Market Run Ups - Now vs. Then

Discuss all general (i.e. non-personal) investing questions and issues, investing news, and theory.
keystone
Posts: 544
Joined: Tue Aug 28, 2012 12:34 pm

Re: Market Run Ups - Now vs. Then

Post by keystone » Fri Feb 24, 2017 12:39 pm

Admiral wrote: Of course we will be blindsided... because of course one cannot know for certain what the future holds. That's the definition of a crash. Otherwise it's just a bear market. I think what you're reading is that in retrospect the signs were obvious, except for a very few individuals who shorted the markets. (Of course, much always seems obvious in retrospect.) And there are those who perhaps saw it, but chose not to churn but to stay the course (and wisely so in most cases).

The point is not that a crash won't come: it will come, as it always has. The OP was asking how this market feels compared to other bull runs. That's what people are posting about: how they felt then and how they feel now.
Exactly. I think a lot of us did know that a crash was likely. I knew at the time that the dot com valuations made no sense and later on we were likely in a real estate bubble. I think a lot of us knew that. The complicated part is that hardly anyone (perhaps nobody) knows exactly when the crashes will take place, to what degree and when they will be over. If you knew that with any type of regularity, you would be one of the wealthiest people on the planet.

That's why the best strategy for most of us is to choose an asset allocation you are comfortable with and stick to it.

User avatar
vitaflo
Posts: 1205
Joined: Sat Sep 03, 2011 3:02 pm

Re: Market Run Ups - Now vs. Then

Post by vitaflo » Fri Feb 24, 2017 2:26 pm

juliewongferra wrote:Many of the responses to this thread are very curious! For those of you who say that the market run ups in 2000 and/or 2007 were plain to see, did you see it at the time? If so, I assume that you went all to cash for a year or so before getting back into the market to capture the upswing. Staying the course is important if we don't know how the stock market will react, but it's a bad strategy if you *know* that there's a run up and an imminent crash.
Knowing there is a run up isn't hard to see. It was obvious in 2000 with tech stocks and in 2007 with housing. The problem is knowing when the collapse will happen to take advantage of it. As an example, I could see the housing bubble start in my area way back in 2002, when houses we were looking at were being bought sight unseen 15 mins after they went on the market. But the crash for the economy as a whole didn't happen until 2008.

Even now it's easy to see where the economic problem areas are. Health care costs are skyrocketing, student loan debt is massive, dividend stocks are way overbought, the market has reacted to potential future fiscal policy that hasn't happened yet, etc. Are any of these actionable though? Will any of them cause a huge crash, and if so, when? We don't know, but it's obvious those things listed are elephants in the room, just like tech stocks in 2000 and housing in 2007.

Admiral
Posts: 2603
Joined: Mon Oct 27, 2014 12:35 pm

Re: Market Run Ups - Now vs. Then

Post by Admiral » Fri Feb 24, 2017 2:33 pm

vitaflo wrote:
juliewongferra wrote:Many of the responses to this thread are very curious! For those of you who say that the market run ups in 2000 and/or 2007 were plain to see, did you see it at the time? If so, I assume that you went all to cash for a year or so before getting back into the market to capture the upswing. Staying the course is important if we don't know how the stock market will react, but it's a bad strategy if you *know* that there's a run up and an imminent crash.
Knowing there is a run up isn't hard to see. It was obvious in 2000 with tech stocks and in 2007 with housing. The problem is knowing when the collapse will happen to take advantage of it. As an example, I could see the housing bubble start in my area way back in 2002, when houses we were looking at were being bought sight unseen 15 mins after they went on the market. But the crash for the economy as a whole didn't happen until 2008.

