Year's worth of earnings in two months?

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carol-brennan
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Year's worth of earnings in two months?

Post by carol-brennan » Sat Mar 09, 2019 5:52 am

Dipping back into the market in January and February, just sensing the momentum, I ended up booking a full year's worth of expected return in 2 months. I was sensing a top (and also the top of the range had been met), so I sold last Thursday. Now, after thinking about this, I don't see much sense in returning to the market this year. After all, I met my goal in the first two months. I can cruise along in the G fund and get a risk-free 2.7% or so for the rest of the year. Why get greedy, especially as economic storm clouds form around the world?

Am I alone in this thinking?

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RickBoglehead
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Re: Year's worth of earnings in two months?

Post by RickBoglehead » Sat Mar 09, 2019 6:06 am

What you're espousing is market timing, which would put you in the very small minority of forum members. Perhaps your goals are not adequate?

Both dipping back in, and then coming out, are contrary to the Boglehead viewpoint, no?
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Re: Year's worth of earnings in two months?

Post by Silk McCue » Sat Mar 09, 2019 6:07 am

It’s just market timing. Returns don’t neatly occur in a calendar year and then start over. You believing that you have met this year’s goal is mental gymnastics. Believing you “sensed” a top is folly.

You will only be successful by staying in the market in your appropriate Asset Allocation for the long run. Your current strategy is wishful thinking.

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Re: Year's worth of earnings in two months?

Post by Daryl » Sat Mar 09, 2019 6:14 am

Like the previous poster, I do thing this is a question about appropriate goal setting; however, it seems the OP's goals are very short-term (a year or less). If that really is the OP's goals, it probably makes sense to reduce risk once they have achieved their goal. Like the OP, I have some short-term financial goals; however, mine are based on annual savings / contributions to retirement accounts. I also have some long-term goals (several decades). Those are based around account balance. Closing in on those goals would be another reason to reduce risk.

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carol-brennan
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Re: Year's worth of earnings in two months?

Post by carol-brennan » Sat Mar 09, 2019 6:23 am

I agree that it's market timing.

Around retirement age (+/- 3 years before and after), I'm willing to time the market to reduce the possibility of having to put off retirement because the market took a big dive or entered an extended bear market, especially when we're sitting at the top of a decade-long, worldwide experiment with never-before-tried quantitative easing.

For everyone involved, I hope the landing will be soft. But hope is not an investing strategy that allows me to sleep well at night.

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Re: Year's worth of earnings in two months?

Post by revhappy » Sat Mar 09, 2019 6:30 am

I am also in 90% cash. I sold 1 SPY 250 PUT expiring Dec 2019 yesterday for $8.50. This is cash secured. My plan for the rest of the year is on market falls sell enough PUTs and earn some extra income. If SPY indeed falls to 250, I will be glad to buy back SPY at that price.

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Re: Year's worth of earnings in two months?

Post by StandingRock » Sat Mar 09, 2019 6:30 am

What are the tax implications?

dcabler
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Re: Year's worth of earnings in two months?

Post by dcabler » Sat Mar 09, 2019 6:34 am

carol-brennan wrote:
Sat Mar 09, 2019 5:52 am
Dipping back into the market in January and February, just sensing the momentum, I ended up booking a full year's worth of expected return in 2 months. I was sensing a top (and also the top of the range had been met), so I sold last Thursday. Now, after thinking about this, I don't see much sense in returning to the market this year. After all, I met my goal in the first two months. I can cruise along in the G fund and get a risk-free 2.7% or so for the rest of the year. Why get greedy, especially as economic storm clouds form around the world?

Am I alone in this thinking?
You're probably not alone. But consider this. You won't earn your full year's goal each and every year. Bailing during any year in which you've met your goal means long term, you'll never meet your goal. You're more likely to meet your long term goals by having those occasional gangbuster years that offset the not-so-good years.

There are many methods for tactical asset allocation (aka market timing), all of which are generally frowned upon by the BH community, but none of which involve "sensing the momentum". They usually have strict mathematical rules about when to get out and when to get back into the market.

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Re: Year's worth of earnings in two months?

Post by revhappy » Sat Mar 09, 2019 6:34 am

StandingRock wrote:
Sat Mar 09, 2019 6:30 am
What are the tax implications?
I am fortunate to be a tax resident of a country that doesn't tax capital gains, interest income etc.

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Re: Year's worth of earnings in two months?

