vanguard's Intermediate-Term Bond ETF. It has more corporate bonds...around half. With Treasury rates so low, that fund may deliver a higher yield without carrying much more risk.
The only constant is CHANGE!!
hnd
Posts: 231
Joined: Mon Jun 22, 2020 11:43 am

Re: Moving to Cash?

Post by hnd »

Jess Saying wrote: Wed Aug 12, 2020 1:38 pm
hnd wrote: Wed Aug 12, 2020 12:53 pm 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.
CAPE ratio. It seems as if investors have just calculated that US stocks will remain permanently overvalued.
my point being is that most people have absolutely no real answer for this outside of the S&P/Dow seem higher than they should relative to the current ongoings in the world/US.

A guy at work (30 yr old) pulled all of his work 401k (over 150k) out of the stock market and into bonds in 2016 because a PODCAST he listened to told him a certain president would usher in a new depression.
Topic Author
Thegame14
Posts: 1654
Joined: Mon May 07, 2018 11:53 am

Re: Moving to Cash?

Post by Thegame14 »

BolderBoy wrote: Wed Aug 12, 2020 10:00 am
Thegame14 wrote: Tue Aug 11, 2020 10:14 amDow 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?
I have 100K in IRA three fund portfolio 80-20 stocks-bonds and 20% of stocks international
I have about $215K in 401K and those I usually pick 5 funds, 20% in each, one bond, one international, and three domestic stocks, one large cap, one mid cap and one small cap.
Topic Author
Thegame14
Posts: 1654
Joined: Mon May 07, 2018 11:53 am

Re: Moving to Cash?

Post by Thegame14 »

HomerJ wrote: Wed Aug 12, 2020 11:41 am
Thegame14 wrote: Tue Aug 11, 2020 11:54 pm
Third Son wrote: Tue Aug 11, 2020 2:38 pm
Thegame14 wrote: Tue Aug 11, 2020 10:14 am 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.
RIght, maybe the best move is to take half my stocks and move to stable value or cash funds and let the rest stick so if the market keeps going up, I still gain, just not as much and if it goes down I can buy back in and buy back in lower, I still think too many people think a vaccine is coming which is may be, but that vaccine is likely 40-50% effective, schools likely to be remote learning, people continuing to WFM and hiring slower than anticipated, so I think there is a ton to much positive hope sentiment in the market and not enough reality that covid is NOT going away, the CDC experts say we will live with it for 100 years, and masks and social distancing are likely to stay for years....
lostdog
Posts: 3342
Joined: Thu Feb 04, 2016 2:15 pm

Re: Moving to Cash?

Post by lostdog »

anon_investor wrote: Tue Aug 11, 2020 6:08 pm
Candor wrote: Tue Aug 11, 2020 6:02 pm 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...
This happens almost all of the time.
lostdog
Posts: 3342
Joined: Thu Feb 04, 2016 2:15 pm

Re: Moving to Cash?

Post by lostdog »

Thegame14 wrote: Wed Aug 12, 2020 2:45 pm
HomerJ wrote: Wed Aug 12, 2020 11:41 am
Thegame14 wrote: Tue Aug 11, 2020 11:54 pm
Third Son wrote: Tue Aug 11, 2020 2:38 pm
Thegame14 wrote: Tue Aug 11, 2020 10:14 am 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.
RIght, maybe the best move is to take half my stocks and move to stable value or cash funds and let the rest stick so if the market keeps going up, I still gain, just not as much and if it goes down I can buy back in and buy back in lower, I still think too many people think a vaccine is coming which is may be, but that vaccine is likely 40-50% effective, schools likely to be remote learning, people continuing to WFM and hiring slower than anticipated, so I think there is a ton to much positive hope sentiment in the market and not enough reality that covid is NOT going away, the CDC experts say we will live with it for 100 years, and masks and social distancing are likely to stay for years....
That sounds ridiculous.

You sound like a 50/50 candidate. HomerJ is right.
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ruralavalon
Posts: 19711
Joined: Sat Feb 02, 2008 10:29 am
Location: Illinois

Re: Moving to Cash?

Post by ruralavalon »

Thegame14 wrote: Wed Aug 12, 2020 2:38 pm
BolderBoy wrote: Wed Aug 12, 2020 10:00 am
Thegame14 wrote: Tue Aug 11, 2020 10:14 amDow 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?
I have 100K in IRA three fund portfolio 80-20 stocks-bonds and 20% of stocks international
I have about $215K in 401K and those I usually pick 5 funds, 20% in each, one bond, one international, and three domestic stocks, one large cap, one mid cap and one small cap.
So that's $315k, with an asset allocation of 80/20 equity/fixed income.


What is your age, and about how long until expected retirement? What bond or money market fund or stable value fund do you currently use in each account? What other bond funds, money market or stable value funds are offered in your employer's 401k plan? What fund firm is the IRA with?
Last edited by ruralavalon on Wed Aug 12, 2020 3:13 pm, edited 1 time in total.
"Everything should be as simple as it is, but not simpler." - Albert Einstein | Wiki article link:Getting Started
Topic Author
Thegame14
Posts: 1654
Joined: Mon May 07, 2018 11:53 am

Re: Moving to Cash?

Post by Thegame14 »

lostdog wrote: Wed Aug 12, 2020 2:56 pm
Thegame14 wrote: Wed Aug 12, 2020 2:45 pm
HomerJ wrote: Wed Aug 12, 2020 11:41 am
Thegame14 wrote: Tue Aug 11, 2020 11:54 pm
Third Son wrote: Tue Aug 11, 2020 2:38 pm

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.
RIght, maybe the best move is to take half my stocks and move to stable value or cash funds and let the rest stick so if the market keeps going up, I still gain, just not as much and if it goes down I can buy back in and buy back in lower, I still think too many people think a vaccine is coming which is may be, but that vaccine is likely 40-50% effective, schools likely to be remote learning, people continuing to WFM and hiring slower than anticipated, so I think there is a ton to much positive hope sentiment in the market and not enough reality that covid is NOT going away, the CDC experts say we will live with it for 100 years, and masks and social distancing are likely to stay for years....
That sounds ridiculous.

You sound like a 50/50 candidate. HomerJ is right.
what sounds ridiculous, NJ just announced it will start accepting schools plans for fall being 100% remote, college football just was cancelled for Fall, NFL likely to follow, even IF schools open the cases will spike within a week or two and according to the CDC we will be facing a nation wide 6 week full shutdown like late March early April, and the CDC also said this virus is not going away we will live with it for the next 100 years like the flu and even a "proven" vaccine may only be 40-50% effective, so I am not sure what sounds ridiculous, when they are all likely to happen.

I think if tomorrow is another up 200-300 point day, I will move to 50/50 stocks bonds and likely no international as I expect USA stocks to lead international in recovery.
Topic Author
Thegame14
Posts: 1654
Joined: Mon May 07, 2018 11:53 am

Re: Moving to Cash?

Post by Thegame14 »

ruralavalon wrote: Wed Aug 12, 2020 3:11 pm
Thegame14 wrote: Wed Aug 12, 2020 2:38 pm
BolderBoy wrote: Wed Aug 12, 2020 10:00 am
Thegame14 wrote: Tue Aug 11, 2020 10:14 amDow 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?
I have 100K in IRA three fund portfolio 80-20 stocks-bonds and 20% of stocks international
I have about $215K in 401K and those I usually pick 5 funds, 20% in each, one bond, one international, and three domestic stocks, one large cap, one mid cap and one small cap.
So that's $315k, with an asset allocation of 80/20 equity/fixed income.


