Market Monitoring -- Best Practices?

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socal.penguin
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Market Monitoring -- Best Practices?

Post by socal.penguin » Fri Jun 16, 2017 8:58 pm

I was speaking with a co-worker the other day about the lofty levels the market is reaching. We talked about the possibility of a "Trump bubble". I asked if he and his friends keep an eye on this market and how. He said they check weekly and just try to get a feeling based on the news.

While not a Bogle-backed idea, I always liked the simple idea of a bull market ending by seeing if it falls below it's 200 day average. That comes from William O'Neil (and others).

What are your "best practices" for monitoring? Even if you are buy-and-hold, you might still monitor because you wanted to, say, focus on Asian equities more than European ones, etc.

PFInterest
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Re: Market Monitoring -- Best Practices?

Post by PFInterest » Sat Jun 17, 2017 10:03 am

Google finance.

John Laurens
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Re: Market Monitoring -- Best Practices?

Post by John Laurens » Sat Jun 17, 2017 10:11 am

socal.penguin wrote:I was speaking with a co-worker the other day about the lofty levels the market is reaching. We talked about the possibility of a "Trump bubble". I asked if he and his friends keep an eye on this market and how. He said they check weekly and just try to get a feeling based on the news.

While not a Bogle-backed idea, I always liked the simple idea of a bull market ending by seeing if it falls below it's 200 day average. That comes from William O'Neil (and others).

What are your "best practices" for monitoring? Even if you are buy-and-hold, you might still monitor because you wanted to, say, focus on Asian equities more than European ones, etc.


"Lofty levels, trump bubble, he and his friends, check weekly, get a feeling, focus on Asia over Europe"

These are all terms that are foreign to me as a boglehead.

Regards,
John

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Watty
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Re: Market Monitoring -- Best Practices?

Post by Watty » Sat Jun 17, 2017 10:17 am

socal.penguin wrote:What are your "best practices" for monitoring? Even if you are buy-and-hold, you might still monitor because you wanted to, say, focus on Asian equities more than European ones, etc.


My money is in a target date retirement fund which has a predetermined asset allocation and it basically rebalances each day to keep that asset allocation.

If something happens like international stocks are "high" and US stocks are "low" it will rebalance and automatically "sell high and buy low" to get back to the set asset allocation.

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Tycoon
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Re: Market Monitoring -- Best Practices?

Post by Tycoon » Sat Jun 17, 2017 10:21 am

socal.penguin wrote:What are your "best practices" for monitoring?.


Vehicular traffic patterns. Posts that speak about bubbles and other nebulous concerns. General confusion about facts and such. :moneybag :moneybag :moneybag
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arcticpineapplecorp.
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Re: Market Monitoring -- Best Practices?

Post by arcticpineapplecorp. » Sat Jun 17, 2017 10:25 am

socal.penguin wrote:I was speaking with a co-worker the other day about the lofty levels the market is reaching. We talked about the possibility of a "Trump bubble". I asked if he and his friends keep an eye on this market and how. He said they check weekly and just try to get a feeling based on the news.

While not a Bogle-backed idea, I always liked the simple idea of a bull market ending by seeing if it falls below it's 200 day average. That comes from William O'Neil (and others).

What are your "best practices" for monitoring? Even if you are buy-and-hold, you might still monitor because you wanted to, say, focus on Asian equities more than European ones, etc.

Best Practice? Don't peek.

Why not peek? Does it matter what the value of your account is today, tomorrow, next week, next month, next year, 5 years from now...? When are you planning on selling shares? If not for decades, then what does checking the market now do for you except increase anxiety?

If you have an IPS then you follow it. If international goes up (as it has now) that "might" require you to add more to bonds (or U.S.). If something goes down, you might have to add to that. You follow the IPS so you don't have to worry about (or follow) the markets. It really is that easy.

