Hitting The Sell Button

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Makaveli
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Re: Hitting The Sell Button

Post by Makaveli » Thu Jan 04, 2018 11:06 pm

livesoft wrote:
Wed Jan 03, 2018 11:43 pm
I have hit an upper bound rebalancing trigger once again today. But I decided that I am just going to increase the range of my rebalancing bands and not sell at this time. I'll sell when I need to get some money to spend instead.
What's the point of having a band if it's elastic? Semi serious, cause I too have a 5% band but rebalanced before it hit the 5%. I wonder how many bogleheads do this. And by this I mean market time.

msk
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Re: Hitting The Sell Button

Post by msk » Thu Jan 04, 2018 11:23 pm

CollegePrudens wrote:
Thu Jan 04, 2018 6:42 pm
I have enough funds to pay for college for my two kids at in-state schools (at today's prices) thank to the bull market. The problem is that college is 11/13 years away and that the kids are invested 90%/10% and 100%/0% for stocks/bonds by way of age based portfolios. The stock portion is 60% US, 40% international at the bond portion is 70% US, 30% international.

I haven't paid too much attention to the college fund beyond putting in money whenever I can. However, now that I think about it, their portfolios are way too aggressive - given that I have no other funds saved for college and likely no ability to save further.

I am contemplating "holding my emotions" and rebalancing to 50%/50% and 60%/40% for the kiddos.
A bit more contemplation is in order, IMHO. I put away $200k as a college fund for my youngest 2 kids when they were still small, 100% stocks (some even in individual picks!). It was also meant to cover private schooling partially in case of my premature death. The kids are finishing their undergrad studies this spring. The fund is still 100% stocks and has grown large enough that it can pay an inflation-adjusted $50k each annually for the rest of their lives. Paying for their entire college education was more than fully funded just by the recent irrational exuberance of the stock market. Over the next year or two I am shifting the 4 or 5 remaining individual stock picks to 90% World Developed and 10% Emerging Markets. Bulk of the fund is already there. There is no way that $200k invested conservatively 10+ years ago could have grown so large. Remember that your kids' funds can also grow while they are in college so the investment horizon is about 4 years longer than just entry into college...

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WpgGuy
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Re: Hitting The Sell Button

Post by WpgGuy » Thu Jan 04, 2018 11:58 pm

michaeljc70 wrote:
Thu Jan 04, 2018 10:32 pm
WpgGuy wrote:
Thu Jan 04, 2018 9:40 pm
michaeljc70 wrote:
Thu Jan 04, 2018 1:19 pm
A lot of these posts sound like market timing disguised as rebalancing. Is this rebalancing to your pre-determined AA or a new AA because the market is "frothy" in your view?
I'm staying the course at 80/20 (stocks/bonds; late 30s in age), but the way I read these posts is it's more about folks feeling their risk tolerance is being pushed to the limits as the PE rise; i.e. if folk are losing sleep at night over higher PEs, then reduce your AA in a methodical & tax efficient fashion. I don't think there's anything wrong with that. The difference here is one of motivation: if you do it because of risk tolerance (knowing rationally the bull could rage for 2, 3, 5 or 10 years more...but who wants to go 10 years without sleep & stress?), I think it's OK; on the other hand, if you do it because you've read the tea leaves on when the next correction will happen that's probably not the right motivation.

I don't think I'll touch my AA unless I start losing sleep as well, or I see some obvious contagion type risk developing. On the latter I worry about the crypto-currency boom, right now it's ~$500B market, and who cares; but now that Wall Street is getting involved w/ derivatives (remember MBSs & CDOs in 2007?), say we add a 0 on that and suddenly we've got some serious problems IMHO. For now though, we corporations just got a fat tax cut, unemployment is low, restaurants are packed, malls full of shoppers, cars flying off dealer lots, 401k's rising, folks are taking family vacations again...the good times are rolling. Soak it up and savour it, as harder times are no doubt ahead.

My 2 cents.
When you decide on an AA, you should know the risks vs. potential return.
Can't the ratio of risk vs. potential return change though? For example if I made 2-3x the average yearly return on the S&P 500 which satisfies my retirement goals, it's pretty rational to step back and say...I'm way ahead of where I should be, so I don't need to take on as much risk. Thus I adjust my risk/return ratio.

Also, looking at https://personal.vanguard.com/us/insigh ... llocations, you can see there's a mere 0.4% in historical annual returns between 80/20 and 70/30 portfolios. If you are young and have compounding on your side, the extra risk for 0.4% might be worth it, as you get older maybe not so much.

Put another way, the inputs to the risk part of this equation is *not* static, so it's important to re-assess/re-evaluate yearly to make sure your AA still makes sense on some regular basis as the facts change on the ground, and as your life progresses.

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cfs
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Re: Hitting The Sell Button

Post by cfs » Fri Jan 05, 2018 12:10 am

Lynette wrote:
Thu Jan 04, 2018 10:19 am
. . . An IPS sounds like a lot of hard work to me so I don't have one . . .
Here is this from Christine Benz from Morningstar:

Create an Investment Policy Statement: http://news.morningstar.com/articlenet/ ... ?id=827425

How to Create a Retirement Policy Statement: http://news.morningstar.com/articlenet/ ... ?id=808697

Good luck, and thanks for reading ~cfs~
~ Member of the Active Retired Force since 2014 ~

texasdiver
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Re: Hitting The Sell Button

Post by texasdiver » Fri Jan 05, 2018 12:11 am

My wife's main portfolio is 100% in Vanguard Target Retirement 2030.
My main portfolio is 100% in the TSP Target Retirement 2030

This means we have had a greater percentage in international stocks than we probably would have had I built the portfolio with individual funds. Which has been a good thing this year. This also means that I can just relax and let our funds re-balance automatically.

The market "feels" frothy to me also. But since everything is on autopilot I don't have to actually *do* anything. No rebalancing bands hit or anything like that. If I were forced to rebalance at the moment I"m afraid that I'd go too conservative and pull back too far. This way I can just let indecision and inertia take its course and know that I"m at least not making any mistakes.
Last edited by texasdiver on Fri Jan 05, 2018 12:13 am, edited 1 time in total.

hulburt1
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Re: Hitting The Sell Button

Post by hulburt1 » Fri Jan 05, 2018 12:12 am

I'm 65 this year. 97% in 500,totle,health, prim cape and 760000 in Facebook bought at$50. Made 500000 last year at 2.5m I'll ride this to 3m or 2m.. only need a million to live a happy life. Still can take SS and a pension. We live on 60000 very nice. I can't believe this is happening. I do have 2 years of cash on the side. Love looking at boglehead every morning.

