That's enough for me in 2019

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market timer
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That's enough for me in 2019

Post by market timer » Sat Mar 16, 2019 7:41 am

This is my top-calling post. Feel free to bump as we make new highs.

We are less than a quarter into 2019 and it has already been incredible year for equities and bonds. My portfolio is up 15% YTD and crossed a nice round number on Friday. Thanks to a decade of low interest rates, I've never had a chance to earn a substantial amount on interest. On Friday, I did a bit of math: $1.5M x 2.5% interest / 365 days. Wow, I could get paid over $100/day just for sitting there and waiting. So that's what I'm doing. I got out of risk assets and went to cash yesterday. Felt nice to realize substantial gains on the sales.

The mood on this forum has been rather optimistic lately. We have many discussions about leveraging both equities and bonds, more interest in derivatives than I've ever seen in the past. Cash has fared poorly for years, so people want to short it by borrowing. Meanwhile, equity valuations are high, as measured by CAPE, and bond risk and term premiums are negligible. The inverted belly of the yield curve is forecasting a downturn in a couple years, while the Fed seems entirely dependent on equity markets for direction (compare Powell's "long way from neutral" rates statement on 3rd October with his about-face in late November). Something needs to give. Either the economy is truly weak and we get a meaningful equity correction or yields need to move higher. I'm not clairvoyant, so happy to sit in cash and wait for either outcome. Also happy to lock-in a 2019 return of 15% + ca. 2% interest.

stan1
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Re: That's enough for me in 2019

Post by stan1 » Sat Mar 16, 2019 7:44 am

I do agree that had I moved all of my bonds into the S&P 500 in my 401K on December 26 2018 I'd be looking to move them back to bonds right about now.

Jags4186
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Re: That's enough for me in 2019

Post by Jags4186 » Sat Mar 16, 2019 7:45 am

Do you think calendar dates matter?

I ask because while yes since January 1 we’ve had a great run up the SP500 is still down ~110 points from it’s ATH only 7 months ago. What made you decide to not get out in September, but you are okay getting out today?

HEDGEFUNDIE
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Re: That's enough for me in 2019

Post by HEDGEFUNDIE » Sat Mar 16, 2019 7:58 am

Would you have sold if the markets were down 15% YTD?

I’m guessing not.

So you’re capping your gains but not your losses with this strategy. 🤔

Also, I prefer to think of all the leverage posts as exercises in portfolio optimization rather than irrational exuberance.

lostdog
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Re: That's enough for me in 2019

Post by lostdog » Sat Mar 16, 2019 7:59 am

:oops:

Noise thread on bogleheads.org.

Time in the market is better than timing the market.

Good luck market timers.
Last edited by lostdog on Sat Mar 16, 2019 8:01 am, edited 2 times in total.
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rutrow2015
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Re: That's enough for me in 2019

Post by rutrow2015 » Sat Mar 16, 2019 7:59 am

OP is not the only one contemplating moves like this right now.

I did it (transitioned 100% to cash) starting in Dec 2007 and finishing by June 2008 and felt like the smartest guy in the room by early 2009.

The problem is that I had to be right twice. I stayed 100% cash until 2013. Factoring in the amount of stress it caused me I would have been farther ahead just ignoring the market completely.

I'm trying to stay disciplined "this time around" but the temptation is definitely there and my 'time to retire' is 10 years shorter.

dayzero
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Re: That's enough for me in 2019

Post by dayzero » Sat Mar 16, 2019 8:01 am

market timer wrote:
Sat Mar 16, 2019 7:41 am
This is my top-calling post. Feel free to bump as we make new highs.

We are less than a quarter into 2019 and it has already been incredible year for equities and bonds. My portfolio is up 15% YTD and crossed a nice round number on Friday. Thanks to a decade of low interest rates, I've never had a chance to earn a substantial amount on interest. On Friday, I did a bit of math: $1.5M x 2.5% interest / 365 days. Wow, I could get paid over $100/day just for sitting there and waiting. So that's what I'm doing. I got out of risk assets and went to cash yesterday. Felt nice to realize substantial gains on the sales.

