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Very bad day

Posted: Wed Sep 04, 2019 9:10 am
by Mike11
I've seen some mention of keeping cash available to purchase funds following a "very bad day." I'm looking for opinions on the idea and specifics of what constitutes a "very bad day." Also a couple basic questions, if you place a buy order on Vanguard the night after a very bad day, when does the buy actually take place for a Vanguard mutual fund? Is the timing different for an ETF buy order placed after hours?

Lastly, how do you search this site for a phrase like "very bad day"? I've tried quotation marks and parentheses but I still only get a single word search.

Re: Very bad day

Posted: Wed Sep 04, 2019 9:12 am
by GoldenFinch
The term is Really Bad Day (RBD). Don’t time the market.

Re: Very bad day

Posted: Wed Sep 04, 2019 9:17 am
by Silk McCue
Mike11 wrote:
Wed Sep 04, 2019 9:10 am
Lastly, how do you search this site for a phrase like "very bad day"? I've tried quotation marks and parentheses but I still only get a single word search.
Don't use either. Just the words. It will then find Really Bad Day as that is the closest match phrase. Once you put quotes on it looks for that specific phrase in its entirety. Parens are of no value for this type of search.

Now that you know how to search properly there are lots of threads on this.

Cheers

Re: Very bad day

Posted: Wed Sep 04, 2019 9:20 am
by hisdudeness
Prepare to be spanked you naughty boy!
For mutual funds:
An order placed during trading hours is executed at the end of the trading day.
An order placed after 4:00 pm EST executes at the end of the next trading day.

Re: Very bad day

Posted: Wed Sep 04, 2019 9:21 am
by livesoft
There are no threads about holding cash to wait to invest on a really bad day.

One might look to see if one needs to rebalance their portfolio on a RBD.

Re: Very bad day

Posted: Wed Sep 04, 2019 9:30 am
by mhc
People talk about "dry powder" for buying in down markets. The dry powder is uninvest money usually.

Livesoft uses RBD as a rebalance trigger. He reports that he does not hold cash. Even though I suspect he has an old penny under a cushion somewhere.

Re: Very bad day

Posted: Wed Sep 04, 2019 10:07 am
by barnaclebob
Holding cash for a bad day or even a downturn is not likely to be better than keeping all of your money invested. Anyone who is too afraid to invest when the markets are doing great will definitely be too afraid to invest when they are doing poorly.

Re: Very bad day

Posted: Wed Sep 04, 2019 10:08 am
by firebirdparts
If you rebalance, then you would not have to write rules for recognizing the RBD. More importantly, rebalancing is more about really bad quarters and years which make a lot more hay than just days.

Re: Very bad day

Posted: Wed Sep 04, 2019 10:09 am
by tennisplyr
I think greed plays a role here....maybe set a goal if the market drops x% you'll make a move.

Re: Very bad day

Posted: Wed Sep 04, 2019 10:14 am
by bgatze
firebirdparts wrote:
Wed Sep 04, 2019 10:08 am
If you rebalance, then you would not have to write rules for recognizing the RBD. More importantly, rebalancing is more about really bad quarters and years which make a lot more hay than just days.
Out of curiousity I have been thinking about this alot lately; anyone have some of their rules to use as an example to get started with this?

Re: Very bad day

Posted: Wed Sep 04, 2019 10:15 am
by Timmy_Tenders
barnaclebob wrote:
Wed Sep 04, 2019 10:07 am
Holding cash for a bad day or even a downturn is not likely to be better than keeping all of your money invested. Anyone who is too afraid to invest when the markets are doing great will definitely be too afraid to invest when they are doing poorly.
Well said.

Re: Very bad day

Posted: Wed Sep 04, 2019 10:23 am
by DesertDiva
Mike11 wrote:
Wed Sep 04, 2019 9:10 am
I've seen some mention of keeping cash available to purchase funds following a "very bad day." I'm looking for opinions on the idea and specifics of what constitutes a "very bad day." Also a couple basic questions, if you place a buy order on Vanguard the night after a very bad day, when does the buy actually take place for a Vanguard mutual fund? Is the timing different for an ETF buy order placed after hours?