WanderingDoc
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Re: Hitting The Sell Button

Post by WanderingDoc » Fri Jan 05, 2018 12:14 am

TomatoTomahto wrote:
Thu Jan 04, 2018 2:19 pm
I’m so happy that I switched to a LMP type of plan. I don’t buy bonds any more (I have tax-deferred accounts full of them). I don’t sell anything. I invest new money in PRIMECAP, TSM, and TISM. Wow, that’s easy; thinking isn’t my long suit 😉. I will come back and ask a lot of questions after we no longer have cash coming in, but that’s in the future.

Rebalancing bands? I don’t need no stinking rebalancing bands.

🍅🍅
Thanks for mentioning PRIMECAP. I haven't heard of it and had to google. I like what I see. I am heavily involved in both healthcare and tech in both my personal and professional life! I have only recently started to grow my Roth IRA, and this will be my fund when I backdoor convert the traditional to the Roth tomorrow. Does the highish expense ratio bother you?
Don't wait to buy real estate. Buy real estate, and wait. | Rent where you live, buy where others pay your mortgage for you.

aqan
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Re: Hitting The Sell Button

Post by aqan » Fri Jan 05, 2018 12:19 am

zaboomafoozarg wrote:
Thu Jan 04, 2018 8:05 am
nedsaid wrote:
Wed Jan 03, 2018 11:24 pm
A nice problem to have but if I was 35 years old, I would simply be enjoying the ride.
I'm 35 but certainly do not enjoy investing new money into stocks at a Shiller PE of 33.

I already changed my AA from 80/20 to 75/25 but still feel uneasy about that.
I'm 45. Changed my allocation to 60/40 for the new money... although I feel we're an year or so away from crash and 60/40 with new money won't make much of a dent anyway... maybe I should stay with 80/20???

Random Walker
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Re: Hitting The Sell Button

Post by Random Walker » Fri Jan 05, 2018 12:25 am

I’m 55, not sure when I could be forced into retirement. I started cooling off the AA two years ago. Two years ago I was 80/20. Now I’m 42 equities/38 bonds/20 alts with equities more tilted to SV. I’m paying big taxes and seeing the equities I used to have keep rising, but can’t time a market and feel good about locking in gains. I like the idea of sort of opportunistically customizing one’s personal glidepath towards the retirement AA.

Dave

WanderingDoc
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Re: Hitting The Sell Button

Post by WanderingDoc » Fri Jan 05, 2018 12:37 am

kappy wrote:
Thu Jan 04, 2018 7:30 pm
Early 30's here and I took the opportunity to rebalance my 6% bonds up to 10%. It'll be back down to single digits soon as I'm DCA-ing the proceeds of the sale of my first house into VTI in taxable.
I am likely biased here, but it actually shocks me that someone would put their cold hard cash into a taxable mutual fund account. What, 35-40% tax on gains, not counting state taxes? You could use that money to purchase real estate, which pays you in at least 5 ways (cash flow, capital appreciation, principal paydown, tax advantages {depreciation, etc}, and inflation-hedging {you pay the same mortgage payment to lender for years while the power of the dollar depreciates}), gives you diversification among asset classes, and you will never have a RED day, month, or year. If you select the right property by doing simple back of napkin math, you will generate a 10-15% yield from cash flow alone, regardless of the property value, which we know rises over the long term. You will legally pay zero taxes or very close to it (I do) on your rental real estate.

Seems like a no brainer vs. paying 40% taxes on gains, and dealing with recessions which wipe away your gains, since stocks really only pay you in one way. A 1.5% dividend won't save you when the market is down 10 or 15%.
Don't wait to buy real estate. Buy real estate, and wait. | Rent where you live, buy where others pay your mortgage for you.

inbox788
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Re: Hitting The Sell Button

Post by inbox788 » Fri Jan 05, 2018 12:43 am

nedsaid wrote:
Wed Jan 03, 2018 11:24 pm
Despite crying in my root beer all weekend over a portfolio return of "only" 15.01%, I can't help but notice the tremendous power of this bull market. Since July 2013, I have been mildly rebalancing from stocks to bonds. It seems like all I have been doing has been hitting the "sell" button, selling stocks in wave after wave as the market advances. Sort of like the hedge growing faster than you would have ever dreamed possible and it seems like you have to trim it back almost monthly. A nice problem to have but if I was 35 years old, I would simply be enjoying the ride. At 58, it seems to be like that laurel hedge growing out of control, a big chore to maintain. This is because I am concerned about controlling my risk as I get older. Ah to be young again!

How are other older investors like me reacting to this? Am I alone in how I feel about this?
Last year, I briefly achieved 30% bonds in my retirement account, but I just checked and it's fallen to 28%. It's a good problem to have, but I've got to rebalance again soon. However, I am timing it a little waiting for the post Olympics peak I'm speculating will occur about 2 weeks after they close, around 1st or 2nd week in March. And if I'm wrong, so be it. Easy come, easy go. If you were aggressive these last few years, you're likely ahead of conservative plan, so you can stay a little aggressive if you choose.

https://www.investopedia.com/financial- ... mpics.aspx

FWIW, last year, I've had some cash drag (aka, dry powder) that I've been slow to invest, so my overall AA has not gotten as far off track. Cash drag/dry powder is a waste (money out of the market), and my AA is over equities, but at least they're offsetting errors.

Sriracha
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Re: Hitting The Sell Button

Post by Sriracha » Fri Jan 05, 2018 1:03 am

Makes me think of a Bill Bernstein interview I read about 4+ years ago where he discusses de-risking when equities are running up gains year after year. http://www.etf.com/sections/features/20 ... nopaging=1

***********

IU: It seems like a typical investor isn’t going to look at it the way you just did. I’m thinking of some headline I read about Carl Icahn saying the market has gone up considerably. There might be a very big pullback. It’s infused with drama. You’re not buying that, are you?

Bernstein: No, no, no. Bob Shiller said there was irrational exuberance in the market in 1996. And then Greenspan took up the phrase that Shiller invented. Shiller was right; he was just four years early. So the answer was not to sell all your stocks in 1996. If you did that, you probably didn’t do well. But you needed to start cutting back in ’96, a little more in ’97, a little more in ’98, a little more in ’99, a little more in 2000. The idea is that if you worked your way, say, from 60/40 down to 40/60 when 2000 came, well, you felt pretty smart.


IU: And this is precisely what intelligent money management should look like? It sure looks good in the rearview mirror, but it takes a certain amount of courage to be doing that before the bottom falls out.

Bernstein: Yes, when the intelligent investor does some trimming back, he usually feels like a dummy for the next year or two. And when he trims back again, he feels like a little bit more of a dummy. And he feels dumb for awhile each time after he does it. But then there comes a point, three to five years hence, when he feels awfully smart.