Even now it's easy to see where the economic problem areas are. Health care costs are skyrocketing, student loan debt is massive, dividend stocks are way overbought, the market has reacted to potential future fiscal policy that hasn't happened yet, etc. Are any of these actionable though? Will any of them cause a huge crash, and if so, when? We don't know, but it's obvious those things listed are elephants in the room, just like tech stocks in 2000 and housing in 2007.
+1. Exactly right. And even if the market is overbought today, who's to say that with a Trump corporate tax cut (which now seems likely) it won't run up even further before tanking? Another 1,000 points for the Dow? 2,000? Doesn't seem beyond the realm of possibility.

User avatar
galeno
Posts: 1576
Joined: Fri Dec 21, 2007 12:06 pm

Re: Market Run Ups - Now vs. Then

Post by galeno » Fri Feb 24, 2017 2:34 pm

With our conservative (age = FI) retirement porfolio drawing a 3.0% AWR is well prepared for volatile slow growth.

Our biggest fear is a 1970s-like inflation because 45% of our portfolio is in low-yielding NOMINAL intermediate term USA treasuries, corporate bonds and cash.
AA = 40/55/5. Expected CAGR = 3.8%. GSD (5y) = 6.2%. USD inflation (10 y) = 1.8%. AWR = 4.0%. TER = 0.4%. Port Yield = 2.82%. Term = 33 yr. FI Duration = 6.0 yr. Portfolio survival probability = 95%.

User avatar
jjustice
Posts: 499
Joined: Tue Aug 04, 2009 9:58 am

Re: Market Run Ups - Now vs. Then

Post by jjustice » Fri Feb 24, 2017 2:50 pm

It seems the same to me: frogs "staying the course" while coming up with reasons why the water hasn't really gotten that hot yet. Besides if it were to get too hot, you wouldn't know when to jump back in. So sit still and be boiled.

John

User avatar
Peter Foley
Posts: 5007
Joined: Fri Nov 23, 2007 10:34 am
Location: Lake Wobegon

Re: Market Run Ups - Now vs. Then

Post by Peter Foley » Fri Feb 24, 2017 2:54 pm

I think the underlying factors are different this time. [Oversimplified] The run up in 1998-2000 was due to technological advances and the promise that might bring. The 2006-8 run up was due to low mortgage interest rates, low or no down payments, and essentially verification free loans made on the premise that housing prices would continue to rise so there was no risk to the lender. (At the time I could see that PE ratios were way out of whack for tech companies in the year 2000, and that real estate was overpriced and under capitalized in 2006-7. What I did not appreciate was the broader impacts these run ups would have on the overall economy.)

The most recent run up is due to speculation that the regulatory environment might changes and corporate taxes might be reduced - both of which might add to a business's bottom line.

They are all similar in that they are bets on a future that may or may not materialize.

Oakwood42
Posts: 205
Joined: Thu Dec 08, 2016 10:48 pm
Location: Philadelphia

Re: Market Run Ups - Now vs. Then

Post by Oakwood42 » Fri Feb 24, 2017 3:07 pm

Historically low interest rates.

http://static6.businessinsider.com/imag ... 9%20am.png

Where does one go for return if interest rates remain low? I would think some investors may increase their exposure to equities in this case. I believe this would drive valuations higher.

User avatar
David Jay
Posts: 7501
Joined: Mon Mar 30, 2015 5:54 am
Location: Michigan

Re: Market Run Ups - Now vs. Then

Post by David Jay » Fri Feb 24, 2017 4:15 pm

Call_Me_Op wrote:Historically, crashes don't happen when people are fearful (like they are now). Usually, people are greedy and think "it is different this time." I think we have a way to go.
This.
Prediction is very difficult, especially about the future - Niels Bohr | To get the "risk premium", you really do have to take the risk - nisiprius

ZenInvestor
Posts: 138
Joined: Thu Jun 18, 2015 1:35 pm

Re: Market Run Ups - Now vs. Then

Post by ZenInvestor » Fri Feb 24, 2017 4:20 pm

jjustice wrote:It seems the same to me: frogs "staying the course" while coming up with reasons why the water hasn't really gotten that hot yet. Besides if it were to get too hot, you wouldn't know when to jump back in. So sit still and be boiled.

