Blood in the water- buying?

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Shallowpockets
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Blood in the water- buying?

Post by Shallowpockets » Sat Feb 03, 2018 8:48 am

So this is the general premise, that when there is blood in the water you buy your investments.
How many have done this in the last three trading days?
How many were actually sitting on enough cash to do so? Especially considering that so many here are not advocates of holding large cash positions and thus would not have the ability to buy more.
Over 600 points yesterday. Only happened 17 times since 1993. A definite price point. Maybe it is timing the market.
I bought VTI, Vanguard total market ETF 300 shares, but only 100 on Friday.
The historical response of the market after 500+ point drop is skewed to the postive 59% and up on the day after and week after timeframes for the S and P, NASDAQ, DOW.

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Re: Blood in the water- buying?

Post by mortfree » Sat Feb 03, 2018 8:57 am

I bought 10 shares of VTI (Total US Stock) on Friday.

Nothing to brag about given that the price was still higher than early January and the 52-week range is 117-146ish.

Blood in the streets

Sorry to rain on your attempted market timing

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Re: Blood in the water- buying?

Post by Valuethinker » Sat Feb 03, 2018 9:07 am

Shallowpockets wrote:
Sat Feb 03, 2018 8:48 am
So this is the general premise, that when there is blood in the water you buy your investments.
How many have done this in the last three trading days?
How many were actually sitting on enough cash to do so? Especially considering that so many here are not advocates of holding large cash positions and thus would not have the ability to buy more.
Over 600 points yesterday. Only happened 17 times since 1993. A definite price point. Maybe it is timing the market.
I bought VTI, Vanguard total market ETF 300 shares, but only 100 on Friday.
The historical response of the market after 500+ point drop is skewed to the postive 59% and up on the day after and week after timeframes for the S and P, NASDAQ, DOW.
You've never experienced a bear market, have you?

This could be merely a correction, or there could be quite a bit worse to come. Correction is normally defined as at least a 10% drop.

In the summer of 2007 markets had been weak, there had been a lot of bad news.

I shrewdly bought several ETFs.

I noticed in 2015 that I was back above book cost ;-).

Oh and buying the dips in 2000 was particularly fun-- lost about 35% of your money by March of 2003 ;-). My pension contributions in 1999 and 2000 were back above water in around 2006, but then came the Great Financial Crisis.

Stocks are on sale, I encourage you to buy before they run out ;-).

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Re: Blood in the water- buying?

Post by livesoft » Sat Feb 03, 2018 9:26 am

I don't see blood.

When I see blood in equities, I simply exchange from bonds into equities. I don't need any cash to do that. I don't even care if bonds are up or down when I do so.

When I see blood in bonds, I simply exchange from short-term bonds into intermediate-term bonds. I don't need any cash to do that. I don't even care if short-term bonds are up or down when I do so.
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Re: Blood in the water- buying?

Post by Dandy » Sat Feb 03, 2018 9:51 am

Every once in awhile there are some really bad days in the market and that will tempt me to rebalance earlier than planned. I believe the last time was when BREXIT passed and the market seemed to overreact. I have a pretty tight equity allocation band 40-43% so as long as I don't push equities above 43% I feel a moderate buy when there are several consecutive really bad days is fine. I will be looking to see what Monday's market is doing and consider buying in my TIRA.

I'm not greedy but do keep an eye out for a buying opportunity. I usually look to rebalance at the end of February to early March each year so the "timing" is right. :happy

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Re: Blood in the water- buying?

Post by 3funder » Sat Feb 03, 2018 9:57 am

I'm not changing my strategy; there isn't nearly enough blood in the water. Equities went from really expensive to really expensive. With valuations this high, I wouldn't blink for anything less than a 20% drop.

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Re: Blood in the water- buying?

Post by herpfinance » Sat Feb 03, 2018 10:02 am

The S&P 500 dropped by 4% over the last week or so. Fairly normal and nowhere close to blood in the streets.
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Re: Blood in the water- buying?

Post by harvestbook » Sat Feb 03, 2018 10:02 am

600 dow points ain't what it used to be
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Re: Blood in the water- buying?

Post by fundseeker » Sat Feb 03, 2018 10:07 am

Shallowpockets wrote:
Sat Feb 03, 2018 8:48 am
Over 600 points yesterday. Only happened 17 times since 1993. A definite price point. Maybe it is timing the market.
600 points is really nothing at 26,000. It would have been back in the days of 8-10,000, but not now. Maybe you should stick with percentage drops when comparing to declines over the past several decades.

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Re: Blood in the water- buying?

Post by arcticpineapplecorp. » Sat Feb 03, 2018 10:20 am

The S&P 500 dropped 2.12% yesterday. Is that what you call a really bad day?

As has been said, don't confuse or be misled by the media by point drops. It's percentage drops that really matter.

The market is basically back to where it was a few weeks ago:

http://quotes.morningstar.com/chart/fun ... 2%3A955%7D

But it's still up for the year by 3.13%:

http://quotes.morningstar.com/chart/fun ... 2%3A955%7D

Don't you think a 3.13% return for one month is pretty good considering the long term average of the stock market is around 8%-10% per year. The market's already still up a third of what the average YEARLY return is. What's the problem?

