Everything keeps going up, this feels too easy?

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WarChest
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Everything keeps going up, this feels too easy?

Post by WarChest » Sat Jun 03, 2017 2:52 pm

Stock markets (both US and non-US) are having a really great 2017 and many are at record highs. Real estate is at record highs in many places. Even bond prices (the past few months at least) have been going up.

Does anyone else get a little uneasy when they look at their portfolio balances go up up up seemingly every day? How are you dealing with this? I will admit to having shifted my AA a little bit more towards bonds in a slow and measured way, but I wonder if that's a function of market timing or because I feel like I am ever closer to having "enough" at a young age.

I get that bull markets can last a long time and go much higher than you think, but if markets keep running really hot, I can't help thinking that dialing back an AA a little faster than the traditional age based glide path makes a ton of sense. Thoughts?

letsgobobby
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Re: Everything keeps going up, this feels too easy?

Post by letsgobobby » Sat Jun 03, 2017 2:54 pm

if your need to take risk has decreased, consider taking less risk.

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Re: Everything keeps going up, this feels too easy?

Post by Grt2bOutdoors » Sat Jun 03, 2017 3:01 pm

Sounds like it is time to rebalance. Have you checked your re-balancing bands? Have you exceeded them or are you still within your asset allocation by asset class? It should take you less than 5 minutes to figure out whether its time to rebalance or not.
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WarChest
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Re: Everything keeps going up, this feels too easy?

Post by WarChest » Sat Jun 03, 2017 3:11 pm

I check my portfolio and breakdown often and am very close to my target AA which is roughly age minus 10 for bonds. I don't mean this thread to be all about my personal situation, more just curious how this long extended bull market in seemingly everything has been impacting others and what actions (or lack thereof) people have been taking.

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Re: Everything keeps going up, this feels too easy?

Post by Blueskies123 » Sat Jun 03, 2017 3:23 pm

I feel this way too but I also felt that way the year before and the year before that year. At this point everyone I follow like Swedroe, Fabre, and others also feel we are at high valuations. Not that they think a crash is coming, maybe just 10 years of meager returns. I am normally at 60/40 but have dialed back to 50/50. I know this market timing but I am two years into retirement and sleep better at 50/50.
You do not say much about yourself. If you are 30 I would not worry at all and just buy more if the market flat lines for 10 years.
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am
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Re: Everything keeps going up, this feels too easy?

Post by am » Sat Jun 03, 2017 3:33 pm

My experience tells me that it could be the other way as well like 08-09. It's certainly fun seeing the portfolio reaching new highs but I have this queasy feeling that this can all evaporate quickly or returns will be poor for years to come. I am staying the course however and enjoying the ride.

RRAAYY3
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Re: Everything keeps going up, this feels too easy?

Post by RRAAYY3 » Sat Jun 03, 2017 3:43 pm

my only regret has been not buying more than I did during that random Wednesday "free fall"

not adding any more at the moment, but still setting aside money each month for another lump sum investment + max Roth contribution next year. if it goes up, oh well I've made money on what already is in the market - if it plummets, sweet more shares at a cheaper price

I'm 32, quite frankly I'm hoping for another 08/09 to dump 10-20K into the market. I'll settle for a 5 - 10% correction.

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Re: Everything keeps going up, this feels too easy?

Post by expat » Sat Jun 03, 2017 3:44 pm

Only buying bonds here ...

Dottie57
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Re: Everything keeps going up, this feels too easy?

Post by Dottie57 » Sat Jun 03, 2017 3:45 pm

I am 5 or less years from retirement. So hot markets do make me un easy. I have a 50/50 portfolio now , so have lowered risk. And am gradually setting aside the money I will spend during the first 5 or 10 years of retirement.


It is really hard to think of spending it.

first_do_no_harm
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Re: Everything keeps going up, this feels too easy?

Post by first_do_no_harm » Sat Jun 03, 2017 3:58 pm

I've felt like stocks were overpriced since 2013. It is some kind of miracle that I've been able to stay long equities (and long bonds). But, at this point, I just don't have it in me to stick around. As of Friday, I'm all-in on alternatives/hedge funds at this point (i.e., basically my portfolio could be proxied by 40/40/20 AQMIX & QSPIX & VGK). I don't really trust stocks; I don't really trust bonds. I even sold most of my bitcoin! And yes, I'm probably going to regret this. I'll count my losses in a few years.

