Should you sell your investments when they start dropping? When should you invest during this market correction?

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Derivative
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Should you sell your investments when they start dropping? When should you invest during this market correction?

Post by Derivative » Fri Feb 09, 2018 11:23 am

Should you sell your investments when they start dropping? When should you invest during this market correction?

I don't see why not sell now and wait for the market to drop more and then buy them again. Will the market go up as fast as it is going down? (I am kind of playing devil's advocate here)

I have about 40k that I will be putting into a solo 401k, should I wait until the deadline (tax day, April 17th) and see if the market drops even more or should I just put it in my solo 401k account, keep it in there as cash, and not actually invest it in any stocks until later in the year? What do you guys recommend?

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Re: Should you sell your investments when they start dropping? When should you invest during this market correction?

Post by radiowave » Fri Feb 09, 2018 11:27 am

and what if the market takes off again and you miss the buying opportunity? I cannot predict the future, but I can stay the course over many years with a good plan.
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rebellovw
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Re: Should you sell your investments when they start dropping? When should you invest during this market correction?

Post by rebellovw » Fri Feb 09, 2018 11:30 am

My plan is to not sell at all. It sucks seeing my account down 50K+ - but that is how it goes. My AA is 60/40 - I'm 52 and while the market is going down - I'm still buying - to get some deals:

401k - 403B- buy 4 times a month
After Tax - buy 4 times a month
Savings (Ally) 4 times a month

(same thing I've always done - all learned from this site - thank you bogleheads!)

So I haven't changed anything - all I can hope for - is while my current holdings drop - my new purchases will someday balloon out because the market will be back eventually - I just hope soon. And next time it occurs - I'll do the same thing.
Last edited by rebellovw on Fri Feb 09, 2018 11:35 am, edited 2 times in total.

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Re: Should you sell your investments when they start dropping? When should you invest during this market correction?

Post by samsoes » Fri Feb 09, 2018 11:31 am

Invest, or do not invest, without regard to market machinations. Do the same as what you would do if the market was climbing, flat, or falling. There should be no difference in your strategy.

You won't find support for market timing on this forum, I assure you.
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Re: Should you sell your investments when they start dropping? When should you invest during this market correction?

Post by mortfree » Fri Feb 09, 2018 11:43 am

samsoes wrote:
Fri Feb 09, 2018 11:31 am

You won't find support for market timing on this forum, I assure you.
Hold my beer....

OP if you are smart enough to know when to buy at the low, by all means wait.

Maybe you'll get lucky and time it just right.

:wink:

This response is not boglehead approved

chevca
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Re: Should you sell your investments when they start dropping? When should you invest during this market correction?

Post by chevca » Fri Feb 09, 2018 11:50 am

OP, you have over 200 posts and joined in 2013.... and, ask these questions? :confused

Time in the market, not timing the market...

mega317
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Re: Should you sell your investments when they start dropping? When should you invest during this market correction?

Post by mega317 » Fri Feb 09, 2018 11:53 am

The two options you presented in the last paragraph are the same. Wait to contribute, or contribute but don't invest.

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Re: Should you sell your investments when they start dropping? When should you invest during this market correction?

Post by Jags4186 » Fri Feb 09, 2018 11:53 am

It's a funny thing about market timing, when it works you feel like a genius, when it doesn't you feel like a jerk.

I sold $150,000 worth of equities in December at around 2660 levels. This was for anticipation of a home purchase. I sure felt like a jerk when it skyrocketed to 2880. And today I fee like a genius at 2576.

My success will be depending on the S&P500 levels when I actually make the downpayment. I guess we'll have to wait and see if I was smart or stupid!

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Re: Should you sell your investments when they start dropping? When should you invest during this market correction?

Post by Tycoon » Fri Feb 09, 2018 11:56 am

I sell when I need the money to buy something.

Patience...
Appeal to Pity:When pity is envoked to support a statement | Appeal to Popular Sentiment:Appealing to unrelated prejudices and attitudes | Hasty Generalization:Too little evidence to support the conclusion

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JoMoney
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Re: Should you sell your investments when they start dropping? When should you invest during this market correction?