John
Hyperbole sans evidence serves only to artificially inflate the ego of the individual presenting the argument.

Jags4186
Posts: 4087
Joined: Wed Jun 18, 2014 7:12 pm

Re: Market Run Ups - Now vs. Then

Post by Jags4186 » Fri Feb 24, 2017 4:57 pm

Not concerned. Market is underperforming its long term historical returns. The worst 35 year period in market returns still got you nearly 6% CAGR. Are we really to believe that we are in the midst of the worst performing 35 year period of all time?

Let us not forget, we have a 35 year period that included 2 World Wars, the Great Depression, the Korean War, and the the start of the Cold War with Nuclear Holocaust threatening. That 35 year period starting in 1917 made us 9.07%.

*3!4!/5!
Posts: 1256
Joined: Fri Sep 02, 2016 1:47 pm

Re: Market Run Ups - Now vs. Then

Post by *3!4!/5! » Fri Feb 24, 2017 5:06 pm

Admiral wrote:Good article. Here's a very interesting quote from it:
And while traders or short-term investors might be viewing the recent rally as a chance to tactically position for a decline, as we highlighted late last year, long-term investors are seriously hurt by moving in and out of markets. Missing the 10 best trading days in each of the last nine decades would have, for example, seen investors gain 31% over the period instead of 10,055%.
Random walk nothingburger.

halfnine
Posts: 1003
Joined: Tue Dec 21, 2010 1:48 pm

Re: Market Run Ups - Now vs. Then

Post by halfnine » Fri Feb 24, 2017 5:07 pm

Well the run up to 2000 felt the most significant to me. I took off 1999 to travel abroad. Before I left I knew only one person who actively traded stocks. When I returned from my trip all of sudden many people I knew were trading. That was my "shoeshine boy with a stock tip" moment.

User avatar
willthrill81
Posts: 15155
Joined: Thu Jan 26, 2017 3:17 pm
Location: USA

Re: Market Run Ups - Now vs. Then

Post by willthrill81 » Fri Feb 24, 2017 5:17 pm

Barefootgirl wrote:I've lived through the 2000 and 2008-2009 market crashes....different circumstances, both devastating. I'm far more diversified now than before, and I have an asset allocation better suited to weather deep dives, etc. - and yet, my stomach still gets queasy when I see run ups. It's hard to shake off the memories of the past - plus, being older impacts one's outlook - particularly for security.

For those who've been in this at least as long as I have (20-25 years)....does it feel the same to you now with the current run up or are the underlying factors different?

Just trying to understand what others are thinking and seeing with this. Thanks.
The big difference I see now is how many 'mainstream' people are saying that this run-up is bogus. Back in 2000, it seemed that everyone was jumping in the market without thinking of the bottom they might hit on the way in. I knew of one fellow who took out a massive HELOC on his paid-off home to put in the market in 1999. He didn't lose his home, but he lost most of the money and is probably still paying for his home now for the second time. I'm not hearing about anyone doing this now.

It seems that investors just see the economy strengthening and the likelihood of things being made more friendly for corporate America going up.
“It's a dangerous business, Frodo, going out your door. You step onto the road, and if you don't keep your feet, there's no knowing where you might be swept off to.” J.R.R. Tolkien,The Lord of the Rings

User avatar
willthrill81
Posts: 15155
Joined: Thu Jan 26, 2017 3:17 pm
Location: USA

Re: Market Run Ups - Now vs. Then

Post by willthrill81 » Fri Feb 24, 2017 5:19 pm

Admiral wrote:+1. Exactly right. And even if the market is overbought today, who's to say that with a Trump corporate tax cut (which now seems likely) it won't run up even further before tanking? Another 1,000 points for the Dow? 2,000? Doesn't seem beyond the realm of possibility.
If earnings go up in the next year or two, that will either push prices up even further, pull down the P/E ratio, or some combination of both.
“It's a dangerous business, Frodo, going out your door. You step onto the road, and if you don't keep your feet, there's no knowing where you might be swept off to.” J.R.R. Tolkien,The Lord of the Rings

