Convince me not to sell all my US equities to Cash temporarily

Discuss all general (i.e. non-personal) investing questions and issues, investing news, and theory.
Topic Author
alaskantraveler
Posts: 274
Joined: Wed May 11, 2016 12:26 pm

Convince me not to sell all my US equities to Cash temporarily

Post by alaskantraveler »

Hi Everyone. For context, I'm 36 years old, married , one child. Less than $500k invested (index funds). 80/20 portfolio. I'm having a really hard time right now, not wanting to temporarily sell all my US equities to cash. The way that US stocks have rebounded baffles me and US equities seem completely disconnected from the economy. The pandemic is only getting worse in the US, yet stocks have regained most of their losses.

I am not one to try to time the market. I held the course through the last dip and only re-balanced my portfolio. Why is this time different? The continued rise of US equities is baffling and I haven't read one good article on what is driving what seems like extreme valuations.

The way I see it, it seems that there is a much higher probability that US equities will drop over the next 6 months then make gains. If I do sell to cash, how will I know when to buy back in? I won't. But sitting on the sidelines for the next 4 to 6 months (After the US election), runs the risk that I could miss out on gains in the markets between now and then, yes, understood. I also have the upside of possibly avoiding a drop due to the pandemic, civil unrest, etc.

Convince me otherwise.
HippoSir
Posts: 145
Joined: Tue Jul 03, 2018 2:56 pm

Re: Convince me not to sell all my US equities to Cash temporarily

Post by HippoSir »

I will never understand why people approach this kind of thing with "it's all or nothing!" thinking. If your allocation is beyond your risk tolerance, just adjust your allocation, maybe go to 60/40.
livesoft
Posts: 73523
Joined: Thu Mar 01, 2007 8:00 pm

Re: Convince me not to sell all my US equities to Cash temporarily

Post by livesoft »

Right back at you: Convince me to convince you. LOL!

Somebody should link all the previous posts just like this one. We know how those turned out. :twisted:
Last edited by livesoft on Mon Jul 20, 2020 12:45 pm, edited 1 time in total.
Wiki This signature message sponsored by sscritic: Learn to fish.
SmallSaver
Posts: 170
Joined: Mon Mar 26, 2012 11:34 am

Re: Convince me not to sell all my US equities to Cash temporarily

Post by SmallSaver »

alaskantraveler wrote: Mon Jul 20, 2020 12:38 pm Hi Everyone. For context, I'm 36 years old, married , one child. Less than $500k invested (index funds). 80/20 portfolio. I'm having a really hard time right now, not wanting to temporarily sell all my US equities to cash. The way that US stocks have rebounded baffles me and US equities seem completely disconnected from the economy. The pandemic is only getting worse in the US, yet stocks have regained most of their losses.

I am not one to try to time the market. I held the course through the last dip and only re-balanced my portfolio. Why is this time different? The continued rise of US equities is baffling and I haven't read one good article on what is driving what seems like extreme valuations.

The way I see it, it seems that there is a much higher probability that US equities will drop over the next 6 months then make gains. If I do sell to cash, how will I know when to buy back in? I won't. But sitting on the sidelines for the next 4 to 6 months (After the US election), runs the risk that I could miss out on gains in the markets between now and then, yes, understood. I also have the upside of possibly avoiding a drop due to the pandemic, civil unrest, etc.

Convince me otherwise.
I mean, the whole founding philosophy of this website is not market timing, rather picking an AA that works for you and hanging on for the long haul. There's a lot more selling to that idea than this particular moment in time.

But a couple of points: how about I talk you out of selling out on the last dip, back in March or April? Who would have expected that we'd be back at this level in the teeth of the pandemic? Not me, but here we are. If you'd sold anywhere but pretty much at the peak you'd be behind now.

Another one, that I apologize might flirt with politics. As lots of people are fond of saying, the stock market is not the economy. Whatever happens with the economy as a whole, I think there's been a pretty clear signal that the power of the state is directed at doing whatever it takes to support asset prices. I'm not sure I see that changing. It's not an approach I necessarily agree with, but as a hedge I feel like I should be exposed to it.
Last edited by SmallSaver on Mon Jul 20, 2020 12:47 pm, edited 1 time in total.
Triple digit golfer
Posts: 5585
Joined: Mon May 18, 2009 5:57 pm

Re: Convince me not to sell all my US equities to Cash temporarily

Post by Triple digit golfer »

U.S. equities are disconnected from the economy. Why does this surprise you? They are not connected to the economy. Stock prices are the fair value of what the collective market thinks are the future cash flows of the companies in the market. Or something like that.
magicrat
Posts: 1088
Joined: Sat Nov 29, 2014 7:04 pm

Re: Convince me not to sell all my US equities to Cash temporarily

Post by magicrat »

Why should we convince you otherwise? There are countless threads on this topic that rehash the same question over and over again. You can read through them and make your own decisions.
Triple digit golfer
Posts: 5585
Joined: Mon May 18, 2009 5:57 pm

