Is it time to GET OUT?

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anon3838
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Re: Is it time to GET OUT?

Post by anon3838 »

Charlie Munger once said: If you're not willing to react with equanimity to a marketplace decline, of 50%, 2-3 times a century, you're not fit to be a common shareholder, and you deserve the mediocre result you're going to get. -Charlie Munger, https://www.youtube.com/watch?v=3WkpQ4PpId4
retire2022
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Re: Is it time to GET OUT?

Post by retire2022 »

ukbogler wrote: Sun Mar 15, 2020 4:21 am
retire2022 wrote: Sat Mar 14, 2020 10:27 am OP

I suggest you read this thread on recovery after crash it is relevant to your quest. Cyclingduo post describes the pluses and minuses of "Tiffany (buys right before major drops), Brittany (buys at the lows after major drops), and Sarah (buys all the time no matter what the price)".

viewtopic.php?f=10&t=306477#p5080504
fascinating. But what would REALLY be useful is 'Charlene, who buys regularly, but LEANS into drops'.
UK

That would be Sarah look over the illustration again
lostdog
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Re: Is it time to GET OUT?

Post by lostdog »

KlangFool wrote: Fri Mar 13, 2020 9:07 pm OP,

My AA ranges from 70/30 to 60/40. My AA makes sure that I "buy low and sell high". Is your AA 100/0?

My 60/40 AA makes sure that I sell stock in a bull market and buy stock in a bear market. I do not need to time the market.

KlangFool
Your AA also makes sure that your gains are a lot slower than a 100/0 AA.
KlangFool
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Re: Is it time to GET OUT?

Post by KlangFool »

lostdog wrote: Sun Mar 15, 2020 10:53 am
KlangFool wrote: Fri Mar 13, 2020 9:07 pm OP,

My AA ranges from 70/30 to 60/40. My AA makes sure that I "buy low and sell high". Is your AA 100/0?

My 60/40 AA makes sure that I sell stock in a bull market and buy stock in a bear market. I do not need to time the market.

KlangFool
Your AA also makes sure that your gains are a lot slower than a 100/0 AA.
lostdog,

1) Not necessarily true. The resulting gain is highly dependent on the individual sequence of returns.

2) It does not matter to me.

KlangFool
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watchnerd
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Re: Is it time to GET OUT?

Post by watchnerd »

KlangFool wrote: Sun Mar 15, 2020 11:32 am
lostdog wrote: Sun Mar 15, 2020 10:53 am
KlangFool wrote: Fri Mar 13, 2020 9:07 pm OP,

My AA ranges from 70/30 to 60/40. My AA makes sure that I "buy low and sell high". Is your AA 100/0?

My 60/40 AA makes sure that I sell stock in a bull market and buy stock in a bear market. I do not need to time the market.

KlangFool
Your AA also makes sure that your gains are a lot slower than a 100/0 AA.
lostdog,

1) Not necessarily true. The resulting gain is highly dependent on the individual sequence of returns.

2) It does not matter to me.

KlangFool

The need to maximize gains is inversely proportional to savings.

If your savings rate is high enough, you don't need to take the extra risk.
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drk
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Re: Is it time to GET OUT?

Post by drk »

watchnerd wrote: Sun Mar 15, 2020 11:37 am If your savings rate is high enough, you don't need to take the extra risk.
This is exactly why I'm comfortable sitting at 60/40 as long as I'm saving 20% of my net worth every year.
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watchnerd
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Re: Is it time to GET OUT?

Post by watchnerd »

drk wrote: Sun Mar 15, 2020 11:50 am
watchnerd wrote: Sun Mar 15, 2020 11:37 am If your savings rate is high enough, you don't need to take the extra risk.
This is exactly why I'm comfortable sitting at 60/40 as long as I'm saving 20% of my net worth every year.
Likewise.

I'm comfortable at 70/30 as long as we're saving 200% of our cost of living every year and have no mortgage or debts.
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H-Town
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Re: Is it time to GET OUT?

Post by H-Town »

Jesteroftheswamp wrote: Fri Mar 13, 2020 5:33 pm I’ve been investing in index funds for about five years now and throughout these years of research, I’ve always heard STAY THE COURSE! I feel that time is now here, but I must admit looking at my portfolio fall is excruciating.

Is the strategy literally to hold and hold and hold, or should one take at least SOME earnings off the table? The index funds I own are for long term, I am only 34 years old, however should I sell to take the little profits I have left or literally just hold on for dear life?
Jesteroftheswamp,

You may have heard of "stay the course!", but I don't believe you understand it entirely.

Investing is not a free lunch. You don't just come in, take profits, and be on your merry way. In order for you to earn the profit, you will need to hang tight on the rollercoaster, ups or downs or sideways.