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Re: Everything keeps going up, this feels too easy?

Post by livesoft » Sat Jun 03, 2017 4:20 pm

I just keep rebalancing back to the top of my rebalancing band for equities.

I'm not sure I would ever have the guts to rebalance back to the mid-range. But now that I think about it, I think one circumstance where I would do that would be if my portfolio was outperforming its benchmarks by 2%, then I would cut back to match the benchmark(s) and be happy about that.
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EyeYield
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Re: Everything keeps going up, this feels too easy?

Post by EyeYield » Sat Jun 03, 2017 4:31 pm

To me it feels surreal. I stopped working in January 2010 (with no intention to permanently retire) and withdrew enough to pay my expenses for a year. In March I did this for the eighth year in a row and not only is my portfolio worth substantially more than it was in 2010, my balance is back up to where it was before my March withdrawal.
Surreal!
I continue to rebalance into fixed income and try to prepare for the worst, but I have to pinch myself every once in a while because it just seems, like the OP says, too easy.

I've been lucky with my timing. Market timing, retirement timing, but most importantly Boglehead timing - when I found this place and began my reading couldn't have come at a more important time. Of course earlier would have been even better.
"The stock market is a giant distraction from the business of investing." - Jack Bogle

Doom&Gloom
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Re: Everything keeps going up, this feels too easy?

Post by Doom&Gloom » Sat Jun 03, 2017 4:36 pm

I'm keeping my anxiety-powder dry until the market takes it's inevitable nose-dive.

I'm willing to wait as long it takes.

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Re: Everything keeps going up, this feels too easy?

Post by SrGrumpy » Sat Jun 03, 2017 4:39 pm

It is surreal. Even with about a third of my retirement portfolio in cash (I am 48), this has been a good year - though it obviously could have been better with a different allocation. Anyway, I will wait for my portfolio to reach a particular round number, soon, and then transfer more into cash. There's no point being greedy, especially as I am no longer contributing new funds to my retirement savings.

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vitaflo
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Re: Everything keeps going up, this feels too easy?

Post by vitaflo » Sat Jun 03, 2017 5:08 pm

WarChest wrote: I get that bull markets can last a long time and go much higher than you think, but if markets keep running really hot, I can't help thinking that dialing back an AA a little faster than the traditional age based glide path makes a ton of sense. Thoughts?
This is why I don't use an age-based glide path, I use a "percent to completion" one. IE, figure out how much money I need for retirement and what AA I want at retirement, and figure out how close I am to that goal with my current portfolio balance. Then calculate my AA based on that.

That way when bull markets get hot, my AA becomes more conservative. It goes the other way when we have a crash. It has nothing to do with my age.

MoonOrb
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Re: Everything keeps going up, this feels too easy?

Post by MoonOrb » Sat Jun 03, 2017 5:22 pm

I can't personally feel uneasy about this since what we're experiencing is just one of many of a range of things that will happen over my investing lifetime. I don't see any reason to get too attached to current market performance since my goal is to capture the market's return, whatever it is. I'm achieving that every day no matter what is going on with the market.

If I force myself to think about it, I think it makes me feel better about things than pessimistic about things: I believe over the long term the market will have a positive return, and look! Here it is having a positive return.

selftalk
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Re: Everything keeps going up, this feels too easy?

Post by selftalk » Sat Jun 03, 2017 5:38 pm

It`s probably nice to look at your stock portfolio and watch the net worth grow but what good does that do except to make you over confident and temp you to buy more than your IPS states. Don`t peek is still and always is the order of the day if you can discipline yourself not to peek.

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Re: Everything keeps going up, this feels too easy?

Post by staythecourse » Sat Jun 03, 2017 5:51 pm

Why does it matter if the market is down, up, or sideways.

I think too many folks on here are calculating their portfolio values and dreaming of living it up in retirement way too often.

If you don't need the money until x years who cares if it is up by 50% or down by 50%? The reason you came with an investment plan is based on needing the money in x years NOT how does it grown along the way. It is like running a marathon and everyone is discussing their times and you want to talk about how you did the first 5 miles into it.