What is your age, and about how long until expected retirement?
I am 40, I don't expect a "traditional" retirement, I expect to stop working for someone else at 55, and transition to my own side hustles as legit businesses hopefully earning at least 50K a year each, and try to build them up to 75K-100K business that I can then transition one of each to my tow boys, so they don't ever have to work for someone else, and I will just be the consiglieri to them.
Topic Author
Thegame14
Posts: 1654
Joined: Mon May 07, 2018 11:53 am

Re: Moving to Cash?

Post by Thegame14 »

lostdog wrote: Wed Aug 12, 2020 2:56 pm
Thegame14 wrote: Wed Aug 12, 2020 2:45 pm
HomerJ wrote: Wed Aug 12, 2020 11:41 am
Thegame14 wrote: Tue Aug 11, 2020 11:54 pm
Third Son wrote: Tue Aug 11, 2020 2:38 pm

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.
RIght, maybe the best move is to take half my stocks and move to stable value or cash funds and let the rest stick so if the market keeps going up, I still gain, just not as much and if it goes down I can buy back in and buy back in lower, I still think too many people think a vaccine is coming which is may be, but that vaccine is likely 40-50% effective, schools likely to be remote learning, people continuing to WFM and hiring slower than anticipated, so I think there is a ton to much positive hope sentiment in the market and not enough reality that covid is NOT going away, the CDC experts say we will live with it for 100 years, and masks and social distancing are likely to stay for years....
That sounds ridiculous.

You sound like a 50/50 candidate. HomerJ is right.
does it sound ridiculous when the expert says it??

https://www.cnbc.com/2020/07/28/even-wi ... perts.html

Even with a vaccine, there is no going back to normal anytime soon,” said Thomas Frieden, former director of the Centers for Disease Control and Prevention

July 23 about a safe return to the workplace. “Prepare for at least eight to 12 months of this situation,” said Frieden,

Michael Osterholm, director of the Center for Infectious Disease Research & Policy at the University of Minnesota, said it is estimated that 7% to 9% of the total U.S. population has been infected with coronavirus, and that means the worst is yet to come. He said the best understanding in the medical field is that transmission will not slow down until 50% to 70% of the population is infected.

In fact, both experts believe Covid-19 is here to stay.
“We will be dealing with this forever,” Osterholm said.
“Covid is here to stay,” added Frieden.
Cash is King
Posts: 251
Joined: Sun Dec 10, 2017 9:04 am

Re: Moving to Cash?

Post by Cash is King »

Thegame14 wrote: Wed Aug 12, 2020 3:13 pm
lostdog wrote: Wed Aug 12, 2020 2:56 pm
Thegame14 wrote: Wed Aug 12, 2020 2:45 pm
HomerJ wrote: Wed Aug 12, 2020 11:41 am
Thegame14 wrote: Tue Aug 11, 2020 11:54 pm

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.
RIght, maybe the best move is to take half my stocks and move to stable value or cash funds and let the rest stick so if the market keeps going up, I still gain, just not as much and if it goes down I can buy back in and buy back in lower, I still think too many people think a vaccine is coming which is may be, but that vaccine is likely 40-50% effective, schools likely to be remote learning, people continuing to WFM and hiring slower than anticipated, so I think there is a ton to much positive hope sentiment in the market and not enough reality that covid is NOT going away, the CDC experts say we will live with it for 100 years, and masks and social distancing are likely to stay for years....
That sounds ridiculous.

You sound like a 50/50 candidate. HomerJ is right.
what sounds ridiculous, NJ just announced it will start accepting schools plans for fall being 100% remote, college football just was cancelled for Fall, NFL likely to follow, even IF schools open the cases will spike within a week or two and according to the CDC we will be facing a nation wide 6 week full shutdown like late March early April, and the CDC also said this virus is not going away we will live with it for the next 100 years like the flu and even a "proven" vaccine may only be 40-50% effective, so I am not sure what sounds ridiculous, when they are all likely to happen.

I think if tomorrow is another up 200-300 point day, I will move to 50/50 stocks bonds and likely no international as I expect USA stocks to lead international in recovery.
You're right. It's your money. Forget 50/50. Stick with your original thought and move 100% to cash first thing tomorrow. Best of luck.
7eight9
Posts: 1545
Joined: Fri May 17, 2019 7:11 pm

Re: Moving to Cash?

Post by 7eight9 »

wannalearn wrote: Wed Aug 12, 2020 1:37 pm
7eight9 wrote: Tue Aug 11, 2020 8:48 pm 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.
Thank you for posting this... this actually interests me... hmm... I assume I would lose my investment if the insurance company went out of business and this unlikely scenario is the reason why it pays somewhat higher than a typical CD/Savings.

Hmm... Is there such a thing as a fund which mitigates the risk over multiple MYGAs?
What happens when an insurance company fails?
When an insurance company is having a liquidity problem, the state puts it into rehabilitation and tries to save it from becoming insolvent. If the insurance company fails from there, the state government will take it over and liquidate the assets to satisfy its obligations to policyholders.

If more money is needed after that, the state guaranty system kicks in.

What is the state guaranty system?
Unlike a bank savings account or CD (which are insured by the FDIC) annuities are not protected by any national insurance program. They depend on a state-by-state safety net with coverage differing by state. In this article I review how that system works.

Each state (plus the District of Columbia) has its own guaranty fund or guaranty association. The purpose of these funds is to protect consumers in the event an insurance company in their own state completely fails.

Read more at --- https://www.immediateannuities.com/stat ... ociations/

I recommend staying under your state's limits for any particular company. Especially if they are lower rated. If you do that (kind of like not putting more than $250K in any one bank) you should be able to sleep very well at night.
I guess it all could be much worse. | They could be warming up my hearse.
lostdog
Posts: 3342
Joined: Thu Feb 04, 2016 2:15 pm

Re: Moving to Cash?

Post by lostdog »

Thegame14 wrote: Wed Aug 12, 2020 3:13 pm
lostdog wrote: Wed Aug 12, 2020 2:56 pm
Thegame14 wrote: Wed Aug 12, 2020 2:45 pm
HomerJ wrote: Wed Aug 12, 2020 11:41 am
Thegame14 wrote: Tue Aug 11, 2020 11:54 pm

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.
RIght, maybe the best move is to take half my stocks and move to stable value or cash funds and let the rest stick so if the market keeps going up, I still gain, just not as much and if it goes down I can buy back in and buy back in lower, I still think too many people think a vaccine is coming which is may be, but that vaccine is likely 40-50% effective, schools likely to be remote learning, people continuing to WFM and hiring slower than anticipated, so I think there is a ton to much positive hope sentiment in the market and not enough reality that covid is NOT going away, the CDC experts say we will live with it for 100 years, and masks and social distancing are likely to stay for years....
That sounds ridiculous.

You sound like a 50/50 candidate. HomerJ is right.
what sounds ridiculous, NJ just announced it will start accepting schools plans for fall being 100% remote, college football just was cancelled for Fall, NFL likely to follow, even IF schools open the cases will spike within a week or two and according to the CDC we will be facing a nation wide 6 week full shutdown like late March early April, and the CDC also said this virus is not going away we will live with it for the next 100 years like the flu and even a "proven" vaccine may only be 40-50% effective, so I am not sure what sounds ridiculous, when they are all likely to happen.

I think if tomorrow is another up 200-300 point day, I will move to 50/50 stocks bonds and likely no international as I expect USA stocks to lead international in recovery.
Based on your doom and gloom and how much you pay attention to the noise, I would step back, not touch your investments at all and call a fee only financial advisor or a low cost advisor like Vanguard PAS. They're available to make sure you don't make emotional mistakes and help you tune out the noise. Based on your tone, you're likely to make a huge emotional mistake.
dvvader
Posts: 82
Joined: Fri Nov 22, 2019 7:07 pm

Re: Moving to Cash?