Re: Convince me not to sell all my US equities to Cash temporarily

Post by Triple digit golfer »

magicrat wrote: Mon Jul 20, 2020 12:46 pm Why should we convince you otherwise? There are countless threads on this topic that rehash the same question over and over again. You can read through them and make your own decisions.
Yep, good to read old ones and see how "certain" posters were. See how a few of those worked out and report back to us, OP.
User avatar
Orbuculum Nongata
Posts: 493
Joined: Thu Nov 06, 2014 1:58 pm

Re: Convince me not to sell all my US equities to Cash temporarily

Post by Orbuculum Nongata »

HippoSir wrote: Mon Jul 20, 2020 12:42 pm I will never understand why people approach this kind of thing with "it's all or nothing!" thinking. If your allocation is beyond your risk tolerance, just adjust your allocation, maybe go to 60/40.
+1
Potential - distraction = performance.
Dottie57
Posts: 9326
Joined: Thu May 19, 2016 5:43 pm
Location: Earth Northern Hemisphere

Re: Convince me not to sell all my US equities to Cash temporarily

Post by Dottie57 »

HippoSir wrote: Mon Jul 20, 2020 12:42 pm I will never understand why people approach this kind of thing with "it's all or nothing!" thinking. If your allocation is beyond your risk tolerance, just adjust your allocation, maybe go to 60/40.
+1
User avatar
simplesimon
Posts: 3965
Joined: Mon Feb 25, 2008 8:53 pm

Re: Convince me not to sell all my US equities to Cash temporarily

Post by simplesimon »

I've posted about this a few times: viewtopic.php?p=5305549#p5305549

When you look at the SP500 or Total Market, you're seeing an aggregate and may be missing that technology is carrying the bulk of the return. Most sectors are still down, some way down, from their February highs.

I'm not arguing for overweighting the "underperforming" sectors, but just be cognizant that when we talk about US Stocks rebounding right now we are talking about US technology stock prices skyrocketing.

Remember a couple years ago when Apple crossed the $1 trillion market cap threshold, the first time any company has done it in the history of the stock market? Well it's about $1.7 trillion market cap today (and several other companies have joined the club). What they say is true...the first trillion is always the hardest.
Last edited by simplesimon on Mon Jul 20, 2020 12:54 pm, edited 2 times in total.
Dottie57
Posts: 9326
Joined: Thu May 19, 2016 5:43 pm
Location: Earth Northern Hemisphere

Re: Convince me not to sell all my US equities to Cash temporarily

Post by Dottie57 »

magicrat wrote: Mon Jul 20, 2020 12:46 pm Why should we convince you otherwise? There are countless threads on this topic that rehash the same question over and over again. You can read through them and make your own decisions.
This.
7eight9
Posts: 1545
Joined: Fri May 17, 2019 7:11 pm

Re: Convince me not to sell all my US equities to Cash temporarily

Post by 7eight9 »

simplesimon wrote: Mon Jul 20, 2020 12:49 pm I've posted about this a few times: viewtopic.php?p=5305549#p5305549

When you look at the SP500 or Total Market, you're seeing an aggregate and may be missing that technology is carrying the bulk of the return. Most sectors are still down, some way down, from their February highs.

I'm not arguing for overweighting the "underperforming" sectors, but just be cognizant that when we talk about US Stocks rebounding right now we are talking about US technology stock prices skyrocketing.
I've found this to be a great visual of how just a few companies are carrying the market --- https://finviz.com/map.ashx?t=sec&st=ytd
I guess it all could be much worse. | They could be warming up my hearse.
sycamore
Posts: 1335
Joined: Tue May 08, 2018 12:06 pm

Re: Convince me not to sell all my US equities to Cash temporarily

Post by sycamore »

I won't convince to not sell all your US equities. Instead, you should come up with an Investment Policy Statement that will keep you from reacting to the market excesses. A reasonable IPS that includes situations like now could be something like: when my net worth reaches 10x expenses, my AA should be 80/20. At 15x, AA=70/30. At 20x, AA=60/40, etc. The idea is to indeed sell some when stocks are high. You pick the ratios to fit your personal life. Trying to get in and out of the market will just leave you always grasping at straws so better to have a plan.
Shael_AT
Posts: 49
Joined: Mon Jul 15, 2019 2:36 pm

Re: Convince me not to sell all my US equities to Cash temporarily

Post by Shael_AT »

US stocks have rebounded baffles me and US equities seem completely disconnected from the economy.
I'm not sure how serious this sentence is.
User avatar
David Jay
Posts: 9618
Joined: Mon Mar 30, 2015 5:54 am
Location: Michigan

Re: Convince me not to sell all my US equities to Cash temporarily

Post by David Jay »

alaskantraveler wrote: Mon Jul 20, 2020 12:38 pmThe way I see it, it seems that there is a much higher probability that US equities will drop over the next 6 months then make gains.
Why do you care what the market will do over the next 6 months? Really, why are you focused on the next 6 months? You are investing for the next 5 decades.

