Did you get spooked by the December 2018 fall and gave up on passive?

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revhappy
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Did you get spooked by the December 2018 fall and gave up on passive?

Post by revhappy » Fri Feb 15, 2019 6:53 pm

The December plunge was brutal and to rub salt on injury, lots of experts said cash is an asset class that will now compete with equities. So now that the markets have reverted back to their early December 2018 levels, are you feeling like getting into cash, or have already gotten into cash?

Just want to know how many people are feeling like me. I sold a chunk of my equities last week and now I am down to 33% equities from 50% equities.

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Re: Did you get spooked by the December 2018 fall and gave up on passive?

Post by delamer » Fri Feb 15, 2019 6:59 pm

No, I did not sell nor did I give up on passive. And on the scale of historic stock market drops, December was not brutal.

It sounds like you may have had too much in equities relative to the risk you can tolerate.

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Re: Did you get spooked by the December 2018 fall and gave up on passive?

Post by livesoft » Fri Feb 15, 2019 6:59 pm

I take a view completely contrary to yours. December was totally fantastic for investors who could rebalance into the teeth of Fear, Uncertainty, and Doubt. Yours truly, made a bunch of money by exchanging bond fund assets into equity fund assets. So much money, that I had to rebalance this month already back from surging equities into bonds.

Doom & Gloom Rulz!

If anything, December 2018 totally confirms and supports the idea of passive investing along with stay-the-course to follow the plan of Buy, Hold, and Rebalance.

I gave up long ago on predicting the future. But I am pretty good at observing the very recent past which is actionable.
Last edited by livesoft on Fri Feb 15, 2019 7:05 pm, edited 1 time in total.
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Re: Did you get spooked by the December 2018 fall and gave up on passive?

Post by retire2022 » Fri Feb 15, 2019 7:02 pm

I lost approx 275K but I made 266k in 2017, I have a very stable job and one step from retirement, no I was not worried, as of tonight I'm approx 40K from all time high August 27, 2019 2018.

This is the nature of stock market
Last edited by retire2022 on Sat Feb 16, 2019 10:31 am, edited 1 time in total.

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Re: Did you get spooked by the December 2018 fall and gave up on passive?

Post by cadreamer2015 » Fri Feb 15, 2019 7:03 pm

Huh? The December dip was brutal? Not particularly. I did some rebalancing into equities. What does the December dip have to do with whether or not passive index funds are a good way to participate in the equity market? As far as I can tell, the index funds did exactly what one should expect. Cash is an asset class? Well yes, but I don't expect the return to cash to compete with equities over the long term. I did make a $100 donation from my Donor Advised Fund, in part because I saw today's rally :)
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Re: Did you get spooked by the December 2018 fall and gave up on passive?

Post by CABob » Fri Feb 15, 2019 7:04 pm

No I didn't make any changes, but I find it interesting that cash was the top performing segment for the year.
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Re: Did you get spooked by the December 2018 fall and gave up on passive?

Post by z3r0c00l » Fri Feb 15, 2019 7:04 pm

Far from it, and it was tempting to pile in more money ahead of schedule as a result of the drop. Now I wish I had, but at the time I simply didn't want to start playing that game.

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Re: Did you get spooked by the December 2018 fall and gave up on passive?

Post by LinusP » Fri Feb 15, 2019 7:06 pm

livesoft wrote:
Fri Feb 15, 2019 6:59 pm
I take a view completely contrary to yours. December was totally fantastic for investors who could rebalance into the teeth of Fear, Uncertainty, and Doubt.
I'm with livesoft on this one. I managed to convert the last of my active (read: expensive) funds to passive Vanguard funds on the second-lowest day of 2018, improving my portfolio for the long term and minimizing capital gains taxes.

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Re: Did you get spooked by the December 2018 fall and gave up on passive?

Post by bligh » Fri Feb 15, 2019 7:07 pm

Here is what I recommend you do. Each year, make a prediction on how you think the market is going to do. Go up 5%, 7%, 10%.. or down 5%, 7%, 10%.. and then see if the market came close to your prediction.