The mood on this forum has been rather optimistic lately. We have many discussions about leveraging both equities and bonds, more interest in derivatives than I've ever seen in the past. Cash has fared poorly for years, so people want to short it by borrowing. Meanwhile, equity valuations are high, as measured by CAPE, and bond risk and term premiums are negligible. The inverted belly of the yield curve is forecasting a downturn in a couple years, while the Fed seems entirely dependent on equity markets for direction (compare Powell's "long way from neutral" rates statement on 3rd October with his about-face in late November). Something needs to give. Either the economy is truly weak and we get a meaningful equity correction or yields need to move higher. I'm not clairvoyant, so happy to sit in cash and wait for either outcome. Also happy to lock-in a 2019 return of 15% + ca. 2% interest.
Some people just never learn.
Last edited by dayzero on Sat Mar 16, 2019 8:02 am, edited 1 time in total.

staythecourse
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Re: That's enough for me in 2019

Post by staythecourse » Sat Mar 16, 2019 8:02 am

Who cares. Thinking about how the market is doing and predicting it going forward is a rabbit hole that experienced long term investors don't even try to guess. My only bet is in a lifetime of guessing you will be wrong more often then right.

Good luck.
"The stock market [fluctuation], therefore, is noise. A giant distraction from the business of investing.” | -Jack Bogle

livesoft
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Re: That's enough for me in 2019

Post by livesoft » Sat Mar 16, 2019 8:09 am

So another going to 100% cash thread. We like such threads.

Some YTD performance numbers:
13.64% VTSAX Total US Stock Index
10.60% VTIAX Total Int'l Stock Index
11.27% MTUM a momentum ETF large caps
13.06% DGS emerging markets small caps
14.14% VSIAX Vanguard small-cap value
13.56% IJS small-cap value
01.68% VBTLX Total US Bond Index

Small-caps were higher a few weeks ago.

So I think being up 15% is not a big deal based on above performance numbers. Plus since things tanked in the last week of December, it is kind of a false number anyways. Basically total return numbers are about 2% to 5% since December a year ago (12/31/2017), so it is like a year has gone by and nothing happened.
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Re: That's enough for me in 2019

Post by UpperNwGuy » Sat Mar 16, 2019 8:11 am

I'm pleased with what has happened in the first two and a half months of 2019, and I am hopeful that the remaining nine and a half months of 2019 are also rewarding. I'm looking forward to recovering my all time high of six months ago. I've never understood why people get out of the market.

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Re: That's enough for me in 2019

Post by RickBoglehead » Sat Mar 16, 2019 8:12 am

Don't know why a market timer would be on this forum since 2007.

Don't know the purpose of proclaiming to the forum that you went to cash.

Don't know what the mood on the forum has to do with where the market is going.

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Re: That's enough for me in 2019

Post by MikeG62 » Sat Mar 16, 2019 8:15 am

livesoft wrote:
Sat Mar 16, 2019 8:09 am
...Basically total return numbers are about 2% to 5% since December a year ago (12/31/2017), so it is like a year has gone by and nothing happened.
^This.

OP, good luck getting back in at lower prices than you sold out at. You may or you may not. Odd's probably a bit worse than a coin flip once human emotion is involved.
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Re: That's enough for me in 2019

Post by market timer » Sat Mar 16, 2019 8:17 am

Jags4186 wrote:
Sat Mar 16, 2019 7:45 am
Do you think calendar dates matter?

I ask because while yes since January 1 we’ve had a great run up the SP500 is still down ~110 points from it’s ATH only 7 months ago. What made you decide to not get out in September, but you are okay getting out today?
I did not have much in equities in September (around 25% in int'l stocks), 80% in late December, 0% today. So I guess this was something of a swing trade.

J295
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Re: That's enough for me in 2019

Post by J295 » Sat Mar 16, 2019 8:21 am

Market Timer .... While we (spouse and I) don't market time, I appreciate you sharing and putting out your decisions in real time .... makes for an interesting (albeit unscientific) case study over time .... enjoy your weekend.