Getting out of the market every time you think that there is “a much higher probability that US equities will drop over the next 6 months than make gains”, will destroy your future. You simply must find a way to get past your short-term mindset or you face a dystopian future.
Prediction is very difficult, especially about the future - Niels Bohr | To get the "risk premium", you really do have to take the risk - nisiprius
Candor
Posts: 332
Joined: Sat May 28, 2011 4:25 pm

Re: Convince me not to sell all my US equities to Cash temporarily

Post by Candor »

"Far more money has been lost by investors preparing for corrections than has been lost in corrections themselves." -Peter Lynch.

Sound familiar?
User avatar
simplesimon
Posts: 3965
Joined: Mon Feb 25, 2008 8:53 pm

Re: Convince me not to sell all my US equities to Cash temporarily

Post by simplesimon »

7eight9 wrote: Mon Jul 20, 2020 12:52 pm I've found this to be a great visual of how just a few companies are carrying the market --- https://finviz.com/map.ashx?t=sec&st=ytd
Very cool. Is there a way to see what the map looked like on 1/1/2020?
dbr
Posts: 33842
Joined: Sun Mar 04, 2007 9:50 am

Re: Convince me not to sell all my US equities to Cash temporarily

Post by dbr »

I'm not taking responsibility for what you are responsible for.

Actionable possible advice: If you are really worried then you don't have the right asset allocation in the first place. This might be a time to rethink what you should have.

If you want to market time, I have no advice how to do that. It is certainly true that the risk in going all to cash is missed opportunity rather than severe loss. Most people would manage that trade off by investing less aggressively to start with.

For some information here is a graphic of historical epidemics. The point is that pandemic is a regular enough event that one should assume this kind of thing will happen rather than imagine it is a black swan. In the past 20 years there have been 5 pandemics though only one ever arrived at even close to the size of SARS-COV2. If you go back and count HIV-AIDS at 50 million deaths this is penny ante, but the populations most affected then were different. Asian and Hong Kong Flu still had double the deaths than this one does so far. https://www.visualcapitalist.com/histor ... deadliest/
MishkaWorries
Posts: 193
Joined: Wed Aug 14, 2019 4:39 pm

Re: Convince me not to sell all my US equities to Cash temporarily

Post by MishkaWorries »

I'll take a somewhat contrary position. I think picking the times when the market is overvalued and do for a correction is pretty easy. You may be off by a few months or predict a correction that doesn't materialize.

Then the question is how do you get back in the market? When do you say now the market is no longer still too overvalued or frothy.

I think the biggest danger of market timing is getting back in. I made that mistake years ago and lost out on a bunch gains.

So be careful in your thoughts. Make sure you're smart enough to time the market two times. Once getting out and once getting back in.
We plan. G-d laughs.
7eight9
Posts: 1545
Joined: Fri May 17, 2019 7:11 pm

Re: Convince me not to sell all my US equities to Cash temporarily

Post by 7eight9 »

simplesimon wrote: Mon Jul 20, 2020 12:57 pm
7eight9 wrote: Mon Jul 20, 2020 12:52 pm I've found this to be a great visual of how just a few companies are carrying the market --- https://finviz.com/map.ashx?t=sec&st=ytd
Very cool. Is there a way to see what the map looked like on 1/1/2020?
I don't believe so.
I guess it all could be much worse. | They could be warming up my hearse.
rascott
Posts: 2381
Joined: Wed Apr 15, 2015 10:53 am

Re: Convince me not to sell all my US equities to Cash temporarily

Post by rascott »

Selling is easy. Buying back in is the part where most investors fall on their face.
User avatar
Toons
Posts: 13826
Joined: Fri Nov 21, 2008 10:20 am
Location: Hills of Tennessee

Re: Convince me not to sell all my US equities to Cash temporarily

Post by Toons »

alaskantraveler wrote: Mon Jul 20, 2020 12:38 pm Hi Everyone. For context, I'm 36 years old, married , one child. Less than $500k invested (index funds). 80/20 portfolio. I'm having a really hard time right now, not wanting to temporarily sell all my US equities to cash. The way that US stocks have rebounded baffles me and US equities seem completely disconnected from the economy. The pandemic is only getting worse in the US, yet stocks have regained most of their losses.

I am not one to try to time the market. I held the course through the last dip and only re-balanced my portfolio. Why is this time different? The continued rise of US equities is baffling and I haven't read one good article on what is driving what seems like extreme valuations.

The way I see it, it seems that there is a much higher probability that US equities will drop over the next 6 months then make gains. If I do sell to cash, how will I know when to buy back in? I won't. But sitting on the sidelines for the next 4 to 6 months (After the US election), runs the risk that I could miss out on gains in the markets between now and then, yes, understood. I also have the upside of possibly avoiding a drop due to the pandemic, civil unrest, etc.