Post by dvvader »

Thegame14 wrote: Wed Aug 12, 2020 3:23 pm
lostdog wrote: Wed Aug 12, 2020 2:56 pm
Thegame14 wrote: Wed Aug 12, 2020 2:45 pm
HomerJ wrote: Wed Aug 12, 2020 11:41 am
Thegame14 wrote: Tue Aug 11, 2020 11:54 pm

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.
RIght, maybe the best move is to take half my stocks and move to stable value or cash funds and let the rest stick so if the market keeps going up, I still gain, just not as much and if it goes down I can buy back in and buy back in lower, I still think too many people think a vaccine is coming which is may be, but that vaccine is likely 40-50% effective, schools likely to be remote learning, people continuing to WFM and hiring slower than anticipated, so I think there is a ton to much positive hope sentiment in the market and not enough reality that covid is NOT going away, the CDC experts say we will live with it for 100 years, and masks and social distancing are likely to stay for years....
That sounds ridiculous.

You sound like a 50/50 candidate. HomerJ is right.
does it sound ridiculous when the expert says it??

https://www.cnbc.com/2020/07/28/even-wi ... perts.html

Even with a vaccine, there is no going back to normal anytime soon,” said Thomas Frieden, former director of the Centers for Disease Control and Prevention

July 23 about a safe return to the workplace. “Prepare for at least eight to 12 months of this situation,” said Frieden,

Michael Osterholm, director of the Center for Infectious Disease Research & Policy at the University of Minnesota, said it is estimated that 7% to 9% of the total U.S. population has been infected with coronavirus, and that means the worst is yet to come. He said the best understanding in the medical field is that transmission will not slow down until 50% to 70% of the population is infected.

In fact, both experts believe Covid-19 is here to stay.
“We will be dealing with this forever,” Osterholm said.
“Covid is here to stay,” added Frieden.
Anyone with a realistic view on things knew this would be the case back in March/April. 'The market' knows this as well. It's not like you've stumbled across some top secret information with life-changing implications here. Chill out, have a beer, and keep on keeping on. Take some profits and reduce your equity holdings if you must, but DO NOT go all cash. Folks who rebalanced and held firm in March have been handsomely rewarded. Those that panicked and bailed missed out on 50% gains and are likely still fretting on when to re-enter. Don't be one of those people.
hnd
Posts: 231
Joined: Mon Jun 22, 2020 11:43 am

Re: Moving to Cash?

Post by hnd »

Thegame14 wrote: Wed Aug 12, 2020 3:23 pm
lostdog wrote: Wed Aug 12, 2020 2:56 pm
Thegame14 wrote: Wed Aug 12, 2020 2:45 pm
HomerJ wrote: Wed Aug 12, 2020 11:41 am
Thegame14 wrote: Tue Aug 11, 2020 11:54 pm

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.
RIght, maybe the best move is to take half my stocks and move to stable value or cash funds and let the rest stick so if the market keeps going up, I still gain, just not as much and if it goes down I can buy back in and buy back in lower, I still think too many people think a vaccine is coming which is may be, but that vaccine is likely 40-50% effective, schools likely to be remote learning, people continuing to WFM and hiring slower than anticipated, so I think there is a ton to much positive hope sentiment in the market and not enough reality that covid is NOT going away, the CDC experts say we will live with it for 100 years, and masks and social distancing are likely to stay for years....
That sounds ridiculous.

You sound like a 50/50 candidate. HomerJ is right.
does it sound ridiculous when the expert says it??

https://www.cnbc.com/2020/07/28/even-wi ... perts.html

Even with a vaccine, there is no going back to normal anytime soon,” said Thomas Frieden, former director of the Centers for Disease Control and Prevention

July 23 about a safe return to the workplace. “Prepare for at least eight to 12 months of this situation,” said Frieden,

Michael Osterholm, director of the Center for Infectious Disease Research & Policy at the University of Minnesota, said it is estimated that 7% to 9% of the total U.S. population has been infected with coronavirus, and that means the worst is yet to come. He said the best understanding in the medical field is that transmission will not slow down until 50% to 70% of the population is infected.

In fact, both experts believe Covid-19 is here to stay.
“We will be dealing with this forever,” Osterholm said.
“Covid is here to stay,” added Frieden.
experts have said lots of crazy and wrong things. you can literally find experts today who say the exact opposite.

You are acting like companies are totally incapable of flexibility and new opportunity. That the companies we have today are the only companies that will exist tomorrow. "not going back to normal" just means new opportunity for thousands of companies out there which means 1000's of new amazing investment opportunities.

your doom and gloom played out to fruition only means the Fed will print more and more money to ease and create near double digit inflation as a result which means your all Cash Position will be even more worthless than staying invested.
grettman
Posts: 638
Joined: Mon Sep 29, 2014 1:47 pm

Re: Moving to Cash?

Post by grettman »

Thegame14 wrote: Wed Aug 12, 2020 3:23 pm
lostdog wrote: Wed Aug 12, 2020 2:56 pm
Thegame14 wrote: Wed Aug 12, 2020 2:45 pm
HomerJ wrote: Wed Aug 12, 2020 11:41 am
Thegame14 wrote: Tue Aug 11, 2020 11:54 pm

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.
RIght, maybe the best move is to take half my stocks and move to stable value or cash funds and let the rest stick so if the market keeps going up, I still gain, just not as much and if it goes down I can buy back in and buy back in lower, I still think too many people think a vaccine is coming which is may be, but that vaccine is likely 40-50% effective, schools likely to be remote learning, people continuing to WFM and hiring slower than anticipated, so I think there is a ton to much positive hope sentiment in the market and not enough reality that covid is NOT going away, the CDC experts say we will live with it for 100 years, and masks and social distancing are likely to stay for years....
That sounds ridiculous.

You sound like a 50/50 candidate. HomerJ is right.
does it sound ridiculous when the expert says it??

https://www.cnbc.com/2020/07/28/even-wi ... perts.html

Even with a vaccine, there is no going back to normal anytime soon,” said Thomas Frieden, former director of the Centers for Disease Control and Prevention

July 23 about a safe return to the workplace. “Prepare for at least eight to 12 months of this situation,” said Frieden,

Michael Osterholm, director of the Center for Infectious Disease Research & Policy at the University of Minnesota, said it is estimated that 7% to 9% of the total U.S. population has been infected with coronavirus, and that means the worst is yet to come. He said the best understanding in the medical field is that transmission will not slow down until 50% to 70% of the population is infected.

In fact, both experts believe Covid-19 is here to stay.
“We will be dealing with this forever,” Osterholm said.
“Covid is here to stay,” added Frieden.
Wow. Sounds like things are terrible! But since the news outlets benefit from focusing on the negative and ratings are driven by fear, I’ll assume there are good things happening that I’m not being told about. So... with no clear direction to take, and since I can’t predict the future, I’ll stick with my plan.
TimeTheMarket
Posts: 170
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Re: Moving to Cash?

Post by TimeTheMarket »

Thegame14 wrote: Wed Aug 12, 2020 3:23 pm does it sound ridiculous when the expert says it??

https://www.cnbc.com/2020/07/28/even-wi ... perts.html

Even with a vaccine, there is no going back to normal anytime soon,” said Thomas Frieden, former director of the Centers for Disease Control and Prevention

July 23 about a safe return to the workplace. “Prepare for at least eight to 12 months of this situation,” said Frieden,

Michael Osterholm, director of the Center for Infectious Disease Research & Policy at the University of Minnesota, said it is estimated that 7% to 9% of the total U.S. population has been infected with coronavirus, and that means the worst is yet to come. He said the best understanding in the medical field is that transmission will not slow down until 50% to 70% of the population is infected.