Post by JoMoney » Fri Feb 09, 2018 12:03 pm

Nope... I'm not selling. I'll invest when I get paid or otherwise have new money to invest.
It's the only way I know of to make sure I'm getting around the 'average' price over any particular time period.
I'm not interested in trying to guess whether or not the market price will be lower next week, next month, or next year. That's a game where the odds are pretty well against me, especially since I expect stock prices to go up over time.
10 years from now I expect prices will be higher, the intrinsic value of the companies will be higher, and maybe I'll be averaging out of the market trying to get something close to the average price over that period.
"To achieve satisfactory investment results is easier than most people realize; to achieve superior results is harder than it looks." - Benjamin Graham

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Re: Should you sell your investments when they start dropping? When should you invest during this market correction?

Post by Clever_Username » Fri Feb 09, 2018 12:10 pm

Derivative wrote:
Fri Feb 09, 2018 11:23 am
Should you sell your investments when they start dropping? When should you invest during this market correction?

I don't see why not sell now and wait for the market to drop more and then buy them again. Will the market go up as fast as it is going down? (I am kind of playing devil's advocate here)

I have about 40k that I will be putting into a solo 401k, should I wait until the deadline (tax day, April 17th) and see if the market drops even more or should I just put it in my solo 401k account, keep it in there as cash, and not actually invest it in any stocks until later in the year? What do you guys recommend?
How do you know when it's done dropping and time to buy again? For all you know, yesterday's closing value is the lowest it will be in your lifetime.

At the very least, put it the money in your 401(k). If you aren't comfortable investing it, put it in a money market or stable value fund. But the reality is you should find a comfortable allocation, invest according to it, and just leave it.
"What was true then is true now. Have a plan. Stick to it." -- XXXX, _Layer Cake_

Derivative
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Re: Should you sell your investments when they start dropping? When should you invest during this market correction?

Post by Derivative » Fri Feb 09, 2018 12:15 pm

Clever_Username wrote:
Fri Feb 09, 2018 12:10 pm
Derivative wrote:
Fri Feb 09, 2018 11:23 am
Should you sell your investments when they start dropping? When should you invest during this market correction?

I don't see why not sell now and wait for the market to drop more and then buy them again. Will the market go up as fast as it is going down? (I am kind of playing devil's advocate here)

I have about 40k that I will be putting into a solo 401k, should I wait until the deadline (tax day, April 17th) and see if the market drops even more or should I just put it in my solo 401k account, keep it in there as cash, and not actually invest it in any stocks until later in the year? What do you guys recommend?
How do you know when it's done dropping and time to buy again? For all you know, yesterday's closing value is the lowest it will be in your lifetime.

At the very least, put it the money in your 401(k). If you aren't comfortable investing it, put it in a money market or stable value fund. But the reality is you should find a comfortable allocation, invest according to it, and just leave it.
Well if it drops this much usually it creates a panic and people start selling right? That's pretty easy to predict, is it not?

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HomerJ
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Re: Should you sell your investments when they start dropping? When should you invest during this market correction?

Post by HomerJ » Fri Feb 09, 2018 12:20 pm

Derivative wrote:
Fri Feb 09, 2018 11:23 am
I don't see why not sell now and wait for the market to drop more and then buy them again.
What if the market doesn't drop more? What if it starts going up?

How long will you wait to invest if that happens? You might think it's just a two-day bounce and you're scared it will start dropping again. Should you wait until it's gone up 5%, 10%, 15%? Would you feel sure it's heading back up then? Of course, you will have already missed out 5%, 10%, 15%.

And what if you buy after it goes up 10%, and then it starts dropping again? Should you sell again?

This stuff will drive you crazy.

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HomerJ
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Re: Should you sell your investments when they start dropping? When should you invest during this market correction?

Post by HomerJ » Fri Feb 09, 2018 12:22 pm

Derivative wrote:
Fri Feb 09, 2018 12:15 pm
Well if it drops this much usually it creates a panic and people start selling right? That's pretty easy to predict, is it not?
No, it's not easy to predict.

There have been plenty of 10%-12% drops that recovered without going lower.

Not every 10% drop automatically leads to a 30% crash.

letsgobobby
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Re: Should you sell your investments when they start dropping? When should you invest during this market correction?

Post by letsgobobby » Fri Feb 09, 2018 12:24 pm

Derivative wrote:
Fri Feb 09, 2018 11:23 am
Should you sell your investments when they start dropping? When should you invest during this market correction?