Convince me otherwise.
Do yourself a favor
Ignore what you can't control
Keep investing
The United States GDP has grown steadily decade after decade.
And will continue to do so
I wouldn't concern myself with 4-6 month time frames
36 years young?
I would be thinking more like "30" years out.
Stay invested
In equities

:happy
"One does not accumulate but eliminate. It is not daily increase but daily decrease. The height of cultivation always runs to simplicity" –Bruce Lee
Jack FFR1846
Posts: 12806
Joined: Tue Dec 31, 2013 7:05 am
Location: 26 miles, 385 yards west of Copley Square

Re: Convince me not to sell all my US equities to Cash temporarily

Post by Jack FFR1846 »

I think this could be a great strategy. Sell to go to cash today. When the market drops like a rock, buy back in. If the market never drops, then don't go to cash today. Pretty simple, eh?
Bogle: Smart Beta is stupid
User avatar
HomerJ
Posts: 15348
Joined: Fri Jun 06, 2008 12:50 pm

Re: Convince me not to sell all my US equities to Cash temporarily

Post by HomerJ »

alaskantraveler wrote: Mon Jul 20, 2020 12:38 pmThe way I see it, it seems that there is a much higher probability that US equities will drop over the next 6 months then make gains.
What's the probability that equities will be higher in 20-30 years?

You know, when you actually need that retirement money.

Stay the course. Invest for the long-term.

If you don't have a good emergency fund, or want a good chunk of money to stay safe just in case everything goes bad for a while, then move $100,000 to bonds/CDs/cash.

Definitely don't go 100% anything. If you are feeling anxious move some to safer assets. But then you should stay at the new allocation forever. If 80/20 lets you sleep at night when things seem crazy, then stay at 80/20 forever. You shouldn't jump back to 100% stocks "later, when things seem normal", because things are never normal.

But don't go 100% cash. That's just silly.
A Goldman Sachs associate provided a variety of detailed explanations, but then offered a caveat, “If I’m being dead-### honest, though, nobody knows what’s really going on.”
awval999
Posts: 1197
Joined: Fri Apr 08, 2011 10:17 pm

Re: Convince me not to sell all my US equities to Cash temporarily

Post by awval999 »

alaskantraveler wrote: Mon Jul 20, 2020 12:38 pm Hi Everyone. For context, I'm 36 years old, married , one child. Less than $500k invested (index funds). 80/20 portfolio. I'm having a really hard time right now, not wanting to temporarily sell all my US equities to cash. The way that US stocks have rebounded baffles me and US equities seem completely disconnected from the economy. The pandemic is only getting worse in the US, yet stocks have regained most of their losses.

I am not one to try to time the market. I held the course through the last dip and only re-balanced my portfolio. Why is this time different? The continued rise of US equities is baffling and I haven't read one good article on what is driving what seems like extreme valuations.

The way I see it, it seems that there is a much higher probability that US equities will drop over the next 6 months then make gains. If I do sell to cash, how will I know when to buy back in? I won't. But sitting on the sidelines for the next 4 to 6 months (After the US election), runs the risk that I could miss out on gains in the markets between now and then, yes, understood. I also have the upside of possibly avoiding a drop due to the pandemic, civil unrest, etc.

Convince me otherwise.
Read my post history.
I did the same thing in April. Rebought in June. Lost 7% in gains. Did the math to make sure it hurt and to never do it again.
Mrxyz
Posts: 730
Joined: Wed Feb 29, 2012 6:12 am

Re: Convince me not to sell all my US equities to Cash temporarily

Post by Mrxyz »

Seriously, this is not a criticism but an observation.
If you had to ask this question, then your AA is wrong (for you). You need to rethink need to take risk, ability to take risk etc etc and come up with what will prevent you from asking such questions (aka SWAN test).
I had similar thoughts many times in my life and each time, I pulled back and reviewed my IPS and my AA. And confirmed that I am doing what I WANT to do.
Lots more information on this on wiki and prior similar posts.
All the best!
hnd
Posts: 231
Joined: Mon Jun 22, 2020 11:43 am

Re: Convince me not to sell all my US equities to Cash temporarily

Post by hnd »

in one sense, we should convince you of nothing, your loss is our gain (the market produces X, we are just after our fair share...someone said that, forget who :D ). but in the sense of being helpful, i've not heard many of these stories followed to completion that resulted in happy endings. There are plenty of them here.

you are in your 30's. unless you are hoping to to retire in 10 years, you just need to adjust your AA but in reality, I don't think you do. If you think things are going to be so disastrous in the near future that you will be incapable of recovery within the next 30 years before you retire, Bonds or a savings account will likely not save your investment. Get it all in true cash and stash it in your mattress or exchange it for gold as such a catastrophy would likely send the world economies spiraling into the abyss.
Last edited by hnd on Mon Jul 20, 2020 1:08 pm, edited 1 time in total.
02nz
Posts: 5723
Joined: Wed Feb 21, 2018 3:17 pm

Re: Convince me not to sell all my US equities to Cash temporarily

Post by 02nz »

livesoft wrote: Mon Jul 20, 2020 12:42 pm Right back at you: Convince me to convince you. LOL!

Somebody should link all the previous posts just like this one. We know how those turned out. :twisted:
And also link all the posts from the past few months of "I panic-sold in March, help me get back into the market." Knowing when to get back in isn't easy, either.
Last edited by 02nz on Mon Jul 20, 2020 1:08 pm, edited 1 time in total.
User avatar
arcticpineapplecorp.
Posts: 6467
Joined: Tue Mar 06, 2012 9:22 pm

Re: Convince me not to sell all my US equities to Cash temporarily

Post by arcticpineapplecorp. »

alaskantraveler wrote: Mon Jul 20, 2020 12:38 pm I am not one to try to time the market.
but that's exactly what you're doing. pure and simple. Denial is not just a river in Egypt.

the four most dangerous words in investing are "This time is different."