In fact, both experts believe Covid-19 is here to stay.
“We will be dealing with this forever,” Osterholm said.
“Covid is here to stay,” added Frieden.
This may all be true. In fact, it probably is.

I had a revelation yesterday (maybe late for me, but I'm not a genius), in that even if we stay with covid forever it is just going to stop mattering. Many companies have done fine, and many have done better than fine. Going back to normal? Maybe not this year, maybe not ever. But if we don't, we'll just find other ways to direct our productivity and at the end of the day that is what keeps the economy going. We don't ever need to get back to "normal".

So let's say packed sports arenas are a thing of the past, and packed concerts are, and we don't get back to peak flight numbers for another five years. In the meantime are people going to sit at home watching netflix? That gets boring. So instead people will get into other things; the money a person would have spent on season tickets for the NFL now maybe they spend on lease payments on a car, or they decide it's finally time to dump $3k into home depot for the patio furniture they always wanted.

This is a huge change in the economy and it's been outrageously destructive, but I am saying I think we can still have a very strong, and ultimately stronger (with enough time) economy even with covid.
Username is not serious :)
fuddbogle
Posts: 58
Joined: Fri Jun 21, 2019 8:35 am

Re: Moving to Cash?

Post by fuddbogle »

Thegame14 wrote: Wed Aug 12, 2020 3:23 pm
lostdog wrote: Wed Aug 12, 2020 2:56 pm
Thegame14 wrote: Wed Aug 12, 2020 2:45 pm
HomerJ wrote: Wed Aug 12, 2020 11:41 am
Thegame14 wrote: Tue Aug 11, 2020 11:54 pm

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.
RIght, maybe the best move is to take half my stocks and move to stable value or cash funds and let the rest stick so if the market keeps going up, I still gain, just not as much and if it goes down I can buy back in and buy back in lower, I still think too many people think a vaccine is coming which is may be, but that vaccine is likely 40-50% effective, schools likely to be remote learning, people continuing to WFM and hiring slower than anticipated, so I think there is a ton to much positive hope sentiment in the market and not enough reality that covid is NOT going away, the CDC experts say we will live with it for 100 years, and masks and social distancing are likely to stay for years....
That sounds ridiculous.

You sound like a 50/50 candidate. HomerJ is right.
does it sound ridiculous when the expert says it??

https://www.cnbc.com/2020/07/28/even-wi ... perts.html

Even with a vaccine, there is no going back to normal anytime soon,” said Thomas Frieden, former director of the Centers for Disease Control and Prevention

July 23 about a safe return to the workplace. “Prepare for at least eight to 12 months of this situation,” said Frieden,

Michael Osterholm, director of the Center for Infectious Disease Research & Policy at the University of Minnesota, said it is estimated that 7% to 9% of the total U.S. population has been infected with coronavirus, and that means the worst is yet to come. He said the best understanding in the medical field is that transmission will not slow down until 50% to 70% of the population is infected.

In fact, both experts believe Covid-19 is here to stay.
“We will be dealing with this forever,” Osterholm said.
“Covid is here to stay,” added Frieden.
Covid is here to stay. It's a virus. They're everywhere. Don't lose a sense of reality, it's easy to do, just like worrying about the stock market. Watch this:

https://twitter.com/FatEmperor/status/1 ... 03109?s=19
MikeG62
Posts: 3252
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Location: New Jersey

Re: Moving to Cash?

Post by MikeG62 »

Thegame14 wrote: Wed Aug 12, 2020 2:38 pm
BolderBoy wrote: Wed Aug 12, 2020 10:00 am
Thegame14 wrote: Tue Aug 11, 2020 10:14 amDow 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?
I have 100K in IRA three fund portfolio 80-20 stocks-bonds and 20% of stocks international
I have about $215K in 401K and those I usually pick 5 funds, 20% in each, one bond, one international, and three domestic stocks, one large cap, one mid cap and one small cap.
I think if you plan to early retire at 55 (even with a small side hustle), you are going to need a portfolio that is many, many times larger than what you have today. In order for that to happen, you are going to need to take risks. Moving to cash is not necessarily going to to help you unless you time things right (sell high) and have the courage to buy back in when the market is down significantly (which I would submit is much harder to do than you think).

Having said all of this, I continue to believe we are in unprecedented times. I'm quite frankly shocked the market has been pretty much straight up since the March low. Maybe a somewhat lower allocation to equities might help - versus a complete go to cash scenario? Keep in mind that bonds appear to be way overbought too. So moving a lot of money there might not be as safe as you think.

Remember old WS adage, "markets can stay irrational longer than you can stay solvent". Another way of saying, don't think you can outsmart the crowd.
Real Knowledge Comes Only From Experience
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ruralavalon
Posts: 19711
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Location: Illinois

Re: Moving to Cash?

Post by ruralavalon »

Cash is King wrote: Wed Aug 12, 2020 3:23 pm
Thegame14 wrote: Wed Aug 12, 2020 3:13 pm
lostdog wrote: Wed Aug 12, 2020 2:56 pm
Thegame14 wrote: Wed Aug 12, 2020 2:45 pm
HomerJ wrote: Wed Aug 12, 2020 11:41 am

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.
RIght, maybe the best move is to take half my stocks and move to stable value or cash funds and let the rest stick so if the market keeps going up, I still gain, just not as much and if it goes down I can buy back in and buy back in lower, I still think too many people think a vaccine is coming which is may be, but that vaccine is likely 40-50% effective, schools likely to be remote learning, people continuing to WFM and hiring slower than anticipated, so I think there is a ton to much positive hope sentiment in the market and not enough reality that covid is NOT going away, the CDC experts say we will live with it for 100 years, and masks and social distancing are likely to stay for years....
That sounds ridiculous.

You sound like a 50/50 candidate. HomerJ is right.
what sounds ridiculous, NJ just announced it will start accepting schools plans for fall being 100% remote, college football just was cancelled for Fall, NFL likely to follow, even IF schools open the cases will spike within a week or two and according to the CDC we will be facing a nation wide 6 week full shutdown like late March early April, and the CDC also said this virus is not going away we will live with it for the next 100 years like the flu and even a "proven" vaccine may only be 40-50% effective, so I am not sure what sounds ridiculous, when they are all likely to happen.

I think if tomorrow is another up 200-300 point day, I will move to 50/50 stocks bonds and likely no international as I expect USA stocks to lead international in recovery.
You're right. It's your money. Forget 50/50. Stick with your original thought and move 100% to cash first thing tomorrow. Best of luck.
.
In my opinion a 50/50 asset allocation is reasonable at age 40 with that amount of anxiety. Go ahead with that allocation using very diversified, low expense mutual funds.

Personally I am not that pessimestic, but you are the one who needs to be comfortable with how your money is invested.
Last edited by ruralavalon on Thu Aug 13, 2020 10:43 am, edited 1 time in total.
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TheTimeLord
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Re: Moving to Cash?

Post by TheTimeLord »

Thegame14 wrote: Tue Aug 11, 2020 10:14 am 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
What country do you live in?
IMHO, Investing should be about living the life you want, not avoiding the life you fear. | Run, You Clever Boy! [9085]
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HomerJ
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Re: Moving to Cash?

Post by HomerJ »

ruralavalon wrote: Thu Aug 13, 2020 10:40 amIn my opinion a 50/50 asset allocation is reasonable at age 40 with that amount of anxiety. Go ahead with that allocation using very diversified, low expense mutual funds.

Personally I am not that pessimestic, but you are the one who needs to be comfortable with how your money is invested.
If it makes the OP feel better, I was 50/50 at age 40. For the exact reason of reducing anxiety. It worked for me. No problems "staying the course" since then with a 50/50 allocation.
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.”
flaccidsteele
Posts: 1139
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Location: Canada

Re: Moving to Cash?