Investing based on "feelings" is counter to what you should be doing. If you're investing on feelings you're either going to panic or be greedy. In either case, you're likely to do the wrong thing at the wrong time. Or you're likely to have your friend's anxiety affect you. Take the emotion out of your investing and just follow your IPS. Do you have an IPS? If not, read here:

https://www.bogleheads.org/wiki/Investm ... _statement

Oh and the more you learn, you'll see that "nobody knows nuthin". So stop listening to others tell you things (whether friends, experts, or strangers on bogleheads). You've got to come to your own conclusions eventually. Sticking to your IPS is the best way to tune out all the "noise" around you. Good luck.

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livesoft
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Re: Market Monitoring -- Best Practices?

Post by livesoft » Sat Jun 17, 2017 10:35 am

Even though I seem to make transactions more than other folks, I really don't care about the fundamentals or absolute numbers of "the market."

So other than a few exceptions (see below), I only monitor my asset allocation as I described in the Portfolio Watch thread. And of course, my asset allocation doesn't really change from day-to-day or from month-to-month unless there is a big day in the market up or down which is clearly the top headline of the day. I like days with the word "worst" somewhere in the headlines.

What are the few exceptions? They arise from the behaviors of other investors doing bad things, so that I can take advantage of them. They usually occur on the day for the FOMC meetings, so I look at prices of my holdings throughout the day on such meeting days. Another way I know people are doing bad things is that I have a standing alert sent to me by Vanguard to my smart phone for when investors are doing bad things. When I get that alert, I then check out what is happening in the stock market.

I also have to look whenever quarterly dividends are paid because I want to reinvest them in a sensible fashion.

In 2017, the Vanguard LifeStrategy and Target Retirement funds are doing very well all on their own. I think this is because US total market is doing well and international equities are doing even better. Bonds are cooking along, too. What is not doing well is small-cap value and things like Wellington and Wellesley which all did great in 2016. There was no way to predict what would do well in 2016, nor in 2017, and there will be no way to predict what will do well in 2018, 2019, etc. An investor just has to take things as they happen.
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livesoft
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Re: Market Monitoring -- Best Practices?

Post by livesoft » Sat Jun 17, 2017 10:37 am

arcticpineapplecorp. wrote:Best Practice? Don't peek.
[...]
If you have an IPS then you follow it. If international goes up (as it has now) that "might" require you to add more to bonds (or U.S.). If something goes down, you might have to add to that. You follow the IPS so you don't have to worry about (or follow) the markets. It really is that easy.

Uh, if you don't peek, then how can you follow your IPS? If you don't peek you won't know if you are required to add more to bonds or to sell some international. :twisted:
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Phineas J. Whoopee
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Re: Market Monitoring -- Best Practices?

Post by Phineas J. Whoopee » Sat Jun 17, 2017 11:58 am

I evaluate periodically to see if my rebalance band has been breached. If it has, I bring everything back to target, taking any resulting income tax into account. The period has been as long as a quarter and as short as a week. In truth it makes no difference.
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Re: Market Monitoring -- Best Practices?

Post by jebmke » Sat Jun 17, 2017 12:01 pm

I only really pay attention to two things. Is my allocation out of whack? Do I have any unrealized losses that need to be booked in taxable.
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Re: Market Monitoring -- Best Practices?

Post by Sandtrap » Sat Jun 17, 2017 12:03 pm

Maybe browse my Morningstar account once a month at best. Sleep Factor.
I think that's why it's called financial porn or such. Or supermarket tabloids, etc. Too much information and lot's of noise which is very anti "Bogle".
Zero monitoring.
Ignore the noise.

Avo
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Re: Market Monitoring -- Best Practices?

Post by Avo » Sat Jun 17, 2017 12:21 pm

I think the best market monitoring practice is to pick two nearby stores and compare their prices on a set of items you buy regularly (cereal, laundry soap, etc) on a monthly basis.

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Re: Market Monitoring -- Best Practices?

Post by Fallible » Sat Jun 17, 2017 12:31 pm

socal.penguin wrote:I was speaking with a co-worker the other day about the lofty levels the market is reaching. We talked about the possibility of a "Trump bubble". I asked if he and his friends keep an eye on this market and how. He said they check weekly and just try to get a feeling based on the news. ...


