Whose being naughty and keeping some dry powder around?

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burritoLover
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Whose being naughty and keeping some dry powder around?

Post by burritoLover »

I'm pumping any leftover money into my settlement fund to try to market time some bargain buying when/if a large correction occurs. Still maxing out my 401k/ira and not changing my normal taxable auto-investment. I know it's dumb but with TSM at a price to book of 3.3, I can't see plowing every last dollar of my money into these high prices. And I already have a decent tilt to small-cap value and a decent international allocation.

Anyone else?
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MNSooner
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Re: Whose being naughty and keeping some dry powder around?

Post by MNSooner »

Depends. Is pumping money into my 60/40 asset allocation and periodically rebalancing “keeping some dry powder around”?

If so, yes. Otherwise, no.
MotoTrojan
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Re: Whose being naughty and keeping some dry powder around?

Post by MotoTrojan »

My only naughty action was moving my 35% S&P500 stake to Large-value. Other 65% was already in global small/deep-value. Cash is too far for me.
gonefishing01
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Re: Whose being naughty and keeping some dry powder around?

Post by gonefishing01 »

Guilty. I haven’t sold anything or changed my normal routine but I did receive a large payment last month and haven’t fully invested it. White knuckled half into my AA right away (hindsight so far glad I did with everything that’s happened this week) and plan to drop the rest in chunks... or bigger chunks if we see a correction.
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TheTimeLord
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Re: Whose being naughty and keeping some dry powder around?

Post by TheTimeLord »

burritoLover wrote: Thu Aug 27, 2020 7:35 am I'm pumping any leftover money into my settlement fund to try to market time some bargain buying when/if a large correction occurs. Still maxing out my 401k/ira and not changing my normal taxable auto-investment. I know it's dumb but with TSM at a price to book of 3.3, I can't see plowing every last dollar of my money into these high prices. And I already have a decent tilt to small-cap value and a decent international allocation.

Anyone else?
I was doing this back in January and February but I have been increasing my equity allocation since the beginning of May, so I guess I have been firing my dry powder. FWIW, I hold 0% REIT, 0% Small Cap and a small position in International that is likely not to survive long.
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Snowjob
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Re: Whose being naughty and keeping some dry powder around?

Post by Snowjob »

MotoTrojan wrote: Thu Aug 27, 2020 7:46 am My only naughty action was moving my 35% S&P500 stake to Large-value. Other 65% was already in global small/deep-value. Cash is too far for me.
Hell of a value weighting. Are you concerned at all about under-performing a S&P benchmark at all? I know value is cheap but sometimes it can mean obsolete, and I know personally I cant deal with a ton of negative tracking error so I don't do sector funds or tilts anymore.
MotoTrojan
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Re: Whose being naughty and keeping some dry powder around?

Post by MotoTrojan »

Snowjob wrote: Thu Aug 27, 2020 8:15 am
MotoTrojan wrote: Thu Aug 27, 2020 7:46 am My only naughty action was moving my 35% S&P500 stake to Large-value. Other 65% was already in global small/deep-value. Cash is too far for me.
Hell of a value weighting. Are you concerned at all about under-performing a S&P benchmark at all? I know value is cheap but sometimes it can mean obsolete, and I know personally I cant deal with a ton of negative tracking error so I don't do sector funds or tilts anymore.
Of course I would be bummed if my longterm performance is lower than the S&P500 but in the short term (5-10 years) I accept it. Without tracking error you won’t outperform.

Someday I’ll unwind that 35% trade but I’ll be leaving the rest where it is (AVUV, VSIAX, QVAL, FNDC, IVAL).
mikejuss
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Re: Whose being naughty and keeping some dry powder around?

Post by mikejuss »

That's a good question, and the sad answer is yes.

How do fellow Bogleheads resist the temptation--especially when the market feels overvalued--to keep some cash in their back pocket in the hope of buying a dip? I haven't developed the disciple to put my investments on complete autopilot, though the numbers probably show that I'd come out ahead in the long run if I did.
Nowizard
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Re: Whose being naughty and keeping some dry powder around?

Post by Nowizard »

If rebalancing to a more conservative allocation based on personal circumstances is trying to keep existing powder dry, yes. Would not call it a naughty act, however.

Tim
atdharris
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Re: Whose being naughty and keeping some dry powder around?