*3!4!/5!
Posts: 1256
Joined: Fri Sep 02, 2016 1:47 pm

Re: Market Run Ups - Now vs. Then

Post by *3!4!/5! » Fri Feb 24, 2017 5:42 pm

*3!4!/5! wrote:
Admiral wrote:Good article. Here's a very interesting quote from it:
And while traders or short-term investors might be viewing the recent rally as a chance to tactically position for a decline, as we highlighted late last year, long-term investors are seriously hurt by moving in and out of markets. Missing the 10 best trading days in each of the last nine decades would have, for example, seen investors gain 31% over the period instead of 10,055%.
Random walk nothingburger.
To rephrase: The statement sounds interesting and surprising, but it's actually just what you should expect to happen.

rattlenap
Posts: 324
Joined: Wed May 25, 2016 6:22 pm

Re: Market Run Ups - Now vs. Then

Post by rattlenap » Fri Feb 24, 2017 6:36 pm

Phineas J. Whoopee wrote:
rattlenap wrote:...
The only problem with all in one funds including VBINX is if you are still holding it in retirement and withdrawing from it, when the market goes down, it takes the value of the whole fund down with it as well. So you're basically withdrawing the money at a reduced amount.
If you held the asset classes separately your portfolio would have gone down by the same amount, and you'd be withdrawing money from the reduced portfolio. Math is math.
PJW
Though the portfolio as whole will go down, by holding individual funds you could withdraw from the fund(s) that are doing well at that moment and time while allowing the fund(s) crashing their chance to recover without withdrawing from them. Math is math? So I guess you knew that 2 + 2 = 4, correct?

User avatar
Phineas J. Whoopee
Posts: 9031
Joined: Sun Dec 18, 2011 6:18 pm

Re: Market Run Ups - Now vs. Then

Post by Phineas J. Whoopee » Fri Feb 24, 2017 6:52 pm

rattlenap wrote:...
Though the portfolio as whole will go down, by holding individual funds you could withdraw from the fund(s) that are doing well at that moment and time while allowing the fund(s) crashing their chance to recover without withdrawing from them. Math is math? So I guess you knew that 2 + 2 = 4, correct?
Daily rebalancing by the all-in-one fund makes it work out the same. Rebalancing timing is not very important. Annual or even quadrennial should work about as well at managing risk. Vanguard just might as well do it daily out of day-by-day cash flows.

By drawing from that which is up, or not down as much, you are rebalancing, just like the fund already did. The numbers work out the same.

PJW

User avatar
Johnnie
Posts: 563
Joined: Sat May 28, 2016 3:18 pm
Location: Michigan

Re: Market Run Ups - Now vs. Then

Post by Johnnie » Fri Feb 24, 2017 7:18 pm

Barefootgirl wrote:I've lived through the 2000 and 2008-2009 market crashes....different circumstances, both devastating. I'm far more diversified now than before, and I have an asset allocation better suited to weather deep dives, etc. - and yet, my stomach still gets queasy when I see run ups. It's hard to shake off the memories of the past - plus, being older impacts one's outlook - particularly for security.

For those who've been in this at least as long as I have (20-25 years)....does it feel the same to you now with the current run up or are the underlying factors different?

Just trying to understand what others are thinking and seeing with this. Thanks.
Similar history (a bit longer), similar feelings in rising markets, one big change in my point-of-view since the last time: I concluded that when it comes to the future I know nothing (and neither does anyone else). It's early days, but that has stood me well in both politics and investing!

It's very liberating, but also hard to let go all at once. I'm closer, with a portfolio newly reallocated to a long term BH-style plan.

I still have opinions though - even if I don't invest based on them. My current one is this feels like the 1980s, when tax cuts and regulatory reforms unleashed the animal spirits, making for better returns ahead. Always a hundred ways for that to go off the rails, but that's my story until I see something that changes it.