Post by flaccidsteele »

hnd wrote: Wed Aug 12, 2020 12:53 pm
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.
+1 well said
The US market always recovers. It’s never different this time. Retired in my 40s. Investing is a simple game of rinse and repeat
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HomerJ
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Re: Moving to Cash?

Post by HomerJ »

flaccidsteele wrote: Thu Aug 13, 2020 11:41 am
hnd wrote: Wed Aug 12, 2020 12:53 pm
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.
+1 well said
People seem to assume they will keep their jobs.

You might need some money BEFORE 15 years go by.
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.”
N.Y.Cab
Posts: 62
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Re: Moving to Cash?

Post by N.Y.Cab »

Speaking of cash, did anyone notice the yield on Vanguard Municipal Money Market is now double that of Prime? Could be a temporary anomaly but may worth taking the extra bit of risk.
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Rowan Oak
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Re: Moving to Cash?

Post by Rowan Oak »

HomerJ wrote: Thu Aug 13, 2020 10:58 am
ruralavalon wrote: Thu Aug 13, 2020 10:40 amIn my opinion a 50/50 asset allocation is reasonable at age 40 with that amount of anxiety. Go ahead with that allocation using very diversified, low expense mutual funds.

Personally I am not that pessimestic, but you are the one who needs to be comfortable with how your money is invested.
If it makes the OP feel better, I was 50/50 at age 40. For the exact reason of reducing anxiety. It worked for me. No problems "staying the course" since then with a 50/50 allocation.
At age 40 I went from around 75% stocks to around 60%. Today, I am around 55% stocks and I don't plan to ever go lower than 45%.

Over the years I have checked in with Vanguard to see what they think. You can do this by simply looking at their "Target Retirement" funds. For example, if you think you are 5 years away from retirement Vanguard thinks you should be 59.08% Stocks, 39.37% Bonds, 1.55% Short-term reserves.

Vanguard Target Retirement 2025 Fund (VTTVX)
“If you can get good at destroying your own wrong ideas, that is a great gift.” – Charlie Munger
Topic Author
Thegame14
Posts: 1654
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Re: Moving to Cash?

Post by Thegame14 »

MikeG62 wrote: Thu Aug 13, 2020 10:02 am
Thegame14 wrote: Wed Aug 12, 2020 2:38 pm
BolderBoy wrote: Wed Aug 12, 2020 10:00 am
Thegame14 wrote: Tue Aug 11, 2020 10:14 amDow 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?
I have 100K in IRA three fund portfolio 80-20 stocks-bonds and 20% of stocks international
I have about $215K in 401K and those I usually pick 5 funds, 20% in each, one bond, one international, and three domestic stocks, one large cap, one mid cap and one small cap.
I think if you plan to early retire at 55 (even with a small side hustle), you are going to need a portfolio that is many, many times larger than what you have today. In order for that to happen, you are going to need to take risks. Moving to cash is not necessarily going to to help you unless you time things right (sell high) and have the courage to buy back in when the market is down significantly (which I would submit is much harder to do than you think).

Having said all of this, I continue to believe we are in unprecedented times. I'm quite frankly shocked the market has been pretty much straight up since the March low. Maybe a somewhat lower allocation to equities might help - versus a complete go to cash scenario? Keep in mind that bonds appear to be way overbought too. So moving a lot of money there might not be as safe as you think.

Remember old WS adage, "markets can stay irrational longer than you can stay solvent". Another way of saying, don't think you can outsmart the crowd.
"small side hustle"??? I am planning on having two side hustles and growing them to each be $50K per year in revenue before "retiring" and then growing them more, before officially retiring and handing them off to my sons....
Topic Author
Thegame14
Posts: 1654
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Re: Moving to Cash?

Post by Thegame14 »

TheTimeLord wrote: Thu Aug 13, 2020 10:43 am
Thegame14 wrote: Tue Aug 11, 2020 10:14 am 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
What country do you live in?
USA
Actin
Posts: 115
Joined: Wed May 16, 2018 8:40 pm

Re: Moving to Cash?

Post by Actin »

If you sold in March, you are pretty much forced to double down on your market timing strategy. Otherwise, you're buying high and selling low
anoop
Posts: 1850
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Re: Moving to Cash?

Post by anoop »

Actin wrote: Fri Aug 14, 2020 7:51 pm If you sold in March, you are pretty much forced to double down on your market timing strategy. Otherwise, you're buying high and selling low
It depends. If they were "in the money" when they sold, why does it matter?
Actin
Posts: 115
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Re: Moving to Cash?

Post by Actin »

anoop wrote: Fri Aug 14, 2020 8:09 pm
Actin wrote: Fri Aug 14, 2020 7:51 pm If you sold in March, you are pretty much forced to double down on your market timing strategy. Otherwise, you're buying high and selling low
It depends. If they were "in the money" when they sold, why does it matter?
I meant people who panic sold after it crashed.
MDfan
Posts: 402
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Re: Moving to Cash?

Post by MDfan »

lostdog wrote: Wed Aug 12, 2020 2:56 pm
Thegame14 wrote: Wed Aug 12, 2020 2:45 pm
HomerJ wrote: Wed Aug 12, 2020 11:41 am
Thegame14 wrote: Tue Aug 11, 2020 11:54 pm
Third Son wrote: Tue Aug 11, 2020 2:38 pm

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.
RIght, maybe the best move is to take half my stocks and move to stable value or cash funds and let the rest stick so if the market keeps going up, I still gain, just not as much and if it goes down I can buy back in and buy back in lower, I still think too many people think a vaccine is coming which is may be, but that vaccine is likely 40-50% effective, schools likely to be remote learning, people continuing to WFM and hiring slower than anticipated, so I think there is a ton to much positive hope sentiment in the market and not enough reality that covid is NOT going away, the CDC experts say we will live with it for 100 years, and masks and social distancing are likely to stay for years....
That sounds ridiculous.

You sound like a 50/50 candidate. HomerJ is right.

It really does. Definitely a more glass half empty person. I don't see any way we're doing these same things for "years."
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dogagility
Posts: 1144
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Re: Moving to Cash?

Post by dogagility »

MDfan wrote: Fri Aug 14, 2020 8:29 pm
lostdog wrote: Wed Aug 12, 2020 2:56 pm
Thegame14 wrote: Wed Aug 12, 2020 2:45 pm
HomerJ wrote: Wed Aug 12, 2020 11:41 am
Thegame14 wrote: Tue Aug 11, 2020 11:54 pm

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.
RIght, maybe the best move is to take half my stocks and move to stable value or cash funds and let the rest stick so if the market keeps going up, I still gain, just not as much and if it goes down I can buy back in and buy back in lower, I still think too many people think a vaccine is coming which is may be, but that vaccine is likely 40-50% effective, schools likely to be remote learning, people continuing to WFM and hiring slower than anticipated, so I think there is a ton to much positive hope sentiment in the market and not enough reality that covid is NOT going away, the CDC experts say we will live with it for 100 years, and masks and social distancing are likely to stay for years....
That sounds ridiculous.

You sound like a 50/50 candidate. HomerJ is right.
It really does. Definitely a more glass half empty person. I don't see any way we're doing these same things for "years."
Agree. My prediction: After a year or two, the population will realize we were duped into our current situation by a fear mongering media and a particular NIH scientist who thought humans could be separated from nature and any death from the virus was one too many.
All children spill milk. Learn to smile and wipe it up. -- A Farmer's Wife
chipperd
Posts: 783
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Re: Moving to Cash?