At the beginning of 2017 I had predicted that the long bull run was going to end and that 2017 would be flat or down. Instead the market was up over 20%. I (along with many talking heads) thought interest rates for 10 year treasuries could be as high as 4% right now. Instead they aren't even 3%.

Either realize that your predictions are worthless and decide to just take what the market gives you.
Or prove to yourself beyond a doubt that you are able to predict what the market will do next.

If you find that you are as bad as me at predicting the market, you will be better off not trying to predict it. :happy

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Re: Did you get spooked by the December 2018 fall and gave up on passive?

Post by wintermute » Fri Feb 15, 2019 7:08 pm

revhappy wrote:
Fri Feb 15, 2019 6:53 pm
Just want to know how many people are feeling like me.
The market price is the dollar-average opinion.

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Re: Did you get spooked by the December 2018 fall and gave up on passive?

Post by thx1138 » Fri Feb 15, 2019 7:09 pm

There was nothing “brutal” about the last dip. Typical speed bump and barely noticeable and certainly not something to act on - well except to buy if rebalancing bands tell you to.

Went through 2008/9 at 100/0 and didn’t flinch so certainly not bothered by this most recent non-event.

But seriously if the past few months gave anyone weak knees they need to realize that it was a ho-hum kind of thing you should expect to see every few years.

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Re: Did you get spooked by the December 2018 fall and gave up on passive?

Post by dacalo » Fri Feb 15, 2019 7:10 pm

Wife and I managed to max out our Roth towards the end of December in lump sum which was great timing in hindsight. No, we weren't trying to time it that way, just got lucky. We just kept buying more and being consistent, nothing changed.

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Re: Did you get spooked by the December 2018 fall and gave up on passive?

Post by Big Dog » Fri Feb 15, 2019 7:17 pm

Wait, what? There was a Dec-18 fall? I guess I was too 'passive' to look at the daily numbers. :twisted:

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Re: Did you get spooked by the December 2018 fall and gave up on passive?

Post by livesoft » Fri Feb 15, 2019 7:20 pm

revhappy wrote:
Fri Feb 15, 2019 6:53 pm
Just want to know how many people are feeling like me.
We probably ruined the OP's thread and scared away from responding people like the OP.
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Re: Did you get spooked by the December 2018 fall and gave up on passive?

Post by retire2022 » Fri Feb 15, 2019 7:22 pm

Big Dog wrote:
Fri Feb 15, 2019 7:17 pm
Wait, what? There was a Dec-18 fall? I guess I was too 'passive' to look at the daily numbers. :twisted:
Unlike most BH I do track daily changes and understand the 200day moving average, if I had a pot of cash I would had brought, nevertheless I told my friends to buy on dips and they have been happy with my recommendations.

see video this will explain when to buy and when to sell, warning NOT a BH method https://www.youtube.com/watch?v=ktToRNpKNgI&t=6s

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Re: Did you get spooked by the December 2018 fall and gave up on passive?

Post by notinuse » Fri Feb 15, 2019 7:24 pm

No, I made no investing changes, and I didn't consider the December drop to be brutal. If the December drop bothered you, you may want to review your asset allocation.

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Re: Did you get spooked by the December 2018 fall and gave up on passive?

Post by arcticpineapplecorp. » Fri Feb 15, 2019 7:25 pm

revhappy wrote:
Fri Feb 15, 2019 6:53 pm
The December plunge was brutal and to rub salt on injury, lots of experts said cash is an asset class that will now compete with equities.
1. Who exactly are these so called "experts" you speak of? Don't you know that "Nobody knows 'nuthin"? If not, you aren't listening to the "right" experts. Read this and see how bad the so called experts did last year:
https://www.etf.com/sections/index-inve ... nopaging=1
revhappy wrote:
Fri Feb 15, 2019 6:53 pm
So now that the markets have reverted back to their early December 2018 levels, are you feeling like getting into cash, or have already gotten into cash?
2. Have you heard the term "market timing"? That's exactly what you described here. How do you think market timing works compared to buy, hold and rebalance? If you haven't heard the news read some of this:

https://www.google.com/search?sitesearc ... ket+timing

3. You're implying that "passive" investing only works in markets that are not volatile. That's completely untrue. Not to mention that markets are generally volatile and yet buy and hold works over the long term, which includes all markets, volatile or not.