Some questions to ask them next time are whether they know the perils of frequently checking the market, i.e., whether they are tempted to, or do, act on their short-term behavior and jeopardize their long-term goals.
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arsenalfan
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Re: Market Monitoring -- Best Practices?

Post by arsenalfan » Sat Jun 17, 2017 12:44 pm

I check when the "US Stocks in Freefall" thread shows up on BH to see if it's time to rebalance.

I used to check daily, but it wasn't actionable. Fantasy baseball was more fun/actionable.

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arcticpineapplecorp.
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Re: Market Monitoring -- Best Practices?

Post by arcticpineapplecorp. » Sat Jun 17, 2017 1:35 pm

livesoft wrote:
arcticpineapplecorp. wrote:Best Practice? Don't peek.
[...]
If you have an IPS then you follow it. If international goes up (as it has now) that "might" require you to add more to bonds (or U.S.). If something goes down, you might have to add to that. You follow the IPS so you don't have to worry about (or follow) the markets. It really is that easy.

Uh, if you don't peek, then how can you follow your IPS? If you don't peek you won't know if you are required to add more to bonds or to sell some international. :twisted:

Again, if you follow your IPS what does it say? Rebalance once a year? That's when you go to re-allocate according to your IPS...but not because of events happening in the market or the news (which then causes your portfolio to fluctuate). If you do that, you would be looking every single day because news happens and markets fluctuate every day. Does that sound like something you want to be doing--checking every single day? That sounds like a fun thing to be doing on vacation. No, unless your IPS tells you to do that, then you look only when it's time to reallocate from the assets that have increased to the assets that have decreased. Until then If your IPS says put X% in U.S. and Y% in International and Z% into bonds...then just do that.

If you want to check more than once a year, then your IPS would have you rebalance quarterly, monthly or whatever. But to have an IPS and then do something different makes the IPS pretty pointless, doesn't it?

Benefits of using an IPS

Every investor could potentially benefit from having an investment policy statement. It provides the foundation for all future investment decisions to be made by an investor. It serves as a guidepost, identifies goals and creates a systematic review process. The IPS is intended to keep investors focused on their objectives during short-term swings in the market and provides a baseline from which to monitor investment performance of the overall portfolio, as well as the performance of individual fund managers. If you are using some sort of financial advisor, an IPS outlines the ground rules of the relationship between you and that advisor. And you can use the IPS as a reference to see whether or not your portfolio is achieving your stated goals and objectives. Any proposed changes to your investments can also be evaluated and reviewed against your overall objectives using your IPS.

A properly constructed Investment Policy Statement provides support for following a well-conceived, long-term investment discipline, rather than one that is based on false overconfidence or panic in reaction to short-term market fluctuations.

Drawbacks of not using an IPS

Someone who doesn't have a written policy often bases decisions on day-to-day events, which often leads to chasing short-term performance that may hinder them in reaching long-term goals. Having a policy encourages maintaining focus on the long-term nature of the investment process, especially during turbulent or exuberant times. source: https://www.bogleheads.org/wiki/Investm ... _statement
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livesoft
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Re: Market Monitoring -- Best Practices?

Post by livesoft » Sat Jun 17, 2017 1:43 pm

arcticpineapplecorp. wrote:Again, if you follow your IPS what does it say? ....

You have made some bizarre statements.

If my asset allocation is OK today (on a Saturday), then it will be OK tomorrow (on a Sunday). If my asset allocation was OK on Monday, then it will OK the next day unless something very drastic occurs in the US or the world ... so drastic that it would be on in all the headlines and all over bogleheads.org.

It is just plain stupid to write that one would be looking every single day because news happens and markets fluctuate every day. Yes, news happens and yes, markets fluctuate every day, but please be realistic: There is no reason to check every single day even if one decides to rebalance based on news and market fluctuations and/or based on rebalancing bands that get triggered from time to time.

