Sell bonds and go equities

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stocknoob4111
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Joined: Sun Jan 07, 2018 12:52 pm

Sell bonds and go equities

Post by stocknoob4111 »

https://www.businessinsider.com/stock-m ... hs-2020-11

A huge number of forecasts are predicting a continued run to 4600 SPX by end of 2022.

I have 10% of a $800k portfolio in Intermediate bonds. I contribute $70k to my portfolio each year. Was thinking if there is an attractive entrypoint into the SPX say at the 200ema which is SPX 3200 then why not put everything in bonds?

I know there isn't a guarantee but given my annual contributions if things don't work out I can just channel new contributions to bonds and rebuild my bond allocation. I don't see a risk in it!

Also, if I had put that $80k in equities at SPX 2300 like I had thought of at that time I would have made $50k in profits. Too late for that now.
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nisiprius
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Re: Sell bonds and go equities

Post by nisiprius »

Do you believe that your personal risk tolerance has increased, yes or no? If you believe that it has increased, can you point to something that has changed in your circumstances or your financial environment that would explain why it has increased?
Annual income twenty pounds, annual expenditure nineteen nineteen and six, result happiness; Annual income twenty pounds, annual expenditure twenty pounds ought and six, result misery.
Topic Author
stocknoob4111
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Joined: Sun Jan 07, 2018 12:52 pm

Re: Sell bonds and go equities

Post by stocknoob4111 »

nisiprius wrote: Sat Nov 21, 2020 3:00 pm Do you believe that your personal risk tolerance has increased, yes or no? If you believe that it has increased, can you point to something that has changed in your circumstances or your financial environment that would explain why it has increased?
My personal risk tolerance has increased because the events of March 2020 which caused me to lose $230,000 did not faze me. Also, my job situation and the field that I am working in is very stable and I have not debts and I live on a shoestring so I have increased capacity to take risk.

As I mentioned if the market crashes and does not recover I will just start putting in new money into fixed income to rebuild that part of the portfolio.

I know this isn't a conventional approach but I am not seeing any problem with it. If the market increases I win, if it stays the same I am not affected and if it drops then I have a Plan B which should not affect me either.

As I said I regret not rolling over all my bonds to equities when the SPX was at 2300, why? because it was a 100% risk free trade. That price point is so low that even if the market did not rise above 2300 (which would be extremely unlikely) then I would get the same risk as being in bonds, if the market dropped from 2300 then it's exceptionally likely to regain the 2300 level so again it was a risk free trade but given what happened with the market skyrocketing I would've gained $60+k. So doing that mathematically was a WIN with all scenarios.
burritoLover
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Re: Sell bonds and go equities

Post by burritoLover »

There is no risk free stock play. The S&P 500 could crash again then do nothing for a decade. Market and economic forecasts are laughably wrong almost all the time and useless for timing the market.
"Your money is like a bar of soap. The more you handle it, the less you’ll have." - Gene Fama
bi0hazard
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Re: Sell bonds and go equities

Post by bi0hazard »

No offense, but Golman Sachs (your article)has absolutely no idea where the market will go. There are also business articles saying equities can drop 60% in 2021. And we ALL regret not exchanging bonds/cash/rolex/gold into stocks in March, but such is life. Not saying you shouldn't go 101% stocks, but I wouldn't base it on crapshoot prediction.
minesweep
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Re: Sell bonds and go equities

Post by minesweep »

stocknoob4111 wrote: Sat Nov 21, 2020 2:53 pm https://www.businessinsider.com/stock-m ... hs-2020-11

A huge number of forecasts are predicting a continued run to 4600 SPX by end of 2022.

I have 10% of a $800k portfolio in Intermediate bonds. I contribute $70k to my portfolio each year. Was thinking if there is an attractive entrypoint into the SPX say at the 200ema which is SPX 3200 then why not put everything in bonds?