Post by Silk McCue » Sat Mar 09, 2019 6:36 am

carol-brennan wrote:
Sat Mar 09, 2019 6:23 am
I agree that it's market timing.

Around retirement age (+/- 3 years before and after), I'm willing to time the market to reduce the possibility of having to put off retirement because the market took a big dive or entered an extended bear market, especially when we're sitting at the top of a decade-long, worldwide experiment with never-before-tried quantitative easing.

For everyone involved, I hope the landing will be soft. But hope is not an investing strategy that allows me to sleep well at night.

I don't "hope" that our "investing strategy" will take care of us and we are less than 2 years from being retired. I know that my AA will carry us through 8 years at that time until SS at 68/70 regardless of what happens in the market and at a higher standard of living than we have now. That is a strategy I can sleep with.

Cheers

ivk5
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Re: Year's worth of earnings in two months?

Post by ivk5 » Sat Mar 09, 2019 6:36 am

carol-brennan wrote:
Sat Mar 09, 2019 6:23 am
I agree that it's market timing.

Around retirement age (+/- 3 years before and after), I'm willing to time the market to reduce the possibility of having to put off retirement because the market took a big dive or entered an extended bear market, especially when we're sitting at the top of a decade-long, worldwide experiment with never-before-tried quantitative easing.

For everyone involved, I hope the landing will be soft. But hope is not an investing strategy that allows me to sleep well at night.
Best way to mitigate the risk of being in the market during really bad days/weeks/months/years is to make sure you’re in the market on the up days too.

There’s plenty of published research showing that the performance impact of missing only a handful of the best days in the market is dramatic.

Your strategy is as likely to have you miss good days as bad days.

dcabler
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Re: Year's worth of earnings in two months?

Post by dcabler » Sat Mar 09, 2019 6:37 am

carol-brennan wrote:
Sat Mar 09, 2019 6:23 am
I agree that it's market timing.

Around retirement age (+/- 3 years before and after), I'm willing to time the market to reduce the possibility of having to put off retirement because the market took a big dive or entered an extended bear market, especially when we're sitting at the top of a decade-long, worldwide experiment with never-before-tried quantitative easing.

For everyone involved, I hope the landing will be soft. But hope is not an investing strategy that allows me to sleep well at night.
It's not unheard of to reduce your exposure to stocks in the years preceding and a few years after starting retirement for the reasons you mention above and then increase your stock exposure from there back to a place you feel comfortable. But it's usually done based on time, not on a perception of where the market is/isn't.

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carol-brennan
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Re: Year's worth of earnings in two months?

Post by carol-brennan » Sat Mar 09, 2019 6:38 am

StandingRock wrote:
Sat Mar 09, 2019 6:30 am
What are the tax implications?
For me, higher RMDs when I turn 70.5.

;)

retiringwhen
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Re: Year's worth of earnings in two months?

Post by retiringwhen » Sat Mar 09, 2019 6:39 am

What if next years gains come in December or last years gains came in JAN/FEB or 2019? The market does not have a 12 mos. calendar. You need to work on understanding your risk tolerance and stay in the pool and take the heat. Otherwise you will be 100% sure to miss one or more of your “feels” and and up very sorry. The biggest risk is missing out on the good days, not avoiding the bad days.

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Re: Year's worth of earnings in two months?

Post by goblue100 » Sat Mar 09, 2019 6:40 am

I'm not as dogmatic as some forum members, but allow me to point out a flaw in your strategy. Lets assume the market doesn't follow your senses, as March 9th is not the top. The US market is up 18% for the year, and International is up 22%. Are you going to buy in at much higher prices on Jan 1 2020? How will you get your gains for 2020 if you don't?

You may say you won't as now the market is sure to drop. But people have been saying that since 2013, if not longer. All of the studies that show safe withdrawal rates assume you stay invested in your asset allocation. Once you get "greedy" and try to avoid the market risk I think is where you are going to run into trouble.
Financial planners are savers. They want us to be 95 percent confident we can finance a 30-year retirement even though there is an 82 percent probability of being dead by then. - Scott Burns

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RickBoglehead
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Re: Year's worth of earnings in two months?

Post by RickBoglehead » Sat Mar 09, 2019 6:42 am

carol-brennan wrote:
Sat Mar 09, 2019 6:23 am
Around retirement age (+/- 3 years before and after), I'm willing to time the market to reduce the possibility of having to put off retirement because the market took a big dive or entered an extended bear market, especially when we're sitting at the top of a decade-long, worldwide experiment with never-before-tried quantitative easing.