One can use bogleheads.org as an indicator of when to check whether one needs to rebalance. Do you check bogleheads.org every day? If you do, then you are using an alternate indicator of your portfolio. :twisted:

Plus I've already mentioned that one can get Vanguard to send you a message on a day that you should check.

Also, just because it is written into the bogleheads.org wiki does not make it a fact.
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Re: Market Monitoring -- Best Practices?

Post by MEA » Sat Jun 17, 2017 2:19 pm

socal.penguin wrote:I was speaking with a co-worker the other day about the lofty levels the market is reaching. We talked about the possibility of a "Trump bubble". I asked if he and his friends keep an eye on this market and how. He said they check weekly and just try to get a feeling based on the news.

While not a Bogle-backed idea, I always liked the simple idea of a bull market ending by seeing if it falls below it's 200 day average. That comes from William O'Neil (and others).

What are your "best practices" for monitoring? Even if you are buy-and-hold, you might still monitor because you wanted to, say, focus on Asian equities more than European ones, etc.


One of the advantages of being a buy and hold investor is that you don't sit around dreaming up ways to drive your portfolio into the ground.
It is speculators speculating on other speculators speculations. It is a tale told by an idiot, full of sound and fury signifying nothing.

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Re: Market Monitoring -- Best Practices?

Post by nisiprius » Sat Jun 17, 2017 2:47 pm

socal.penguin wrote:...What are your "best practices" for monitoring?...
My "best practices" are to avoid monitoring to the extent that I possibly can. I couldn't be more serious about that.

Don't monitor.

I followed this practice during the time I had a Fidelity account, roughly 1996-2011. The Fidelity home page had a little market chart which showed the Dow, S&P 500, and NASDAQ minute by minute. I clicked through to my main accounts page and replaced my "favorites" entry with the page that did not show the current market level.

I haven't consciously looked at the Dow lately, although obviously I can't avoid overhearing it on news programs and I've posted Morningstar charts going through the present, but I don't know what the Dow is. I'm going to see just how tuned in I am. It can't be below 20,000 or there'd have been widespread angst. I think it might have gotten close to 22,000, and I think I've heard something about rise early in the presidential term dissipating a bit, and then the Fed raised interest rates recently... so... let's say, 21,000? (Checking) 21,384. Dammit. I'm too close. I'm paying too much attention.

But you see my point. I already know that the Dow is between 20,000 and 22,000. That's good enough. I know that it's not in the process of a major crash at this present time. Even if it were, I still wouldn't know what to do about it.

There's no point in monitoring anything unless you plan to do something. John C. Bogle has said "Time is your friend, impulse is your enemy." The more you "monitor," the more danger that you will see something that provokes an impulsive action.

The people I trust and follow all advocate a long-term approach and "staying the course." Virtually all of the presentations you will see of research-informed strategies are basically presentations of past behavior over very long periods of time. They are the results you would have obtained if you had stayed the course[/i]. There's almost no point in talking about [b]any strategy unless you have a serious intention of staying the course. For example, an advocate of factor-based investing has written:
Any transparent strategy, which applies to everything outlined in this piece [specifically size, value, momentum, and low-beta], is capable of extended periods of underperformance. There is nothing that preordains these strategies to work over any period of any length. Investors should either commit to these strategiesover an extremely long time horizon or not tilt toward these factors at all.
You will not get the long-term results of any strategy unless you follow a strategy for the long term.

There is no way in the world that "monitoring" will help you do that, and many ways that it can interfere with your doing that.
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nedsaid
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Re: Market Monitoring -- Best Practices?

Post by nedsaid » Sat Jun 17, 2017 3:18 pm

socal.penguin wrote:I was speaking with a co-worker the other day about the lofty levels the market is reaching. We talked about the possibility of a "Trump bubble". I asked if he and his friends keep an eye on this market and how. He said they check weekly and just try to get a feeling based on the news.

While not a Bogle-backed idea, I always liked the simple idea of a bull market ending by seeing if it falls below it's 200 day average. That comes from William O'Neil (and others).