Lastly, how do you search this site for a phrase like "very bad day"? I've tried quotation marks and parentheses but I still only get a single word search.
Better idea: develop an IPS and stick to it. Prevents the urge to time the market.

Re: Very bad day

Posted: Wed Sep 04, 2019 10:24 am
by Vanguard Fan 1367
Before I read John Bogle's books I thought the same way. Wait for a down day and then invest. I now agree with Bogle that I don't know how to time the market and I don't know anyone who knows anyone who can time the market. The last time the market was down 50 percent I wasn't a Boglehead. I admire myself for not selling when things looked bad in those 2007-2009 "bad days".

In our most recent 20 percent drop we dropped and came back relatively quickly. Unfortunately there was no little bird to tell me that we were down 20 percent and now is the time to invest. So I took Bogle's advice: "don't do something, just stand there."

I have prospered much more just buying the whole market and having some bond funds and doing nothing else. The stock market has been like someone walking uphill with a yo-yo. The yo -yo goes up and down but overall there is a long term increase.

Re: Very bad day

Posted: Wed Sep 04, 2019 10:32 am
by livesoft
Vanguard Fan 1367 wrote:
Wed Sep 04, 2019 10:24 am
I admire myself for not selling when things looked bad in those 2007-2009 "bad days".

In our most recent 20 percent drop we dropped and came back relatively quickly. Unfortunately there was no little bird to tell me that we were down 20 percent and now is the time to invest. So I took Bogle's advice: "don't do something, just stand there."
You are rationalizing not buying when the market is down. That's just another behaviorial trap. Sure, feel good about not selling, but that is not the same as buying when the chips are down.

Re: Very bad day

Posted: Wed Sep 04, 2019 10:37 am
by montanagirl
Lately I've been setting a limit order to buy vxf if it hits a certain low price, which it never seems to do before it goes back up.

Maybe if I raise it a dollar... :twisted:

Re: Very bad day

Posted: Wed Sep 04, 2019 10:42 am
by friar1610
I heard a podcast with Jonathan Clements recently (don't remember which of the many financial 'casts I listen to). He had a suggestion for people who have a big chunk to invest in equities but who can't steel themselves to throw it all in at once. I don't know why this wouldn't work for a big rebalance into equities as well.

- divide the chunk into 6, 10 or 12 pieces.
- start investing one chunk every month (DCA).
- if the equity market drops by 10%, double your monthly investment.
- if it drops by 20%, quadruple it.
- stick with these rules until the money is all invested.

Re: Very bad day

Posted: Wed Sep 04, 2019 10:54 am
by dknightd
"very bad day." Just wait a day or year or more.

Re: Very bad day

Posted: Wed Sep 04, 2019 10:57 am
by Tyler Aspect
Don't pay too much attention to the really bad days. If you do pay too much attention, your investment horizon could grow shorter and your investment approach could become more speculative. These changes could significant reduce your long term investment results.

Re: Very bad day

Posted: Wed Sep 04, 2019 11:00 am
by mariezzz
The problem with 'really bad days' (i.e., a trough) is you can only identify them with certainty in hindsight ... quite a long ways after they occur. Because when a 'really bad day' is occurring, you'll be wondering if the next day will be worse. And while you're waiting for them to occur, you'll be missing out on a lot of growth.

Lots of posts on here over the last 4-5 years asking whether Person X should get into the market now or wait ... anyone who waited missed out on a lot of growth.

Re: Very bad day

Posted: Wed Sep 04, 2019 11:05 am
by ohai
Since no one seems to have answered the execution question, you will be filled on the next closing net asset value. So, if the market recovers the next day, you will buy at this higher level.

Regarding cash on hand - I don't think it's a good idea to keep cash on hand specifically for the reason you mentioned. You will lose more from not participating in the market than from the opportunity to buy at some down day.

With that being said, a general stock/bond allocation should already give you capital to move from bonds to stocks should the need arise to rebalance...

With regards to market timing... I don't know if you can time the day where the market is the lowest. However, I believe you can sometimes identify periods when the market is suppressed by unusual supply or demand. The short VIX unwind in 2018 is one recent example.