For everyone involved, I hope the landing will be soft. But hope is not an investing strategy that allows me to sleep well at night.
If a dive in the market causes you to put off retirement, then you have an inadequate financial base for retirement, and you AA isn't setup correctly. As you approach retirement, more assets should be in bonds/cds/cash. When equities dip, they allow you to not flinch.

We're 2 years from retirement. I'm at 71/29 presently, up from our year-ending 67.5/32.5. But we have 8 years of spending on the bond/cd/cash side, and then with Social Security kicking in, if the market was down 50% from today's levels our equity position would provide 18 years of spending, so I feel comfortable with the ratio.

The 2019 market increase is only an increase due to the significant drop in late 2018. Where we measure from is all important. Saying this year is up, or the last ten years are up, or ____ is all due to where you start the measuring tape. What matters isn't % increases or decreases, but absolute dollars we have available to us. We don't spend percentages, we spend dollars.

In 2018 had you bailed in September or November you'd look omniscient instead of widely lucky. When would you have left in 2017?
Last edited by RickBoglehead on Sat Mar 09, 2019 6:45 am, edited 1 time in total.
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Topic Author
carol-brennan
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Re: Year's worth of earnings in two months?

Post by carol-brennan » Sat Mar 09, 2019 6:42 am

dcabler wrote:
Sat Mar 09, 2019 6:37 am

It's not unheard of to reduce your exposure to stocks in the years preceding and a few years after starting retirement for the reasons you mention above and then increase your stock exposure from there back to a place you feel comfortable. But it's usually done based on time, not on a perception of where the market is/isn't.
Agree. But in this case, the time seems right on two fronts. Put another way: what's the greater risk for someone 2 years before retirement: hoping against all signs that the market will somehow go higher from here or pulling out, for now, and collecting a risk-free 2.7 percent (likely to go down if the market continues selling off, yes)?

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carol-brennan
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Re: Year's worth of earnings in two months?

Post by carol-brennan » Sat Mar 09, 2019 6:44 am

RickBoglehead wrote:
Sat Mar 09, 2019 6:42 am

If a dive in the market causes you to put off retirement, then you have an inadequate financial base for retirement, and you AA isn't setup correctly. As you approach retirement, more assets should be in bonds/cds/cash. When equities dip, they allow you to not flinch.

We're 2 years from retirement. I'm at 71/29 presently, up from our year-ending 67.5/32.5. But we have 8 years of spending on the bond/cd/cash side, and then with Social Security kicking in, if the market was down 50% from today's levels our equity position would provide 18 years of spending, so I feel comfortable with the ratio.
You're right. Even when in the market, my AA is low enough so that I would not need to worry. Nevertheless, I would not at all be surprised to see the market give back a huge percentage of the gains we've seen in the last 10 years. I don't want to be around to watch the impact that that would take on my portfolio, even if the impact would not be catastrophic.

Let's put it another way: part of this stock market investing game is based on faith. Right now, I ain't got much of that.

sambb
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Re: Year's worth of earnings in two months?

Post by sambb » Sat Mar 09, 2019 6:54 am

sounds like yout risk tolerance changed, and you rebalanced to a lower allocation.

finite_difference
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Re: Year's worth of earnings in two months?

Post by finite_difference » Sat Mar 09, 2019 6:57 am

carol-brennan wrote:
Sat Mar 09, 2019 6:44 am
RickBoglehead wrote:
Sat Mar 09, 2019 6:42 am

If a dive in the market causes you to put off retirement, then you have an inadequate financial base for retirement, and you AA isn't setup correctly. As you approach retirement, more assets should be in bonds/cds/cash. When equities dip, they allow you to not flinch.

We're 2 years from retirement. I'm at 71/29 presently, up from our year-ending 67.5/32.5. But we have 8 years of spending on the bond/cd/cash side, and then with Social Security kicking in, if the market was down 50% from today's levels our equity position would provide 18 years of spending, so I feel comfortable with the ratio.
You're right. Even when in the market, my AA is low enough so that I would not need to worry. Nevertheless, I would not at all be surprised to see the market give back a huge percentage of the gains we've seen in the last 10 years. I don't want to be around to watch the impact that that would take on my portfolio, even if the impact would not be catastrophic.