What are your "best practices" for monitoring? Even if you are buy-and-hold, you might still monitor because you wanted to, say, focus on Asian equities more than European ones, etc.


Primarily, I look at the P/E ratio of the market and look at market sentiment. This is not actionable except at the extremes and we are not at an extreme now.

There is no need to be obsessed with market valuations other than to have a general sense of where we are from a historical perspective. My take is that valuations are stretched a bit but not irrationally so particularly in light of very low interest rates. Price to earnings ratios are almost 20 based on future estimated earnings and probably 25 or 26 based on trailing earnings. When we had the high tech/internet mania of the late 1990's, P/E's got to 32 based on estimated future earnings and 45 based on trailing earnings. We are a long way from a market mania but certainly stocks are not cheap.

There is optimism out there but again we are not in a mania. I still see a lot of negative articles out there in the financial press. If you haven't rebalanced your portfolio in a while, this is a good time but other than that no need to take action.
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Re: Market Monitoring -- Best Practices?

Post by MindBogler » Sat Jun 17, 2017 3:41 pm

nedsaid wrote:Primarily, I look at the P/E ratio of the market and look at market sentiment. This is not actionable except at the extremes and we are not at an extreme now.

The yield curve is flattening rapidly and we're at a PE10 level that has only occurred 3 times previously on Black Friday and while ascending/descending the dot com peak. It is extreme by any historical measure. This is a great time to rebalance or re-evaluate one's risk tolerance or need.

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Re: Market Monitoring -- Best Practices?

Post by nedsaid » Sat Jun 17, 2017 3:48 pm

MindBogler wrote:
nedsaid wrote:Primarily, I look at the P/E ratio of the market and look at market sentiment. This is not actionable except at the extremes and we are not at an extreme now.

The yield curve is flattening rapidly and we're at a PE10 level that has only occurred 3 times previously on Black Friday and while ascending/descending the dot com peak. It is extreme by any historical measure. This is a great time to rebalance or re-evaluate one's risk tolerance or need.


I am in a minority here but I don't track P/E 10 other than what I read here on the forum. I didn't even know that the metric existed until I read about it here. The rationale behind the P/E 10 metric makes a lot of sense since earnings can be volatile, it is a matter of smoothing the numbers out. My best guess is that once we get past the 10 year anniversary of the 2008-2009 financial crisis that the P/E 10 numbers will look better as the financial crisis had a very depressing effect on earnings.

I just know that market timing doesn't work. I do not believe we are in a mania here.
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Re: Market Monitoring -- Best Practices?

Post by arcticpineapplecorp. » Sat Jun 17, 2017 4:00 pm

livesoft wrote:
arcticpineapplecorp. wrote:Again, if you follow your IPS what does it say? ....

You have made some bizarre statements.

If my asset allocation is OK today (on a Saturday), then it will be OK tomorrow (on a Sunday). If my asset allocation was OK on Monday, then it will OK the next day unless something very drastic occurs in the US or the world ... so drastic that it would be on in all the headlines and all over bogleheads.org.

It is just plain stupid to write that one would be looking every single day because news happens and markets fluctuate every day. Yes, news happens and yes, markets fluctuate every day, but please be realistic: There is no reason to check every single day even if one decides to rebalance based on news and market fluctuations and/or based on rebalancing bands that get triggered from time to time.

One can use bogleheads.org as an indicator of when to check whether one needs to rebalance. Do you check bogleheads.org every day? If you do, then you are using an alternate indicator of your portfolio. :twisted:

Plus I've already mentioned that one can get Vanguard to send you a message on a day that you should check.

Also, just because it is written into the bogleheads.org wiki does not make it a fact.

Ok, I'm not sure what you read but it wasn't anything I wrote.

I never said to check the markets every day (that's what you're saying I said). I said quite the opposite. If you're going to put words into my mouth I'd prefer they be the one's I stated. Not something counter to what I've stated.