**********

I'm "feeling like a dummy" lately! Hope Dr. Bill is right!
Don't reach for yield.

msk
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Re: Hitting The Sell Button

Post by msk » Fri Jan 05, 2018 2:02 am

I posted this on another thread, but this de-risking theme is recurrent. You can insure a 100% stock portfolio by paying the following premia, take your pick, no need for bonds, etc. and you will still benefit from dividends and any further upward movements in the market. Cost of one-year Puts:

0% losses tolerated from the value of SP 500 today, but all gains and dividends will be received. Premium is 5.2% of portfolio
Max loss exposure is 10%, i.e. 90% value of portfolio at 1.1.2018 is insured, but all gains and dividends will be received. Premium is 2.6%
Max loss exposure is 20%, i.e. 80% value of portfolio at 1.1.2018 is insured, but all gains and dividends will be received. Premium is 1.7%

All bond interest, guesstimating of future interest rates, guesstimating the direction of the economy, etc., etc. are built into those premia.

As an aside, I would urge folks to keep away from Stop-Loss Sell orders. I used those last time I felt things were getting too frothy. Lost $100k on my holding of BRK.B alone, in minutes! Permanent loss. By the time the markets recovered my BRK.B was already sold and had rebounded. Had to buy it back at a much higher price than my Stop Loss was executed. Recall the infamous flash crash? No more Stop Loss orders for me.

broslami
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Re: Hitting The Sell Button

Post by broslami » Fri Jan 05, 2018 2:18 am

I don't own bonds.
bonds are on their inexorable downward slide
No thanks
I'd rather hold it in cash

Sriracha
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Re: Hitting The Sell Button

Post by Sriracha » Fri Jan 05, 2018 2:35 am

broslami wrote:
Fri Jan 05, 2018 2:18 am
I don't own bonds.
bonds are on their inexorable downward slide
No thanks
I'd rather hold it in cash
Don't know about that "inexorable downward slide." That's been said time and time again over the past several years and really hasn't borne that bitter fruit.

Of course, I agree that you can use alternatives like CDs etc to compose the "ballast" portion of your portfolio if you are so inclined.
Don't reach for yield.

SGM
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Re: Hitting The Sell Button

Post by SGM » Fri Jan 05, 2018 3:16 am

DW warned me that I cannot tell anyone how much our portfolio has grown in the first 3 days of 2018. :shock:

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FIREchief
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Re: Hitting The Sell Button

Post by FIREchief » Fri Jan 05, 2018 3:45 am

TomatoTomahto wrote:
Thu Jan 04, 2018 2:19 pm
I’m so happy that I switched to a LMP type of plan. I don’t buy bonds any more (I have tax-deferred accounts full of them). I don’t sell anything. I invest new money in PRIMECAP, TSM, and TISM. Wow, that’s easy; thinking isn’t my long suit 😉. I will come back and ask a lot of questions after we no longer have cash coming in, but that’s in the future.

Rebalancing bands? I don’t need no stinking rebalancing bands.

🍅🍅
Best post so far.

(I also am LMP centric, but making Roth conversions on the RP/equity side. Fortunately, I got my entire 2018 conversion processed on Jan 2; as has been my historical practice)
Last edited by FIREchief on Fri Jan 05, 2018 3:53 am, edited 2 times in total.
I am not a lawyer, accountant or financial advisor. Any advice or suggestions that I may provide shall be considered for entertainment purposes only.

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FIREchief
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Re: Hitting The Sell Button

Post by FIREchief » Fri Jan 05, 2018 3:48 am

FIREchief wrote:
Thu Jan 04, 2018 4:19 am
nedsaid wrote:
Wed Jan 03, 2018 11:24 pm
It seems like all I have been doing has been hitting the "sell" button, selling stocks in wave after wave as the market advances.
Is this because of rebalancing to your firm/established A/A, or because of emotion about the market?
Still anxiously awaiting an answer on this.

Your OP sure sounds a lot like market timing, but hoping you can reassure us that it is just selling to rebalance to your target AA. 8-)
I am not a lawyer, accountant or financial advisor. Any advice or suggestions that I may provide shall be considered for entertainment purposes only.

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AtlasShrugged?
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Re: Hitting The Sell Button

Post by AtlasShrugged? » Fri Jan 05, 2018 6:58 am

At 58, it seems to be like that laurel hedge growing out of control, a big chore to maintain. This is because I am concerned about controlling my risk as I get older. Ah to be young again!
nedsaid....First: Happy New Year! Second: I have enjoyed reading your posts, and the 'Nedsaid Effect' term has made it into my IPS, so you have now been 'enshrined' in a way. The 'How do you like my new doo' thread....I think that thread has run it's course. :happy

I thought about the implications of your post. Namely, if one does not 'de-risk' (not a real word, but it fits), you place yourself in financial danger. We have had an extended party (the bull market) and you're wondering how much fun can you really have and not get a hangover (market correction), or worse, get devastated (severe correction) by not de-risking enough. And that is really what this is about, no?

What I have learned nedsaid, mostly by bitter life experience, is that life is too short to give yourself angst over money. It just isn't worth it.

Why not just take more off the table, and be done with it? If you are at 67% equities and feeling angst, go down to 60%. In terms of overall return, what are you really talking about here? Answer: Probably not all that much.

There are times where picking up your winnings from the table is the correct move, even if the game is still going on.
“If you don't know, the thing to do is not to get scared, but to learn.”

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TomatoTomahto
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Re: Hitting The Sell Button

Post by TomatoTomahto » Fri Jan 05, 2018 7:02 am

WanderingDoc wrote:
Fri Jan 05, 2018 12:14 am
TomatoTomahto wrote:
Thu Jan 04, 2018 2:19 pm
I’m so happy that I switched to a LMP type of plan. I don’t buy bonds any more (I have tax-deferred accounts full of them). I don’t sell anything. I invest new money in PRIMECAP, TSM, and TISM. [snip]
Thanks for mentioning PRIMECAP. I haven't heard of it and had to google. I like what I see. I am heavily involved in both healthcare and tech in both my personal and professional life! I have only recently started to grow my Roth IRA, and this will be my fund when I backdoor convert the traditional to the Roth tomorrow. Does the highish expense ratio bother you?
PRIMECAP is closed to new investors, but there are some versions still open. We (and our son) are grandfathered in, but are limited to $25k per account per year of new contributions (and less in IRA accounts).

So far, the higher expense ratio has not bothered us :D because it has done so well.
Zero Net Carbon by 2019.