Let's put it another way: part of this stock market investing game is based on faith. Right now, I ain't got much of that.
What has your return been over the last 5, 10, 15, 20, 25 years?
The most precious gift we can offer anyone is our attention. - Thich Nhat Hanh

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Re: Year's worth of earnings in two months?

Post by jsprag » Sat Mar 09, 2019 8:02 am

sambb wrote:
Sat Mar 09, 2019 6:54 am
sounds like yout risk tolerance changed, and you rebalanced to a lower allocation.
Exactly what I was thinking.

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Re: Year's worth of earnings in two months?

Post by Silk McCue » Sat Mar 09, 2019 8:46 am

jsprag wrote:
Sat Mar 09, 2019 8:02 am
sambb wrote:
Sat Mar 09, 2019 6:54 am
sounds like yout risk tolerance changed, and you rebalanced to a lower allocation.
Exactly what I was thinking.
This is a euphemism for “market timing”.

Cheers

Random Walker
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Re: Year's worth of earnings in two months?

Post by Random Walker » Sat Mar 09, 2019 8:59 am

carol-brennan wrote:
Sat Mar 09, 2019 5:52 am
Dipping back into the market in January and February, just sensing the momentum, I ended up booking a full year's worth of expected return in 2 months. I was sensing a top (and also the top of the range had been met), so I sold last Thursday. Now, after thinking about this, I don't see much sense in returning to the market this year. After all, I met my goal in the first two months. I can cruise along in the G fund and get a risk-free 2.7% or so for the rest of the year. Why get greedy, especially as economic storm clouds form around the world?

Am I alone in this thinking?
I’m no fan of market timing, but I have come to appreciate periodically measuring one’s personal circumstance and goals relative to where the markets are. What you are describing sounds a bit like Value Averaging. From your post I think you might find this book interesting: Value Averaging by Michael Edleson.

https://en.m.wikipedia.org/wiki/Value_averaging

Dave

sambb
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Re: Year's worth of earnings in two months?

Post by sambb » Sat Mar 09, 2019 9:03 am

If one's risk tolerance changes, and you decide on a new asset allocation, you are rebalancing to a new asset allocation. it is ok to have risk tolerance changes, everyone does in their lives at some point, and changes their allocations. Sounds like your risk tolerance changed.

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Re: Year's worth of earnings in two months?

Post by UpperNwGuy » Sat Mar 09, 2019 9:07 am

carol-brennan wrote:
Sat Mar 09, 2019 5:52 am
Dipping back into the market in January and February, just sensing the momentum, I ended up booking a full year's worth of expected return in 2 months. I was sensing a top (and also the top of the range had been met), so I sold last Thursday. Now, after thinking about this, I don't see much sense in returning to the market this year. After all, I met my goal in the first two months. I can cruise along in the G fund and get a risk-free 2.7% or so for the rest of the year. Why get greedy, especially as economic storm clouds form around the world?

Am I alone in this thinking?
You mention the G Fund, so I assume you're a Fed. If so, FERS and Social Security provide you with a stable defined benefit for most of your retirement expenses, and you can afford to engage in market timing with the TSP portion. Most Bogleheads are not Feds and don't have that same luxury.

jsprag
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Re: Year's worth of earnings in two months?

Post by jsprag » Sat Mar 09, 2019 9:13 am

Silk McCue wrote:
Sat Mar 09, 2019 8:46 am
jsprag wrote:
Sat Mar 09, 2019 8:02 am
sambb wrote:
Sat Mar 09, 2019 6:54 am
sounds like yout risk tolerance changed, and you rebalanced to a lower allocation.
Exactly what I was thinking.
This is a euphemism for “market timing”.
Not always, but in this case I agree.

SGM
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Re: Year's worth of earnings in two months?

Post by SGM » Sat Mar 09, 2019 9:33 am

When the public is most pessimistic often the market rises and vice versa. Maybe you need a more conservative allocation.

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Re: Year's worth of earnings in two months?

Post by tibbitts » Sat Mar 09, 2019 9:35 am

carol-brennan wrote:
Sat Mar 09, 2019 5:52 am
Dipping back into the market in January and February, just sensing the momentum, I ended up booking a full year's worth of expected return in 2 months. I was sensing a top (and also the top of the range had been met), so I sold last Thursday. Now, after thinking about this, I don't see much sense in returning to the market this year. After all, I met my goal in the first two months. I can cruise along in the G fund and get a risk-free 2.7% or so for the rest of the year. Why get greedy, especially as economic storm clouds form around the world?