Mainly what I want to say is this: I live with the knowledge that the lovely big numbers on the fund statements could be 20 percent lower in six weeks, and I might be glad it's no worse - so far. I live knowing those numbers may be down 50 percent in any year and held there a couple or three years.

I live in hope it then has some rebound after that but - I know nothing. So I might as well follow apparent best practices and hope for good-enough results.
"I know nothing."

rattlenap
Posts: 324
Joined: Wed May 25, 2016 6:22 pm

Re: Market Run Ups - Now vs. Then

Post by rattlenap » Fri Feb 24, 2017 7:22 pm

Phineas J. Whoopee wrote:
rattlenap wrote:...
Though the portfolio as whole will go down, by holding individual funds you could withdraw from the fund(s) that are doing well at that moment and time while allowing the fund(s) crashing their chance to recover without withdrawing from them. Math is math? So I guess you knew that 2 + 2 = 4, correct?
Daily rebalancing by the all-in-one fund makes it work out the same. Rebalancing timing is not very important. Annual or even quadrennial should work about as well at managing risk. Vanguard just might as well do it daily out of day-by-day cash flows.

By drawing from that which is up, or not down as much, you are rebalancing, just like the fund already did. The numbers work out the same.

PJW
But the all-in-one funds like VBINX don't rebalance on a daily basis, do they? I thought it was every quarter.

User avatar
Phineas J. Whoopee
Posts: 9031
Joined: Sun Dec 18, 2011 6:18 pm

Re: Market Run Ups - Now vs. Then

Post by Phineas J. Whoopee » Fri Feb 24, 2017 7:31 pm

rattlenap wrote:...
But the all-in-one funds like VBINX don't rebalance on a daily basis, do they? I thought it was every quarter.
They rebalance daily out of cash flows, 'cause they may as well what with Vanguard investors buying and selling every day, but it hardly makes any difference. As I wrote, annual, or even quadrennial, rebalancing works about as well.
PJW

User avatar
auntie
Posts: 287
Joined: Mon Dec 08, 2008 12:49 pm

Re: Market Run Ups - Now vs. Then

Post by auntie » Fri Feb 24, 2017 8:51 pm

before the 2000 crash my husband was heavily into tech stocks, even some on margin. It scared me and I begged him to sell some. Fortunately he did sell a small amount before the crash. I knew it had to come, but of course I didn't know when. We lost a huge amount.

By the next crash I was single and again I saw it coming. I was tempted to sell my house but I needed to live somewhere so I didn't. If I'd thought I could time it right I would have sold high and bought low later.

Now I don't see anything terrible coming. There isn't anything as obvious. Of course it will happen sooner or later.
High risk does not equal high reward. It equals high risk of no reward.

Topic Author
Barefootgirl
Posts: 2271
Joined: Tue Oct 06, 2009 7:05 pm

Re: Market Run Ups - Now vs. Then

Post by Barefootgirl » Fri Feb 24, 2017 9:42 pm

Missing the 10 best trading days in each of the last nine decades would have, for example, seen investors gain 31% over the period instead of 10,055%.
I'm wondering if this isn't an exaggerated example. For all intents and purposes, most investors aren't in the market for nine decades...six decades maybe and often, less. I'd be interested in the shorter timeframes lol.

Yes, I agree with those who say the irrational exuberance is missing this go around. I think many of us are battle weary, lol.
Nevertheless, if anything, experience has taught me that anything can and will happen.
How many retired people does it take to screw in a lightbulb? Only one, but he takes all day.

User avatar
CyclingDuo
Posts: 2826
Joined: Fri Jan 06, 2017 9:07 am

Re: Market Run Ups - Now vs. Then

Post by CyclingDuo » Fri Feb 24, 2017 9:53 pm

"Everywhere is within walking distance if you have the time." ~ Steven Wright

Topic Author
Barefootgirl
Posts: 2271
Joined: Tue Oct 06, 2009 7:05 pm

Re: Market Run Ups - Now vs. Then

Post by Barefootgirl » Fri Feb 24, 2017 9:57 pm

Someone up the thread mentioned their boss crunching personal numbers during the 2000 run up.