Post by atdharris »

I deployed most of my dry powder 2 weeks ago. At this point, I don't want to be holding much cash given the current monetary policy we're seeing. I'm keeping roughly $45,000 in cash, but I am considering investing a portion of that as well into my taxable account.
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White Coat Investor
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Re: Whose being naughty and keeping some dry powder around?

Post by White Coat Investor »

burritoLover wrote: Thu Aug 27, 2020 7:35 am I'm pumping any leftover money into my settlement fund to try to market time some bargain buying when/if a large correction occurs. Still maxing out my 401k/ira and not changing my normal taxable auto-investment. I know it's dumb but with TSM at a price to book of 3.3, I can't see plowing every last dollar of my money into these high prices. And I already have a decent tilt to small-cap value and a decent international allocation.

Anyone else?
I get dry powder every month.

In my experience, beginning investors have trouble staying the course at market lows, intermediate investors have trouble staying the course at market highs, and experienced investors just stay the course. Take from that what you will.
Last edited by White Coat Investor on Thu Aug 27, 2020 9:01 am, edited 1 time in total.
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Re: Whose being naughty and keeping some dry powder around?

Post by Robot Monster »

burritoLover wrote: Thu Aug 27, 2020 7:35 am I know it's dumb but with TSM at a price to book of 3.3, I can't see plowing every last dollar of my money into these high prices.
You don't seem completely on-board with the notion what you're doing is dumb.
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Triple digit golfer
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Re: Whose being naughty and keeping some dry powder around?

Post by Triple digit golfer »

No. I am being disciplined. I always have been, but I am now even more convinced after the last six months that doing anything other than staying the course and maintaining my AA is just a bet that I could either win or lose. Since my goal isn't to win, but simply not to lose, I am maintaining my AA and therefore guaranteed not to lose.
UpperNwGuy
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Re: Whose being naughty and keeping some dry powder around?

Post by UpperNwGuy »

I never have dry powder, and that's by design. Having idle money is just not my thing. I keep a balance of $3 in each of my settlement funds. When I add new money to the account, I invest it on the day I add it. I may be the only boglehead who didn't buy any extra VTSAX or VFIAX during the market lows in March 2020. I just kept investing according to plan.
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CyclingDuo
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Re: Whose being naughty and keeping some dry powder around?

Post by CyclingDuo »

burritoLover wrote: Thu Aug 27, 2020 7:35 amI'm pumping any leftover money into my settlement fund to try to market time some bargain buying when/if a large correction occurs. Still maxing out my 401k/ira and not changing my normal taxable auto-investment. I know it's dumb but with TSM at a price to book of 3.3, I can't see plowing every last dollar of my money into these high prices. And I already have a decent tilt to small-cap value and a decent international allocation.
The bolded part suggests you should invest some of your dry powder in a fully stocked liquor cabinet to support the drinking game we all like to play: "Every time small cap value is mentioned, you have to take a drink."

:sharebeer

CyclingDuo

P.S. We own the entire market including small cap and small cap value, so know the game quite well...so our liquor cabinet is always well stocked.
"Save like a pessimist, invest like an optimist." - Morgan Housel
johnegonpdx
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Re: Whose being naughty and keeping some dry powder around?

Post by johnegonpdx »

I've always had a rather large cash reserve, and I'll admit to having grown it considerably over the past several months. However, I did so by pulling way back on non-essential spending while keeping contributions into my investment portfolio steady. I grew my reserve in order go safeguard the near-term financial stability for my family no matter what happens to my profession, my company, the economy, the market, or all 4. However, at some point, I may start thinking that the size of my reserve is excessive due to diminished risk. At that point, I guess I'd use the "excess" to help re-balance my investment portfolio.
runner3081
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Re: Whose being naughty and keeping some dry powder around?

Post by runner3081 »

I am letting cash reserves fluctuate up a bit. Not to market time, but because the economy and potential impact to my job spooked me a bit. Only took a small pay cut for a few months, but made me think (wife doesn't work).

Now, assuming all goes well for the next few months, this will absolutely be dry powder and get dumped into the market.

To be honest, this wasn't really intentional. We just don't really spend any money anymore. We already had an extremely low spending amount per year, but it has continued to drop.
BlueCable
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Re: Whose being naughty and keeping some dry powder around?