The problem is you're getting caught up in headlines and fear. Can the market continue to drop? Most certainly. Do you need the money now (or soonish)? If not, then what's the problem? Keep buying shares at lower prices.

If you're concerned that's probably a good indication your portfolio has too much risk. Dial back to the level you won't panic and sell...but realize you'll get less upside when the market turns positive. Trade-offs, my friend. You can't have high return with low risk. Doesn't work that way, I'm afraid.
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Shallowpockets
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Re: Blood in the water- buying?

Post by Shallowpockets » Sat Feb 03, 2018 10:24 am

Maybe not as extreme as blood in the water. And maybe a bit of market timing. Still, an opportunity to get a better price than it had been.
After all, isn't it part of the premise that eventually the market will go up? Long term.
This 20% drop for a bear market. When would that be? Should I wait for that? And should I wait for the 20% or might it be only 15%. Should I disregard all else? Any market going down is going to stop at some point. And waiting for the bottom is impossible because it is only apparent in retrospect.
So, buying on the way down, or maybe just dips may be a way to mitigate the impossibility of knowing the extremes.
Since I am not investing anymore through a paycheck on a regular basis, my time to invest is, when? I know that the premise is to not time, to just invest regardless of any day, pirce, time. However, when you get a small pullback it would seem like a time to take "some" advantage of that.
Since I was in some individual stocks that I had sold on this up market, I had this money waiting and I saw this past week as a time to get into indexing with this money.

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AtlasShrugged?
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Re: Blood in the water- buying?

Post by AtlasShrugged? » Sat Feb 03, 2018 10:27 am

Don't you think a 3.13% return for one month is pretty good considering the long term average of the stock market is around 8%-10% per year. The market's already still up a third of what the average YEARLY return is. What's the problem?
This....X1,000,000. Exactly my thinking. What is the problem?! I think a one-month return of 3% is great. Do that 11 more times and.....holy moly! My 401K and Roth are going gangbusters. I love it. :happy

shallowpockets....I have never seen such a great market so unloved by it's participants. :oops:
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Re: Blood in the water- buying?

Post by MoonOrb » Sat Feb 03, 2018 10:34 am

I don’t have a pile of cash sitting around that isn’t invested, so there’s no real way to see these fluctuations as buying opportunities. If there is enough of a change in my holdings that I reach a point where it’s appropriate to rebalance, I could do that, maybe.

For everyone who is sitting around with cash and thinking “what a great opportunity to buy!” what were you thinking in August of this past year? In October? In December? Why would this look like a good buying opportunity if prices are higher now than then?

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Re: Blood in the water- buying?

Post by Valuethinker » Sat Feb 03, 2018 10:50 am

MoonOrb wrote:
Sat Feb 03, 2018 10:34 am
I don’t have a pile of cash sitting around that isn’t invested, so there’s no real way to see these fluctuations as buying opportunities. If there is enough of a change in my holdings that I reach a point where it’s appropriate to rebalance, I could do that, maybe.

For everyone who is sitting around with cash and thinking “what a great opportunity to buy!” what were you thinking in August of this past year? In October? In December? Why would this look like a good buying opportunity if prices are higher now than then?
usually we are talking about rebalancing from bonds to stocks. Or for those who hold cash in a portfolio, rebalancing away from cash, which is now a greater percentage than its target weighting.

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Re: Blood in the water- buying?

Post by willthrill81 » Sat Feb 03, 2018 10:53 am

Being a rules-based trend follower, I'm not substantially changing anything (e.g. moving into bonds or SVF) unless/until my holdings drop another 8%.
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Re: Blood in the water- buying?

Post by nisiprius » Sat Feb 03, 2018 11:10 am

The phrase is "blood in the streets." The reference is to the Paris Commune of 1871, when literal blood literally flowed in literal streets. That is, it is a reference to a severe national and political crisis, bordering on revolution.

To "buy when there is blood in the streets" would mean something like, maybe, buying Venezuelan stocks today. It means buying stocks when they are so desperately low that there is genuine, well-founded fear of a total economic collapse, and it is a seriously bold risk-taking move.

A 2% drop in the Dow is hardly "blood in the streets," not literally, not figuratively. Hopefully this, the first chart that popped up when I searched is accurate. (By the way: if you look carefully you can see that it is not a Gaussian "bell-shaped curve," and you can see the long tails.)

Image

A 2% drop in one day is not a big deal, as you can see. Indeed, the scare headlines say "worst since 2016." Since 2016! Oh, the humanity! Seriously, I'm too lazy to dig up the statistics but I must have seen literally dozens of 2% drops. The only reason it makes the paper is because of a general mood of jitteriness. It's like flying through bumpy weather, hitting a big enough bump to spill your coffee and wondering if the plane is about to fall out of the sky.

The reference is to a story which is almost certainly fictional, as the first known version of it was published in 1894. In the 1894 version, it went: Source
It is related that in the old days of the Commune in Paris a panic-stricken investor turned up in the office of M. de Rothschild and exclaimed:

“You advise me to buy securities now. You are my enemy. The streets of Paris run with blood.”