I don't see why not sell now and wait for the market to drop more and then buy them again. Will the market go up as fast as it is going down? (I am kind of playing devil's advocate here)

I have about 40k that I will be putting into a solo 401k, should I wait until the deadline (tax day, April 17th) and see if the market drops even more or should I just put it in my solo 401k account, keep it in there as cash, and not actually invest it in any stocks until later in the year? What do you guys recommend?
I cannot tell if this is a facetious or serious question. You have been a Boglehead for five years and do not know the answer to this question?

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Re: Should you sell your investments when they start dropping? When should you invest during this market correction?

Post by SocalLiving » Fri Feb 09, 2018 12:28 pm

HomerJ wrote:
Fri Feb 09, 2018 12:20 pm
This stuff will drive you crazy.
Couldn't agree more!
I am so grateful not be be trapped in the whirlpool of trying to predict the market. It is liberating. Thank you Bogleheads.

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Re: Should you sell your investments when they start dropping? When should you invest during this market correction?

Post by nisiprius » Fri Feb 09, 2018 12:31 pm

Derivative wrote:
Fri Feb 09, 2018 12:15 pm
...Well if it drops this much usually it creates a panic and people start selling right? That's pretty easy to predict, is it not?...
No. It is not.

Nothing about the stock market is "easy to predict." It is hard to know exactly where the truth lies, but I, and most Bogleheads, have come to the conclusion that it is much closer to the truth to say "the stock market is unpredictable," than to take action based on statements like "usually" and "tends to." It is maddening to sit there and do nothing and watch your investments lose money, but trying to do something about it usually turns out worse.

Most of us cannot resist forming really bad mental models of stock market movements, that are much smoother and "physics-like" than the real thing. The real thing is fractal. Big rises contain smaller downturns, those smaller downturns contain smaller rises, those smaller rises contain smaller downturns, and so on, from decade-to-decade down to minute-by-minute.

I think the best plan is to make sure that your stock allocation is low enough that you can ignore the movements in it. You have to be in a place where you can say "win a few, lose a few" or "easy come, easy go." The idea that you can get the risk premium--the extra turn of stocks--without actually taking the risk, is greed, and in my opinion it's like perpetual motion; it can't be done.

I don't know what the exact drop is right now. In fact I'm ashamed to admit that I've been paying enough attention to know that it's something like 10%. So, here is a question. Look at these two charts, in each of which the market is down about 10%, and tell me what you think happened next.

Image
Image

Answer: to see, drag mouse from here
vvvvvvvvvvvvv
In the first chart, it immediately stopped dropping and bounced right back to where it had been.
In the second chart, it continued to drop until it was almost 20% down, stayed there for about four or five months... then came back.

^^^^^^^^^^^^
to here.
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.

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Re: Should you sell your investments when they start dropping? When should you invest during this market correction?

Post by Blister » Fri Feb 09, 2018 12:34 pm

rebellovw wrote:
Fri Feb 09, 2018 11:30 am
My plan is to not sell at all. It sucks seeing my account down 50K+ - but that is how it goes. My AA is 60/40 - I'm 52 and while the market is going down - I'm still buying - to get some deals:

401k - 403B- buy 4 times a month
After Tax - buy 4 times a month
Savings (Ally) 4 times a month

(same thing I've always done - all learned from this site - thank you bogleheads!)

So I haven't changed anything - all I can hope for - is while my current holdings drop - my new purchases will someday balloon out because the market will be back eventually - I just hope soon. And next time it occurs - I'll do the same thing.
I think rebellovw got to the crux of the matter. Its the feelings that affect us. Taking the emotions out of the equation lets us follow our plan. Just retired last year and it does suck to see these equities drop. But I've got at least 7 years in non equities that I can use for expenses. Thats why having the proper asset allocation is the key to letting you sleep at night. Stay the course.
Everthing works out in the end. If it doesn't then its not the end.

Derivative
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Re: Should you sell your investments when they start dropping? When should you invest during this market correction?

Post by Derivative » Fri Feb 09, 2018 12:44 pm

letsgobobby wrote:
Fri Feb 09, 2018 12:24 pm
Derivative wrote:
Fri Feb 09, 2018 11:23 am
Should you sell your investments when they start dropping? When should you invest during this market correction?