Post by chipperd »

Thegame14 wrote: Wed Aug 12, 2020 3:23 pm
lostdog wrote: Wed Aug 12, 2020 2:56 pm
Thegame14 wrote: Wed Aug 12, 2020 2:45 pm
HomerJ wrote: Wed Aug 12, 2020 11:41 am
Thegame14 wrote: Tue Aug 11, 2020 11:54 pm

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.
RIght, maybe the best move is to take half my stocks and move to stable value or cash funds and let the rest stick so if the market keeps going up, I still gain, just not as much and if it goes down I can buy back in and buy back in lower, I still think too many people think a vaccine is coming which is may be, but that vaccine is likely 40-50% effective, schools likely to be remote learning, people continuing to WFM and hiring slower than anticipated, so I think there is a ton to much positive hope sentiment in the market and not enough reality that covid is NOT going away, the CDC experts say we will live with it for 100 years, and masks and social distancing are likely to stay for years....
That sounds ridiculous.

You sound like a 50/50 candidate. HomerJ is right.
does it sound ridiculous when the expert says it??

https://www.cnbc.com/2020/07/28/even-wi ... perts.html

Even with a vaccine, there is no going back to normal anytime soon,” said Thomas Frieden, former director of the Centers for Disease Control and Prevention

July 23 about a safe return to the workplace. “Prepare for at least eight to 12 months of this situation,” said Frieden,

Michael Osterholm, director of the Center for Infectious Disease Research & Policy at the University of Minnesota, said it is estimated that 7% to 9% of the total U.S. population has been infected with coronavirus, and that means the worst is yet to come. He said the best understanding in the medical field is that transmission will not slow down until 50% to 70% of the population is infected.

In fact, both experts believe Covid-19 is here to stay.
“We will be dealing with this forever,” Osterholm said.
“Covid is here to stay,” added Frieden.
When most see a problem, the wealthy, savvy and wise see an opportunity. There are and will continue to be plenty of covid related business opportunities ( and others: alternative energy anyone?) that have and will continue to pop up.

Fear sells and grabs eye balls. Careful of your information sources. I read that in the UAE, where they test much more of their population, about 75% of positive cases have no symptoms. A study in Iceland came up with about 50% of positive test results having no symptoms. How many in the U.S. were infected with no symptoms then? I've read as high as 10x the U.S. population has had covid as have tested positive. That's 50 million in the U.S. who have already built up anti bodies, or, unfortunately are no longer with us.
A positive covid test result doesn't necessarily mean the gloom and doom you are reading. And 8-12 months more of this is nothing in the big scheme of things.
If that's true, which who knows at this point. Relax, stay the course. The best information you have you already know.
"A portfolio is like a bar of soap, the more it's handled, the less there is." Dr. William Bernstein
Compound
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Re: Moving to Cash?

Post by Compound »

ruralavalon wrote: Thu Aug 13, 2020 10:40 am
Cash is King wrote: Wed Aug 12, 2020 3:23 pm
Thegame14 wrote: Wed Aug 12, 2020 3:13 pm
lostdog wrote: Wed Aug 12, 2020 2:56 pm
Thegame14 wrote: Wed Aug 12, 2020 2:45 pm
RIght, maybe the best move is to take half my stocks and move to stable value or cash funds and let the rest stick so if the market keeps going up, I still gain, just not as much and if it goes down I can buy back in and buy back in lower, I still think too many people think a vaccine is coming which is may be, but that vaccine is likely 40-50% effective, schools likely to be remote learning, people continuing to WFM and hiring slower than anticipated, so I think there is a ton to much positive hope sentiment in the market and not enough reality that covid is NOT going away, the CDC experts say we will live with it for 100 years, and masks and social distancing are likely to stay for years....
That sounds ridiculous.

You sound like a 50/50 candidate. HomerJ is right.
what sounds ridiculous, NJ just announced it will start accepting schools plans for fall being 100% remote, college football just was cancelled for Fall, NFL likely to follow, even IF schools open the cases will spike within a week or two and according to the CDC we will be facing a nation wide 6 week full shutdown like late March early April, and the CDC also said this virus is not going away we will live with it for the next 100 years like the flu and even a "proven" vaccine may only be 40-50% effective, so I am not sure what sounds ridiculous, when they are all likely to happen.

I think if tomorrow is another up 200-300 point day, I will move to 50/50 stocks bonds and likely no international as I expect USA stocks to lead international in recovery.
You're right. It's your money. Forget 50/50. Stick with your original thought and move 100% to cash first thing tomorrow. Best of luck.
.
In my opinion a 50/50 asset allocation is reasonable at age 40 with that amount of anxiety. Go ahead with that allocation using very diversified, low expense mutual funds.

Personally I am not that pessimestic, but you are the one who needs to be comfortable with how your money is invested.
I agree with ruralavalon: it’s time for an adjustment to the asset allocation.

A one-time asset allocation adjustment to a level the OP thinks they can stick with in good and bad times is the way to go.

OP — do you have an investing policy statement? If not, now is definitely the time to forge one.

https://www.bogleheads.org/wiki/Investm ... _statement
MikeG62
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Re: Moving to Cash?

Post by MikeG62 »

Thegame14 wrote: Fri Aug 14, 2020 4:27 pm
MikeG62 wrote: Thu Aug 13, 2020 10:02 am
Thegame14 wrote: Wed Aug 12, 2020 2:38 pm
BolderBoy wrote: Wed Aug 12, 2020 10:00 am
Thegame14 wrote: Tue Aug 11, 2020 10:14 amDow 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?
I have 100K in IRA three fund portfolio 80-20 stocks-bonds and 20% of stocks international
I have about $215K in 401K and those I usually pick 5 funds, 20% in each, one bond, one international, and three domestic stocks, one large cap, one mid cap and one small cap.
I think if you plan to early retire at 55 (even with a small side hustle), you are going to need a portfolio that is many, many times larger than what you have today. In order for that to happen, you are going to need to take risks. Moving to cash is not necessarily going to to help you unless you time things right (sell high) and have the courage to buy back in when the market is down significantly (which I would submit is much harder to do than you think).

Having said all of this, I continue to believe we are in unprecedented times. I'm quite frankly shocked the market has been pretty much straight up since the March low. Maybe a somewhat lower allocation to equities might help - versus a complete go to cash scenario? Keep in mind that bonds appear to be way overbought too. So moving a lot of money there might not be as safe as you think.

Remember old WS adage, "markets can stay irrational longer than you can stay solvent". Another way of saying, don't think you can outsmart the crowd.
"small side hustle"??? I am planning on having two side hustles and growing them to each be $50K per year in revenue before "retiring" and then growing them more, before officially retiring and handing them off to my sons....
If by revenue you mean what you expect to take home from these side hustles, then I'd ask that with this level of expected cash flow (>$100K per year and growing) why you are so worried about protecting $315K that is not the expected foundation (lynchpin) of your retirement?

By the way, do you think the Federal reserve is going to sit by idly while the market sells off by a massive amount? They haven't so far. That through their actions it won't eventually recover?
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New Providence
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Re: Moving to Cash?

Post by New Providence »

The FED backstopped, again, the global economy. Trillions were dumped to avoid a calamity. The way I see it, the current catastrophe (I pray) can't get any worse.
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sperry8
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Re: Moving to Cash?

Post by sperry8 »

Thegame14 wrote: Wed Aug 12, 2020 3:13 pm
lostdog wrote: Wed Aug 12, 2020 2:56 pm
Thegame14 wrote: Wed Aug 12, 2020 2:45 pm
HomerJ wrote: Wed Aug 12, 2020 11:41 am
Thegame14 wrote: Tue Aug 11, 2020 11:54 pm

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.
RIght, maybe the best move is to take half my stocks and move to stable value or cash funds and let the rest stick so if the market keeps going up, I still gain, just not as much and if it goes down I can buy back in and buy back in lower, I still think too many people think a vaccine is coming which is may be, but that vaccine is likely 40-50% effective, schools likely to be remote learning, people continuing to WFM and hiring slower than anticipated, so I think there is a ton to much positive hope sentiment in the market and not enough reality that covid is NOT going away, the CDC experts say we will live with it for 100 years, and masks and social distancing are likely to stay for years....
That sounds ridiculous.