And Rothschild’s answer was this: “My dear friend, if the streets of Paris were not running with blood do you think you would be able to buy at the present prices?”
Buying when there is blood in the streets will not necessarily or automatically be rewarded. It is reward for taking risk. For example:

Image

(The St. Petersburg stock market then went to zero and stayed there until its revival after the breakup of the Soviet Union).
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Re: Blood in the water- buying?

Post by UpperNwGuy » Sat Feb 03, 2018 11:15 am

I'm not doing any unplanned buying. My IPS calls for me to invest a fixed amount each month, and I don't plan to change that practice because of market movements.
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Re: Blood in the water- buying?

Post by Sheepdog » Sat Feb 03, 2018 11:52 am

Blood in the water? From a little pin prick? Now here is the definition of Dow Jones "Blood in the Water"

Go to the WSJ Biggest One-Day Dow Jones Gains and Losses http://www.wsj.com/mdc/public/page/2_30 ... ltime.html

Here are the top five point losses.
1. 9/29/2008 -777.68 -6.97%
2. 10/15/2008 -773.08 -7.87%
3. 9/17/2001 -684.81 -7/13%
4. 12/1/2008 -679.95 -7.70%
5. 10/9/2008 -678.51 -7.33% (This was the day I wrote a panic thread here. I learned my lesson.)


Here is the top percent loss.
10/19/1987 -508.00 -22.61% NOW THAT was a blood bath.

People, please don't get so excited by a tiny little blip......
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Kenkat
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Re: Blood in the water- buying?

Post by Kenkat » Sat Feb 03, 2018 11:57 am

This is a paper cut so far.

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Re: Blood in the water- buying?

Post by willthrill81 » Sat Feb 03, 2018 11:57 am

Sheepdog wrote:
Sat Feb 03, 2018 11:52 am
Here is the top percent loss.
10/19/1987 -508.00 -22.61% NOW THAT was a blood bath.
And now that the circuit breakers are in place, a 20% drop is the biggest possible in a single trading day.
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Re: Blood in the water- buying?

Post by jeremyl » Sat Feb 03, 2018 12:14 pm

I DCA my Roth contributions for 2xs a month but I have been wanting to get to the point that I can max the Roth at the beginning of the year so I did contribute a grand yesterday to work towards maxing it sooner than December. I was motivated by the minor dip. It's buy and hold so I don't care if it goes up or down in the short term. In the market sooner so it has longer to work. Works for me.

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Re: Blood in the water- buying?

Post by chevca » Sat Feb 03, 2018 12:46 pm

I agree, this is hardly blood in the streets... or water.

But, it was payday yesterday, so my contributions to deferred comp. bought on a down day. Of course, also would've bought if it were an up day, so.....

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Re: Blood in the water- buying?

Post by MoonOrb » Sat Feb 03, 2018 1:38 pm

Valuethinker wrote:
Sat Feb 03, 2018 10:50 am
MoonOrb wrote:
Sat Feb 03, 2018 10:34 am
I don’t have a pile of cash sitting around that isn’t invested, so there’s no real way to see these fluctuations as buying opportunities. If there is enough of a change in my holdings that I reach a point where it’s appropriate to rebalance, I could do that, maybe.

For everyone who is sitting around with cash and thinking “what a great opportunity to buy!” what were you thinking in August of this past year? In October? In December? Why would this look like a good buying opportunity if prices are higher now than then?
usually we are talking about rebalancing from bonds to stocks. Or for those who hold cash in a portfolio, rebalancing away from cash, which is now a greater percentage than its target weighting.
I think I have a hard time wrapping my head around the idea of having a fixed percentage of cash. I can much better understand having a fixed amount of cash, but a fixed percentage for some reason just doesn't compute for me. But to the extent people are referring just to normal rebalancing here--whether it's because they keep a fixed percentage of assets in cash or a fixed percentage in other things, I get that. I don't think there's much of an advantage to rebalancing after RBD's (it's fine if people do, I guess), but "blood in the water-buying?" suggests something different than "it's time to rebalance" to me.

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Re: Blood in the water- buying?

Post by Wildebeest » Sat Feb 03, 2018 2:30 pm

If there is blood in the streets there is a Black Swan lurking.

If there is going to blood in the water, I will not be swimming. I do not want end up food for a feeding frenzy of sharks.

I recall that in October 2008 I had my eye on Berkshire and I would buy it on the dip when the it would drop from $120 k and my strike price was $ 105 k and I could not see how anything could go wrong. I would have to buy on a margin account and Vanguard would sell some of my stock for BRK. I lost my nerve and then Berkshire went as low $73,195 in March 2009. I will never have a margin account again.

I still can not believe how fortunate we are that the Great Recession only lasted 2 years from December 2007 till June 2009 as opposed to the great depression from 1929 to 1939.
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Re: Blood in the water- buying?

Post by Peculiar_Investor » Sat Feb 03, 2018 2:38 pm

I posted this in another similar topic, but it probably best belongs here.