Post by BlueCable »

We found out that while my wife's job may be fairly resilient to a bad economy, it is vulnerable to a healthcare system unprepared for a pandemic. We increased cash not for for emergency purposes. We are keeping powder dry for food, not deals.
Xrayman69
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Re: Whose being naughty and keeping some dry powder around?

Post by Xrayman69 »

The same investment contribution every week for taxable account and every month for tax advantageous accounts.

With that said cash reserves build up every month as monthly income exceeds the monthly expenses and investment contributions. Always willing to make single additional contributions (did this 4 times in the month of March and early April of this year). We hold a fair amount in the cash accounts (savings and checking) to begin with regardless. Every year we increase the amount contributed to the weekly taxable account to adjust for typical increased income. We are comfortable with having the cash account increase and stay relatively stable and proportional to the stock and bond portfolio.

This year more conspicuous than prior years we made the lump sum additional contributions, in years past when the cash accounts increased disproportionately we typically would make extra contributions to mortgage. But now in process of refinancing down to 2.25% rate for 15 years and don’t envision paying this off faster.

So technically we always have “dry powder” looking for opportunities.
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Re: Whose being naughty and keeping some dry powder around?

Post by ChinchillaWhiplash »

I have overweighted my fix income side of things with short term treasury fund. Have sold off some equities at the new highs to fund this. Pays a little interest and doesn’t fluctuate in price much. Usually goes up a little when equities are down. When the market starts dropping I will sell off a little and buy whichever equities asset class is down the most. Will keep doing that until my fixed income is back to my normal AA. I believe a major correction is inevitable in the near future. Market is propped up by interest cuts, hope for a COVID vaccine, and a few mega caps that are doing OK. There is nothing left up the sleeves of the Fed. Any new bad news will result in a drop in the price of equities. There is way too much uncertainty in what the future holds to not have a correction. It is pretty normal to have a 10% correction every year. I believe given all the pieces to the puzzle we have now, the next correction will be big and long lasting.
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TheTimeLord
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Re: Whose being naughty and keeping some dry powder around?

Post by TheTimeLord »

I am in the process of selling all my Brokerage CDs with interest rates below 2.5%. No real magic to 2.5%, just need to draw the line somewhere and 3% seemed excessive.
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burritoLover
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Re: Whose being naughty and keeping some dry powder around?

Post by burritoLover »

Robot Monster wrote: Thu Aug 27, 2020 9:01 am
burritoLover wrote: Thu Aug 27, 2020 7:35 am I know it's dumb but with TSM at a price to book of 3.3, I can't see plowing every last dollar of my money into these high prices.
You don't seem completely on-board with the notion what you're doing is dumb.
I'm on board, I just know the odds are stacked against me.
"it is always wise to expect the unexpected." - John Bogle
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burritoLover
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Re: Whose being naughty and keeping some dry powder around?

Post by burritoLover »

CyclingDuo wrote: Thu Aug 27, 2020 9:18 am
burritoLover wrote: Thu Aug 27, 2020 7:35 amI'm pumping any leftover money into my settlement fund to try to market time some bargain buying when/if a large correction occurs. Still maxing out my 401k/ira and not changing my normal taxable auto-investment. I know it's dumb but with TSM at a price to book of 3.3, I can't see plowing every last dollar of my money into these high prices. And I already have a decent tilt to small-cap value and a decent international allocation.
The bolded part suggests you should invest some of your dry powder in a fully stocked liquor cabinet to support the drinking game we all like to play: "Every time small cap value is mentioned, you have to take a drink."

:sharebeer

CyclingDuo

P.S. We own the entire market including small cap and small cap value, so know the game quite well...so our liquor cabinet is always well stocked.
:sharebeer
"it is always wise to expect the unexpected." - John Bogle
Independent George
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Re: Whose being naughty and keeping some dry powder around?

Post by Independent George »

I'm keeping some extra cash around in case I lose my job. Otherwise, my investments remain on autopilot as usual.
Grt2bOutdoors
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Re: Whose being naughty and keeping some dry powder around?