You sound like a 50/50 candidate. HomerJ is right.
what sounds ridiculous, NJ just announced it will start accepting schools plans for fall being 100% remote, college football just was cancelled for Fall, NFL likely to follow, even IF schools open the cases will spike within a week or two and according to the CDC we will be facing a nation wide 6 week full shutdown like late March early April, and the CDC also said this virus is not going away we will live with it for the next 100 years like the flu and even a "proven" vaccine may only be 40-50% effective, so I am not sure what sounds ridiculous, when they are all likely to happen.

I think if tomorrow is another up 200-300 point day, I will move to 50/50 stocks bonds and likely no international as I expect USA stocks to lead international in recovery.
What sounds ridiculous isn't necessarily that Covid is here to stay. Fine, let's take that assumption. What is ridiculous is to then make the only outcome a horrific crash in the stock market due to it. You are conflating two ideas. People being sick does not take down the stock market or future corporate earnings (as a whole). If enough people died, it might. But we aren't even close to having that conversation. Here's one example, HIV has infected 76 million people and killed 33 million people since its inception. Orders of magnitude greater than Covid. HIV was new... not one death due to it prior. But even 33 million dead hasn't affected future earnings (as we are at all time highs again). We can start adding in all sorts of other deaths too. The point is, population growth globally is still a thing. More consumers, consuming more things. Yes, with a covid world as you paint it - what people consume will shift. So less spending money on movies, dining out, and cruises, etc. But more money spent on groceries, netflix, and road trips, etc. The money just shifts, it does not disappear. And this is a very simplistic view. Even if money spending drops somewhat, guess who can step in and spend to make up the shortfall? You are not thinking clearly about the future post covid. Things are not static. There will be vaccines (even if at 50% efficacy as you say) and there will be therapeutics. Death rates (as a %) should come down, not go up as time goes on. Infection rates solely shift spending they do not stop it. You, as with most of the media, are mistaking the ultimate outcome. Short term, anything can happen in the market (true pre and post covid). But long term, the market should be higher (unless this time it's different). And those are some dangerous words to be making trades upon.
BH contest results: 2019: #233 of 645 | 18: #150 of 493 | 17: #516 of 647 | 16: #121 of 610 | 15: #18 of 552 | 14: #225 of 503 | 13: #383 of 433 | 12: #366 of 410 | 11: #113 of 369 | 10: #53 of 282
Topic Author
Thegame14
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Re: Moving to Cash?

Post by Thegame14 »

sperry8 wrote: Sat Aug 15, 2020 11:43 am
Thegame14 wrote: Wed Aug 12, 2020 3:13 pm
lostdog wrote: Wed Aug 12, 2020 2:56 pm
Thegame14 wrote: Wed Aug 12, 2020 2:45 pm
HomerJ wrote: Wed Aug 12, 2020 11:41 am

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.
RIght, maybe the best move is to take half my stocks and move to stable value or cash funds and let the rest stick so if the market keeps going up, I still gain, just not as much and if it goes down I can buy back in and buy back in lower, I still think too many people think a vaccine is coming which is may be, but that vaccine is likely 40-50% effective, schools likely to be remote learning, people continuing to WFM and hiring slower than anticipated, so I think there is a ton to much positive hope sentiment in the market and not enough reality that covid is NOT going away, the CDC experts say we will live with it for 100 years, and masks and social distancing are likely to stay for years....
That sounds ridiculous.

You sound like a 50/50 candidate. HomerJ is right.
what sounds ridiculous, NJ just announced it will start accepting schools plans for fall being 100% remote, college football just was cancelled for Fall, NFL likely to follow, even IF schools open the cases will spike within a week or two and according to the CDC we will be facing a nation wide 6 week full shutdown like late March early April, and the CDC also said this virus is not going away we will live with it for the next 100 years like the flu and even a "proven" vaccine may only be 40-50% effective, so I am not sure what sounds ridiculous, when they are all likely to happen.

I think if tomorrow is another up 200-300 point day, I will move to 50/50 stocks bonds and likely no international as I expect USA stocks to lead international in recovery.
What sounds ridiculous isn't necessarily that Covid is here to stay. Fine, let's take that assumption. What is ridiculous is to then make the only outcome a horrific crash in the stock market due to it. You are conflating two ideas. People being sick does not take down the stock market or future corporate earnings (as a whole). If enough people died, it might. But we aren't even close to having that conversation. Here's one example, HIV has infected 76 million people and killed 33 million people since its inception. Orders of magnitude greater than Covid. HIV was new... not one death due to it prior. But even 33 million dead hasn't affected future earnings (as we are at all time highs again). We can start adding in all sorts of other deaths too. The point is, population growth globally is still a thing. More consumers, consuming more things. Yes, with a covid world as you paint it - what people consume will shift. So less spending money on movies, dining out, and cruises, etc. But more money spent on groceries, netflix, and road trips, etc. The money just shifts, it does not disappear. And this is a very simplistic view. Even if money spending drops somewhat, guess who can step in and spend to make up the shortfall? You are not thinking clearly about the future post covid. Things are not static. There will be vaccines (even if at 50% efficacy as you say) and there will be therapeutics. Death rates (as a %) should come down, not go up as time goes on. Infection rates solely shift spending they do not stop it. You, as with most of the media, are mistaking the ultimate outcome. Short term, anything can happen in the market (true pre and post covid). But long term, the market should be higher (unless this time it's different). And those are some dangerous words to be making trades upon.
This is only true if the money in the economy stays the same, but with so many people not working, overall spending has and will decline, which then businesses make less money and they lay people off and it spirals to a smaller economy with overall less spending on everything which then overall corporate earnings are down and the stocks of those companies go down, so my point is the hope that people have to a non-existent "return to normal" is not going to and may never happen, and if it does it is not anytime soon, maybe 3-5 years, but not anytime soon, and I think most people dont realize this. most people think in 6 months we will have a vaccine and then boom business and life will be "back to normal" which isnt going to happen
Topic Author
Thegame14
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Re: Moving to Cash?

Post by Thegame14 »

New Providence wrote: Sat Aug 15, 2020 9:03 am The FED backstopped, again, the global economy. Trillions were dumped to avoid a calamity. The way I see it, the current catastrophe (I pray) can't get any worse.
Sure it can get worse, the govt is about to release their final stimulus, there is not going to likely be another and the FED has rates at zero, so there is little left the govt can do to step in
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Re: Moving to Cash?

Post by TheTimeLord »

Thegame14 wrote: Sat Aug 15, 2020 2:30 pm
New Providence wrote: Sat Aug 15, 2020 9:03 am The FED backstopped, again, the global economy. Trillions were dumped to avoid a calamity. The way I see it, the current catastrophe (I pray) can't get any worse.
Sure it can get worse, the govt is about to release their final stimulus, there is not going to likely be another and the FED has rates at zero, so there is little left the govt can do to step in
If only we could look to the past and find a case where humanity had overcome a disease and went on not only to coexist with it but to thrive.
IMHO, Investing should be about living the life you want, not avoiding the life you fear. | Run, You Clever Boy! [9085]
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AlabamaPaul
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Re: Moving to Cash?