GoldenFinch
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Re: Hitting The Sell Button

Post by GoldenFinch » Fri Jan 05, 2018 7:11 am

BigJohn wrote:
Thu Jan 04, 2018 6:24 pm
I’m 61 and have been retired for about 3 years. I did my annual rebalancing earlier this week and based on the kind of year it’s been that required selling a fairly large chunk of TSM and TISM to IT bond fund. Given the size, my initial reaction was to potentially moderate the amount. However, after considering the importance of managing my portfolio risk early in retirement, I went ahead and rebalanced back to my target AA. The market has been up since then but I can honestly say I have no regrets since at this point the SWAN factor of my portfolio is more important than some potential lost incremental return.
You discounted emotion and stuck to your plan! :sharebeer

BigPrince
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Re: Hitting The Sell Button

Post by BigPrince » Fri Jan 05, 2018 8:02 am

Consider hitting the exchange button instead.

Stormbringer
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Re: Hitting The Sell Button

Post by Stormbringer » Fri Jan 05, 2018 8:10 am

What I've been selling is BONDS ... and building a CD ladder in my 401(k) instead. The yields a bit higher and I don't have to worry about principal loss.
"Compound interest is the most powerful force in the universe." - Albert Einstein

Lynette
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Re: Hitting The Sell Button

Post by Lynette » Fri Jan 05, 2018 9:10 am

nedsaid wrote:
Thu Jan 04, 2018 9:03 pm
Lynette wrote:
Thu Jan 04, 2018 10:19 am
Nedsaid,

Thanks for posting. An IPS sounds like a lot of hard work to me so I don't have one. Recently I rolled over my 401K to Vanguard and Fidelity IRA's. I landed up having more stock funds outside of my normal 60/40 AA. I have to take RMDs this year so I just sold some stock funds in both Fidelity and Vanguard. I will do some more QCDs. The advantage of waiting till the end of the year to do RMDs and QCDs is that one's portfolio may go up but it may also go down and one still has to take out the RMDs ...so what is Mr Market going to do ????
Lynette, you are an experienced investor and writing an IPS should not be difficult. For one thing, as a Boglehead, you already have a coherent investment philosophy. The Investment Policy Statement should be strategic and not tactical. It should be a document written with a long term view in mind. So if you are 70 years old, it might be appropriate to say that you plan to reduce your allocation to stocks from 50% to 40% by the time you hit 80.

I have seen people say that their IPS tells them to do X when the market does Y. They try to figure out tactical moves ahead of time and that is not the purpose of an IPS. An example would be, if the market goes up 50%, I will change my stock allocation from 70% to 50%, and back again if the market goes down 50%. Markets and life just don't work that way.

An IPS is really a statement of your investment philosophy and your long term strategy. It can be as simple as you want.
:happy Thanks for suggestion. I think Taylor mentioned that he does not have an IPS either so I'll pass on that as I'll be 75 this year. I don't know where I got the idea that I should be 60/40. It was likely from a mutual fund book I read eons ago and got that idea. I've always followed this. My pensions and SS cover my expenses as well as discretionary items. My savings are for later-in-life healthcare requirements. I cannot predict the future and don't even know if I'll be alive in 10 years although there is longevity in my family. I spend most of my time on finances figuring out my expenses as I've only been retired for a year. I also monitor my taxes as I'm fed up about having to pay Medicare IRMAA. Best wishes to those who have an IPS. :happy

Johm221122
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Re: Hitting The Sell Button

Post by Johm221122 » Fri Jan 05, 2018 9:29 am

I found out my company was sold,made me do some just in case I don't have job scenarios.
If I went to CD/bond lader(100% of portfolio)I could make it 14 years,I would be 62(with same exact standard of living)
I was 60/40 but after my roll over(money in transit)I'll think I'll go 55/45 till next dip.My willingness to take risk has changed,I just don't need risk with uncertainty of new employer
Can't wait to next what is your average expense ratio thread :beer

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fishandgolf
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Re: Hitting The Sell Button

Post by fishandgolf » Fri Jan 05, 2018 11:23 am

fishandgolf wrote:
Thu Jan 04, 2018 9:27 am
64 years young and retired for 9 years. I was at 60/40, then trimmed back to 50/50 in early 2017. I'm now at 55/45 and am hyperventilating at the thought of taking a bit off the table and heading south to the 40/60 line. :? I'll give a few more days, then make a decision........ :?: Oh...the de-pain....the de-pain........... :|

Done....Dunn....Duhn........ :)

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zaboomafoozarg
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Re: Hitting The Sell Button

Post by zaboomafoozarg » Fri Jan 05, 2018 12:05 pm

WanderingDoc wrote:
Fri Jan 05, 2018 12:37 am
I am likely biased here, but it actually shocks me that someone would put their cold hard cash into a taxable mutual fund account. What, 35-40% tax on gains, not counting state taxes?
Mutual funds are subject to long term capital gains tax if you hold them more than a year. That is 15% for incomes up to about $400k, then 20% above that.
WanderingDoc wrote:
Fri Jan 05, 2018 12:37 am
You could use that money to purchase real estate, which pays you in at least 5 ways (cash flow, capital appreciation, principal paydown, tax advantages {depreciation, etc}, and inflation-hedging {you pay the same mortgage payment to lender for years while the power of the dollar depreciates}), gives you diversification among asset classes, and you will never have a RED day, month, or year.
It's not possible to have a loss over a time period on real estate? What about unexpected large repairs? I know someone who had was renting out a house and their renter completely trashed the interior, including painting all walls/ceilings/floors/windows black. By the time he got the person out and repaired the house he had lost at least a couple year's worth of profits.

Or what if property value decreases? A coworker just sold a house for a $150k loss (bought it in a neighborhood that went from nice to bad over a decade), and I had some neighbors who had to move for jobs in 2008-2010 and they realized about 40% losses on property value.

I guess maybe they just did it wrong or are maybe in the wrong place. Not everyone lives in NY or SF.

garlandwhizzer
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Re: Hitting The Sell Button

Post by garlandwhizzer » Fri Jan 05, 2018 2:04 pm

Great post, nedsaid, with a lot of good input. I don't think it's one size fits all when it comes to how much to take from stocks and put into bonds as a bull market goes on for years. Personally I have been doing two things. First annual rebalancing which moves modest amounts of money from stocks into bonds every year according the my asset allocation model as this bull keeps going. Second, since I am now 70, modestly increasing the bond component of my asset allocation model. I have had a stock dominated portfolio (100% - 70%) for my 30 year investing life and I certainly don't regret that. If you're able to hold onto stocks in a market collapse, it looks great in retrospect. If not, it can look very bad. High equity allocation allows you to maximize benefits when you do get a big bull market like we have now. However, as an old guy I have recently moved my bond allocation from 30% to 33 -35%, still more aggressive than the standard 60/40 model. I am strong believer in stocks for the long run and, having been through multiple bear markets, I don't panic when they occur. That works for me but the best advice for the individual investor IMO is not to blindly follow a model someone else designs but to know yourself and your circumstances--your risk tolerance, financial goals, emotional ability to hang on when the going gets tough which it inevitably will at some point, job stability, age, etc.--and set up your own asset allocation model accordingly. The problem is that such self-knowledge usually comes from long experience with a lot of missteps along the way, sleepless nights from the devastation of severe bear markets as well as the exhilaration from the incredible returns of exuberant bull markets that just keep on going and going.