Post by Grt2bOutdoors »

burritoLover wrote: Thu Aug 27, 2020 9:59 am
Robot Monster wrote: Thu Aug 27, 2020 9:01 am
burritoLover wrote: Thu Aug 27, 2020 7:35 am I know it's dumb but with TSM at a price to book of 3.3, I can't see plowing every last dollar of my money into these high prices.
You don't seem completely on-board with the notion what you're doing is dumb.
I'm on board, I just know the odds are stacked against me.
If your time horizon is shorter than 10 years you have no business being in the market. If your horizon is 20-50 years, you might as well give up on this notion that it’s only going to get worse. Those who got out in 1987 are kicking themselves big time! Those who got out in 2000, ditto. Those who got out in 2008, double ditto. Those who got out in the third week of March? Triple ditto for now. Nobody knows nothing, you look at 3.3x book as too expensive? What is apple trading for? Warren bought it for more than 3.3x book, go look at it now.
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Re: Whose being naughty and keeping some dry powder around?

Post by AerialWombat »

Cash is king. It’s a normal part of my AA, not “dry powder” for deployment elsewhere.

The one naughty thing I’m considering is putting $5k-$10k into the Palantir IPO.
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burritoLover
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Re: Whose being naughty and keeping some dry powder around?

Post by burritoLover »

White Coat Investor wrote: Thu Aug 27, 2020 9:01 am In my experience, beginning investors have trouble staying the course at market lows, intermediate investors have trouble staying the course at market highs, and experienced investors just stay the course. Take from that what you will.
That fits, I've always been an intermediate-type person.
"it is always wise to expect the unexpected." - John Bogle
Robot Monster
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Re: Whose being naughty and keeping some dry powder around?

Post by Robot Monster »

burritoLover wrote: Thu Aug 27, 2020 9:59 am
Robot Monster wrote: Thu Aug 27, 2020 9:01 am
burritoLover wrote: Thu Aug 27, 2020 7:35 am I know it's dumb but with TSM at a price to book of 3.3, I can't see plowing every last dollar of my money into these high prices.
You don't seem completely on-board with the notion what you're doing is dumb.
I'm on board, I just know the odds are stacked against me.
Have you ever heard of the mental state called an "alief". It serves to illustrate a particular way someone can be of two minds about something. "For example, a person standing on a transparent balcony may believe that they are safe, but alieve that they are in danger." In the same way, while you may believe what you're doing is dumb, you may be aliefing something quite different.

BTW, just noticed, it should be who's, not whose, in the thread title.
Who is being naughty = Who's being naughty

https://en.m.wikipedia.org/wiki/Alief_(mental_state)
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TheTimeLord
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Re: Whose being naughty and keeping some dry powder around?

Post by TheTimeLord »

AerialWombat wrote: Thu Aug 27, 2020 10:13 am Cash is king. It’s a normal part of my AA, not “dry powder” for deployment elsewhere.

The one naughty thing I’m considering is putting $5k-$10k into the Palantir IPO.
Palantir is very intriguing to me. Haven't decided if I will buy any but I do find it very interesting.


A palantír (/ˈpælənˌtɪər/; pl. palantíri) is a fictional magical artefact from J. R. R. Tolkien's Middle-earth legendarium. A palantír (from Quenya palan, 'far; tir, 'watch over') is described as an indestructible ball of crystal, used for communication and to see events in other parts of Arda, whether past or future.
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khangaroo
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Re: Whose being naughty and keeping some dry powder around?

Post by khangaroo »

After my 401k maxes in October, I plan on not maxing next year but still maxing my Roth and HSA. I'm going to pile up my cash but probably not going to put it back into the stock market as I have a fairly decent size portfolio there already. I'm going to try my luck in the real estate market and being prepared for the potential opportunities that will pop up in the next year or so.
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burritoLover
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Re: Whose being naughty and keeping some dry powder around?

Post by burritoLover »

Grt2bOutdoors wrote: Thu Aug 27, 2020 10:09 am If your time horizon is shorter than 10 years you have no business being in the market. If your horizon is 20-50 years, you might as well give up on this notion that it’s only going to get worse. Those who got out in 1987 are kicking themselves big time! Those who got out in 2000, ditto. Those who got out in 2008, double ditto. Those who got out in the third week of March? Triple ditto for now. Nobody knows nothing, you look at 3.3x book as too expensive? What is apple trading for? Warren bought it for more than 3.3x book, go look at it now.
An individual stock at 3.3 is a lot different than 3500 stocks averaging 3.3.