I don't see why not sell now and wait for the market to drop more and then buy them again. Will the market go up as fast as it is going down? (I am kind of playing devil's advocate here)

I have about 40k that I will be putting into a solo 401k, should I wait until the deadline (tax day, April 17th) and see if the market drops even more or should I just put it in my solo 401k account, keep it in there as cash, and not actually invest it in any stocks until later in the year? What do you guys recommend?
I cannot tell if this is a facetious or serious question. You have been a Boglehead for five years and do not know the answer to this question?
I like to play the devil's advocate (as mentioned in my original post). In my opinion you can never know enough and probably have something else to learn.

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Re: Should you sell your investments when they start dropping? When should you invest during this market correction?

Post by letsgobobby » Fri Feb 09, 2018 12:46 pm

Derivative wrote:
Fri Feb 09, 2018 12:44 pm
letsgobobby wrote:
Fri Feb 09, 2018 12:24 pm
Derivative wrote:
Fri Feb 09, 2018 11:23 am
Should you sell your investments when they start dropping? When should you invest during this market correction?

I don't see why not sell now and wait for the market to drop more and then buy them again. Will the market go up as fast as it is going down? (I am kind of playing devil's advocate here)

I have about 40k that I will be putting into a solo 401k, should I wait until the deadline (tax day, April 17th) and see if the market drops even more or should I just put it in my solo 401k account, keep it in there as cash, and not actually invest it in any stocks until later in the year? What do you guys recommend?
I cannot tell if this is a facetious or serious question. You have been a Boglehead for five years and do not know the answer to this question?
I like to play the devil's advocate (as mentioned in my original post). In my opinion you can never know enough and probably have something else to learn.
Well, I was tempted to sell in mid January when stocks were at all time highs. I was also tempted to sell in December, November, October, September, August, July, June (oh, especially June! I think), May, April, etc.

Now that stocks are down 10% I’m tempted to buy.

Instead I’ll just go back to work.

Derivative
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Re: Should you sell your investments when they start dropping? When should you invest during this market correction?

Post by Derivative » Fri Feb 09, 2018 12:47 pm

nisiprius wrote:
Fri Feb 09, 2018 12:31 pm
Derivative wrote:
Fri Feb 09, 2018 12:15 pm
...Well if it drops this much usually it creates a panic and people start selling right? That's pretty easy to predict, is it not?...
No. It is not.

Nothing about the stock market is "easy to predict." It is hard to know exactly where the truth lies, but I, and most Bogleheads, have come to the conclusion that it is much closer to the truth to say "the stock market is unpredictable," than to take action based on statements like "usually" and "tends to." It is maddening to sit there and do nothing and watch your investments lose money, but trying to do something about it usually turns out worse.

Most of us cannot resist forming really bad mental models of stock market movements, that are much smoother and "physics-like" than the real thing. The real thing is fractal. Big rises contain smaller downturns, those smaller downturns contain smaller rises, those smaller rises contain smaller downturns, and so on, from decade-to-decade down to minute-by-minute.

I think the best plan is to make sure that your stock allocation is low enough that you can ignore the movements in it. You have to be in a place where you can say "win a few, lose a few" or "easy come, easy go." The idea that you can get the risk premium--the extra turn of stocks--without actually taking the risk, is greed, and in my opinion it's like perpetual motion; it can't be done.

I don't know what the exact drop is right now. In fact I'm ashamed to admit that I've been paying enough attention to know that it's something like 10%. So, here is a question. Look at these two charts, in each of which the market is down about 10%, and tell me what you think happened next.

Image
Image

Answer: to see, drag mouse from here
vvvvvvvvvvvvv
In the first chart, it immediately stopped dropping and bounced right back to where it had been.
In the second chart, it continued to drop until it was almost 20% down, stayed there for about four or five months... then came back.

^^^^^^^^^^^^
to here.
Thank you. The two charts are the tangible evidence that I was seeking :) Where do you analyze these graphs? I want to look at the entire market history of all indices, stocks, etc. so I can see how unpredictable the market is. What site is best for this?

chevca
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Re: Should you sell your investments when they start dropping? When should you invest during this market correction?

Post by chevca » Fri Feb 09, 2018 12:49 pm

So, you think something has changed, or there's more to learn about market timing?? Again, you joined in 2013....

cashmoney
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Re: Should you sell your investments when they start dropping? When should you invest during this market correction?