Re: Very bad day

Posted: Wed Sep 04, 2019 11:07 am
by tea_pirate
Most of the market timers refer to this concept as "dry powder." You can search the forum for that term and get many results.

Re: Very bad day

Posted: Wed Sep 04, 2019 11:07 am
by H-Town
Mike11 wrote:
Wed Sep 04, 2019 9:10 am
I've seen some mention of keeping cash available to purchase funds following a "very bad day." I'm looking for opinions on the idea and specifics of what constitutes a "very bad day." Also a couple basic questions, if you place a buy order on Vanguard the night after a very bad day, when does the buy actually take place for a Vanguard mutual fund? Is the timing different for an ETF buy order placed after hours?

Lastly, how do you search this site for a phrase like "very bad day"? I've tried quotation marks and parentheses but I still only get a single word search.
You can find the market movement anywhere on the internet (Marketwatch, Google Finance, U.S. stock in free fall thread, etc.).

I usually rebalance from fixed income into stocks on RBD (2-3% plus drop). I also use monthly cashflow and fund in the EF to buy stocks during RBD. I can always restock the EF later.

Who wouldn't like a discount? I bought some Friday before last (?) with 2.5%+ drop.

Re: Very bad day

Posted: Wed Sep 04, 2019 11:09 am
by MotoTrojan
This is a surefire way to trail the market over time. Invest as much as you can, as soon as you can. Not only is it the highest expected return but it’s also the easiest to implement, win-win!

Re: Very bad day

Posted: Wed Sep 04, 2019 11:55 am
by lukestuckenhymer
The RBD you're waiting for may actually end the day higher than today's close. Doesn't seem so bad now. Don't time the market.

Re: Very bad day

Posted: Wed Sep 04, 2019 1:31 pm
by David Jay
bgatze wrote:
Wed Sep 04, 2019 10:14 am
firebirdparts wrote:
Wed Sep 04, 2019 10:08 am
If you rebalance, then you would not have to write rules for recognizing the RBD. More importantly, rebalancing is more about really bad quarters and years which make a lot more hay than just days.
Out of curiousity I have been thinking about this alot lately; anyone have some of their rules to use as an example to get started with this?
If you are referring to rebalancing, the rule is very simple: set a limit - a rebalancing band. For most this is a percentage deviation from target Asset Allocation (let’s say, 3%-5%). Whenever your stock-to-bond ratio moves away from your target by more than the limit, rebalance to your target.

Example: Target is 70/30 (stock to bond), rebalancing limit is 3%. If stocks hit 73%, sell stocks and buy bonds back down to 70%. If stocks hit 67%, sell bonds and buy stocks back up to 70%.

Re: Very bad day

Posted: Wed Sep 04, 2019 2:02 pm
by goodenyou
Is it a RBD or an RBD?

Re: Very bad day

Posted: Wed Sep 04, 2019 2:03 pm
by FIREchief
If you have money on the sideline, any day that the market goes up is a bad day. If it goes up a lot, it's a really bad day.

Re: Very bad day

Posted: Wed Sep 04, 2019 2:18 pm
by LiterallyIronic
goodenyou wrote:
Wed Sep 04, 2019 2:02 pm
Is it a RBD or an RBD?
It's an. It's not based on whether the first letter is a vowel, it's based on whether the word starts with a vowel sound.

Re: Very bad day

Posted: Wed Sep 04, 2019 2:31 pm
by mariezzz
:sharebeer
LiterallyIronic wrote:
Wed Sep 04, 2019 2:18 pm
goodenyou wrote:
Wed Sep 04, 2019 2:02 pm
Is it a RBD or an RBD?
It's an. It's not based on whether the first letter is a vowel, it's based on whether the word starts with a vowel sound.

Re: Very bad day

Posted: Wed Sep 04, 2019 2:34 pm
by firebirdparts
So, I haven't found much commentary on this, and I had to look for a list, just to see what we are looking at here. This is useful:
https://en.wikipedia.org/wiki/List_of_l ... _500_Index

I think really bad years are much more of interest than days. As an academic point, the book "living off your money" compares backtests of many strategies for retirement/decumulation and one of those reviewed has a dry powder feature. I am not advocating this or saying I came up with it. I am just saying a book reviewed it. In that case, the trigger was a broad market decline of 30%. That one was "The Parker Strategy."