I'm not getting out of the market. Nothing in my current portfolio is changing nor is my normal contributions twice a month.
"it is always wise to expect the unexpected." - John Bogle
RomeoMustDie
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Re: Whose being naughty and keeping some dry powder around?

Post by RomeoMustDie »

I have a small trader account and I fluctuate out of 0-25% cash AA.

Looking at beaten down financial stocks but I'm not sure if the macro will swing back to them anytime soon.

Expecting a sell off sometime soon from the lack of stimulus package.
ksualum
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Re: Whose being naughty and keeping some dry powder around?

Post by ksualum »

For people holding "dry powder" why don't you just invest in VWITX until a correction and then sell VWITX and buy VT.
So essentially if you think the market is too "high" maybe your % stock allocation has grown too large and you should add to bonds
This is the simplest way to sell high and buy low by keeping your stock:bond allocation within your preferred bands . . . .
SimplicityNow
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Re: Whose being naughty and keeping some dry powder around?

Post by SimplicityNow »

No dry powder here.

We have been accumulating cash as we will be purchasing a new home next year and we plan to purchase it with cash.

When will sell our old home ,we will take the proceeds and invest it according to our AA (60/40).

I think if you want to keep a small amount of dry powder that doesn't affect your AA significantly then I think it's fine.

Other than that, it's just another form of market timing.
JD2775
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Re: Whose being naughty and keeping some dry powder around?

Post by JD2775 »

I am not sure I understand this, but I am not as knowledgeable as most here...

If you believe the market will go up over time (even with the dips) why wouldn't you just buy now? VTSAX is basically at the same level it was in February. So if you ignore the "crash" it's been a flat year just looking at the share price. Compared to last year, it's probably a good time to buy, no?

For example, let's say you have $1000 extra this month that you can throw into your taxable acct, for simplicity let's say its VTSAX

What would be better....

Throwing it all in today
Waiting for possibly a 10-20% dip...who knows when that will be. Could be 2 weeks from now, could be 6 months. Meanwhile you are on the sidelines, time out of market.

For someone who is a buy it and hold kinda person, wouldn't it make sense just to put it in now?

Maybe my thinking is incorrect
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burritoLover
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Re: Whose being naughty and keeping some dry powder around?

Post by burritoLover »

ksualum wrote: Thu Aug 27, 2020 10:43 am For people holding "dry powder" why don't you just invest in VWITX until a correction and then sell VWITX and buy VT.
So essentially if you think the market is too "high" maybe your % stock allocation has grown too large and you should add to bonds
This is the simplest way to sell high and buy low by keeping your stock:bond allocation within your preferred bands . . . .
When you have a massive correction and wait until the next day to buy, the market could already be up 20% from its low. You need to have the money poised and ready to buy immediately.
"it is always wise to expect the unexpected." - John Bogle
Doctor Rhythm
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Re: Whose being naughty and keeping some dry powder around?

Post by Doctor Rhythm »

Cash reserves grew in the last 6 months due to (1) briefly turning off some automatic investments in taxable accounts to prevent a wash sale during TLH, and (2) ongoing big drop in expenses due to pandemic. I did make an arbitrarily large lump sum purchase last week, but I need to increase the automatic investments amount. Good problem to have.

Not waiting for any kind of correction though.
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Re: Whose being naughty and keeping some dry powder around?

Post by rascott »

MotoTrojan wrote: Thu Aug 27, 2020 7:46 am My only naughty action was moving my 35% S&P500 stake to Large-value. Other 65% was already in global small/deep-value. Cash is too far for me.
You changed your portfolio yet again?? :P

That's not a tilt. That's a full blown all value portfolio.
Last edited by rascott on Thu Aug 27, 2020 11:57 am, edited 1 time in total.
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burritoLover
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Re: Whose being naughty and keeping some dry powder around?

Post by burritoLover »

JD2775 wrote: Thu Aug 27, 2020 11:37 am If you believe the market will go up over time (even with the dips) why wouldn't you just buy now? VTSAX is basically at the same level it was in February. So if you ignore the "crash" it's been a flat year just looking at the share price. Compared to last year, it's probably a good time to buy, no?
My entire portfolio is already invested with this in mind and it continues to auto-invest twice a month. I'm talking about taking some of the "icing" on future contribution cake, additional unexpected money above my investment plan, and instead of plowing it into the same portfolio, keeping it in the settlement fund to be poised to buy some bargains on a potential crash.