Post by cashmoney » Fri Feb 09, 2018 12:51 pm

Derivative wrote:
Fri Feb 09, 2018 11:23 am
Should you sell your investments when they start dropping? When should you invest during this market correction?

I don't see why not sell now and wait for the market to drop more and then buy them again. Will the market go up as fast as it is going down? (I am kind of playing devil's advocate here)

I have about 40k that I will be putting into a solo 401k, should I wait until the deadline (tax day, April 17th) and see if the market drops even more or should I just put it in my solo 401k account, keep it in there as cash, and not actually invest it in any stocks until later in the year? What do you guys recommend?


The 20 answers inside a standard Magic 8-Ball are:

● It is certain
● It is decidedly so
● Without a doubt
● Yes definitely
● You may rely on it
● As I see it, yes
● Most likely
● Outlook good
● Yes
● Signs point to yes
● Reply hazy try again
● Ask again later
● Better not tell you now
● Cannot predict now
● Concentrate and ask again
● Don't count on it
● My reply is no
● My sources say no
● Outlook not so good
● Very doubtful

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jharkin
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Re: Should you sell your investments when they start dropping? When should you invest during this market correction?

Post by jharkin » Fri Feb 09, 2018 1:00 pm

Its interesting that the market drops 10% this week and suddenly all these market timing threads show up, and people start necro positng to panic threads started during great recession in 2008.


What was that line again? "stay the course" ?

I remind my self that this weeks 401k deferral bought stocks 10% cheaper than last weeks did :beer

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Re: Should you sell your investments when they start dropping? When should you invest during this market correction?

Post by Grt2bOutdoors » Fri Feb 09, 2018 1:10 pm

Derivative wrote:
Fri Feb 09, 2018 12:44 pm
letsgobobby wrote:
Fri Feb 09, 2018 12:24 pm
Derivative wrote:
Fri Feb 09, 2018 11:23 am
Should you sell your investments when they start dropping? When should you invest during this market correction?

I don't see why not sell now and wait for the market to drop more and then buy them again. Will the market go up as fast as it is going down? (I am kind of playing devil's advocate here)

I have about 40k that I will be putting into a solo 401k, should I wait until the deadline (tax day, April 17th) and see if the market drops even more or should I just put it in my solo 401k account, keep it in there as cash, and not actually invest it in any stocks until later in the year? What do you guys recommend?
I cannot tell if this is a facetious or serious question. You have been a Boglehead for five years and do not know the answer to this question?
I like to play the devil's advocate (as mentioned in my original post). In my opinion you can never know enough and probably have something else to learn.
With a name like Derivative, I think your trolling us. What is the purpose of this thread? Is it even actionable when you stated yourself, you like to play devil's advocate.

BTW, bought yesterday, buying again today. Follow your plan, do you even have a plan?
"One should invest based on their need, ability and willingness to take risk - Larry Swedroe" Asking Portfolio Questions

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Re: Should you sell your investments when they start dropping? When should you invest during this market correction?

Post by bottlecap » Fri Feb 09, 2018 1:13 pm

You don't see why you shouldn't try to guess which may the market is going to go in the future?

Because you don't know where it's going and the market will never tell you.

You are unlikely to get out at a correct point and even more unlikely to get back in at a correct point.

If you get out now, and the market gains 20%, will you then think it's safe to invest again? Odds are you will not and you will be waiting for the next drop to get back in. It may not come. Or it will come and you will think you should wait until it drops even more.

What a fun game to play. Some have been playing it for more than a decade.

JT

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Re: Should you sell your investments when they start dropping? When should you invest during this market correction?

Post by k66 » Fri Feb 09, 2018 1:16 pm

Derivative wrote:
Fri Feb 09, 2018 11:23 am
Should you sell your investments when they start dropping? When should you invest during this market correction?

I don't see why not sell now and wait for the market to drop more and then buy them again. Will the market go up as fast as it is going down? (I am kind of playing devil's advocate here)

I have about 40k that I will be putting into a solo 401k, should I wait until the deadline (tax day, April 17th) and see if the market drops even more or should I just put it in my solo 401k account, keep it in there as cash, and not actually invest it in any stocks until later in the year? What do you guys recommend?
As many others have noted. You will not be able to beneficially time the market (as much as you really want to believe that you or your favourite Guru can do that, it simply won't happen). Instead, why not "buy low" and sell later (when you need to at a higher price)?
LOSER of the Boglehead Contest 2015 | lang may yer lum reek

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Re: Should you sell your investments when they start dropping? When should you invest during this market correction?