Personally, I look at my portfolio exactly 12x/ year. That is once a month. That is ONLY because I need to figure out where I am lagging according to my asset allocation and then deploy the money to invest that month. How I am doing now has NO bearing on what I am trying to achieve in the long run good or bad.

Good luck.

P.s. Yes the market will tank. That is called volatility. What goes up HAS to go down. the upside and downside of an asset class is the same. The ones that go up a lot also go down a lot. If it didn't it would be a "free lunch".
"The stock market [fluctuation], therefore, is noise. A giant distraction from the business of investing.” | -Jack Bogle

livesoft
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Re: Everything keeps going up, this feels too easy?

Post by livesoft » Sat Jun 03, 2017 5:53 pm

selftalk wrote:It`s probably nice to look at your stock portfolio and watch the net worth grow but what good does that do except to make you over confident and temp you to buy more than your IPS states. Don`t peek is still and always is the order of the day if you can discipline yourself not to peek.
Actually, if you don't peek, then you are would end up owning MORE than your IPS states because only by peeking would you know that you needed to sell equities to rebalance back to what your IPS states.

Growth in equities doesn't tempt me to buy more; it tempts me to buy less equities and more bonds.
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KlangFool
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Re: Everything keeps going up, this feels too easy?

Post by KlangFool » Sat Jun 03, 2017 6:11 pm

vitaflo wrote:
WarChest wrote: I get that bull markets can last a long time and go much higher than you think, but if markets keep running really hot, I can't help thinking that dialing back an AA a little faster than the traditional age based glide path makes a ton of sense. Thoughts?
This is why I don't use an age-based glide path, I use a "percent to completion" one. IE, figure out how much money I need for retirement and what AA I want at retirement, and figure out how close I am to that goal with my current portfolio balance. Then calculate my AA based on that.

That way when bull markets get hot, my AA becomes more conservative. It goes the other way when we have a crash. It has nothing to do with my age.
+1.

I adjusted my AA from 64/36 to 63/37.

KlangFool

rongos
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Re: Everything keeps going up, this feels too easy?

Post by rongos » Sat Jun 03, 2017 6:14 pm

It will come to an end sooner or later. I am full speed ahead on this "boom" as long as I have the feeling that nothing is going to happen tomorrow.

When it starts to feel like something bad could happen tomorrow, I will pull back.

Vanguard Fan 1367
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Re: Everything keeps going up, this feels too easy?

Post by Vanguard Fan 1367 » Sat Jun 03, 2017 6:16 pm

This is classic bubble theory. Money pours into Vanguard at record rates. Unfortunately a stock winter is coming and the stocks will go down, maybe dramatically and maybe very frighteningly.

When it feels too hard and the market is crashing I hope that you stay the course. I hope you don't do something, just stand there, to paraphrase Bogle.

I wasn't too bright during the drops of 2000 and 2008, I didn't buy any more other than a couple of 100 dollar a month auto investments with Vanguard but I didn't sell off.

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Re: Everything keeps going up, this feels too easy?

Post by Dieharder » Sat Jun 03, 2017 6:18 pm

Yes, nervous about when this is all going to stop. Doing not much other than not directing any new money into equities for at least last couple of years, still they haven't been out of order due to all the growth. Sold some over the last year to reduce it further to bring down to age-10 in bonds, almost there. Need to take risk is going down, and at some point, it wil all correct itself.

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Re: Everything keeps going up, this feels too easy?

Post by avalpert » Sat Jun 03, 2017 6:19 pm

first_do_no_harm wrote:I've felt like stocks were overpriced since 2013. It is some kind of miracle that I've been able to stay long equities (and long bonds). But, at this point, I just don't have it in me to stick around. As of Friday, I'm all-in on alternatives/hedge funds at this point (i.e., basically my portfolio could be proxied by 40/40/20 AQMIX & QSPIX & VGK). I don't really trust stocks; I don't really trust bonds. I even sold most of my bitcoin! And yes, I'm probably going to regret this. I'll count my losses in a few years.
So I take it your user name was chosen ironically?

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SimpleGift
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Re: Everything keeps going up, this feels too easy?