You will do this every time the market seems disconnected with the economy to you. (hint: the market is forward looking, not present looking. It's looking beyond the virus, because multiple vaccines are being developed faster than any time throughout history. You're looking at the present. See the difference?)

do you think you have discovered something that no one else has thought about? Even if you did, you've now shared it with all of us, so the information you have has already been priced into the market. There's nothing you know that isn't already known. You're acting as if you have figured out something no one else knows. Nothing could be further than the truth.

Here's an exercise for you. Go to the following sites and play their game. It's a stock market timing game. You get to make buy and sell decisions based on the past movements of the stock market (that's what you're trying to do now). No actual money involved (therefore it's safer than what you're about to do). Now go and play:

https://www.prudential.com/cdn/tools/ou ... oolcta=OFF
https://qz.com/487013/this-game-will-sh ... right-now/
https://engaging-data.com/market-timing-game/

now the fun part. How'd you do? Did you beat the market?

If you didn't beat the market with past, known data, what makes you so sure you will beat the market with future, unknown data?

The answers to every market timing question:
Q: When do I buy?
A: When you have the money.

Q: When do I sell?
A: When you need the money.

You're not selling because you need the money. you're selling for some other reason, basically fear. Fear and Greed move the markets, but it doesn't deliver the returns for most people they think they'll get, but it does help us buy and holders.

Best of luck. Sell it all if you want. Makes no difference to me.
Last edited by arcticpineapplecorp. on Mon Jul 20, 2020 1:10 pm, 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
User avatar
SB1234
Posts: 239
Joined: Sat Mar 10, 2018 7:41 pm
Location: Laniakea

Re: Convince me not to sell all my US equities to Cash temporarily

Post by SB1234 »

alaskantraveler wrote: Mon Jul 20, 2020 12:38 pm Hi Everyone. For context, I'm 36 years old, married , one child. Less than $500k invested (index funds). 80/20 portfolio. I'm having a really hard time right now, not wanting to temporarily sell all my US equities to cash. The way that US stocks have rebounded baffles me and US equities seem completely disconnected from the economy. The pandemic is only getting worse in the US, yet stocks have regained most of their losses.

I am not one to try to time the market. I held the course through the last dip and only re-balanced my portfolio. Why is this time different? The continued rise of US equities is baffling and I haven't read one good article on what is driving what seems like extreme valuations.

The way I see it, it seems that there is a much higher probability that US equities will drop over the next 6 months then make gains. If I do sell to cash, how will I know when to buy back in? I won't. But sitting on the sidelines for the next 4 to 6 months (After the US election), runs the risk that I could miss out on gains in the markets between now and then, yes, understood. I also have the upside of possibly avoiding a drop due to the pandemic, civil unrest, etc.

Convince me otherwise.
Do you have a written plan. If yes then do what your plan says. If you don't have a written plan, then first make a plan. After that ask this question.
anecdotes are not data
User avatar
arcticpineapplecorp.
Posts: 6467
Joined: Tue Mar 06, 2012 9:22 pm

Re: Convince me not to sell all my US equities to Cash temporarily

Post by arcticpineapplecorp. »

SB1234 wrote: Mon Jul 20, 2020 1:09 pm
alaskantraveler wrote: Mon Jul 20, 2020 12:38 pm Hi Everyone. For context, I'm 36 years old, married , one child. Less than $500k invested (index funds). 80/20 portfolio. I'm having a really hard time right now, not wanting to temporarily sell all my US equities to cash. The way that US stocks have rebounded baffles me and US equities seem completely disconnected from the economy. The pandemic is only getting worse in the US, yet stocks have regained most of their losses.

I am not one to try to time the market. I held the course through the last dip and only re-balanced my portfolio. Why is this time different? The continued rise of US equities is baffling and I haven't read one good article on what is driving what seems like extreme valuations.

The way I see it, it seems that there is a much higher probability that US equities will drop over the next 6 months then make gains. If I do sell to cash, how will I know when to buy back in? I won't. But sitting on the sidelines for the next 4 to 6 months (After the US election), runs the risk that I could miss out on gains in the markets between now and then, yes, understood. I also have the upside of possibly avoiding a drop due to the pandemic, civil unrest, etc.

Convince me otherwise.
Do you have a written plan. If yes then do what your plan says. If you don't have a written plan, then first make a plan. After that ask this question.
example of how to do this here:
https://www.bogleheads.org/wiki/Investm ... _statement
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
User avatar
goingup
Posts: 3922
Joined: Tue Jan 26, 2010 1:02 pm

Re: Convince me not to sell all my US equities to Cash temporarily

Post by goingup »

alaskantraveler wrote: Mon Jul 20, 2020 12:38 pm Convince me otherwise.
I wouldn't try to do that but nearly all of us on this site believe in developing an asset allocation and sticking with it.