Post by getthatmarshmallow » Fri Feb 09, 2018 1:19 pm

Most of my investments are tied to my paycheck and come out automatically, so I guess I invest according to my predetermined allocation about a day after my check clears.

As my timeline is 30 years I don't really care too much about what the market is doing now, and when I'm older, and I care, my way of dealing with it will be to adjust my asset allocation so I don't really care too much. Not caring is key.

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Re: Should you sell your investments when they start dropping? When should you invest during this market correction?

Post by gotester2000 » Fri Feb 09, 2018 1:28 pm

It is important to buy low - you should pause buying when market is at extreme high and put in more when it is low - there are enough indicators to know the current state of market - just dont wait for peak or trough to sell and buy.

Dont sell, buy more at lows.

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Re: Should you sell your investments when they start dropping? When should you invest during this market correction?

Post by nisiprius » Fri Feb 09, 2018 3:22 pm

Derivative wrote:
Fri Feb 09, 2018 12:47 pm
...Thank you. The two charts are the tangible evidence that I was seeking :) Where do you analyze these graphs? I want to look at the entire market history of all indices, stocks, etc. so I can see how unpredictable the market is. What site is best for this?...
It's hard to say, but I'm very fond of Morningstar. The charts I showed you come from here, and you can experiment with different starting and ending dates.

Generally, Morningstar is "for" mutual funds, and the charts go back as far (but only as far) as the fund does. By default, when you select a mutual fund Morningstar shows a growth chart, which is total return including the constant accumulation of fund dividends reinvested in the fund, which in my opinion is usually what you want to see, rather than a price chart.

That chart is for the Vanguard Total Stock Market Index Fund, which, as its name suggests, approximates the total market.

To go back farther, you can plot VFINX, the Vanguard 500 Index Fund, which tracks the S&P 500 and goes back to 1976. You can also plot the S&P (total return) curve along with it:

Source

When you are looking at the chart 'live," you can drag the mouse along it and read out the numbers rising and falling.

Image
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.

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Re: Should you sell your investments when they start dropping? When should you invest during this market correction?

Post by RRAAYY3 » Fri Feb 09, 2018 3:25 pm

Derivative wrote:
Fri Feb 09, 2018 11:23 am
Should you sell your investments when they start dropping? When should you invest during this market correction?

I don't see why not sell now and wait for the market to drop more and then buy them again. Will the market go up as fast as it is going down? (I am kind of playing devil's advocate here)

I have about 40k that I will be putting into a solo 401k, should I wait until the deadline (tax day, April 17th) and see if the market drops even more or should I just put it in my solo 401k account, keep it in there as cash, and not actually invest it in any stocks until later in the year? What do you guys recommend?
So, you’ll sell ... and it’ll keep going down ... and you’ll then feel comfortable buying? No - you won’t.

Only invest money you don’t need short term, then either ignore it or actually put more in when it does go down (cheaper shares!)

Nate79
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Re: Should you sell your investments when they start dropping? When should you invest during this market correction?

Post by Nate79 » Fri Feb 09, 2018 3:45 pm

jharkin wrote:
Fri Feb 09, 2018 1:00 pm
Its interesting that the market drops 10% this week and suddenly all these market timing threads show up, and people start necro positng to panic threads started during great recession in 2008.


What was that line again? "stay the course" ?

I remind my self that this weeks 401k deferral bought stocks 10% cheaper than last weeks did :beer
Haven't seen very many net worth threads though..... :twisted:

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Re: Should you sell your investments when they start dropping? When should you invest during this market correction?

Post by honduranhurricane » Fri Feb 09, 2018 8:56 pm

Keeping my regular routine of regular buying,,,,the younger me would be quite bored with that but it works (as most in this forum know).

That said, I have been adding incremental $ to buy this swoon (on top of my time based investments). My sweat moment today was whether I should buy Amazon when it was down 4+% at one point (adding to an existing position) or direct the $ to my index ETF's. Ultimately I went with the indexes (large, mid and small) which has been my trend since lurking in this group (then joining) a year or two ago (maybe its been three :)).