Re: Very bad day

Posted: Wed Sep 04, 2019 2:42 pm
by Vanguard Fan 1367
LiterallyIronic wrote:
Wed Sep 04, 2019 2:18 pm
goodenyou wrote:
Wed Sep 04, 2019 2:02 pm
Is it a RBD or an RBD?
It's an. It's not based on whether the first letter is a vowel, it's based on whether the word starts with a vowel sound.

Is the r in really a vowel sound?

Re: Very bad day

Posted: Wed Sep 04, 2019 2:43 pm
by 123
We have some cash reserves in a taxable account that we have reserved for purchase of additional VTI if there is a significant drop in price. We have some limit orders to purchase lots at staggered prices in the event of a "flash crash" or similar situation. The limit orders are established with expiration dates 3 or 4 months out and we review them every couple of months (extending them). We have bands in our AA that accommodate additional purchases in favorable conditions. It's just a lot easier than paying attention to what the market is doing all the time.

Re: Very bad day

Posted: Wed Sep 04, 2019 3:14 pm
by GoldenFinch
Vanguard Fan 1367 wrote:
Wed Sep 04, 2019 2:42 pm
LiterallyIronic wrote:
Wed Sep 04, 2019 2:18 pm
goodenyou wrote:
Wed Sep 04, 2019 2:02 pm
Is it a RBD or an RBD?
It's an. It's not based on whether the first letter is a vowel, it's based on whether the word starts with a vowel sound.

Is the r in really a vowel sound?
An RBD is a really bad day. :happy

Re: Very bad day

Posted: Wed Sep 04, 2019 8:33 pm
by Daquan
Put money to work whenever CNBC runs the show markets in turmoil

Re: Very bad day

Posted: Wed Sep 04, 2019 9:51 pm
by LadyGeek
From the wiki: Abbreviations and Acronyms - Bogleheads
RBD - Really Bad Day. A Bogleheads' idiomatic term coined by forum member livesoft. An early mention is in this thread: Today was a Really Bad Day.
Daquan, Welcome!

Re: Very bad day

Posted: Wed Sep 04, 2019 10:26 pm
by Miriam2
goodenyou wrote: Is it a RBD or an RBD?
It's a Really Bad Day - but it's an RBD.

Re: Very bad day

Posted: Wed Sep 04, 2019 11:55 pm
by CurlyDave
hisdudeness wrote:
Wed Sep 04, 2019 9:20 am
Prepare to be spanked you naughty boy!
For mutual funds:
An order placed during trading hours is executed at the end of the trading day.
An order placed after 4:00 pm EST executes at the end of the next trading day.
Forget ordinary mutual funds and buy an ETF. You will know the execution price in real time. And you can set limit orders, stop loss orders, and, at some brokerages, trailing stops.

Re: Very bad day

Posted: Thu Sep 05, 2019 1:18 am
by Wannaretireearly
Miriam2 wrote:
Wed Sep 04, 2019 10:26 pm
goodenyou wrote: Is it a RBD or an RBD?
It's a Really Bad Day - but it's an RBD.
Things I learn here. Just wow. Lol

Re: Very bad day

Posted: Thu Sep 05, 2019 2:24 am
by Ki_poorrichard
Seriously, just look at the astronomical highs on these major averages. What RBDs?

Re: Very bad day

Posted: Thu Sep 05, 2019 2:36 am
by ivk5
Vanguard Fan 1367 wrote:
Wed Sep 04, 2019 2:42 pm
LiterallyIronic wrote:
Wed Sep 04, 2019 2:18 pm
goodenyou wrote:
Wed Sep 04, 2019 2:02 pm
Is it a RBD or an RBD?
It's an. It's not based on whether the first letter is a vowel, it's based on whether the word starts with a vowel sound.

Is the r in really a vowel sound?
Queue all the pirates in unison: arrrr!