Here is what stay the course mean:
1) Set your AA appropriately to your situation.
2) Set automatic contributions while you're in accumulating phase.
3) Rinse and repeat until you reach your goal.
4) Once you retire, sell your investment to fund your retirement.
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arcticpineapplecorp.
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Re: Is it time to GET OUT?

Post by arcticpineapplecorp. »

Is it time to GET OUT?
no, it's time to get in.
also, you gotta get up to get down.
and "“If your outgo exceeds your income, then your upkeep will be your downfall.” -- Bill Earle
Finally, there's no need to yell.
Last edited by arcticpineapplecorp. on Mon Mar 16, 2020 10:37 am, edited 1 time in total.
It's "Stay" the course, not Stray the Course. Buy and Hold works. You should really try it sometime. Get a plan: www.bogleheads.org/wiki/Investment_policy_statement
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watchnerd
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Re: Is it time to GET OUT?

Post by watchnerd »

H-Town wrote: Sun Mar 15, 2020 11:55 am
Investing is not a free lunch. You don't just come in, take profits, and be on your merry way. In order for you to earn the profit, you will need to hang tight on the rollercoaster, ups or downs or sideways.

I think a lot of speculative traders thought they were long term investors.

They are now finding out that those are very different personas.
Last edited by watchnerd on Sun Mar 15, 2020 12:01 pm, edited 1 time in total.
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core4portfolio
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Re: Is it time to GET OUT?

Post by core4portfolio »

TLH and buy similar funds. 529 invest time for me...
Yes index down in my portfolio wiped out all gains since 2017 June.
I see that I fail to open the 529 for my son few years ago losing 30% of gains in past 2 years but now I really felt its good opportunity to buy.
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Caduceus
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Re: Is it time to GET OUT?

Post by Caduceus »

langlands wrote: Sun Mar 15, 2020 9:46 am
Just to be clear, that's only 10% from Thursday right (considering the 10% surge on Friday)? Considering the current volatility, I'm not sure how you can think a 20% drop from here is unlikely.

I also think it's possible we're seeing the tip of the iceberg, but I come to the opposite conclusion. The market wants this to be drawn out- that's how the economic impact is minimized. If we wanted the quickest pandemic, we'd just do nothing and let everyone who will die, die. If it comes to light that we're much further along the curve than we realized, the market will tank hard since that will mean any mitigation measures that are taken will be much less likely to succeed. So in my opinion, your assessment of the real world situation and how the market will react to that news are not congruent.
I don't find vague predictions of where markets go from here particularly interesting. But as historical context, there have only been 3 crashes exceeding 50% in magnitude from peak to trough from 1928 till the present day.

Stock market drops are not independent from one another. You're writing as if the first second 20% drop is as likely as the first 20% drop, and so on. But stocks represent fractional shares in real businesses, and the market index represents the discounted present value of all future cash flows, of which what happens in 2020, 2021 and 2022 represent only a fraction of its value. To discount the market by another 20% after it's already dropped by 30% would involve incorporating rather apocalyptic predictions of what would happen to future cash flows not just in the next two quarters or two years, but far out in time. Maybe you're one of those people who think this is the kind of event that will permanently affect aggregate business profitability, so that 5 years down the road, the coronavirus is still influencing Apple's profitability, IBM's profitability, and so on. You can get to any market valuation you want if you're sufficiently frightened by the coronavirus.

Actually, if you look at history when volatility was elevated, those were some of the best times to get insanely rich. Take a look at the historical VIX chart and overlay it with the stock market price movements - I'm not telling you to invest based on VIX, but I'm saying that insofar as you are using volatility to predict what will happen one or two years out, you're wrong.
sf_tech_saver
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Re: Is it time to GET OUT?

Post by sf_tech_saver »

Jesteroftheswamp wrote: Fri Mar 13, 2020 5:33 pm I’ve been investing in index funds for about five years now and throughout these years of research, I’ve always heard STAY THE COURSE! I feel that time is now here, but I must admit looking at my portfolio fall is excruciating.

Is the strategy literally to hold and hold and hold, or should one take at least SOME earnings off the table? The index funds I own are for long term, I am only 34 years old, however should I sell to take the little profits I have left or literally just hold on for dear life?
Your most variable and important asset in a recission is your human capital and day-job. I'd focus your energy there and try to double down on investing that cash into your AA for the long term.

When financial markets crash it increases the relative value of human capital based cash flows for those who can retain them.
VTI is a modern marvel
remomnyc
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Re: Is it time to GET OUT?

Post by remomnyc »

If you think it's time to get out, revisit your asset allocation. I was 40 with an asset allocation of 80/20 when the Great Recession started. My solution was not to look. I was still getting paper statements at the time, and I stacked them up unopened. My 401k investing continued each paycheck. My one regret was that I took additional cash that had been going to taxable monthly and diverted it into savings during that time.
indian86
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Re: Is it time to GET OUT?