When market prices are high, the expected future return is much lower. And prices are very high at this point - not quite dot com bubble levels but second to only that.
"it is always wise to expect the unexpected." - John Bogle
ImUrHuckleberry
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Re: Whose being naughty and keeping some dry powder around?

Post by ImUrHuckleberry »

We have a lot of dry powder coming that we were not expecting to receive. And I think it's going to be difficult to just pump it into the market at our normal AA. I know that because I keep stressing about it.
MotoTrojan
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Re: Whose being naughty and keeping some dry powder around?

Post by MotoTrojan »

rascott wrote: Thu Aug 27, 2020 11:56 am
MotoTrojan wrote: Thu Aug 27, 2020 7:46 am My only naughty action was moving my 35% S&P500 stake to Large-value. Other 65% was already in global small/deep-value. Cash is too far for me.
You changed your portfolio yet again?? :P

That's not a tilt. That's a full blown all value portfolio.
I did say I was being naughty, didn't I? Come check again in 6 months when it's 65/35 QVAL/IVAL :twisted:.
meaghansketch
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Re: Whose being naughty and keeping some dry powder around?

Post by meaghansketch »

Yep. This is me. I'm mid-late 30s, I had no problem investing throughout the lows of the 2008 recession. I have been a true Boglehead, indexes only, investment every paycheck investor, but the stock market now just seems completely disconnected from the rest of the economy that I can't bring myself to invest. I don't have a 401(k) (none available at work, and I'm not self employed so no self-employed 401k or other self employed plan) so I'm not even doing automatic investing that way. I fully funded my IRA on Jan 1. I put a bunch into the market when it dipped in March (I work ~4-6 month contracts so my emergency fund grows and shrinks depending on whether I've just started a contract or whether it's about to end) but have almost entirely stopped investing in my taxable account since then. I still feel like my cash reserves aren't too egregious (less than 1 year salary) which, since I don't have a stable job, some would find sensible, but I feel like if the market keeps going up I feel like I'll get to the point where I can't justify my cash reserves and I have to begin investing again no matter what's going on in the market.

Like several others in the thread, I know what I'm doing is not the best decision, mathematically or otherwise. I've read all the Boglehead literature. I just can't bring myself to pull the trigger.
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quisp65
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Re: Whose being naughty and keeping some dry powder around?

Post by quisp65 »

I only do one way balance but I do think about dry powder sometime. I think if I can have dry powder then I could just make my AA more aggressive and do better with a larger buy & hold. I certainly wouldn't want to do it without a plan. There was a difference in the pandemic crash and the 2000 slow down. But can you really tell when you are there. Can't remember 2000 well but I think it got extended due to the war and the pandemic crash could have been extended just as well. Can't really ever be sure. This leaves me to believe if I can do dry powder then I can be just as comfortable with a more aggressive AA.
Plan: 75/25 stock index/cash investments, one-way balance market highs, can lower expenses easily by 1/3rd
ksualum
Posts: 93
Joined: Mon Jan 15, 2018 3:01 pm

Re: Whose being naughty and keeping some dry powder around?

Post by ksualum »

burritoLover wrote: Thu Aug 27, 2020 11:48 am
ksualum wrote: Thu Aug 27, 2020 10:43 am For people holding "dry powder" why don't you just invest in VWITX until a correction and then sell VWITX and buy VT.
So essentially if you think the market is too "high" maybe your % stock allocation has grown too large and you should add to bonds
This is the simplest way to sell high and buy low by keeping your stock:bond allocation within your preferred bands . . . .
When you have a massive correction and wait until the next day to buy, the market could already be up 20% from its low. You need to have the money poised and ready to buy immediately.
Ok so put it in VTEB. You can sell that day and then buy that same day.
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H-Dog
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Joined: Tue Sep 08, 2015 10:39 pm

Re: Whose being naughty and keeping some dry powder around?

Post by H-Dog »

I have to admit, yes I am being naughty. Maybe I need collective boglehead wisdom.

No mortgage + max all tax advantaged accounts which have been automatic.

Problem is my taxable account as I cannot auto buy VTI in Fidelity and I am force to log in. I wish I could ask Fidelity to move all balance over specific $ threshold to a another account and then buy VTI with all of it. If I drop below original $ threshold then just leave it as my paychecks will replenish the account.