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hdas
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Re: That's enough for me in 2019

Post by hdas » Sat Mar 16, 2019 8:22 am

HEDGEFUNDIE wrote:
Sat Mar 16, 2019 7:58 am
I prefer to think of all the leverage posts as exercises in portfolio optimization rather than irrational exuberance.
It’s hard to see the forest when you are in the middle of it. :wink:
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Re: That's enough for me in 2019

Post by Wanderingwheelz » Sat Mar 16, 2019 8:22 am

The Fed could very well cut rates back down to zero, for all we know. If that happens there goes your hundred bucks a day. I think we can all agree that if a 100% cash position is to pay off that the Fed is going to be extremely active. And times like those it’s extremely difficult to buy back all if the stock you sold.

There’s so many different variables that putting all of your conviction into basically one outcome is risky in the same sense that the person who is now 100% stock is being risky too. Risk is risk, whether it’s being too aggressive or too conservative.

Full discourse: I’m 47, still employed full-time, and have a substantially larger cash position than what would be advisable if the CAPE ratio was in the range of “normal”. I’m about 7.5% light in stocks, but I’m prepared to get overweight if we ever get the big one. So I do agree that this is a really good time to be a thoughtful skeptic, particularly when you factor in the household net worth to income ratio. None of us are supposed to be this rich! :sharebeer

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Re: That's enough for me in 2019

Post by gorow » Sat Mar 16, 2019 8:26 am

I worked with a couple of guys who would move their full 401k balance into megacorp stock before ex-dividend, and then move back to their AA immediately after. I tried getting them to do the math on how much of a market move would offset the dividend gain (less than 0.75%) but they were convinced that over the years, this added significant value to their portfolio.
I guess the OP does not have an IPS, or the IPS is sort of unique.
Retired 1/1/2019. Not concerned about sequence of returns because two years here taught me what I need to know.

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Re: That's enough for me in 2019

Post by whodidntante » Sat Mar 16, 2019 8:29 am

User name checks out. I think market timer's posts are always interesting and worth reflecting on. You can decide if you want to do anything differently.

So from one market timer to another:
While I don't have the conviction to "go to cash" I have been increasing my fixed income slightly and my fixed income duration is and will remain short as long as the yield curve looks this way. I do not know that the term premium will be negative, but I don't want to take term risk when spreads are so small or even negative depending on what you look at.

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Re: That's enough for me in 2019

Post by Jon H » Sat Mar 16, 2019 8:29 am

I don’t know or understand why so many people care about someone else’s money.

You do what you do, they do what they do.

Nobody knows what is going to happen, but the OP feels comfortable with the approach taken. Seems fine to me if that’s what they need to do.

Agree to disagree and move on.
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Re: That's enough for me in 2019

Post by market timer » Sat Mar 16, 2019 8:31 am

Wanderingwheelz wrote:
Sat Mar 16, 2019 8:22 am
So I do agree that this is a really good time to be a thoughtful skeptic, particularly when you factor in the household net worth to income ratio. None of us are supposed to be this rich! :sharebeer
I thought about mentioning net worth to income ratio in my OP. It's something I track regularly and worth graphing. The latest Q4 2018 reading dipped due to the equity selloff, but I suspect it will recover in Q1 2019. I agree we are not supposed to be this rich.

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Re: That's enough for me in 2019

Post by dogagility » Sat Mar 16, 2019 8:40 am

Ah yes, an investing strategy based upon market noise. Best of luck to ya.
Taking "risk" since 1995.

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Re: That's enough for me in 2019

Post by siriusblack » Sat Mar 16, 2019 8:47 am

I'll admit I've also indulged my market timing emotions (wait, I mean, umm, my disciplined investment strategy) this week. Reduced AA from ~60/40 (my age in bonds) to ~55/45. My reasoning is that if the market just keeps going up smoothly from here, I'm content to stay at this AA for quite some time, with lower risk and slightly lower returns (knowing the AA will drift back towards 60/40 with new contributions and growth, so I would just skip the rebalancing along the way if that happens). On the other hand, if volatility picks back up, I would go back to 60/40 (or maybe even 65/35) after the next big correction. So ... yeah ... I guess I'm market timing with a small percentage of my portfolio. It's an indulgence that at least keeps me from making bigger moves (like going to 100% cash) which I think would be a much bigger mistake.