Garland Whizzer

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ray.james
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Re: Hitting The Sell Button

Post by ray.james » Fri Jan 05, 2018 2:24 pm

Great thread, Nedsaid. I am personally not excited about any asset classes in current environment. Money is cheap and speculation is rampant in many places from housing to bond yields to tech. I have tilted to EM 2 years ago in my international allocations and have kept that so far and still seem a fine place.
Steadily increased bonds to 30% and they will go to 40% if we see another 20%+ returns across the globe.
When in doubt, http://www.bogleheads.org/forum/viewtopic.php?f=1&t=79939

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Re: Hitting The Sell Button

Post by kappy » Fri Jan 05, 2018 3:40 pm

WanderingDoc wrote:
Fri Jan 05, 2018 12:37 am
kappy wrote:
Thu Jan 04, 2018 7:30 pm
Early 30's here and I took the opportunity to rebalance my 6% bonds up to 10%. It'll be back down to single digits soon as I'm DCA-ing the proceeds of the sale of my first house into VTI in taxable.
I am likely biased here, but it actually shocks me that someone would put their cold hard cash into a taxable mutual fund account. What, 35-40% tax on gains, not counting state taxes? You could use that money to purchase real estate, which pays you in at least 5 ways (cash flow, capital appreciation, principal paydown, tax advantages {depreciation, etc}, and inflation-hedging {you pay the same mortgage payment to lender for years while the power of the dollar depreciates}), gives you diversification among asset classes, and you will never have a RED day, month, or year. If you select the right property by doing simple back of napkin math, you will generate a 10-15% yield from cash flow alone, regardless of the property value, which we know rises over the long term. You will legally pay zero taxes or very close to it (I do) on your rental real estate.

Seems like a no brainer vs. paying 40% taxes on gains, and dealing with recessions which wipe away your gains, since stocks really only pay you in one way. A 1.5% dividend won't save you when the market is down 10 or 15%.
Not sure what you mean. I don't live in a state with state taxes. When I do eventually sell the ETF, they will be long term capital gains which are taxed at 15% and the dividends are all (or nearly all) qualified.

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Re: Hitting The Sell Button

Post by Leroy Jones » Fri Jan 05, 2018 8:26 pm

I don't worry about rebalancing. My IRA is in VSMGX Vanguard Life Strategy Moderate Growth at 60-40. They handle the rebalancing for me. My Roth is in Wellesley VWIAX 35-65 and I let them do the rebalancing. That gives me an overall 50-50. 64 and retiring in February 2018. So far been able to sleep at night have no plans to make any changes per my written plan.
:sharebeer

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Re: Hitting The Sell Button

Post by malabargold » Fri Jan 05, 2018 8:27 pm

Mid- late fifties.
95-100% stock since the 1960’s.

Held steady through many ups and downs.

Now we have so much more $ than our needs, we
couldn’t care less if the market tanks.

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jainn
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Re: Hitting The Sell Button

Post by jainn » Fri Jan 05, 2018 8:29 pm

We decided to hit the sell button today. We finally came to the conclusion that if the market continues to melt up this year, even to the magic SP500 @ 3000 mark, the additional rise in our equities would be good news nonetheless, and our elaborate spreadsheets would get happily updated. We had to consume half of our remaining carry-over losses from 2009 to make this adjustment.

We were 72/28 and now officially 65/35. :sharebeer
One way we looked at it is we took approx. half of our 2017's 21% equity gain and moved it to bonds (inter-term tax-exempt bond fund). Our bond allocation is now 14 years of annual spending and taxes.

For us needing the portfolio to last 50+ years, 60/40 felt like we would be underinvested and need long-term growth, and 70/30 was causing some anxiety and eye twitching :annoyed as the portfolio continued to grow, and it grew feverishly in 2017....we split the difference. :)

Jainn

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Re: Hitting The Sell Button

Post by WanderingDoc » Fri Jan 05, 2018 8:34 pm

zaboomafoozarg wrote:
Fri Jan 05, 2018 12:05 pm
WanderingDoc wrote:
Fri Jan 05, 2018 12:37 am
I am likely biased here, but it actually shocks me that someone would put their cold hard cash into a taxable mutual fund account. What, 35-40% tax on gains, not counting state taxes?
Mutual funds are subject to long term capital gains tax if you hold them more than a year. That is 15% for incomes up to about $400k, then 20% above that.
WanderingDoc wrote:
Fri Jan 05, 2018 12:37 am
You could use that money to purchase real estate, which pays you in at least 5 ways (cash flow, capital appreciation, principal paydown, tax advantages {depreciation, etc}, and inflation-hedging {you pay the same mortgage payment to lender for years while the power of the dollar depreciates}), gives you diversification among asset classes, and you will never have a RED day, month, or year.
It's not possible to have a loss over a time period on real estate? What about unexpected large repairs? I know someone who had was renting out a house and their renter completely trashed the interior, including painting all walls/ceilings/floors/windows black. By the time he got the person out and repaired the house he had lost at least a couple year's worth of profits.

Or what if property value decreases? A coworker just sold a house for a $150k loss (bought it in a neighborhood that went from nice to bad over a decade), and I had some neighbors who had to move for jobs in 2008-2010 and they realized about 40% losses on property value.

I guess maybe they just did it wrong or are maybe in the wrong place. Not everyone lives in NY or SF.
Your friends were "accidental landlords", not real estate investors. Repairs and capital expenditures are baked into the expenses, when you underwrite the deal. 5% and 10% of gross rents, respectively, is a good place to start.

So yes, it is pretty impossible to have a loss if you choose markets not accidentally, and underwrite for the proper expenses. If your coworker did this, they wouldn't need to sell at a loss because they would have a 10-15% ROI on cash flow alone.

The odd bad eviction is a possibilty, but a vanishing one if your monthly rents are $1500-3000 per month, with 700+ credit score tenant. Also, having more doors mitigates this already very low possibility even more. You are more likely to hear exaggerated horror stories among office gossip.