4. you know what happens to people who hold cash waiting on the sidelines? They usually don't get the returns of the market. How can they if they are out of the market? Obviously if you're in cash that can only mean you're afraid of the market going down and don't want to be in it when that happens. Unfortunately, more money has been lost in anticipation of market declines than in the declines themselves. See why:

https://www.etf.com/sections/index-inve ... nopaging=1
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Re: Did you get spooked by the December 2018 fall and gave up on passive?

Post by TropikThunder » Fri Feb 15, 2019 7:26 pm

CABob wrote:
Fri Feb 15, 2019 7:04 pm
No I didn't make any changes, but I find it interesting that cash was the top performing segment for the year.
Callan Table
Funny, all the times I've looked at the Callan table, I've never paid attention to the ranking for "Cash or equivalents." Interesting though, Cash and EM traded places between 2017 and 2018: worst to first and vice versa. Now it's EM's turn again? :D

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Re: Did you get spooked by the December 2018 fall and gave up on passive?

Post by Cycle » Fri Feb 15, 2019 7:28 pm

No, i just bought every Wednesday as always. The December drop wasn't even worth click bait.

I did tax loss harvest though :moneybag
Last edited by Cycle on Fri Feb 15, 2019 7:30 pm, edited 1 time in total.

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Re: Did you get spooked by the December 2018 fall and gave up on passive?

Post by Doom&Gloom » Fri Feb 15, 2019 7:29 pm

livesoft wrote:
Fri Feb 15, 2019 6:59 pm
I take a view completely contrary to yours. December was totally fantastic for investors who could rebalance into the teeth of Fear, Uncertainty, and Doubt. Yours truly, made a bunch of money by exchanging bond fund assets into equity fund assets. So much money, that I had to rebalance this month already back from surging equities into bonds.

Doom & Gloom Rulz!

If anything, December 2018 totally confirms and supports the idea of passive investing along with stay-the-course to follow the plan of Buy, Hold, and Rebalance.

I gave up long ago on predicting the future. But I am pretty good at observing the very recent past which is actionable.
Aw shucks. Stop it. You're embarrassing me--and giving me far too much credit.

But yeah. That wasn't a fall.

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Re: Did you get spooked by the December 2018 fall and gave up on passive?

Post by livesoft » Fri Feb 15, 2019 7:36 pm

TropikThunder wrote:
Fri Feb 15, 2019 7:26 pm
Funny, all the times I've looked at the Callan table, I've never paid attention to the ranking for "Cash or equivalents."
I'm thinking it never appeared in the past and is a new addition to the table. Callan probably back added it.
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Re: Did you get spooked by the December 2018 fall and gave up on passive?

Post by Wakefield1 » Fri Feb 15, 2019 7:37 pm

At where I used to work sometimes one of the workers would show up with a nice new car. Others would joke about "sell me that thing for" some insulting low amount,like half of what it cost new the previous week.
What the stock market did on Christmas Eve was sort of like that.
I am trying to/raising a bit of cash not because of the stock market but because I have developed a tremendous potential need to own a house (which I have desired for some time but have been prevented from by family obligations)

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Re: Did you get spooked by the December 2018 fall and gave up on passive?

Post by JoeRetire » Fri Feb 15, 2019 7:38 pm

revhappy wrote:
Fri Feb 15, 2019 6:53 pm
So now that the markets have reverted back to their early December 2018 levels, are you feeling like getting into cash, or have already gotten into cash?

Just want to know how many people are feeling like me.
Not us. I don't react to short market fluctuations.
I sold a chunk of my equities last week and now I am down to 33% equities from 50% equities.
Oh well. Good luck. Maybe it will be a good learning opportunity at least.

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Re: Did you get spooked by the December 2018 fall and gave up on passive?