Another viewpoint from one of my favorite blogs -- It’s Over | The Irrelevant Investor
Michael Batnick wrote:Jack Bogle likes to say “the stock market is a giant distraction to the business of investing.” The chart below is a good visual to support this statement. Friday was the seventeenth -2% day for the S&P 500 in the last five years. Focusing on the day-to-day is a really good way to lose sight of the long-term trends, or why you’re even investing in the first place.
A good reminder to all.
Michael Batnick wrote:But if we weren’t overreacting, we wouldn’t be human, and that’s what makes markets so fun and interesting and scary and exciting.
Also worthwhile remembering the first part. The markets are something totally different than investing. Investing isn't supposed to be interesting, scary or exciting. Generally it should be boring.
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Re: Blood in the water- buying?

Post by Theoretical » Sat Feb 03, 2018 2:40 pm

MoonOrb wrote:
Sat Feb 03, 2018 1:38 pm
Valuethinker wrote:
Sat Feb 03, 2018 10:50 am
MoonOrb wrote:
Sat Feb 03, 2018 10:34 am
I don’t have a pile of cash sitting around that isn’t invested, so there’s no real way to see these fluctuations as buying opportunities. If there is enough of a change in my holdings that I reach a point where it’s appropriate to rebalance, I could do that, maybe.

For everyone who is sitting around with cash and thinking “what a great opportunity to buy!” what were you thinking in August of this past year? In October? In December? Why would this look like a good buying opportunity if prices are higher now than then?
usually we are talking about rebalancing from bonds to stocks. Or for those who hold cash in a portfolio, rebalancing away from cash, which is now a greater percentage than its target weighting.
I think I have a hard time wrapping my head around the idea of having a fixed percentage of cash. I can much better understand having a fixed amount of cash, but a fixed percentage for some reason just doesn't compute for me. But to the extent people are referring just to normal rebalancing here--whether it's because they keep a fixed percentage of assets in cash or a fixed percentage in other things, I get that. I don't think there's much of an advantage to rebalancing after RBD's (it's fine if people do, I guess), but "blood in the water-buying?" suggests something different than "it's time to rebalance" to me.
Well the proper portfolio definition of cash involves assets that have a duration of less than one year and are liquid among other things. From a portfolio perspective, t-bill ladders, money market funds, ultra-short bond funds, and high yield savings accounts are fundamentally different than cash in a megabank that earns .05%. These assets can and do get rewarded when short term interest rates rise, pretty much as a matter of cousins. It's also surprisingly valuable in inflationary periods.

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Re: Blood in the water- buying?

Post by BuyAndHoldOn » Sat Feb 03, 2018 2:45 pm

Valuethinker wrote:
Sat Feb 03, 2018 9:07 am

You've never experienced a bear market, have you?

This could be merely a correction, or there could be quite a bit worse to come. Correction is normally defined as at least a 10% drop.

In the summer of 2007 markets had been weak, there had been a lot of bad news.

I shrewdly bought several ETFs.

I noticed in 2015 that I was back above book cost ;-).

Oh and buying the dips in 2000 was particularly fun-- lost about 35% of your money by March of 2003 ;-). My pension contributions in 1999 and 2000 were back above water in around 2006, but then came the Great Financial Crisis.

Stocks are on sale, I encourage you to buy before they run out ;-).

You could have just as easily directed that post to me. ==> thank you for your insight, it is helpful.


I've often treated every dip as a chance to buy; I was surprised by how severe late 2015 and early 2016 turned out to be, for instance. Didn't have nearly as much capital as I would have liked by the time things looked bleakest (relatively speaking) in 2016.

I was in college during the financial crisis. I think about it much more now than I ever did back then.

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Re: Blood in the water- buying?

Post by StevieG72 » Sat Feb 03, 2018 2:52 pm

I rebalanced two weeks ago since I had drifted 8% from my target AA. I was too heavily weighted in stocks.

I am still just under 1% off so I will continue to buy bonds with my weekly automatic investment.

If the bleeding continues and my stock allocation drifts away from my target I will switch up to buying stocks.
A swing greater than 5% and I will rebalance.

I have taken cash off the table this year and put it to work. No significant cash reserves to but with which to me is an accomplishment. I can always rebalance.
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Re: Blood in the water- buying?

Post by ram » Sat Feb 03, 2018 2:55 pm

A few days ago I nicked my face while shaving and there was blood in the water. This 2-3% drop seems similar.
Nevertheless I have moved 1.2% of my assets from bonds and stable value fund to stocks in the last 3 days.
Ram

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Re: Blood in the water- buying?

Post by gilgamesh » Sat Feb 03, 2018 6:54 pm

willthrill81 wrote:
Sat Feb 03, 2018 10:53 am
Being a rules-based trend follower, I'm not substantially changing anything (e.g. moving into bonds or SVF) unless/until my holdings drop another 8%.
Is this just your rebalancing band or is it more? If more, you may have a thread here and can your provide the link. Thanks!

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Re: Blood in the water- buying?

Post by aqan » Sat Feb 03, 2018 6:57 pm

Blood??? The market barely lost one week of gains. Its still up an unreal amount YTD.

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Re: Blood in the water- buying?

Post by rustymutt » Sat Feb 03, 2018 7:05 pm

If I were a market timer, and I'm not, so this is mere speculation. I bury my head in the sand and blow bubbles in frustration over yet another year were index holders did better than most timers. :moneybag
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Re: Blood in the water- buying?