You are confusing people who think "rents - mortgage = profit" with investing.
Don't wait to buy real estate. Buy real estate, and wait. | Rent where you live, buy where others pay your mortgage for you.

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Re: Hitting The Sell Button

Post by ThePrince » Fri Jan 05, 2018 8:42 pm

Makaveli wrote:
Thu Jan 04, 2018 11:06 pm
livesoft wrote:
Wed Jan 03, 2018 11:43 pm
I have hit an upper bound rebalancing trigger once again today. But I decided that I am just going to increase the range of my rebalancing bands and not sell at this time. I'll sell when I need to get some money to spend instead.
What's the point of having a band if it's elastic? Semi serious, cause I too have a 5% band but rebalanced before it hit the 5%. I wonder how many bogleheads do this. And by this I mean market time.
A lot of times we’re our own worst enemy. This is one of the reasons I use Betterment—they have control of rebalancing my portfolio.

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Re: Hitting The Sell Button

Post by nedsaid » Fri Jan 05, 2018 8:56 pm

FIREchief wrote:
Fri Jan 05, 2018 3:48 am
FIREchief wrote:
Thu Jan 04, 2018 4:19 am
nedsaid wrote:
Wed Jan 03, 2018 11:24 pm
It seems like all I have been doing has been hitting the "sell" button, selling stocks in wave after wave as the market advances.
Is this because of rebalancing to your firm/established A/A, or because of emotion about the market?
Still anxiously awaiting an answer on this.

Your OP sure sounds a lot like market timing, but hoping you can reassure us that it is just selling to rebalance to your target AA. 8-)
Well, I am selling in small waves to keep my asset allocation steady. I am also taking baby steps towards de-risking my portfolio a bit. Going from 69% stocks to 66% stocks over 4 1/2 years is hardly emotion driven selling.

I am not market timing, at least not yet. There gets to be a point at which higher and higher valuations would call for more drastic action. We are not there. Again, the market is signaling optimism about the economy. So far, the optimism is justified.

The thing is, I have not hit my number, that is the stash I need before I feel comfortable retiring. But I am getting closer and closer. If I "market time" it will be more because of my age and desire to de-risk rather than some magic timing signal. I am getting closer to "winning the game." But yes, the market is looking more and more expensive and that is making me a bit nervous. I am 58 and retirement is getting close. If I was 35, I wouldn't care.
A fool and his money are good for business.

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Re: Hitting The Sell Button

Post by nedsaid » Fri Jan 05, 2018 9:01 pm

Lynette wrote:
Fri Jan 05, 2018 9:10 am
nedsaid wrote:
Thu Jan 04, 2018 9:03 pm
Lynette wrote:
Thu Jan 04, 2018 10:19 am
Nedsaid,

Thanks for posting. An IPS sounds like a lot of hard work to me so I don't have one. Recently I rolled over my 401K to Vanguard and Fidelity IRA's. I landed up having more stock funds outside of my normal 60/40 AA. I have to take RMDs this year so I just sold some stock funds in both Fidelity and Vanguard. I will do some more QCDs. The advantage of waiting till the end of the year to do RMDs and QCDs is that one's portfolio may go up but it may also go down and one still has to take out the RMDs ...so what is Mr Market going to do ????
Lynette, you are an experienced investor and writing an IPS should not be difficult. For one thing, as a Boglehead, you already have a coherent investment philosophy. The Investment Policy Statement should be strategic and not tactical. It should be a document written with a long term view in mind. So if you are 70 years old, it might be appropriate to say that you plan to reduce your allocation to stocks from 50% to 40% by the time you hit 80.

I have seen people say that their IPS tells them to do X when the market does Y. They try to figure out tactical moves ahead of time and that is not the purpose of an IPS. An example would be, if the market goes up 50%, I will change my stock allocation from 70% to 50%, and back again if the market goes down 50%. Markets and life just don't work that way.

An IPS is really a statement of your investment philosophy and your long term strategy. It can be as simple as you want.
:happy Thanks for suggestion. I think Taylor mentioned that he does not have an IPS either so I'll pass on that as I'll be 75 this year. I don't know where I got the idea that I should be 60/40. It was likely from a mutual fund book I read eons ago and got that idea. I've always followed this. My pensions and SS cover my expenses as well as discretionary items. My savings are for later-in-life healthcare requirements. I cannot predict the future and don't even know if I'll be alive in 10 years although there is longevity in my family. I spend most of my time on finances figuring out my expenses as I've only been retired for a year. I also monitor my taxes as I'm fed up about having to pay Medicare IRMAA. Best wishes to those who have an IPS. :happy
Sacre Bleu. Taylor doesn't have an IPS? Well, someone is going to have to have a discussion with him. :wink:

It sounds like you are set. Just maintain the 60/40 and you will be fine.
A fool and his money are good for business.

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Re: Hitting The Sell Button

Post by nedsaid » Fri Jan 05, 2018 9:06 pm

Sriracha wrote:
Fri Jan 05, 2018 1:03 am
Makes me think of a Bill Bernstein interview I read about 4+ years ago where he discusses de-risking when equities are running up gains year after year. http://www.etf.com/sections/features/20 ... nopaging=1

***********

IU: It seems like a typical investor isn’t going to look at it the way you just did. I’m thinking of some headline I read about Carl Icahn saying the market has gone up considerably. There might be a very big pullback. It’s infused with drama. You’re not buying that, are you?

Bernstein: No, no, no. Bob Shiller said there was irrational exuberance in the market in 1996. And then Greenspan took up the phrase that Shiller invented. Shiller was right; he was just four years early. So the answer was not to sell all your stocks in 1996. If you did that, you probably didn’t do well. But you needed to start cutting back in ’96, a little more in ’97, a little more in ’98, a little more in ’99, a little more in 2000. The idea is that if you worked your way, say, from 60/40 down to 40/60 when 2000 came, well, you felt pretty smart.


IU: And this is precisely what intelligent money management should look like? It sure looks good in the rearview mirror, but it takes a certain amount of courage to be doing that before the bottom falls out.

Bernstein: Yes, when the intelligent investor does some trimming back, he usually feels like a dummy for the next year or two. And when he trims back again, he feels like a little bit more of a dummy. And he feels dumb for awhile each time after he does it. But then there comes a point, three to five years hence, when he feels awfully smart.

**********

I'm "feeling like a dummy" lately! Hope Dr. Bill is right!
I would be pleased to be as "dumb" as Bill Bernstein. One of the smartest authors I have read and the thing that is so cool about him is that his early work has held up so darned well. He had it figured out a long time ago. He is a classic thinker and his works will still look good many years from now.
A fool and his money are good for business.