Am I alone in this thinking?
I'm sure some other people did the same. Just remember that no matter what, you can't re-enter the market at a higher level than you got out at, by whatever objective measure you use.

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Re: Year's worth of earnings in two months?

Post by juliewongferra » Sat Mar 09, 2019 12:16 pm

carol-brennan wrote:
Sat Mar 09, 2019 5:52 am
Dipping back into the market in January and February, just sensing the momentum, I ended up booking a full year's worth of expected return in 2 months. I was sensing a top (and also the top of the range had been met), so I sold last Thursday. Now, after thinking about this, I don't see much sense in returning to the market this year. After all, I met my goal in the first two months. I can cruise along in the G fund and get a risk-free 2.7% or so for the rest of the year. Why get greedy, especially as economic storm clouds form around the world?

Am I alone in this thinking?
Congratulations to you for taking those profits off the table! So you think the market wuill be flat or go lower this year? In that case, you SHOULD get back in the market, to lock in the profits. (If you sold X shares at Y dollars, and the market goes down, then you now have X+A shares at Y dollars.)

Because like others are saying, if the market goes up, you are locking in losses (buying X shares at Y+A dollars)

cheers,
jwf
If you aren't familiar with Mr. Bogle and his investment philosophy, then you don't know Jack!

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Re: Year's worth of earnings in two months?

Post by ralph124cf » Sat Mar 09, 2019 12:31 pm

revhappy wrote:
Sat Mar 09, 2019 6:34 am
StandingRock wrote:
Sat Mar 09, 2019 6:30 am
What are the tax implications?
I am fortunate to be a tax resident of a country that doesn't tax capital gains, interest income etc.
Some, but not all, IRA accounts allow the sale of cash covered puts. I consider a cash covered put simply as a limit order to buy, with an income incentive if the put price is not reached.

Ralph

delamer
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Re: Year's worth of earnings in two months?

Post by delamer » Sat Mar 09, 2019 12:36 pm

How long do you expect to live? How you long do you expect your heirs to live?

Because you are investing as if you are trying to maximize your portfolio value for the next few years, rather than over the long term.

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Re: Year's worth of earnings in two months?

Post by Mountain Doc » Sat Mar 09, 2019 12:40 pm

carol-brennan wrote:
Sat Mar 09, 2019 6:44 am
You're right. Even when in the market, my AA is low enough so that I would not need to worry. Nevertheless, I would not at all be surprised to see the market give back a huge percentage of the gains we've seen in the last 10 years. I don't want to be around to watch the impact that that would take on my portfolio, even if the impact would not be catastrophic.

Let's put it another way: part of this stock market investing game is based on faith. Right now, I ain't got much of that.
Suppose you are wrong, and we end the year 10% higher than when you sold. Will you get back in for 2020 at the higher prices?

Suppose you don't, and we end next year 10% higher still. Will you get back in for 2021?

Trying to time the market is a lot more stressful than picking an asset allocation you can live with. If that is 20/80, fine. But don't deceive yourself into believing you can successfully time the market. The evidence is quite clear that it cannot be done.

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Re: Year's worth of earnings in two months?

Post by letsgobobby » Sat Mar 09, 2019 1:06 pm

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pdavi21
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Re: Year's worth of earnings in two months?

Post by pdavi21 » Sat Mar 09, 2019 1:19 pm

My comment has been removed as a "personal attack", and so I will offer an alternative comment.

One time I timed the market and won big. I became [less intelligent] as a result and lost more than I had won later.

I would like to stress that this only refers to myself and not the OP. Also, this is not a personal attack on myself as "less intelligent" and it's synonyms are relative descriptions and do not refer to a state of intelligence except in relation to an alternate state of intelligence.
Last edited by pdavi21 on Sat Mar 09, 2019 2:35 pm, edited 1 time in total.
"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: Year's worth of earnings in two months?

Post by letsgobobby » Sat Mar 09, 2019 1:20 pm

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bhsince87
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Re: Year's worth of earnings in two months?

Post by bhsince87 » Sat Mar 09, 2019 1:51 pm

carol-brennan wrote:
Sat Mar 09, 2019 5:52 am
Dipping back into the market in January and February, just sensing the momentum, I ended up booking a full year's worth of expected return in 2 months. I was sensing a top (and also the top of the range had been met), so I sold last Thursday. Now, after thinking about this, I don't see much sense in returning to the market this year. After all, I met my goal in the first two months. I can cruise along in the G fund and get a risk-free 2.7% or so for the rest of the year. Why get greedy, especially as economic storm clouds form around the world?