Reminds me of another difference. I recall, as we approached Y2K (and I was speculating on companies involved in remediation efforts lol) - that my co-workers and I had completely dismissed that we were working there for our salaries - all that mattered was our net worth based on the company stock price on any given day. Work and paychecks fell to the wayside while we were consumed with soaring net worth calculations - we kept a big white board in the office and getting in on IPOs.

It was very sobering when it all came to an end, like a New Years Day hangover. I was shocked one day to find myself wondering about raises. I hadn't thought of raises in years. It was a once in a lifetime event - but as we've said here - you never know it in the moment. I rarely hear anyone now get excited over their employer's stock lol
How many retired people does it take to screw in a lightbulb? Only one, but he takes all day.

*3!4!/5!
Posts: 1256
Joined: Fri Sep 02, 2016 1:47 pm

Re: Market Run Ups - Now vs. Then

Post by *3!4!/5! » Fri Feb 24, 2017 10:54 pm

Barefootgirl wrote:
Missing the 10 best trading days in each of the last nine decades would have, for example, seen investors gain 31% over the period instead of 10,055%.
I'm wondering if this isn't an exaggerated example. For all intents and purposes, most investors aren't in the market for nine decades...six decades maybe and often, less. I'd be interested in the shorter timeframes lol.
Why would you call it "exaggerated"? I'm not going to check the original data, but a quick sanity check on the numbers makes you realize this is quite unsurprising.

Prudence
Posts: 493
Joined: Fri Mar 09, 2012 4:55 pm

Re: Market Run Ups - Now vs. Then

Post by Prudence » Fri Feb 24, 2017 11:36 pm

Barefootgirl wrote:I've lived through the 2000 and 2008-2009 market crashes....different circumstances, both devastating. I'm far more diversified now than before, and I have an asset allocation better suited to weather deep dives, etc. - and yet, my stomach still gets queasy when I see run ups. It's hard to shake off the memories of the past - plus, being older impacts one's outlook - particularly for security.

For those who've been in this at least as long as I have (20-25 years)....does it feel the same to you now with the current run up or are the underlying factors different?

Just trying to understand what others are thinking and seeing with this. Thanks.
This run up is driven by non economic factors e.g. fed policy makes bonds unattractive relative to equities and wall street thinks we will have favorable tax changes and less regulation. So, hold off on adding to equities.

gundlached
Posts: 117
Joined: Wed Nov 18, 2015 12:45 pm

Re: Market Run Ups - Now vs. Then

Post by gundlached » Fri Feb 24, 2017 11:57 pm

CyclingDuo wrote:
Barefootgirl wrote:I've lived through the 2000 and 2008-2009 market crashes....different circumstances, both devastating. I'm far more diversified now than before, and I have an asset allocation better suited to weather deep dives, etc. - and yet, my stomach still gets queasy when I see run ups. It's hard to shake off the memories of the past - plus, being older impacts one's outlook - particularly for security.

For those who've been in this at least as long as I have (20-25 years)....does it feel the same to you now with the current run up or are the underlying factors different?

Just trying to understand what others are thinking and seeing with this. Thanks.
Secular Bull Market 1982 - 2000
Secular Bear market 2000 - 2013
Current Bull began in the Spring of 2013 ( http://thereformedbroker.com/2016/10/13 ... begin-irl/ )

Typical things we are hearing now are normal in a bull market "Stocks have gotten ahead of themselves"; "Valuations are extended"; "Market needs to digest these gains", and yada, yada, yada. Personally, I do not see the euphoric conditions akin to what occurred during the 1995-2000 parabolic craze. It feels much like a market forecasting earnings growth, and a global economic recovery - yet studying and figuring out where we are in the economic business cycle is key - as well as prudent. Excellent primer here: https://www.fidelity.com/viewpoints/inv ... ness-cycle

Will the market "digest the gains", correct along the way, and do what it normally does?