I know there isn't a guarantee but given my annual contributions if things don't work out I can just channel new contributions to bonds and rebuild my bond allocation. I don't see a risk in it!

Also, if I had put that $80k in equities at SPX 2300 like I had thought of at that time I would have made $50k in profits. Too late for that now.
Coulda, shoulda, woulda. You are better at predicating the past than the future. Otherwise, you would have made 50K in profits.
Time is your friend; impulse is your enemy - John Bogle | Learn every day, but especially from the experiences of others, it's cheaper! - John Bogle
lazynovice
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Re: Sell bonds and go equities

Post by lazynovice »

Wasn’t SPX below 3,200 between late Feb and middle of July? Why didn’t you do this then? What has changed for you since July?
yules
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Re: Sell bonds and go equities

Post by yules »

stocknoob4111 wrote: Sat Nov 21, 2020 2:53 pm
I know there isn't a guarantee but given my annual contributions if things don't work out I can just channel new contributions to bonds and rebuild my bond allocation. I don't see a risk in it!
In other words, if you mistakenly buy high on stocks and they crash...you will then buy high on bonds to rebuild your bond allocation?

Not trying to dissuade you, I think that people should do what makes them feel good, but just realize what you are saying.

Yules
Pawpatrol
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Re: Sell bonds and go equities

Post by Pawpatrol »

yules wrote: Sat Nov 21, 2020 3:48 pm
stocknoob4111 wrote: Sat Nov 21, 2020 2:53 pm
I know there isn't a guarantee but given my annual contributions if things don't work out I can just channel new contributions to bonds and rebuild my bond allocation. I don't see a risk in it!
In other words, if you mistakenly buy high on stocks and they crash...you will then buy high on bonds to rebuild your bond allocation?

Not trying to dissuade you, I think that people should do what makes them feel good, but just realize what you are saying.

Yules
These types of threads are going to be more common as we have only bad choices with investment options- buy overpriced stocks at all time highs or buy overpriced bonds at all time highs. My fear is this will lead to another boom/bust lost decade ala 2000-2010.

Im staying the course
yules
Posts: 221
Joined: Wed Nov 27, 2019 10:31 am

Re: Sell bonds and go equities

Post by yules »

Pawpatrol wrote: Sat Nov 21, 2020 4:05 pm
yules wrote: Sat Nov 21, 2020 3:48 pm
stocknoob4111 wrote: Sat Nov 21, 2020 2:53 pm
I know there isn't a guarantee but given my annual contributions if things don't work out I can just channel new contributions to bonds and rebuild my bond allocation. I don't see a risk in it!
In other words, if you mistakenly buy high on stocks and they crash...you will then buy high on bonds to rebuild your bond allocation?

Not trying to dissuade you, I think that people should do what makes them feel good, but just realize what you are saying.

Yules
These types of threads are going to be more common as we have only bad choices with investment options- buy overpriced stocks at all time highs or buy overpriced bonds at all time highs. My fear is this will lead to another boom/bust lost decade ala 2000-2010.

Im staying the course
Lol, I agree that we will see lots of threads like this. But everything end up being glass half empty, right?
US stocks- overpriced and at all time highs
US bonds- overpriced and at all time highs
International stocks- not over priced and not at all time highs, but don’t want to buy because reasons
Cash- can’t keep up with inflation

I agree with you, stay the course! :sharebeer
Yulie
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Re: Sell bonds and go equities

Post by Broken Man 1999 »

It all depends on why you hold bonds.

I don't hold bonds for the return, and my bonds did exactly what I wanted them to do. I used some of my bond funds to add to my equities when we experienced the equity swoon earlier this year. Then I sold some of my equity holdings to add back to my bond funds. Now I have more of each, all due to rebalancing activities.

My portfolio is at ATH.

Broken Man 1999
“If I cannot drink Bourbon and smoke cigars in Heaven then I shall not go. " -Mark Twain
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