Post by SimpleGift » Sat Jun 03, 2017 6:24 pm

The U.S. stock market advance since the 2009 crash has certainly been robust — but by no means unprecedented (chart below). All equity investors just need to be prepared (financially and emotionally) for the inevitable pullback at some point down the road.
Last edited by SimpleGift on Sat Jun 03, 2017 6:28 pm, edited 1 time in total.
Cordially, Todd

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BuyAndHoldOn
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Re: Everything keeps going up, this feels too easy?

Post by BuyAndHoldOn » Sat Jun 03, 2017 6:28 pm

Will equities be up more than they are now in 2, 5, 10; 30 years? I guess it all depends on your time frame.

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Kalo
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Re: Everything keeps going up, this feels too easy?

Post by Kalo » Sat Jun 03, 2017 6:43 pm

I have been selling some equities and buying some bonds with those proceeds. Part of the reason is that my AA is a bit too high in equities, although not outrageously so for me (fairly risk tolerant and was 100% equities for years). I'm about age - 23 in bonds. So for a lot of people that would be very equity heavy for someone my age, 56 y/o. So I figure there's nothing wrong with moving some to bonds, and the time to do it is not after the market starts to correct, and certainly not after it has corrected.

The biggest danger is that if equities continue to run on for years, I may come to regret these moves, and would be just lucky enough to reverse course just before the next big crash. So what I need to make sure of is that when I make these moves, I am doing it permanently, or at least as part of a continuous process of de-risking my portfolio as I age. The other risk that is always in the back of my mind is that I am trading volatility risk for inflation risk. But the best way to reduce inflation risk (for the bond portion of my portfolio) is probably TIPS and/or I Bonds.

I'm also potentially retired, depending on whether I go back to work, and therefore have about 13 years until I plan to start collecting SS at 70. So I am at the period of greatest risk of a bad sequence of returns. In my situation, I see nothing wrong with converting equities to bonds, especially when we have strong up days. If I get to 60/40 stock bond I may decide to just leave it there, depending on the absolute size of the bond piece compared to my needs.

Kalo
"When people say they have a high risk tolerance, what they really mean is that they are willing to make a lot of money." -- Ben Stein/Phil DeMuth - The Little Book of Bullet Proof Investing.

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Re: Everything keeps going up, this feels too easy?

Post by AntsOnTheMarch » Sat Jun 03, 2017 6:53 pm

vitaflo wrote: This is why I don't use an age-based glide path, I use a "percent to completion" one. IE, figure out how much money I need for retirement and what AA I want at retirement, and figure out how close I am to that goal with my current portfolio balance. Then calculate my AA based on that.

That way when bull markets get hot, my AA becomes more conservative. It goes the other way when we have a crash. It has nothing to do with my age.
Is there a online calculator or spreadsheet for this?

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bligh
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Re: Everything keeps going up, this feels too easy?

Post by bligh » Sat Jun 03, 2017 7:19 pm

It probably feels as unreal as it felt in 1997 when the PE ratio was around the same. Which would have been a great time to be buying.

It is impossible to know if this is 2007 or 1997. I am not adjusting my asset allocation. I am buying stocks and sticking to my stock/bond allocation plan.

I was on this board around the end of last year when people were talking about going all cash and that the dip was around the corner. They are probably right, but the market is up ~15% since then. If they were hoping for a 10% dip to buy back in, now they are hoping for a 15% one. It is possible by the end of the year they will be hoping for a 20% dip.

Stay the course, you are not smarter than the market. You are not seeing some chart or some pattern that people a lot smarter than you aren't seeing. This bull market could go on another 2 weeks or another 2 years.
Last edited by bligh on Sat Jun 03, 2017 7:27 pm, edited 2 times in total.

livesoft
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Re: Everything keeps going up, this feels too easy?

Post by livesoft » Sat Jun 03, 2017 7:21 pm

I like in 2016 folks were waiting for a 10% dip, then when it happened they didn't even notice it. :) Oh, not that 10% dip, but the next one.
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IlliniDave
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Re: Everything keeps going up, this feels too easy?

Post by IlliniDave » Sat Jun 03, 2017 7:37 pm

For two years now I've been putting the vast majority of new money into bonds and my AA has barely budged. I may have to break down and do an actual directed rebalance sometime this year.