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Re: That's enough for me in 2019

Post by staythecourse » Sat Mar 16, 2019 8:48 am

hdas wrote:
Sat Mar 16, 2019 8:22 am
HEDGEFUNDIE wrote:
Sat Mar 16, 2019 7:58 am
I prefer to think of all the leverage posts as exercises in portfolio optimization rather than irrational exuberance.
It’s hard to see the forest when you are in the middle of it. :wink:
Do you have a problem with a static 40/60 allocation to sp500/LTT? Not sure how many would choose that allocation, but it is not outside the reasonable range of static asset allocations. So, the real issue is if you agree or disagree is with leverage. This topic is COMPLETELY different as it advocates for market timing/ active management and Hedgies does not. The elegance of his thread is it is rooted in a simple passively invested 40/60 sp500/ LTT allocation with quarterly rebalances MEANT for a long time horizon with a small portion of one's net work (akin to a play account).

Good luck.
"The stock market [fluctuation], therefore, is noise. A giant distraction from the business of investing.” | -Jack Bogle

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Re: That's enough for me in 2019

Post by sabtastic » Sat Mar 16, 2019 8:51 am

With US valuations being what they are I can't blame you, but I couldn't stand being 100% cash, or even US bonds. The FED showed its cards last year, and they have nowhere left to go.

DW and I have changed our equity allocations substantially over the last few years and we are nearly 50% US 50% international. From 2000-2016 we were essentially 100% US. While I wouldn't say we are timing the market, we probably wouldn't have felt the need to diversify if US valuations were reasonable.

I don't think we will ever go back, either. I could easily see moving to VT or VTWAX permanently for the majority of our equity investments.

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Re: That's enough for me in 2019

Post by flyingaway » Sat Mar 16, 2019 8:55 am

Good intuition. When do you plan to move back into equities?

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Re: That's enough for me in 2019

Post by cherijoh » Sat Mar 16, 2019 9:01 am

rutrow2015 wrote:
Sat Mar 16, 2019 7:59 am
OP is not the only one contemplating moves like this right now.

I did it (transitioned 100% to cash) starting in Dec 2007 and finishing by June 2008 and felt like the smartest guy in the room by early 2009.

The problem is that I had to be right twice. I stayed 100% cash until 2013. Factoring in the amount of stress it caused me I would have been farther ahead just ignoring the market completely.

I'm trying to stay disciplined "this time around" but the temptation is definitely there and my 'time to retire' is 10 years shorter.
Thanks for posting your experience. Most people wouldn't be this honest - even on an anonymous forum! :wink: You are absolutely correct - market timing only works to your advantage when you get the timing right twice.

However, I do think if anyone is contemplating retirement in the near future and got very nervous when the market dropped in December, now would be a good time to rethink their AA and lock in some of their gains. I'm talking to those posters who think bonds are for sissies and are sticking to aggressive allocations thinking they will magically be able to reallocate to a retiree portfolio in a single rebalance exactly x months before they retire.

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Re: That's enough for me in 2019

Post by CarpeDiem22 » Sat Mar 16, 2019 9:03 am

I felt the same way about current valuations and took below actions:

1. Decided to lower my target stock AA by 15%, as guided by Jack Bogle (tactical stock allocation change).
2. Realised that I'm currently at about 20% below my original stock target AA, so need to add 5% more. :oops: I've been steadily increasing stock % starting at zero so still below my target. Will probably buy international this month which looks a bit cheaper.

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Re: That's enough for me in 2019

Post by market timer » Sat Mar 16, 2019 9:05 am

flyingaway wrote:
Sat Mar 16, 2019 8:55 am
Good intuition. When do you plan to move back into equities?
Possibly never. I don't feel FOMO (fear of missing out) because I don't need equity gains to fund my retirement. Seriously considering buying some single-family rentals with my stash. Let's see what the market offers later this year.