The OP is asking, "should I do something because of a Trump Bubble?", "Should I do something because of a 200 day moving average? "Should I do something because, because because???"

I am referring him to create (if s/he hasn't already) an IPS so that s/he is not reacting to a 200 day moving average (which would require him/her to be checking every single day, right?) or because of something else that's in the news (which will be changing daily). I don't see how that's bizarre. I don't really see how anything I've said is bizarre. I've only said (and quoted, no less) what's beeen written here at bogleheads (and is contained in the wiki). Yes, the wiki is not gospel and people are free to do what they want (including checking the market every day...which, again, I do not recommend. Are we clear on that or do I need to say it again?). But, aren't we supposed to be providing information and advice that is at the very least consistent with what's contained in the wiki? Otherwise, what's the point of the wiki? I've done that....provided information on an IPS, where to find it, and quoted right from the wiki the upsides and downsides of following or not following, respectively an IPS. How bizarre is that?

Regarding whether or not something in the bogleheads wiki makes it a fact...well, I never said it was a "fact". Those are your words, not mine and again I'd appreciate you not putting words into my mouth that I didn't use. In this post-fact world it seems hard to get people to agree on what's fact and fiction. Regardless, the information contained in the wiki, especially with regards to an IPS is a lot better information than I've seen elsewhere on the internet. It's a guide though (and the wiki says so):

It serves as a guidepost, identifies goals and creates a systematic review process. source: https://www.bogleheads.org/wiki/Investm ... _statement

A guideline, that's all. Not gospel. Not fact. A guideline. That sounds ok to me. That ok with you?

There have already been posts written here about what a severe decrease (or increase) it takes to move one's portfolio beyond a +/-5% rebalancing band. The gist of those posts were that changes to one's allocation don't need to (and probably won't) occur all that often. That being said, what's the benefit of checking one's portfolio often? There isn't any. That's the point.

Why don't most investors get the return of the market? They're too busy "doing something" instead of buying and "holding". They're looking at their portfolios and second guessing themselves and listening to co-workers scare them which causes them to get in and out of the market at the wrong time. Subsequently they never get the return of the market, because they're never in the market consistently. That's what I'm trying to help the OP avoid. I really don't see what's so bizarre about anything I've said.
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Re: Market Monitoring -- Best Practices?

Post by nisiprius » Sat Jun 17, 2017 4:05 pm

nedsaid wrote:...I do not believe we are in a mania here...
Agreed. It feels completely different from 1998-2000. Of course now that I'm retired I'm talking to different sets of people...

Around 1999 or 2000, at work, an electrician running cables in the dropped ceiling climbed down the ladder and sat down to talk to his broker about GE stock--come to think of it, I think he was buying it--I wonder how that worked out for him? Being retired, I no longer have the opportunity to see that kind of thing.

In 1999-2000 people talked about friends who were "day-traders," as if that were some kind of occupation or actual career, and there were all kinds of passing references to it in TV sitcoms, you couldn't get away from it... just as you couldn't get away from hearing about house-flipping and people owning five houses in 2005 or so.

By the way, my Canadian-aware friends seem to be convinced that there's a monumental real-estate bubble going on in Canada right now, they're suggesting worse than the U.S. (but maybe just a pure old-fashioned bubble without subprime and CDOs and tranches and what not). [Insert joke about split-level tranche houses here.]
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Re: Market Monitoring -- Best Practices?

Post by goingup » Sat Jun 17, 2017 4:10 pm

OP-
There is no need to follow the market closely. Your 401K will chug along without your intervention. Set up any IRA contributions to happen automatically. If you hear or see that the markets are tanking you could consider tax loss harvesting in a taxable account.

The poster livesoft had a post a few years ago that provocatively asked, "What will you do when the Market drops 30%?" It's good to consider that scenario beforehand. But seriously, there is no reason I can think of to monitor the market with any regularity.

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Re: Market Monitoring -- Best Practices?

Post by MindBogler » Sat Jun 17, 2017 4:10 pm

nedsaid wrote:I just know that market timing doesn't work. I do not believe we are in a mania here.