Post by remomnyc » Sat Feb 03, 2018 7:33 pm

Still nothing in the red to TLH and still within my 5% bands, so nothing for me to do. The sideline sitters in my office were excited. I didn't have the heart to point out that even with the dip, we're still up for the month, the past year, etc. A colleague in the market went 50% cash and incurred capital gains to avoid a repeat of 2008 when he lost half his portfolio and his job. I'm glad I have a plan.

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Re: Blood in the water- buying?

Post by willthrill81 » Sat Feb 03, 2018 7:46 pm

gilgamesh wrote:
Sat Feb 03, 2018 6:54 pm
willthrill81 wrote:
Sat Feb 03, 2018 10:53 am
Being a rules-based trend follower, I'm not substantially changing anything (e.g. moving into bonds or SVF) unless/until my holdings drop another 8%.
Is this just your rebalancing band or is it more? If more, you may have a thread here and can your provide the link. Thanks!
I use a relative strength momentum approach with a seven month timing window. This means that I invest in whichever asset class I have access to in a given account (e.g. 401k, HSA, IRAs) that has had the highest returns over the last seven months. This includes assets like large cap growth, mid cap value, total international, emerging markets, total bond market, a stable value fund paying 3.25%, etc. The closing price of the last trading day of the month is used, which means that I trade no more often than once per month. It takes less than one minute using Portfolio Visualizer (my model is saved into the system) to determine whether any trades are needed; usually, none are. It's a completely objective, rules-based approach that minimizes (though clearly doesn't eliminate) downside risk.

If stocks across the board (all classes) drop by about 8% from where they are now, I'll move into either TBM or my stable value fund, depending on relative performance and the specific account (SVF is only in my 401k).
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Re: Blood in the water- buying?

Post by abuss368 » Sat Feb 03, 2018 7:53 pm

I did not buy specifically yesterday. I plan to this week and will buy what is underweight in our asset allocation.
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Re: Blood in the water- buying?

Post by nisiprius » Sat Feb 03, 2018 7:59 pm

Shallowpockets wrote:
Sat Feb 03, 2018 8:48 am
...So this is the general premise, that when there is blood in the water you buy your investments...
Someone ought to say for the record that the theme of this forum is

Image

Investing Advice Inspired by John Bogle,

and John Bogle has never said anything like "buy when there is blood in the water" or streets. The Bogleheads investment philosophy is worth reading, and point 5 is "Never try to time the market" and point 10 is "Stay the course."

"Stay the course" is one of Bogle's own maxims, and he elaborated on it a little in 2001 in The Twelve Pillars of Wisdom:
There are an infinite number of strategies worse than this one: Commit, over a period of a few years, half of your assets to a stock index fund and half to a bond index fund. Ignore interim fluctuations in their net asset values. Hold your positions for as long as you live, subject only to infrequent and marginal adjustments as your circumstances change. When there are multiple solutions to a problem, choose the simplest one....

Do not let transitory changes in stock prices alter your investment program. There is a lot of noise in the daily volatility of the stock market, which too often is "a tale told by an idiot, full of sound and fury, signifying nothing." Stocks may remain overvalued, or undervalued, for years. Patience and consistency are valuable assets for the intelligent investor. The best rule: Stay the Course.
Notice how different this is from advice like e.g. Buffett's "Be fearful when others are greedy and greedy when others are fearful."
Annual income twenty pounds, annual expenditure nineteen nineteen and six, result happiness; Annual income twenty pounds, annual expenditure twenty pounds ought and six, result misery.

gilgamesh
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Re: Blood in the water- buying?

Post by gilgamesh » Sat Feb 03, 2018 8:25 pm

willthrill81 wrote:
Sat Feb 03, 2018 7:46 pm
gilgamesh wrote:
Sat Feb 03, 2018 6:54 pm
willthrill81 wrote:
Sat Feb 03, 2018 10:53 am
Being a rules-based trend follower, I'm not substantially changing anything (e.g. moving into bonds or SVF) unless/until my holdings drop another 8%.
Is this just your rebalancing band or is it more? If more, you may have a thread here and can your provide the link. Thanks!
I use a relative strength momentum approach with a seven month timing window. This means that I invest in whichever asset class I have access to in a given account (e.g. 401k, HSA, IRAs) that has had the highest returns over the last seven months. This includes assets like large cap growth, mid cap value, total international, emerging markets, total bond market, a stable value fund paying 3.25%, etc. The closing price of the last trading day of the month is used, which means that I trade no more often than once per month. It takes less than one minute using Portfolio Visualizer (my model is saved into the system) to determine whether any trades are needed; usually, none are. It's a completely objective, rules-based approach that minimizes (though clearly doesn't eliminate) downside risk.

If stocks across the board (all classes) drop by about 8% from where they are now, I'll move into either TBM or my stable value fund, depending on relative performance and the specific account (SVF is only in my 401k).
So you are you moving your entire retirement account nest egg into each asset class based on the above rule? So it's conceivable that all your nest egg is in emerging markets for a while?

Or is there an AA formula you failed to mention?

You are not talking about just new investements.

How about taxable?

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willthrill81
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Re: Blood in the water- buying?