Regarding the OP, well, this *is* the easy part--just standing around while the world stuffs money into your pocket. Inevitably there will be a reversal. It's okay to lean away from equities a little either by rebalancing or a modest modification to your AA. The thing you probably want to avoid is assuming you can determine when it's going to happen and overreacting. I know people who still haven't bought back in after 2008-2009 because of a litany of things they thought were about to happen.
Don't do something. Just stand there!

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Re: Everything keeps going up, this feels too easy?

Post by triceratop » Sat Jun 03, 2017 7:43 pm

I think this could not have been timed better, as I pulled back a bit on retirement saving in order to save for other purposes (and to increase spending a little), and it's good to know that as much of my savings as possible are invested.

I've been continuing to buy some bonds as part of my wide rebalancing bands about 100/0 equity.

It's also not true that things have been "too easy". On May 17 I experienced the largest portfolio drop I have seen so far, my first daily drop of more than $1,000. That was a lot of fun. Sure, the decline was less than the cumulative losses in early 2016 or the significant swings in August 2015. But it was fun to watch the market tank and simply go about my day without a worry. I cannot wait until a $10,000 drop is routine.

Anyway, the real money is made when you buy during downturns. Investments in early 2016 and post-Brexit look great.
"To play the stock market is to play musical chairs under the chord progression of a bid-ask spread."

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Re: Everything keeps going up, this feels too easy?

Post by cutehumor » Sat Jun 03, 2017 7:53 pm

I'm not complaining. My asset allocation for 70% US stocks/ 30% international stocks. I'm buying only international stocks and moving to 50/50. There could be a buying opportunity for US stocks, if US tax reform doesn't materialize or is weak tax reform. It appears US stocks have increased because the market thinks this is a done deal. I'm not so sure about that.

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vitaflo
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Re: Everything keeps going up, this feels too easy?

Post by vitaflo » Sat Jun 03, 2017 7:56 pm

AntsOnTheMarch wrote:
vitaflo wrote: This is why I don't use an age-based glide path, I use a "percent to completion" one. IE, figure out how much money I need for retirement and what AA I want at retirement, and figure out how close I am to that goal with my current portfolio balance. Then calculate my AA based on that.

That way when bull markets get hot, my AA becomes more conservative. It goes the other way when we have a crash. It has nothing to do with my age.
Is there a online calculator or spreadsheet for this?
I made my own spreadsheet, but it's not super complicated to do. Here's a simplified example:

Say you want 25x expenses (4% withdrawal rate) in your portfolio to retire on. Say your expenses are $80k per year. This means when you hit $2 million you're "done".

Decide what you want your lowest and highest bond allocation to be. Say it's 10% on the low end (90% stock) when you start and 50% at the hight end (50/50 AA) when you retire.

Now say you currently have a $1 million portfolio. You're half way to $2m. The difference between your highest and lowest bond allocation is 40% (50-10). So take half of that (20%) and add it to the low end of your bond allocation (10%). So your AA for a $1m portfolio is 70/30, stock/bond.

Plug in your own data and you're good to go. As you can see, when the market goes up, your AA will become more conservative. Vice versa when there's a crash. Also, if your expenses increase, so does what you need to retire on, and thus your AA becomes more aggressive to compensate (as you'll be further from your goal if your portfolio hasn't changed in value).

I started doing it this way when I realized I was going to retire early but didn't know exactly when (as a business owner my income is high but variable) and the normal "retire at 65" age-based bond allocations didn't apply to me. What I like about this is that if I'm age 40 in the above example, and my portfolio doubles in a 5 year bull market, I've hit my goal and I get to a 50/50 AA at age 45. But if I used age-10 in bonds, I'd be at only 35% bonds at that point, which I would find too aggressive when I've already won the game and about to retire.

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Re: Everything keeps going up, this feels too easy?

Post by hoops777 » Sat Jun 03, 2017 8:14 pm

I will tell you that I very clearly see a widespread attitude that the stock market is just so fantastic and there is almost certainty that it is going up and up and up.
GOOD LUCK WITH THAT.
Reminds me of a team,pick any sport,that has won a bunch of easy games and thinks they are way better than they actually are.I can tell you how that always ends up.
I am not predicting another 2008,although anything is possible,but I see so much cockiness about stocks.Nobody knows the future or what black swans are out there.With our current situation in D.C. all bets are off the table in my humble opinion.
K.I.S.S........so easy to say so difficult to do.