Post by AlabamaPaul »

Thegame14 wrote: Sat Aug 15, 2020 2:30 pm
New Providence wrote: Sat Aug 15, 2020 9:03 am The FED backstopped, again, the global economy. Trillions were dumped to avoid a calamity. The way I see it, the current catastrophe (I pray) can't get any worse.
Sure it can get worse, the govt is about to release their final stimulus, there is not going to likely be another and the FED has rates at zero, so there is little left the govt can do to step in
The Fed has plenty it can do. It's been manipulating the markets for the past 11 years, and it can continue to do so...
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Re: Moving to Cash?

Post by abuss368 »

Thegame14 wrote: Tue Aug 11, 2020 10:14 am 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
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Re: Moving to Cash?

Post by sperry8 »

Thegame14 wrote: Sat Aug 15, 2020 2:28 pm
sperry8 wrote: Sat Aug 15, 2020 11:43 am
Thegame14 wrote: Wed Aug 12, 2020 3:13 pm
lostdog wrote: Wed Aug 12, 2020 2:56 pm
Thegame14 wrote: Wed Aug 12, 2020 2:45 pm
RIght, maybe the best move is to take half my stocks and move to stable value or cash funds and let the rest stick so if the market keeps going up, I still gain, just not as much and if it goes down I can buy back in and buy back in lower, I still think too many people think a vaccine is coming which is may be, but that vaccine is likely 40-50% effective, schools likely to be remote learning, people continuing to WFM and hiring slower than anticipated, so I think there is a ton to much positive hope sentiment in the market and not enough reality that covid is NOT going away, the CDC experts say we will live with it for 100 years, and masks and social distancing are likely to stay for years....
That sounds ridiculous.

You sound like a 50/50 candidate. HomerJ is right.
what sounds ridiculous, NJ just announced it will start accepting schools plans for fall being 100% remote, college football just was cancelled for Fall, NFL likely to follow, even IF schools open the cases will spike within a week or two and according to the CDC we will be facing a nation wide 6 week full shutdown like late March early April, and the CDC also said this virus is not going away we will live with it for the next 100 years like the flu and even a "proven" vaccine may only be 40-50% effective, so I am not sure what sounds ridiculous, when they are all likely to happen.

I think if tomorrow is another up 200-300 point day, I will move to 50/50 stocks bonds and likely no international as I expect USA stocks to lead international in recovery.
What sounds ridiculous isn't necessarily that Covid is here to stay. Fine, let's take that assumption. What is ridiculous is to then make the only outcome a horrific crash in the stock market due to it. You are conflating two ideas. People being sick does not take down the stock market or future corporate earnings (as a whole). If enough people died, it might. But we aren't even close to having that conversation. Here's one example, HIV has infected 76 million people and killed 33 million people since its inception. Orders of magnitude greater than Covid. HIV was new... not one death due to it prior. But even 33 million dead hasn't affected future earnings (as we are at all time highs again). We can start adding in all sorts of other deaths too. The point is, population growth globally is still a thing. More consumers, consuming more things. Yes, with a covid world as you paint it - what people consume will shift. So less spending money on movies, dining out, and cruises, etc. But more money spent on groceries, netflix, and road trips, etc. The money just shifts, it does not disappear. And this is a very simplistic view. Even if money spending drops somewhat, guess who can step in and spend to make up the shortfall? You are not thinking clearly about the future post covid. Things are not static. There will be vaccines (even if at 50% efficacy as you say) and there will be therapeutics. Death rates (as a %) should come down, not go up as time goes on. Infection rates solely shift spending they do not stop it. You, as with most of the media, are mistaking the ultimate outcome. Short term, anything can happen in the market (true pre and post covid). But long term, the market should be higher (unless this time it's different). And those are some dangerous words to be making trades upon.
This is only true if the money in the economy stays the same, but with so many people not working, overall spending has and will decline, which then businesses make less money and they lay people off and it spirals to a smaller economy with overall less spending on everything which then overall corporate earnings are down and the stocks of those companies go down, so my point is the hope that people have to a non-existent "return to normal" is not going to and may never happen, and if it does it is not anytime soon, maybe 3-5 years, but not anytime soon, and I think most people dont realize this. most people think in 6 months we will have a vaccine and then boom business and life will be "back to normal" which isnt going to happen
You are simply incorrect. The economy will grow larger, not spiral down over the next 5 years. There are more people globally and thus more growth for the US. Consumer spending has only declined modestly overall. In fact, retail spending surpassed pre-covid levels in July (just one data point, but it goes to show you that spending has not cratered and remained there). As I previously mentioned upthread, spending is up significantly in certain categories (to offset reduced spending in others). https://www.statista.com/statistics/110 ... -pandemic/ Further, the overall reduction in spend has been mitigated by Fed spending. It can also be made up by business spending (consumers are just one leg of stool). Admittedly the largest leg, but not the only one.

Don't you find it interesting that you feel you know more than Mr. Market and its collective wisdom? Do you believe the best and brightest in the room haven't considered what you stated above? Clearly they have, and they've come to a different conclusion. Now if you are able to figure out something the rest of us haven't - then you may be on to something. But suggesting most people "dont realize this", is untrue. The market may actually spring significantly higher from here if/when a vaccine is announced. I believe the market is priced appropriately without said vaccine.

Finally, let me leave you with something else to ponder. A buddy of mine who talks like you got out of the market to all cash in early February. A genius move, right? Early February! He wanted to wait for a crash and then re-enter as things got better. When the market was down 34% he was petrified and spoke just as you do now. I suggested he buy some at down 30% and he laughed. I asked when his re-entry point was and with all the media fear he said "down 60%". As you may guess, he still hasn't re-entered the market. He is still 100% cash and is down since the day he exited his positions. And this with an amazing call to get out. Except that such a call requires 2 correct timing events. The other, is when to get back in. And I posit that someone who sees the world as you both seem to, will simply be unable to get back in anywhere near the lows. Because you see the downside to the event, and if the market drops again 35%, then you'll see even more downside. And that's exactly when the market snaps back and leaves you out. I saw it happen to friends in 08/09. Even down 50% my friends didn't buy stocks or get back in. How could they when they saw a great depression coming? Betting 100% is a costly maneuver. It leaves no room for anything but for you to be 100% right or 100% wrong. Personally I'd never make a bet that large. Trim some holdings, pare back, etc. That I could perhaps understand. Although really when you set your AA initially you should anticipate 35%, even 50% drops... and your AA should be set to a tolerance level that allows you to stay the course. If you cannot stay the course through 35-50% drops, then your AA is set inappropriately. Fine tune it until you can. And then sit back and watch others panic while you sleep well at night and play the long game :moneybag
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stocknoob4111
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Re: Moving to Cash?

Post by stocknoob4111 »

I actually did quite the opposite... I had $50k sitting in cash, i'm DCAing into the market albeit after waiting for the so called correction that never came and i'm just going to proceed now since I have no idea when the pullback is going to happen or if it will happen at all. I also lumpsummed several thousand into the market yesterday into VTSAX. Time will tell whether it was a bad move or not, hopefully it will not be a 2000 situation where one had to wait 13 years to get back to break even.
7eight9
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Re: Moving to Cash?

Post by 7eight9 »

stocknoob4111 wrote: Sat Aug 15, 2020 6:33 pm I actually did quite the opposite... I had $50k sitting in cash, i'm DCAing into the market albeit after waiting for the so called correction that never came and i'm just going to proceed now since I have no idea when the pullback is going to happen or if it will happen at all. I also lumpsummed several thousand into the market yesterday into VTSAX. Time will tell whether it was a bad move or not, hopefully it will not be a 2000 situation where one had to wait 13 years to get back to break even.
A 13 year situation to get to break even would be preferable to that of the poor investor who lump summed into the Nikkei in December 1989. They are still waiting. :happy
I guess it all could be much worse. | They could be warming up my hearse.
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