Post by willthrill81 » Sat Feb 03, 2018 9:31 pm

gilgamesh wrote:
Sat Feb 03, 2018 8:25 pm
willthrill81 wrote:
Sat Feb 03, 2018 7:46 pm
gilgamesh wrote:
Sat Feb 03, 2018 6:54 pm
willthrill81 wrote:
Sat Feb 03, 2018 10:53 am
Being a rules-based trend follower, I'm not substantially changing anything (e.g. moving into bonds or SVF) unless/until my holdings drop another 8%.
Is this just your rebalancing band or is it more? If more, you may have a thread here and can your provide the link. Thanks!
I use a relative strength momentum approach with a seven month timing window. This means that I invest in whichever asset class I have access to in a given account (e.g. 401k, HSA, IRAs) that has had the highest returns over the last seven months. This includes assets like large cap growth, mid cap value, total international, emerging markets, total bond market, a stable value fund paying 3.25%, etc. The closing price of the last trading day of the month is used, which means that I trade no more often than once per month. It takes less than one minute using Portfolio Visualizer (my model is saved into the system) to determine whether any trades are needed; usually, none are. It's a completely objective, rules-based approach that minimizes (though clearly doesn't eliminate) downside risk.

If stocks across the board (all classes) drop by about 8% from where they are now, I'll move into either TBM or my stable value fund, depending on relative performance and the specific account (SVF is only in my 401k).
So you are you moving your entire retirement account nest egg into each asset class based on the above rule? So it's conceivable that all your nest egg is in emerging markets for a while?

Or is there an AA formula you failed to mention?

You are not talking about just new investements.

How about taxable?
I've considered using a two-asset class approach, where I would be invested in the top two performing assets over the prior seven months, but haven't decided to pull the trigger on that and don't think I will. There is no traditional AA formula; I may be all in stocks one month and then all in fixed income the next, depending on how the trends change.

But only a small portion of my portfolio could be in EM at any given point because I don't have access to EM in my 401k, which is my largest account and will remain so. In my 401k, I'm 100% in large cap growth currently. But my HSA and our IRAs are currently both in EM. So while the rules for trading are the same across all accounts, they are only applicable to the investments available in each account.

We have no taxable accounts and should never need one. Altogether, we currently have a little over $72k of tax-advantaged space available every year, more than we could realistically max out even with a high savings rate.
“It's a dangerous business, Frodo, going out your door. You step onto the road, and if you don't keep your feet, there's no knowing where you might be swept off to.” J.R.R. Tolkien,The Lord of the Rings

tesuzuki2002
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Re: Blood in the water- buying?

Post by tesuzuki2002 » Sat Feb 03, 2018 9:37 pm

Shallowpockets wrote:
Sat Feb 03, 2018 8:48 am
So this is the general premise, that when there is blood in the water you buy your investments.
How many have done this in the last three trading days?
How many were actually sitting on enough cash to do so? Especially considering that so many here are not advocates of holding large cash positions and thus would not have the ability to buy more.
Over 600 points yesterday. Only happened 17 times since 1993. A definite price point. Maybe it is timing the market.
I bought VTI, Vanguard total market ETF 300 shares, but only 100 on Friday.
The historical response of the market after 500+ point drop is skewed to the postive 59% and up on the day after and week after timeframes for the S and P, NASDAQ, DOW.


This was nothing. If you would have bought Jan 1 you would still be up ~3%... I’d love a 30% crash. I’ll move in some stag at cash then. Others wise I’ll keep putting in 40% of my paycheck every 2 weeks.

randomguy
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Re: Blood in the water- buying?

Post by randomguy » Sat Feb 03, 2018 11:01 pm

Shallowpockets wrote:
Sat Feb 03, 2018 8:48 am
So this is the general premise, that when there is blood in the water you buy your investments.
How many have done this in the last three trading days?
How many were actually sitting on enough cash to do so? Especially considering that so many here are not advocates of holding large cash positions and thus would not have the ability to buy more.
Over 600 points yesterday. Only happened 17 times since 1993. A definite price point. Maybe it is timing the market.
I bought VTI, Vanguard total market ETF 300 shares, but only 100 on Friday.
The historical response of the market after 500+ point drop is skewed to the postive 59% and up on the day after and week after timeframes for the S and P, NASDAQ, DOW.
A 500 pt drop at 26000 isn't remotely the same as a 500 point drop at 3000. If you look at it as a percentage, days like last week are pretty normal

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Cosmo
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Re: Blood in the water- buying?

Post by Cosmo » Sun Feb 04, 2018 7:36 am

harvestbook wrote:
Sat Feb 03, 2018 10:02 am
600 dow points ain't what it used to be

Not your father's 600 Dow points!

gilgamesh
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Re: Blood in the water- buying?