If you're feeling really pessimistic change your AA by 10% and go to 70/30. Then stick with that.
User avatar
sergeant
Posts: 1635
Joined: Tue Dec 04, 2007 11:13 pm
Location: The Golden State

Re: Convince me not to sell all my US equities to Cash temporarily

Post by sergeant »

" I am not one to try and time the market." :annoyed

I wouldn't bother trying to convince you to do anything though I hope that if you do this that you will report in on the results. We seem to have lost just about everyone who makes these types of moves.
AA- 20+ Years of Expenses Fixed Income/The remainder in Equities.
Robot Monster
Posts: 1661
Joined: Sun May 05, 2019 11:23 am
Location: New York

Re: Convince me not to sell all my US equities to Cash temporarily

Post by Robot Monster »

Dottie57 wrote: Mon Jul 20, 2020 12:49 pm
magicrat wrote: Mon Jul 20, 2020 12:46 pm Why should we convince you otherwise? There are countless threads on this topic that rehash the same question over and over again. You can read through them and make your own decisions.
This.
Yeah, why should we answer this same question yet again when we can make so much better use of our time debating international vs domestic, or lump sum vs dca?
JimmyJames
Posts: 41
Joined: Thu May 23, 2019 9:12 pm

Re: Convince me not to sell all my US equities to Cash temporarily

Post by JimmyJames »

alaskantraveler wrote: Mon Jul 20, 2020 12:38 pm Hi Everyone. For context, I'm 36 years old, married , one child. Less than $500k invested (index funds). 80/20 portfolio. I'm having a really hard time right now, not wanting to temporarily sell all my US equities to cash. The way that US stocks have rebounded baffles me and US equities seem completely disconnected from the economy. The pandemic is only getting worse in the US, yet stocks have regained most of their losses.

I am not one to try to time the market. I held the course through the last dip and only re-balanced my portfolio. Why is this time different? The continued rise of US equities is baffling and I haven't read one good article on what is driving what seems like extreme valuations.

The way I see it, it seems that there is a much higher probability that US equities will drop over the next 6 months then make gains. If I do sell to cash, how will I know when to buy back in? I won't. But sitting on the sidelines for the next 4 to 6 months (After the US election), runs the risk that I could miss out on gains in the markets between now and then, yes, understood. I also have the upside of possibly avoiding a drop due to the pandemic, civil unrest, etc.

Convince me otherwise.
For what it's worth, I am almost in an identical position to you. I didn't sell everything, but a darn big chunk of it. Now sitting in cash. Maybe its a generational thing, where the older crowd is just used to decades of never ending gains and ever growing income inequality, with no notion of that ending anytime soon. But I do see things changing once the younger generation starts to get more elected officials into office. Sure, the stock market will continue to go up, but the kinds of gains we have seen over the last decade are not sustainable.

I will wait until a vaccine is announced, and until after the election. If the market drops another 20% before then, i'm jumping back in. If it goes up another 20%, then oh well. I am with you though, the latter doesn't seem likely.

To each their own. Do what you feel is right.
User avatar
SB1234
Posts: 239
Joined: Sat Mar 10, 2018 7:41 pm
Location: Laniakea

Re: Convince me not to sell all my US equities to Cash temporarily

Post by SB1234 »

JimmyJames wrote: Mon Jul 20, 2020 1:48 pm For what it's worth, I am almost in an identical position to you. I didn't sell everything, but a darn big chunk of it. Now sitting in cash. Maybe its a generational thing, where the older crowd is just used to decades of never ending gains and ever growing income inequality, with no notion of that ending anytime soon. But I do see things changing once the younger generation starts to get more elected officials into office. Sure, the stock market will continue to go up, but the kinds of gains we have seen over the last decade are not sustainable.

I will wait until a vaccine is announced, and until after the election. If the market drops another 20% before then, i'm jumping back in. If it goes up another 20%, then oh well. I am with you though, the latter doesn't seem likely.

To each their own. Do what you feel is right.
Sigh. Those who don't study history will be forced to repeat it. :oops:
anecdotes are not data
Robot Monster
Posts: 1661
Joined: Sun May 05, 2019 11:23 am
Location: New York

Re: Convince me not to sell all my US equities to Cash temporarily

Post by Robot Monster »

SB1234 wrote: Mon Jul 20, 2020 1:54 pm
JimmyJames wrote: Mon Jul 20, 2020 1:48 pm To each their own. Do what you feel is right.
Sigh. Those who don't study history will be forced to repeat it. :oops:
You can lead a horse to water...
Badger1754
Posts: 208
Joined: Thu Jan 25, 2018 2:00 pm
Location: Upstate NY

Re: Convince me not to sell all my US equities to Cash temporarily

Post by Badger1754 »

Here, see this link.

And this image:

Image
orhkaf
Posts: 88
Joined: Tue Feb 13, 2018 12:39 am

Re: Convince me not to sell all my US equities to Cash temporarily

Post by orhkaf »

Toons wrote: Mon Jul 20, 2020 1:02 pm
alaskantraveler wrote: Mon Jul 20, 2020 12:38 pm Hi Everyone. For context, I'm 36 years old, married , one child. Less than $500k invested (index funds). 80/20 portfolio. I'm having a really hard time right now, not wanting to temporarily sell all my US equities to cash. The way that US stocks have rebounded baffles me and US equities seem completely disconnected from the economy. The pandemic is only getting worse in the US, yet stocks have regained most of their losses.