Post by indian86 »

I would build do the following:

1. Don't sell current holdings.
2. Continue "buying" the market through your 401k contributions
3. Assuming you have a job, don't put new extra income in the market but instead build cash until you are comfortable you can live on it for two years.
4. After that, buy SPY with new cash.
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watchnerd
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Re: Is it time to GET OUT?

Post by watchnerd »

You know....

I don't think keeping up the encouragement and coaching to stick to one's AA is going to be sustainable over the next few months as we see more and more of these threads.

I almost feel like saying:

If you need to go, go.

If staying in the market is giving you anxiety, well, mental health is a component of physical health. And health should be a top priority.

Buy and hold indexing is not suitable for every persona.

Bon voyage, and good luck.

May we meet again when the tides have changed.
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Waiting_for_Godot
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Re: Is it time to GET OUT?

Post by Waiting_for_Godot »

watchnerd wrote: Sun Mar 15, 2020 4:12 pm You know....

I don't think keeping up the encouragement and coaching to stick to one's AA is going to be sustainable over the next few months as we see more and more of these threads.

I almost feel like saying:

If you need to go, go.

If staying in the market is giving you anxiety, well, mental health is a component of physical health. And health should be a top priority.

Buy and hold indexing is not suitable for every persona.

Bon voyage, and good luck.

May we meet again when the tides have changed.
I've definitely been struggling with my resolve to stay the course; my saving grace in doing so thus far is that my 401k wasn't particularly large. That being said, there was discussion here a solid 2 weeks prior to the drop that was compelling enough to act on re: swaths of China being shut down. Most of us here certainly do not expect to be able to trade with an edge on a daily basis, but this specific swan was, I believe, actionable. I stayed the course thus far, and am wondering if I am committing a gambler's fallacy of 'well, I'm stuck x amount, may as well let it ride' since I expect this to continue to get worse as quarterly earnings come in, daily consumer spending continues to be muted, and the administration fights against bailing out the airline industry.

The next step becomes, when to get back in? Or perhaps most importantly, to not wait years to jump back in, to accept a less-than-perfect return price, because it will be nearly impossible to guess. For now, I will continue to stay the course, but I find myself questioning my resolve in the face of a unique world event.
alexfoo39
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Re: Is it time to GET OUT?

Post by alexfoo39 »

I bailed out. My country Malaysia is exercising strict control now having witnessed the fate of Italy. We don't want to be like them, and there are already numerous untracked cases and it's spreading fast.

I'm now 0/100. Call me market timer or anything. Personally, I think I underestimated income risk.

Stay safe everyone.
mickroark
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Re: Is it time to GET OUT?

Post by mickroark »

Yes

The best time to panic is during the panic, :arrow:
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watchnerd
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Re: Is it time to GET OUT?

Post by watchnerd »

Waiting_for_Godot wrote: Mon Mar 16, 2020 10:12 am
I've definitely been struggling with my resolve to stay the course; my saving grace in doing so thus far is that my 401k wasn't particularly large. That being said, there was discussion here a solid 2 weeks prior to the drop that was compelling enough to act on re: swaths of China being shut down. Most of us here certainly do not expect to be able to trade with an edge on a daily basis, but this specific swan was, I believe, actionable. I stayed the course thus far, and am wondering if I am committing a gambler's fallacy of 'well, I'm stuck x amount, may as well let it ride' since I expect this to continue to get worse as quarterly earnings come in, daily consumer spending continues to be muted, and the administration fights against bailing out the airline industry.

The next step becomes, when to get back in? Or perhaps most importantly, to not wait years to jump back in, to accept a less-than-perfect return price, because it will be nearly impossible to guess. For now, I will continue to stay the course, but I find myself questioning my resolve in the face of a unique world event.
I'm changing nothing.

The long-term market returns include the bad periods.

The only time that price matters is when you buy and when you sell. And selling for me is 10+ years away.

But if getting out of the market is important for your mental and emotional health, then please take care of yourself.

It's just money...
70% Global Market Weight Equities | 15% Long Treasuries 15% short TIPS & cash || RSU + ESPP
james22
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Re: Is it time to GET OUT?

Post by james22 »

H-Town wrote: Sun Mar 15, 2020 11:55 amInvesting is not a free lunch. You don't just come in, take profits, and be on your merry way. In order for you to earn the profit, you will need to hang tight on the rollercoaster, ups or downs or sideways.
Great.
BalancedJCB19
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Re: Is it time to GET OUT?