The last 8 years have been highly rewarding for buy and hold investors. Touching your portfolio for any reason could be construed by some as market timing. But I do not believe there is anything wrong with periodically reevaluating one's need to take risk. I also think there is a sensible middle ground between the extremes of believing one can beat the market and "do nothing because no one can win." Every time you rebalance you're doing something. I'm not advocating people go short here but we are in territory that, if your eyes are open, should give you a moment of pause.

nisiprius wrote:
nedsaid wrote:...I do not believe we are in a mania here...
Agreed. It feels completely different from 1998-2000. Of course now that I'm retired I'm talking to different sets of people...

This time its different.

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Re: Market Monitoring -- Best Practices?

Post by nisiprius » Sat Jun 17, 2017 4:15 pm

MindBogler wrote:
nisiprius wrote:
nedsaid wrote:...I do not believe we are in a mania here...
Agreed. It feels completely different from 1998-2000. Of course now that I'm retired I'm talking to different sets of people...

This time its different.
Touché, but not touché. What I mean is that to me it feels more or less normal. In 1998-2000 it felt manic, as if people had discovered the secret key to wealth without work, and we really did hear people saying "this time it's different." I'm thinking here of Wired and the Wired index and the supposed "new economy," the companies worth any multiples because they so obviously would be making incredible amounts of money later, selling garden mulch over the internet or whatever.

This time it's the same. Not the same as 1998-2000 or 1929, just the same as always.

Apart from the ever-popular CAPE-is-high, CAPE-is-not-neither-high, CAPE is wrong debate... what's your evidence for its being a mania?
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Re: Market Monitoring -- Best Practices?

Post by MindBogler » Sat Jun 17, 2017 4:26 pm

nisiprius wrote:
MindBogler wrote:
nisiprius wrote:
nedsaid wrote:...I do not believe we are in a mania here...
Agreed. It feels completely different from 1998-2000. Of course now that I'm retired I'm talking to different sets of people...

This time its different.
Touché, but not touché. What I mean is that to me it feels more or less normal. In 1998-2000 it felt manic, as if people had discovered the secret key to wealth without work, and we really did hear people saying "this time it's different." I'm thinking here of Wired and the Wired index and the supposed "new economy," the companies worth any multiples because they so obviously would be making incredible amounts of money later, selling garden mulch over the internet or whatever.

This time it's the same. Not the same as 1998-2000 or 1929, just the same as always.

Apart from the ever-popular CAPE-is-high, CAPE-is-not-neither-high, CAPE is wrong debate... what's your evidence for its being a mania?

My personal feeling is that the level of mania experienced in 2000 was probably an outlier even as far as mania is concerned. I don't think most of us will ever see that level of mania again in our lives. I wouldn't say we're in a mania today but there is enough mounting evidence for me that justifies reconsidering my need to take a certain level of risk. This is a safe time to decide whether one's stock allocation is appropriate going forward.

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Re: Market Monitoring -- Best Practices?

Post by nedsaid » Sat Jun 17, 2017 4:28 pm

MindBogler wrote:The last 8 years have been highly rewarding for buy and hold investors. Touching your portfolio for any reason could be construed by some as market timing. But I do not believe there is anything wrong with periodically reevaluating one's need to take risk. I also think there is a sensible middle ground between the extremes of believing one can beat the market and "do nothing because no one can win." Every time you rebalance you're doing something. I'm not advocating people go short here but we are in territory that, if your eyes are open, should give you a moment of pause.


The stock market is volatile and thus it is prudent to be cautious. I have said that this is a good time to rebalance the portfolio. I have also said that if valuations are making you nervous that there is nothing wrong with taking a bit off the top, that is reducing your commitment to the stock market in a manner greater than just rebalancing. So if your target allocation is 70% stocks and you now have a 73% allocation, rebalancing would take you back to 70%. Taking a bit off the top would be reducing your allocation to stocks down to maybe 65% or even 60%. If you are going to "panic", better to do it at market highs rather than after the market has already fallen dramatically. Markets can be scary so I can understand people's nervousness. An adjustment in your asset allocation as described above is the most that I would advise. Then again, if one is that nervous, their asset allocation was probably too stock heavy to begin with.
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Re: Market Monitoring -- Best Practices?