I am not one to try to time the market. I held the course through the last dip and only re-balanced my portfolio. Why is this time different? The continued rise of US equities is baffling and I haven't read one good article on what is driving what seems like extreme valuations.

The way I see it, it seems that there is a much higher probability that US equities will drop over the next 6 months then make gains. If I do sell to cash, how will I know when to buy back in? I won't. But sitting on the sidelines for the next 4 to 6 months (After the US election), runs the risk that I could miss out on gains in the markets between now and then, yes, understood. I also have the upside of possibly avoiding a drop due to the pandemic, civil unrest, etc.

Convince me otherwise.
Do yourself a favor
Ignore what you can't control
Keep investing
The United States GDP has grown steadily decade after decade.
And will continue to do so
I wouldn't concern myself with 4-6 month time frames
36 years young?
I would be thinking more like "30" years out.
Stay invested
In equities

:happy
Listen to toons
asif408
Posts: 2209
Joined: Sun Mar 02, 2014 8:34 am
Location: Florida

Re: Convince me not to sell all my US equities to Cash temporarily

Post by asif408 »

OP,

You've got 25-30 years to invest, you should only care about the next 6 months performance if you're going to be spending that money in the next 6 months. And if you're concerned about US equities, many other countries are handling the virus better whose stock markets also have lower valuations.

The answer to me is easy: invest more outside the US and be patient, you've got plenty of time to ride the ups and downs of investing.
JimmyJames
Posts: 41
Joined: Thu May 23, 2019 9:12 pm

Re: Convince me not to sell all my US equities to Cash temporarily

Post by JimmyJames »

Robot Monster wrote: Mon Jul 20, 2020 2:06 pm
SB1234 wrote: Mon Jul 20, 2020 1:54 pm
JimmyJames wrote: Mon Jul 20, 2020 1:48 pm To each their own. Do what you feel is right.
Sigh. Those who don't study history will be forced to repeat it. :oops:
You can lead a horse to water...
OP -- if you haven't been on the board much, you will quickly find out that there is many on here who don't allow for independent thought. They are smart, but don't let them make your decisions for you :sharebeer
User avatar
SB1234
Posts: 239
Joined: Sat Mar 10, 2018 7:41 pm
Location: Laniakea

Re: Convince me not to sell all my US equities to Cash temporarily

Post by SB1234 »

JimmyJames wrote: Mon Jul 20, 2020 2:26 pm
Robot Monster wrote: Mon Jul 20, 2020 2:06 pm
SB1234 wrote: Mon Jul 20, 2020 1:54 pm
JimmyJames wrote: Mon Jul 20, 2020 1:48 pm To each their own. Do what you feel is right.
Sigh. Those who don't study history will be forced to repeat it. :oops:
You can lead a horse to water...
OP -- if you haven't been on the board much, you will quickly find out that there is many on here who don't allow for independent thought. They are smart, but don't let them make your decisions for you :sharebeer
Independent thought aside, first you should learn to not have glaring inaccuracies in whatever you post. If your observations are incorrect any inferences/conclusions you make are invalid.
anecdotes are not data
User avatar
btq96r
Posts: 200
Joined: Thu Dec 26, 2019 3:46 pm

Re: Convince me not to sell all my US equities to Cash temporarily

Post by btq96r »

JimmyJames
Posts: 41
Joined: Thu May 23, 2019 9:12 pm

Re: Convince me not to sell all my US equities to Cash temporarily

Post by JimmyJames »

SB1234 wrote: Mon Jul 20, 2020 2:30 pm
JimmyJames wrote: Mon Jul 20, 2020 2:26 pm
Robot Monster wrote: Mon Jul 20, 2020 2:06 pm
SB1234 wrote: Mon Jul 20, 2020 1:54 pm
JimmyJames wrote: Mon Jul 20, 2020 1:48 pm To each their own. Do what you feel is right.
Sigh. Those who don't study history will be forced to repeat it. :oops:
You can lead a horse to water...
OP -- if you haven't been on the board much, you will quickly find out that there is many on here who don't allow for independent thought. They are smart, but don't let them make your decisions for you :sharebeer
Independent thought aside, first you should learn to not have glaring inaccuracies in whatever you post. If your observations are incorrect any inferences/conclusions you make are invalid.
Please elaborate.
palanzo
Posts: 1645
Joined: Thu Oct 10, 2019 4:28 pm

Re: Convince me not to sell all my US equities to Cash temporarily

Post by palanzo »

7eight9 wrote: Mon Jul 20, 2020 12:52 pm
simplesimon wrote: Mon Jul 20, 2020 12:49 pm I've posted about this a few times: viewtopic.php?p=5305549#p5305549

When you look at the SP500 or Total Market, you're seeing an aggregate and may be missing that technology is carrying the bulk of the return. Most sectors are still down, some way down, from their February highs.