Post by gilgamesh » Sun Feb 04, 2018 7:52 am

willthrill81 wrote:
Sat Feb 03, 2018 9:31 pm
gilgamesh wrote:
Sat Feb 03, 2018 8:25 pm
willthrill81 wrote:
Sat Feb 03, 2018 7:46 pm
gilgamesh wrote:
Sat Feb 03, 2018 6:54 pm
willthrill81 wrote:
Sat Feb 03, 2018 10:53 am
Being a rules-based trend follower, I'm not substantially changing anything (e.g. moving into bonds or SVF) unless/until my holdings drop another 8%.
Is this just your rebalancing band or is it more? If more, you may have a thread here and can your provide the link. Thanks!
I use a relative strength momentum approach with a seven month timing window. This means that I invest in whichever asset class I have access to in a given account (e.g. 401k, HSA, IRAs) that has had the highest returns over the last seven months. This includes assets like large cap growth, mid cap value, total international, emerging markets, total bond market, a stable value fund paying 3.25%, etc. The closing price of the last trading day of the month is used, which means that I trade no more often than once per month. It takes less than one minute using Portfolio Visualizer (my model is saved into the system) to determine whether any trades are needed; usually, none are. It's a completely objective, rules-based approach that minimizes (though clearly doesn't eliminate) downside risk.

If stocks across the board (all classes) drop by about 8% from where they are now, I'll move into either TBM or my stable value fund, depending on relative performance and the specific account (SVF is only in my 401k).
So you are you moving your entire retirement account nest egg into each asset class based on the above rule? So it's conceivable that all your nest egg is in emerging markets for a while?

Or is there an AA formula you failed to mention?

You are not talking about just new investements.

How about taxable?
I've considered using a two-asset class approach, where I would be invested in the top two performing assets over the prior seven months, but haven't decided to pull the trigger on that and don't think I will. There is no traditional AA formula; I may be all in stocks one month and then all in fixed income the next, depending on how the trends change.

But only a small portion of my portfolio could be in EM at any given point because I don't have access to EM in my 401k, which is my largest account and will remain so. In my 401k, I'm 100% in large cap growth currently. But my HSA and our IRAs are currently both in EM. So while the rules for trading are the same across all accounts, they are only applicable to the investments available in each account.

We have no taxable accounts and should never need one. Altogether, we currently have a little over $72k of tax-advantaged space available every year, more than we could realistically max out even with a high savings rate.
Available funds inside each retirement account is entirely arbitrary. The fact that EM is not available for you inside your largest account is also just pure chance. This could theoretically change at any moment...These to some degree dictate your final AA...so, to some degree you are throwing dice here, no?

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willthrill81
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Re: Blood in the water- buying?

Post by willthrill81 » Sun Feb 04, 2018 11:44 am

gilgamesh wrote:
Sun Feb 04, 2018 7:52 am
willthrill81 wrote:
Sat Feb 03, 2018 9:31 pm
gilgamesh wrote:
Sat Feb 03, 2018 8:25 pm
willthrill81 wrote:
Sat Feb 03, 2018 7:46 pm
gilgamesh wrote:
Sat Feb 03, 2018 6:54 pm


Is this just your rebalancing band or is it more? If more, you may have a thread here and can your provide the link. Thanks!
I use a relative strength momentum approach with a seven month timing window. This means that I invest in whichever asset class I have access to in a given account (e.g. 401k, HSA, IRAs) that has had the highest returns over the last seven months. This includes assets like large cap growth, mid cap value, total international, emerging markets, total bond market, a stable value fund paying 3.25%, etc. The closing price of the last trading day of the month is used, which means that I trade no more often than once per month. It takes less than one minute using Portfolio Visualizer (my model is saved into the system) to determine whether any trades are needed; usually, none are. It's a completely objective, rules-based approach that minimizes (though clearly doesn't eliminate) downside risk.

If stocks across the board (all classes) drop by about 8% from where they are now, I'll move into either TBM or my stable value fund, depending on relative performance and the specific account (SVF is only in my 401k).
So you are you moving your entire retirement account nest egg into each asset class based on the above rule? So it's conceivable that all your nest egg is in emerging markets for a while?

Or is there an AA formula you failed to mention?

You are not talking about just new investements.

How about taxable?
I've considered using a two-asset class approach, where I would be invested in the top two performing assets over the prior seven months, but haven't decided to pull the trigger on that and don't think I will. There is no traditional AA formula; I may be all in stocks one month and then all in fixed income the next, depending on how the trends change.

But only a small portion of my portfolio could be in EM at any given point because I don't have access to EM in my 401k, which is my largest account and will remain so. In my 401k, I'm 100% in large cap growth currently. But my HSA and our IRAs are currently both in EM. So while the rules for trading are the same across all accounts, they are only applicable to the investments available in each account.

We have no taxable accounts and should never need one. Altogether, we currently have a little over $72k of tax-advantaged space available every year, more than we could realistically max out even with a high savings rate.
Available funds inside each retirement account is entirely arbitrary. The fact that EM is not available for you inside your largest account is also just pure chance. This could theoretically change at any moment...These to some degree dictate your final AA...so, to some degree you are throwing dice here, no?
Using this system, I would have no problem going all in with EM or any other major asset class.

And yes, the investments available to us in 401k accounts do dictate our final AA to some extent, no matter which strategy is being used.
“It's a dangerous business, Frodo, going out your door. You step onto the road, and if you don't keep your feet, there's no knowing where you might be swept off to.” J.R.R. Tolkien,The Lord of the Rings

chevca
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Re: Blood in the water- buying?