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Re: Should you sell your investments when they start dropping? When should you invest during this market correction?

Post by mega317 » Fri Feb 09, 2018 9:43 pm

Nate79 wrote:
Fri Feb 09, 2018 3:45 pm
jharkin wrote:
Fri Feb 09, 2018 1:00 pm
Its interesting that the market drops 10% this week and suddenly all these market timing threads show up, and people start necro positng to panic threads started during great recession in 2008.


What was that line again? "stay the course" ?

I remind my self that this weeks 401k deferral bought stocks 10% cheaper than last weeks did :beer
Haven't seen very many net worth threads though..... :twisted:
Also no "should I invest my emergency fund?"

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Re: Should you sell your investments when they start dropping? When should you invest during this market correction?

Post by radiowave » Fri Feb 09, 2018 9:57 pm

I waited until today to update my spreadsheet for February before I made any decision whether I needed to rebalance. I was pleasantly surprised I didn't get the big hit I was anticipating, yeah about a 5.5% decrease overall which puts me back to early December as far as total assets. I was thinking of buying total stock at the low point, but AA is about the same. According to my IPS, I don't need to do anything other than my normal monthly contribution to tax-deferred and bulking up my cash/CD positions anticipating retirement in about 5 years. The Boglehead method really does work.
Bogleheads Wiki: https://www.bogleheads.org/wiki/Main_Page

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Re: Should you sell your investments when they start dropping? When should you invest during this market correction?

Post by stimulacra » Fri Feb 09, 2018 10:04 pm

My understanding is that the best and worst trading days occur very close together… I might be able to nail one and totally miss the other so it's essentially futile trying to thread that moving needle.

I'm staying the course as so many folks here advocate… I probably rebalance into equities if the decline continues another 10-15% but that's probably it.

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Re: Should you sell your investments when they start dropping? When should you invest during this market correction?

Post by GerryL » Fri Feb 09, 2018 10:41 pm

OP:
Here is the secret for successful market timing:

Sell a day or two before the market drops.
Buy a day or two before the market goes up.

(Don't spread this around or it won't be a secret anymore.)

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Re: Should you sell your investments when they start dropping? When should you invest during this market correction?

Post by remomnyc » Fri Feb 09, 2018 10:48 pm

I don't know much, but I know I can't time the market. I spent too much time in the past in cash waiting for corrections. I could probably have retired a few years earlier, if I had been more disciplined. Now, I sell only if I breach my 5% band or to tax loss harvest. I buy whenever I have money and invest to rebalance to my allocation.

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Re: Should you sell your investments when they start dropping? When should you invest during this market correction?

Post by TropikThunder » Fri Feb 09, 2018 11:08 pm

Derivative wrote:
Fri Feb 09, 2018 11:23 am
I don't see why not sell now and wait for the market to drop more and then buy them again.
You must be new here. :twisted:
chevca wrote:
Fri Feb 09, 2018 11:50 am
OP, you have over 200 posts and joined in 2013.... and, ask these questions? :confused
Or not ....
Derivative wrote:
Fri Feb 09, 2018 12:15 pm
Well if it drops this much usually it creates a panic and people start selling right? That's pretty easy to predict, is it not?
Haven't you been watching all week? It's dropped every day, until today right at the end of trading it spiked into +1.5% or so. NONE of that was easy to predict, at least not before it happened. Still down a lot since the most recent peak in January, but what it the panic is done and starting Monday it takes off again?
The problem is, most people who take step 1 of this strategy (sell now), can't pull the trigger on step 2 (buy later) since they keep thinking the downward trend will continue. You'll never know when to get back in.

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Re: Should you sell your investments when they start dropping? When should you invest during this market correction?

Post by EyeYield » Sat Feb 10, 2018 3:16 am

Derivative, all your answers will be questioned by going here:
https://www.bogleheads.org/RecommendedReading.php

For an easy introduction start here: https://www.etf.com/docs/IfYouCan.pdf

If you like that, try this: http://www.amazon.com/Four-Pillars-Inve ... TCDS1ZKERC

The big secret to investing is education. Educate yourself! Once educated, you'll know what questions to ask that may be pertinent to you.
"The stock market is a giant distraction from the business of investing." - Jack Bogle

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Re: Should you sell your investments when they start dropping? When should you invest during this market correction?