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Re: Everything keeps going up, this feels too easy?

Post by AlohaJoe » Sat Jun 03, 2017 8:15 pm

livesoft wrote:I like in 2016 folks were waiting for a 10% dip, then when it happened they didn't even notice it. :) Oh, not that 10% dip, but the next one.
Exactly. That was barely more than a year ago and people act like it never happened.

"Stocks feel like they just keep going up"

"They went down a substantial amount just a year ago."

"Well, uh, yeah, but then they recovered and went up again."

"That's what they've always done for 100+ years in 19 countries."

AntsOnTheMarch
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Re: Everything keeps going up, this feels too easy?

Post by AntsOnTheMarch » Sat Jun 03, 2017 8:28 pm

@vitaflo: Thanks!

KESP
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Re: Everything keeps going up, this feels too easy?

Post by KESP » Sat Jun 03, 2017 8:51 pm

I reached a milestone this week, $750k, but while I am happy, I have no doubt we will be seeing a sizable drop, sometime but who knows when. I just hope it's when I am still contributing to my accounts and not when I retire. I can feel good about buying sale priced funds then. I've been lecturing my kids that a drop will happen and to ignore it. Just keep contributing to those 401ks. Very happy I found Bogleheads.

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nedsaid
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Re: Everything keeps going up, this feels too easy?

Post by nedsaid » Sat Jun 03, 2017 8:54 pm

I have been doing waves of mild rebalancing from stocks to bonds since July of 2013 and even milder rebalancing from US Stocks to International Stocks. It seems like all I have been doing is hitting the "sell" button. But rebalance I must.
A fool and his money are good for business.

am
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Re: Everything keeps going up, this feels too easy?

Post by am » Sat Jun 03, 2017 9:41 pm

Could this be a new normal where more and more people are buying index funds and using roboadvisors and boosting all stocks and Big drops won't happen. :D I'll keep dreaming. But boy, it would be fun to get to my goal in my 40s. Than I'd have bigger problems of what to do next, but I'd take it!

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Re: Everything keeps going up, this feels too easy?

Post by GoldenFinch » Sat Jun 03, 2017 9:44 pm

Simplegift wrote:The U.S. stock market advance since the 2009 crash has certainly been robust — but by no means unprecedented (chart below). All equity investors just need to be prepared (financially and emotionally) for the inevitable pullback at some point down the road.
^^If you look at the period between 2000 and today, it looks like one long buying opportunity. Actually the whole chart looks like a buying opportunity.

I have to admit that the recent highs make me feel a little strange. It might be hard to watch the portfolio number go down someday, but I'm just going to keep buying, mostly equities and some bonds.

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Re: Everything keeps going up, this feels too easy?

Post by SrGrumpy » Sat Jun 03, 2017 9:44 pm

KESP wrote:I reached a milestone this week, $750k
I'm about $9,000 behind you. When/if I get there, I will dial back a bit on the equities exposure. There's no scientific analysis or spreadsheets in my thinking. It's just a nice figure at which to take stock.

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Re: Everything keeps going up, this feels too easy?

Post by Gnirk » Sat Jun 03, 2017 9:49 pm

Being retired for about ten years (not long before the 2008 downturn), I get a little nervous when I watch this Bull market continue. But I'm comfortable with my AA at 35/60/5, even though my withdrawal is about 1%/year at this point.
Last edited by Gnirk on Sat Jun 03, 2017 9:54 pm, edited 1 time in total.

DomDangelina
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Re: Everything keeps going up, this feels too easy?

Post by DomDangelina » Sat Jun 03, 2017 9:50 pm

Could it feel strange to us because we're failing to sufficiently tune out the noise?
"Often the remedy causes the disease. It is by no means the least of life's rules: to let things alone." | Baltasar Gracián, S.J., The Art of Worldly Wisdom, Maxim 121

avalpert
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Re: Everything keeps going up, this feels too easy?

Post by avalpert » Sat Jun 03, 2017 9:57 pm

am wrote:Could this be a new normal where more and more people are buying index funds and using roboadvisors and boosting all stocks and Big drops won't happen. :D I'll keep dreaming. But boy, it would be fun to get to my goal in my 40s. Than I'd have bigger problems of what to do next, but I'd take it!
I realize it is just a dream of yours - but why would one think that more people using index funds and roboadvisors would have any impact on big ups and downs?

