Team Buy and Hold

Discuss all general (i.e. non-personal) investing questions and issues, investing news, and theory.
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ChiLawyer
Posts: 18
Joined: Thu Aug 22, 2019 11:10 pm

Team Buy and Hold

Post by ChiLawyer »

There have been so many posts of late about folks market timing and making all kinds of moves in response to the past two weeks of market activity. Anyone who even briefly checks the news saw that [political comment deleted by admin alex] + viral pandemic was a recipe for disaster. Despite the obvious alarm bells (and dozens of posts about them here), I have held my ground and done nothing except prepared to do a TLH in the next week or so.

I know I am lucky to be 30 (long time horizon) and have a relatively stable career, but it’s tough to read BH or any financial news and not think I just left a ton of money on the table by not getting into shorts/options, or at least could have avoided significant unrealized losses by dumping my stocks 2 weeks ago. In these uncertain times, just looking for some moral support from this community that I did the right thing sticking to my plan. I am 80/20, with a 70/30 domestic-intl split on the equities side. I buy on a specific schedule based on pay cycles and don’t plan to change that. Am I being too much of a purist, or following the rules to avoid undue risk?
Thesaints
Posts: 3501
Joined: Tue Jun 20, 2017 12:25 am

Re: Team Buy and Hold

Post by Thesaints »

Well, didn't you chose your 80/20 allocation on the basis of what risk and expected return for stock and bond markets was ?
Do you think that now they are the same looking forward ?

I see three possibilities:
1) You made a mistake in calculating 80/20 in the past, but that is now your correct AA.
2) You calculated 80/20 correctly at some point in the past and necessarily that is not your optimal AA now.
3) You always calculated it wrong, or didn't calculated it at all.
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JoMoney
Posts: 10527
Joined: Tue Jul 23, 2013 5:31 am

Re: Team Buy and Hold

Post by JoMoney »

I'm older than you and have a higher equity allocation. I'm still making my regular contributions / purchases.
Everyone should have been prepared for the possibility of a drop like this eventually happening.
A few months back we were at all time highs, now we're at something less, a few months from now we might very well be at a very different level.
I'll just keep averaging across time, and on average, my return will be something close to the average available across my horizon. Trying to guess better times to jump out and back in is a different game that's much harder than it looks, and impossible for investors in aggregate to beat each other at.
"To achieve satisfactory investment results is easier than most people realize; to achieve superior results is harder than it looks." - Benjamin Graham
Alchemist
Posts: 582
Joined: Sat Aug 30, 2014 6:35 am

Re: Team Buy and Hold

Post by Alchemist »

ChiLawyer wrote: Thu Mar 19, 2020 11:47 pm
I know I am lucky to be 30 (long time horizon) and have a relatively stable career, but it’s tough to read BH or any financial news and not think I just left a ton of money on the table by not getting into shorts/options, or at least could have avoided significant unrealized losses by dumping my stocks 2 weeks ago. In these uncertain times, just looking for some moral support from this community that I did the right thing sticking to my plan. I am 80/20, with a 70/30 domestic-intl split on the equities side. I buy on a specific schedule based on pay cycles and don’t plan to change that. Am I being too much of a purist, or following the rules to avoid undue risk?

It seems frustrating but you did the right thing. We are all broken clocks with huge inbuilt biases. We will always remember when we actually were right and forget the far more numerous times we were wrong.

So either think back very honestly at all your wrong calls or start keeping track now. We are all wrong far more than we are right, that is why staying the course is the only viable path forward for the long haul.
acegolfer
Posts: 2336
Joined: Tue Aug 25, 2009 9:40 am

Re: Team Buy and Hold

Post by acegolfer »

Thesaints wrote: Fri Mar 20, 2020 12:16 am Do you think that now they are the same looking forward ?
another BH wrote "When it does poorly, the expected returns rise". do you agree with him?
mike_in_ny
Posts: 42
Joined: Sat Dec 23, 2017 9:48 am

Re: Team Buy and Hold

Post by mike_in_ny »

As my user name notes, I'm in NY, near one of the hot-zone that everyone talks about.
I'm considerably older and am (was?) within five years of looking to transition into
something different career wise. My allocation plan was 80/20, with 70/30 US/Int within the
equities. The paper loss of recent weeks is obviously considerable and makes looking
at the accounts difficult.

That said, I've done nothing related to my portfolio. 401k still is going in with each paycheck,
and life goes on. I'm questioning when I should re-balance to the 80/20, since bonds have
crept up to 24% in my portfolio. I have yet to pull that trigger....but am working up the
nerve to do so.

Overall, I think that two years from now--even six months from now---the world will have a
considerably different business outlook than it does today. Am I foolish....we'll see. Its
cathartic just writing about it.

Onward!
lostdog
Posts: 3598
Joined: Thu Feb 04, 2016 2:15 pm

Re: Team Buy and Hold

Post by lostdog »

You're doing the right thing. As others have said above, market timing is tough. You have to be right twice.

There is an influx of new users ever since this event started. Most of them are market timers and fear mongers. Others are the normal and chill buy and hold bogleheads that decided to create an account to get moral support.

The fear mongers you can ignore. Mostly the market timers are here to brag or to razz the buy and hold folks. There are a few market timers here that are cool and provide value to this forum.

Stick around and just filter out the bad ones. You're doing fine.

:sharebeer
Brokerage: VTI+VXUS || Retirement: VTWAX || Short-Term: Cash+BSV || 33x Expenses
AK1236
Posts: 13
Joined: Sat Jan 04, 2020 10:20 pm

Re: Team Buy and Hold

Post by AK1236 »

Onward through the fog.
no longer in the weeds and thorns
blueskytoo
Posts: 22
Joined: Thu Feb 07, 2019 8:48 pm

Re: Team Buy and Hold

Post by blueskytoo »

I have been in the market a very long time.

1987, I sold nothing, did buy a bargain.

2000, I sold nothing, did buy some bargains.

Warren Buffet famously said, "Buy when the price of an asset is a bargain, don't wait for the bottom, nobody knows when it happens".

I have never caught a bottom, and don't care. The stocks or funds that I have bought were at good prices when I bought them. That is all that is important.

I have not bought in all of the declines since 1987, but I have not sold either.

Unrelated to downturns, from time to time, I have had a stock or fund which, on an individual basis, has lost its way, and I sell it. Recently, the travel industry was an obvious disaster starting to unfold, and I exited. I don't know if I will be there again, but that was a unique area where past experience assured that recovery would be slow, I have been invested in that fund since before 2000, and the IRS will be glad that I sold, as there was a good gain in it.

Being relatively old at this point, my AA is shifting toward bonds year by year, so that is not guidance for younger people here. I have not checked the ratio in about a year, but since my new investments are under 5% of my portfolio per year, they do not shift the totals much. If there is a bargain in equities, I buy them, if not, I buy bonds.

Part of the funds that resulted from dis investing in travel have already been reinvested in equities, the rest into bonds.

I still have stocks and mutual funds that I bought before 2000, so holding is clearly something I do with conviction, even in severe downturns. This time feels differently from the last time, but I said that for every one of them. Each has been unique in both the down, and the up trajectories, because each had different initiating causes and conditions.

I am not a died in the wool Boglehead, but close. I have too many dollars in individual companies to qualify, but they are much less than half of my equities.
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