Post by MindBogler » Sat Jun 17, 2017 4:32 pm

nedsaid wrote:The stock market is volatile and thus it is prudent to be cautious. I have said that this is a good time to rebalance the portfolio. I have also said that if valuations are making you nervous that there is nothing wrong with taking a bit off the top, that is reducing your commitment to the stock market in a manner greater than just rebalancing.

I am advocating this and nothing more. These are sensible steps towards allowing one to sleep well at night.

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Re: Market Monitoring -- Best Practices?

Post by nedsaid » Sat Jun 17, 2017 4:38 pm

MindBogler wrote:
nedsaid wrote:The stock market is volatile and thus it is prudent to be cautious. I have said that this is a good time to rebalance the portfolio. I have also said that if valuations are making you nervous that there is nothing wrong with taking a bit off the top, that is reducing your commitment to the stock market in a manner greater than just rebalancing.

I am advocating this and nothing more. These are sensible steps towards allowing one to sleep well at night.


You are in line with my way of thinking. There is the old saying about selling to the sleeping point.
A fool and his money are good for business.

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Re: Market Monitoring -- Best Practices?

Post by nisiprius » Sat Jun 17, 2017 5:03 pm

MindBogler wrote:...I wouldn't say we're in a mania today but there is enough mounting evidence for me that justifies reconsidering my need to take a certain level of risk. This is a safe time to decide whether one's stock allocation is appropriate going forward...
Yes. Well said.

It's the difference between "The market could drop 50% at any time, can I tolerate that?" and "The market really, seriously could drop 50%, yeah, it could really happen... can I tolerate that?"

Notice that you don't need "market monitoring" to do this.
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Re: Market Monitoring -- Best Practices?

Post by MindBogler » Mon Jun 19, 2017 1:59 pm

I decided to migrate to 70/30 today. My allocation had drifted to close to 85/15 from recent gains. Its been almost 10 years since early 2009 when I shifted to 80/20. I'm not in the same place as I was then and I do not need to be taking this much risk today. I will sleep better tonight. :)

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Re: Market Monitoring -- Best Practices?

Post by nedsaid » Mon Jun 19, 2017 9:35 pm

MindBogler wrote:I decided to migrate to 70/30 today. My allocation had drifted to close to 85/15 from recent gains. Its been almost 10 years since early 2009 when I shifted to 80/20. I'm not in the same place as I was then and I do not need to be taking this much risk today. I will sleep better tonight. :)


I think you made a very wise decision. I let my stock allocation drift higher to 72% stocks and did not rebalance back in 2008. The financial crisis hit and I was filled with regrets that I had not rebalanced my portfolio closer to my target allocation.

When July 2013 rolled around, we had the so called taper tantrum where bond prices went down. Well, stock prices were still going up and I thought it a great opportunity to sell stocks and buy cheaper bonds. Since then I have been in a program of mild rebalancing from stocks to bonds and an even milder rebalancing from US Stocks to International Stocks. The effect of this was to reduce my stock allocation from 69% to 67%. Almost four years later, I am still in this rebalancing process. Had I done nothing, I would probably be at 75% stocks or perhaps a bit more than that. I didn't want to experience that regret again that I felt in late 2008.
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Re: Market Monitoring -- Best Practices?

Post by badbreath » Mon Jun 19, 2017 10:47 pm

I look at my account at the end of the quarter and put the numbers in my Excel spreadsheet to see what I have done. It may have gone up, may have gone down, may have gone sideways hit save wait for next quarter. The only odd time I look at the account is the 4th of July, that's when I rebalance (Independance Day).
“While money can’t buy happiness, it certainly lets you choose your own form of misery.” Groucho Marx

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