Post by chevca » Sun Feb 04, 2018 11:54 am

Quite an interesting approach, will. Not that I would use it. But, I'm curious where the 7 month return comes from? Is there something about whatever has done well for 7 months is about guaranteed to do well for 8 or 10 months? Just seems like an odd number. What's that about? I would think it would be opposite and whatever has done well for 7 months would be more worrisome about going back the other way.

gilgamesh
Posts: 1076
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Re: Blood in the water- buying?

Post by gilgamesh » Sun Feb 04, 2018 11:59 am

willthrill81 wrote:
Sun Feb 04, 2018 11:44 am
gilgamesh wrote:
Sun Feb 04, 2018 7:52 am
willthrill81 wrote:
Sat Feb 03, 2018 9:31 pm
gilgamesh wrote:
Sat Feb 03, 2018 8:25 pm
willthrill81 wrote:
Sat Feb 03, 2018 7:46 pm


I use a relative strength momentum approach with a seven month timing window. This means that I invest in whichever asset class I have access to in a given account (e.g. 401k, HSA, IRAs) that has had the highest returns over the last seven months. This includes assets like large cap growth, mid cap value, total international, emerging markets, total bond market, a stable value fund paying 3.25%, etc. The closing price of the last trading day of the month is used, which means that I trade no more often than once per month. It takes less than one minute using Portfolio Visualizer (my model is saved into the system) to determine whether any trades are needed; usually, none are. It's a completely objective, rules-based approach that minimizes (though clearly doesn't eliminate) downside risk.

If stocks across the board (all classes) drop by about 8% from where they are now, I'll move into either TBM or my stable value fund, depending on relative performance and the specific account (SVF is only in my 401k).
So you are you moving your entire retirement account nest egg into each asset class based on the above rule? So it's conceivable that all your nest egg is in emerging markets for a while?

Or is there an AA formula you failed to mention?

You are not talking about just new investements.

How about taxable?
I've considered using a two-asset class approach, where I would be invested in the top two performing assets over the prior seven months, but haven't decided to pull the trigger on that and don't think I will. There is no traditional AA formula; I may be all in stocks one month and then all in fixed income the next, depending on how the trends change.

But only a small portion of my portfolio could be in EM at any given point because I don't have access to EM in my 401k, which is my largest account and will remain so. In my 401k, I'm 100% in large cap growth currently. But my HSA and our IRAs are currently both in EM. So while the rules for trading are the same across all accounts, they are only applicable to the investments available in each account.

We have no taxable accounts and should never need one. Altogether, we currently have a little over $72k of tax-advantaged space available every year, more than we could realistically max out even with a high savings rate.
Available funds inside each retirement account is entirely arbitrary. The fact that EM is not available for you inside your largest account is also just pure chance. This could theoretically change at any moment...These to some degree dictate your final AA...so, to some degree you are throwing dice here, no?
Using this system, I would have no problem going all in with EM or any other major asset class.

And yes, the investments available to us in 401k accounts do dictate our final AA to some extent, no matter which strategy is being used.
Ok!, I think one final question, I'm pretty sure you back tested this plus overall feel comfortable with it. However, isn't it difficult to back test asset classes like 'emerging markets' too far back - do emerging markets of the past have semblance to current?... If you agree with that premise, are you still comfortable significantly being in EM?

Well may be another question, why 7 months? Is that from back testing? (edit: already asked....so only one unique question)

GoldenFinch
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Re: Blood in the water- buying?

Post by GoldenFinch » Sun Feb 04, 2018 12:10 pm

harvestbook wrote:
Sat Feb 03, 2018 10:02 am
600 dow points ain't what it used to be
It really isn’t!

This dip is nothing percentage wise and nothing after such a long term run up. Just keep doing what your doing.

Leesbro63
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Re: Blood in the water- buying?

Post by Leesbro63 » Sun Feb 04, 2018 12:41 pm

Cosmo wrote:
Sun Feb 04, 2018 7:36 am
harvestbook wrote:
Sat Feb 03, 2018 10:02 am
600 dow points ain't what it used to be

Not your father's 600 Dow points!
Exactly. How many 2.5 percent down days since 1993? Way more than the number of 600+ point down days.

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kenyan
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Re: Blood in the water- buying?

Post by kenyan » Sun Feb 04, 2018 2:16 pm

I bought a bunch this past week. It had nothing to do with the market's performance, and everything to do with re-jiggering my thinking into considering my entire portfolio as one AA, rather than separating out a super-safe EF. I had to buy equities.

Unfortunately for me, I bought midway through the week, so I only caught 2% of the drop. I have a feeling that it won't matter in the long run.
Retirement investing is a marathon.

RRAAYY3
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Re: Blood in the water- buying?

Post by RRAAYY3 » Sun Feb 04, 2018 3:21 pm

Blood in the water - things haven’t been this cheap since January 10th/11th !

mptfan
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Re: Blood in the water- buying?

Post by mptfan » Sun Feb 04, 2018 3:53 pm

Shallowpockets wrote:
Sat Feb 03, 2018 8:48 am
So this is the general premise, that when there is blood in the water you buy your investments.
How many have done this in the last three trading days?
The S&P 500 is still higher than it was at the beginning of January, barely a month ago. That's not blood in the water, that's ketchup.

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