Post by Big Dog » Fri Feb 15, 2019 7:42 pm

Unlike most BH I do track daily changes and understand the 200day moving average, if I had a pot of cash I would had brought, nevertheless I told my friends to buy on dips and they have been happy with my recommendations.
Sorry, I was being snarky. I also track the market daily, but don't buy daily. Long-term buy and hold. Remained in 100% equities in '87, '99/'00, & '08. I did TLH for the first time this December.

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Re: Did you get spooked by the December 2018 fall and gave up on passive?

Post by MiddleOfTheRoad » Fri Feb 15, 2019 7:42 pm

I immediately grabbed some popcorn as soon as this thread started. Now I have to get up and grab another bowl.

To OP, you need to do some reading before your next move. Start with “A random walk down Wall Street”

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Re: Did you get spooked by the December 2018 fall and gave up on passive?

Post by Fallible » Fri Feb 15, 2019 7:43 pm

revhappy wrote:
Fri Feb 15, 2019 6:53 pm
The December plunge was brutal and to rub salt on injury, lots of experts said cash is an asset class that will now compete with equities. So now that the markets have reverted back to their early December 2018 levels, are you feeling like getting into cash, or have already gotten into cash?

Just want to know how many people are feeling like me. I sold a chunk of my equities last week and now I am down to 33% equities from 50% equities.
In looking at some of your posts on previous threads it appears you would benefit from a return to the basics, beginning with an overall plan, then learning how to set an asset allocation that reflects your ability, willingness, and need to take risk. You could start with visiting the wiki's "Getting started" page and continue to the pages below:

Most important, TAKE YOUR TIME to avoid being spooked and jumping from one allocation to the next depending on what the market does.

https://www.bogleheads.org/wiki/Getting_started

https://www.bogleheads.org/wiki/Asset_Allocation
https://www.bogleheads.org/wiki/Risk_tolerance

https://www.cbsnews.com/news/asset-allo ... -you-take/
https://www.cbsnews.com/news/asset-allo ... tolerance/
https://www.cbsnews.com/news/asset-allo ... -you-need/
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Re: Did you get spooked by the December 2018 fall and gave up on passive?

Post by David Jay » Fri Feb 15, 2019 7:49 pm

livesoft wrote:
Fri Feb 15, 2019 6:59 pm
I take a view completely contrary to yours. December was totally fantastic for investors who could rebalance into the teeth of Fear, Uncertainty, and Doubt. Yours truly, made a bunch of money by exchanging bond fund assets into equity fund assets. So much money, that I had to rebalance this month already back from surging equities into bonds.
Hey, that’s my story too. I rebalanced on Dec.24!

I have sold some equities over the last few weeks in preparation for a distribution (now that I am in the de-cumulation stage of life).
Prediction is very difficult, especially about the future - Niels Bohr | To get the "risk premium", you really do have to take the risk - nisiprius

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Re: Did you get spooked by the December 2018 fall and gave up on passive?

Post by Shackleton » Fri Feb 15, 2019 7:50 pm

I was too busy working to notice anything really happening. And now that I look, I see nothing to get excited about.
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Re: Did you get spooked by the December 2018 fall and gave up on passive?

Post by JonnyDVM » Fri Feb 15, 2019 7:54 pm

I tax loss harvested and I lament the fact that I had a good chunk of money parked at Ally for the extra 1%
bonus. I very wrongly assumed the market would stay down for at least a little while and that I had ample time to buy at a nice discount. Wrong wrong wrong wrong. :oops:

How that could possibly have spooked anyone. You blinked and it was over! It was like a 5 minute fire sale.
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Re: Did you get spooked by the December 2018 fall and gave up on passive?

Post by pdavi21 » Fri Feb 15, 2019 7:59 pm

Even on December 24th, at 3:59 PM, US stocks appeared expensive to me...but the market does stupid things...so I blindly follow it.
"We spend a great deal of time studying history, which, let's face it, is mostly the history of stupidity." -Stephen Hawking

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Re: Did you get spooked by the December 2018 fall and gave up on passive?

Post by AlohaJoe » Fri Feb 15, 2019 8:04 pm

revhappy wrote:
Fri Feb 15, 2019 6:53 pm
The December plunge was brutal
Why was 2018 different than the falls in 2016 or 2012?