And now of course the market is all time high which I don't really want to buy manually. I love buying when the market goes down but if it is all time high. In my head I justify this by "increasing emergency cash fund" but in reality I am on board with not having an emergency cash fund at all (dipping into taxable if need be).
Osterix
Posts: 41
Joined: Sat Mar 03, 2018 8:55 am

Re: Whose being naughty and keeping some dry powder around?

Post by Osterix »

burritoLover wrote: Thu Aug 27, 2020 7:35 am I'm pumping any leftover money into my settlement fund to try to market time some bargain buying when/if a large correction occurs. Still maxing out my 401k/ira and not changing my normal taxable auto-investment. I know it's dumb but with TSM at a price to book of 3.3, I can't see plowing every last dollar of my money into these high prices. And I already have a decent tilt to small-cap value and a decent international allocation.

Anyone else?
We have a large cash reserve outside our 6 month EF that was earmarked for a home down payment. We offered on a home but found out that due to Fannie/Freddie guidelines I could not be approved for a conventional mortgage as I do not have two years worth of self-employed tax returns. So we will likely pursue home ownership through a physician mortgage this spring.

Anyway, we have maxed our 401(k) (employee and employer), backdoor Roth IRA x2, and HSA for the year. Added mid-five figures into a taxable so far this year. In theory, the cash that was earmarked for the home down payment is our "dry powder" since we have already hit >20% gross savings for the year.
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burritoLover
Posts: 327
Joined: Sun Jul 05, 2020 12:13 pm

Re: Whose being naughty and keeping some dry powder around?

Post by burritoLover »

ksualum wrote: Thu Aug 27, 2020 12:13 pm
burritoLover wrote: Thu Aug 27, 2020 11:48 am
ksualum wrote: Thu Aug 27, 2020 10:43 am For people holding "dry powder" why don't you just invest in VWITX until a correction and then sell VWITX and buy VT.
So essentially if you think the market is too "high" maybe your % stock allocation has grown too large and you should add to bonds
This is the simplest way to sell high and buy low by keeping your stock:bond allocation within your preferred bands . . . .
When you have a massive correction and wait until the next day to buy, the market could already be up 20% from its low. You need to have the money poised and ready to buy immediately.
Ok so put it in VTEB. You can sell that day and then buy that same day.
You might want to look at what that ETF did late March this year.
"it is always wise to expect the unexpected." - John Bogle
ksualum
Posts: 93
Joined: Mon Jan 15, 2018 3:01 pm

Re: Whose being naughty and keeping some dry powder around?

Post by ksualum »

burritoLover wrote: Thu Aug 27, 2020 12:52 pm
ksualum wrote: Thu Aug 27, 2020 12:13 pm
burritoLover wrote: Thu Aug 27, 2020 11:48 am
ksualum wrote: Thu Aug 27, 2020 10:43 am For people holding "dry powder" why don't you just invest in VWITX until a correction and then sell VWITX and buy VT.
So essentially if you think the market is too "high" maybe your % stock allocation has grown too large and you should add to bonds
This is the simplest way to sell high and buy low by keeping your stock:bond allocation within your preferred bands . . . .
When you have a massive correction and wait until the next day to buy, the market could already be up 20% from its low. You need to have the money poised and ready to buy immediately.
Ok so put it in VTEB. You can sell that day and then buy that same day.
You might want to look at what that ETF did late March this year.
Yeah. Along with everything else including gold
davidsorensen32
Posts: 453
Joined: Wed Jul 24, 2013 9:57 am

Re: Whose being naughty and keeping some dry powder around?

Post by davidsorensen32 »

I'm bored out of my mind doing nothing. How to get excitement ?
White Coat Investor wrote: Thu Aug 27, 2020 9:01 am In my experience, beginning investors have trouble staying the course at market lows, intermediate investors have trouble staying the course at market highs, and experienced investors just stay the course. Take from that what you will.
123
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Joined: Fri Oct 12, 2012 3:55 pm

Re: Whose being naughty and keeping some dry powder around?

Post by 123 »

Guilty, usually have some in taxable accounts (tax-deferred is 100% invested). I used quite a bit on the March dip and am very happy we held on to everything through it all. I usually maintain some limit orders to buy VTI automatically if it reaches a bargain price in another flash crash scenario.
The closest helping hand is at the end of your own arm.
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