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Re: That's enough for me in 2019

Post by AlphaLess » Sat Mar 16, 2019 9:07 am

RickBoglehead wrote:
Sat Mar 16, 2019 8:12 am
5 minutes I can't get back...
No one else to blame but yourself :)))
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Re: That's enough for me in 2019

Post by OHWantToRetire » Sat Mar 16, 2019 9:20 am

As a recent reader of the site, I’ve read a lot about adjusting AA based on the 5% bands. Has anyone been doing this already this year as the market has been up?

I am 75/25 ( I didn’t realize that until I put all my accounts in Personal Capital) but am thinking I’d be happier at 60/40. I’m considering a move to 70/30 right now to start towards that goal. Most of my 25 is in shorter term but I’d consider the next 5 in a Money Market/Cash as 2.3-2.5% rates seem not too bad vs the bond alternatives at this point.

I am not working at this point so it does make me think more about capital preservation. I just don’t know if I could afford to go all cash at this point.

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Re: That's enough for me in 2019

Post by RadAudit » Sat Mar 16, 2019 9:29 am

market timer wrote:
Sat Mar 16, 2019 7:41 am
I did a bit of math: $1.5M x 2.5% interest / 365 days. ... I could get paid over $100/day just for sitting there and waiting.
Good point. Best of luck.

I take a slightly different point of view. Let's call it the Make Hay While the Sun Shines Theory of Investing vs. The That's enough for me in 2019 Theory.

I may be wrong about this; but, I think that significant market run ups happen fairly infrequently. Just when, I don't know. How long the run up will last, I don't know. After a significant drop is usually a good time to invest, as long as the drop is over. Don't know when it's over, either. So, the only option I have is to set an AA I can live with and rebalance IAW my IPS.

Since I'm in retirement and taking RMDs, I'm really hoping this approach works for some time to come. Right now, I'm still down from September '18 highs thanks to the December sell-off and the RMD. So, I think I'll let this run as far as it will go and push a little more in to bonds via rebalancing when the time comes. Hopefully, that approach will help me through the next downturn so I can start the whole process over, again.

YMMV; but, so might mine.
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Re: That's enough for me in 2019

Post by jibantik » Sat Mar 16, 2019 9:35 am

Market timing on pure speculation based on the returns from an arbitrary date. Best of luck with your incorrect decision!

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Re: That's enough for me in 2019

Post by livesoft » Sat Mar 16, 2019 9:38 am

OHWantToRetire wrote:
Sat Mar 16, 2019 9:20 am
As a recent reader of the site, I’ve read a lot about adjusting AA based on the 5% bands. Has anyone been doing this already this year as the market has been up?
Sure, but that's because I had to adjust to buy equities in December based on things in my IPS. And in 2019, I've had to sell some of those equities to get back within my bands. Bond index funds have not been too shabby either. VCSH is up more than 2% YTD. That's the short-term corporate bond index fund for those that don't want to look it up.
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Wanderingwheelz
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Re: That's enough for me in 2019

Post by Wanderingwheelz » Sat Mar 16, 2019 9:42 am

OHWantToRetire wrote:
Sat Mar 16, 2019 9:20 am
As a recent reader of the site, I’ve read a lot about adjusting AA based on the 5% bands. Has anyone been doing this already this year as the market has been up?

I am 75/25 ( I didn’t realize that until I put all my accounts in Personal Capital) but am thinking I’d be happier at 60/40. I’m considering a move to 70/30 right now to start towards that goal. Most of my 25 is in shorter term but I’d consider the next 5 in a Money Market/Cash as 2.3-2.5% rates seem not too bad vs the bond alternatives at this point.

I am not working at this point so it does make me think more about capital preservation. I just don’t know if I could afford to go all cash at this point.
A lot of what you’re contemplating would be affected by how much you have invested and what your expenses are, since you don’t have any earned income.

Going all cash really should only be considered if the 2% taxable income is enough for you to live on. But.. the total stock market is yielding roughly the same amount, taxable, so you’d be just as well covered in 100% stocks if you’re able to support your lifestyle on 2% of assets.

All most of us really need is inflation + 1 or 2 percent.

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TheTimeLord
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Re: That's enough for me in 2019

Post by TheTimeLord » Sat Mar 16, 2019 9:51 am

market timer wrote:
Sat Mar 16, 2019 7:41 am
This is my top-calling post. Feel free to bump as we make new highs.