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Re: Did you get spooked by the December 2018 fall and gave up on passive?

Post by MotoTrojan » Fri Feb 15, 2019 8:07 pm

Wasn't spooked, quite enjoyed the TLH opportunity (missed the last 5% in that regards though... enjoying xmas too much).

I think it likely was a good wake-up call to newer investors. I am new myself but was well prepared based on studying the past and having reasonable expectations (even with a 100/0 portfolio that is tilted to assets which dropped more than Total US).

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Re: Did you get spooked by the December 2018 fall and gave up on passive?

Post by staythecourse » Fri Feb 15, 2019 8:25 pm

My answer for stocks up or down is the same... Who cares?

If your time horizon is long term then WHY would you compare your returns for 1 month intervals? I would say this is the BIGGEST frame of reference risk for an investor. We preach having an asset allocation appropriate for time horizon. For most on here they would say their's is 10+ years out. Yet they look at the returns over 1 month, 6 month, or even 5 year periods. Does that make any sense?

The only folks who SHOULD care about each day's returns are active DAY traders as they name implies.

Good luck.
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Re: Did you get spooked by the December 2018 fall and gave up on passive?

Post by Shamb3 » Fri Feb 15, 2019 8:31 pm

I would be a liar if I said the market volatility did not make me nervous sometimes.
I made no changes though, because the math still works out to say I shouldn't.

I am more worried about losing my job because of things going on at my employer lining up at the wrong time with a recession.

I think everyone has been expecting the next downturn, but they have been expecting it for 2-5 years and it might still be 2-4 years away.
If I got out of the equities market every time I got nervous, I would never be able to retire on my investments.

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Re: Did you get spooked by the December 2018 fall and gave up on passive?

Post by oldcomputerguy » Fri Feb 15, 2019 8:31 pm

My IPS says to check twice a year (on my birthday and six months prior) and, if more than 5% off target, rebalance. I rebalanced in January.
It’s taken me a lot of years, but I’ve come around to this: If you’re dumb, surround yourself with smart people. And if you’re smart, surround yourself with smart people who disagree with you.

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Re: Did you get spooked by the December 2018 fall and gave up on passive?

Post by chw » Fri Feb 15, 2019 8:37 pm

Not spooked here. I did some nice tax loss harvesting, and re-balanced at same time in late December. Have to admit some minor trepidation, but have always stayed the course and been rewarded in time.

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Re: Did you get spooked by the December 2018 fall and gave up on passive?

Post by staustin » Fri Feb 15, 2019 8:40 pm

i had been sitting on the sidelines with too much cash thinking p/e ratios were too high.... i bought, bought, bought, in december.

valuations do matter..

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Re: Did you get spooked by the December 2018 fall and gave up on passive?

Post by unclescrooge » Fri Feb 15, 2019 8:41 pm

revhappy wrote:
Fri Feb 15, 2019 6:53 pm
The December plunge was brutal and to rub salt on injury, lots of experts said cash is an asset class that will now compete with equities. So now that the markets have reverted back to their early December 2018 levels, are you feeling like getting into cash, or have already gotten into cash?

Just want to know how many people are feeling like me. I sold a chunk of my equities last week and now I am down to 33% equities from 50% equities.
Who are these experts?

If you mean the talking mouths on TV, I recommend you smash your TV. You'll end up much richer :mrgreen:

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Re: Did you get spooked by the December 2018 fall and gave up on passive?

Post by FelixTheCat » Fri Feb 15, 2019 8:45 pm

You need to rethink your asset allocation if you are have emotional issues about market fluctuations.
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Re: Did you get spooked by the December 2018 fall and gave up on passive?

Post by bhsince87 » Fri Feb 15, 2019 8:50 pm

Nope. I actually retired early near the bottom in December.

Stuck with my plan, didn't change a thing.
Retirement: When you reach a point where you have enough. Or when you've had enough.

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Re: Did you get spooked by the December 2018 fall and gave up on passive?