Post by CyclingDuo » Sat Feb 10, 2018 8:34 am

Derivative wrote:
Fri Feb 09, 2018 12:47 pm
Thank you. The two charts are the tangible evidence that I was seeking :) Where do you analyze these graphs? I want to look at the entire market history of all indices, stocks, etc. so I can see how unpredictable the market is. What site is best for this?
https://www.yardeni.com/pub/sp500corrbear.pdf
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Re: Should you sell your investments when they start dropping? When should you invest during this market correction?

Post by tmcc » Sat Feb 10, 2018 9:23 am

if you feel strongly about more short term declines, scale your cash in based on limit order entries rather than buying on a schedule. better yet, continue to invest on a schedule AND try to scale in at certain levels.

there is nothing wrong with trying to anticipate demand if you have the extra cash to throw at it.

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Re: Should you sell your investments when they start dropping? When should you invest during this market correction?

Post by 220volt » Sat Feb 10, 2018 9:46 am

The 100-year history of bull and bear markets in one chart (I like it because it's a PDF and you can zoom in as much as you like)
https://www.ftportfolios.com/Common/Con ... 8ff9bfe12d

And of course legendary chart of Dow Jones from 1896-2016 with annotations and time to recovery periods.
https://virtueofselfishinvesting.s3.ama ... ?link=mktw
"If I had only followed the advice of financial analysts in 2008, I'd have a million dollars today, provided I started with a hundred million dollars" - Jon Stewart

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Re: Should you sell your investments when they start dropping? When should you invest during this market correction?

Post by SVariance1 » Sat Feb 10, 2018 10:10 am

This issue is largely dependent on risk tolerance/time horizon and you current asset allocation. If you are young with a higher risk tolerance, you should stay the course. If you are older with a moderate to low risk tolerance, you should reevaluate your positioning to see if it still makes sense for you.
Mike

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Re: Should you sell your investments when they start dropping? When should you invest during this market correction?

Post by munemaker » Sat Feb 10, 2018 10:14 am

Derivative wrote:
Fri Feb 09, 2018 11:23 am
Should you sell your investments when they start dropping? When should you invest during this market correction?
You should not let a market correction influence your investing decisions. This means you should not sell your investments when they start dropping and you should not invest more than usual during a correction.

You should just continue to invest as you usually would. Ignore the correction in your decision making.

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Re: Should you sell your investments when they start dropping? When should you invest during this market correction?

Post by Peculiar_Investor » Sat Feb 10, 2018 10:16 am

This piece from Vanguard has been linked in a few topics, How to navigate market corrections | Vanguard
Vanguard wrote:Timing the market is futile. The best and worst trading days happen close together.Image
Trying to time when to sell and then re-buy means you need to get two timing decisions correct. Do you really think you (or anyone else) can get both of them right?

Have a plan and then stay the course.
Normal people… believe that if it ain’t broke, don’t fix it. Engineers believe that if it ain’t broke, it doesn’t have enough features yet. – Scott Adams

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Re: Should you sell your investments when they start dropping? When should you invest during this market correction?

Post by dbr » Sat Feb 10, 2018 10:37 am

You should always sell everything just before it drops and buy it all again just before it goes up.

So, there.

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Re: Should you sell your investments when they start dropping? When should you invest during this market correction?

Post by mega317 » Sat Feb 10, 2018 10:50 am

But if you buy the day before it goes up, you catch the last day of going down. Better to miss the first day of going up? Or switch to ETFs and then my question holds for the minute before or after the turnaround.

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Re: Should you sell your investments when they start dropping? When should you invest during this market correction?

Post by Toons » Sat Feb 10, 2018 10:54 am

I don't know about others.
I would not sell investments because they are "dropping"
That is not investing.
I would invest the monies as soon as possible(Monday) in whatever your asset allocation might be.
Time IN the Market,
:happy
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Re: Should you sell your investments when they start dropping? When should you invest during this market correction?

Post by whodidntante » Sat Feb 10, 2018 11:06 am

Some people use a quantitative trend following strategy where they will pick some arbitrary trend metric e.g. 200 day moving average and use that as a trigger to sell or buy. It doesn't improve returns versus a Boglehead approach but it does limit drawdowns. You'll still be invested during some ugly downturns and you'll be out of the market during some big moves up. There isn't a solution that allows you to get the returns of risk assets without taking the risk.

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