Yes.

Is it a typical cyclical bull market, or have we entered a longer term secular bull market?

Only time will tell as it is only in retrospect these names and moves can be labeled. This rally certainly has had excellent breadth, good money flow, and is not solely US based. The 13 year secular bear made a lot of investors forget what a bull market feels like. :wink: So questioning it every day/week/month will most likely continue.

Are we in mid-phase, or late phase of this economic cycle?

In the end, if one is still in the wealth accumulation phase, we keep on socking away our monthly contributions and let our investments ride with the AA to reach one's goals.

I get different results when including dividends. I show back to even from 08/09 in 2012. Just threw VINIX (Vanguard S&P 500) in M*.

Unlike the 90s, this stock market feels driven by an equity risk premium that makes sense only in a world with a real yield on the 10 year of 0.4%. I feel more uneasy now than I did in 08, but I can't figure a way to act on it. I am staying the course because I don't have another credible strategy.

Topic Author
Barefootgirl
Posts: 2271
Joined: Tue Oct 06, 2009 7:05 pm

Re: Market Run Ups - Now vs. Then

Post by Barefootgirl » Thu Mar 02, 2017 6:12 am

I'm looking at yesterday's climb...I know how to make money in down markets...I buy more.

In up markets, like this one, I freeze, but it has not served me well in the past. I stayed the course to disastrous results that took years to recover from. I am much, much closer to retirement now than I was in the previous cycles. I think I have to do some step selling...It's a phase thing.
How many retired people does it take to screw in a lightbulb? Only one, but he takes all day.

investingdad
Posts: 1687
Joined: Fri Mar 15, 2013 10:41 pm

Re: Market Run Ups - Now vs. Then

Post by investingdad » Thu Mar 02, 2017 6:27 am

I shifted 1% from equity to bonds at the close yesterday. My ratio is getting out of whack and just contributing new money to bonds isn't getting it done.

Topic Author
Barefootgirl
Posts: 2271
Joined: Tue Oct 06, 2009 7:05 pm

Re: Market Run Ups - Now vs. Then

Post by Barefootgirl » Thu Mar 02, 2017 6:31 am

Yes mine as well. New money coming into my 401k is still allocated to plan - but the distribution by fund is getting out of whack, as I have started to move more to bonds slowly in the past weeks....now it's my taxable accounts that I am looking at.
How many retired people does it take to screw in a lightbulb? Only one, but he takes all day.

Topic Author
Barefootgirl
Posts: 2271
Joined: Tue Oct 06, 2009 7:05 pm

Re: Market Run Ups - Now vs. Then

Post by Barefootgirl » Thu Mar 02, 2017 8:52 am

"There's nothing wrong with cash"
How many retired people does it take to screw in a lightbulb? Only one, but he takes all day.

investingdad
Posts: 1687
Joined: Fri Mar 15, 2013 10:41 pm

Re: Market Run Ups - Now vs. Then

Post by investingdad » Thu Mar 02, 2017 9:57 am

I've been using my tax advantaged accounts to rebalance. I just shifted around another 0.25% this morning in addition to making our monthly purchases. So about a 1.25% rebalance from equity to bond funds in total.

Nothing more to do at this point except do what we've done for the last twenty plus years...keep buying, sit tight, rebalance on occasion, go to work, shuttle the kids to practices and games, and have a beer.

User avatar
BrandonBogle
Posts: 2148
Joined: Mon Jan 28, 2013 11:19 pm

Re: Market Run Ups - Now vs. Then

Post by BrandonBogle » Thu Mar 02, 2017 10:15 am

I feel bad that I haven't hit any of my rebalancing bands even with this runup. I do have regular contributions to the 401k and my annual IRA contribution, so those have probably muted the need to tweak.

investingdad
Posts: 1687
Joined: Fri Mar 15, 2013 10:41 pm

Re: Market Run Ups - Now vs. Then

Post by investingdad » Thu Mar 02, 2017 10:48 am

Quicken shows me portfolio make-up, so it's pretty easy to see when the mix is off kilter.