Am I alone in this thinking?
If you are planning to never get back in the market again, then this approach can make sense. Put it in the fixed income fund, and set it aside until retirement.

However, if you plan on putting the money back in at some point, the question is, when? This board has many posts with the question, "I got out of the market at X, and have been on the sidelines since. Now I've missed X years of gains How should I get my money back in the market?"

And as others have mention, Jan-Dec is a completely arbitrary time frame, at least for individuals. Fund managers might have to meet yearly targets, but that might be one reason why they tend to underperform over time.
"If ye love wealth better than liberty, the tranquility of servitude better than the animating contest of freedom, go home from us in peace." Samuel Adams

KlangFool
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Re: Year's worth of earnings in two months?

Post by KlangFool » Sat Mar 09, 2019 1:58 pm

carol-brennan wrote:
Sat Mar 09, 2019 6:23 am
I agree that it's market timing.

Around retirement age (+/- 3 years before and after), I'm willing to time the market to reduce the possibility of having to put off retirement because the market took a big dive or entered an extended bear market, especially when we're sitting at the top of a decade-long, worldwide experiment with never-before-tried quantitative easing.

For everyone involved, I hope the landing will be soft. But hope is not an investing strategy that allows me to sleep well at night.
carol-Brennan,

<<But hope is not an investing strategy that allows me to sleep well at night.>>

Then, you should have a strategy that will work without timing the market correctly.

<< I'm willing to time the market to reduce the possibility of having to put off retirement because the market took a big dive or entered an extended bear market, >>

You are hoping that you are lucky and your timing is good. That is contrary to what you claimed in your post.

It is very simple.

Why do you think that you cannot have a strategy that works even if the market takes a dive right before your retirement?

KlangFool

jtl46
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Re: Year's worth of earnings in two months?

Post by jtl46 » Sat Mar 09, 2019 2:48 pm

I am currently all cash and will stay that way until I feel the market has adjusted by at least 20%. That may or may not happen but in the meantime I can live very comfortably on my meager mm interest rate and SS. Imo rolling the dice at the 10 year mark of a bull market is not a bet I care to make. I guess that makes me a market timer. I sometimes think investing in the market is closer to gambling than a lot of people care to admit. I see many negatives, like larger and larger govt deficits, very high corporate and personal debt, lofty RE valuations (at least where I live), many store closings, wages are rising but they are still low for most people, too many companies with over sized valuations compared to their earnings. Anyway, I'm sure most of you will not agree and perhaps even take exception, but that is my very conservative opinion.

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Re: Year's worth of earnings in two months?

Post by Shallowpockets » Sat Mar 09, 2019 3:09 pm

With the market down as it was in Dec there was a massive outflow from funds. It may have been more than in 2008.
Unless these people stay out forever, there will be buying back in in the future. This would be a boost to the market. So staying in is good.
OP sold with the 10% increase and I agree they could sit out on that profit of one year. However that 10% increase was only since the end of year December results which really only brought you back to same as mid year 2018.

It is a plan of sorts. 2017 was a 21% gain with dividends reinvested. A good year. Possible for OP to miss out on an additonal 11%. That's OK. But if wants to buy back in then he has to do it at +11% over his selling prices.

Research has shown that if you miss the biggest market up days you really cut your gains. This could be as few as 6-10 in the entire year. Hard to time for that.

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Re: Year's worth of earnings in two months?

Post by StandingRock » Sat Mar 09, 2019 4:12 pm


Why do you think market timers hang around on Bogleheads?

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Re: Year's worth of earnings in two months?

Post by siriusblack » Sat Mar 09, 2019 5:11 pm

Random Walker wrote:
Sat Mar 09, 2019 8:59 am
I’m no fan of market timing, but I have come to appreciate periodically measuring one’s personal circumstance and goals relative to where the markets are. What you are describing sounds a bit like Value Averaging. From your post I think you might find this book interesting: Value Averaging by Michael Edleson.
This is sort of what I intend to do with my kids' 529 plans. I contribute monthly, and I'm expecting an average 7% rate of return. I have a spreadsheet that shows me what the account should be worth at the end of each year at that rate. If the account starts lagging, then I will add a bit more at the end of the year to try to get it back on track. (But I wouldn't slow down the contributions if it gets ahead of my target... would just keep investing in that case.)