We are less than a quarter into 2019 and it has already been incredible year for equities and bonds. My portfolio is up 15% YTD and crossed a nice round number on Friday.
Using the S&P 500 we are still about 3.7% below September 20th, 2018 (2,930.75), so I guess you have had a great quarter and a bad 6 months. Or you had a slow year since we are up 2.56% since 3/15/2018.
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Re: That's enough for me in 2019

Post by Broken Man 1999 » Sat Mar 16, 2019 10:00 am

market timer wrote:
Sat Mar 16, 2019 9:05 am
flyingaway wrote:
Sat Mar 16, 2019 8:55 am
Good intuition. When do you plan to move back into equities?
Possibly never. I don't feel FOMO (fear of missing out) because I don't need equity gains to fund my retirement. Seriously considering buying some single-family rentals with my stash. Let's see what the market offers later this year.

Might work out fine. The rental units should give you a bit of protection from inflation. That would be your risk in holding fixed-income only.

Do you have any experience being a landlord? Seems fraught with pitfalls to me. Though, my oldest daughter just sold her townhouse she had purchased right out of college and had been renting for about 15 years. She had good tenants, but did suffer two major plumbing leaks. Fortunately the insurance company treated her very fairly.

She tried to purchase another unit or two in the same complex, but they were always snapped up quickly. There are some REITs that are investing in single family homes, so you will have some competition if your location is large enough for them to consider the area.

Good luck in whatever you decide! :beer

Broken Man 1999
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Re: That's enough for me in 2019

Post by willthrill81 » Sat Mar 16, 2019 10:20 am

It is difficult to determine whether the OP's strategy is correct or not. Many proclaim that simply comparing his results to that of the market's is sufficient for this purpose, but it's not.

If you speed right through a red light at an intersection 20 times and don't get in an accident, does that mean that your decision to do so was good? Of course not. We cannot evaluate the viability of a strategy based on the results alone.

Some investors choose to limit their downside risk by owning fixed income investments. Others choose to limit their downside risk by limiting the time in which they own stocks. There are many roads to Dublin.
“It's a dangerous business, Frodo, going out your door. You step onto the road, and if you don't keep your feet, there's no knowing where you might be swept off to.” J.R.R. Tolkien,The Lord of the Rings

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Re: That's enough for me in 2019

Post by dayzero » Sat Mar 16, 2019 10:22 am

There are also many roads that don't get to Dublin.

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Re: That's enough for me in 2019

Post by H-Town » Sat Mar 16, 2019 10:27 am

willthrill81 wrote:
Sat Mar 16, 2019 10:20 am
It is difficult to determine whether the OP's strategy is correct or not.
It sounds like OP's goal is to preserve wealth. Over a short term less than 10 years where inflation is not an issue, it makes sense. But OP is fighting a losing battle against inflation and market timing if he has 40+ years time horizon. Again - goals and game plans evolve over time.

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Re: That's enough for me in 2019

Post by willthrill81 » Sat Mar 16, 2019 10:29 am

dayzero wrote:
Sat Mar 16, 2019 10:22 am
There are also many roads that don't get to Dublin.
True, but how do you know in advance that the OP's strategy is a bad one? And how will you evaluate post hoc whether the strategy was poor?

If I own a homeowner's insurance policy for 40 years and never file a claim, does that mean that owning the policy was a bad strategy? Obviously not.
“It's a dangerous business, Frodo, going out your door. You step onto the road, and if you don't keep your feet, there's no knowing where you might be swept off to.” J.R.R. Tolkien,The Lord of the Rings

cherijoh
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Re: That's enough for me in 2019

Post by cherijoh » Sat Mar 16, 2019 10:31 am

OHWantToRetire wrote:
Sat Mar 16, 2019 9:20 am
As a recent reader of the site, I’ve read a lot about adjusting AA based on the 5% bands. Has anyone been doing this already this year as the market has been up?

I am 75/25 ( I didn’t realize that until I put all my accounts in Personal Capital) but am thinking I’d be happier at 60/40. I’m considering a move to 70/30 right now to start towards that goal. Most of my 25 is in shorter term but I’d consider the next 5 in a Money Market/Cash as 2.3-2.5% rates seem not too bad vs the bond alternatives at this point.