Post by BalancedJCB19 »

Don't worry about your portfolio. Worry that this does not get totally out of hand and wipe out many millions of us. If that doesn't happen, which nobody knows it will not, your portfolio will come back.

Watching the Press conference today was a real eye opener. Everyone looked scared and no one knew what it was going to do next. This either will make us stronger for going through it, or be something others will read in the history books a 100 years from now.

Again, your portfolio will come roaring back if or when things get better.

For the record, nothing changed in my portfolio and I'm still adding to it. I'm 55.
LHRAdam
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Re: Is it time to GET OUT?

Post by LHRAdam »

I’m the same as several other posters.

Contributed to my pension last Friday (when I was paid) - exactly the same % amount as every other month.

Nothing in my portfolio has changed.

I made myself ready for this by spending hours learning about investing from this blog and understand that staying the course even when times are bad is essential.

No changes for me.
Prahasaurus
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Re: Is it time to GET OUT?

Post by Prahasaurus »

Jesteroftheswamp wrote: Fri Mar 13, 2020 5:33 pm I’ve been investing in index funds for about five years now and throughout these years of research, I’ve always heard STAY THE COURSE! I feel that time is now here, but I must admit looking at my portfolio fall is excruciating.

Is the strategy literally to hold and hold and hold, or should one take at least SOME earnings off the table? The index funds I own are for long term, I am only 34 years old, however should I sell to take the little profits I have left or literally just hold on for dear life?
I'm always reminded of the Mike Tyson quote, that everyone has a great plan until they get punched in the face.

You are 34 years old. You have over 30 years before you retire. 30 years ago, George H.W. Bush was president, and the Iron Curtain was falling. It was a totally different world. 30 years from now, it will be a totally different world.

Stop checking your portfolio and just relax. You will be fine. Just make sure you continue to rebalance and purchase regularly, within your means, over the coming decades.

Now, if you were over 50, I might have different advice. But you are going to be fine.
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oken
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Re: Is it time to GET OUT?

Post by oken »

Jesteroftheswamp wrote: Fri Mar 13, 2020 5:33 pm I’ve been investing in index funds for about five years now and throughout these years of research, I’ve always heard STAY THE COURSE! I feel that time is now here, but I must admit looking at my portfolio fall is excruciating.

Is the strategy literally to hold and hold and hold, or should one take at least SOME earnings off the table? The index funds I own are for long term, I am only 34 years old, however should I sell to take the little profits I have left or literally just hold on for dear life?
If you sell now, you're sure to lose.
If you don't sell, you lose nothing.

Did you have plans for the money? Or you just want to hold them?
If no plans, why sell?
dboeger1
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Re: Is it time to GET OUT?

Post by dboeger1 »

Being 100% in stocks, there are 2 things I like to think about that help me stay calm:

First, this won't apply to someone who just started investing right at the peak of the bull market, but for anybody who has been in it for a few years like you have, the drop from the peak doesn't actually represent your losses relative to your contributions. In other words, if you invest $5k, and it goes up $10k, but then drops back down to $5k, the headlines will be flashing red saying the market dropped 50%, but in reality, all you did was break even. I haven't been checking my accounts too closely lately, but I think the market had dropped something like 30% from the highs, yet my dashboard says I only lost about $15k from my contributions. I don't even know how much the contributions were, but they were something like $200k, so we're talking less than a 10% drop relative to my contributions. That's a lot less scary, and helps put into perspective just how effective buying stocks each paycheck is over the long run. When markets rebound by orders of magnitude, I'm going to make huge amounts of money.

Second, whether the market is going up or down is irrelevant. It's just a price. If a nice new TV is on sale for $1k, and then somehow goes up to $2k due to a shortage and high demand, then goes back down to $1k, then down to $500, then back up to $1k, is it a better deal at the 1st, 3rd, or 5th steps? Nope, they're all the same. You might think you're being smart timing the market by taking into account the direction, but in the end, the only prices that matter are when you buy and sell. Everything else is noise. Pick a stock or fund, look at its historical price chart, and pretend you have a wet sponge. Use it to just smear all the lines together so that you get a general fuzzy idea of stock prices, instead of worrying about trend lines and supports and moving averages and 52-week highs and price ratios and volumes and all this other nonsense. Now do the same approximately 15 years after that period. Now, throw a dart at the fuzzy area from 15 years before, and throw another dart at the fuzzy area from 15 years later. If those darts represent potential buying and selling points, virtually 100 percent of your dart throws, assuming you're halfway decent at darts, will likely be acceptable to you and most investors. We're in a fuzzy area, and 15 years from now, we're probably going to be in a much higher fuzzy area. That's all anybody really knows. Why would you let which way the market's going keep you from making the investment that your dart throws promised you? We're all just throwing darts at the market anyway. Let time do the work for you.
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