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Re: Year's worth of earnings in two months?

Post by letsgobobby » Sat Mar 09, 2019 5:12 pm

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GCD
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Re: Year's worth of earnings in two months?

Post by GCD » Sat Mar 09, 2019 5:26 pm

carol-brennan wrote:
Sat Mar 09, 2019 5:52 am
...just sensing the momentum...
...I was sensing a top...
carol-brennan wrote:
Sat Mar 09, 2019 6:23 am
But hope is not an investing strategy that allows me to sleep well at night.
But hope is your investing strategy when you base your decisions on sensing things. Do you have some sort of specific guidelines you have set for yourself or do you just follow the news and get in and out when it feels right on a gut instinct? Just curious.

carol-brennan wrote:
Sat Mar 09, 2019 5:52 am
Am I alone in this thinking?
On this board most people will try to talk you out of this, but you have lots of company nationwide.

letsgobobby
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Re: Year's worth of earnings in two months?

Post by letsgobobby » Sat Mar 09, 2019 5:38 pm

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Re: Year's worth of earnings in two months?

Post by sf_tech_saver » Sat Mar 09, 2019 5:51 pm

Markets always climb a wall of worry. Finding worry isn't predicting the future.
VTI is a modern marvel

StandingRock
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Re: Year's worth of earnings in two months?

Post by StandingRock » Sat Mar 09, 2019 5:55 pm

letsgobobby wrote:
Sat Mar 09, 2019 5:38 pm
StandingRock wrote:
Sat Mar 09, 2019 4:12 pm

Why do you think market timers hang around on Bogleheads?
Once you know the data, to tilt against it is self-deluded narcissism. In my opinion.
I read through some of those threads and it seems like the OP's woke up in a panic one morning and went straight to Google to find a way to justify their fears.

UpperNwGuy
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Re: Year's worth of earnings in two months?

Post by UpperNwGuy » Sat Mar 09, 2019 6:00 pm

StandingRock wrote:
Sat Mar 09, 2019 4:12 pm

Why do you think market timers hang around on Bogleheads?
I have had this same question ever since I first joined Bogleheads 18 months ago.

delamer
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Re: Year's worth of earnings in two months?

Post by delamer » Sat Mar 09, 2019 7:38 pm

jtl46 wrote:
Sat Mar 09, 2019 2:48 pm
I am currently all cash and will stay that way until I feel the market has adjusted by at least 20%. That may or may not happen but in the meantime I can live very comfortably on my meager mm interest rate and SS. Imo rolling the dice at the 10 year mark of a bull market is not a bet I care to make. I guess that makes me a market timer. I sometimes think investing in the market is closer to gambling than a lot of people care to admit. I see many negatives, like larger and larger govt deficits, very high corporate and personal debt, lofty RE valuations (at least where I live), many store closings, wages are rising but they are still low for most people, too many companies with over sized valuations compared to their earnings. Anyway, I'm sure most of you will not agree and perhaps even take exception, but that is my very conservative opinion.
How can you “feel” that the market has adjusted by 20%? What do you do if it goes up 25% before it goes down 20%? Do all the negatives you listed change if the stock market goes down 20%?

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Re: Year's worth of earnings in two months?

Post by MikeG62 » Sun Mar 10, 2019 11:55 am

carol-brennan wrote:
Sat Mar 09, 2019 6:44 am

...Let's put it another way: part of this stock market investing game is based on faith. Right now, I ain't got much of that.
The investing pathway is littered with the bodies of people who moved in and out if the market based upon faith or a feeling.

Two questions:

1. If you are right and the market sours, when will you know it is safe to get back in the water?

If you are predicting a 50% decline (or more to give back most of the gains of the last 10 years), what happens if the market pull back ends with a 45% decline. You are left sitting on the sidelines waiting for the trigger that never comes.

Keep in mind that in the teeth a very severe bear markets it’s psychologically very hard to pull the buy trigger as things seems really bleak.

2. What happens if you are wrong and the Oct-Dec pullback is it and the market climbs ever higher? You know how many people thought the same thing as you in 2011, 2012, 2013, etc...what then becomes the trigger for you to get back in?
Real Knowledge Comes Only From Experience

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Re: Year's worth of earnings in two months?

Post by LadyGeek » Sun Mar 10, 2019 12:09 pm

I removed an off-topic post. As a reminder, this is a "no politics" forum. See: Politics and Religion
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