I am not working at this point so it does make me think more about capital preservation. I just don’t know if I could afford to go all cash at this point.
That sounds like a better plan to me than going all cash. It is hard to stay ahead of inflation when you are all cash.

Are you offically retired at this point? I noticed your avatar is "want to retire".

sambb
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Re: That's enough for me in 2019

Post by sambb » Sat Mar 16, 2019 10:31 am

if your RISK TOLERANCE has changed, then rebalance to a lower allocation. Sounds like your risk tolerance has changed, so i would rebalance.

People have risk tolerance changes for all sorts of life events, aging, job issues, feelings of financial security,etc. if yours has changed then rebalance to whatever you desire. If you were comfortable before with 80S/20B, and now, you are more comfy with 50/50, then your risk tolerance has changed. Rebalance to your desired allocation based on your ability to tolerate risk - upside and downside. If you cant tolerate a 20% pullback, then i would not be heavy in stocks.

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willthrill81
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Re: That's enough for me in 2019

Post by willthrill81 » Sat Mar 16, 2019 10:32 am

H-Town wrote:
Sat Mar 16, 2019 10:27 am
willthrill81 wrote:
Sat Mar 16, 2019 10:20 am
It is difficult to determine whether the OP's strategy is correct or not.
It sounds like OP's goal is to preserve wealth. Over a short term less than 10 years where inflation is not an issue, it makes sense. But OP is fighting a losing battle against inflation and market timing if he has 40+ years time horizon. Again - goals and game plans evolve over time.
I don't believe that the OP is planning on staying in cash forever.
“It's a dangerous business, Frodo, going out your door. You step onto the road, and if you don't keep your feet, there's no knowing where you might be swept off to.” J.R.R. Tolkien,The Lord of the Rings

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Re: That's enough for me in 2019

Post by letsgobobby » Sat Mar 16, 2019 10:32 am

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Last edited by letsgobobby on Thu Apr 18, 2019 12:55 am, edited 1 time in total.

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F150HD
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Re: That's enough for me in 2019

Post by F150HD » Sat Mar 16, 2019 10:35 am

Jon H wrote:
Sat Mar 16, 2019 8:29 am
I don’t know or understand why so many people care about someone else’s money.

You do what you do, they do what they do.

Nobody knows what is going to happen, but the OP feels comfortable with the approach taken. Seems fine to me if that’s what they need to do.

Agree to disagree and move on.
Isn't that the entire point of this board? 🤔

----------------

OPs thoughts have crossed my mind w/ the market getting back to nearly where it was last Summer/Fall. I have no plans to go to cash, but have been bumping up my bond allocation up a kiss in t-deferred. Not near retirement so long time horizon. Goal is slow and steady.

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willthrill81
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Re: That's enough for me in 2019

Post by willthrill81 » Sat Mar 16, 2019 10:37 am

letsgobobby wrote:
Sat Mar 16, 2019 10:32 am
willthrill81 wrote:
Sat Mar 16, 2019 10:20 am
It is difficult to determine whether the OP's strategy is correct or not. Many proclaim that simply comparing his results to that of the market's is sufficient for this purpose, but it's not.

If you speed right through a red light at an intersection 20 times and don't get in an accident, does that mean that your decision to do so was good? Of course not. We cannot evaluate the viability of a strategy based on the results alone.

Some investors choose to limit their downside risk by owning fixed income investments. Others choose to limit their downside risk by limiting the time in which they own stocks. There are many roads to Dublin.
The strategy is definitely incorrect. A sudden move to 100% cash based on his belief he can predict the future is not a strategy, it’s a delusion.
It's definitely a strategy. Whether it's a good one is a different matter entirely.
letsgobobby wrote:
Sat Mar 16, 2019 10:32 am
As for the outcome, who knows? People get lucky all the time.