User avatar
Peter Foley
Posts: 5007
Joined: Fri Nov 23, 2007 10:34 am
Location: Lake Wobegon

Re: Market Run Ups - Now vs. Then

Post by Peter Foley » Thu Mar 02, 2017 10:59 am

Over the past couple of weeks I hit my rebalancing bands for the first time in about 5 years.

One other thing to consider. If you use a donor advised fund for some of your charitable contributions, now might be a good time to donate some appreciated stock or mutual funds.

User avatar
ERMD
Posts: 291
Joined: Thu Dec 26, 2013 11:26 am

Re: Market Run Ups - Now vs. Then

Post by ERMD » Thu Mar 02, 2017 1:53 pm

BrandonBogle wrote:I feel bad that I haven't hit any of my rebalancing bands even with this runup. I do have regular contributions to the 401k and my annual IRA contribution, so those have probably muted the need to tweak.
i was thinking the same thing. i'm just over 2% off my targets and don't rebalance until 5%. i can't imagine any run-up forcing me to manually rebalance, and it would take a pretty steep and rapid drop to force me to make moves on the other end.
between scotch and nothing, i'll take scotch. -- faulkner

User avatar
BrandonBogle
Posts: 2148
Joined: Mon Jan 28, 2013 11:19 pm

Re: Market Run Ups - Now vs. Then

Post by BrandonBogle » Thu Mar 02, 2017 7:42 pm

ERMD wrote:
BrandonBogle wrote:I feel bad that I haven't hit any of my rebalancing bands even with this runup. I do have regular contributions to the 401k and my annual IRA contribution, so those have probably muted the need to tweak.
i was thinking the same thing. i'm just over 2% off my targets and don't rebalance until 5%. i can't imagine any run-up forcing me to manually rebalance, and it would take a pretty steep and rapid drop to force me to make moves on the other end.
Yup. Exactly the same here. 2% off on some holdings (less on others) and a +/- 5% band.

User avatar
billyv
Posts: 57
Joined: Fri Aug 05, 2016 10:25 am

Re: Market Run Ups - Now vs. Then

Post by billyv » Fri Mar 03, 2017 12:32 pm

I think it's helpful to distinguish between the real economy, in which real companies make real products and provide real services, and the equity markets, where investors speculate on future growth and earnings. From what I can tell, the real economy seems to be doing pretty well at the moment -- not great, but not bad either. Equity prices, on the other hand, are looking pretty stretched these days, with many stocks trading well above their historical norms. That's why I think we'll see a 10-15% "correction" this year, especially when it becomes clear that many of the things driving the market right now -- expectations of tax cuts, regulatory changes, etc. -- may not happen any time soon.

That said, I'm not sure the next recession, when it comes, will start in the US. Whether or not you approve of globalization, the US economy is part of a full globalized and integrated financial eco-system. As such, the next big economic shock could come from just about anywhere -- Russia, emerging markets, French bonds, Chinese bank debt, cats and dogs living together...

User avatar
ERMD
Posts: 291
Joined: Thu Dec 26, 2013 11:26 am

Re: Market Run Ups - Now vs. Then

Post by ERMD » Fri Mar 03, 2017 12:45 pm

billyv wrote:That's why I think we'll see a 10-15% "correction" this year
people seem to be looking for the mythical 10% correction every year for the past several years. it's turning into the loch ness monster.
billyv wrote:especially when it becomes clear that many of the things driving the market right now -- expectations of tax cuts, regulatory changes, etc. -- may not happen any time soon.
isn't the possibility of regulatory changes not happening already factored into values?
between scotch and nothing, i'll take scotch. -- faulkner

Post Reply