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Re: Hitting The Sell Button

Post by nedsaid » Fri Jan 05, 2018 9:21 pm

jainn wrote:
Fri Jan 05, 2018 8:29 pm
We decided to hit the sell button today. We finally came to the conclusion that if the market continues to melt up this year, even to the magic SP500 @ 3000 mark, the additional rise in our equities would be good news nonetheless, and our elaborate spreadsheets would get happily updated. We had to consume half of our remaining carry-over losses from 2009 to make this adjustment.

We were 72/28 and now officially 65/35. :sharebeer
One way we looked at it is we took approx. half of our 2017's 21% equity gain and moved it to bonds (inter-term tax-exempt bond fund). Our bond allocation is now 14 years of annual spending and taxes.

For us needing the portfolio to last 50+ years, 60/40 felt like we would be underinvested and need long-term growth, and 70/30 was causing some anxiety and eye twitching :annoyed as the portfolio continued to grow, and it grew feverishly in 2017....we split the difference. :)

Jainn
I want to make clear that I am not writing a market timing newsletter. What I am saying is that this bull market is a great opportunity to evaluate where you are, what level of risk you are taking, and rethink your asset allocation. Time to take stock and do some life planning. The reason being is that we tend to get too optimistic during bull markets and too pessimistic during bear markets. My feeling is that people, including myself, are taking more risk that what they realize. We are all brave during bull markets. What I am telling people is to think this through while things are still going great, think of trying to do this through the emotional pain of a bad bear market.

Jainn, it sounds like you thought this through and made a rational decision. It sounds like you have pretty much won the game and taking some off the table was wise. Going from 72% stocks down to 65% stocks is hardly panic selling.

A financial planner I was working with was on me to start de-risking my portfolio back in 2007 or 2008. My stocks were up to 72% of my portfolio and the strong bull market was making me feel pretty frisky. When the financial crisis arrived suddenly, I had pangs of regret that I didn't listen to my financial planner. Now here I am ten years later, and much richer, and 66% stocks is making me nervous. A big difference between nearing 50 and nearing 60. Not feeling so brave, particularly since I have had spotty employment over the last 3 years or so. Being less sure of my cash flows from work is also a big factor in my caution. Think of the nightmare of a lay-off coupled with a retirement portfolio crash.
A fool and his money are good for business.

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Re: Hitting The Sell Button

Post by J295 » Fri Jan 05, 2018 9:34 pm

Retired. Age 58. Roughly 50/50. Rebalance band hit at the end of this year. Otherwise just check accounts quarterly.

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Re: Hitting The Sell Button

Post by dharrythomas » Fri Jan 05, 2018 10:19 pm

Nedsaid,

Thanks. Great thread.

55 plan to retire at 62, though may continue to work, definitely will be doing something different. Will have GS and Army Reserve Pensions that with SS should give us enough. I made my plan while working in the private sector and just kept working it when I became a FED. We're about 90% index funds. I use balanced funds like LifeStrategy in Roths, and Target Retirement (LifeCycle in the TSP for all).

We cut our savings to 15% in the Roth TSP in 2015 when we had an argument about what enough meant. We have de-risked some in the last several months, as I realized that we have hit our number (without counting an inheritance) several years earlier than I expected. Derisked is relative since we're at about 72/28, but as I let the balanced funds work for me, those pesky taxable funds get in the way. We only sale taxable to fund the Roth IRAs and if we need cash for a gift. My long term plan for the bulk of that is the basis step up at death.

We'll keep cutting the risk going forward. Only in the worst scenarios (US becomes Greece), will we not be OK.

We've worked hard and lived a disciplined life, but we've also been BLESSED beyond measure.

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Re: Hitting The Sell Button

Post by FIREchief » Fri Jan 05, 2018 10:28 pm

nedsaid wrote:
Fri Jan 05, 2018 8:56 pm
I am not market timing, at least not yet. There gets to be a point at which higher and higher valuations would call for more drastic action. We are not there. Again, the market is signaling optimism about the economy. So far, the optimism is justified.
Good to hear. I'm in the minority that just doesn't buy into the use of simplistic "valuations" to steer my investing course. Of course, I'll be wrong one of these days. But ignoring them has kept me "right" for long enough that it should all balance out (and then some). :sharebeer
I am not a lawyer, accountant or financial advisor. Any advice or suggestions that I may provide shall be considered for entertainment purposes only.

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Re: Hitting The Sell Button

Post by TonyDAntonio » Fri Jan 05, 2018 10:43 pm

malabargold wrote:
Fri Jan 05, 2018 8:27 pm
Mid- late fifties.
95-100% stock since the 1960’s.

Held steady through many ups and downs.

Now we have so much more $ than our needs, we
couldn’t care less if the market tanks.
You have more than enough because by your numbers you had stocks when you were 10 years old. Congrats but not many of us had lemonade stands that made enough to buy stocks.

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Re: Hitting The Sell Button

Post by animule » Fri Jan 05, 2018 10:49 pm

The mere existence of this thread and the relatively large number of comments in a short time suggest that an imminent drop in the market that many perceive to be possible (otherwise why would so many be "hitting the sell button") may not be so imminent.

Markets climb a "wall of worry" and it looks like the wall still exists. Nobody knows when these increases will end, but I would guess that the market still has room to rise. We're not even close to "irrational exuberance" territory. Maybe for Bitcoin, but not for stocks; at least not yet.

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Re: Hitting The Sell Button

Post by nedsaid » Fri Jan 05, 2018 10:50 pm

JCE66 wrote:
Fri Jan 05, 2018 6:58 am
At 58, it seems to be like that laurel hedge growing out of control, a big chore to maintain. This is because I am concerned about controlling my risk as I get older. Ah to be young again!
nedsaid....First: Happy New Year! Second: I have enjoyed reading your posts, and the 'Nedsaid Effect' term has made it into my IPS, so you have now been 'enshrined' in a way. The 'How do you like my new doo' thread....I think that thread has run it's course. :happy

Nedsaid: I will post in the "New 'Doo" thread again but it will be a while. It is really more for me than for other forum members as it is a good place to gather my thoughts and evaluate my own situation. It got some traction because a lot of people were evaluating their 2017 performance at year end. But yes, the discussion there ran its course for now. Pretty much crying in my root beer over making "only" 15%.

The "Nedsaid effect" is a variation of a phrase that Jim Cramer used. He called it "making a sacrifice to the trading Gods." Pretty much, sell a disappointing investment and move on even though you know that what you just sold will likely turn around. Cramer viewed it as the price paid for moving on.


I thought about the implications of your post. Namely, if one does not 'de-risk' (not a real word, but it fits), you place yourself in financial danger. We have had an extended party (the bull market) and you're wondering how much fun can you really have and not get a hangover (market correction), or worse, get devastated (severe correction) by not de-risking enough. And that is really what this is about, no?