Market timer is famous for his catastrophic foray into, well, market timing just at the height of the real estate crisis a decade ago. He’s literally the poster child for making huge mistakes based on gut feelings, and proof that being bright is no protection against disastrous cognitive errors. It’s even more disheartening that he’s apparently learned nothing from that experience. I make mistakes all the time, but I do try to learn from them.
I agree that making such decisions on the basis of intuition, feelings, and/or other subjective criteria seems likely to be a poor strategy. That's why I use a rules-based, objective strategy in my own trend following that does not depend on my own perceptions in any way going forward.
“It's a dangerous business, Frodo, going out your door. You step onto the road, and if you don't keep your feet, there's no knowing where you might be swept off to.” J.R.R. Tolkien,The Lord of the Rings

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TheTimeLord
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Re: That's enough for me in 2019

Post by TheTimeLord » Sat Mar 16, 2019 10:56 am

market timer wrote:
Sat Mar 16, 2019 7:41 am
This is my top-calling post. Feel free to bump as we make new highs.
Your post made me curious so I went back to my records to check how my equity position has change. The value of my equities as of yesterday's close is 176% (an increase of 76%) of what they were at the close on 12/22/2019 (the close prior to the 12/24/2019 close). This is a result mostly of heavy buying on 12/24 and continued buying for the following 3 weeks plus the gains from the rally since the 12/24 bottom. Since I had been de-risking my portfolio since February 2018 I see no reason for me to pullback on equities at this point. As an aside my portfolio has hit an all-time high 6 of the past 7 weeks although not as impressive as the 11 out of 12 weeks it hit new highs in July-September of 2018.
IMHO, Investing should be about living the life you want, not avoiding the life you fear. | Run, You Clever Boy! [9085]

cherijoh
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Re: That's enough for me in 2019

Post by cherijoh » Sat Mar 16, 2019 11:00 am

willthrill81 wrote:
Sat Mar 16, 2019 10:29 am
dayzero wrote:
Sat Mar 16, 2019 10:22 am
There are also many roads that don't get to Dublin.
True, but how do you know in advance that the OP's strategy is a bad one? And how will you evaluate post hoc whether the strategy was poor?

If I own a homeowner's insurance policy for 40 years and never file a claim, does that mean that owning the policy was a bad strategy? Obviously not.
Don't confuse results with strategy. You can never predict a priori the results of a particular course of action on an individual implementing that course of action.

But you can often use probability and expected returns to evaluate whether a particular strategy makes sense based on the associated risks. Insurance companies do this all the time when evaluating how much to charge customers. It is all a matter of having access to suffificient data.

It would be tough to figure out all the combinations and permutations of market timing where you are getting into and out of the market multiple times. But you could definitely use a sophisticated retirement calculator (with Monte Carlo simulation or historical returns) to compare going 100% to cash and staying there vs. keeping a sensible AA and staying the course for various retirement withdrawal rates.

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Re: That's enough for me in 2019

Post by finite_difference » Sat Mar 16, 2019 11:10 am

willthrill81 wrote:
Sat Mar 16, 2019 10:29 am
dayzero wrote:
Sat Mar 16, 2019 10:22 am
There are also many roads that don't get to Dublin.
True, but how do you know in advance that the OP's strategy is a bad one? And how will you evaluate post hoc whether the strategy was poor?

If I own a homeowner's insurance policy for 40 years and never file a claim, does that mean that owning the policy was a bad strategy? Obviously not.
I think it’s a bad strategy because it’s based on emotion and not logic. (I think some people can develop intuition about things but that usually comes with significant expertise, knowledge and experience, and I don’t think based on the past performance that is the case here. And intuition can still be imperfect.)

I think it’s a bad strategy because you should have at least 25% in stocks.

I think it’s a bad strategy because the OP does not seem very transparent about calculating returns. Up 15% YTD is meaningless without also taking into account past performance over 1, 3, 5, 10, 15, 20, and 30 year time spans.
The most precious gift we can offer anyone is our attention. - Thich Nhat Hanh

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Re: That's enough for me in 2019

Post by flyingaway » Sat Mar 16, 2019 11:25 am

My strategy for market at high levels is to spend the money. I am about to return to the U.S. after one week of wonderful travel in Columbia.
I just spend the money that I may plan to spend in retirement. When the market goes down, the money has already been spent.

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