I'm not arguing for overweighting the "underperforming" sectors, but just be cognizant that when we talk about US Stocks rebounding right now we are talking about US technology stock prices skyrocketing.
I've found this to be a great visual of how just a few companies are carrying the market --- https://finviz.com/map.ashx?t=sec&st=ytd
That's scary.

This is less scary but still scary.

https://finviz.com/map.ashx?t=sec_all&st=ytd
JimmyJames
Posts: 41
Joined: Thu May 23, 2019 9:12 pm

Re: Convince me not to sell all my US equities to Cash temporarily

Post by JimmyJames »

SB1234 wrote: Mon Jul 20, 2020 2:30 pm
JimmyJames wrote: Mon Jul 20, 2020 2:26 pm
Robot Monster wrote: Mon Jul 20, 2020 2:06 pm
SB1234 wrote: Mon Jul 20, 2020 1:54 pm
JimmyJames wrote: Mon Jul 20, 2020 1:48 pm To each their own. Do what you feel is right.
Sigh. Those who don't study history will be forced to repeat it. :oops:
You can lead a horse to water...
OP -- if you haven't been on the board much, you will quickly find out that there is many on here who don't allow for independent thought. They are smart, but don't let them make your decisions for you :sharebeer
Independent thought aside, first you should learn to not have glaring inaccuracies in whatever you post. If your observations are incorrect any inferences/conclusions you make are invalid.
My point is that no one knows EXACTLY what will happen in the next 3 months, 6 months, 5 years, 50 years. Most users on this thread seem to know for a fact that the market will continue to rise higher, forever. How do they know that? They don't. They base it off of historical data and make an educated guess. And they are probably right.

That is all that the OP and I are doing as well. We are weighing the current situation and the range of outcomes over the next 6-12 months. My best guess is that the negative factors currently at play would lean towards a higher probability that the market will go down sometime in the next 6-12 months, than the probability that it will continue to rise.

I think other users assume people that pose these questions are doing this kind of market timing on a regular basis. We don't. I personally do not. In fact, this is the first time I've ever done it. But this is also the first time in my lifetime that I have witnessed an economic event such as this. And it is quite obvious to my educated mind, that there is a lot of bricks propping up the weight of the economic house, and those bricks are going to start being removed soon. Eventually the house will tumble.
User avatar
David Jay
Posts: 9618
Joined: Mon Mar 30, 2015 5:54 am
Location: Michigan

Re: Convince me not to sell all my US equities to Cash temporarily

Post by David Jay »

JimmyJames wrote: Mon Jul 20, 2020 1:48 pmDo what you feel is right.
Alaska Traveler:

This is perhaps the worst advice you have received today. The human brain is wired completely wrong for appropriate investment decisions. The "flight" response to fear will get you every time. DO NOT do what "feels" appropriate, have a written plan that you can refer to in times of fear and follow the plan written by your "sane" self (i.e. you were thinking more clearly when you weren't fearful). Following your instincts will get you into investing trouble almost every time. This is often referred to as "the enemy in the mirror".

Read a book on behavioral economics, a good starting point is "Your Money and Your Brain".
Prediction is very difficult, especially about the future - Niels Bohr | To get the "risk premium", you really do have to take the risk - nisiprius
User avatar
SB1234
Posts: 239
Joined: Sat Mar 10, 2018 7:41 pm
Location: Laniakea

Re: Convince me not to sell all my US equities to Cash temporarily

Post by SB1234 »

JimmyJames wrote: Mon Jul 20, 2020 2:36 pm
SB1234 wrote: Mon Jul 20, 2020 2:30 pm
JimmyJames wrote: Mon Jul 20, 2020 2:26 pm
Robot Monster wrote: Mon Jul 20, 2020 2:06 pm
SB1234 wrote: Mon Jul 20, 2020 1:54 pm
Sigh. Those who don't study history will be forced to repeat it. :oops:
You can lead a horse to water...
OP -- if you haven't been on the board much, you will quickly find out that there is many on here who don't allow for independent thought. They are smart, but don't let them make your decisions for you :sharebeer
Independent thought aside, first you should learn to not have glaring inaccuracies in whatever you post. If your observations are incorrect any inferences/conclusions you make are invalid.
Please elaborate.
..where the older crowd is just used to decades of never ending gains...
Just in the last two decades there have been 2 nearly 50% drawdowns and many 10% more.

You can be right about everything you say and still the market may go up. Or vice versa. You can get everything wrong and market still falls. Because the future is unknown and unknowable.
Last edited by SB1234 on Mon Jul 20, 2020 2:53 pm, edited 1 time in total.
anecdotes are not data
User avatar
whodidntante
Posts: 9268
Joined: Thu Jan 21, 2016 11:11 pm
Location: outside the echo chamber

Re: Convince me not to sell all my US equities to Cash temporarily

Post by whodidntante »

alaskantraveler wrote: Mon Jul 20, 2020 12:38 pm I am not one to try to time the market.
I would debate you on that.
User avatar
Hector
Posts: 1381
Joined: Fri Dec 24, 2010 2:21 pm
Contact:

Re: Convince me not to sell all my US equities to Cash temporarily

Post by Hector »

Seems like your AA is too aggressive for you.
Post Reply