Nedsaid: Well, the bull market is almost nine years old now. The 2008-2009 bear market bottomed out in May of 2009. Forward P/E's on the US Total Stock Market Index are creeping up on 22 and that is starting to concern me. There is a lot of optimism priced in. You have to wonder how much higher P/E ratios can go and you also wonder how long the bull market can last.

Successful investors think differently, Buffett said to be fearful when others are greedy and greedy when others are fearful. I don't see euphoria out there which is one reason I think this could go on for a while. Another reason I am not too pessimistic is that economic growth is picking up. This reminds me of the fact that investors forgot what a true bull market feels like, we had so much disappointment from early 2000 until March of 2009. The market really didn't start hitting new highs until about 2012. In a similar manner, we have forgotten what a really good economy looks like. As far as the economy, my feeling is that we haven't seen anything yet.

So I am optimistic about the economy and worried about the markets. There is optimism but we aren't at euphoria. You don't hear about people quitting their jobs and taking up day trading.


What I have learned nedsaid, mostly by bitter life experience, is that life is too short to give yourself angst over money. It just isn't worth it.

Why not just take more off the table, and be done with it? If you are at 67% equities and feeling angst, go down to 60%. In terms of overall return, what are you really talking about here? Answer: Probably not all that much.

Nedsaid: I am thinking about something like that. Stay tuned.

There are times where picking up your winnings from the table is the correct move, even if the game is still going on.

Nedsaid: There is an old saying that when the paddy wagon backs up to the house of ill repute that even the piano player gets taken downtown. Bear markets after euphoria are like that. Even good stocks get beaten up pretty badly. I don't want the ride in the paddy wagon.
A fool and his money are good for business.

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Re: Hitting The Sell Button

Post by Leif » Fri Jan 05, 2018 10:54 pm

michaeljc70 wrote:
Thu Jan 04, 2018 1:19 pm
A lot of these posts sound like market timing disguised as rebalancing. Is this rebalancing to your pre-determined AA or a new AA because the market is "frothy" in your view?
The market can get a lot more frothy, as we were shown that in 2000. The important point is to stick with your IPS, even when it may not "feel" right.

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Re: Hitting The Sell Button

Post by nedsaid » Fri Jan 05, 2018 10:58 pm

animule wrote:
Fri Jan 05, 2018 10:49 pm
The mere existence of this thread and the relatively large number of comments in a short time suggest that an imminent drop in the market that many perceive to be possible (otherwise why would so many be "hitting the sell button") may not be so imminent.

Markets climb a "wall of worry" and it looks like the wall still exists. Nobody knows when these increases will end, but I would guess that the market still has room to rise. We're not even close to "irrational exuberance" territory. Maybe for Bitcoin, but not for stocks; at least not yet.
Individual investors have been pulling money out of stocks recently. And yes, that is a heartening development. My guess is that it is mostly rebalancing. It shows that individual investors are not as dumb as the financial press portrays them and frankly it shows prudence. Certainly, we are not seeing panic selling, even on this thread. Pretty much expressing caution.

To me, this feels more like the early to mid 1990's. But I am seeing real estate in my area just zoom and that is adding to my nervousness. But so far, my moves have been modest.
A fool and his money are good for business.

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Re: Hitting The Sell Button

Post by pascalwager » Fri Jan 05, 2018 10:59 pm

The world bond/stock market values determine my bond percentage, currently 41.3%; so I have no need to re-balance.
Overall AA: 51/37/12 | Portfolio 1: total world stock market, short-term TIPS | Portfolio 2: global large value, global small cap, ultra short-term global bonds | Cash: Treasury money market

Sriracha
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Re: Hitting The Sell Button

Post by Sriracha » Sat Jan 06, 2018 12:01 am

nedsaid wrote:
Fri Jan 05, 2018 9:06 pm
Sriracha wrote:
Fri Jan 05, 2018 1:03 am
Makes me think of a Bill Bernstein interview I read about 4+ years ago where he discusses de-risking when equities are running up gains year after year. http://www.etf.com/sections/features/20 ... nopaging=1



I'm "feeling like a dummy" lately! Hope Dr. Bill is right!
I would be pleased to be as "dumb" as Bill Bernstein. One of the smartest authors I have read and the thing that is so cool about him is that his early work has held up so darned well. He had it figured out a long time ago. He is a classic thinker and his works will still look good many years from now.
Me too!

I cut my Boglehead teeth on Dr. B's writing. Wish he had authored a book or two back in the 80s or early 90s! I'd be so much further ahead :-)
Don't reach for yield.

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Re: Hitting The Sell Button

Post by Case59 » Sat Jan 06, 2018 12:25 am

nedsaid wrote:
Fri Jan 05, 2018 9:06 pm
Sriracha wrote:
Fri Jan 05, 2018 1:03 am
Makes me think of a Bill Bernstein interview I read about 4+ years ago where he discusses de-risking when equities are running up gains year after year. http://www.etf.com/sections/features/20 ... nopaging=1

***********

IU: It seems like a typical investor isn’t going to look at it the way you just did. I’m thinking of some headline I read about Carl Icahn saying the market has gone up considerably. There might be a very big pullback. It’s infused with drama. You’re not buying that, are you?

Bernstein: No, no, no. Bob Shiller said there was irrational exuberance in the market in 1996. And then Greenspan took up the phrase that Shiller invented. Shiller was right; he was just four years early. So the answer was not to sell all your stocks in 1996. If you did that, you probably didn’t do well. But you needed to start cutting back in ’96, a little more in ’97, a little more in ’98, a little more in ’99, a little more in 2000. The idea is that if you worked your way, say, from 60/40 down to 40/60 when 2000 came, well, you felt pretty smart.


IU: And this is precisely what intelligent money management should look like? It sure looks good in the rearview mirror, but it takes a certain amount of courage to be doing that before the bottom falls out.

Bernstein: Yes, when the intelligent investor does some trimming back, he usually feels like a dummy for the next year or two. And when he trims back again, he feels like a little bit more of a dummy. And he feels dumb for awhile each time after he does it. But then there comes a point, three to five years hence, when he feels awfully smart.

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I'm "feeling like a dummy" lately! Hope Dr. Bill is right!
I would be pleased to be as "dumb" as Bill Bernstein. One of the smartest authors I have read and the thing that is so cool about him is that his early work has held up so darned well. He had it figured out a long time ago. He is a classic thinker and his works will still look good many years from now.
Ditto. I wish I had known about and read Four Pillars of Investing when it first came out.
"Most quotations on the internet are incorrect."-Mark Twain

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