Post by tadamsmar » Fri Feb 15, 2019 8:52 pm

livesoft wrote:
Fri Feb 15, 2019 6:59 pm
I gave up long ago on predicting the future. But I am pretty good at observing the very recent past which is actionable.
I thought time-travel to the past is impossible now that Roth recharacterization has been repealed.

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Re: Did you get spooked by the December 2018 fall and gave up on passive?

Post by montanagirl » Fri Feb 15, 2019 8:54 pm

I bought the dips. :beer

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Re: Did you get spooked by the December 2018 fall and gave up on passive?

Post by Yohanson » Fri Feb 15, 2019 8:56 pm

I was 100% equities before 2008 and have continued to be 100% equities even now. I don't see myself changing my AA for at least a year or more.
Last edited by Yohanson on Sat Feb 16, 2019 8:09 pm, edited 1 time in total.

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Re: Did you get spooked by the December 2018 fall and gave up on passive?

Post by jebmke » Fri Feb 15, 2019 8:57 pm

I never hit a re-balance point so did nothing.
When you discover that you are riding a dead horse, the best strategy is to dismount.

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Re: Did you get spooked by the December 2018 fall and gave up on passive?

Post by staythecourse » Fri Feb 15, 2019 8:58 pm

staustin wrote:
Fri Feb 15, 2019 8:40 pm
i had been sitting on the sidelines with too much cash thinking p/e ratios were too high.... i bought, bought, bought, in december.

valuations do matter..
Actually no they don't (at least not much). Please read the regression analysis from Vanguard. The predictive value of PE10 and PE1 for future return of stocks is: 0.41 and 0.37 respective. So, not much predictive value there. One of the great misunderstanding of the markets is that the ERP is in fact clustered to only a FEW trading days which has nothing to do with valuations. Of all trading days the ERP is condensed down to <1% of all trading days. So the only way to not miss the ERP is to be in the market the WHOLE time because if you miss just a few of those "special" days you could have just been in bonds the WHOLE time as you would have done better.

Good luck.

P.s. Despite saying the above valuations MAY matter, but I can say the data does NOT back up the usual valuation metrics have figured out WHICH valuations on an ex ante basis is worth following. SO a losers game thus far.
"The stock market [fluctuation], therefore, is noise. A giant distraction from the business of investing.” | -Jack Bogle

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Re: Did you get spooked by the December 2018 fall and gave up on passive?

Post by n00b » Fri Feb 15, 2019 9:17 pm

I'm disappointed that it came back so fast having already taken some 2018 long-term capital gains in the 0% tax bracket that I didn't want to erase by tax loss harvesting. I did harvest some losses in January though. :)

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Re: Did you get spooked by the December 2018 fall and gave up on passive?

Post by nolesrule » Fri Feb 15, 2019 9:29 pm

I had just tax loss harvested and was waiting out the 31 days so I could do it again. Never got the chance, because it recovered so quickly.

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Re: Did you get spooked by the December 2018 fall and gave up on passive?

Post by stimulacra » Fri Feb 15, 2019 9:34 pm

Nope, sold 1/3 of my bond holdings on 12/18 and bought into U.S. equities. Nothing life-changing but enjoying the nice bump now a couple of months later. Currently directing new cashflows into total bonds and TIPS.

Chris42163
Posts: 84
Joined: Fri Feb 15, 2019 8:03 pm

Re: Did you get spooked by the December 2018 fall and gave up on passive?

Post by Chris42163 » Fri Feb 15, 2019 9:38 pm

I'm going to brag, because it's probably the only time in my life it's going to work out. After not timing markets for my 12-year investing life, I pulled 100% out of the market at S&P 2809 on ~Oct 17th. I reinvested at 2469. I posted elsewhere about why, and I do feel that it was absolutely nothing but luck. I'll take the luck, though. lol

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StevieG72
Posts: 923
Joined: Wed Feb 05, 2014 9:00 pm

Re: Did you get spooked by the December 2018 fall and gave up on passive?

Post by StevieG72 » Fri Feb 15, 2019 9:46 pm

I was piling any spare cash I could scrape up in to stocks during the last quarter of 2018.

Definitely have not given up on passive.
Fools think their own way is right, but the wise listen to others.

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