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JonnyDVM
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Re: Everything keeps going up, this feels too easy?

Post by JonnyDVM » Sat Jun 03, 2017 10:14 pm

Expecting the other shoe to drop sooner rather than later particularly given the current political climate. Not doing anything specific about it other than to deadpan "winter is coming" whenever the topic of this terrific market is brought up in conversation.
Sometimes the questions are complicated and the answers are simple. -Dr. Seuss

DomDangelina
Posts: 180
Joined: Thu Jun 01, 2017 8:50 pm
Location: California refugee

Re: Everything keeps going up, this feels too easy?

Post by DomDangelina » Sat Jun 03, 2017 10:20 pm

Isn't a market on the brink of collapse usually characterized by irrational exhuberance? Instead, I see a lot of caution and pessimism, indeed a doomsday outlook in many.
"Often the remedy causes the disease. It is by no means the least of life's rules: to let things alone." | Baltasar Gracián, S.J., The Art of Worldly Wisdom, Maxim 121

am
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Re: Everything keeps going up, this feels too easy?

Post by am » Sat Jun 03, 2017 11:03 pm

avalpert wrote:
am wrote:Could this be a new normal where more and more people are buying index funds and using roboadvisors and boosting all stocks and Big drops won't happen. :D I'll keep dreaming. But boy, it would be fun to get to my goal in my 40s. Than I'd have bigger problems of what to do next, but I'd take it!
I realize it is just a dream of yours - but why would one think that more people using index funds and roboadvisors would have any impact on big ups and downs?

Maybe more people using roboadvisors doing the "right" thing by buying and holding, more buying into the idea of index funds, buying shares every paycheck/chance they can get regardless of market conditions, active management going out of vogue, insititutional investors going away from active trading, innumerable blogs, books, etc. touting low cost buy and hold? Doubt it but maybe some impact?

avalpert
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Re: Everything keeps going up, this feels too easy?

Post by avalpert » Sat Jun 03, 2017 11:10 pm

am wrote:
avalpert wrote:
am wrote:Could this be a new normal where more and more people are buying index funds and using roboadvisors and boosting all stocks and Big drops won't happen. :D I'll keep dreaming. But boy, it would be fun to get to my goal in my 40s. Than I'd have bigger problems of what to do next, but I'd take it!
I realize it is just a dream of yours - but why would one think that more people using index funds and roboadvisors would have any impact on big ups and downs?

Maybe more people using roboadvisors doing the "right" thing by buying and holding, more buying into the idea of index funds, buying shares every paycheck/chance they can get regardless of market conditions, active management going out of vogue, insititutional investors going away from active trading, innumerable blogs, books, etc. touting low cost buy and hold? Doubt it but maybe some impact?
Why would buying and holding change the nature of valuations to go through cycles of optimism/pessimism? More people accepting the movements instead of trying to drive them doesn't eliminate the driver of the movements.

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bligh
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Re: Everything keeps going up, this feels too easy?

Post by bligh » Sat Jun 03, 2017 11:37 pm

avalpert wrote: Why would buying and holding change the nature of valuations to go through cycles of optimism/pessimism? More people accepting the movements instead of trying to drive them doesn't eliminate the driver of the movements.
This is completely anecdotal, but before I switched to passive index investing I held a substantial percentage of my portfolio in cash. Sure I had some buy and hold stocks, but there was also a lot of "waiting" for a buying opportunity and then jumping in and later jumping out after a run up. I am of course a tiny invisible speck in the market, but if the behavior of millions of individuals, endowments, organizations changed from this "jumping in" at opportunities and "jumping out" at run ups it could have an impact don't you think? If enough of them turned to buy and hold investors who left smaller amounts of their cash sitting on the sidelines waiting for a buying opportunity, and then also didn't jump out after market rallies.. you would expect to see lower volatility and a smooth growth in the value of equities as more and more money that was accepting of market returns was confidently plowed into the markets.

Is that what we are seeing? No clue. Obviously it will be a multitude of factors. for example, dismal bond yields chasing away money seeking returns in riskier places. It is an interesting hypothesis though. Such a massive and sustained shift in investing patterns has to have had _some_ impact on the market, we may not know what it was until many years from now though.

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